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High Court of Karnataka
THE HONOURABLE MR. JUSTICE N. KUMAR
M.S. Shivashankar
Versus
State of Karnataka & Another
Writ Petition No.2292 of 2009 connected with Writ Petition Nos. 2704, 2849 & 2428 of 2009; 12519 of 2008 & 3032 of 2009 (GM-RES)
Decided on : 03-02-2009
KARNATAKA PROTECTION OF INTEREST OF DEPOSITORS IN FINANCIAL ESTABLISHMENTS ACT, 2004 - Sections 3 & 12:[N.Kumar,J] Proceedings are initiated at the instance of the depositors of the company by name M/s Invest Tech and Invest Tech Builders and Developers Private Limited - Notification issued by the Government bringing the properties of the petitioners for sale - Challenge to - Failure of the Government to publish the order of attachment in the Official Gazette - Non filing of the application by the competent authority before the Special Court - Procedure followed by the Special Court in passing the order for sale of property - Legality of - Held, Admittedly, the Government has not published the order of attachment in the Official Gazette. It is not published in two daily newspapers. It is not affixed to the properties which are attached. Even the Competent Authority has not filed application before the Special Court as contemplated under the Act. Unfortunately, the Special Court without proper application of mind, without issuing notices to the financial establishments or to the persons in whose name the property stands and without making the order of attachment absolute has permitted the competent authority to bring the properties attached by the Government for sale. The entire procedure followed by the Government, the Competent Authority and the Special Court is illegal, contrary to law and are wholly without jurisdiction and therefore their acts and the Notifications issued which are impugned in these writ petitions cannot be sustained.
KARNATAKA PROTECTION OF INTEREST OF DEPOSITORS IN FINANCIAL ESTABLISHMENTS ACT, 2004 - Section 12: [N.Kumar,J] Attachment - Powers of the Special Court - Held, Section 12 provides for a comprehensive machinery for adjudication of all disputes arising out of an attachment of the property under Section 3 of the Act. Once the competent authority appointed under Section 5 of the Act makes an application to the Special Court seeking for the order of attachment to be made absolute, the proceedings before the Special Court commences. It is a judicial proceeding. The Special Court has to (a) Issue notice to the financial establishment; (b) Issue notice to any other person, if any, whose property is attached by the designated authority under Section 3; (c) Also issue such notices to all other persons represented to it as having or being likely to claim, any interest or title to the property attached by the designated authority under Section 3; and (d) Any person claiming an interest in the property attached or any portion thereof may notwithstanding that no notice has been served upon him under the Section can make an objection to the attachment at any time before an order is passed under sub-Section (4) or sub-Section (6). Further, The procedure to be followed in such investigation/enquiry is the summary procedure contemplated under Order 37 of the CPC, 1908, The Court shall exercise all the powers of a Court hearing a suit under the CPC. It is for the objector to adduce evidence to show that on the date of attachment he had some interest in the property attached. After investigation under sub-Section (5), the Special Court shall pass an order within one year from the date of receipt of the application under sub-Section (1) making the attachment absolute or release the property from attachment by cancelling ad-interim order of attachment.
KARNATAKA PROTECTION OF INTEREST OF DEPOSITORS IN FINANCIAL ESTABLISHMENT ACT, 2004 - Sections 3,5 & 12: [N. Kumar, J] Attachment of property of financial establishment -Order of attachment not published in official Gazette - Nor published in two daily newspapers -It is not affixed to properties which are attached - Competent Authority failed to file application before Special Court as contemplated under Act - Bringing property for sale by public auction by Special Court, without issuing notices to financial establishment or to persons in whose name property stands and without making order of attachment absolute - Held, Entire procedure followed by Government, Competent Authority and Special Court is illegal, contrary to law and without jurisdiction.
The petitioners in all these writ petitions have challenged the notification issue by the Government bringing property for sale under the provisions of Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004 (for short, hereinafter referred to as the Ace). The question involved is purely question of law. Therefore, they are taken up for consideration together and disposed of by this common order.
2. The petitioner in W.P.No.2292 of 2009 Sri M.S. Shivashankar contends that his mother Smt. M.S. Saraswathamma purchased the schedule property, a BDA vacant site bearing No. 28 situated at H.S.R. Layout, Sector-I, Begur Hobli, Bangalore, under a registered sale deed dated 27-3-2006 for a consideration of Rs. 17.00 lakhs as per Annexure-B. Her name was entered in the encumbrance certificate, she was put in possession, katha was transferred in her name and she was paying the property tax till her death. She had put up a construction on the schedule property after obtaining sanctioned plan and licence from the BDA. She died on 30-11-2007, leaving behind the petitioner, his elder brother M.S. Rajendra Prasad, elder sister KS. Ramalakshmamma and younger sister M.S. Geetamani as legal representatives. Thereafter among them a registered release deed came to be executed in pursuance of which the petitioner has become the absolute owner. The said property is now notified for sale under the Act.
3. The petitioner in W.P.No.2428 of 2009, Mr. V.R. Ramesh contends that he purchased the schedule property, a vacant site bearing No. 3579, Domlur, BBMP, Jeevanbheemanagar Sub-Division (Ward No. 72) from M/s. N. Suresh Krishnamurthy and others under a registered sale deed dated 23-12-2005 for a consideration of Rs. 50,00,000/-. Subsequently, katha has been made out in his name, he has been paying tax, his name was entered in the encumbrance certificate and he is in peaceful possession and enjoyment of the said property as absolute owner thereof. His property is now brought to sale by virtue of the impugned notification.
4. The petitioner in W.P.No.12519 of 2008 Smt. Savitha contends that she has purchased the property bearing No.178/A situated at 6th Sector, HSR Layout, Bangalore, under a registered sale deed dated 18-7-2003 from its previous owner Doddeeraiah as per Annexure-A for a valuable consideration. Subsequently, katha was transferred in her favour, her name was entered in the encumbrance certificate and she has been paying tax. Now the said property is brought to sale by the impugned notification.
5. The petitioner in W.P.No.2704 of 2009 Sri S.H. Chakravarthy contends that he has purchased the vacant site bearing No.1889 formed by the BDA, situated at 9th Main Road, Banashankari II Stage, Corporation Ward No.56, in a Court sale held on 31-5-2007 for a sum of Rs. 1,59,72,000/-. The said sale has been duly confirmed by the Bangalore City Civil Court on 14-8-2007 and a sale certificate came to be issued as per Annexure-A. Subsequently, katha was made out in his name. He has been paying tax, his name finds a place in the encumbrance certificate, he is in peaceful possession and enjoyment of the said property. The said property is now notified for public auction under the impugned notification.
6. The petitioner in W.P.No.2849 of 2009 Dr. Talawani Krishna contends that he has entered into an agreement of sale with respondent 4 in respect of site bearing No.1083, 12th Main, 5th Cross, HAL II Stage, Bangalore, for purchasing the same for a sum of Rs. 2,10,00,000/-. The agreement of sale is reduced into writing on 12-2-2005. A sum of Rs. 1,71,30,000/- lying with the purchaser is adjusted towards sale consideration. Thereafter, he has paid a sum of Rs. 77,75,000/-. On account of construction of the building, the- balance amount of Rs. 38,70,000/-was also paid, thus he has paid in all a sum of Rs. 2,10,00,000/- for purchase of the said site. In fact, he has already filed a suit for specific performance in O.S.No.17
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