Dismissed

City Co-Operative Bank Limited v. Veena

Karnataka HC11 Dec 2023WP/7563/2020

Case brief

AI extract

What is this about?

The High Court dismissed a writ petition filed by a cooperative bank challenging an order of the Karnataka Appellate Tribunal that set aside the surety's liability in an arbitral award. The Court held that the Tribunal correctly found that the decree-holder could not execute the award against the deceased surety's legal representatives without a specific decree or award against them.

What did the court decide?

Writ petition dismissed as being devoid of merit.

City Co-Operative Bank Limited Vs Veena — Contract and Commercial Disputes | Karnataka HC (2023)

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1 - NC: 2023:KHC:45040 WP No. 7563 of 2020

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 11^TH DAY OF DECEMBER, 2023

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BEFORE

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THE HON'BLE MR JUSTICE C.M. POONACHA WRIT PETITION NO. 7563 OF 2020 (CS-RES)

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BETWEEN:

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CITY CO-OPERATIVE BANK LIMITED, KOTE ROAD, SHIVAMOGGA CITY - 577 202, REPRESENTED BY ITS SECRETARY K.M. MANOJ KUMAR, S/O MANJEGOWDA, AGED ABOUT 36 YEARS.

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…PETITIONER

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(BY SRI. P.N. HARISH, ADVOCATE)

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AND:

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Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

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VEENA, W/O SHANKAR, D/O LATE P. CHIKKANNA, AGED ABOUT 53 YEARS, R/O NO. 128, KUMBARAKERI, NEAR JANAKIRAM TEMPLE, SHIVAMOGGA - 577 201.

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DEPUTY REGISTRAR OF CO-OPERATIVE SOCIETIES, SHIVAMOGGA DISTRICT, SHIVAMOGGA - 577 201.

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M. SHANKAR, S/O MARIYAPPA, MAJOR IN AGE, PEPSI SOFT DRINKS, KUMBARAKERI, SHIVAMOGGA CITY - 577 201.

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…RESPONDENTS

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(BY SRI. SYED AKBAR PASHA, ADVOCATE FOR R1; SRI. SIDDHARATH BABU RAO, AGA FOR R2; SMT. KUSUMA RANGANATH, ADVOCATE FOR R3)

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THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED 21.04.2017 PASSED BY KARNATAKA APPELLATE TRIBUNAL BENGALURU IN APPEAL NO.722/2012 AS PER ANNEXURE-C AND ETC.,

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THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:

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ORDER

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The present Writ Petition is filed challenging the judgment dated 21.04.2017 passed in Appeal No.722/2012 by the Karnataka Appellate Tribunal (hereinafter referred as 'Tribunal').

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The relevant facts necessary for consideration of the present Writ Petition are that Respondent No.3 had availed credit facilities from the Petitioner and due to his failure to repay the same, proceedings for recovery was instituted by the Petitioner by raising a dispute under Section 70 of the Karnataka Cooperative Societies Act (hereinafter referred as 'Act'), the adjudication of which was referred to an Arbitrator. The father of Respondent No.1 was a surety to the loan availed by Respondent No.3. In the arbitral proceedings Respondent No.3 is arrayed as Respondent No.1 and the father of Respondent No.1 is arrayed as Respondent No.2.

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It is forthcoming that during the pendency of the proceedings before the Arbitrator, it has been noticed that the father of Respondent No.1 who was arrayed as Respondent No.2 in the said proceedings was deceased and hence, by award dated 01.09.2005 the Arbitrator held that Respondent No.1 therein who is Respondent No.3 herein was liable to pay sum of Rs.1,20,145/- together with interest and liberty was reserved to the Petitioner to initiate recovery proceedings against the legal representatives of the deceased Respondent No.2 therein.

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The Petitioner instituted the execution proceedings before Respondent No.2 - Deputy Registrar to execute the award dated 01.09.2005. In the said proceedings an application under Rule 45 of the Karnataka Cooperative Societies Rules, 1960 (hereinafter referred to as 'Rules') to bringing the legal representatives of deceased of the surety on record was filed by the Petitioner. Respondent No.2 vide order dated 29.09.2012 allowed the said application and permitted to bring the legal representatives of the surety on record.

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It is forthcoming from the record that being aggrieved by the auction proceedings initiated with regard to

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bringing the house property bearing No.128 situated at Kumbarkeri near Janakiram temple, Shivamoga District, to sale, respondent No.1 has filed an Appeal No.722/2012 before the Tribunal. The Petitioner entered appearance in the said proceedings and contested the same. The Tribunal by its judgment dated 21.04.2017 allowed the appeal and passed the following order:

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"1. The IA.No.1 filed by the appellantapplicant u/s 5 of the Limitation Act is hereby allowed, consequently the delay is condoned.

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2. The appeal filed by the appellant is hereby partly allowed and impugned award in respect of deceased P.Chikkanna the surety is set aside. Further it is clarified that the impugned award is kept intact as against respondent No.3 - M. Shankar and the respondent No.2 - Bank can execute the same against respondent No.3 and his property.

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Being aggrieved by the said judgment dated

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21.04.2017, the present Writ Petition is filed.

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Learned counsel for the Petitioner in support of the

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reliefs sought for in the present petition contends:

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i) That the Arbitrator while passing the award dated

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01.09.2005 had reserved liberty to the PetitionerSociety to initiate proceedings against the legal

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representatives of the deceased surety, which it has done by filing an application under Rule 45 of the Rules;

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ii) The order dated 29.09.2012 passed by Respondent No.2 allowing the application to bring the legal representatives of deceased surety has not been challenged by Respondent No.1;

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iii) Admittedly there are five legal representatives of deceased surety and only one legal representative has filed the appeal before Tribunal and hence, in view of the non filing of the appeal by other legal representatives the appeal of Respondent No.1 ought to have been rejected;

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iv) That the award dated 01.09.2005 and the order dated 29.09.2012 passed by the Deputy Registrar has not been challenged by Respondent No.1;

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v) The Tribunal ought to have set aside the order and remanded the matter for adjudication of the liability of the legal representatives of the surety;

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Per contra learned counsel for Respondent No.1

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submits that the Tribunal has considered all aspects of the matter and by its judgment dated 21.05.2017 allowed the

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same, which is not required to be interfered with by this

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Court in the present Writ Petition.

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Learned counsel for Respondent No.3, the principal borrower submits that he is ready to refund the money availed and he has no objection for the Bank to auction the auto rickshaw which was purchased by him after availing the credit facility from the Petitioner-Bank.

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The submissions made by the learned counsel

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have been considered and the material on record have been perused. The question that arises for consideration is, “whether the judgment passed by the Tribunal is erroneous and liable to be set aside?”

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It is undisputed that the surety was deceased during the proceedings before the Arbitrator and that the legal representatives of deceased surety were not brought on record in the proceedings before the Arbitrator, before the award was passed. It is also relevant to note in the award dated 01.09.2005, the Arbitrator has passed the

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award only against the principal borrower who was arrayed as Respondent No.3 therein.

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The Petitioner-Bank is seeking to faster the liability that has been passed in the award dated 01.09.2005 on he legal representatives of the surety by filing an application under Rule 45 of the Rules in the execution proceedings initiated under Rule 34 of the Rules.

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It is relevant to note the statutory provisions.

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The relevant Rules stipulate as under:

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"34.1) Every decree-holder requiring execution of a decree under the provisions of clause (c) of Section 101, shall apply to the Recovery Officer within whose jurisdiction the judgment-debtor resides or has property and shall deposit the probable cost of execution as may be fixed by such officer.

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45.1) Where a judgment-debtor dies before the decree has been fully satisfied, an application under sub-rule (1) of Rule 34 may be made or continued against the legal representatives of the deceased and thereupon all the provisions of this Chapter shall, save as otherwise provided in this rule, apply as if such legal representative were the judgment-debtor.

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Provided that a show-cause notice shall be issued to such legal representative and his objections heard, before execution is proceeded against him.

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45.2) Where the decree is executed against such legal representative, he shall be liable

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only to the extent of the property of the deceased which has come to his hands and has not been duly disposed of; and for the purpose of ascertaining such liability, the Recovery Officer executing the decree may, of his own motion or on the application of the decree-holder, compel such legal representative to produce such accounts as he thinks fit."

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It is clear and forthcoming that a decree holder is entitled to execute a decree by filing an application as contemplated under Rule 34 of the Rules. It is further clear that it is open for the decree holder to file an application under Rule 45 of the Rules for the purpose of bringing the legal representatives of a deceased.

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It is clear from the present fact situation that there is no decree against the deceased surety. The endeavor of the Petitioner-Bank to foist liability on the legal representatives of the deceased surety by filing an application under Rule 45 of the Rules to bring them on record in the execution proceedings for the first time is exfacie erroneous and cannot be sustained.

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The Tribunal will considering the appeal filed by Respondent No.1 upon noticing the contentions put forth

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by the respective parties and upon appreciation of the material available on record has recorded the following findings:

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i) That the death certificate of P. Chikkanna (Surety) discloses that he died on 15.04.2005.

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ii) The dispute was presented on 04.10.2004 during the lifetime of P. Chikkanna and the date of hearing was fixed on 01.08.2005.

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iii) As on date of the award i.e., on 01.09.2005 the surety was deceased.

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It is clear form the aforementioned that as on the

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date of award dated 01.09.2005 surety having been deceased the endeavor of the Petitioner to bring the legal representatives of the deceased surety on record in the execution proceedings for the first time, without there being any decree/award either against the surety or the legal representatives and attempting to recover money in the execution proceedings from the legal representatives is unsustainable in law.

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The Tribunal has also recorded that the

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principal borrower has given a statement before the Tribunal that the bank can seize the auto and auction the same and recover the loan amount, despite which the bank has not initiated any proceedings for sale of the same for reasons best known to it.

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The contention of the learned counsel for the Petitioner that certain observations made against the liability of the surety is erroneous and is liable to be set aside, is also not required to accepted. The Tribunal, upon noticing the relevant factual matrix has recorded a finding that the award having been passed against a dead person, the same cannot be executed, against the legal representatives of the deceased P. Chikkanna is just and proper.

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It is clear from the aforementioned that the Tribunal has rightly appreciated relevant facts and allowed the appeal vide judgment dated 21.04.2017.

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The Petitioner has failed in demonstrating that the judgment passed by the Tribunal is in any manner

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erroneous and liable to be interfered with by this Court in the present Writ Petition. The question framed for consideration is answered in the negative.

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In view of the aforementioned, the Writ Petition filed by the Petitioner is dismissed as being devoid of merit.

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Needless to state, this order nor judgment passed by the Tribunal will come in the way of the Petitioner-Bank initiating proceedings for recovery of the amounts due to it from the legal representatives of the deceased surety and if such proceedings are initiated, it is open to the legal representatives of the deceased surety to take such defence as permissible under law in accordance with law.

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SD/JUDGE

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PNV - List No.: 1 Sl No.: 43 CT: BHK

City Co-Operative Bank Limited v. Veena

Case brief

What is this about?

What did the court decide?

City Co-Operative Bank Limited v. Veena

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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