Allowed

Nathashree Urban Co-Operative Societies Ltd., v. the Assistant Registrar of

Karnataka HC13 Dec 2023WP/104322/2017

Case brief

AI extract

What is this about?

The High Court allowed the writ petition, setting aside the Appellate Tribunal order which had set aside the award against the respondent under the Karnataka Cooperative Societies Act. The court held that the liability fixed under the final Section 68 order stood independent of non-impleading of directors.

What did the court decide?

The impugned order of the Karnataka Appellate Tribunal was set aside, the arbitrator's award was restored, and the writ petition was allowed.

Nathashree Urban Co-Operative… — Constitutional and Fundamental Rights | Karnataka HC (2023)

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NC: 2023:KHC-D:14608 WP No. 104322 of 2017

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IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH

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DATED THIS THE 13^TH DAY OF DECEMBER, 2023

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BEFORE

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THE HON'BLE MR JUSTICE ANANT RAMANATH HEGDE

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WRIT PETITION NO. 104322 OF 2017 (CS-RES)

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BETWEEN:

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NATHASHREE URBAN CO-OPERATIVE SOCIETIES LTD, NIPANI, TQ: CHIKKODI, DIST: BELAGAVI, REPRESENTED BY ITS SECRETARY, SRI. MAHADEV S/O. LAXMAN JADAV, AGE: 48 YEARS.

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…PETITIONER

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(BY SRI. SHIVARAJ P. MUDHOL, ADVOCATE)

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AND:

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THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETY CHIKODI, SUB-DIVISION CHIKODI, TALUK: CHIKODI, DISTRICT: BELAGAVI.

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SAMBAJI S/O. RUPAJI GAIKWAD AGE: 41 YEARS, OCC: AGRICULTURE, R/O: YARANAL, TQ: CHIKODI, DIST: BELAGAVI.

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MOHANKUMAR B SHELAR

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Digitally signed by MOHANKUMAR B SHELAR Date: 2023.12.14 15:38:28 +0530

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…RESPONDENTS (BY SMT. KIRTILATA R. PATIL, HCGP FOR RESP. NO.1, SRI. MRUTYUNJAYA TATA BANGI, ADV. FOR RESP. NO.2)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO ISSUE WRIT IN THE NATURE OF CERTIORARI TO QUASH THE IMPUGNED JUDGMENT AND ORDER DATED 11.04.2016 IN APPEAL NO.469/2013 PASSED BY THE KARNATAKA APPELLATE TRIBUNAL BENGALURU VIDE ANNEXURE-B BY ALLOWING THIS WRIT PETITION.

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THIS PETITION, COMING ON FOR FURTHER HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:

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2 - NC: 2023:KHC-D:14608 WP No. 104322 of 2017

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ORDER

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Heard the learned counsel appearing for the petitioner, the learned Government Advocate appearing for respondent No.1 as well as the learned counsel appearing for respondent No.2.

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The petitioner is assailing the order dated 11.04.2019 passed by the Karnataka Appellate Tribunal in Appeal No.469/2013. The said appeal is filed by the 2^nd respondent of this petition. The appeal is filed questioning the award passed by the Assistant Registrar under Section 70 of the Karnataka Cooperative Societies Act, 1960 (‘the Act’, for short), which is marked at Annexure-A. In terms of the said award, liability to pay Rs.4,54,186.42 along with interest at 18% per annum from 03.09.2007, till date of payment, is passed against the 2^nd respondent.

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The basis for the petitioner-Society invoking Section 70 of the Act is an order under Section 68 of the Act. In the said order, after an enquiry under Section 64, liability is fixed against the 2^nd respondent to pay the

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3 - NC: 2023:KHC-D:14608 WP No. 104322 of 2017

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aforementioned amount. Section 68 order further says that since the action is not initiated against the 2^nd respondent by the Directors of the Society at the relevant point of time, hence, the directors are also liable to reimburse the amount.

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Placing reliance on the aforementioned

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observation, the award passed by the Arbitrator is set aside and the petitioner Society is directed to raise fresh dispute under Section 70 of the Act by impleading all the directors.

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Aggrieved by the aforementioned order, the

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petitioner-Society is before this Court.

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Sri.Shivaraj P. Mudhol, the learned counsel appearing for the petitioner would contend that the order of the Appellate Tribunal is erroneous inasmuch as the award passed against the 2^nd respondent, which is passed on a finding under Section 64 enquiry and an order under Section 68 of the Act, which has attained finality. Thus, he

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4 - NC: 2023:KHC-D:14608 WP No. 104322 of 2017

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would contend that the order against the 2^nd respondent could not have been set aside.

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Sri.Mrutyunjaya Tata Bangi, the learned counsel appearing for the 2^nd respondent would contend that since the order under Section 68 of the Act also makes reference to the liability of the Directors of the Society at relevant point of time, the Tribunal is justified in allowing the appeal.

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This Court has considered the contentions

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raised at the bar.

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Since, the recovery proceeding initiated by the petitioner-Society is pursuant to a finding under Section 64 enquiry and an order under Section 68 of the Act, the doctrine of joint and several liability cannot be invoked. The liability on the 2^nd respondent is fixed and the said order under Section 68 has attained finality. This being the position, the Appellate Authority could not have found fault with the action of the Society initiated under Section 70

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proceeding against the 2^nd respondent. The action of the petitioner-Society to proceed against the 2^nd respondent, does not render a proceeding initiated against the 2^nd respondent invalid merely against the Directors referred to under Section 68 order are not impleaded in the proceeding. The right to proceed against the Directors referred to under Section 68 order is available to the Society, subject to law of limitation, if any.

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Under these circumstances, the impugned order is set aside. The order of the arbitrator dated 11.04.2019 marked at Annexure-B, is restored. Writ petition is allowed.

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If action is not initiated and order under Section 68 is not complied by the Society, the Authorities under the Act are at liberty to take such action against the Society as advised in law.

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KGK/ct-an / List No.: 1 Sl No.: 35

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Sd/JUDGE

Nathashree Urban Co-Operative Societies Ltd., v. the Assistant Registrar of

Case brief

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Nathashree Urban Co-Operative Societies Ltd., v. the Assistant Registrar of

Case brief

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