IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 13^TH DAY OF NOVEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE E.S.INDIRESH WRIT PETITION NO. 6148 OF 2020 (GM-CFA)

BETWEEN:

M/S MARGADARSI CHITS (KAR) PVT. LTD., HONNA KAMALA CREST, 2ND FLOOR, GENERAL KARIYAPPA MAIN ROAD, TUMAKURU - 572 101 REP BY ITS VICE PRESIDENT/GENERAL MANAGER, SRI. P LAKSHMANA RAO …PETITIONER (BY SRI. JAYAKUMARA P.P, ADVOCATE)

AND:

1. MR. C.N. NARASIMHA REDDY S/O CHIKKANARAYANAPPA, S.L.E.S. GROUP OF INSTITUTION, NEAR RAILWAY TRACK, CHELUR ROAD, Digitally signed by ARUNKUMAR M S CHINTAMANI - 563 125.

Location: H IGH COURT OF KARNATAKA 2. THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES AND CHITS, CHAMARAJPET, BENGALURU

3. THE DEPUTY REGISTRAR OF CHITS TUMAKURU DISTRICT TUMAKURU …RESPONDENTS (BY SRI. V. VISHWANATH SHETTY, ADVOCATE FOR R1;

SRI. MAHANTESH SHETTAR, ADVOCATE FOR R2 AND R3)

THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA TO QUASH THE IMPUGNED ORDER DATED 07.12.2019 PASSED BY THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES AND JOINT REGISTRAR OF CHITS, BANGALORE ZONE, AT BANGALORE IN CHITS APPEAL ANNEXURE-A AND ETC., THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE E.S.INDIRESH

ORAL ORDER

1. In this writ petition, the petitioner is assailing the order dated 07.12.2019 (Annexure-A) passed by respondent No.2 and the order dated 15.07.2017 (Annexure – B) passed by respondent No.3.

2. The facts in nutshell for the purpose of adjudication of this petition are that; the petitioner entity is having a business of promoting and conducting chits as per the provisions contained under the Chit Funds Act, 1982 (hereinafter referred to as ‘the Act’). It is further stated that one Sri.J.S.Shankar Raju and one Sri.K.V.Ananda Gowda had availed loan to an extent of Rs.30,00,000/- and for the security of the same, respondent No.1 herein along with five others have entered into an Agreement of Guarantee as per Annexures - G and H to the writ petition. In view of default on the part of the principal borrower, the petitioner herein has initiated the proceedings against the respondent No.1 under the Act. In this regard, respondent No.1 herein has approached respondent No.3 in Dispute No.DRT/CFS/20/2016-17 and the said petition came to be disposed of on 15.07.2017 (Annexure–B). Feeling aggrieved by the same, the petitioner herein has preferred an appeal before respondent No.2 in Appeal No.JRB/Chits/Appeal/15/2017-18 and the said appeal came to be dismissed on 07.12.2019 (Annexure – A). Feeling aggrieved by the same, the petitioner has presented this writ petition.

3. Heard Sri.Jayakumara P.P, learned counsel appearing for the petitioner and Sri.V.Vishwanath Shetty, learned counsel appearing for respondent No.1 and Sri.Mahantesh Shettar, learned Additional Government Advocate appearing for respondent Nos.2 and 3.

4. It is argued by learned counsel appearing for the petitioner by referring to Section 128 of the Contract Act, and submitted that, respondent No.1 being a surety to the chits raised by the original borrowers - Sri.J.S.Shankar Raju and Sri.K.V.Ananda Gowda is liable to satisfy the claim made by the petitioner herein and accordingly, sought for interference of this Court.

5. Per contra, Sri.V.Vishwanath Shetty, learned counsel appearing for respondent No.1 submitted that, an extent of Rs.11,25,636/- is held up with the petitioner chits and there is no impediment for the petitioner to deduct the share of the respondent No.1 to an extent of Rs.3,06,873/- and to release the remaining amount of Rs.8,18,763/- with interest in favour of respondent No.1. Further, it is argued by referring to the judgment of the Hon'ble Supreme Court in case of Ram Kishun and Others Vs. State of Uttar Pradesh and Others reported in (2012) 11 SCC 511 that, the liability be equally apportioned on all the co-sureties unless an agreement of contract provides otherwise and accordingly, he sought