IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 16TH DAY OF JULY, 2019 BEFORE THE HON’BLE MRS. JUSTICE K.S.MUDAGAL MISCELLANEOUS SECOND APPEAL NO.37/2013 BETWEEN:
1. KARNATAKA INDUSTRIAL CO-OPERATIVE BANK (PRESENTLY KNOWN AS KARNATAKA RAJYA KAIGARIKA VANIJYA SAHAKARA BANK NIYAMITHA) BASAVANAGUDI BULL TEMPLE ROAD BANGALORE – 560 004 REPRESENTED BY ITS MANAGING DIRECTOR 2. KARNATAKA INDUSTRIAL CO-OPERATIVE BANK (PRESENTLY KNOWN AS KARNATAKA RAJYA KAIGARIKA VANIJYA SAHAKARA BANK NIYAMITHA, CHITHARDURGA BRANCH) MADEHALLI ROAD CHITRADURGA – 577 501 REPRESENTED BY ITS MANAGER … APPELLANTS (BY SRI VIVEK B.N., ADVOCATE FOR SRI ABHINAV R., ADVOCATE) AND:
1. SRI KARAMATHULLA S/O MOHAMMED KHASIM SAB AGED ABOUT 62 YEARS REVENUE OFFICIAL R/O GANDHINAGAR CHALLAKERE – 577 522 CHITRADURGA DISTRICT 2. REGISTRAR OF CO-OPERATIVE SOCIETIES NO.1, ALI ASKAR ROAD BANGALORE – 560 052 3. ASSISTANT REGISTRAR OF CO-OP. SOCIETIES CHITRADURGA – 577 501 4. SALE OFFICER REGISTRAR OF CO-OPERATIVE SOCIETIES KARNATAKA STATE INDUSTRIAL CO-OPERATIVE SOCIETY LTD. MEDAHALLI ROAD CHITRADURGA BRANCH CHITRADURGA – 577 501 5. P.GAREEBSAB S/O PEERSAB AGED ABOUT 44 YEARS “D” GROUP EMPLOYEE RESIDENTIAL HIGH SCHOOL GHATAPARTI VILLAGE CHALLAKERE TALUK – 577 522 6. B.V.LINGARAJ S/O H.M.VEERANNA AGED ABOUT 35 YEARS R/O BELLARY ROAD JAGAJYOTHI BUILDING CHALLAKERE TOWN – 577 522 7. SRI SHARANESH S/O G.SHARANABASAPPA AGED ABOUT 46 YEARS M/S LAKSHMI TRADERS BELLARY ROAD CHALLAKERE – 577 522 … RESPONDENTS (BY SRI R.V.JAYAPRAKASH, ADVOCATE FOR R-1; SRI S.B.SHAHAPUR, HCGP FOR R-2 AND R-3; R-5 SERVED AND UNREPRESENTED;
R-4, R-6 AND R-7 ARE DISPENSED WITH) THIS MSA IS FILED UNDER ORDER 43 RULE 1(u) OF THE CPC, PRAYING TO SET ASIDE THE JUDGMENT AND DECREE DATED 25.02.2013 PASSED IN R.A.NO.102/2009 ON THE FILE OF THE ADDL. SESSIONS JUDGE (FAST TRACK COURT), CHITRADURGA AND CONFIRM THE JUDGMENT AND DECREE PASSED IN O.S.NO.51/2007 ON THE FILE OF THE CIVIL JUDGE (SR.DN.), CHALLAKERE.
THIS MSA COMING ON FOR FINAL HEARING THIS DAY, THE COURT DELIVERED THE FOLLOWING:
J U D G M E N T “Whether suit in O.S.No.51/2007 before the Trial/Civil Court seeking declaration that the procedure followed by defendant No.5 in attaching the suit schedule property under Rule 38(2)(c) of the Karnataka Co-operative Societies Rules, 1960 (‘the Rules’ for short) was barred by Section 118 of the Karnataka Co-operative Societies Act, 1959 (‘the Act’ for short)” is the question involved in this case.
2. Appellants were defendant Nos.2 and 3, respondent No.1 was the plaintiff, respondent No.2 was defendant No.1 and respondent Nos.3 to 7 were defendant Nos.4 to 8 in O.S.No.51/2007 on the file of the Civil Judge (Senior Division), Challakere. For the purpose of convenience, parties will be referred to henceforth by their ranks before the trial Court.
3. Subject matter of the suit was site No.29 measuring 30’ X 40’ carved out of khata/assessment No.2169/2209/2841 of Challakere Town.
4. The suit property originally belonged to defendant No.7. Defendant No.7 sold the said property to defendant No.6. Defendant No.6 in turn sold the property to the plaintiff under Ex.P1 the registered sale deed dated 21.03.2005.
5. In Arbitration Case No.1554:98-99 Defendant No.4 passed award dated 23.04.1999 against defendant Nos.7 and 8 for recovery of Rs.3,62,057/- with interest thereon at 20% per annum and 2% penal interest payable from 01.10.1998. In the award it was further directed that, if defendant Nos.7 and 8 fail to satisfy the award, the award amount shall be recovered by auction of movable and immovable properties of the said defendants which would be mortgaged/pledged to the award holder. Defendant No.3 of this suit was plaintiff in arbitration case.
6. Plaintiff filed O.S.No.51/2007 claiming that defendant No.5 issued attachment notice dated 14.02.2001 and sale notice dated 01.08.2006 for sale of the suit schedule property without following the procedure prescribed under Rule 38(2)(c) of the Rules. He contended that suit schedule property is no way concerned to the award passed. He sought declaration of his title to the suit schedule property and that the attachment notice dated 14.02.2001 is illegal and for permanent injunction against defendant Nos.1 to 5 from interfering with his possession.
7. Defendant Nos.3 and 5 filed written statement contending that defendant Nos.7 and 8 while borrowing loan in the year 1997 have mortgaged the subject matter of the suit to defendant Nos.2 and 3. They further contended that since the said defendants failed to repay the said loan amount, dispute was raised before defendant No.4 and an award was passed against defendant Nos.7 and 8. They further contended that in execution of the said award suit property was attached. They claimed that Section 118 of the Act bars jurisdiction of the Civil Court to decide on the action of defendant Nos.4 and 5 in the execution proceedings.
8. On the basis of such pleadings, the trial Court framed the following issues:
1) Whether plaintiff proves that he is the absolute owner in possession of the suit schedule property?
2) Whether plaintiff proves the interference caused by the defendants?
3) Whether defendant Nos.3 & 5 prove that this Court has no jurisdiction to try this suit?
4) What decree or order?
9. The trial Court treated issue No.3 as preliminary issue. On hearing, vide order dated 10.11.2009 the trial Court held that Section 118 of the Act bars jurisdiction of the Civil Court to adjudicate the dispute in question and dismissed the suit.
10. Plaintiff challenged the said judgment before the First Appellate Court. The First Appellate Court by impugned judgment and order allowed the appeal, reversed the findings of the trial Court on issue No.3 and remanded the matter to the trial Court for disposal of the entire matter on merits, on the following grounds:
i) The dispute in question is not covered under Section 118 of the Act;
ii) Defendant No.1 was required to show that the suit property was the subject matter of the award;
iii) Despite giving sufficient opportunity, defendant Nos.2 to 4 and the sale officer failed to produce the records of execution case No.4/2000-2001 to show that they followed the procedure required under Rule 38(2)(c) of the Rules;
iv) Whether defendant Nos.2 to 4 followed the required statutory procedure is a matter of evidence. In the absence of such material, the jurisdiction of the Civil Court was not barred.
11. Aggrieved by the order of the First Appellate Court, defendant Nos.2 and 3 have preferred this appeal and this Court admitted the appeal for hearing. The top noted question of law arises for consideration of this Court.
12. Sri Vivek.B.N, learned Counsel for appellants seeks to assail the order of the First Appellate Court on the following grounds:
i) Section 101(2)(b)(iv) and Section 118 of the Act bar the jurisdiction of the Civil Court in such matters;
ii) If at all plaintiff wanted to challenge the attachment or sale, his remedy was to prefer his objections before defendant No.1 the Registrar of Co-operative Societies;
iii) Only if the first defendant passed any adverse order on such objection, plaintiff’s remedy was to approach the Civil Court within one year from the date of such order.
In support of his contentions, he relied upon the judgment of this Court in Vadigeri Jambanna vs. Hospet Co-operative City Bank Limited, Hospet and others [(1996) 2 Kant. LJ 556].
13. Per contra, Sri R.V.Jayaprakash, learned Counsel for respondent No.1 seeks to support the impugned order of the First Appellate Court on the following grounds:
(i) Suit property was not the subject matter of the award;
(ii) Defendant No.5 had not issued any notices as prescribed under Rule 38(2)(c) of the Rules;
(iii) Despite granting sufficient opportunity, defendant Nos.1 to 5 did not produce the records of the execution case to show that the property was subject matter of the award and notices as required under Rule 38(2) of the Rules were issued. When authority fails to exercise its power as per law, civil suit does lie; & (iv) Section 9 of the Code of Civil Procedure, 1908 does not bar such right in its entirety.
14. In support of his contention, he relies upon the judgment of the Supreme Court in M.P.Electricity Board v. Vijaya Timber Co [(1997) 1 SCC 68].
15. The trial Court took up the question of jurisdiction for hearing as a preliminary issue. The contention of defendant Nos.3 and 5 was that the order and notice of attachment and sale notice issued by defendant No.5 were not amenable to the jurisdiction of the Civil Court in view of Section 118 and Section 101 of the Act.
16. Plaintiff claims that the procedure as required under Rule 38(2) of the Rules is not followed. According to the plaintiff, no notice was issued before attachment and sale to the concerned. Relevant provisions of Rule 38(1) and Rule 38(2)(c) of the Rules read as follows:
“38. Attachment and sale of immoveable property.―(1) Immoveable property shall not be sold in execution of a decree unless such property has been previously attached:
Provided that where the decree has been obtained on the basis of a mortgage of such property it shall not be necessary to attach it.
(2) In the attachment and sale or sale without attachment of immoveable property, the following rules shall be observed,-
(a) ...............................................................
(b)................................................................
(c) Where attachment is required before sale, the sale officer shall cause a notice of attachment to be served on the judgment-debtor personally or on an adult male member of his family, or on his authorized agent. Where such service is not possible, the notice shall be affixed in some conspicuous part of the judgment-debtor’s last known place of residence.
The fact of attachment shall also be proclaimed by beat of drum or other customary mode at some place on or adjacent to the property attached, and at such other place or places as the Recovery Officer may consider necessary to give due publicity to the sale. The attachment notice shall set forth that, unless the amount due with interest and expenses be paid within the date therein mentioned, the property will be brought to sale. A copy of such notice shall be sent to the decree-holder. Where the Recovery Officer so directs the attachment shall also be notified in the Official Gazette;
17. Therefore, now the question was whether plaintiff could approach Civil Court questioning the legality of the notice of attachment and sale directly?
18. The relevant provisions of Section 118(1)(c) and sub-Section (3) of the Act read as follows:
118. Bar of jurisdiction of courts.- (1) Save as provided in this Act, no Civil, Labour or Revenue Court or Industrial Tribunal shall have any jurisdiction in respect of,— (a).............................................................
(b).............................................................
(c) any dispute required under section 70 to be referred to the Registrar or the recovery of moneys under Section 100.
..................................................................
(3) Save as provided in this Act, no order, decision or award made under this Act shall be questioned in any court on any ground whatsoever.
19. The above referred Section bars jurisdiction of the civil Court relating to the order made under the Act, except as provided under the Act. The order of attachment and sale regarding execution of the award are also the orders passed under the Act.
20. Section 101 of the Act deals with execution of the order etc. Section 101(2)(a) of the Act reads as follows:
“Notwithstanding anything contained in this Act every question relating to the execution, discharge or satisfaction of an order, decision or award referred to in sub-section (1) or relating to the confirmation or setting aside of a sale held in an execution of such order, decision or award in pursuance of clause (c) of sub-section (1), or relating to any claim or objection to an attachment of any property made under section 103 or in execution in pursuance of the said clause (c), shall be determined, by an order of the Registrar or any other person subordinate to him, empowered by the Registrar under the said clause (c) (hereinafter in this section referred to as “authorized person”) before whom such question arises.”
21. The above referred Section states that notwithstanding anything contained in the Act, every question relating to the execution, discharge or satisfaction of an order, decision or award referred to sub-section 1 or relating to the confirmation or setting aside of a sale held in an execution of such order, decision or award shall be determined by an order of the Registrar or any other person subordinate to him and authorized by him by award.
22. Section 101(2)(b)(i) of the Act reads as follows:
“Where any claim is preferred against, or any objection is made to, the attachment of any property made under section 103 or in execution in pursuance of clause (c) of sub-section (1), on the ground that the said property is not liable to such attachment, the Registrar or the authorized person shall proceed to investigate the claim or objection: Provided that where the Registrar or the authorized person considers that the claim or objection was designedly or unnecessarily delayed, he shall make an order refusing such investigation;”
23. Above Section states that where any claim is preferred against or any objection is made to the attachment of any property or in execution shall be investigated by the Registrar or the person authorized by him.
24. Section 101(2)(b)(iv) of the Act reads as follows:
“Where a claim or an objection is preferred, the party against whom an order is made may within a period of one year from the date of such order, institute a suit in a Civil Court to establish the right which he claims to the property in dispute; but subject to the result of such suit, if any, the order of the Registrar or the authorized person shall be conclusive”.
25. Thus, it is clear that whenever a property is attached in an execution of award the person objecting such attachment or sale has to prefer his objections/claim before the Registrar. If the Registrar on adjudicating the claim or objections to the attachment rejects the same, party against whom the order is passed may approach the Civil Court within one year from the date of such order.
26. By the scheme of the Act, it becomes clear that though the jurisdiction of the Civil Court to adjudicate on the objection raised or claim made against attachment of the property in execution of the award passed under the Act, is not totally barred, the party opposing the attachment or sale has to first exhaust his remedy following the procedure prescribed under Section 101 of the Act.
27. In M.P.Electricity Board’s case relied upon by learned Counsel for plaintiff-respondent No.1 in para 9 of the judgment referring to the earlier judgment of the Supreme Court in Dhulabhai v. State of M.P it was held as follows:
“9. It is well settled that the exclusion of jurisdiction of civil court cannot be readily inferred and the normal rule is that civil courts have jurisdiction to try all suits of a civil nature except those of which cognizance by them is either expressly or impliedly excluded. A Constitution Bench of this Court in Dhulabhai v. State of M.P. [(1968) 3 SCR 662 : AIR 1969 SC 78 : (1968) 22 STC 416] had laid down several propositions in this regard. The first proposition is apposite for the facts of this case. It reads as under:
“(1) Where the statute gives a finality to the orders of the special tribunals the civil court's jurisdiction must be held to be excluded if there is adequate remedy to do what the civil courts would normally do in a suit. Such provision, however, does not exclude those cases where the provisions of the particular Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure.”
(emphasis supplied) 28. Even reading of the aforesaid judgment makes it clear that when separate authority was created to decide the issue and if authorities fail to comply those statutory provisions, such acts are amenable to the jurisdiction of the Civil Court. The said judgment, cannot be read to state that without exhausting the remedy prescribed under Section 101 of the Act, plaintiff can approach Civil Court and Section 118 of the Act is not applicable to him.
29. This Court in Vadigeri Jambanna’s case, in similar circumstances referring to Section 101 of the Act and Rules 38 of the Rules in paras 11 and 12 held as follows:
“11. Sub-section (2) of Section 101 read with Rule 38(5) of the rules clearly provides that any person who is aggrieved by a sale effected under the said provisions has to file his objection before the sale officer for setting aside the sale at the first instance. In case such a claim or objection is rejected then only as provided under Section 101(2)(b)(iv) of the Act, the party against whom the order is made in such proceeding can institute a suit in a Civil Court to establish the right which he claims in the property. The said clause reads thus:— “Where a claim or an objection is preferred, the party against whom an order is made may within a period of one year from the date of such order, institute a suit in a Civil Court to establish the right which he claims to the property in dispute”.
12. Therefore, from the scheme of the Act, it is quite clear that the jurisdiction of the Civil Court to entertain a suit involving a dispute of the present nature can be entertained only if such claim or objection is raised before the authorities under the Act at the first instance. This is a condition precedent or sine qua non for entertainment of a civil suit. That being the legal position, in my considered opinion, the Courts below have rightly held that the present suit is not maintainable. So far as the decisions cited by Mr. Savanur are concerned, I do not find any relevance of the said decisions on the facts of the present case, requiring any detailed discussion. The appeal is accordingly dismissed.”
(emphasis supplied) 30. Thus, it is clear that without preferring claim/ objections before the authorities under the Act at the first instance, plaintiff could not have invoked the jurisdiction of the Civil Court. Unless such procedure was followed, Jurisdiction of the Civil Court was barred under Section 118 of the Act.
31. It was contended that plaintiff has sought declaration of title and for that the plaintiff cannot go before the Registrar. Plaintiff has claimed declaration of title only because of the notice attachment and sale. Cloud was created on his title by such notices issued by defendant No.5. Therefore, the question of seeking declaration arises, only if Registrar rejects the objections or claim of the plaintiff as contemplated under Section 101 of the Act.
32. Plaintiff has to make claim before the Registrar under the said Section on all grounds available to him including non-compliance of Rule 32 of the Rules. Only thereafter, his remedy lies to the Civil Court as contemplated under Section 101(2)(b)(iv) of the Act. Until then the jurisdiction of the Civil Court is barred.
33. The First Appellate Court without considering all these aspects, itself conducts a trial to hold that, records in execution case were called for and not produced and award did not include the subject matter of the suit etc., which is contrary to the scheme of the Act, more particularly Section 118 and Section 101 of the Act. Therefore, the impugned judgment of the First Appellate Court is unsustainable.
34. The appeal is allowed with costs. The impugned judgment and decree dated 25.02.2013 in R.A.No.102/2009 passed by the Additional District and Sessions Judge (Fast Track Court, Chitradurga) is hereby set aside. Suit of the plaintiff is hereby dismissed reserving liberty to the plaintiff to follow the procedure prescribed under Section 101 of the Act.
Transmit the records to the trial Court forthwith.
Letter of the Presiding Officer of the trial Court does not survive for consideration and disposed of accordingly.
Sd/- JUDGE KSR