- 1 - HC-KAR NC: 2026:KHC:1632 WP No. 31295 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 12TH DAY OF JANUARY, 2026 BEFORE THE HON'BLE MRS. JUSTICE M G UMA WRIT PETITION NO. 31295 OF 2024 (CS-RES) BETWEEN: 1. M/S. SRI LAKSHMI PROPERTIES, REPRESENTED BY ITS PARTNER MR. C.V. CHANDRAHASA OFFICE AT NO.4011, VASUDHA KRUPA, 3RD CROSS, SHANKAR NAGAR, MANDYA - 571 401 2. MR. H.K. RAMESH, S/O LATE H.D. KRISHNE GOWDA AGED ABOUT 59 YEARS, R/AT NO. 4011, VASUDHA KRUPA, 3RD CROSS, SHANKAR NAGAR, MANDYA - 571 401 …PETITIONERS (BY SRI. UDAY HOLLA, SR. ADVOCATE FOR SRI. MAHESH S., ADVOCATE) AND: 1. ADDITIONAL REGISTRAR OF CO-OPERATIVE SOCIETIES, (HOUSING AND MISCELLANEOUS) NO.1, ALI ASKER ROAD BENGALURU - 560 052 2. M/S. YASHASWINI GRUHA NIRMANA SAHAKARA SANGHA NO.43, 1ST CROSS, H.D. DEVEGOWDA CIRCLE, BANNUR RING ROAD MYSORE - 570 028, REPRESENTED BY ITS CHIEF EXECUTIVE OFFICER …RESPONDENTS (BY SRI. NEELAKANTAPPA K. PUJAR, HCGP FOR R1 SRI. S. RUPESH KUMAR, ADVOCATE FOR C/R2) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO I) QUASH THE Digitally signed by NANDINI B G Location: High Court of Karnataka - 2 - HC-KAR NC: 2026:KHC:1632 WP No. 31295 of 2024 ENTIRE PROCEEDINGS PENDING BEFORE THE 1ST RESPONDENT ADDL. REGISTRAR OF CO-OPERATIVE SOCIETIES (HOUSING AND MISCELLANEOUS) IN DISPUTE NO. ANI (VA AND E)/D- 2/NMD/01/2020-21 AS AGAINST THE PETITIONERS HEREIN. AND ETC., THIS WRIT PETITION, COMING ON FOR FURTHER HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MRS. JUSTICE M G UMA ORAL ORDER The petitioners have approached this Court seeking issuance of writ in the nature of certiorari to quash the proceedings pending before respondent No.1 in Dispute No.ANI(Va&E)/D-2/NMD/01/2020-21 produced as per Annexure-Z and to set aside the order dated 19.09.2024 passed by KAT in Appeal No.146 of 2022 by confirming the interim order passed by respondent No.1. 2. Brief facts of the case are that, petitioner No.1 is the developer and petitioner No.2 is the owner. Petitioner Nos.1, 2 and respondent No.2 - Society entered into a MOU dated 18.09.2015 as per Annexure-G to develop the properties for residential purposes. In the meantime, petitioner No.2 had entered into an agreement of sale with one Chengappa in respect of Sy.No.67 measuring 4.19 acres and got the sale deed registered in his favour. During 2014 petitioner No.2 had - 3 - HC-KAR NC: 2026:KHC:1632 WP No. 31295 of 2024 acquired 1.31 acres of land in Sy.No.64/1C and permitted petitioner No.1 to develop the same as per the terms of MOU. 3. Now it is the contention of respondent No.2 that petitioner No.1 being the developer and petitioner No.2 being the owner have not complied with the terms of MOU dated 18.09.2015. Therefore, raised a dispute before the Registrar under Section 70 of the Karnataka Co-operative Societies Act (for short 'KCS Act'). The Assistant Registrar of Co-operative Societies (ARCS) passed the interim order in favour of the Society. The same was challenged before the KAT. The Tribunal dismissed the appeal. Being aggrieved by the same, the petitioners are before this Court. 4. Heard Sri. Uday Holla, learned senior advocate for Sri. Mahesh H, learned counsel for the petitioners, Sri Neelakantappa K Pujar, learned HCGP for respondent No.1 and Sri. S Rupesh Kumar, learned counsel for caveator - respondent No.2. Perused the materials on record. 5. Learned senior advocate for the petitioners contended that since the petitioners are not the members of the respondent - Society nor its employees, the dispute under - 4 - HC-KAR NC: 2026:KHC:1632 WP No. 31295 of 2024 Section 70 of KCS Act, is not maintainable. Therefore, the entire proceedings is to be quashed. 6. Learned Senior advocate drew the attention of the Court to Annexure-G - the Memorandum of Understanding dated 18.09.2015 to contend that the terms of MOU makes it clear that the partnership firm and the partner who is none other than petitioner No.2 herein are referred to as first party and the Society is referred to as second party. The agreement between these two is to the effect that the first party who is engaged in business of real estate as developer possesses right on certain properties described in the schedule therein, seeking to collaborate and enter into an arrangement with the Society under the MOU. As per the terms of MOU, petitioner No.2 is the purchaser of Sy.No.64/1C under the registered sale deed, which was transferred to H.M. Chengappa, who was also the owner of Sy.No.67 measuring 4.19 acres. The MOU discloses that the schedule property belonged to one C.V. Chandrahasa and others who sold said schedule-A property in favour of H.M.Chengappa under the registered sale deed. Pursuant to the sale deed, the RTC stood in his name and the said - 5 - HC-KAR NC: 2026:KHC:1632 WP No. 31295 of 2024 H.M.Chengappa executed into a registered sale deed in favour of H.K.Ramesh - petitioner No.2 herein. Therefore, the MOU was entered between the parties, wherein, petitioner No.2 is the partner of first party, who has an exclusive and independent arrangement under the sale agreement with the owners of the schedule property, has undertaken to acquire the rights over the schedule property to facilitate the development and the sale of the same. Based on this contingent, first party entered into the MOU with second party - Society to convey the rights of the schedule property so as to facilitate the second party to sell the schedule property to its members. Therefore, learned senior advocate contended that the terms of MOU are very clear and under no stretch of imagination, petitioner No.2 could be termed as agent of the Society. 7. Learned Senior advocate further contended that Annexure-N is the order passed by the Assistant Registrar of Co-operative Societies confirming the attachment before judgment in respect of Sy.Nos.64/1C and 67 measuring 6.10 acres. He also contended that Annexure-R is the order passed by the Assistant Registrar of Co-operative Societies where the - 6 - HC-KAR NC: 2026:KHC:1632 WP No. 31295 of 2024 contentions taken by both the parties are highlighted. At no point of time the Society has taken up a contention that the petitioners herein is agent of the Society. On the other hand the allegation is that the petitioners herein have not complied with the conditions undertaken under the MOU. However, now an attempt is being made to contend that the petitioner is the agent of Society which has no basis. 8. Learned senior advocate has also drawn the attention of the Court to Annexure-U - the copy of IA.No.5 dated 21.08.2023 filed by the Society seeking permission to prosecute the dispute against respondent Nos.1 and 2 i.e., petitioner No.1 and 2. Learned senior advocate drew the attention of the Court to paragraph No.4 to contend that, even according to Respondent No.2-Society, petitioner No.1 being partnership firm is not the member or a nominal member of the Society and the application was filed seeking permission to prosecute the above case only because the partnership firm is not concerned with the Society in any manner. Even in this application, it is not stated that the partnership firm or its partners are the agents of the Society. If that was the case, - 7 - HC-KAR NC: 2026:KHC:1632 WP No. 31295 of 2024 there was no need to seek permission to prosecute by filing IA.No.5. 9. Learned Senior advocate places reliance on the decision of this Court in Schedule Cast (Harijan) House Building Co-Operative Society Limited And Another V.S The State Of Karnataka And Others1 to contend that the Co-ordinate Bench of this Court has categorically held that when there is no specific averment in the dispute that the opposite party is a member of the Society, the question whether the opposite party is a member of the Society or not cannot be gone into in a dispute under Section 70 of the Act, 1959. 10. 10. Learned senior advocate places reliance on the decision of the Division Bench of this Court in Jyotiba Yellappa Jadhav and others V.s The Hubli Co-operative Cotton Sale Society Ltd., and Others2 to contend that Section 70 of the Act, 1959 cannot be invoked when there is a dispute between the Society and a non-member as he cannot be bought within the scope of relevant statute for the special 1 ILR 2006 KAR 2180 2 1970 SCC Online KAR 126 - 8 - HC-KAR NC: 2026:KHC:1632 WP No. 31295 of 2024 authorities functioning under the statute to make any effective order. If such a dispute was raised against such person, he cannot be made a party for essential and effective adjudication. Under such circumstances, the matter may have to be referred to the ordinary Civil Court for proper and effective adjudication. 11. Learned senior advocate referred to the decision of the Co-ordinate Bench of this Court in Sri. K Chandrashekar V.s State of Karnataka3 to contend that even if Section 117(3)(a) of the Act, 1959 is taken into consideration, the petitioners cannot be brought under Section 70 of the Act, 1959. 12. Learned senior advocate also referred to the decision of this Court in Smt. Siddamma V.s Bhavani House Co-operative Society Limited4 to contend that the dispute as to the validity of the sale deed in favour of the deceased, under whom the petitioner claims, could not have been raised before the Registrar of the Co-operative Societies. The Court has held that, on bare reading of Section 117 of the Act, 1959, the same would not indicate that said authority is vested with any such 3 WP.No.1250/2024 dd 23.09.2024 4 2016 SCC Online KAR 1105 - 9 - HC-KAR NC: 2026:KHC:1632 WP No. 31295 of 2024 power to address the validity of registered sale deed. Consequently, even the appellate authority, prescribed under the KCS Act does not have such authority. 13. Placing reliance on these decisions, learned Senior advocate contended that even according to respondent No.2 - Society the petitioner is neither an agent nor a member, and when in categorical terms it is stated that the petitioner is not a member of the Society and it was never stated that he is an agent, the dispute under Section 70 of the Act, 1959 could not have been raised. He further contended that when the dispute was raised before respondent No.1, it was never the contention of respondent No.2 that the petitioner was an agent. Further, the recitals in MOU makes it clear that the petitioners are not the agents of the Society to come within the ambit of Section 70 of the Act, 1959. Therefore, the impugned orders passed by respondent No.1 is liable to be set aside as it is without jurisdiction. Accordingly, he prays for allowing the petition. 14. Learned Senior advocate for the petitioners has drawn the attention of the Court to memorandum of understanding and contended that, as per terms and conditions - 10 - HC-KAR NC: 2026:KHC:1632 WP No. 31295 of 2024 of the memorandum of understanding, the petitioners are required to procure the lands from third parties, facilitate development, form the sites, and sell those sites to the Society to enable it to sell to its members. In turn the petitioners were entitled for consideration of Rs.11,40,00,000/-. The memorandum of understanding also states that an area measuring 6.10 acres was required to be procured by the petitioners and they are entitled for cost at Rs.940/- per Sq.ft. Learned Senior advocate submits that it is nothing short of an agreement to sell in the form of memorandum of understanding. 15. Learned Senior advocate places reliance on the decision of the Hon'ble Apex Court in Bharti Cellular Limited (Now Bharti Airtel Limited) V.s Assistant Commissioner of Income Tax, Circle 57, Kolkata and Another5 to contend that to constitute an agency there must be triangular relationship agreement consisting of Principal, agent and a third party. Here in the present case there is no tripartite agreement, the petitioners have no relationship whatsoever with the members of the Society. The petitioners are only interested in 5 (2024)8 SCC 608 - 11 - HC-KAR NC: 2026:KHC:1632 WP No. 31295 of 2024 executing the sale deed in favour of the Society for consideration. Hence, it is his contention that the respondents could not have raised the dispute invoking Section 70 of KCS Act. Therefore, prays for quashing the dispute raised under Section 70 of the KCS Act. 16. Per contra, learned counsel for respondent No.2- Society contended that in view of the terms of MOU, wherein, petitioner Nos.1 and 2 have undertaken to get the land converted and register the same in the name of respondent No.2, petitioner Nos.1 and 2 assume the character of agent under respondent No.2. Therefore, Section 70 of KCS Act will be applicable. Therefore, the dispute was maintainable before respondent No.1 and the dispute was rightly considered and the impugned orders came to be passed. 17. Learned counsel for respondent No.2 submits that as per Annexure - G - the memorandum of understanding, the firm agreed to act as an agent for the Society to develop the land and form layout for the Society to allot the sites in favour of its members. The recitals in the memorandum of understanding is very much clear that the firm acting as an - 12 - HC-KAR NC: 2026:KHC:1632 WP No. 31295 of 2024 agent undertook to do various acts and deeds. Therefore, he contends that as per Section 182 of the Indian Contract Act, 1872, the definition of the word 'agent', who is employed to do any act of the principal brings the dispute within the ambit of Section 70 of the KCS Act in view of Section 70(1)(b). 18. Learned counsel for respondent No.2 submitted that Annexure - 'S' is the application filed by the petitioner herein before respondent No.1 - ARCS seeking to reject the dispute. The said application is already dismissed by passing an order as per Annexure - 'W'. Admittedly, said order was not challenged by the petitioner before the KAT. On the other hand, similar relief is claimed in the present petition. Hence, the petition is not maintainable. 19. Learned counsel for respondent No.2 submits that the order for attachment before judgment passed by respondent No.1 was challenged by the petitioner before KAT. But the Tribunal dismissed the said appeal, by passing the order as per Annexure - 'Y', only on the ground of delay. The said order is being challenged herein. Therefore, at the most, the order passed by KAT dismissing the appeal on delay could - 13 - HC-KAR NC: 2026:KHC:1632 WP No. 31295 of 2024 be set aside and the Tribunal may be called upon to decide the matter on merits but challenge regarding maintainability of the dispute before ARCS without challenging the order, rejecting IA produced as per Annexure -'S' i.e, the order Annexure - 'W', in the writ petition is not maintainable. 20. Learned counsel for the respondent No.2 contends that the order passed by the ARCS rejecting the application to rejected the dispute under Section 70 of KCS Act was never challenged by the petitioners. Even though, IA.No.3 filed under Order 7 Rule 11 of CPC to dismiss the dispute was rejected, the said order was never challenged before the competent authority. On the other hand, the petitioners have straight away approached this Court seeking to quash the proceedings, which is not maintainable. Learned counsel placed reliance on the decision of the Bombay High Court in Eknath Namdev Lashkare and Ors V.s Pancharatna Properties and Ors6 to contend that in a similar case, the Bombay High Court has held that an agreement to develop the land will result in the developer as the agent and the dispute under the Co-operative Societies Act could be raised. He also placed reliance on the 6 WP.No.12956/2022 - 14 - HC-KAR NC: 2026:KHC:1632 WP No. 31295 of 2024 decision of the Co-ordinate Bench of this Court in M/s CMR Square Buliders and promoters V.s M/s BSNL Employees Welfare House Building Co-operative Society Ltd.,7 to contend that once the parties have agreed to develop the land entered into between the petitioners and the Society concern, the petitioners will be the agent of the Society. Hence, prays for dismissing the petition. 21. Alternatively, learned counsel for the respondent No.2 submits that if the Court is of the opinion that the dispute under Section 70 of the KCS Act is not maintainable, the respondents may be permitted to approach the Civil Court. 22. In view of the rival contentions urged by learned counsel for both the parties, the point that would arise for my consideration is: "Whether the petitioners have made out any grounds to allow the petition and to quash the criminal proceedings initiated against them?" My answer to the above point is in the 'Affirmative' for the following: 7 WP.No.6692/2025 DD 07.03.2025 - 15 - HC-KAR NC: 2026:KHC:1632 WP No. 31295 of 2024 REASONS 23. An Admitted fact that respondent No.2 and the petitioners have entered into a memorandum of understanding dated 18.09.2015 produced as per Annexure-G. The petitioners are never referred to as an agent of the Society and it is not a tripartite agreement. The only work agreed to be carried out by the petitioners as per this memorandum of understanding is to procure the land, develop the same, form the sites and to sell it to the Society or in favour of its members, if directed. The consideration is fixed at Rs.940/- per Sq.ft to acquire the land measuring 6.10 acres at the approximate total cost of Rs.11.40 crores. If the terms and condition of memorandum of understanding are taken into consideration, it is akin to an agreement of sale executed by the petitioners in favour of the Society, Ofcourse with additional undertaking to develop and form the layout. None of the terms and conditions under the memorandum of understanding would indicate either expressively or by necessary implication that the petitioners were the agents. The decisions relied on by the learned Senior advocate for the petitioners in Jyotiba Yellappa Jadhav and Others (supra) makes it clear that Section 70 of the KCS Act - 16 - HC-KAR NC: 2026:KHC:1632 WP No. 31295 of 2024 cannot be invoked when there is a dispute between the Society and the non member. 24. The Respondent do not dispute the fact that the petitioners are not even a nominal members of the Society. But it is his contention that the petitioners are the agents of Society. It is pertinent to note that when the dispute was raised before the ARCS under Section 70 of KCS Act, it was never the contention of respondent No.2 that the petitioners are the agents. It is for the first time before this Court such a contention was raised. It is also pertinent to note that an application was filed under Section 117 of the KCS Act before ARCS seeking permission to prosecute the petition. If at all the petitioners were agents, there no reason for respondent No.2 to file an application to seek permission to prosecute the petition. 25. The petitioners have placed reliance on the decision of the Hon'ble Apex Court in Bharti Cellular Ltd., (supra) where there is reference to Section 182 of the Contract Act, which defines the word 'agent' and 'principal' and categorically held that, the agency is a triangular relationship between the principal agent and the third party. Here in the present case, - 17 - HC-KAR NC: 2026:KHC:1632 WP No. 31295 of 2024 there is no third party in existence. Even though, learned counsel for respondent No.2 contends that the members of the Society are the third parties, there is no basis to accept such contention, because the members are not the parties to memorandum of understanding. They do not have any subsisting rights over the sites to be formed. The petitioners have nothing to do with the members of Society. The petitioners and the members have no contractual obligations against one another. Therefore, the memorandum of understanding does not give an impression that the petitioners are the agents working for respondent No.2. Learned counsel for respondent No.2 placed reliance on the decision of the High Court of Bombay in Eknath Namdev Lashkare and Ors (supra) and contended that under similar facts and circumstances, the High Court of Bombay held that there was a principal agent relationship as defined under Section 182 of Contract Act. The facts of the case in the said case are entirely different. Therein, the administrator of the Society executed a development agreement in favour of respondent No.1 - the developer for consideration and the dispute was raised by the petitioners, seeking declaration that the Resolution passed in - 18 - HC-KAR NC: 2026:KHC:1632 WP No. 31295 of 2024 the General Body Meeting is illegal and void. Admittedly, the developer was not the owner of the property, he was acting only on behalf of the Society to develop the land. Under such circumstances, the facts of the said case are not similar to the present case and the decision relied on by the learned counsel for respondent No.2 cannot be made applicable to the present facts and circumstance. 26. From the materials on record including the recitals found in the admitted document i.e., memorandum of understanding dated 18.09.2015, I am of the opinion that no relationship of principal and agent is created between respondent No.2 and the petitioners. The petitioners have undertaken to procure the land, develop it and form the sites for the purpose of selling the same to the Society or to its members as per the directions of the Society for consideration. Under such circumstances, by no stretch of imagination, the petitioners are the agents of Society to raise the dispute by invoking Section 70 of KCS Act. Hence, I am of the opinion that the proceedings before the ARCS is liable to be quashed. Accordingly, I answer the above point in the 'Affirmative' and proceed to pass the following: - 19 - HC-KAR NC: 2026:KHC:1632 WP No. 31295 of 2024 ORDER i) The petition is allowed. ii) The proceedings initiated against the petitioners herein in dispute No. ANI(Va&E)/D- 2/NMD/01/2020-21 before respondent No.1 - ARCS, is hereby quashed. iii) Respondent No.2 is at liberty to approach the Civil Court seeking appropriate relief in accordance with law, if he is advised to do so. Sd/- (M G UMA) JUDGE PNV List No.: 1 Sl No.: 16