- 1 - HC-KAR NC: 2025:KHC:50925 WP No. 8768 of 2022 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 4TH DAY OF DECEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE E.S.INDIRESH WRIT PETITION NO. 8768 OF 2022 (GM-CFA) BETWEEN: SRI. B.K VIJAYA SHANKAR S/O B.R.KRISHNAIAH SETTY AGED ABOUT 63 YEARS, AT NO.11/11, 24TH MAIN, 1ST PHASE, J.P.NAGAR, BANGALORE-560 078. …PETITIONER (BY SRI. M SHIVAPRAKASH., ADVOCATE) AND: 1. THE DEPUTY REGISTRAR OF CHITS 4TH CIRCLE, BANGALORE URBAN DISTRIT SAHAKARI SOUDHA 3RD MAIN, MALLESHWARAM, BANGALORE-560 003. 2. DHARTHI CHITS PVT. LTD., AT NO.121, MEZZANINE FLOOR, PRITHVI BUILDING, 5TH MAIN, CHAMARAJPET, BANGALORE-560 018 REPRESENTED BY ITS MANAGING DIRECTOR AND FOREMEN SRI.PADMANABHA.S S/O GUDAIAH SETTY. …RESPONDENTS (BY SRI. MAHANTESH SHETTAR, AGA FOR R1, SRI. V. RAVIPRAKASH, ADVOCATE FOR R2) THIS W.P. IS FILED UNDER ARTICLE 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO CALL FOR THE Digitally signed by PADMASHREE SHEKHAR DESAI Location: High Court Of Karnatka - 2 - HC-KAR NC: 2025:KHC:50925 WP No. 8768 of 2022 ENTIRE RECORDS AND CONNECTED MATTERS FROM THE OFFICE OF THE R-1 AT ANENXURE-J DTD:27.7.2020 AND QUASH THE IMPUGNED ORDERS OF R-1 PASSED DTD:7.12.2019 AND 27.7.2020 PASSED BY R-1 AT ANNEXURE- H AND J TO CONFIRM THE DISPUTE CONCLUDED/CONSENTING THE TERMS OF COMPROMISE DTD.29.01.2016 AND ETC. THIS PETITION COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE E.S.INDIRESH ORAL ORDER In this writ petition, the petitioner is assailing the order dated 07.12.2019 (Annexure H) and the orders dated 27.07.2020, (Annexures J1 to J8) passed by the respondent No.1. 2. The facts relevant for the adjudication of this writ petition, are that respondent No.2 is a Chit Fund Company and the petitioner is a subscriber of the Chit Fund Group-Dharthi 2008, for a value of Rs.25 lakhs for a duration of 25 months. 3. It is also stated that the petitioner had availed 4 ticket Nos.07, 14, 33 and 34 in terms of the Chit Agreement produced at Annexure-A to the writ petition. It is also stated that the petitioner has participated in the chit with a bid of 30% of chit - 3 - HC-KAR NC: 2025:KHC:50925 WP No. 8768 of 2022 value and had received Rs.17,50,000/-, as per the ticket No.07 on 01.09.2008. It is also stated that the petitioner suffered loss in the business, as he was not able to pay the amount to the respondent No.2/Chit company. In this regard, the petitioner has issued advance cheque in favour of the respondent No.2 and the same came to be dishonoured and as such, criminal action has been taken against the petitioner. The respondent No.2 has initiated the criminal proceedings against the petitioner in CC Nos.No.53789/2010, 53786/2010, 53787/2010, 53790/2010 and 19949/2010. 4. The proceedings initiated against the petitioner as to the dishonour of the cheque issued by the petitioner came to be dismissed by the competent criminal court. Thereafter, respondent No.2 has preferred appeals before this court in Crl.A.Nos.643/2015, 644/2015, 645/2015, 646/2015 and 814/2015 and the copy of the criminal appeals are produced at Annexure B series. In the meanwhile, respondent No.2 has initiated the dispute in DRB-2/CSF No.233 to 240/2011-2012 before the respondent No.1, produced at Annexures C1-C8. In the said proceedings, a settlement was arrived at between the petitioner and respondent No.2, and accordingly the dispute - 4 - HC-KAR NC: 2025:KHC:50925 WP No. 8768 of 2022 came to be closed, as per the order dated 29.01.2016 (Annexure-E). 5. Hence, it is the case of the petitioner that after the completion of the proceedings in the DIS/CFS No.233 to 240/2011-2012 before the respondent No.1 and thereafter the respondent No.2 has filed the application dated 06.02.2016 to recall the memo filed on 29.01.2016 and the said application was accepted by the respondent No.1. Accordingly, being aggrieved by the same, the petitioner has presented this writ petition. 6. Heard, Sri.M.Shivaprakash,learned counsel for the petitioner, Sri.Mahantesh Shettar, learned AGA for respondent No.1 and Sri.V.Raviprakash, learned counsel for respondent No.2 7. It is contended by the learned counsel Sri.M.Shivaprakash, appearing for the petitioner, by inviting the attention of this court to the order dated 29.1.2016 (Annexure E) before the respondent No.1 in the DRB/CFS No.233 to 240/2011-2012 wherein the proceedings came to be concluded upon the demand draft made by the petitioner to the extent of - 5 - HC-KAR NC: 2025:KHC:50925 WP No. 8768 of 2022 Rs.36,50,000/- dated 27.07.2016, which is in full settlement of the claim made by respondent No.2 and therefore it is contended by the learned counsel for the petitioner that once the settlement has been arrived, before the respondent No.1, the same cannot be reopened by the respondent No.2, by filing an application. Accordingly, sought for interference by this court. 8. It is also contended by the learned counsel for the petitioner that in view of the settlement arrived at on 29.01.2016, the respondent No.2 has realised the Demand Draft for a sum of Rs.36,50,000/- which amounts to the admission made by the respondent No.2 and therefore same cannot be re-agitated by respondent No.2, on the ground that the said settlement has been arrived at, as a fraud made by the petitioner. 9. Per contra, Sri.V.Raviprakash learned counsel for respondent No.2., submitted with regard to the order dated 09.02.2016 in Crl.Appeal No.643/2015 and connected Criminal Appeals (Annexure R2) that the claim made by the respondent No.2 to reopen the dispute before respondent No.1 is, as to the - 6 - HC-KAR NC: 2025:KHC:50925 WP No. 8768 of 2022 claim made in the dispute and the same cannot be adjudicated in so far as cheques which has been presented by respondent No.2 and the criminal actions have been taken pursuant to the same. Therefore, it is contended by the learned counsel appearing for respondent No.2 that in view of the observation made by this Court at paragraph No.2 in Crl.A.No.643/2015 and connected criminal appeals dated 09.02.2016 (Annexure R2) which is passed by this court subsequent to the settlement arrived at between the parties said to have been produced at Annexure E and therefore sought for dismissal of the present writ petition. 10. It is also submitted by the learned counsel appearing for respondent no.2 that during the pendency of the proceedings, before the respondent no.1, the petitioner herein had delayed the proceedings for nearly two and a half years and thereafter, presented the writ petition challenging proceedings before the competent authority i.e., respondent No. 1 and therefore sought for dismissal of the petition. 11. Learned AGA appearing for respondent No.1 sought to justify the proceedings before the respondent No.1. - 7 - HC-KAR NC: 2025:KHC:50925 WP No. 8768 of 2022 12. In the light of the submission made by the learned counsel appearing for the parties, it is not in dispute that the parties as to the fact that the petitioner is a subscriber of the chit fund group Dharti 2008 for a value of Rs.25 lakhs for the duration of 25 months and issued the Agreement which is produced at Annexure A. In this regard, proceedings have been initiated for recovery of the same in dispute No.DBS/CFS/233-240/2011-12 before the respondent No.1. In the said proceedings a Joint Memo of compromise was filed under Order XXIII Rule 3 read with Section 151 of CPC (Annexure D) paragraph Nos.3 and 4 in the said Joint Memo reads as under; “3. That the opponents 1 to 3 have agreed to pay Rs.36,50,000/- (Thirty Six Lakhs Fifty Thousand Only) by demand draft bearing No.123144, dated 27.01.2016 drawn on Bank of Baroda, J.P. Nagar Branch, Bengaluru towards full and final settlement of all known and unknown claims of the disputant, in the above said disputes, pertaining to chit transactions including criminal appeals Nos.643/2015, 644/2015, 645/2015, 646/2015 and 814/2015 filed by disputant/appellant before the Hon’ble High Court of Karnataka, Bengaluru regarding the cheques issued by the Opponent No.1 in favour of the disputant regarding the same chit transactions. - 8 - HC-KAR NC: 2025:KHC:50925 WP No. 8768 of 2022 4. That the Diputant has also agreed to receive Rs.36,50,000/- (Thirty Six Lakhs Fifty Thousand Only) by demand draft bearing No.123144, dated 27.01.2016 drawn on Bank of Baroda, J.P. Nagar Branch Bengaluru towards full and final settlement of the claims of the disputant, in the above said disputes between Disputant and Opponents, pertaining to chit transactions including criminal appeals Nos.643/2015, 644/2015, 645/2015, 646/2015 and 814/2015 filed by disputant/appellant before the Hon’ble High Court of Karnataka, Bengaluru regarding the cheques issued by the Opponent No.1 in favour of the disputant regarding the same chit transactions.” 13. It is also forthcoming from the paragraph No.10 of the Joint Memo that both the parties have entered into the settlement voluntarily, without any force or any influence or any coercion from any partners. Based on the Joint Memo filed by the petitioner and the respondent No.2, respondent No.1 disposed of the dispute on 29.01.2016 (Annexure E) and recorded the finding that the petitioner herein has paid Rs.36,50,000/- through demand draft No.123414 dated 27.07.2016 drawn on Bank of Baroda. It is also not in dispute that the aforementioned demand draft was realised by the respondent no.2 as the full settlement pursuant to the Joint Memo filed before the respondent no.1 as per Annexure-D to the writ petition. In that view of the matter, as the respondent - 9 - HC-KAR NC: 2025:KHC:50925 WP No. 8768 of 2022 no.2 has realised the amount of Rs.36,50,000/- in terms of the order dated 29.01.2016 passed by the respondent no.1 as per Annexure E, I am of the view that the respondent No.2 has no authority under law to reopen the compromise entered into between the petitioner with the respondent No.2 dated 29.01.2016. Therefore, I find force in the submission made by the learned counsel appearing for the petitioner that the subsequent proceedings by reopening of the dispute by respondent No.2, cannot be accepted. It is also to be noted that if the contention as raised by the learned counsel appearing for respondent no.2 that the fraud has been committed by the petitioner to induce the respondent no.2 to put signature on the Joint Memo and also before the respondent no.1, if such being the case, the respondent No.2 ought not to have presented the Demand Draft No.123414 dated 27.07.2016 received as per the order dated 29.01.2016 (Annexure E). 14. In that view of the matter, I am of the opinion that the contentions raised by the learned counsel appearing for respondent No.2, cannot be accepted on the sole ground that the amount claimed in the dispute is different from the amount - 10 - HC-KAR NC: 2025:KHC:50925 WP No. 8768 of 2022 claimed in the Crl.A.No.643/2015 and other connected matters, disposed on 09.02.2016 (Annexure R2.) Therefore, I proceed to pass the following ORDER 1. The writ petition is allowed. 2. Order dated 07.12.2019 (Annexure-H) in JRB/Chits/Appeal/02/2017-2018 and the disputes in DRB-2/CSF/DIS/233-240/ 2011-12 dated 27.07.2020 passed by respondent no.1 (Annexures J1 to J8), are hereby quashed. 3. Order dated 29.01.2016 (Annexure-E) passed in DIS/CFS/233-240/2012/13 is hereby confirmed to the effect that full and final settlement has been made by the petitioner in favour of the respondent No.2, arising out of the chits availed by the petitioner as stated in the petition. Sd/- (E.S.INDIRESH) JUDGE AKV List No.: 1 Sl No.: 23