- 1 - HC-KAR NC: 2026:KHC:31912 WP No. 25443 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND DAY OF JULY, 2026 BEFORE THE HON'BLE MR. JUSTICE M.I.ARUN WRIT PETITION NO. 25443 OF 2025 (CS-RES) BETWEEN: 1. TUMKURU GRAIN MERCHANT'S COOPERATIVE BANK LTD., HAVING ITS REGISTERED OFFICER AT B.H.ROAD, TUMKUR-572 103 REP. BY ITS CHIEF EXECUTIVE OFFICER (THE PETITIONER BANK IS REGISTERED UNDER THE PROVISIONS OF KARNATAKA COOPERATIVE SOCIETIES ACT 1959) …PETITIONER (BY SRI. MANJUNATHESWAR J., ADVOCATE) AND: 1. THE STATE OF KARNATAKA BY ITS PRINCIPAL SECRETARY TO GOVERNMENT DEPARTMENT OF COOPERATION GOVERNMENT OF KARNATAKA 6TH FLOOR, M.S. BUILDING DR. B.R. AMBEDKAR VEEDHI BENGALURU-560 001. 2. THE DEPUTY REGISTRAR OF COOPERATIVE SOCIETIES UNDER RULE 441, ARBITRATION COURT KARNATAKA STATE SOUHARDA FEDERATION LTD. Digitally signed by GEETHA P G Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2026:KHC:31912 WP No. 25443 of 2025 "SHOUHARDASAHAKARI" 1ST FLOOR, BETWEEN 17TH AND 18TH CROSS MARGOSA ROAD, MALLESHWARA BENGALURU-560 055. 3. M/S SRI LAKSHMI MAHILASOUHARDA CREDIT COOPERATIVE LTD. HAVING ITS REGISTERED OFFICE AT SHIVAMARUTHI ESTATE MYLANAHALLI UDUKUNTE POST, SOLUR HOBLI MAGADI TALUK, RAMANAGARA DISTRICT-562 123. REP. BY ITS CHIEF EXECUTIVE OFFICER/ AUTHORIZED OFFICER (REGISTERED UNDER THE PROVISIONS OF KARNATAKA SOUHARDA SAHAKARI ACT 1997). 4. SRI SAIPETROLEUM SERVICE STATION NO.108/1B1, PARASHIRAMAPURA VILLAGE PAVAGADA ROAD, NEAR SARVODAYA SCHOOL CHALLAKERE TALUK CHITRADURGA DIST-577 522. REP. BY ITS PROPRITOR SRI. R. KANTHARAJA. 5. SRI. R. KANATHARAJA S/O RAMAPPA AGED ABOUT 51 YEARS R/AT SRI SAI PETROLEUM SERVICE STATION NO.108/1B1, PARASHIRAMAPURA VILLAGE PAVAGADA ROAD, NEAR SARVODAYA SCHOOL CHALLAKERE TALUK, CHITRADURGA DIST-577 522. 6. SMT. JYOTHI W/O KANTHARAJA AGED ABOUT 49 YEARS - 3 - HC-KAR NC: 2026:KHC:31912 WP No. 25443 of 2025 SRI SAI PETROLEUM SERVICE STATION NO.108/1B1, PARASHIRAMAPURA VILLAGE PAVAGADA ROAD, NEAR SARVODAYA SCHOOL CHALLAKERETALUK, CHITRADURGA DIST-577 522. 7. SMT. GOWRAMMA W/O N.THIPPESWAMY AGED ABOUT 68 YEARS R/AT NO.HOSA YELANADU JAVANAGONDANAHALLI HOBLI HIRIYURU TALUKU, YELANADU CHITRADURGA-577 598. 8. SRI. LJV. VERENDRA KUMAR C/O INDIAN OIL PETROL BANK (LJV VEERENDRA KUMAR) ARASIKERE-VADANAKALLU ROAD (CHALLAKERE ROAD) OPPOSITE TO MGM PRE-UNIVERSITY COLLEGE LINGADAHALLI VILLAGE, PAVAGADA TALUKU TUMKUR DISTRICT-561 202. 9. SRI. RAVINDRA KUMAR LINGADAHALLI C/O THE NEW EMPRESS PUBLIC ENGLISH PRIMARY SCHOOL LINGADAHALLI VILLAGE, PAVAGADA TALUK TUMKURU DISTRICT-561 202. …RESPONDENTS (BY SRI. YOGESH D.NAIK, AGA FOR R1 AND R2; SRI. S.M.SREERAMA REDDY, ADVOCATE FOR R3; SRI. SHEKARAPPA, ADVOCATE FOR R8; R4 AND R5 - SERVED AND UNREPRESENTED; VIDE ORDER DATED 15.12.2025 PETITION AGAINST R6, R7 AND R9 IS DISMISSED AS NOT PRESSED) - 4 - HC-KAR NC: 2026:KHC:31912 WP No. 25443 of 2025 THIS PETITION IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA, PRAYING TO ISSUE A WRIT OF CERTIORARI OR ANY OTHER APPROPRIATE WRIT OR ORDER OR DIRECTION, QUASHING THE ORDERS PASSED BY THE 2ND RESPONDENT-THE DEPUTY REGISTRAR OF COOPERATIVE SOCIETIES, UNDER RULE 441, ARBITRATION COURT, KARNATAKA STATE SOUHARDA FEDERATION LTD., BENGALURU IN DISPUTE BEARING NO.JRD/KSSSSN/2035/2022-23 ON ITS FILE AT ANNEXURE-A DATED 20.03.2023 AS WELL AS THE ORDER PASSED ON 02.09.2024 ON ITS FILE AT ANNEXURE-A1 AND ETC. THIS PETITION COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THROUGH PHYSICAL HEARING/VIDEO CONFERENCING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE M.I.ARUN ORAL ORDER 1. Aggrieved by the order passed by respondent no.2 in No.eÉDgïr/PÀ.gÁ.¸Ë.¸ÀA.¸À.¤.,/2035-2022-23, respondent no.5 therein has preferred this writ petition. 2. The case of the petitioner is that, it is a co-operative bank and that respondent no.5 had borrowed loan from the petitioner. As a security for the loan borrowed, respondent no.5 had mortgaged the property which is the subject matter of the writ petition. It is submitted that, thereafter, respondent nos.4 and 5 have together borrowed loan from respondent no.3 which - 5 - HC-KAR NC: 2026:KHC:31912 WP No. 25443 of 2025 is another co-operative bank and that respondent no.5 had agreed to mortgage the property in favour of respondent no.3 after clearing the loan of the petitioner-bank. 3. Respondent no.5 thereafter committed default in repayment of loan in respect of both petitioner-bank as well as respondent no.3-bank. Because of which, both petitioner as well as respondent no.3-bank have initiated separate proceedings for recovery of their respective loans. 4. In the process, the petitioner-bank has initiated proceedings under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the 'SARFAESI Act') and has attached and sold the property which is the subject matter of writ petition in favour of a third person. 5. Respondent no.3-bank initiated recovery proceedings under the provisions of the Karnataka Souharda Sahakari Act, 1997 and in the process, the impugned order came to be passed by respondent no.2, wherein it has been ordered as follows: - 6 - HC-KAR NC: 2026:KHC:31912 WP No. 25443 of 2025 "DzÉñÀ ªÉÄð£À CA±ÀUÀ¼À »£À߯ÉAiÀÄ°è PÀ£ÁðlPÀ ¸ËºÁzÀð ¸ÀºÀPÁj PÁAiÉÄÝ 1997gÀ PÀ®A 44gÀrAiÀÄ°è ¸À°è¹gÀĪÀ CfðAiÀÄ£ÀÄß ªÀÄvÀÄÛ PÀ£ÁðlPÀ ¸ËºÁzÀð ¸ÀºÀPÁj C¢ü¤AiÀĪÀÄ PÀ®A 41(3)gÀrAiÀÄ°è ¸À°è¹gÀĪÀ CfðUÀ¼À£ÀÄß ¥ÀÄgÀ¸ÀÌj¹zÉ. PÀ£ÁðlPÀ ¸ËºÁzÀð ¸ÀºÀPÁj C¢ü¤AiÀĪÀÄ, 1997gÀ PÀ®A 44, PÀ®A 41(3)gÀ£ÀéAiÀÄ ºÁUÀÆ C¢ü¸ÀÆZÀ£É ¸ÀASÉå: ¹.N.26.¹.J¯ïJªÀiï.2018 ¢£ÁAPÀ: 11.06.2018gÀ°è zÀvÀÛªÁVgÀĪÀ C¢üPÁgÀªÀ£ÀÄß ZÀ¯Á¬Ä¸ÀÄvÁÛ, ¹.¥Àæ¸Ázï gÉrØ ¸ÀºÀPÁgÀ ¸ÀAWÀUÀ¼À dAn ¤§AzsÀPÀgÀÄ (¤.,441) ¸ËºÁzÀð ¸ÀºÀPÁjUÀ¼À zÁªÁ ¥ÀAZÁ¬ÄÛ £ÁåAiÀiÁ®AiÀÄ, ªÀįÉèñÀégÀA ¨ÉAUÀ¼ÀÆgÀÄ DzÀ £Á£ÀÄ ¥ÀæwªÁ¢-1 ªÀÄvÀÄÛ 2gÀªÀgÀÄ 5£Éà ¥ÀæwªÁ¢ ¨ÁåAPï£À°è CqÀªÀiÁ£À EnÖgÀĪÀ F PɼÀV£À µÉqÀÆå¯ï ¹ÜgÁ¹ÛUÀ¼À£ÀÄß ªÁ¢ ¸ÀºÀPÁjUÉ IÄt¨sÁgÀ(ºÉÆuÉUÁjPÉ) µÀgÀwÛUÉ M¼À¥ÀlÄÖ DzÉñÀ ¥ÀƪÀð d¦Û DzÉñÀ ¤ÃrzÉ. SCHEDULE PROPERTY All That Piece And Parcel Of The Industrial Converted Land Bearing Sy.No.108/1B1, Measuring 2 Acres, Situated At Parashuramapura Village, Parashuramapura Hobali, Challakere Taluku, Chitradurga District And Bounded On: East by : Sy.No.108/1c West by : Sy.No.108/1B2 North by : Road, South by : Sy.No.108/2 remaining land Including the property earmarked to petroleum oil Retail business outlet i.e. M/s Sri. Sai Petroleum service station, measuring 37 x 39 meters and building and other structures constructed therein. ªÀÄÄAzÀĪÀgÉzÀÄ ¥ÀæwªÁ¢-1 ªÀÄvÀÄÛ 2gÀªÀgÀÄ µÉqÀÆå¯ïØ ¹ÜgÁ¹ÛUÀ¼À ªÀÄÆ® zÁR¯ÁwUÀ¼À£ÀÄß 5£Éà ¥ÀæwªÁ¢AiÀĪÀgÀÄ vÀªÀÄä ¸Á® wgÀĪÀ½AiÀiÁzÀ £ÀAvÀgÀ ªÁ¢ ¸ÀºÀPÁjUÉ ºÀ¸ÁÛAvÀj¸À®Ä 5£Éà ¥ÀæwªÁ¢UÉ ¤zÉÃð±À£À ¤ÃqÀ¯ÁVzÉ. - 7 - HC-KAR NC: 2026:KHC:31912 WP No. 25443 of 2025 F DzÉñÀªÀ£ÀÄß £À£Àß ¸À» ºÁUÀÆ £ÁåAiÀiÁ®AiÀÄzÀ ªÉƺÀj£ÉÆA¢UÉ ¢£ÁAPÀ:20.03.2023gÀAzÀÄ ºÉÆgÀr¹¯ÁVzÉ." 6. As can be seen from the aforementioned order, respondent no.2 has directed handing over of the documents pertaining to the property which is the subject matter of the writ petition in favour of respondent no.3 after the borrower satisfies the loan of the petitioner. Aggrieved by the same, the present writ petition is filed. 7. The case of the petitioner is that, in order to recover the loan advanced by it, it has sold the entire property and hence, it is required to hand over documents in favour of the subsequent purchaser and the same cannot be handed over in favour of respondent no.3 as directed in the impugned order. 8. Per contra, learned counsel for respondent no.3 submits that, the auction sale conducted by the petitioner-bank in respect of the property which is the subject matter of the writ petition, is deliberately undervalued to defeat the claim of respondent no.3-bank and for that reason, it is prayed that the writ petition be dismissed. - 8 - HC-KAR NC: 2026:KHC:31912 WP No. 25443 of 2025 9. Perusal of the impugned order reveals that respondent no.2 does recognize the primary lien of the petitioner-bank on the property concerned and the direction to hand over the property documents in favour of respondent no.3-bank arises only if the dues of the petitioner-bank is satisfied and the property is not required to be sold in satisfaction of the said dues or after the sale, if the consideration received is much more than the dues of the petitioner-bank, then in that event the same will have to be transferred to respondent no.3-bank, though the impugned order does not mentions the same in those many words. 10. It is a well settled principle of law that when a property is mortgaged in favour of two persons or if it is mortgaged in favour of one person and there is a promise made to mortgage the same in favour of a second creditor, then in that event, the person in whose favour mortgage has been executed first, will have the primary lien to sell the same if his dues are not satisfied by the borrower and the other person will be entitled to balance if any after satisfaction of the dues of the first - 9 - HC-KAR NC: 2026:KHC:31912 WP No. 25443 of 2025 creditor. The impugned order passed by respondent no.2 is required to be understood in that sense. 11. If, in the opinion of respondent no.3-bank, the petitioner- bank has sold the property by undervaluing the same without showing due care that is required, it is needless to state that respondent no.3-bank can initiate appropriate proceedings before the appropriate authority challenging the action of petitioner-bank. 12. For the aforementioned reasons, the writ petition is disposed of by directing the parties concerned to give effect to the impugned order passed by respondent no.2 as clarified in paragraphs nos.9, 10 and 11 cited supra. Sd/- (M.I.ARUN) JUDGE PGG List No.: 1 Sl No.: 1