- 1 - HC-KAR NC: 2025:KHC:39119-DB MFA No. 5281 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25TH DAY OF SEPTEMBER, 2025 PRESENT THE HON'BLE MRS. JUSTICE ANU SIVARAMAN AND THE HON'BLE MR. JUSTICE RAJESH RAI K MISCELLANEOUS FIRST APPEAL NO. 5281 OF 2025 (KPIDFA) BETWEEN: SRI GOUTAM MALOO S/O LATE BHAWERLAL MALOO AGED ABOUT 54 YEARS RESIDING AT NO. D-1802 ETA GARDEN, MAGADI ROAD, BINNY MILL ROAD BENGALURU-560 023. …APPELLANT (BY SRI. BAPAT SAMPATH VINAYAKA RAO, ADV.) AND: 1. COMPETENT AUTHORITY FOR SRI KANVA SOUHARDA CREDIT CO-OPERATIVE LTD., AND KANVA GROUP OF COMPANIES, BENGALURU AND ADDITIONAL REGIONAL COMMISSIONER, OFFICE OF THE REGIONAL COMMISSIONER, BENGALURU DIVISION, BMTC BUILDING, 2ND FLOOR, K.H. ROAD, SHANTINAGAR, BENGALURU-560 027. 2. SRI KANVA SOUHARDA CREDIT CO-OPERATIVE LTD., AND KANVA GROUP OF COMPANIES REP. BY ITS CHAIRMAN AND ADMINISTRATOR OF THE BOARD OF Digitally signed by CHANNEGOWDA PREMA Location: High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:39119-DB MFA No. 5281 of 2025 ADMINISTRATORS, SRI. JUSTICE K. N. KESHAVANARAYANA, FORMER JUDGE, HIGH COURT OF KARNATAKA, RESIDING AT No.10/11, 'MANASA', SINGAPORE GARDENS, GREENFIELDS, GUBBALALA GATE, KANAKAPURA ROAD, BENGALURU-560 062. 3. SRI. M. NANJUNDAIAH S/O NARAYANAPPA, AGED ABOUT 50 YEARS, FOUNDER AND DIRECTOR OF SRI KANVA SOUHARDA CREDIT CO-OPERATIVE LTD., AND SRI. KANVA GROUP OF COMPANIES, RESIDING AT No.A-408, R/AT. BRIGADE APARTMENT, MALLESWARAM, BENGALURU-560 003. …RESPONDENTS (BY SRI. VEERESH R BUDIHAL, ADV., C/R) THIS MFA IS FILED U/S.16 OF THE KARNATAKA PROTECTION OF INTEREST OF DEPOSITORS IN FINANCIAL ESTABLISHMENTS ACT, AGAINST THE ORDER DT. 09.01.2024 PASSED IN MISC. No.1204/2023 ON THE FILE OF THE XCI ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, AND SPECIAL JUDGE FOR KPIDFE CASES, BENGALURU (CCH-92), ALLOWING THE PETITIONS FILED U/S.5(2) OF THE KARNATAKA PROTECTION OF INTEREST OF DEPOSITORS IN FINANCIAL ESTABLISHMENTS ACT, 2004. THIS APPEAL, COMING ON FOR ORDERS, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: - 3 - HC-KAR NC: 2025:KHC:39119-DB MFA No. 5281 of 2025 CORAM: HON'BLE MRS. JUSTICE ANU SIVARAMAN and HON'BLE MR. JUSTICE RAJESH RAI K ORAL JUDGMENT (PER: HON'BLE MRS. JUSTICE ANU SIVARAMAN) This appeal is filed as against the order of the Special Court dated 09.01.2024 passed under Section 5(2) of the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004 ('KPIDFE Act' for short). 2. It is submitted by the learned counsel for the appellant that the property was purchased by the appellant in the year 2020 and that the 3(2) Notification came to be issued on 30.08.2023. 3. It is further submitted that it is only where the assets of a Financial Establishment available for attachment are found to be less than the amount or value which such Financial Establishment is required to repay to the depositors that the other properties standing in the name of other persons can be attached. It is submitted - 4 - HC-KAR NC: 2025:KHC:39119-DB MFA No. 5281 of 2025 that the proceedings under Section 13 of the Act have to be taken and the Special Court has to be satisfied that the transfer of the property was not in good faith before an order under 5(2) can be issued. It is submitted that in the instant case, proceedings under Section 13 have not been taken. 4. In the above view of the matter, the order passed under Section 5(2) of the KPIDFE Act cannot be sustained. 5. Having considered the contentions advanced and in view of the fact that the proceedings under Section 13 of KPIDFE Act have evidently not been resorted to in the instant case, we are of the opinion that the order passed under Section 5(2) of the KPIDFE Act is not legally sustainable. 6. In the above view of the matter, the order under appeal is set aside, without prejudice to the rights - 5 - HC-KAR NC: 2025:KHC:39119-DB MFA No. 5281 of 2025 of the competent authority to take appropriate steps in accordance with law after following the due procedure. In view of disposal of the main appeal, pending applications, if any, stand disposed of. Sd/- (ANU SIVARAMAN) JUDGE Sd/- (RAJESH RAI K) JUDGE PN List No.: 1 Sl No.: 30