Karnataka High Court
Dr. Viswanatha Bheemashankara Deepali vs The Competent Authority on 2 February, 2026
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NC: 2026:KHC:5689-DB
MFA No. 7997 of 2024
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 2ND DAY OF FEBRUARY, 2026
PRESENT
THE HON'BLE MRS. JUSTICE ANU SIVARAMAN
AND
THE HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL
MISCELLANEOUS FIRST APPEAL NO. 7997 OF 2024 (KPIDFA)
BETWEEN:
DR. VISWANATHA BHEEMASHANKARA DEEPALI
S/O DR. B.C. DEEPALI,
HOUSE NO.527, 1ST MAIN,
8TH CROSS, 16TH WARD,
BASAVESHWARA EXTENSION,
HOSAPETE, VIJAYANAGARA DISTRICT.
...APPELLANT
(BY SRI. DESHPANDE ANOOP GOPALRAO, ADVOCATE)
AND:
Digitally signed by 1. THE COMPETENT AUTHORITY
RUPA V FOR AHANA SOUHARDHA CREDIT
HIGH COURT OF CO-OPERATIVE SOCIETY LTD., HOSAPETE,
KARNATAKA
VIJAYANAGARA DISTRICT, 3RD FLOOR,
MINI V.V. TOWER, PODIUM BLOCK,
DR. AMBEDKAR VEEDHI
BENGALURU - 560001
REPRESENTED BY ITS COMPETENT AUTHORITY,
S.N. SUBRAMANYA, ASSISTANT COMMISSIONER
AGED ABOUT 57 YEARS.
2. AHANA SOUHARADHA CREDIT CO-OPERATIVE
SOCIETY LTD., HOSAPETE,
VIJAYANAGARA DISTRICT
REPRESENTED BY ITS CHIEF EXECUTIVE OFFICER
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NC: 2026:KHC:5689-DB
MFA No. 7997 of 2024
HC-KAR
SHRI RAGHAVENDRARAO
SS/O GURURAJARAO, HOSURU
CHITTAVADAGI POST - 583 221
HOSAPETE TALUK, VIJAYANAGARA DISTRICT.
...RESPONDENTS
(BY SRI. VEERESH R. BUDIHAL, ADVOCATE FOR C/R1;
R-2 SERVED)
THIS MFA IS FILED U/S. 16 OF THE KARNATAKA
PROTECTION OF INTEREST OF DEPOSITORS IN FINANCIAL
ESTABLISHMENTS ACT, AGAINST THE ORDER DATED
05.1.2024. PASSED IN MISC.NO.715/2023 ON THE FILE OF
THE XCI ADDITIONAL CITY CIVIL AND SESSIONS JUDGE AND
SPECIAL JUDGE FOR KARNATAKA PROTECTION OF INTEREST
OF DEPOSITORS IN FINANCIAL ESTABLISHMENTS (KPIDFE)
CASES, BENGALURU, (CCH-92) AND ETC.
THIS APPEAL HAVING BEEN HEARD AND RESERVED ON
19.01.2026, COMING ON FOR PRONOUNCEMENT OF
JUDGMENT, THIS DAY VIJAYKUMAR A. PATIL J., DELIVERED
THE FOLLOWING:
CORAM: HON'BLE MRS. JUSTICE ANU SIVARAMAN
and
HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL
CAV JUDGMENT
(PER: HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL) This appeal is filed by the appellant under Section 16 of the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004 (hereinafter referred to as 'the Act') challenging the order dated 05.01.2024 -3- NC: 2026:KHC:5689-DB MFA No. 7997 of 2024 HC-KAR passed in Misc.No.715/2023 by the XCI Additional City Civil and Sessions Judge and Special Judge for KPIDFE Cases, Bengaluru (hereinafter referred to as 'the Trial Court').
2. The brief facts leading to the filing of this appeal are that the respondent No.2-Society is registered under Section 5 of the Karnataka Souharda Sahakari Act, 1997, on 23.10.2013. A complaint was filed against the respondent No.2 alleging misuse and misappropriation of the deposits and failure to return the said deposits to the depositors. The Government, pursuant to the said complaint initiated proceedings under the provisions of the Act and appointed the respondent No.1 as the Competent Authority under the Act. In furtherance of exercising its powers under the Act, the Government ordered for attachment of the properties of the respondent No.2. As the properties, in the name of the respondent No.2 was found to be insufficient to meet the claims of the depositors, which stood around Rs.42.72 Crores, the -4- NC: 2026:KHC:5689-DB MFA No. 7997 of 2024 HC-KAR properties of the Directors and the associated persons were also attached by the Government. The appellant is one of the Directors of the respondent No.2, whose properties were provisionally attached. The respondent No.1, in pursuance to the said provisional attachment, filed a petition in Misc.No.715/2023 under Section 5(2) of the Act, seeking to make the interim order of attachment, absolute. The Trial Court, after considering the material on record allowed the said petition, making the attachment absolute and also ordered for realization of the said property through a public auction. Being aggrieved by the said order, the appellant is in appeal.
2. Sri.Deshpande Anoop Gopalrao, learned counsel appearing for the appellant submits that the Trial Court has failed to consider the material on record in its proper perspective and erroneously allowed the petition. It is submitted that the Trial Court failed to take into consideration that the appellant had submitted the resignation to the post of the Director of the respondent -5- NC: 2026:KHC:5689-DB MFA No. 7997 of 2024 HC-KAR No.2-Society on 04.02.2015 and the same was accepted on 09.02.2015. It is further submitted that the petition schedule property was only purchased by the appellant after his resignation as the Director and hence, the same cannot be attached to realize the dues of the depositors. It is also submitted that the Trial Court considered the case of the former Directors and dismissed the miscellaneous petition filed by the Competent Authority in Misc.715/2023. However, the same principle was not applied in the case of the appellant, who is also a former Director. It is contended that the petition under Section 5(2) of the Act has been preferred by the respondent No.1 after a delay of 61 days, and the said delay is non- condonable as there is an express limit of thirty days to file the petition as per Section 5(2) of the Act. It is further contended that the Trial Court has erroneously applied the Limitation Act, 1973 (for short 'Limitation Act') and condoned the delay of 61 days in filing the petition. It is also contended that the respondent No.1 has failed to -6- NC: 2026:KHC:5689-DB MFA No. 7997 of 2024 HC-KAR produce any material before the Court to show the liability of the respondent No.2-Society as Rs.42.72 Crores and unless such aspects are determined, the property cannot be attached. Hence, he seeks to allow the appeal and set aside the order of the Trial Court.
3. Per Contra, Sri.Veeresh R. Budihal, learned counsel appearing for the respondent-Authority supports the impugned order of the Trial Court and submits that the Trial Court has passed the impugned order after detailed consideration of the material available on record. Hence, he seeks to dismiss the appeal.
4. We have heard the arguments advanced by the learned counsel appearing for the appellant, learned counsel appearing for the respondent No.1 and perused the material available on record. We have given our anxious consideration to the submissions advanced on both sides.
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5. The point that arises for consideration in this appeal is:
"Whether the impugned order of the Trial Court calls for any interference?"
6. The pleading on record indicates that the respondent No.2-Society is registered under Section 5 of the Karnataka Souhardha Sahakari Act, 1997, on 23.10.2013 in the office of the Assistant Registrar of Co- operatives, Hosapet Sub-Division, Hosapet. A complaint was registered in Hosapet Rural police station in FIR No.26/2021 on 03.04.2021 against the Directors of the respondent No.2-Society for the offences punishable under Sections 406, 415, 417, 419, 420, 465, 467, 470, 471, 477(A), 149 of the Indian Penal Code, 1860 and under Section 9 of the Act, for having committed irregularities in violation of the Karnataka Souharadha Co-operatives Act and the bye-laws of the Society, for misuse and misappropriation of the deposits collected from the depositors and failing to return the said deposits. The -8- NC: 2026:KHC:5689-DB MFA No. 7997 of 2024 HC-KAR Government, in pursuance to the said complaint, initiated action under the provisions of the Act. The respondent No.1 was duly appointed as the Competent Authority for the respondent No.2 by the Government under Section 5(1) of the Act vide Notification No.E-RD.82.GRC.2022, Bengaluru dated 28.06.2022. The Government, in further exercise of its power under Section 3(2) of the Act, provisionally attached the properties belonging to the respondent No.2 and its associated persons. The property standing in the name of the respondent No.2 was found to be insufficient to meet the claims of the depositors, due to which the properties of the Directors of the respondent No.2 and associated persons were provisionally attached by the Government vide Notification bearing No.E- RD.82.GRC.2022 Bengaluru dated 08.02.2023. The appellant herein is one of the Directors and the properties acquired by him under the registered deed dated 07.06.2019 were provisionally attached. It would be useful to mention that the provisional order of attachment -9- NC: 2026:KHC:5689-DB MFA No. 7997 of 2024 HC-KAR was duly published as per law. However, no objection was placed by the appellant to such provisional attachment. The respondent No.1 being the Competent Authority filed the petition in Misc.No.715/2023 under Section 5(2) of the Act, seeking to make the order of interim attachment absolute in respect of the property attached vide notification dated 08.02.2023. The Trial Court, on considering the petition with the material on record passed the impugned order with detailed reasons, thereby making the attachment of the property absolute and ordered the respondent No.1 to realize the same through a public auction and the said order of the Trial Court is under challenge in this appeal.
7. The contention of the appellant is that he had resigned on 04.02.2015 and the same was accepted on 09.02.2015. The Trial Court, in its order at paragraph 14(q) on perusal of the records, has recorded a specific finding that the resignation afforded by the appellant was only to the position of the Vice-President of the respondent
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NC: 2026:KHC:5689-DB MFA No. 7997 of 2024 HC-KAR No.2 and not to the post of the Director. The Trial Court has rightly recorded the finding that the post of Vice- President and the post of Director are distinct and separate. It has also been clearly held that no material is placed on record to indicate that the appellant has given resignation to the post of the Director of the respondent No.2. The said finding of the Trial Court is on proper consideration of the material on record and the same does not call for any interference. Hence, the contention that the property was purchased after resignation to the post of the Director and cannot be attached, does not hold good and is required to be rejected. The contention that the former Director's case was considered by the Trial Court and the application for making the attachment was rejected, cannot be a ground for the appellant to seek for similar relief. In the case on hand, the Trial Court has recorded a clear finding that the appellant was a Director during the relevant period and his property is liable to be
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NC: 2026:KHC:5689-DB MFA No. 7997 of 2024 HC-KAR attached. Hence, the said contention is also required to be rejected.
8. The other contention of the appellant is that the delay of 61 days in filing the petition under Section 5(2) of the Act is non-condonable as the Act expressly mentions the period for filing the petition as 30 days and that the application of the provisions of the Limitation Act to condone the said delay is erroneous. Section 5(2) of the Act provides a period of 30 days from the date of the order made under Section 3 of the Act, for the Competent Authority to apply to the Special Court for making an order of attachment absolute. A further proviso is also added by way of the Karnataka Act No.06 of 2021, wherein an extension of 15 days can be sought by the Competent Authority to the Secretary to the Government, Revenue Department.
9. It would be useful to refer to paragraphs 26 to 31 of the decision of this Court in the case of SMT.
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NC: 2026:KHC:5689-DB MFA No. 7997 of 2024 HC-KAR YASHODA AND OTHERS Vs. THE COMPETENT AUTHORITY FOR M/s. SRI VASISTA CREDIT SOUHARDA CO-OPERATIVE LTD. AND ANOTHER1 which is extracted hereinbelow:
"26. Section 5(2) of the Act provides a period of 30 days from the date of the order made under Section 3 of the Act for the Competent authority to apply to the Special Court for making the order of attachment absolute. A proviso has been added to sub-Section 5(2) by the Karnataka Act No.06 of 2021, providing as follows:-
"Provided that, the Secretary to Government, Revenue Department, may on the request of the Competent Authority, extend this period by another fifteen days in cases having valid reasons and based on the merits of the case."
27. It is to be noticed here that there is no provision in the KPIDFE Act excluding the provisions of the Limitation Act for filing applications under the KPIDFE Act. The High Court of Madras in a series of decisions has held that where the applications are to be filed before a Special Court and where there is no express exclusion of the provisions of the Limitation Act, 1 MFA No.380/2025 dtd 20.01.2026
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NC: 2026:KHC:5689-DB MFA No. 7997 of 2024 HC-KAR then, the Limitation Act is applicable. The enactment being considered was the TNPID Act, which was in pari materia to the provisions of the KPIDFE Act before its amendment by introduction of the proviso to Section 5(2) of the KPIDFE Act.
28. The Apex Court in K.K. Baskaran v. State Represented by its Secretary, Tamil Nadu and others reported in (2011) 3 SCC 793, upheld the legal validity of the TNPID Act and held that the object of the Act to safeguard the interest of the gullible depositors from fraudulent activities of the financial establishments. It further held at Paragraphs No.28 to 30, which reads as follows:-
"28. In the case of the Tamil Nadu Act, the attachment of properties is intended to provide an effective and speedy remedy to the aggrieved depositors for the realisation of their dues. The offences dealt with in the impugned Act are unique and have been enacted to deal with the economic and social disorder in society, caused by the fraudulent activities of such financial establishments.
29. Under Sections 3 and 4 of the Tamil Nadu Act, certain properties can be attached, and there is also provision for interim orders for attachment after which a post-decisional hearing is provided for. In our opinion this is valid in view of the prevailing realities.
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30. The Court should interpret the constitutional provisions against the social setting of the country and not in the abstract. The Court must take into consideration the economic realities and aspirations of the people and must further the social interest which is the purpose of the legislation, as held by Holmes, Brandeis and Frankfurter, JJ. of the US Supreme Court in a series of decisions. Hence the courts cannot function in a vacuum. It is for this reason that courts presume in favour of constitutionality of the statute because there is always a presumption that the legislature understands and correctly appreciates the needs of its own people."
29. We notice that the proviso to Section 5(2) of the KPIDFE Act gives the Government in the Revenue Department a right to extend the period of 30 days by 15 more days for the Competent Authority to move the Special Court. However, such power given to the Government to extend the time by 15 more days cannot be construed as being a bar on the power of the Special Court under Section 5 of the Limitation Act. We are of the clear opinion that the proviso granting a power to the Government dehors the power of the Special Court to extend the time for making the application before the Special Court cannot, in any way, limit the powers of the Special Court.
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30. The Special Court is constituted under Section 10 of the KPIDFE Act. Such Court is clearly a "Court" for the application of the Limitation Act. As such, the Special Court exercises its power under Section 5 of the KPIDFE Act by virtue of its status as a Court. The time period provided under the Act and the power provided to the Government to extend the time for a period of 15 days thereafter cannot therefore, be construed as limiting the powers of the Special Court under Section 5 of the Limitation Act.
31. Further, we notice that the Special Court has considered the specific grounds raised in the application for condonation of delay and has found that in the nature of the application under Section 5(2) of the KPIDFE Act, sufficient cause has been shown to condone the delay in filing the application. To arrive at this conclusion, the Special Court has specifically considered the nature of the statute under which the proceedings are filed and the consequences of the rejection of Section 5(2) of the KPIDFE Act application on the ground of delay. We are of the opinion that such considerations cannot be totally lost sight of and the order of the Special Court cannot be said to
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NC: 2026:KHC:5689-DB MFA No. 7997 of 2024 HC-KAR be illegal or invalid due to the consideration of the said grounds."
10. The aforesaid enunciation of law by this Court makes it clear that the contention that the Limitation Act is not applicable to the Act is erroneous in law as the discretionary power of the Trial Court for condoning the delay in filing the applications under the Act, cannot be in anyway limited. It is also clearly held that there is no provision in the KPIDFE Act that expressly excludes the provisions of the Limitation Act from applying to the applications filed under the KPIDFE Act. Therefore, the contention of the appellant that the delay of 61 days in filing the petition under Section 5(2) of the Act is non- condonable, is required to be rejected.
11. Insofar as the contention of the appellant that the assets and liabilities of the respondent No.2 have not been determined and unless the same is determined, the property cannot be attached is concerned, the same is required to be rejected. The Trial Court, in paragraph
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NC: 2026:KHC:5689-DB MFA No. 7997 of 2024 HC-KAR 14(aa) of the impugned order has made a clear finding that the respondent No.1 had filed Misc.No.1080/2022 to submit the report regarding the assets and liabilities of the respondent No.2 as required under the Section 7(1) of the Act, and along with the said report, the respondent No.2 has also filed a separate report as to the assets and liabilities of respondent No.2. The Trial Court, on perusal of the report has clearly noticed that the assets of the respondent No.2 is Nil and the liabilities of the respondent No.2 is Rs.42,72,44,027/-. Hence, the contention of the appellant that the details of assets and liabilities are not produced and the same is required to be determined, is rejected.
12. The contention of the appellant is that the term of his position as a Director has already expired. However, the merit of the said contention cannot be gone into at this stage, especially since the said contention has not been raised before the Trial Court and is required to be rejected.
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13. For the aforementioned reasons, we do not find any merit in this appeal. Accordingly, the appeal is dismissed. Consequently, the pending applications stand disposed of.
Sd/-
(ANU SIVARAMAN) JUDGE Sd/-
(VIJAYKUMAR A. PATIL) JUDGE RV List No.: 3 Sl No.: 3