- 1 - HC-KAR NC: 2025:KHC:33479 WP No. 4772 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 28TH DAY OF AUGUST, 2025 BEFORE THE HON'BLE MR. JUSTICE R. NATARAJ WRIT PETITION NO. 4772 OF 2025 (CS-RES) BETWEEN: 1. SMT.PUSHPAVATHI W/O LATE BALAKRISHNA GOWDA AGED 62 YEARS 2. M. MANINDRA S/O LATE BALAKRISHNA GOWDA AGED 36 YEARS 3. M. YATHINDRA S/O LATE BALAKRISHNA GOWDA AGED 34 YEARS ALL PETITIONERS NOS.1 TO 3 ARE RESIDENTS OF MERKAJE HOUSE, DODDATHOTA, AMARAMUDNOOR VILLAGE, SULLIA TALUK, DAKSHINA KANNADA DISTRICT, PIN-574248 …PETITIONERS (BY SRI. NAGARAJ S. JAIN, ADVOCATE) AND: 1. STATE OF KARNATAKA REP BY ITS PRINCIPAL SECRETARY, CO-OPERATIVE DEPARTMENT, M.S. BUILDING, AMBEDKAR VEEDHI, BENGALURU-560001. 2. ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES PUTTURU SUB-DIVISION CAMPCO BUILDING, MAHAMAYI TEMPLE ROAD, PUTTURU-574201, S.K. DISTRICT. Digitally signed by SUMA Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:33479 WP No. 4772 of 2025 3. RECOVERY OFFICER (KCSR 441) OF CO-OPERATIVE SOCIETIES SOUTH CANARA DISTRICT CENTRAL CO-OPERATIVE BANK LTD., KODIYABAILU, MANGALURU-575003. 4. YENEKALLU PRIMARY AGRICULTURE PATTINA CO-OPERATIVE SOCIETY YENEKALLU, KADABA TALUK, SOUTH CANARA DISTRICT-574238 REP BY ITS CHIEF EXECUTIVE OFFICER MR. RATHAN K 5. NITHIN B. SON OF GOPALAKRISHNA GOWDA, AGE: MAJOR, BOODIPALLA HOUSE, YENEKALLU, KADABA TALUK, SOUTH CANARA DISTRICT. AMENDMENT CARRIED OUT AS PER THE ORDER DATED 04.04.2025. …RESPONDENTS (BY SRI. HARISHA A.S., ADDITIONAL GOVERNMENT ADVOCATE FOR RESPONDENT NOS.1 TO 3; SRI. PUNDIKAI ISHWARA BHAT, ADVOCATE FOR RESPONDENT NO.4; SRI. ARUN KUMAR, ADVOCATE FOR RESPONDENT NO.5) THIS WP IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE FORM NO.8 AND FORM NO.9 BEARING DISPUTE NO.390/2008-09 AND CEP NO.1162/2009-10 BOTH DATED 17.12.2024 ISSUED BY THE RESPONDENT NO.4 AT ANNEXURES-E AND F RESPECTIVELY AND QUASH THE PUBLIC AUCTION SALE NOTICE PUBLISHED IN THE NEWSPAPER SUDDI BIDUGADE ON 10.02.2025 ISSUED BY THE RESPONDENT NO.3 AT ANNEXURE-G AS ARBITRARY AND ILLEGAL AND ETC. - 3 - HC-KAR NC: 2025:KHC:33479 WP No. 4772 of 2025 THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE R. NATARAJ ORAL ORDER The petitioners have called in question Form Nos.8 and 9 of even date i.e. 17.12.2024 bearing Dispute No.390/2008-09 and C.E.P No.1162/2009-10, issued by the respondent No.3. They have also challenged the public auction notice published by the respondent No.3 in ‘Suddi Bidugade’, Kannada newspaper dated 10.02.2025. They have also sought for a writ in the nature of certiorari to quash the auction proceedings held on 19.02.2025 in Dispute Nos.390/2008-09 and 391/2008-09 and CEP Nos.1162/2009-10 and 1163/2009-10 as arbitrary and illegal. They have sought for a writ in the nature of mandamus to direct respondent No.3 to enquire into the matter and pass appropriate orders before taking any precipitative action in respect of the petition schedule property. 2. The petitioners contend that the petitioner No.1 is the wife and petitioner Nos.2 and 3 are the children of Sri. M. Balakrishna Gowda, who was the owner of certain extents of lands bearing Sy. Nos.201/1, 201/7, 201/2B, 286/3, 223/1B - 4 - HC-KAR NC: 2025:KHC:33479 WP No. 4772 of 2025 and 203/2 of Amaramudnuru village, Sullia Taluk, he having purchased them in terms of a sale dated 25.11.2005. The said Sri M. Balakrishna Gowda died on 20.10.2016 leaving behind the petitioners who succeeded to his estate. The names of the petitioners were entered in the revenue records of the aforesaid properties pursuant to acceptance of mutation in M.R No.H 47/2018-2019. The petitioners contend that they were shocked to know that the respondent No.3 had caused auction notices in Form Nos.8 and 9 of even date i.e. 17.12.2024 and a paper publication was also caused in ‘Suddi Bidugade’, Kannada newspaper on 10.02.2025 for sale of the aforesaid properties in public auction. The petitioners approached the respondent No.4 and enquired about the matter. Thereupon, respondent No.4 handed them over a copy of the award allegedly passed on 26.06.2009 by the respondent No.2 against one Sri Ramanna Gowda and others for a sum of Rs.9,73,907/-. The petitioners contend that as per the said award, Sri Ramanna Gowda had borrowed a loan from respondent No.4 and the award directed him to repay a sum of Rs.9,73,000/- with interest stated therein. They contend that their predecessor Sri M. Balakrishna Gowda was not a party in the award. They also claimed that Sri - 5 - HC-KAR NC: 2025:KHC:33479 WP No. 4772 of 2025 M. Balakrishna Gowda had not availed any loan from the respondent No.4 and had not mortgaged any of the aforesaid properties and he was not even a member of the respondent No.4. The petitioners, therefore, alleged that Sri Ramanna Gowda colluded with the respondent No.4 and had created some documents so as to encumber the properties that belonged to Sri M. Balakrishna Gowda. The petitioners are therefore before this Court challenging the sale notices as well as the paper publication bringing the aforesaid properties for sale in a public auction. 3. Learned counsel for the petitioners referred to the award passed by the respondent No.2 and contended that Sri M. Balakrishna Gowda was not a party to the proceedings before the respondent No.2 and there was no reference of any power of attorney executed by Sri Balakrishna Gowda in favour of Sri Ramanna Gowda or the mortgage deed allegedly executed by Sri Ramanna Gowda in favour of the respondent No.4. He contends that the properties of Sri M. Balakrishna Gowda are proceeded against to recover the dues of Sri Ramanna Gowda. Hence, he contends that the awards are passed behind the back of the petitioners and therefore, - 6 - HC-KAR NC: 2025:KHC:33479 WP No. 4772 of 2025 notwithstanding the remedy of an appeal against the award and notwithstanding raising claims before the Sale Officer as provided under Rule 41 of the Karnataka Co-operative Societies Rules, 1960 (for short, ‘the Rules, 1960’), the petitioners are entitled to question the action taken by the respondent No.3 to proceed against the properties. 4. Respondent No.4 has filed statement of objections inter alia stating that the petition schedule property belonged to Sri M. Balakrishna Gowda and that he had executed a power of attorney on 10.07.2006 in favour of Sri Ramanna Gowda, son of Sri Ugrappa Gowda, authorizing him to avail loan from the respondent No.4. It is contended that in the power of attorney, Sri Ramanna Gowda was authorized to execute necessary documents in favour of the respondent No.4 and also mortgage the properties mentioned above as security for the loan. Based on the power of attorney, Sri Ramanna Gowda, on behalf of Sri M. Balakrishna Gowda, availed a mortgage loan of Rs.8,00,000/- from the respondent No.4 and mortgaged the schedule property on 27.09.2006 in favour of the respondent No.4. It is also claimed that Sri Ramanna Gowda, the power of attorney holder of Sri Balakrishna Gowda availed Mangala - 7 - HC-KAR NC: 2025:KHC:33479 WP No. 4772 of 2025 Kissan Credit Card (MKCC) loan of Rs.3,82,500/- (stated as Rs.3,82,000/- in para No.2 of the statement of objections) from the respondent No.4 on 21.12.2006 and that the properties mentioned above were offered as security for the MKCC loan. It is claimed that Sri Ramanna Gowda executed necessary loan documents in favour of the respondent No.4 on 23.09.2006 and 21.12.2006 respectively. Later both Sri Ramanna Gowda and Sri Balakrishna Gowda became defaulters and hence, respondent No.4 called upon Sri Balakrishna Gowda to remit the outstanding amount due in its favour vide notice dated 09.11.2007. Sri Balakrishna Gowda replied to the notice vide his letter dated 24.11.2007 and expressed inability to remit the outstanding amount and sought for time till the end of January 2008. However, Sri Balakrishna Gowda failed to honour his undertaking. As such, the respondent No.4 filed a claim petition in Dispute No.390/2008-09 in respect of mortgage loan and in Dispute No.391/2008-09 in respect of MKCC loan before the respondent No.1 against Sri Ramanna Gowda, who was the member of the respondent No.4 – Society. In spite of service of notice of the proceedings, Sri Ramanna Gowda remained silent. Hence, respondent No.1 passed separate awards dated - 8 - HC-KAR NC: 2025:KHC:33479 WP No. 4772 of 2025 26.06.2009 in Dispute No.390/2008-09 and Dispute No.391/2008-09. After the awards, either the borrower Sri Ramanna Gowda or the mortgagor Sri Balakrishna Gowda remitted the outstanding amount to the respondent No.4 which was forced to file Execution Petitions, namely, C.E.P No.1162/2009-10 in respect of Dispute No.390/2008-09 and C.E.P No.1163/2009-10 in respect of Dispute No.391/2008-09. They admit that Sri Balakrishna Gowda died on 20.10.2016 and Sri Ramanna Gowda also died in the year 2017. It is contended that the Recovery Officer proceeded to bring the mortgaged properties for sale and in that regard, issued a newspaper publication on 10.02.2025 proposing to sell the mortgaged properties in a public auction on 19.02.2025. It is contended that the auction notices were sent to the petitioners in Form Nos.8 and 9. It is claimed that at the auction, seven bidders participated and the highest bid was submitted by one Mr. Nitin B (respondent No.5) who quoted Rs.50,02,000/- and the same was accepted. Accordingly, the properties were ordered to be sold to Mr. Nitin B. The auction purchaser deposited 15% of the bid amount on the same day and that the balance could not be deposited in view of the interim order - 9 - HC-KAR NC: 2025:KHC:33479 WP No. 4772 of 2025 dated 18.02.2025 granted by this Court in W.P. No.4772/2025. It is contended that the respondent No.3 is not in a position to issue sale confirmation or sale certificate in favour of the auction purchaser even though he is ready and willing to deposit the remaining portion of the bid amount. Further, it is claimed that the petitioners have an alternate remedy of an appeal under Section 105 of the Karnataka Co-operative Societies Act, 1959 (for short, ‘the Act’) before the Tribunal and this writ petition under Article 226 of the Constitution of India is not maintainable. With these and other contentions, the respondent No.4 contended that the impugned auction notices cannot be set at nought in proceedings under Article 226 of the Constitution of India. 5. Learned counsel for respondent No.4 reiterated the above and vehemently contended that Sri M. Balakrishna Gowda, the predecessor of the petitioners had executed a power of attorney authorizing the principal borrower/Sri Ramanna Gowda to mortgage the properties in question and accordingly, a mortgage deed was executed by Sri Ramanna Gowda in favour of respondent No.4 which was duly registered. He contends that since the loan was outstanding, the - 10 - HC-KAR NC: 2025:KHC:33479 WP No. 4772 of 2025 respondent No.4 did not have any other option than to proceed against the mortgaged assets. He contends that the predecessor of the petitioners was informed by the respondent No.4 on 09.11.2007 about the outstanding amount and that he had issued a reply on 24.11.2007 admitting the execution of the mortgage. He, therefore, contends that the predecessor of the petitioners knew very well about the mortgage deed executed in respect of the properties in question and therefore, the petitioners cannot contend to the contrary. He, therefore, submits that no interference is warranted with the proceedings brought about by the respondent No.3 to sell the properties that are mortgaged. 6. Learned Additional Government Advocate for respondent Nos.1 to 3 also supported the contentions of the learned counsel for the respondent No.4. 7. Petitioners have filed rejoinder to the statement of objections filed by the respondent No.4 inter alia stating that the general power of attorney produced by the respondent No.4 was a document created by Sri Ramanna Gowda in collusion with the respondent No.4 and that Sri Balakrishna Gowda was - 11 - HC-KAR NC: 2025:KHC:33479 WP No. 4772 of 2025 not a member of the respondent No.4 and he had not availed any loan from respondent No.4 and the petition schedule property was mortgaged in favour of DCC Bank, Sullia branch on 25.11.2005 and hence, it was not available to create mortgage again in favour of respondent No.4. After the demise of Sri Balakrishna Gowda, the petitioners are in possession and enjoyment of the schedule property and no notices were issued to them and they were not brought on record in the proceedings initiated under Section 70 of the Act, 1959 and they were not afforded opportunity of hearing before conduct of auction sale. They have denied that the auction was conducted on 19.02.2025. They contend that the auction sale notices in Form Nos.8 and 9 revealed only award bearing Dispute No.390 but in the public auction notification, another award bearing Dispute No.391 was included illegally. 8. I have considered the submissions of the learned counsel for the petitioners as well as learned Additional Government Advocate for the official respondents as well as the learned counsel for respondent No.4. - 12 - HC-KAR NC: 2025:KHC:33479 WP No. 4772 of 2025 9. A perusal of the award passed by the respondent No.1 in Dispute Nos.390/2008-09 and 391/2008-09 raised by the respondent No.4 under Section 70 of the Act, 1959 shows that Sri M. Balakrishna Gowda, the predecessor of the petitioners was not arraigned as a party to the proceedings. A reading of the awards also shows that there was no reference to any power of attorney executed by the predecessors of the petitioners in favour of Sri Ramanna Gowda. There was also no reference to any mortgage deed brought about by Sri Ramanna Gowda in respect of the properties that belonged to Sri M. Balakrishna Gowda. Though the respondent No.4 has placed on record a reply sent by Sri Balakrishna Gowda to the notice dated 09.11.2007 issued by the respondent No.4, a copy of the notice dated 09.11.2007 is not placed on record. Be that as it may, one of the parties in the awards passed by the respondent No.1 is merely an agent of Sri M. Balakrishna Gowda and without arraigning Sri M. Balakrishna Gowda in the proceedings, the respondent No.4 could not have passed any enforceable decree or an award in respect of the properties that belonged to Sri M. Balakrishna Gowda. Therefore, the proceedings taken out by the respondent No.3 to bring the - 13 - HC-KAR NC: 2025:KHC:33479 WP No. 4772 of 2025 properties belonging to the petitioners for sale to recover the dues of Sri Ramanna Gowda is an attempt to enforce a decree to which the petitioners and their predecessor were not parties. It is well settled that a writ petition under Article 226 of the Constitution of India is maintainable if a proceeding or an act is done by any authority of the State without following the principles of natural justice (See Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and Others (1998) 8 SCC 1). It is relevant to note that under Rule 41 of the Rules, 1960, any person aggrieved by the attachment of a property is entitled to raise a dispute and the concerned Sale Officer is bound to consider the same in accordance with law. However, since the petitioners were caught unaware and were not made parties in any proceedings, the sale of the properties of the petitioners deserve to be halted until an effective consideration of the claim of the petitioners is done at the hands of the respondent No.3, which would serve the ends of justice. In view of the aforesaid, the writ petition deserves to be allowed in part. 10. Accordingly, the Writ Petition is allowed in part. The impugned auction sale notice in Dispute Nos.390/2008-09 - 14 - HC-KAR NC: 2025:KHC:33479 WP No. 4772 of 2025 and 391/2008-09 bearing C.E.P Nos.1162/2009-10 and 1163/2009-10 issued by respondent No.4 and Sale Officer of South Canara District Central Co-operative Bank, Kodiyabailu, Mangalore, which was published in ‘Suddi Bidugade’, Kannada Newspaper on 10.02.2025 as well as Form Nos.8 and 9 of even date i.e. 17.12.2024 in Dispute No.390/2008-09 and bearing C.E.P No.1162/2009-10 issued by respondent No.3 are quashed. The respondent No.3 is directed to consider the case of the petitioners and pass appropriate orders regarding the claim of the petitioners. 11. In order to expedite the above, the petitioners are directed to appear before the respondent No.3 on 30.09.2025 and file an appropriate petition raising a challenge to the auction sale of the petition schedule property. The respondent No.3 shall after hearing the petitioners, pass appropriate orders in accordance with law. 12. It is needless to mention that respondent No.3 shall also hear the respondent No.4 before passing any orders. Until the aforesaid exercise, respondent Nos.3 and 4 are restrained from bringing the properties of the petitioners for sale or - 15 - HC-KAR NC: 2025:KHC:33479 WP No. 4772 of 2025 creating any encumbrance of whatsoever nature. The sale made in favour of respondent No.5 shall stand suspended and may be confirmed after the consideration of the claim of the petitioners. 13. In view of disposal of this petition, I.A. No.5/2025 for vacating stay does not survive for consideration and the same stands disposed off. Sd/- (R. NATARAJ) JUDGE SMA/List No.: 1 Sl No.: 14