Karnataka High Court
Belve Vyavasaya Seva Sahakara Sanga Ltd vs The State Of Karnataka on 30 August, 2024
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NC: 2024:KHC:34990
WP No. 8480 of 2019
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 30TH DAY OF AUGUST, 2024
BEFORE
THE HON'BLE MR. JUSTICE K. V. ARAVIND
WRIT PETITION No. 8480 OF 2019 (GM-ST/RN)
BETWEEN:
1. BELVE VYAVASAYA SEVA SAHAKARA SANGA LTD.,
BELVE, KUNDAPURA TALUK,
KUNDAPURA -576 201
REPRESENTED BY THE CHIEF OFFICER.
...PETITIONER
(BY SRI CHANDRANATH ARIGA K., ADVOCATE)
AND:
1. THE STATE OF KARNATAKA
BY ITS SECRETARY, DEPARTMENT OF REVENUE,
REGISTRATION AND STAMPS
BENGALURU-560 001.
Digitally signed 2. THE SUB REGISTRAR
by VALLI SHANKARANARAYANA-576 227
MARIMUTHU UDUPI DISTRICT.
Location: High ...RESPONDENTS
Court of
Karnataka (BY SRI S.H. RAGHAVENDRA, AGA FOR R1 & R2)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO
QUASH THE ENDORSEMENT DATED 30.11.2018 ISSUED BY R-2
(ANNX-D). DIRECT THE R-2 TO REGISTER THE SALE DEED OF
THE SCHEDULE PROPERTY AS AND WHEN THE SALE DEED IS
SUBMITTED.
THIS WRIT PETITION COMING ON FOR PRELIMINARY
HEARING IN 'B' GROUP THIS DAY, ORDER WAS MADE THEREIN
AS UNDER:
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NC: 2024:KHC:34990
WP No. 8480 of 2019
CORAM: HON'BLE MR. JUSTICE K. V. ARAVIND
ORAL ORDER
Heard Mr.Chandranath Argia, learned counsel for the petitioner and Mr.S.H.Raghavendra, learned Additional Government Advocate for respondent Nos.1 and 2.
2. This petition is filed under Article 226 of the Constitution of India seeking to quash the endorsement No.UPN/SN/R.G.N./1/2018-19, dated 30.11.2018 issued by Sub Registrar, Shankaranarayana, Udupi District - respondent No.2 at (Annexure-D).
3. The petitioner is a Society registered under Karnataka Co-operative Societies Act (hereinafter referred to as 'the Act' for short). The petitioner extended loan to Mr.Raviraj in the course of its business. The borrower failed to repay the loan and a dispute was raised under Section 70 of the Act. The borrower mortgaged land bearing Survey No.315 measuring 0.55 Acres of Belve Village I Kundapura Taluk. On 26.08.2019, an award was passed against the borrower to pay a sum of -3- NC: 2024:KHC:34990 WP No. 8480 of 2019 Rs.3,71,980/- with 16% interest and another sum of Rs.2,54,508/- with 16% interest p.a.
4. The mortgaged property was attached, notified for auction and sold in auction sale on 08.09.2018. The petitioner submitted sale certificate in favour of the purchaser for registration before the respondent No.2. Respondent No.2 refused to register by stating that the land sold in the auction is a granted land and prior permission of the government is required.
5. Sri. K. Chandranath Ariga, learned advocate for the petitioner submits that the property in question was mortgaged as a security against the loan lent to Sri. Raviraj. The purpose of securing the property is to realize the loan amount by proceeding against the security. It is submitted that when the Karnataka Scheduled Castes and Scheduled Tribes (Prohibition of Transfer of Certain Lands) Act, 1978 (for short 'PTCL Act') does not impose any restriction to mortgage the property, it cannot be held that the said PTCL Act imposes a restriction on realization of -4- NC: 2024:KHC:34990 WP No. 8480 of 2019 the loan amount by proceeding against the secured property.
6. It is submitted that the petitioner is a Co- operative Society and engaged in the business of banking. The transfer of land by the petitioner is exempt from application of the provisions of PTCL Act.
7. Sri. S. H. Raghavendra, learned Additional Government Advocate by relying on the statement of objections submits that the transfer of granted land is protected under Section 4 of the PTCL Act. The auction sale of the property would amount to transfer. Further submits that exemption is to a Bank, the petitioner is a Co-operative Society.
8. It is the contention of the learned Additional Government Advocate that the grant of land is in favour of a person belonging to Scheduled Caste/Scheduled Tribe Community. Section 4(2) of the PTCL Act prohibits alienation of the granted property. -5-
NC: 2024:KHC:34990 WP No. 8480 of 2019
9. Considered the submissions of learned counsel for the parties and perused the writ petition papers.
10. The petitioner is a Co-operative Society engaged in the business of banking. The petitioner has lent money to one Raviraj. Sri Raviraj(borrower) committed default, resulting in a dispute under Section 70 of the Co-operative Societies Act, wherein an award was passed. Execution proceedings were initiated to execute the award, which resulted in attachment and sale of the property in question. In view of the refusal of respondent No.2- sub registrar to register the sale certificate, the present petition under Article 226 of the Constitution of India.
11. Sections 3(1)(a)(i) and 7 of the PTCL Act are reproduced for easy reference.
3. Definitions.- (1) In this Act, unless the context otherwise requires,-
(a) "bank" means,-
(i) a co-operative society (including a co-
operative bank);
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NC: 2024:KHC:34990 WP No. 8480 of 2019 "7. Exemption.- Nothing in this Act shall apply to the transfer of granted lands in favour of the Government, the Central Government, a local authority or a bank either before or after the commencement of this Act."
12. Section 7 of the Act extends protection from applicability of transfer of granted lands in favour of a Bank. Section 3(1)(a)(i) of the PTCL Act defines Bank, which covers a co-operative Society including a Co- operative Bank. A bare perusal of the above provisions would make it clear that a co-operative society is a Bank for the purpose of the PTCL Act. Section 7 of the PTCL Act exempts transfer in favour of a Bank.
13. The issue of applicability of PTCL Act regarding transfer of land, protected under Section 4 of the PTCL Act while auction sale of the granted lands for default in repayment of the loans is considered by this Court in W.P. No.57108 of 2014 dated 05.04.2023. This Court in the above judgment has taken the following view, "25. A perusal of the above would indicate that a Bank would also include a Co-operative society, including a Co-operative Bank. Thus, there being -7- NC: 2024:KHC:34990 WP No. 8480 of 2019 no restriction on a grantee of agricultural land to avail himself of a loan from any Bank for the purpose of agricultural activities. In the event of there being a default in repayment of the said loan, the borrower cannot subsequently contend that on account of the embargo under Section 4 of the PTCL Act, the property cannot be brought for sale. If such a stand is accepted, then no land which has been mortgaged by a grantee belonging to a Scheduled Caste or Scheduled Tribe Community, can be brought for sale on a default of repayment of the loan. It is for that reason that an exception or an exemption is created under Section 7 of the PTCL Act, and if there is a default in the repayment of the loan, the Bank could be well within its rights to bring the said property for auction, exercising its mortgage rights."
14. The facts and the position of law involved in the judgment referred to supra and in the present case are similar. The controversy is no more res integra in view of the law laid down in the above referred judgment. The issue raised in the petition is covered by the judgment in W.P. No.57108 of 2014 supra. Accordingly, the following, ORDER
(i) The writ petition is allowed.
(ii) The endorsement at Annexure D dated 30.11.2018 issued by respondent No.2-
-8- NC: 2024:KHC:34990 WP No. 8480 of 2019 Sub Registrar, Shankaranarayana, Udupi District, is hereby quashed. (iii) The respondent No.2 is directed to
register the sale certificate / sale deed relating to the property bearing Sy.No.315 measuring 0.55 acres of Belve Village, Kundapura Taluk without insisting the requirement of prior permission of the Government.
(iv) The respondent No.2 is directed to register the sale certificate / sale deed as the case may be within a period of one week from the date of presentation of the sale deed subject to payment of necessary stamp duty in accordance with law.
Sd/-
(K. V. ARAVIND) JUDGE VBS List No.: 1 Sl No.: 22