Karnataka High Court
Sri C Keshavamurthy vs Joint Registrar Of on 19 February, 2018
Author: S.N.Satyanarayana
Bench: S.N.Satyanarayana
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 19TH DAY OF FEBRUARY 2018
BEFORE
THE HON'BLE MR.JUSTICE S.N.SATYANARAYANA
WRIT PETITION NOs.2179-2181/2014 (CS-RES)
BETWEEN
1. SRI C. KESHAVAMURTHY,
S/O LATE CHINNAPPA B,
AGED ABOUT 52 YEARS,
R/AT 59, 12TH CROSS,
5TH MAIN ROAD,
WILSON GARDEN,
BANGALORE-560 030.
2. SRI. C.R. RAGHUNATH
S/O LATE CHINNAPPA. B,
AGED ABOUT 45 YEARS,
RESIDING AT No.58,
12TH CROSS, 5TH MAIN ROAD,
WILSON GARDEN,
BANGALORE-560 030.
3. SRI C.R. DIVAKAR,
S/O LATE CHINNAPPA B.
AGED ABOUT 43 YEARS,
RA/T 59, 12TH CROSS,
5TH MAIN ROAD, WILSON GARDEN,
BANGALORE-560 030. ... PETITIONERS
(BY SRI K.MANJUNATH FOR
SRI G. MANIVANNAN, ADVOCATES )
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AND
1. JOINT REGISTRAR OF
CO-OPERATIVE SOCIETIES (R-441),
KARNATAKA STATE CO-OPERATIVE
URBAN BANKS FEDERATION LTD.,
BANGALORE.
2. THE GENERAL MANAGER
THE MALLESWARAM
CO-OPERATIVE BANK LTD.,
MALLESWARAM,
BANGALORE-560 003. ... RESPONDENTS
(BY SRI LAXMINARAYANA, ADDITIIONAL GOVERNMENT
ADVOCATE FOR R1,
SRI N. JAGADISH BALIGA, ADVOCATE FOR R2)
THESE WRIT PETITIONS ARE FILED UNDER ARTICLES
226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO
QUASH THE ORDER PASSED BY THE FIRST RESPONDENT
DATED 19.06.2009 VIDE ANNEXURE-A AND THE ORDER
PASSED BY THE HON'BLE KARNATAKA APPELLATE TRIBUNAL
IN APPEAL BEARING No.451/2009 FINAL ORDER
DT.30.10.2013 VIDE ANNEXURE-B AND ETC.
THESE WRIT PETITIONS COMING ON FOR PRELIMINARY
HEARING IN 'B' GROUP THIS DAY, THE COURT MADE THE
FOLLOWING:
ORDER
Petitioner No.1 herein is the borrower and petitioner Nos.2 and 3 are the guarantors to the loan secured by the first petitioner with second respondent - The Malleswaram Co- operative Bank Limited (hereinafter referred to as 'the Bank'). -3-
2. Petitioners have sought for quashing the order of the first respondent - Joint Registrar of Co-operative Societies (Rule-441) in Dispute bearing No.JRD/UBF/3576/2008-09 dated 19.06.2009 vide Annexure 'A' to the petitions and the judgment of the Karnataka Appellate Tribunal, Bengaluru, in Appeal No.451/2009 dated 30.10.2013 (Annexure 'B' to the petitions).
3. The brief facts leading to these petitions are as under:
3.1 It is stated that the first petitioner borrowed a loan of Rs.54,00,000/- from the second respondent - Bank on 23.02.2006 and agreed to repay the entire loan with interest at 11% per annum and in the event of default, he had also agreed to pay penal interest at 2% on the outstanding balance amount beyond the period within which it was required to be paid. The said loan is secured by personal guarantee of petitioner NOs.2 and 3, who are also brothers of the first petitioner.-4-
3.2 When the first petitioner committed default in repayment of the loan, proceedings were initiated by the second respondent - Bank under Section 70 of the Karnataka Co-operative Societies Act, 1959 (hereinafter referred to as the 'KCS Act') in dispute No.JRD/UBF/3576/2008-09 on the file of Joint Registrar of Co-operative Societies (Rule 441) Dava Panchayati, (' the Joint Registrar', for short) for recovery of a sum of Rs.46,73,667/- from the respondents therein, who are petitioners herein.
3.3 In the said proceedings, both the parties were issued notice. The respondents participated in the said proceedings. The respondents admitted borrowing of Rs.54,00,000/- from the petitioner - Bank and also their liability to repay the same for which they sought for one month's time. Since the respondents failed to repay the loan within the time granted, the representative of the petitioner -
Bank filed evidence by way of affidavit and produced documents as per Exs.P1 to P7. However, the respondents did not seriously contest the matter inasmuch as they did not choose either to cross-examine the witness examined on -5- behalf of the petitioner - Bank or to adduce evidence on their behalf.
3.4 The Joint Registrar, having regard to the evidence adduced by the petitioner - Bank, has observed that the first respondent therein had borrowed a sum of Rs.54,00,000/- from the petitioner - Bank by mortgaging his property and he had committed default in repayment of loan and as a result, the first respondent was liable to pay a sum of Rs.46,73,667/- as on 08.12.2008 to the petitioner - Bank. Accordingly, the Joint Registrar, by his order dated 19.06.2009 (Annexure 'A' to the petitions), has ordered the respondents therein (petitioners herein) to jointly and severally pay a sum of Rs.46,73,667/- and litigation cost at Rs.2,170/- with interest at 11% per annum from 09.12.2008 till the date of payment and penal interest at 2% to the petitioner - Bank, failing which, the petitioner - Bank was directed to attach and bring to sale either the movable and immovable properties belonging to the respondents therein or the property, which was mortgaged by the first respondent / respondents in favour -6- of the petitioner - Bank and description of which is given in the schedule to the said order.
3.5 The said order of the Joint Registrar was subject matter of appeal in Appeal No.451/2009 preferred by the petitioners herein before the Karnataka Appellate Tribunal ('the Tribunal', for short). In the said proceedings, the appellants - petitioners herein contended that they had suffered loss in the business and sought for more time to repay the loan. The Tribunal having regard to the fact that the appellants had admitted borrowing of loan from the second respondent - Bank and their liability to repay the said loan and in the absence of any document to support their claim that they had suffered loss in the business, has declined to interfere with the order of the Joint Registrar dated 19.06.2009 and accordingly, has dismissed the appeal by its judgment dated 30.10.2013. Being aggrieved by the same, petitioners are before this Court.
4. It is contended by the petitioners that during the pendency of appeal before the Tribunal, they gave -7- representation to the Joint Registrar of Co-operative Societies dated 30.04.2012 (Annexure 'E' to the petitions) to extend the benefit of One-Time Settlement (OTS) scheme to them as per the guidelines issued by Reserve Bank of India (RBI). In spite of repeated requests by petitioners, the second respondent - Bank did not take any action to extend the benefit of OTS scheme to them. Subsequently, the Joint Registrar of Co- operative Societies has addressed letter dated 04.05.2013 (Annexure 'K' to the petitions) to the first petitioner herein intimating him that the OTS scheme under which certain loans were recovered by levying interest at discounted rate i.e., 12% per annum had expired on 30.06.2012 and since the loan advanced to the petitioners carried interest at 11% per annum and the matter was pending consideration before the Tribunal, the OTS Scheme was not applicable to the petitioners.
5. It is pointed out by the petitioners that pursuant to the award dated 19.06.2009 passed by the first respondent - Joint Registrar, which was later confirmed by the Tribunal, the second respondent - Bank has initiated execution proceedings in CEP No.480/2009-10, wherein Assistant Registrar of Co- -8- operative Societies, North Circle, Bengaluru City, has issued Form Nos.8 and 9 (Annexure 'M' and 'M1' to the petitions respectively) and has brought the property of the petitioners described in schedule to the award dated 19.06.2009 (Annexure 'A' to the petitions) for public auction, which was scheduled to be held on 19.02.2014.
6. Heard the learned counsel for petitioners, learned Additional Government Advocate appearing for respondent No.1 and learned counsel appearing for respondent No.2. Perused the material on record.
7. It is pointed out by the learned counsel for petitioners that pursuant to the interim order granted by this Court dated 14.02.2014, the petitioners have deposited Rs.30,00,000/- with the second respondent - Bank on 17.02.2014. He contended that the second respondent - Bank has not properly accounted for the money that was paid by the petitioners and in spite of payment of nearly Rs.55,00,000/- to the second respondent - Bank, they are still seeking recovery of huge sum.
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8. Learned counsel appearing for the second respondent - Bank would bring to the notice of this Court that as per the Statement of Accounts maintained by the Bank, the outstanding amount payable by petitioners as on 22.01.2018 is Rs.56,53,175-58Ps., which includes interest at 11% per annum and penal interest at 2%.
9. In the instant case, learned counsel appearing for the second respondent - Bank was directed to submit whether there was any possibility of settlement in the matter. Learned counsel submits that the second respondent - Bank is willing to give concession of Rs.93,563/- if the entire outstanding amount is paid by the petitioners within three months from today.
10. However, this Court is of the opinion that in the fact situation, when there is no opposition on the part of the petitioners either to the loan borrowed by them from the second respondent - Bank or their liability to repay the same, it would be appropriate to direct the second respondent - Bank to waive off penal interest levied at 2% on the
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outstanding amount and grant three months time from the date of furnishing of recalculated statement of account to the petitioners to clear the entire loan.
11. Accordingly, the second respondent - Bank is directed to furnish to the petitioners, a fresh Statement of Account by charging interest on the outstanding amount only at 11% per annum and showing the amount that is due to be paid by them, within four weeks from today. Petitioners are granted three months from the date of furnishing of recalculated statement of account by the second respondent - Bank, to pay the entire outstanding principal and interest.
12. In the event, if the petitioners do not pay the entire amount due within three months as observed in this order, it is open for the second respondent - Bank to recover the entire amount as per the award dated 19.06.2009 passed by the first respondent - Joint Registrar of Co-operative Societies (Rule 441) in the execution petition - CEP No.480/2009-10 levied by them.
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13. With the aforesaid observations, these Writ Petitions are disposed of.
Sd/-
JUDGE sma