Disposed

The Malleswaram Co. Operative Bank Limited v. the State of Karnataka

Karnataka HC22 Feb 2024WP/4464/2024

Case brief

AI extract

What is this about?

A co-operative bank challenged orders directing a Section 64 enquiry into allegations that its loan was secured by forging mortgage documents over a complainant's property. The court held the enquiry was fact-finding only, found application of mind in the order, and disposed of the petition directing an impartial enquiry.

What did the court decide?

Petition disposed; Deputy Registrar directed to hold impartial Section 64 enquiry on the three points framed on 21.12.2023, with liberty to both parties to produce documents.

The Malleswaram Co. Operative Bank Limited Vs the… — Cooperative Societies | Karnataka HC (2024)

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NC: 2024:KHC:7563 WP No. 4464 of 2024

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 22^ND DAY OF FEBRUARY, 2024

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BEFORE

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THE HON'BLE MR JUSTICE ANANT RAMANATH HEGDE

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WRIT PETITION NO. 4464 OF 2024 (CS-RES)

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BETWEEN:

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THE MALLESWARAMA CO-OPERATIVE BANK LIMITED, 7^TH CROSS, MALLESWARAM, BANGALORE - 560 003, BY ITS CHIEF EXECUTIVE OFFICER,

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M G GUUPRASAD, AGED ABOUT 54 YEARS,

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REG. UNDER CO-OPERATIVE SOCIETY ACT 1956.

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…PETITIONER

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(BY SRI SAILESH S KATAREY, ADVOCATE)

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AND:

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THE STATE OF KARNATAKA

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DEPARTMENT OF CO-OPERATION, MULTI STORIED BUILDING, AMBEDKAR BEEDHI, BANGALORE - 560 001.

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Digitally signed by PRAMILA G V Location: HIGH COURT OF KARNATAKA

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REGISTRAR OF CO-OPERATIVE SOCIETIES, ALI ASKER ROAD, BANGALORE - 560 052.

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DEPUTY REGISTRAR OF CO-OPERATIVE SOCIETIES 4^TH CIRCLE, MALLESWARAM, BANGALORE - 560 003.

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JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES, NO.1, ALI ASKER ROAD, BANGALORE - 560 052.

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VENKATESHA N,

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S/O LATE NARAYANAPPA A,

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AGED ABOUT 70 YEARS,NO.41, 1^ST F MAIN,

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8^TH CROSS, GIRINAGAR, BANGALORE - 560085.

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SMT VIJAYALAKSHMI D, S/O LATE NARAYANAPPA A, AGED ABOUT 70 YEA,NO 41, 1^ST F MAIN,

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2 - NC: 2024:KHC:7563 WP No. 4464 of 2024

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8^TH CROSS, GIRINAGAR, BANGALORE - 560 085.

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RAVI AGARWAL S/O VISHNU AGARWAL, AGED ABOUT 42 YEARS, NO.16, 1^ST FLOOR, NARAYANAREDDY LAYOUT, 2^ND CROSS, CHINNAPPANAHALLI, BANGALORE - 560 037.

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KUSHAL AGARWAL, S/O VISHNU AGARWAL, AGED ABOUT 42 YEARS, NO 8-2-684/250 ROAD NO.12, MLA COLONY, ACB HEAD QUARTERS, BANJARA HILLA KHAIRATABAD, HYDERABAD - 500 034.

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…RESPONDENTS

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(BY SRI SIDHARTH BABU RAO, AGA FOR R1 TO R4)

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THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF CONSTITUTION OF INIDA PRAYING TO a) QUASH ANNEXURE-A BEARING NO.KRAMA SANKE DRB-4/PA BYA/06/2023-24 ISSUED BY THE R3 ON 12/01/2024.BEARING NO. SAM RCS/UBC-6/DHU A/24/2022-23 b) QUASH ANNEXURE-B ISSUED BY THE R4 ON 21/12/2023. c) FOR COSTS AND SUCH OTHER RELIEF.

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

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ORDER

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Heard Sri.Sailesh S.Katarey, the learned counsel

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appearing for the petitioner and Sri.Sidharth Babu Rao., the learned Government Advocate appearing for respondents No.1 to 4.

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NC: 2024:KHC:7563 WP No. 4464 of 2024

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The petition is filed questioning the notice dated 12.01.2024 issued by the 3^rd respondent-Deputy Registrar of Co-operative Societies invoking Section 64 of the Karnataka Co-operative Societies Act, 1959 (for short hereinafter referred to as 'the Act of 1959'). This notice dated 12.01.2024 is preceded by the order dated 06.01.2024 issued under Section 64 of the Act of 1959.

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The order is passed to hold an enquiry under Section 64 of the Act of 1959 in respect of three points mentioned in the order dated 21.12.2023.

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Learned counsel for the petitioner would contend that the petitioner-Bank had taken over the loan availed by the 5^th respondent-Venkatesha N. Said Venkatesha N had availed loan from Bangalore District Central Co-operative Bank and the 7^th respondent in this petition lodged a complaint alleging that his property was mortgaged as a security for the said loan. It is the contention of the learned counsel for the petitioner that the petitioner -Bank as well as the previous Bank had exercised due diligence while sanctioning the loan and taking over the loan and no loss is caused to the petitioner-Bank. Merely

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4 - NC: 2024:KHC:7563 WP No. 4464 of 2024

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because there is a title dispute between the 5^th respondent and the 7^th respondent which was not known to the petitioner-Bank, the Authority under Section 70 of the Act of 1959 could not have issued the notice to the petitioner-Bank under Section 64 of the Act of 1959. It is also his submission that there is no application of mind by the 4^th respondent while directing the 3^rd respondent to hold an enquiry under Section 64 of the Act of 1959 on a complaint filed by the 7^th respondent.

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The 7^th respondent who is present before this Court would contend that the property belonging to the 7^th respondent was mortgaged without the consent and knowledge of the 7^th respondent by creating and forging documents, the loan is sanctioned to the 5^th respondent creating charges over the property of the 7^th respondent as such the 7^th respondent is aggrieved and has lodged a complaint. It is also the contention of the 7^th respondent that he came to know about this illegal transaction only after going through the encumbrance certificate and it is also the contention of the 7^th respondent that he had already instituted a suit against the 5^th respondent to establish his title over the property in question.

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5 - NC: 2024:KHC:7563 WP No. 4464 of 2024

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This Court has considered the contentions raised at

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the bar and also perused the records.

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Admittedly, there is a complaint against the petitioner-Bank and the said complaint is lodged by the 7^th respondent. The 4^th respondent has looked into the complaint and has formulated four points and directed the 3^rd respondent to hold an enquiry under Section 64 of the Act of 1959. Though the learned counsel for the petitioner would contend that the order is not a speaking order and there is no application of mind by the 4^th respondent before directing an enquiry under Section 64 of the Act of 1959, what can be noticed is that the 4^th respondent has referred the complaint lodged by the 7^th respondent and has formulated three points for which the enquiry is ordered. After going through the three points referred to in the impugned order at Annexure-B, it is apparent that there is application of mind by the 4^th respondentAuthority. It is relevant to note that Section 64 enquiry is only a fact finding enquiry. The order dated 21.12.2023 appointing an officer to conduct an enquiry under Section 64 of the Act of 1959 cannot be construed as an order holding the petitioner guilty. The 3^rd respondent is required to objectively assess the

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NC: 2024:KHC:7563 WP No. 4464 of 2024

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claim of the petitioner as well as the 7^th respondent and has to give a finding on the aforementioned three points mentioned in the order dated 21.12.2023. And for this purpose he has issued a show-cause notice and nothing more.

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Learned counsel for the petitioner would contend that the petitioner has produced several records before the 4^th respondent to substantiate its claim that there is no scope for holding an enquiry under Section 64 and it is his submission that the records are not considered by the 4^th respondent. As already noticed, the order dated 21.12.2023 is not a verdict of guilty against the petitioner. It is only an order to hold an enquiry to ascertain the facts. The 3^rd respondent is under obligation to consider all the documents produced by the petitioner as well as the documents produced by the 7^th respondent and thereafter he has to arrive at an independent opinion without being influenced by any of the observations made in the orders at Annexures-A and B.

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This Court has also perused three points formulated

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by the 4^th respondent.

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NC: 2024:KHC:7563 WP No. 4464 of 2024

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Though, the observation in the said order indicates that the responsibility has to be fixed on the concerned person, that should not be construed as a direction to the 3^rd respondent to fix responsibility. The responsibility can be fixed provided as case is made out in this regard and loss caused to the Bank is established in the enquiry.

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It is also relevant to note that at Annexure-A, the 3^rd respondent has framed certain points and has documents in this regard. Both the parties are at liberty to produce the documents in support of their respective claims, merely because the documents are not produced, any adverse inference cannot be drawn, unless it is found that the documents are material for inquiry and such documents are with the parties or could have secured by them.

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It is urged by the learned counsel for the petitioner that documents sought to be produced in respect of the loan alleged to have been advanced to Smt. D.Vijayalakshmi is not a scope of enquiry order under Section 64 of the Act of 1959 by the Registrar. The contention in this regard should also addressed by the 3^rd respondent.

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NC: 2024:KHC:7563 WP No. 4464 of 2024

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It is also relevant to note that in point No.4, the 4^th respondent has also directed that in case any other infirmity is found during the course of enquiry, the same is to be enquired into. It is needless to say that the infirmity should confine the complaint alleged by the 7^th respondent.

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With these observations, this Court is of the view that the Writ Petition is to be disposed of directing the 3^rd respondent - Authority to hold an impartial enquiry in to the allegations levelled against the petitioner -Bank in respect of the three points framed in the order dated 21.12.2023.

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Sd/JUDGE

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GVP

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List No.: 1 Sl No.: 9

The Malleswaram Co. Operative Bank Limited v. the State of Karnataka

Case brief

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What did the court decide?

The Malleswaram Co. Operative Bank Limited v. the State of Karnataka

Case brief

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