Karnataka High Court
Mahadevi S/O Bandiwadar vs D. K. Shivanagouda on 18 April, 2023
Author: R.Devdas
Bench: R.Devdas
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WA No. 100094 of 2023
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
DATED THIS THE 18TH DAY OF APRIL, 2023
PRESENT
THE HON'BLE MR JUSTICE R.DEVDAS
AND
THE HON'BLE MR JUSTICE RAJESH RAI K
WRIT APPEAL NO. 100094 OF 2023 (GM-KSFC)
BETWEEN:
MAHADEV S/O BANDIWADAR
AGED ABOUT 43, OCC. BUSINESS,
R/O WARD NO.3, SAIDAPUR GALLI,
MUDHOL, BAGALKOT (DIST.).
...APPELLANT
(BY SRI. S S DODDALINGANNAVAR, SRI.M.M.DODDALINGANNAVAR,
SRI.C.S.PATIL, SRI.UMESH P.HAKKARAKI, ADVS)
AND:
1. D. K. SHIVANAGOUDA
AGED ABOUT 41 OCC. BUSINESS,
Digitally
signed by
R/O.JAMKHANDI
VINAYAKA B V
VINAYAKA Location:
BV DHARWAD
Date:
2023.04.20
TQ. JAMKHANDI
16:53:37 -0700
BAGALKOT (DIST.).
2. SANJU S/O TIMMANNA NINGAREDDY
AGED ABOUT 36 YEARS,
OCC. COOLIE
R/O.SHIROL VILLAGE,
TQ. MUDHOL, BAGALKOT
3. THE MANAGING DIRECTOR
KARNATAKA STATE FINANCIAL CORPORATION
R/O.HEAD OFFICE 1/1 THIMAIYA ROAD,
KFC BHAVAN, BENGALURU-560052
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WA No. 100094 of 2023
4. THE EXECUTIVE DIRECTOR
KARNATAKA STATE FINANCIAL CORPORATION
R/O.HEAD OFFICE 1/1 THIMAIYA ROAD,
KFC BHAVAN, BENGALURU-560052
5. THE GENERAL MANAGER
KARNATAKA STATE FINANCIAL CORPORATION
R/O.HEAD OFFICE 1/1 THIMAIYA ROAD,
KFC BHAVAN, BENGALURU-560052
6. ASSISTANT GENERAL MANAGER
KARNATAKA STATE FINANCIAL CORPORATION
R/O.BELAGAVI BRANCH,
NEAR SANMAN HOTEL
BELAGAVI-590001
7. ISMAIL SAHEB M KESARI
AGE. 56 YEARS, OCC. BUSINESS,
R/O. SY.NO.1097/1, MARUTI NAGAR,
SAMBRA ROAD, BELAGAVI-590016
8. SHRI ANIL S/O PARAGOWDA PATIL
AGE. 46 YEARS, OCC.PARTNER, BELGAUM THERMOCOL
INDUSTRY, R/O.WING, 2ND FLOOR,
M.G.BHAVAN, COLLEGE ROAD,
BEHIND SANMAN HOTEL,BELAGAVI
...RESPONDENTS
(BY SRI.HARSHAWARDHANA M.PATIL, ADV. FOR C/R1 & C/R2,
SRI.SHARAD MAGADUM, ADV. FOR R3 TO R6,
SRI.SHIVARAJ S.BALLOLI, ADV. FOR R8,
R7 SERVED)
THIS WRIT APPEAL IS FILED U/S.4 OF KARNATAKA HIGH
COURT ACT, 1961, PRAYING THIS HON BLE COURT TO SET ASIDE
IMPUGNED ORDER DATED 07/12/2022 PASSED BY THE LEARNED
SINGLE JUDGE IN WP NO. 104290/2022 AND DISMISS THE WRIT
PETITION BY ALLOWING THIS WRIT APPEAL.
THIS WRIT APPEAL COMING ON FOR ORDERS THIS DAY,
R.DEVDAS J., DELIVERED THE FOLLOWING:
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WA No. 100094 of 2023
JUDGMENT
R.DEVDAS J., (ORAL):
Appellant, an auction purchaser at the hands of the respondent-KSFC is aggrieved of the impugned order dated 07.12.2022 passed by the learned Single Judge in W.P.No.104290/2022.
2. Respondent Nos.1 and 2 herein had filed writ petition contending that they had purchased the property in question from one Sri.Ismail Babalal Bilagi under registered sale deed dated 18.09.2017 and 28.03.2019 without being aware of the fact that property was mortgaged in favour of KSFC. Nevertheless, the property was brought to auction and the appellant herein participated in the auction and was declared as successful bidder. The public auction was conducted on 13.12.2021 and after payment of auction amount of Rs.19,96,300/-, a sale deed was executed in favour of the appellant on 05.04.2022. It has been submitted that a few days prior to auction being conducted at the hands of the respondent-KSFC, since respondent Nos.1 and 2 came to know about the auction notice issued by the KSFC, they filed writ petition before this court in W.P.No.100845/2022 challenging -4- WA No. 100094 of 2023 the auction notice. Respondent Nos.1 and 2 also filed a suit in O.S.No.40/2022 and O.S.No.61/2022 on the file of the Senior Civil Judge and JMFC, Mudhol. Nevertheless, after sale deed was executed in favour of the appellant herein, respondent Nos.1 and 2 filed W.P.No.104290/2022 challenging the auction sale. During the course of the proceedings before the learned Single Judge, in order to show their bonafides, respondent Nos.1 and 2 herein were asked to deposit the entire sale consideration. Accordingly, in two installments, the entire sale consideration of Rs.19,96,300/- was deposited by respondent Nos.1 and 2 before this court. The learned Single Judge, having noticed the fact that public auction was conducted during December 2021 and sale deed was executed only in April 2022, and in terms of settled position of law, full opportunity was required to be given to the owner of the property to save his property by paying the entire outstanding amount due to the bank/KSFC and accordingly, the writ petitioners deposited the entire amount and further on taking note of the fact that the writ petitioners had got sale deed executed in their favour way back in the year 2017 and 2019, the learned Single Judge proceeded to allow the writ petition, setting aside the auction -5- WA No. 100094 of 2023 sale made in favour of the appellant herein. The learned Single Judge found it justifiable to direct respondent Nos.1 and 2 to pay interest to the appellant herein at the rate of 12% p.a. from the date of sale deed till the date of deposit.
3. Today, learned counsel for respondent Nos.1 and 2, the original writ petitioners has furnished copy of the memo dated 13.12.2022 stating that in terms of the directions issued by the learned Single Judge, a sum of Rs.2,40,000/- which forms the interest calculated at the rate of 12% p.a. has been deposited before this court.
4. Learned counsel for respondent Nos.1 and 2 has placed reliance on a decision of the Hon'ble Supreme Court in the case of R.S.Infra-Transmission Ltd., vs Saurinindubhai Patel and Others reported in 2022 SCC OnLine SC 854 wherein in similar circumstances, it was held that valuable right and last resort/opportunity to the owner of the property/mortgager should be given to save his property. In the present context, the learned Single Judge found that although the original writ petitioners had purchased the property by paying valuable sale consideration, nevertheless, in -6- WA No. 100094 of 2023 order to save their property they have come forward once again to pay the auction sale amount of Rs.19,96,300/-. Moreover, the auction sale amount was paid by the appellant herein only between December, 2021 and April, 2022 and not much time had elapsed from the date of execution of the sale deed in favour of the appellant herein and the payment of the amount to the KSFC. The decision of the learned Single Judge to appropriately compensate the appellant herein by directing payment of interest calculated at the rate of 12% p.a. also requires to be taken into consideration.
5. After hearing the learned counsels and on perusing the petition papers, we also find that the common line of equity that runs in various judgments of the Hon'ble Supreme Court has been reiterated in one of the recent judgment of the Hon'ble Supreme Court in the case of S. Karthik and Ors. Vs. N. Subhash Chand Jain and Ors, (2022) 10 SCC 641 wherein it was held that the 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. The Supreme Court held that if the tender is made by the borrower at the last moment before the sale or transfer, the -7- WA No. 100094 of 2023 secured asset should not be sold or transferred by the secured creditor. There was no reason as to why the general principle laid down in the case of Narandas Karsondas v. S.A. Kamtam and Anr, (1977) 3 SCC 247 that refers to Section 60 of the Transfer of Property Act could not have application in respect of a secured interest in a secured asset created in favour of a secured creditor. In the present case we have found that respondent Nos.1 and 2 have expressly brought it to the notice of the KSFC that they had purchased the property way back in the year 2017 and 2019 and respondents No.1 and 2 made attempts to stall the auction proceedings. We find that the KSFC which was required to appraise the bidders about the encumbrance created on the secured asset, did not do so. It is possible that if such information was made available to the bidders, even as on the date of auction, the appellants would not have tendered their bid. In that view of the matter, we find that the respondent-KSFC has kept the appellants herein in dark.
6. As regards the rate of interest that could be levied on respondents No.1 and 2 for repayment of the auction sale consideration, we find that though the provisions contained in -8- WA No. 100094 of 2023 the Karnataka Co-operative Societies, Rules, 1960 and its provisions cannot be made applicable to the present facts, nevertheless, it is required to be noticed that an auction purchaser is only entitled for 5% solatium on the sale price in the form of interest, if for any reason the auction sale is set aside. Nevertheless, in the present case, the learned Single Judge has directed payment of interest calculated at the rate of 12% p.a. to the auction purchaser.
7. Having regard to the above, this court is of the considered opinion that no infirmity could be found in the impugned order passed by the learned Single Judge. The appellant is entitled to receive the entire sale consideration of Rs.19,96,300/- along with interest deposited by respondent Nos.1 and 2 and accrued interest thereon.
8. Accordingly, the writ appeal stands dismissed permitting the appellant to withdraw entire amount of Rs.19,96,300/- along with the interest deposited by respondent Nos.1 and 2 and accrued interest since the amount is invested in a fixed deposit as was directed by this court. -9- WA No. 100094 of 2023
9. Office is directed to release the entire amount to the appellant after taking necessary documents for identification.
10. In view of dismissal of the writ appeal, I.A.No.1/2023 does not survive for consideration and the same stands disposed off.
Sd/-
JUDGE Sd/-
JUDGE MBS/List No.: 1 Sl No.: 37