Dismissed

Sri Gopal S/O Ramappa Hugar v. the State of Karnataka

Karnataka HC18 Apr 2024WP/101532/2023

Case brief

AI extract

What is this about?

This judgment dismisses a writ petition seeking to quash an auction notice against mortgaged property sold without a charge reflecting in revenue records. The Court held the petitioner was not a bonafide purchaser due to knowledge of the debt post-award, the sale had already completed with certificate issuance, and the statutory remedy under Section 43 was uninvoked.

What did the court decide?

Quashing of auction notice and mandamus for consideration of representation were denied.

Sri Gopal S/O Ramappa Hugar Vs the State of Karnataka — Cooperative Societies | Karnataka HC (2024)

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1 - NC: 2024:KHC-D:6449 WP No. 101532 of 2023

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IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH

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DATED THIS THE 18^TH DAY OF APRIL, 2024

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BEFORE

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THE HON'BLE MRS. JUSTICE M.G.UMA

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WRIT PETITION NO.101532/2023(CS-DAS)

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BETWEEN:

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SRI GOPAL S/O. RAMAPPA HUGAR, AGE: 39 YEARS, OCC: AGRICULTURE, R/O: NOGNIHAL VILLAGE, TQ: HUKKERI, DIST: BELAGAVI – 591 309.

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…PETITIONER

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(BY SRI SHIVRAJ S. BALLOLI, ADVOCATE)

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AND:

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THE STATE OF KARNATAKA, DEPARTMENT OF CO-OPERATION, REP. BY ITS PRINCIPAL SECRETARY, VIDHAN SOUDHA, AMBEDKAR VEEDHI, BENGALURU – 560 001.

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Digitally signed by MANJANNA E Location: High Court of Karnataka

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THE DEPUTY REGISTRAR, CO-OPERATIVE SOCIETIES, KARANTAKA STATE SOUHARDA FEDERAL COP - OPERATIVE LTD., NO.62, 2^ND FLOOR, 3^RD MAIN, MARGOSA ROAD, 18^TH CROSS, MALLESHWARAM, BENGALURU – 560 055.

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RECOVERY OFFICER AND ASST. REGISTRAR OF CO-OPERATIVE SOCIETIES, KARANTAKA STATE SOUHARDA FEDERAL COP-OPERATIVE LTD., NO.62, 2^ND FLOOR, 3^RD MAIN, MARGOSA ROAD, 18^TH CROSS, MALLESHWARAM, BENGALURU – 560 055.

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2 - NC: 2024:KHC-D:6449 WP No. 101532 of 2023

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THE LIQUIDATOR, KARANTAKA STATE SOUHARDA FEDERAL COP-OPERATIVE LTD., 1119/B, KANABARGI INDUSTRIAL AREA, NEAR RURAL AYURVEDIC COLLEGE, AUTO NAGAR, BELAGAVI – 590 016.

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BASAVESHWAR URBAN CREDIT SOUHARD CO-OPERATIVE LTD., MAIL BUILDING, NIDSHOSHI ROAD, SANKESHWAR, TQ: HUKKERI DIST: BELAGAVI – 591 309, REP. BY ITS CHIEF OFFICER/LIQUIDATOR.

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SHRI RAJESH S/O. SHANKARRAO KUNDAPUR, AGE: 51 YEARS, OCC: AGRICULTURE, R/O: HUKKERI VILLAE, TQ: HUKKERI DIST: BELAGAVI – 591 309.

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…RESPONDENTS

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(BY SMT. KIRTILATA R. PATIL, HCGP FOR R1 AND R2; SMT. CHETANA S. BIRAJ, ADVOCATE FOR R5; R3 AND R4 ARE SERVED)

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THIS WP IS FILED UNDER ARTICLE 227 PRAYING TO ISSUE WRIT OF CERTIORARI QUASHING IMPUGNED AUCTION NOTICE DATED 25.10.2022 ISSUED BY THE 2^ND RESPONDENT IN EP NO.KARASOUSAMSANI/VAA/791/2021-22, VIDE ANNEXURE-A. ISSUE A WRIT OF MANDAMUS DIRECTING THE RESPONDENTS NO.4 AND 5 TO CONSIDER THE REPRESENTATION/LEGAL NOTICE DATED 07.12.2022 ISSUED ON BEHALF OF THE PETITIONER, VIDE ANNEXURE-B AND ETC.,

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

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3 - NC: 2024:KHC-D:6449 WP No. 101532 of 2023

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ORDER

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The petitioner has approached this court for issuance of writ in the nature of certiorari to quash the impugned auction notice dated 25.10.2022 issued by respondent No.2 in the execution petition produced as per Annexure-A and for issuance of mandamus directing respondent Nos.4 and 5 to consider the representation/legal notice dated 07.12.2022 issued on behalf of the petitioner, produced as per Annexure-B.

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Heard the learned counsel Sri.Shivaraj S.Balloli for the petitioner, learned HCGP for respondent Nos.1 and 2 and Smt.Chetana S.Biraj for respondent No.5.

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Learned counsel for the petitioner contended that petitioner is the bonafide purchaser of the property in question from respondent No.6 under the registered sale deed dated 24.02.2021. Later, petitioner came to know that respondent No.6 had obtained loan from respondent No.5 and charge was created over the same. The said charge was not reflected in the revenue records and no

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4 - NC: 2024:KHC-D:6449 WP No. 101532 of 2023

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notice was issued to the petitioner, which was initiated by respondent No.5. Finally, the petitioner came to know that auction notice dated 25.10.2022 was issued and immediately, the petitioner got issued the legal notice as per Annexure-B on 07.12.2022 to respondent No.5 expressing his willingness to pay the amount that was due, along with interest. No reply was received to the said notice and therefore, the petitioner filed this petition seeking appropriate relief.

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Learned counsel submitted that as on today, respondents proceeded to sell the property in favour of a third party. Therefore, right of the petitioner as a bonafide purchaser is to be protected. Learned counsel placed reliance on the decision of the Division Bench of this court in Mahadev s/o Bandiwadar vs. D.K.Shivanagouda and others¹ in support of his contention, to contend that the Division Bench of this court as well as the Hon’ble Apex Court in catena of decisions held that valuable right

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1 W.A.No.100094/2023 d.d.18.04.2023

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5 - NC: 2024:KHC-D:6449 WP No. 101532 of 2023

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of the owners of the property is to be safeguarded even where an auction sale was held and auction purchaser has deposited the amount. If the owner of the property is ready and willing to deposit the amount along with interest, priority is to be given to the petitioner to safeguard his interest rather than right of the auction purchaser. Therefore, he prays for allowing the petition.

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Per contra, learned counsel for respondent No.5 opposing the petition submitted that the vendorrespondent No.6 had borrowed the loan from respondent No.5 long back and he was a defaulter. Notice was issued to the borrower and the surety, since the property in question was mortgaged and charge was created in favour of respondent No.5. In spite of issuance of notice, borrower was not available for service of notice and the notice issued returned unserved as ‘addressee left’. Therefore, a notice was published in Kannada Prabha, Kannada daily newspaper on 10.01.2019 calling upon the borrower to participate in the recovery proceedings. In

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spite of that, he has not chosen to participate in the proceedings. Later award was came to be passed on 17.10.2020. It is thereafter, the borrower proceeded to sell the property in favour of the petitioner under sale deed dated 24.02.2021. In the execution case, attachment of the property was ordered on 18.02.2022 and the property was brought for auction. The petitioner issued legal notice as per Annexure-B on 07.12.2022 stating that he is ready and willing to deposit the amount due along with interest. But till date, the petitioner has not deposited anything towards the said amount. The auction sale is held, auction purchaser has deposited the amount, sale certificate is already issued and third party right is created over the property. Under such circumstances, the petitioner could not have filed the present petition seeking to quash the auction notice or seeking mandamus to consider his representation.

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Learned counsel submitted that writ petition

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itself is not maintainable in view of Section 43 of the

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Karnataka Souharda Sahakari Act, 1997 (hereinafter referred to as ‘the Act’ for short). If at all, the petitioner was aggrieved by any of the order, he was having the remedy under Section 43 of the Act, which was never invoked by the petitioner for the reasons best known to him. Therefore, she prays for dismissal of the petition as not maintainable.

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Perused the material on record.

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The facts and circumstances of the case that

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respondent No.6 was the borrower of the loan from respondent No.5 and an award was came to be passed against him on 17.10.2020 is not in dispute. It is thereafter, respondent No.6 sold the property in question in favour of the petitioner. When admittedly, respondent No.6 had mortgaged the property in favour of respondent No.5, respondent No.6 could not have sold the said property in favour of the petitioner.

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8 - NC: 2024:KHC-D:6449 WP No. 101532 of 2023

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My attention was drawn to the copy of the legal notice dated 07.12.2022 issued by the petitioner to respondent No.5. The contents of the notice disclose that petitioner was very much aware of the fact of respondent No.6 borrowing the amount from respondent No.5 and a portion of the amount was still due to be paid. It is stated that due to covid-19, there was financial crisis and 3-4 installments were due to be paid. But materials on record disclose that heavy amount was due to be paid and the award was passed for a sum of Rs.15,00,000/-.

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On going through Annexure-B, it cannot be presumed that the petitioner was not aware of the loan obtained by respondent No.6 or he was not aware about the amount due by respondent No.6 to respondent No.5. On the other hand, prima facie, it discloses that the petitioner was very much aware of all the developments including the amount that was due by respondent No.6 to respondent No.5. Under such circumstances, the petitioner

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cannot be termed as a bonafide purchaser for value, without notice.

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Learned counsel for the petitioner placed reliance on the decision of the Division Bench in Mahadev S/o Bandiwadar (supra) to contend that this court as well as the Hon’ble Apex Court always came to the rescue of the owner of the property to save it from auction sale. I have gone through the decision rendered by the Division Bench of this court. The facts and circumstances in the said case are entirely different. In the case that was considered by the Division Bench, the public auction was conducted on 13.12.2021 and thereafter, the sale deed was executed on 05.04.2022. However, the purchaser has deposited the entire sale amount along with interest before the court and sought for an opportunity to save his property at the last moment. Considering the facts and circumstances and conduct of the purchaser, the court

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held that valuable right of the owner of the property is to be safeguarded to save the property. The Division Bench

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10 - NC: 2024:KHC-D:6449 WP No. 101532 of 2023

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has also placed reliance on the decision of the Hon’ble

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Apex Court in the case of S.Karthik and Others. Vs

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N.Subhash Chand Jain and Others² to highlight the position of law that a mortgager retains full right to redeem the property by tendering all dues to the secured creditor at any time before the date fixed for sale or transfer. It is also highlighted that if the purchaser or borrower as the case may be, tendered the amount that is due before the sale or transfer, the secured asset should not be sold or transferred by the secured creditor. Even

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though all those settled position of law are to be applied to the facts in the present case, as I have already noted, petitioner was very much aware of the borrowing of the amount and the amount that was due by the borrower to respondent No.5. In spite of that, he has taken the risk of purchasing the property. The award was came to be passed on 17.10.2020 and the sale deed in question is dated 24.02.2021. Thereafter, the respondent attached

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2 (2022) 10 SCC 641

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the property on 18.02.2022. But the petitioner issued notice to respondent No.6 only on 07.12.2022. Even though the petitioner has stated that he is ready and willing to pay the amount with interest, till date no attempt is made to pay the said amount. It is not in dispute that auction of the property was held on 31.12.2022 and even the sale certificate was issued in favour of the auction purchaser. The writ petition was came to be filed on 28.01.2023, that is much after holding auction sale. But in spite of that, there is no prayer with

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regard to the said auction sale held by the respondents. Strangely, the auction purchaser is not a party before this court. When third party interest is already created in accordance with law, I do not find any reason to grant any relief in favour of the petitioner.

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It is relevant to refer Section 43 of the Act, which provides necessary remedy including setting aside the sale already held in execution.

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But this provision of law was not invoked by the petitioner by approaching the Registrar for appropriate

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relief. There is no reason for not invoking Section 43 of the Act. I find considerable force in the contention taken by the learned counsel for respondent No.5. Therefore, I do not find any merit in the petition and the petition is liable to be dismissed.

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Accordingly, the petition is dismissed.

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In view of dismissal of the petition, pending I.A’s do

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not survive consideration and the same are dismissed.

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SD/JUDGE

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MBS/CT-ASC List No.: 1 Sl No.: 5

Sri Gopal S/O Ramappa Hugar v. the State of Karnataka

Case brief

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Sri Gopal S/O Ramappa Hugar v. the State of Karnataka

Case brief

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