Vishwakarma Sahakara Bank Ltd. v. Assistant Registrar Of Co-Operative Societies And Recovery Officer, Karnataka State Urban Banks
2026-01-05
ASHOK S.KINAGI
body2026
DigiLaw.ai
ORDER : Ashok S.Kinagi, J. These writ petitions are filed challenging the order dated 28.12.2015 passed by respondent No.2 (WP No.12667/2016) in Appeal No.1/2009-10 filed under Section 106 of the Karnataka Co-operative Societies Act, 1959 (‘Act’ for short). 2. WP No.12667/2016 is filed by the Society, WP No.18951/2016 is filed by the auction purchaser and WP No.64567/2016 is filed by the purchaser of the property under reference from the auction purchaser (petitioner in WP No.18951/2016). For convenience, the parties are referred to based on their rankings in WP No.12667/2016. 3. Brief facts leading rise to the filing of these petitions are as follows: 3.1. The petitioner is a Co-operative Society registered under the Act. Respondent No.5 obtained a loan from the petitioner-Society by mortgage in a sum of Rs.5,15,000/- on 19.12.2003. Respondent No.5 failed to repay the loan amount. The petitioner-Society invoked arbitration clause for recovery of the said amount. The Arbitrator has passed an award in Dispute No.3179/04-05 under Section 71 of the Act, which was communicated to respondent No.5 in accordance with law. Even then, respondent No.5 did not clear the overdue loan amount to the petitioner-Society. The petitioner proceeded to take a steps for recovery by filing execution petition before the respondent No.1. Thereafter, Form No.2 was issued on 22.02.2006 and the said Form No.2 was served on respondent No.5 on 07.03.2006. Since the loan amount was not cleared, Form No.6 was issued on 11.08.2006 and the same was served on respondent No.5 on 30.08.2006. Thereafter, the Sale Officer issued Form No.7 on 27.09.2006 and the same was served on respondent No.5 on 27.09.2006. Form Nos.8 and 9 were issued on 26.02.2007 and same were served on respondent No.5 on 28.02.2007. The details of the properties brought for sale were published in Kannada Daily newspaper ‘Udayavani’ on 22.03.2007. Respondent No.5 filed an appeal before the Karnataka Appellate Tribunal, Bengaluru (‘Tribunal’ for short) in Appeal No.313/2006 and obtained an interim order of stay. Respondent No.5 was unable to fulfill the conditions stated in the interim order, the same was vacated and the appeal was dismissed. Respondent No.5 filed a writ petition in WP No.11655/2007 and he has obtained an interim order of stay.
Respondent No.5 was unable to fulfill the conditions stated in the interim order, the same was vacated and the appeal was dismissed. Respondent No.5 filed a writ petition in WP No.11655/2007 and he has obtained an interim order of stay. Respondent No.5 also filed a civil suit in OS No.69/2007 on the file of learned Civil Judge (Junior Division) Belthangady, D.K. Form Nos.8 and 9 were issued again on 21.09.2007, since there were no auction bidders and a writ petition in WP No. 16830/2006 was filed by respondent No.5, the auction could not be taken place. On 17.01.2008, Form Nos.8 and 9 were issued, once again, which was challenged in WP No. 3281/2008 before this Court and interim order was granted. Respondent No.5 was unable to comply with the conditions of interim order passed by this court in WP No.3281/2008 and the same was vacated. A paper publication for auction was issued on 15.08.2008, and canvassing was also made in the village by distributing the pamphlets before the date of auction. Due to some technical reasons, the auction could not be held on the date fixed i.e., on 25.08.2008 and the same was postponed to 01.09.2008. Respondent No.4 was the highest bidder in the auction. Respondent No.5, after losing several rounds of litigation, filed an appeal before respondent No.2 in Appeal No.1/2009-10 challenging the auction sale and confirmation order dated 22.11.2008. Respondent No.2 allowed the appeal on 28.12.2015 and set aside the auction sale and confirmation order. Hence, this writ petition. 4. Heard the arguments of learned counsel for the petitioner, learned counsel for the auction purchaser, learned counsel for the borrower, and learned AGA for respondent Nos.1 and 2. In WP No.12667/2016 5. Learned counsel for the petitioner-Society submits that there were several rounds of litigation between the petitioner and respondent No.5. The said aspect was not considered by respondent No.2, and proceeded to pass the impugned order. He also submits that, respondent No.2 has not assigned any reasons for setting aside the auction sale and confirmation order dated 22.11.2008. The order passed by respondent No.2 is without application of mind and it is not a speaking order. He also submits that, no sufficient opportunity was provided to the petitioner-Society to put forth its case. Hence, the order passed by respondent No.2 is arbitrary, erroneous and contrary to the records.
The order passed by respondent No.2 is without application of mind and it is not a speaking order. He also submits that, no sufficient opportunity was provided to the petitioner-Society to put forth its case. Hence, the order passed by respondent No.2 is arbitrary, erroneous and contrary to the records. Hence, on these grounds, he prays to allow WP No.12667/2016 and set aside the impugned order dated 28.12.2015 passed by respondent No.2. 6. Per contra, learned counsel for the auction purchaser and the purchaser from the auction purchaser adopt the arguments of the petitioner-Society. 7. Per contra, learned counsel for the respondent-borrower also submits that, the matter requires re-consideration by respondent No.2. Hence, he prays to dispose of the writ petitions. 8. Learned AGA supports the impugned order and submits that, respondent No.2 has considered the entire materials placed on record, and has rightly passed the impugned order. Thus, the impugned order passed by respondent No.2 is just and proper, and do not call for any interference the hands of this Court. Hence, he prays to dismiss the writ petitions. 9. Perused the records and considered the submissions of learned counsel for the parties. 10. The undisputed facts are, respondent No.5 had obtained a loan from the petitioner-Society of Rs.5,15,000/- on 19.12.2003 and the loan was overdue. Inspite of granting a sufficient opportunity, he did not repay the loan amount. The petitioner-Society initiated recovery proceedings by filing an arbitration case in Dispute No.3179/04-05. The Arbitrator has passed an award directing the respondent No.5 to pay the amount with interest. Vide award dated 21.02.2005. Despite the award passed by the Arbitrator, respondent No.5 did not repay the loan amount as per the award. The petitioner-Society filed an execution petition to enforce the award passed. Form No.2 was issued and the same was served on respondent No.5. Form No.6 was issued on 11.08.2006, Form No.7 was issued on 27.09.2006, Form Nos.8 and 9 were issued on 26.02.2007. Respondent No.5, aggrieved by Form Nos.7, 8 and 9, filed an appeal before the Tribunal in Appeal No.313/2006. The Tribunal granted an interim order subject to certain conditions. Respondent No.5 did not comply with the conditions imposed by the Tribunal while granting the interim order. The said appeal came to be dismissed by the Tribunal.
Respondent No.5, aggrieved by Form Nos.7, 8 and 9, filed an appeal before the Tribunal in Appeal No.313/2006. The Tribunal granted an interim order subject to certain conditions. Respondent No.5 did not comply with the conditions imposed by the Tribunal while granting the interim order. The said appeal came to be dismissed by the Tribunal. Respondent No.5 filed a writ petition in WP No.11655/2007 before this Court and this Court granted an interim order of stay subject to certain conditions on 27.07.2007. In the meanwhile, respondent No.5 filed a civil suit in OS No.69/2007. Respondent No.5 did not comply with the conditions imposed while granting the interim order by this court in WP No.11655/2007. Once again, Form Nos.8 and 9 were issued on 21.09.2007. Since there were no auction bidders and respondent No.5 filed a writ petition in WP No.16830/2006, the auction could not be taken place. Form Nos.8 and 9 dated 17.01.2008 were issued by respondent No.1 served on respondent No.5 for fourth time on 23.01.2008. Again, respondent No.5 approached this Court in WP No.3281/2008 and this Court had granted an interim order. Respondent No.5 was unable to comply with the conditions of the interim order passed by this Court in WP No.3281/2008. Again, Form Nos.8 and 9 were issued on 14.07.2008 and same were served on respondent No.5 on 23.07.2008. The petitioner-Society has also taken out a paper publication for auction, and canvassing was also made in the village by distributing the pamphlets before the date of auction. Finally, the auction was conducted on 01.09.2008 and respondent No.4 was the highest bidder for Rs.9,00,000/- and the intimation was given to the respondent No.5, communicating the auction sale and the highest bid amount. Thereby, an opportunity was given to respondent No.5 to deposit the loan amount and to get the auction sale set aside. Despite granting sufficient opportunity, the respondent No.5 failed to comply with the statutory requirement of depositing the loan amount. Respondent No.1 confirmed the sale under Rule 441 of the Rules vide ordered dated 22.11.2008. Respondent No.5 approached respondent No.2, and challenged the auction sale and sale confirmation before respondent No.2 in Appeal No.1/2009-10. Respondent No.2 allowed the appeal filed by the borrower vide order dated 28.12.2015. 11.
Respondent No.1 confirmed the sale under Rule 441 of the Rules vide ordered dated 22.11.2008. Respondent No.5 approached respondent No.2, and challenged the auction sale and sale confirmation before respondent No.2 in Appeal No.1/2009-10. Respondent No.2 allowed the appeal filed by the borrower vide order dated 28.12.2015. 11. From the perusal of the impugned order dated 28.12.2015, although the petitioner-Society, the auction purchaser and the purchaser from auction purchaser have raised several grounds before respondent No.2, without considering the said aspects, respondent No.2 has proceeded to pass the impugned order. Respondent No.2 has not considered the entire material placed on record. Respondent No.2 committed an error in passing an impugned order. The impugned order passed by Respondent No.2 is arbitrary, without application of mind and it is a cryptic order. Hence, the matter requires re-consideration by respondent No.2. 12. In view of the above discussion, I proceed to pass the following: ORDER IN WP No.12667/2016: i. The writ petition is allowed ii. The impugned order dated 28.12.2015 vide Annexure-A is hereby quashed; iii. The matter is remitted to respondent No.2 and respondent No.2 is directed to consider the entire material placed on record, personally hear the petitioner-Society, the borrower and the auction purchaser, and pass an appropriate order in accordance with law; iv. All the contentions of the parties are kept open; v. Pending IA(s), if any, shall stand disposed of accordingly. IN WP No.18951/2016 & 64567/2016: i. The writ petitions are disposed of ii. The sale confirmation shall be subject to the outcome of Appeal No.1/2009-10; iii. Pending IA(s), if any, shall stand disposed of accordingly.