IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 12TH DAY OF DECEMBER, 2017 B E F O R E THE HON’BLE MR.JUSTICE S.N.SATYANARAYANA WRIT PETITION NO.17790/2012 (CS-DAS) BETWEEN:
THE BANGALORE DISTRICT AND RAMANAGARA DISTRICT CO-OPERATIVE CENTRAL BANK LTD. LAXMI SADAN, 5TH MAIN, CHAMARAJPET, BANGALORE-560018, REP.BY ITS MANAGING DIRECTOR ... PETITIONER (BY SRI SOMASHEKAR, ADVOCATE) AND 1. THE SCHEDULED CASTE AND SCHEULED TRIBES CLASS 3 & 4 EMPLOYEES CREDIT CO-OP. SOCIETY LTD NO.723/30, 15TH A MAIN ROAD, GOKULA I STAGE, I PHASE, MATHIKERE LAYOUT BANGALORE-560054, REP BY ITS SECRETARY 2. SRI P.N. PENCHALIAH S/O LATE CHINNAIAH MAJOR, NO.34/11, SBM COLONY, III CROSS, GOKUL, BANGALORE-560054 3. SRI K. MUTHEGOWDA S/O SRI KRISHNAPPA MAJOR, NO.720/145, 15TH A MAIN, MATHIKERE LAYOUT, BANGALORE-560054 4. SMT. RAJAMMA W/O P.N. PENCHALAIAH MAJOR, NO.34/11, SBM COLONY, III CROSS, GOKUL, BANGALORE-560054 5. SRI NARASAIAH MAJOR, NO.103, HANUMANTHAPPA COLONY BEHIND KRISHNA FLOUR MILLS SHESHADRIPURAM BANGALORE-560020 6. SRI GANGAIAH MAJOR, NO.47, G BLOCK OLD SAVARLINE SHESHADRIPURAM BANGALORE-560020 7. SRI N.C. MALLA MAJOR, NO.567 (38), 60 FEET ROAD, GOKULA I STAGE, MATIKERE LAYOUT BANGALORE-560054 ... RESPONDENTS (BY SRI SIDDANTH VISHWANATH, ADVOCATE FOR R-2 – ABSENT;
SRI M.CHANDRASHEKAR, ADVOCATE FOR R-3 AND R-5 – ABSENT;
VIDE ORDER DT. 7.2.2014, W.P. IS DISMISSED AS ABATED AGAINST R-6;
R-1, R-4 & R-7 SERVED, UNREPRESENTED) THIS WRIT PETITION IS FILED UNDER ARTICLES 26 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED ORDER DT.3.2.12, IN APPEAL NO.492/01 PASSED BY THE KARNATAKA APPELLATE TRIBUNAL,BANGALORE AT ANN-R INSO FAR AS IT PERTAINS TO EXONERATING THE LIBILITY OF THE R2 TO R7 ARE CONCERNED & PASS SUCH OTHER APPROPRIATE ORDER.
THIS PETITION COMING ON FOR FURTHER ARGUMENTS THIS DAY, THE COURT MADE THE FOLLOWING ORDER The 1st respondent in appeal No.492/2001 on the file of Karnataka Appellate Tribunal, has come up in this writ petition impugning the judgment dated 3.2.2012 rendered in the said proceedings.
2. Admittedly the said proceeding is at the instance of respondent nos.2 to 7 in this writ petition who were the directors of the 1st respondent society at the relevant point of time, i.e. when the petitioner bank extended credit facility to the 1st respondent society to the tune of 530 lakh rupees on the personal guarantee of respondents 2 to 7. Admittedly the 1st respondent society comprises of Class III and IV employees belonging to Scheduled Caste and Scheduled Tribe. The said society was represented by a managing committee consisting of respondents 2 to 7.
3. Though the loan was availed by the 1st respondent society for distribution amongst the members of the society for their upliftment, the same is said to have been misappropriated, resulting in non-recovery of the loan received from the petitioner bank.
4. In that behalf, proceedings were initiated by the bank for recovery of the loan by raising a dispute under Section 70 of the Karnataka Co-operative Societies Act (hereinafter referred to as the Act, for brevity) in No.JRB/DIS/1065/1995-96 on the file of the Joint Registrar of Co-operative Societies, Bengaluru Division, which came to be allowed by award dated 12.3.1999 wherein it was ordered that the bank is entitled to recover a sum of Rs.4,85,62,993/- with future interest at the rate of 21.5% p.a. and penal interest at the rate of 2% p.a. on the defaulted principal amount of Rs.3,96,00,000/- from 1.11.1995 till the date of realization. When it comes to fastening of liability, the order spelt out that the petitioner bank is entitled to receive the same from the 1st respondent society as well as its managing committee members who are respondent nos.2 to 7, by attachment and sale of their movable and immovable properties.
5. The records would also indicate that the said award of the Joint Registrar of Co-operative Societies in the aforesaid dispute was the subject matter of appeal before the Appellate Tribunal in No.492/2001 (qua) which was filed by respondent nos.2 to 7 herein. The said appeal was heard on merits and came to be allowed by judgment dated 3.2.2012 wherein the Tribunal, while confirming the award so far as the right of the bank being retained, modified the liability of respondent nos.2 to 7 with an observation that there is no material on record to show that there is any error committed by respondent nos.2 to 7 which called for liability being fixed on them for recovery of the said amount. The said judgment is challenged by the 1st respondent society.
6. Heard the learned counsel for the petitioner.
Perused the documents produced and relied upon in this writ petition.
7. On going through the same, it is seen that with reference to the conduct of respondent nos.2 to 7 in managing the affairs of the 1st respondent society, proceedings were initiated regarding the irregularities in the affairs of the 1st respondent society, and a report dated 10.12.1999 is filed under Section 68 of the Act in No.BLRV:Parivikshane:22/96-97 (Annexure-P) by the Joint Registrar. The said order is in fact produced by the petitioner herein before the Appellate Tribunal while filing its objections and appended as R-1. Despite the fact that the same was available on record, the Appellate Authority has not looked into it. It was observed in paragraph 11 of the judgment that in the absence of any material to show any kind of irregularity on the part of respondent nos.2 to 7 herein in utilization of the amount borrowed from the petitioner bank, the Joint Registrar of Co-operative Societies, while considering the dispute raised under Section 70 of the Act, has erroneously held that respondent nos.2 to 7 were responsible for payment of the amount borrowed, and therefore, it requires to be expunged.
8. The aforesaid observation of the Tribunal in paragraph 11 is contrary to the pleading available on record. This clearly shows that there is a deliberate attempt on the part of the judicial and revenue members of the Tribunal in ignoring the said document with an intention to provide respite to respondent nos.2 to 7 by absolving them of the liability to repay the loan to the petitioner bank. Therefore, the order impugned calls for interference by this court in the light of the judgment rendered by a Division Bench of this court in the case of GOPAL KRISHNA VISHWESHWAR AND OTHERS .vs. YELLAPURA T.A.P.C.M. SOCIETY AND OTHERS reported in ILR 1978 KAR 739 wherein, in paragraph 8, it is held as under:
‘There is no substance in the second contention also. When the appellants have advanced the amount contrary to the bye-law, they can be proceeded against along with the debtor and the sureties. There is no rule or byr-law which requires the society to exhaust its remedies against the debtor and the sureties before proceeding against the members of the committee who have advanced the loan contrary to the bye-laws. It is open to the appellants and respondents 5 and 6 to proceed against the respondents 2 and 3 in the event of the amount being recovered from them. There is however no infirmity in the award which is impugned in these proceedings.’ 9. Thus it is seen that while recovery proceedings are initiated against the 1st respondent society, nothing prevents the petitioner herein to proceed against respondent nos.2 to 7 as well and to attach and sell the movable and immovable properties belonging to them for recovery of the dues of the 1st respondent society to the bank.
10. With the aforesaid observation, this writ petition is allowed.
Sd/- JUDGE vgh*