SRI R SHANKARAPPA S/O RAMAKRISHNAPPA vs. THE STATE OF KARNATAKA

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 29TH DAY OF OCTOBER 2015 BEFORE THE HON’BLE MR. JUSTICE ANAND BYRAREDDY WRIT PETITION No.1112 OF 2012 (GM-RES) CONNECTED WITH WRIT PETITION No.12518 OF 2013 (GM-RES) IN W.P.No.1112/2012 BETWEEN: Sri. Udaya Rama Yermal, Son of R.K.Thingalaya, Aged 52 years, Resident of 3rd Cross, WIDIA Layout, Opp. Income Tax Layout, Vijayanagar, Bangalore 560 040. …PETITIONER

(By Shri Padmanabha V Mahale, Senior Advocate for Shri Naveed Ahmed, Advocate)

AND:

Bangalore Urban District,

Bangalore.

Bangalore South Taluk,

Bangalore.

Bank Limited,

Mumbai,

Represented by its Manager.

Govt. of Maharashtra Co-operative Department,

No.89, GBCB House,

Bhuleshwar,

Mumbai.

Society Limited,

By its Secretary,

Ideal Homes Township,

Mysore Road,

Bangalore.

Rajarajeshwari Nagar Sub Range,

Bruhath Bangalore Mahanagara Palike,

Rajarajeswarinagar,

Bangalore.

Rajarajeswari Nagar Police Station,

Rajarajeswarinagar,

Bangalore. …RESPONDENTS

3 (By Smt. Pramodini Krishnan, Government Pleader for Respondent Nos. 1, 2 and 7; Shri Rishabh Shah and Smt. Nandita Haldipur, Advocates for Respondent No.3; Shri N. Ramachandra, Advocate for Respondent No.5; Shri S.G.Muniswamy, Advocate for Respondent No.4; Shri B.V. Muralidhar and Shri Aswin S Haladi, Advocates for Respondent No.6) *****

This Writ Petition is filed under Articles 226 and 227 of the Constitution of India praying to quash the order of attachment at Annexure-F dated 2.12.2010 issued by the Executing Court of Special Recovery and Sales Officer, Mumbai -13 and quash the Communication of the R1 and R2 dated 20.10.2011 dated 11.11.2011, communicated between R2 and R7. The communication between the 1st and 2nd respondent dated 8.12.2011 and the entry in the property register extract dated 24.11.2011 bearing property No.112/17/520 based on the order of the R1 Deputy Commissioner and the auction notice of the R2 dated 9.12.2011 vide Annexure-J, K, L, M and N respectively which inclusive of all consequently reliefs.

IN W.P. No.12518/2013

BETWEEN:

Sri. R. Shankarappa, Son of Ramakrishnappa, Aged about 55 years, Resident of 31, 18th Cross, 34th Main, Ideal Home Township, Rajarajeshwarinagar, Bangalore 560 098.

…PETITIONER

4 (By Shri M.R.Rajagopal and Shri H.N.Basavaraju, Advocates)

AND:

Its Secretary,

Department of Co-operation,

Vidhana Soudha,

Bangalore 560 001.

Bangalore Urban District,

Bangalore.

Bangalore South Taluk,

Bangalore 560 001.

Bank Limited,

Represented by its Managing Director, GBCB House, 89, Bhuleshwar, Mumbai,

Govt. of Maharashtra Department of Co-operation,

Office at No.89, GBCB House,

Bhuleshwar,

Mumbai -02.

Society Limited,

By its Secretary,

Ideal Homes Township,

Mysore Road,

Bangalore 560 026.

Rajarajeshwari Nagar Sub Range,

Bruhath Bangalore Mahanagara Palike,

Rajarajeswarinagar,

Bangalore. 560 098.

This Writ Petition is filed under Articles 226 and 227 of the Constitution of India praying to quash the proceedings dated 21.11.2011 vide Annexure-R and also the letter dated 20.10.2011 of the second respondent to the third respondent as per Annexure-Q and etc;

These Writ Petitions coming on for Preliminary Hearing in ‘B’ Group this day, the court made the following:

O R D E R

These petitions are disposed of by this common order as they pertain to the same subject matter.

7 of the petitioner under a registered sale deed. Such a sale deed has not been executed till date. The petitioner claims to be a partner of M/s Kalyani Exporters, which was engaged in garment business. The partnership firm consisted of two others along with the petitioner and they were carrying on business from premises no.4, Ujagar Industrial Estate, Deonar, Mumbai. It transpires that the firm had borrowed the loan from the third respondent - Co-operative bank, which is governed by the Maharashtra Co- operative Societies Act, 1960 (Hereinafter referred to as the ‘MCS Act’, for brevity) and Rules thereunder. It is the claim of the petitioner that the property in question was not subject matter of any mortgage or security for any loan extended by the said bank. However, there was a loan transaction by the firm with the said bank and the default having occurred in repayment of the loan, the third respondent had instituted a dispute under the provisions of the MCS and there was an award in its favour after adjudication. And in

8 execution of the award, certain properties were brought to sale, but the award having remained unsatisfied, the provisions of the Revenue Recovery Act, 1890 (Hereinafter referred to as the ‘RR Act”, for brevity) was invoked in order to proceed against the above said property, which was subject matter of lease- cum-sale agreement in favour of the petitioner herein. It is in that background, that a sale notice was issued pursuant to the invocation of the provisions and the matter having transferred by the Collector, Mumbai to the Deputy Commissioner, Bangalore Urban District, respondent no.1 and the said authority thereafter having issued an auction sale notice dated 9.12.2011 seeking to bring the property to sale, that the present petitions are filed.

9 same property said to have been executed by the petitioner in WP 1112/2012 in favour of the petitioner in WP 12518/2013 and that suit having been decreed, the petitioner in WP 1112/2012 claims a right over the property and therefore has sought to protect his interest by filing a petition challenging the very sale notice issued by the authorities.

Respondent no.3 has entered appearance through counsel and has filed statement of objections to meet the petition averments.

10 which have been invoked in seeking to proceed against the present property. He would hence submit that it is wholly without jurisdiction for respondent no.3 to have invoked the provisions of the RR Act.

It is secondly contended that insofar as the property in question is concerned, admittedly, it is subject matter of a lease- cum-sale agreement, whereby the petitioner is a mere lessee in respect of the premises, till such time there is conveyance effected by execution of a registered sale deed in favour of the petitioner and till such time, there is no ownership vested in the petitioner. Hence, in seeking to recover the alleged arrears from the petitioner, the property being brought to sale would be well without authority of the third respondent - bank nor would it be possible for the revenue authorities to bring the property to sale, purportedly in exercise of the power under the provisions of the RR Act. The respondent – bank could only claim whatever rights the petitioner possessed in the property and could not enlarge the scope of that right to one of absolute

11 right in seeking to bring the property to sale. Hence, the learned Senior Advocate would submit that from a reading of the provisions of the MCS Act and the Rules thereunder, and the provisions of the RR Act, it is evident that there is no reference to the RR Act under the provisions of the MCS Act and the Rules and therefore, respondent no.3 as well as the authorities have over-reached in seeking to proceed against the property in a wholly unlawful and irregular manner, which would have to be set at naught.

12 said Central Act is in place. For otherwise, the respondent – bank would be left with no remedy to recover arrears or it would also be possible for a debtor to put his properties or assets outside the reach of the bank, by simply transporting it to an outside State. It is to counter such a situation that the very enactment is on the statute book.

The learned Counsel would further point out that insofar as the contention that the amount due to the bank cannot be recovered as arrears of land revenue, is also not a correct statement, for Section 101(3) of the MCS Act provides that any amount covered under the Recovery Certificate issued by the Registrar of Societies would be treated as arrears of land revenue. Further, the Act provides that it shall be lawful for the Collector and the Registrar to take precautionary measures not only under the Bombay Land Revenue Code, 1879, but also by recourse to law. Therefore, invocation of the provisions of the RR Act is in order and there can be no fault found in the procedure that has been adopted.

It is further pointed out that in so far as the contention that the respondent – bank ought to have taken recourse to the provisions of the Code of Civil Procedure, 1908 or such other Code, in seeking transfer of the award or decree to be executed through a competent court is concerned, is also not permissible, for the special mechanism that is provided. In that, a Recovery Certificate can be issued only by a special authority named in the Act and that authority, for a limited purpose of Article 136 of the Schedule to the Limitation Act,1963, could be treated as a Civil Court, but not in the true sense of the term. Therefore, the question of invoking the provisions of the Code of Civil Procedure, 1908, is not contemplated. It is in this manner that the learned counsel for respondent no.3 seeks to explain the reasons for invoking the provisions of the RR Act.

Incidentally, an identical issue having come up before the Bombay High Court, it had been considered and answered as follows:

“4. The only question is whether the respondent No.2 is prohibited from recovering the amount as arrears of land revenue on account not being Government dues. It is no doubt true that respondent No.3 though a statutory authority is not a department of the State of Gujarat. The issue is whether the demand of the respondent No.3 can be recovered as arrears of land revenue in district other than district in the State of Gujarat. The contention of the learned Counsel for the petitioner is that at the highest that may have been possible if the recovery is to be made in the same State. However, as it is not Government dues, the recovery cannot be made as arrears of land revenue in the district which is not falling in the State of Gujarat. We are afraid, we cannot subscribe to that view or for that matter the judgment of the learned Single Judge of Kerala High Court in the case of Dat Pethe (supra). The language of Sections 3 and 5 of the Recovery Act makes it clear that not only arrears of land revenue can be recovered under the Recovery Act but all sums recoverable as arrears of land revenue. In other words, any amount can be recovered as long as it is the amount which is capable of being recovered as arrears of land revenue. In the instant case, the Development Act itself permits the recovery of dues as arrears of

15 land revenue. Once that be the case, the amount would fall under the expression “sum recoverable as arrears of land revenue”. The purpose behind the Revenue Recovery Act is to enable the Collector of District wherein the property is situated to recover from the defaulter all sums of money which are capable of being recovered either as land revenue or which can be recovered as arrears of land revenue. The object behind it is that there must be public mechanism or body which can recover the amounts from a defaulter in a district where he has property considering that these are public dues. If the contention of the petitioners is to be accepted then the amount payable by public bodies which are recoverable as arrears of land revenue say like in the instant case outside the State of Gujarat would be incapable of being so recovered. Such bodies will have to file suits where the defendant resides or where the property is or not the decree transferred for execution. This by itself would lead on many occasions to claims being time barred or a lengthy process. The aim of the Legislature was to avoid such situations and to permit recovery under the provisions of the Recovery Act which is a Central enactment of public dues capable of being recovered as arrears of land revenue. We therefore, have no hesitation

16 in holding that the amount recoverable under the provisions of the Recover Act as arrears of land revenue can/be recovered by respondent No.2 as arrears of land revenue in the State of Maharashtra.”

Insofar as the second contention that there is no right in the bank to bring the property to sale, as in the proceeding initiated against the petitioner, it could at best claim a right which the petitioner possessed in the property is concerned. The learned counsel would endeavour to interpret the terms of the lease-cum-sale agreement in favour of the petitioner to contend that when there is power conferred on the petitioner to mortgage the property, it does contemplate a right being vested in the petitioner and especially so, when the document is a registered document under section 17 of the Registration Act, 1908, it could not really be considered as mere agreement of

17 sale with right to possession. He is not only given the right to construct on the property, but also to mortgage it to raise a loan for such construction. When that being the case, the contention that there is limited right in the petitioner and it could not be enlarged into an absolute right, is not wholly correct.

In any event, the learned counsel would submit that if the first limb of argument is accepted and taken that the procedure adopted by invoking the provisions of the RR Act is in order, then it would follow that the respondent bank should be permitted to claim whatever right which the petitioner possessed and to work out its remedies accordingly. And even if the sale notice is set aside, the attachment cannot be lifted and the attachment to the extent that it would enure to the benefit of the bank, ought to be set aside, with liberty to the petitioner to proceed in consonance with the law and fact insofar as the property is concerned and the scope of the right which the petitioner would hold in the property. Notwithstanding the same having been subject to a judgment and decree and since

18 the decree holder also claims under the petitioner, the learned counsel would submit that it could be followed into the hands of the decree holder. These aspects can be left open for being worked out by the respondent – bank in appropriate fashion.

19 what the petitioner possessed. It is with reference to the same that the respondent – bank would now have to work out its remedies and to proceed in accordance with law. The other question as to whether the purchaser from the petitioner could also be bound by the attachment is a question that is left open to be worked out before the appropriate authorities.

The petitions are allowed in part. The sale notice and the consequential notice are quashed.

Sd/-

JUDGE