2015 Supreme(SC) 997

SUPREME COURT OF INDIA
T.S. THAKUR, V. GOPALA GOWDA, JJ.
B.S. SHESHAGIRI SETTY & ORS. – APPELLANTS
Vs.
STATE OF KARNATAKA & ORS. – RESPONDENTS
CIVIL APPEAL NOS.8663-8664 OF 2015 (Arising Out of SLP (C) Nos.10802-10803 of 2013)
Decided On : 15-10-2015

IMPORTANT POINTS
Section 108 of the 1959 Act empowers the State Government to pass any order deemed fit in case there has been a miscarriage of justice.
When State Government exercised its statutory power after being satisfied about illegality of the sale of mortgaged immoveable property of the appellants; it will not be open to respondents to contest the same by urging technical grounds like limitation.
When the auction sale was confirmed even after repaying the entire principal amount, it would be illegal and the auction purchaser will not be a bona fide purchaser.

Headnote:(a) Karnataka Cooperative Societies Act, 1959 – Section 108 – Appellants rendered landless for more than two decades even after repaying the loan amount – State Government empowered to pass any order deemed fit in case there has been a miscarriage of justice – Instantly, plight of appellants amounts to gross miscarriage of justice – In such cases technicalities like limitation should not further hamper complete justice – Instantly, Government permitting defaulters to pay entire loan by 30.06.1983 by an order under Article 162, Constitution of India – Sale of appellants’ lands confirmed on 10.12.1985 despite repayment of loan having been brought on record – Confirmation contrary to the Government’s order and illegal – Confirmation order depriving appellants of their right to livelihood – Constitution of India – Article 21 – Highly pedantic and technical approach of courts below deprecated. (Para 17, 18, 19)

       (1996)3 SCC 132; (2014) 14 SCC 127; (1985) 3 SCC 545 – Relied upon

       (1969) 2 SCC 187; (1987) 2 SCC 107 – Referred

       (2011) 1 SCC 53; (2009) 9 SCC 352 – Distinguished

       (b) Karnataka Cooperative Societies Act, 1959 – Section 108 – Act is a special Act – Conferring power of revision on the State Government suo moto at any time, or on application by an applicant within 6 months of the passing of an order – State Government having power of condonation of delay – Section 29(2), Limitation Act, 1963 – State Government exercising statutory power on being satisfied about illegality of the sale of mortgaged immoveable property of the appellants – Not open to respondents to contest the same by urging technical grounds – Action by Minister must be taken to be suo moto exercise. (Para 20)

       (c) Karnataka Cooperative Societies Act, 1959 – Section 89 and 38 – Service of notice of sale on mortgagor imperative – Instantly, award of Arbitrator ordering sale of appellants’ mortgaged land ex parte – No opportunity afforded to appellants – Further, appellants repaying their loan in full on 30.06.1983, yet order for confirmation of sale passed on 10.12.1985 – Sale was not valid and no right accrued to the auction purchaser – He cannot be said to be bona fide purchaser. (Para 22, 23)

       (2008) 9 SCC 299 – Relied upon

       (2008) 12 SCC 582 – Distinguished

       Facts of the case:

       The appellants are small farmers who had availed a loan of Rs.16,000/-from the Kadur Taluk Primary Co-Operative Land Development Bank Ltd. by mortgaging their entire immoveable agricultural property as security for the same.

       The appellants were able to pay only one instalment of the loan, and were not able to pay the subsequent instalments. The respondent Bank filed a petition before the Arbitrator of Co-Operative Societies, Chikmagalur District. The learned Arbitrator, passed an ex parte award in favour of the Bank.

       On 27.05.1981, the bank conducted the auction sale of the immoveable property in public auctions and the bid stood at Rs.40,050/-.

       The appellants filed an appeal before the Karnataka Appellate Tribunal, Bangalore. During the pendency of the appeal, the State Government of Karnataka issued a notification in respect of the borrowers of the Bank, pursuant to which the appellant paid to the Bank the entire remaining loan amount of Rs.7050/-on 30.06.1983, excluding the interest as he had already deposited an amount of Rs.9,000/-with the Karnataka Cooperative Society on 07.09.1981.

       The learned Karnataka Appellate Tribunal allowed the appeal filed by the appellants and remitted the matter back to the Arbitrator, to dispose of the same in accordance with law.

       The respondents filed a Writ Petition before the High Court of Karnataka, which was allowed

       In the meanwhile, on 10.12.1985, the Assistant Registrar of Cooperative Societies issued a certificate of sale under Rule 38(7) of the Karnataka Cooperative Societies Rules, 1960 in favour of the auction purchaser S.V. Vijaydev (respondent no.6), thereby confirming the sale of the lands of the appellants herein.

       The appellants preferred an appeal before the Deputy Registrar of the Cooperative Societies, Chikmagalur District which was dismissed.

       The appellants then filed a Review Petition challenging the order of confirmation of sale of the immoveable property passed by the Assistant Registrar of Co-Operative Societies, which was dismissed as not maintainable. Revision Petition thereagainst before the Deputy Registrar of Co-operative Societies was dismissed as not maintainable.

       The appellants thereafter filed a Revision Petition before the Minister of Co-operation, Government of Karnataka which was allowed.

       The auction purchaser (respondent no. 6 herein) challenged the aforementioned order of Minister of Cooperation by Writ Petition. The State Government of Karnataka also filed a writ petition.

       The single judge by a common judgment and order quashed the order of the Minister being perverse and arbitrary.

       The appellants preferred Writ Appeal which was dismissed.

       Finding of the Court:

       The confirmation of auction sale of the immoveable property in question was illegal. The learned High Court erred in setting aside the order dated 9.2.2004 of the Minister for Cooperation, State Government of Karnataka, passed in the Revision Petition.

       Result: Appeals allowed.