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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
SURAJ GOVINDARAJ, J.
THE BANGALORE, BANGALORE RURAL AND RAMANAGARA DISTRICT CENTRAL CO-OPERATIVE BANK LTD. – Petitioner
Versus
THE ASST. COMMISSIONER, BANGALORE – Respondent
Writ Petition No. 29196 of 2014, Writ Petition Nos. 17857, 17858 of 2015
Decided On : 25-07-2024
Banking - Co-operative Societies - Karnataka Schedule Caste and Schedule Tribes (Prohibition of Transfer of Certain Lands) Act, 1978 - Sections 4, 6, 7, 11; Karnataka Co-operative Societies Act, 1959 - Section 70 - The court interpreted the provisions of the PTCL Act and KCS Act, concluding that the Bank could not enforce an award against a grantee who was not a party to the loan transaction.
Fact of the Case:
The petitioner Bank sought to quash orders related to the attachment of properties owned by a grantee, arguing that it had a valid claim based on an award against a co-operative society that had defaulted on a loan. The grantee contended that the society had no right to mortgage the property as it was not the owner.
Finding of the Court:
The court found that the Bank could not enforce the award against the grantee since there was no privity of contract between them, and the society had no legal right to mortgage the property. The orders of the Assistant Commissioner and Deputy Commissioner were upheld.
Issues: Whether the Bank can claim benefits under the PTCL Act without the grantee having mortgaged the property, and whether the Bank can execute an award against a third party's property.
Ratio Decidendi: The court held that the Bank could not enforce an award against a grantee who had not borrowed from the Bank and had no contractual relationship with it, thus affirming the independence of the transactions between the Bank, the society, and the grantee.
Result: The petitions were dismissed as lacking merit.
ORDER :
1. The petitioner in all the above writ petitions is Bangalore, Bangalore Rural and Ramanagara District Central Co-operative Bank Ltd.(hereinafter referred to as the Bank or BBRRDCCB), seeking the following reliefs in each of the petitions. Which reads as hereunder:
(a) Quash the impugned order No. K.SC.ST.170/2007-08 dated 26.08.2010 passed by the 1st respondent at ANNEXURE-C.
(b) Set aside the order dated 25.10.2013 passed in Appeal No. SC.ST.(A)120/2010- 11 by the 7th respondent; at ANNEXURE-E.
(c) Pass such other orders as deemed fit to grant in the facts and circumstances of the case.
(d) In the alternative the 6th respondent may please be directed to refund to the petitioner an amount of Rs.25,000/- along with interest at 18% in the interest of justice.
In W.P. No. 17857/2015:
(a) Quash the impugned order No. K.SC.ST.30/2007-08 dated 26.8.2010 passed by the 1st respondent at ANNEXURE-C.
(b) Set aside the order dated 06.03.2014 passed in Appeal No. SC.ST.(A)122/2010-11 by the 11th respondent; at ANNEXURE-E.
(c) Pass such other orders as deemed fit to grant in the facts and circumstances of the case.
(d) In the alternative the 4th and 10th respondents may please be directed to refund to the petitioners an amount of Rs.1,05,000/- along with interest at 18% from 3.4.1993 the date of agreement till the date of payment in the interest of justice.
In W.P. No. 17858/2015:
(a) Quash the impugned order No. K.SC.ST.172/2007-08 dated 26.8.2010 passed by the 1st respondent at ANNEXURE-C.
(b) Set aside the order dated 01.07.2013 passed in Appeal No. SC.ST.(A)117/2010- 11 by the 1st respondent; at ANNEXURE-E.
(c) Pass such other orders as deemed fit to grant in the facts and circumstances of the case.
(d) In the alternative the 6th and 7th respondents may please be directed to refund to the petitioners an amount of Rs.75,000/- along with interest at 18% from 3.4.1993 the date of agreement till the date of payment in the interest of justice.
2. The factual background in all the above petitions more or less similar in that the petitioner-Bank claims to be a financial institution registered under the provisions of the Karnataka Co-operatives Act, 1959. The main sources of finance to the said Bank are deposits from members and the public, loans from Apex Bank, NABARD as also loan/share capital from the Government of Karnataka. It is claimed that the said Bank operates in Bangalore District, Bangalore Rural and Ramanagara District.
3. It is further claimed that respondent No. 3-Javahar House Building Co-operative Society Ltd., having approached the petitioner for sanction of a loan an amount of Rs.2 crores, was sanctioned on 06.01.1993 to enable the said Society to purchase lands for the formation of layouts. There being a default in repayment of the loan, the petitioner-Bank raised a dispute before the Joint Registrar of Co-operative Societies in Dispute No. 908/1993-94 against the Society for recovery of Rs.2,38,00,497/-, an award was passed on 01.03.1997 directing the payment of the said amount with interest at the rate of 22.5% and penal interest at 1% on defaulted principal amount of Rs.1,99,98,500/- from 01.01.1994 till the date of realisation.
4. In pursuance thereof, the petitioner-Bank had approached the Joint Registrar of Co-operative Societies for the execution of the award by attachment of the properties as regards which respondent No. 3 had entered into various agreements of sale. By an order dated 22.09.2007, the said properties came to be attached.
5. Respondent No. 6 the original owner of the property claiming to be a grantee of the land had filed a proceeding before the Assistant Commissioner under Section 5 of the Karnataka Schedule Caste and Schedule Tribes (prohibition of transfer of certain lands) Act, 1978 (hereinafter referred as PTCL Act) contending that respondent No. 6 had been granted an extent of 1 acre of 25 guntas in Sy. No. 79, Block No. 15 of Machohalli village, Dasanapura Hobli, Bangalore North T
AI
A bank cannot enforce an award against a grantee who is not a party to the loan transaction, as there is no privity of contract.
Authority under Section 70 enables the Additional Registrar to cancel improper allotments and registered sale deeds within cooperative societies, reinforcing adherence to bylaws and judicial oversigh....
The power of attorney authorized the attorney to mortgage the property, creating a binding mortgage valid against the family's claims, even if the borrowing parties did not own the property.
Point of law : Special Deputy Commissioner is entitled to go into the merits of the matter including question of delay and laches in filing the application before the Assistant Commissioner.
Point of law : in case of a diverted land, the requirement of obtaining the permission under Section 4(2) of the Act does not arise as the permission has to be obtained only in respect of 'granted la....
Sale of property under mortgage invalid when prior encumbrances are ignored, highlighting the need for equitable operations in financial transactions.
The court established that mutual agreements regarding compensation in the context of litigation are enforceable, and that the absence of a notice under Section 125 of the Societies Act does not prec....
A fraudulent gift deed executed after the initiation of surcharge proceedings is invalid, and subsequent transactions cannot confer title, as they occur during pending enforcement actions.
The central legal point established in the judgment is the strict application of the PTCL Act, particularly regarding the prohibition of transfer of granted land, the binding nature of non-alienation....
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