IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 9^TH DAY OF MARCH, 2026 PRESENT THE HON'BLE MRS. JUSTICE ANU SIVARAMAN AND THE HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL MISCELLANEOUS FIRST APPEAL NO. 7076 OF 2025 (KPIDFA) BETWEEN:

K.C. NATARAJAN S/O K.S. CHAYAPATHI AGED ABOUT 80 YEARS RESIDING AT No.1153 SHREE CHAYA, 3^RD MAIN 2^ND PHASE, GIRINAGARA BANASHANKARI III STAGE BENGALURU-560 085 ...APPELLANT (BY SRI. HITESH GOWDA B.J., ADVOCATE)

AND:

1 . THE COMPETENT AUTHORITY FOR SRI GURUSARVABHAUMA SOUHARDA CREDIT CO-OPERATIVE LTD BENGALURU OFFICE OF THE MANAGING DIRECTOR KARNATAKA PUBLIC LAND CORPORATION URBAN DC OFFICE BUILDING K.G. ROAD, BENGALURU-560 009

2 . SRI GURUSARVABHAUM SOUHARDA CREDIT CO-OPERATIVE LTD REP. BY MANAGING DIRECTOR SRI. K. RAMAKRISHNA SHANKARPRAM, No.28 SHANKAR MUTT ROAD BENGALURU-560 004 ...RESPONDENTS (BY SRI. VEERESH R. BUDIHAL, ADVOCATE FOR C/R1)

THIS MFA IS FILED U/S.16 OF THE KARNATAKA PROTECTION OF INTEREST OF DEPOSITORS IN FINANCIAL ESTABLISHMENTS ACT, AGAINST THE ORDER DATED 28.06.2025 PASSED IN MISC. No.736/2022 ON THE FILE OF THE XCI ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, SPECIAL JUDGE FOR KPIDFE CASES, BENGALURU, ALLOWING THE PETITIONS FILED U/S.5(2) OF KPIDFE ACT AND ETC.

THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 25.02.2026 AND COMING ON FOR PRONOUNCEMENT OF JUDGMENT THIS DAY, ANU SIVARAMAN J., PRONOUNCED THE FOLLOWING:

CORAM: HON'BLE MRS. JUSTICE ANU SIVARAMAN and HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL

CAV JUDGMENT

(PER: HON'BLE MRS. JUSTICE ANU SIVARAMAN)

This appeal is filed challenging the Order dated

28.06.2025 passed by the XCI Additional City Civil and Sessions Judge, Bengaluru (CCH-92) ('Special Court' for short) in Misc.No.736/2022 filed by respondent No.1 under Section 5(2) of the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004, (‘KPIDFE Act’ for short) thereby confirming the Interim Order of attachment dated 04.11.2021 in respect of the petition schedule property.

2. We have heard Shri. Hitesh Gowda B.J, learned counsel appearing for the appellant and Shri. Veeresh R Budihal, learned counsel appearing for respondent No.1.

3. The petition averments were as follows:-

It was alleged that Shri. Gurusarvabhauma Souharda Credit Co-operative Limited ('Credit Co-operative Limited' for short) - respondent No.1 and its associates - respondents No.2 and 3, induced depositors by offering higher interest rates but failed to repay the principal and assured interest on maturity or demand. The deposited funds were criminally misappropriated and unlawfully diverted for the purchase of movable and immovable properties and for clearing outstanding loans of borrowers of Sri. Guru Raghavendra Sahakara Niyamita Bank.

On complaints filed by the depositors, the Government on 23.07.2020 appointed the petitioner as the Competent Authority for the Credit Co-operative Limited. Thereafter, in exercise of the powers under Section 3(2) of the KPIDFE Act, the Government passed an Interim Order of attachment on 04.11.2021, attaching the properties of respondent No.1 and its associates. The Interim Order of attachment was published in Karnataka Gazette on 12.11.2021, in two widely circulated newspapers on 04.12.2021 and was affixed at a conspicuous place on the petition schedule property. The Competent Authority filed the present petition on 30.05.2022 under Section 5(2) of the KPIDFE Act seeking to make the Interim Order of attachment absolute. Respondent No.3, one of the Directors of the Credit Co-operative Limited, is the owner of the petition schedule property. As the assets of respondent No.1 were insufficient to satisfy deposit liabilities, the Competent Authority contended that the provisional attachment of the personal property of respondent No.3 should be made absolute to repay the depositors.

4. It was the contention of the appellant/respondent No.3 before the Special Court that the petitioner had suppressed material facts and failed to establish a prima- fa