Allowed

Mr Naveen Kumar S v. State of Karnataka

Karnataka HC12 Feb 2024WP/7184/2023

Case brief

AI extract

What is this about?

A co-operative bank's award against a judgment debtor who died before the award was passed was held to be a nullity. Execution proceedings and the subsequent auction sale were also declared void. The award, execution proceeding and sale deed were set aside, the sale certificate cancelled, and fresh adjudication ordered with legal representatives impleaded.

What did the court decide?

Award, execution proceeding and sale deed set aside/quashed; sale certificate cancelled; encumbrance register note ordered; fresh hearing with LR impleading permitted; bank to refund bid amounts plus

Mr Naveen Kumar S Vs State of Karnataka — Cooperative Societies | Karnataka HC (2024)

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NC: 2024:KHC:5978 WP No. 7184 of 2023

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 12^TH 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. 7184 OF 2023 (CS-RES)

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BETWEEN:

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MR NAVEEN KUMAR S, S/O LATE SHESHAPPA POOJARY, AGED ABOUT 43 YEARS, R/AT SARAKERE HOUSE, IVARNADU VILLAGE AND POST, SULLIA TALUK, DAKSHINA KANNADA-574239.

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…PETITIONER

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(BY SRI GOVINDARAJU K, ADVOCATE)

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AND:

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STATE OF KARNATAKA, REPRESENTED BY ITS CHIEF SECRETARY, DEPARTMENT OF CO-OPERATIVE SOCIETIES, VIKASA SOUDHA, DR B R AMBEDKAR VEEDHI, BANGALORE - 560 001.

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

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THE REGISTRAR OF SOWHARDA SOCIETIES SOWHARDA SAHAKARI SOUDHA, NO.68, GROUND FLOOR, BETWEEN 17^TH AND 18^TH CROSS MALLESWARAM, BANGALORE-560055.

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THE ASSISTANT REGISTRAR AND RECOVERY OFFICER CO-OPERATIVE SOCIETIES, OFFICE OF ASSISTANT REGISTRAR CO-OPERATIVE SOCIETIES, K R SOU.CO-OPERATIVE SOCIETIES, MALLESHWARAM, BANGALORE-560055.

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SRI SARASWATH CREDIT SOWHARDA SAHAKARI LTD.,

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NC: 2024:KHC:5978 WP No. 7184 of 2023

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SULLIA BRANCH, DURGA COMPLEX, CARSTREET, SULLIA, DAKSHINA KANNADA-574239. REG. UNDER CO-OPERATIVE SOCIETIES ACT, REPRESENTED BY ITS MANAGER.

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SRI DHARMAPALA, S/O CHANNAPPA POOJARY, AGED ABOUT 42 YEARS, R/AT SHANI MANE, AMARAPADNUR VILLAGE, CHOKKADI POST, SULLIA TALUK, DAKSHINA KANANDA-574212.

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THE TAHSILDAR, SULLIA TALUK, DAKSHINA KANANDA-574239.

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…RESPONDENTS

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(BY SRI SIDHARTH BABU RAO, AGA FOR R1-R3 AND R6 SMT SHRIDEVI BHOSALE M, ADVOCATE FOR R4 SRI M B PRABHAKAR, ADVOCATE FOR R5)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE CONFIRMATION OF SALE DATED 28.11.2022 BEAIRNG AMALJARI NO.KA.RAA.SOW.SAM.SA.NI./SA.SA. NI/VA/A/01/2016-17 ISSUED BY THE R3 (ANNEXURE-A) AS NULL AND VOID AND ETC.

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

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ORDER

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An auction sale was confirmed on 28.11.2022, in an execution proceeding which is initiated by the 4^th respondent - bank pursuant to an award under Section 41(4) of Karnataka

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3 - NC: 2024:KHC:5978 WP No. 7184 of 2023

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Souharda Societies Act, 1997. The award was passed on 26.02.2016.

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The present petitioner is one of the legal representatives of Judgment Debtor no.1. Admittedly, Judgment Debtor no.1 died on 03.02.2015. The date of death of Judgment Debtor no.1 is not in dispute.

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Respondent No.4 - bank proceeded under the assumption that Judgment Debtor no.1 is alive and filed an execution proceeding to recover the dues pursuant to the aforementioned award. The property of Judgment Debtor no.1 was put for auction. The petitioner realizing this, filed a representation before the 4^th respondent - bank reporting death of his father who is the Judgment Debtor no.1 in the aforementioned award. The 4^th respondent - bank instead of filing an application to substitute the legal representatives of deceased Judgment Debtor no.1 proceeded further in the execution proceeding and put the property of Judgment Debtor no.1 for auction. The auction was held on 14.09.2022. Then the sale was confirmed on 28.11.2022. The sale certificate is

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NC: 2024:KHC:5978 WP No. 7184 of 2023

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executed and sale is registered on 27.02.2023. The auction

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purchaser has purchased the property for Rs.36,60,000/-.

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Admittedly, the auction purchaser has paid the registration charges as well as the stamp duty.

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The petitioner is before this Court on the premise that the entire Execution proceeding and all other action taken thereafter to sell the property of the petitioner's father are null and void. It is also his submission that the award against defendant No.1 is also null and void as the award is passed against a dead person. Thus, he would contend that the award is to be set-aside and the matter has to be heard afresh.

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Learned counsel for the 4^th respondent would submit that the death of the 1^st defendant before the Assistant Registrar of Co-operative Societies was not brought to the notice of the 4^th respondent- bank when the proceeding was pending before the said Authority. It is also her contention that after the award is passed, an Execution Petition is filed and the petitioner made a representation stating that his father is dead however, the amount would be repaid and sought time to repay the amount. It is the contention of the learned counsel for the

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4^th respondent - bank that acting on the assurance of the

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petitioner, 4^th respondent-bank did not immediately proceed further in the Execution proceeding. However, after realizing that the petitioner has not repaid the amount, 4^th respondent-

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bank has proceeded to auction the property in accordance with law. It is also her contention that the property is auctioned after giving due notice to all the concerned persons and auction purchaser has paid the entire bid amount and sale certificate is issued in his favour. The sale certificate is registered. Thus, it is urged that the writ petition is to be dismissed.

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Learned counsel appearing for the auction purchaser would contend that he was totally kept in darkness about the death of the original Judgment Debtor. He is a bonafide purchaser in the auction and his submission is that he has paid the entire consideration amount, sale is confirmed and sale certificate is issued and same is duly registered. Thus, he would pray for dismissal of the writ petition. In the alternative, he would submit that in case, the Court has to hold that auction is null and void, the entire sale amount paid by the auction purchaser along with registration charges and the stamp duty be refunded to the auction purchaser along with interest.

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NC: 2024:KHC:5978 WP No. 7184 of 2023

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This Court has considered the contentions raised at the bar.

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There is no dispute that the 1^st defendant died on 03.02.2015. It is further not in dispute that the award is passed on 26.02.2016. Admittedly, the legal representatives of deceased defendant No.1 are not brought on record when the proceeding was pending before the Assistant Registrar. Even in the Execution proceeding, despite the bank coming to know that Judgment Debtor No.1 is dead, no steps are taken to substitute the legal representatives. This being the position, the award against Judgment Debtor no.1 is in nullity. The property auctioned in the Execution proceeding is the property of Judgment Debtor No.1. Since, there is no award against Judgment Debtor no.1 in the eye of law, there could not have been further proceedings to recover the dues from Judgment Debtor no.1 who was dead by the time the award was passed. Thus, respondent No.4 - bank could not have proceeded to auction the property of Judgment Debtor no.1. This being the position, this Court is of the view that the impugned award at Annexure - C is to be quashed and the same is quashed.

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Since the award is in nullity as it is passed against a dead person, the Execution proceeding against a dead person is also in nullity. All further action taken against the deceased Judgment Debtor no.1 and the auction sale of his property are also untenable. Accordingly, the auction sale is set-aside.

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Though, it is urged on behalf of the 4^th respondent that the expenses relating to the registration of sale certificate and the stamp duty is to be borne by the petitioner, this Court does not find any justification to fasten the liability on the petitioner.

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The award against Judgment Debtor no.1 is in nullity. The bank has proceeded to auction the property of the dead person. This being the position, the liability to pay the expenses and registration charges is on the 4^th respondentbank. It is also relevant to note that auction has taken place on 14.09.2022. The auction purchaser has paid Rs.9,15,000/on 14.09.2022 and balance amount of Rs.27,45,000/- is paid on 08.11.2022. Since the auction sale is set-aside, the liability to pay the said amount is on the 4^th respondent-bank.

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Since this Court has already observed that the 4^th respondent - bank proceeded to auction the property of a dead person, the auction purchaser is to be compensated by awarding interest @ 8% p.a. on the amount paid by him from the date of payment till the date of repayment. It is also relevant to state that the 4^th respondent - bank shall also bear the registration charges and expenses incurred by the auction purchaser. The 4^th respondent- bank is also liable to pay interest @ 8% p.a. on the registration charges and stamp duty from the date of registration till payment.

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Though, it is brought to the notice of this Court that the legal representatives of the deceased were notified before the auction sale by issuing notice of auction, it is relevant to note that when the award itself is a nullity as it is an award passed against a dead person, notice issued before auction sale to the legal representatives of deceased without impleading the legal representatives of the deceased Judgment Debtor does not cure the defect in passing the award. Since the award is set-aside and award is passed against the dead person, matter has to be heard afresh by the jurisdictional Assistant Registrar of Co-operative Societies - 3^rd respondent.

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NC: 2024:KHC:5978 WP No. 7184 of 2023

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Hence the following:

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ORDER

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(i) The impugned award dated 26.02.2016 marked at Annexure - C is set-aside.

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(ii) The Execution proceeding initiated before the 3^rd respondent in proceeding No.01/2016-17 is quashed.

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(iii) The sale deed dated 27.02.2023 is set-aside.

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(iv) The sale certificate is cancelled.

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(v) The jurisdictional Sub-registrar is directed to make a note in the encumberance register relating to cancellation of sale deed dated 27.02.2023 to the effect that sale deed dated 27.02.2023 at Regn.No.BKI/2984/2022-23 is cancelled.

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(vi) Respondent No.3 - Assistant Registrar of Co-operative Societies shall hear the petition afresh.

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(vii) The respondent-bank is permitted to implead the legal representatives of deceased Judgment Debtor no.1.

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(viii) The amount deposited by the petitioner pursuant to the interim order passed by this Court which is said to be deposited in the bank, the same shall be treated as a fixed deposit from

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NC: 2024:KHC:5978 WP No. 7184 of 2023

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today till the decision is taken by the jurisdictional Assistant Registrar. The entitlement to said amount and interest on it is subject to the award to be passed in the proceeding.

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Sd/JUDGE

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brn

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List No.: 1 Sl No.: 16

Mr Naveen Kumar S v. State of Karnataka

Case brief

What is this about?

What did the court decide?

Mr Naveen Kumar S v. State of Karnataka

Case brief

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