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2025 Supreme(Online)(Kar) 17736
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 24TH DAY OF JULY, 2025 PRESENT THE HON'BLE MR. JUSTICE R.NATARAJ AND THE HON'BLE MR. JUSTICE RAJESH RAI K REGULAR FIRST APPEAL NO. 100221 OF 2020 BETWEEN:
1. CITY UNION BANK LTD NO.4620, J.C.NAGAR, 3RD CROSS, HUBBALLI-580020, REPRESENTED BY ITS BRANCH MANAGER SRI. RAMASUNDARAM T.
AGE: 37 YEARS, 2. AMIRTHA GANESH T.S.
AGE: 51 YEARS, Digitaly signed b N y A Y R A A S Y H AN AV K A A N R T BRANCH MANAGER, Location: HIGH Y N A A S R H A A Y V A A N N K T AR C K D A O H R U A N R R A W T T O A A D F KA CITY UNION BANK LTD., BENCH DHARWAD D 20 a 2 te 5 : .07.24 NO.4620, J.C.NAGAR, 14:14:56 +0530
3RD CROSS, HUBBALLI-580020.
...APPELLANTS (BY SRI. SURESH S.GUNDI, ADVOCATE)
AND:
1. KARNATAKA SAHAKARI SAKKARE KARKHANE LIMITED, SANGUR, TQ: HAVERI-581148, REPRESENTED BY ITS MANAGING DIRECTOR.
2. SADASHIVA S/O. CHANABASAPPA BELLAD, AGE: 59 YEARS, OCC: AGRICULTURE AND BUSINESS AND EX-PRESIDENT, KSSK LTD, SANGUR, R/O: AKKI-ALUR, TQ: HANGAL, DIST: HAVERI-581102.
…RESPONDENTS (BY SRI. ARAVIND D.KULKARNI AND SRI. L.M.KURAHATTI, ADVOCATES FOR R1;
SRI. SHRIKANT T.PATIL AND SRI. ROHIT S.PATIL, ADVOCATE FOR R2)
THIS RFA IS FILED UNDER SECTION 96 READ WITH ORDER 41 RULE 1 OF CPC AGAINST THE JUDGMENT AND DECREE DATED 27.01.2020 PASSED IN O.S.NO.20/2013 ON THE FILE OF THE ADDITIONAL SENIOR CIVIL JUDGE AND JUDICIAL MAGISTRATE FIRST CLASS, HANGAL, DECREEING THE SUIT FILED FOR RECOVERY OF MONEY.
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 30.06.2025 AND COMING ON FOR PRONOUNCEMENT OF JUDGMENT THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: THE HON'BLE MR. JUSTICE R.NATARAJ AND THE HON'BLE MR. JUSTICE RAJESH RAI K
CAV JUDGMENT
(PER: THE HON'BLE MR. JUSTICE RAJESH RAI K)
The defendants No.2 and 3 in O.S. No.20/2013 on the file of the Addl. Senior Civil Judge and JMFC., Hanagal, (henceforth referred to as ‘the Trial Court’) filed this regular first appeal challenging the judgment and decree dated 27.01.2020 by which the suit in O.S. No.20/2013 was decreed with cost and ordered that plaintiff is entitled to recover an amount of Rs.20,00,000/- from defendants No.1 to 3 with interest @18% per annum from 15.02.2008 till its actual realization. Further, it is ordered that defendants No.1 to 3 are jointly and severally liable to pay the amount to the plaintiff within 3 months from the date of judgment, failing which, the plaintiff is at liberty to recover amount along with interest from the defendants by following due procedure of law.
2. The parties shall henceforth be referred to as they were arrayed before the Trial Court.
3. Brief facts, leading raise to the filing of this appeal are as follows:
The plaintiff filed the suit for recovery of Rs.20,00,000/- from defendants No.1 to 3 with interest @ 18% per annum. The plaintiff is a Co-operative Society running a Sugar Factory in the name and style of Karnataka Sahakari Sakkare Karkane Niyamita (hereinafter referred to as ‘plaintiff Society’ for short). The Commissioner for Cane Development and Director of Sugar, Bengaluru being the competent authority, by its order dated 22.11.2007, superseded the committee of management of plaintiff Society and appointed the District Commissioner of Haveri as Administrator and the Deputy Registrar of Co-operative Society, Haveri as a Managing Director of the plaintiff’s Society. Hence, they both were administering the plaintiff Society from 22.11.2007.
4. The plaintiff Society was an assessee under the provisions of Karnataka Commercial Tax and was to pay purchase tax on purchase of sugarcane from farmers for crushing during the year 1990-91 to 1995-96. The plaintiff Society had paid excess tax of Rs.45,76,981/- to Commercial Tax Department. As such, the plaintiff preferred an appeal before the Karnataka Appellate Tribunal, Bangalore seeking refund of excess tax paid. The Karnataka Appellate Tribunal allowed the claim of plaintiff and passed an order for refund of the said amount to the plaintiff by the Commercial Tax Department. Accordingly, Deputy Commissioner, Commercial Tax, Dharwad by his letter dated 01.02.2008 arranged for refund of Rs.45,76,981/- to the plaintiff’s Society.
5. The defendant No.1 was the elected President of plaintiff Society till 22.11.2007 i.e., before superseding the committee of management. The defendant No.1 knowingfully that, he is no authorized to manage the affairs of the plaintiff Society, with an ulterior motive, he received the refund order with voucher dated 01.02.2008 issued by the Deputy Commissioner, Commercial Tax and approached defendant No.2- the Manager of defendant No.3 Bank to open an account in the name of plaintiff Society. The defendant No.2 without properly verifying the authenticity of documents produced by defendant No.1, including the Board resolution, allowed a current account bearing No.88997 to be opened on 12.02.2008 in the name of Karnataka Sahakari Sakkare Karkane Niyamita. Later, defendant No.1 submitted the refund payment order of Rs.45,76,981/-. The defendant No.2 cleared the same on 14.02.2008 and defendant No.1 withdrew a sum of Rs.20,00,000/- by cash on 15.02.2008 by presenting a self drawn cheque.
6. The audit of the plaintiff Society for the year 2007- 08 and 2008-09 was finalized on 29.06.2010. The Auditor reported a shortfall of Rs.20,00,000/- out of the amount refunded by the Tax Department. It was thereafter found that defendant No.1 by opening an account in defendant No.3 Bank, withdrew the said amount. As such, the auditor of plaintiff’s Society advised to recover the said amount from defendants jointly.
7. Accordingly, the plaintiff Society got issued a notice to defendants on 03.06.2012 calling
