- 1 - HC-KAR NC: 2025:KHC:29798 WP No. 8831 of 2018 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 1ST DAY OF AUGUST, 2025 BEFORE THE HON'BLE MR. JUSTICE R. NATARAJ WRIT PETITION NO. 8831 OF 2018 (CS-RES) BETWEEN: 1. SMT. ARUNA RAVI W/O LATE RAVI RAJKUMAR, AGED ABOUT 43 YEARS, 2. KUMMARI NIMISHA AGED ABOUT 17 YEARS, D/O LATE RAVI RAJKUMAR REPRESENTED BY HER MINOR GUARDIAN MOTHER, SMT.ARUNA RAVI W/O LATE RAVI RAJKUMAR BOTH ARE RESIDING AT NO.2878/28, 14TH MAIN, E BLOCK, RAJAJINAGAR II STAGE, BANGALORE-560 010. …PETITIONERS (BY SRI. R. HEMANTH RAJ, ADVOCATE) AND: 1. THE CHIEF EXECUTIVE OFFICER THE TUMKUR GRAIN MERCHANTS CO-OP BANK LTD., B.H.ROAD, TUMKUR-572101 2. THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES, URBAN BANKS, KARNATAKA STATE URBAN BANK FEDERATIONS, Digitally signed by SUMA Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:29798 WP No. 8831 of 2018 NO.132, K.H.ROAD, BANGALORE-560 027. …RESPONDENTS (BY SMT. ANITHA S.M. PATIL, ADVOCATE FOR SRI. K. RAVISHANKAR AND SRI ADITHYA C., ADVOCATE FOR RESPONDENT NO.1; SRI. S.R. KHAMROZ KHAN, ADDITIONAL GOVERNMENT ADVOCATE FOR RESPONDENT NO.2) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH / SET ASIDE THE ORDER DATED 03.04.2012 PASSED BY THE 2ND RESPONDENT IN CASE NO.J.R.D/U.B.F/1525/2006-07 AT ANNEXURE-D 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 R. NATARAJ ORAL ORDER The petitioners have challenged an order dated 03.04.2012 passed by the respondent No.2 in Case No.J.R.D/U.B.F/1525/2006-07 as well as an order dated - 3 - HC-KAR NC: 2025:KHC:29798 WP No. 8831 of 2018 30.12.2017 passed by the Karnataka Appellate Tribunal, Bengaluru, in Co-operative Appeal No.318/2012. 2. The facts in brief are that, the respondent No.1, which is a co-operative Society registered under the Karnataka Co-operative Societies Act, 1959 had advanced a pledge loan of Rs.22,50,000/- to M/s. Pushpak Motors on the security of 72 brand new Yamaha motorcycles. The said loan became recoverable and proceedings were initiated by the respondent No.1 for recovery of Rs.18,47,850/- and Rs.13,12,763/- being the interest and penal interest thereon. 3. During the pendency of the proceedings, one of the partners named Mr. S. Ravi, the predecessor of the petitioners died on 16.08.2001. Later, another partner died on 25.06.2006. The respondent No.1 adduced evidence and produced documents to substantiate its claim for recovery. The petitioners being the legal heirs of the said Mr. S. Ravi also entered the witness box and adduced evidence and produced Exs.R1 to R9. The respondent No.2 passed an award dated 03.04.2012 awarding a sum of Rs.31,60,613/- along with interest and penal interest stated therein, recoverable from the - 4 - HC-KAR NC: 2025:KHC:29798 WP No. 8831 of 2018 petitioners and the other partner of the Firm. The petitioners thereafter challenged this order before the Karnataka Appellate Tribunal (for short, ‘the Tribunal’) in Co-operative Appeal No.318/2012. The said appeal was also dismissed in terms of an order dated 30.12.2017. 4. Being aggrieved by the same, the petitioners are before this Court. 5. Respondent No.1 has filed statement of objections inter alia contending that the petitioners being the legal representatives of the deceased Mr. S. Ravi and having inherited the estate of the deceased are liable to discharge the debt of the deceased to the respondent No.1 - co-operative Bank and sought to justify the impugned orders. 6. Learned counsel for the petitioners contended that the petitioners were not the members of the respondent No.1 and they were not the ones who had availed the loan from the respondent No.1. They were not even the guarantors to the respondent No.1 and were not the partners of the firm. Therefore, he contends that the impugned order passed by the respondent No.2 directing recovery of Rs.31,60,613/- from the - 5 - HC-KAR NC: 2025:KHC:29798 WP No. 8831 of 2018 petitioners is illegal and improper. He also contends that as per the partnership deed, the death of Mr. S. Ravi did not result in dissolution of the Firm and the partners were entitled to continue the business. He, therefore, contends that the petitioners are not liable and it is only the Firm which is liable for the dues. He also contends that the loan was sanctioned to the respondent No.1 against the pledge of 72 brand new motorcycles and therefore, the loan had to be recovered by proceeding against those pledged items and not against the petitioners. He also contends that the motorcycles which were pledged were in the custody of the respondent No.1 and therefore, respondent No.1 had all the means to proceed against the pledged property to recover the outstanding loan. 7. Per contra, the learned counsel for the respondent No.1 submits that the petitioners being the legal heirs of Mr. S. Ravi, who was a partner of the Firm, are equally liable to meet the liability of their predecessor. He, therefore, contends that the impugned award passed by the respondent No.2 is just and proper and does not call for any interference. - 6 - HC-KAR NC: 2025:KHC:29798 WP No. 8831 of 2018 8. The learned Additional Government Advocate submitted that the petitioners being the legal heirs of the partner of the Firm are liable for the dues of the Firm. 9. I have considered the submissions of the learned counsel for the petitioners and the learned counsel for the contesting respondent No.1. I have also considered the submissions of the learned Additional Government Advocate. 10. A copy of the partnership deed dated 07.10.1993 of M/s. Pushpak Motors indicates that Mr. S. Ravi was one of the partners of the Firm. The partnership Firm was reconstituted on 05.11.1999 in terms of which, the said Mr. S.Ravi continued in the Firm. The partnership Firm was one at will and each of the partners were entitled to apportion the profits and liabilities of the Firm equally. Clause 16 of the deed of Retirement and Reconstitution of Partnership provided for the contingency in the event of death or retirement of the partners and the same reads as follows: "16. RETIREMENT OR DEATH of any of the partners will not dissolve the partnership and the same shall be continued by the other partners and heirs or successors of such retiring/death - 7 - HC-KAR NC: 2025:KHC:29798 WP No. 8831 of 2018 partner shall have no right on Goodwill, Tenancy Right and name of the partnership and to become a partner in this firm unless agreed to by the partners." 11. In the case on hand, it is not in dispute that the Firm had raised a loan from the respondent No.1 - co-operative Bank and there is also no dispute that such loan was raised by pledging 72 brand new motorcycles. Under Section 25 of the Indian Partnership Act, 1932 (for short, 'the Act, 1932') the partners of the Firm are liable for all acts of the Firm and therefore, it goes without saying that Mr. S. Ravi was liable for all the acts of the Firm in the ratio mentioned in the partnership deed and deed of Retirement and Reconstitution of partnership. Under Section 35 of the Act, 1932, once a partner dies and if the Firm is not dissolved, the estate of such deceased partner is liable only to the extent of the acts done by the Firm before his death. This therefore means that notwithstanding the death of one of the partners of the Firm, the estate of the said partner in the hands of his heirs would still be liable for the acts of the Firm till the date of death of such partner. If we take the above into account, the legal heirs - 8 - HC-KAR NC: 2025:KHC:29798 WP No. 8831 of 2018 of the deceased partner are only liable to the extent of the property that they would have or have inherited from the deceased partner and not anything beyond. A similar provision is contained in Rule 45 of the Karnataka Co-operative Societies Rules, 1960 which reads as follows: "45. Death of judgment-debtor-Execution against legal representative.- (1) Where a judgment-debtor dies before the decree has been fully satisfied, an application under sub- rule (1) of Rule 34 may be made or continued against the legal representative of the deceased and thereupon all the provisions of this Chapter shall, save as otherwise provided in this rule, apply as if such legal representative were the judgment-debtor: Provided that a show-cause notice shall be issued to such legal representative and his objections heard, before execution is proceeded against him. (2) Where the decree is executed against such legal representative, he shall be liable only to the extent of the property of the deceased which has come to his hands and has not been duly disposed of; and for the purpose - 9 - HC-KAR NC: 2025:KHC:29798 WP No. 8831 of 2018 of ascertaining such liability, the Recovery Officer executing the decree may, of his own motion or on the application of the decree- holder, compel such legal representative to produce such accounts as he thinks fit." 12. In view of the fact that the petitioners have not disputed that the Firm had raised a loan from the respondent No.1 - co-operative Bank and also that the said loan had become outstanding to the respondent No.1 and also that the partnership Firm was liable to pay the loan, the petitioners cannot dispute the entitlement of the respondent No.1 to proceed against them in respect of the property they have inherited or succeeded from the deceased partner Mr. S. Ravi. The petitioners cannot be proceeded against as if they were partners of the Firm, as they were not. In that view of the matter, the impugned award passed by the respondent No.2 cannot be faulted with and therefore, the impugned order passed by the Karnataka Appellate Tribunal cannot be also faulted with as the liabilities are admitted liabilities of the Firm. However, in so far as the right of the respondent No.1 to proceed against the petitioners is concerned, it has to be - 10 - HC-KAR NC: 2025:KHC:29798 WP No. 8831 of 2018 restricted and it is held that the right of the respondent No.1 to proceed against the petitioners is only to the extent of the properties that the petitioners have inherited from the said Mr. S. Ravi. This also means that the respondent No.1 cannot proceed against the personal properties of the petitioners. The Writ Petition, therefore, stands disposed off on the above terms. Sd/- (R. NATARAJ) JUDGE SMA/List No.: 1 Sl No.: 27