- 1 - HC-KAR NC: 2025:KHC:21518-DB MFA No. 6264 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 20TH DAY OF JUNE, 2025 PRESENT THE HON'BLE MRS. JUSTICE ANU SIVARAMAN AND THE HON'BLE DR. JUSTICE K.MANMADHA RAO MISCELLANEOUS FIRST APPEAL NO. 6264 OF 2024 (KPIDFA) BETWEEN: SRI. MANJEGOWDA S/O SRI. PUTTEGOWDA AGED ABOUT 51 YEARS RESIDENT OF No.453 VIKAS, 2ND MAIN, BHCS LAYOUT NEAR BRIGHT WAY SCHOOL BENGALURU-560 061 …APPELLANT (BY SRI. GURUDHATTA K., ADVOCATE) AND: 1. THE COMPETENT AUTHORITY FOR M/S. SRI VASISTA CREDIT SOUHARDHA CO-OPERATIVE LTD. 3RD FLOOR, OFFICE OF THE SPECIAL OFFICER AND COMPETENT AUTHORITY (IMA AND OTHER SCAM CASES) PODIUM BLOCK, V.V. TOWERS BENGALURU-560 001 REPRESENTED BY ITS COMPETENT AUTHORITY SRI. SUDARSHAN B.K. ASSISTANT COMMISSIONER O/O. THE SPECIAL OFFICER AND COMPETENT AUTHORITY AGED ABOUT 33 YEARS Digitally signed by CHANNEGOWDA PREMA Location: High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:21518-DB MFA No. 6264 of 2024 2. M/S. SRI VASISTA CREDIT SOUHARDA CO-OPERATIVE LTD. REP. BY ITS CHIEF EXECUTIVE OFFICER (CEO) VANKATANARAYANA K.V. No.1, I FLOOR, RAMANJANEYA ROAD HANUMANTHANAGARA BENGALURU-560 019 …RESPONDENTS (BY SRI. VEERESH R. BUDHIHAL, ADVOCATE FOR RESPONDENTS) THIS MFA IS FILED U/S.16 OF THE KARNATAKA PROTECTION OF INTEREST OF DEPOSITORS IN FINANCIAL ESTABLISHMENTS ACT, AGAINST THE ORDER DATED 12.08.2024 PASSED IN MISC.No.111/2024 ON THE FILE OF THE XCI ADDITIONAL CITY CIVIL AND SESSIONS JUDGE AND SPECIAL JUDGE FOR KPIDFE CASES, BENGALURU (CCH-92), ALLOWING THE PETITION FILED U/S.5(2) OF THE KARNATAKA PROTECTION OF INTEREST OF DEPOSITORS IN FINANCIAL ESTABLISHMENTS ACT. THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MRS. JUSTICE ANU SIVARAMAN and HON'BLE DR. JUSTICE K.MANMADHA RAO - 3 - HC-KAR NC: 2025:KHC:21518-DB MFA No. 6264 of 2024 ORAL JUDGMENT (PER: HON'BLE MRS. JUSTICE ANU SIVARAMAN) This appeal is preferred against an order dated 12.08.2024 passed in Misc. No.111/2024 by the XCI Additional City Civil and Sessions Judge, Bengaluru City, (CCH-92), which is a Special Court, under the Karnataka Protection of Interest of Depositors in Financial Establishments Act (for short 'KPIDFE' Act). 2. It is submitted by the learned counsel for the appellant that the appellant who was a member of respondent No.1- M/s Sri. Vasista Credit Souhardha Co- operative Limited, which is the financial establishment in the instant case, had availed loan of Rs.35 lakhs on 15.05.2019 with agreed interest at the rate of 15% per annum. It is submitted that the appellant was ready and willing to make the repayments in accordance with the repayment schedule, but was prevented from doing so only because the financial establishment had been closed and was non-operational due to RBI moratorium. - 4 - HC-KAR NC: 2025:KHC:21518-DB MFA No. 6264 of 2024 3. Learned counsel would contend that the present finding of the Special Court that the appellant has to repay an amount of Rs.55,23,885/- as on 29.12.2023 and Rs.1,410/- per day as interest is completely untenable, since the interest has to be calculated at the rate by which, the appellant and respondent No.1- Society had agreed with regard to recovery of instalments. It is submitted that the interest agreed is at the rate of 15% per annum and the repayment period was 120 months. 4. Learned counsel would also raise a contention that he was only a member of respondent No.1- Society, who availed loan and had no role in functioning of the Society. 5. Learned counsel appearing for the respondents, on the other hand, contends that the appellant had made no attempts to make the payments before the Special Court or the Competent Authority and that the contentions in that regard are only to be discarded. It is further - 5 - HC-KAR NC: 2025:KHC:21518-DB MFA No. 6264 of 2024 contended that payment of the amounts due under the loan cannot be waived of due to COVID-19 pandemic and lockdown and that the compound interest for the period of lockdown is all that is liable to be waived in terms of the Guidelines and Circulars issued by the Reserve Bank of India (for short 'RBI'). 6. Having considered the contentions advanced and in view of the specific provisions of Section 3 and 5 of the KPIDFE Act, we are of the opinion that the contentions raised by the learned counsel for appellant that the appellant is not liable to be called upon to make the payments to the Competent Authority at one go and that he should be permitted to pay the amounts in instalments cannot be accepted. However, we are of the opinion that the amounts which were out standing can be realised even by the Competent Authority only by applying the rate of interest that was agreed to between the parties i.e., the appellant and the financial establishment. Further, any concessions that were due under the competent circulars - 6 - HC-KAR NC: 2025:KHC:21518-DB MFA No. 6264 of 2024 during Covid-19 lockdown period are also liable to be granted to the appellant. 7. In the above view of the matter, appeal is disposed of modifying the order of the Special Court as under; (i) The appellant is liable to pay the principal amount i.e., Rs.34,31,696/- with interest amounting to Rs.12,34,265/- as on 29.04.2022 as agreed between the parties. (ii) The competent authority shall make necessary calculations and inform the appellant of the exact amount due under the loan by applying the interest at the rate of 15% per annum and granting all benefits, which were available to the appellant. In case such calculation is made and informed to the appellant within two weeks from today, the amounts due under the said calculation shall be remitted by the appellant within a period of four weeks thereafter. - 7 - HC-KAR NC: 2025:KHC:21518-DB MFA No. 6264 of 2024 (iii) The amount of Rs.27,61,943/- already in deposit pursuant to the interim order of this Court, shall be given due credit to while making the calculations as directed above. (iv) Once the payments as directed above are made, the original documents of the property in question shall be returned to the appellant. Sd/- (ANU SIVARAMAN) JUDGE Sd/- (DR.K.MANMADHA RAO) JUDGE PN List No.: 1 Sl No.: 10