Karnataka High Court
K S Ganapathi vs Bapuji Griha Niramana Sahakara Sangha ... on 6 November, 2025
Author: Suraj Govindaraj
Bench: Suraj Govindaraj
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NC: 2025:KHC:45490
WP No. 40198 of 2014
C/W WP No. 3853 of 2024
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 6TH DAY OF NOVEMBER, 2025
BEFORE
THE HON'BLE MR. JUSTICE SURAJ GOVINDARAJ
WRIT PETITION NO. 40198 OF 2014 (CS-RES)
C/W
WRIT PETITION NO. 3853 OF 2024 (CS-RES)
IN W.P.NO.40198/2014
BETWEEN
1. K S GANAPATHI
AGED 60 YEARS
S/O LATE SRI SUBBAIAH
RESIDING AT NAPOKLU VILLAGE AND POST
MADIKERI TLAUK
KODAGU DISTRICT
KARNATAKA STATE 571 201
2. SMT M M BHARATHI
AGED 44 YEARS
W/O B G PRASANNA
Digitally signed RESIDING AT HEGGADALLI VILLAGE
by SHWETHA
RAGHAVENDRA KUSHALNAGAR HOBLI
Location: HIGH SOMWARPET TALUK
COURT OF
KARNATAKA KODAGU DISTRICT
KARNATAKA STATE 571 234
...PETITIONERS
(BY SRI. VENKATESH R BHAGAT., ADVOCATE)
AND
1. BAPUJI GRIHA NIRAMANA SAHAKARA
SANGHA NIYAMITHA
NO.107/B, BAPUJINAGARA
BANGALORE 560026
REPRESENTED BY ITS SECRETARY
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NC: 2025:KHC:45490
WP No. 40198 of 2014
C/W WP No. 3853 of 2024
HC-KAR
2. REGISTRAR OF CO-OPERATIVE SOCIETIES
ALI ASKER ROAD
BANGALORE 560 052
3. ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES
AND SALES OFFICER
OFFICE OF THE ASSISTANT REGISTRAR OF
CO-OPERATIVE SOCIETIES
KODAGU, FORT
MADIKERI 571 201
4. M.I.GULZAR AHMAD
S/O LATE. M.A.IBRAHIM,
AGED ABOUT 46 YEARS,
R/AT. D.NO.640, GANAPATHI STREET,
MADEKERI-571201.571201
.... RESPONDENTS
(BY SRI. HARISH A.S., AGA FOR R2 & R3;
SRI. MAHESH KIRAN SHETTY., ADVOCATE FOR R1;
SRI. H. PAVANA CHANDRA SHETTY., ADVOCATE FOR R4)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227
OF THE CONSTITUTION OF INDIA PRAYING TO CALL FOR THE
RECORDS PERTAINING TO THE SALE NOTICE DTD.21.7.2014 AT
ANNEX-A PUBLISHED IN SHAKTHI DAILY HAVING CIRCULATION IN
KODAGU DISTRICT. AND ETC.
IN W.P.NO.3853/2024
BETWEEN
M/S. ORCHID INVESTMENTS
A PARTNERSHIP FIRM REGISTERED UNDER
PROVISIONS OF PARTNERSHIP ACT,
R/AT NO. 77/8, 2ND MAIN ROAD,
VAYALIKAVAL,
BENGALURU-560003,
REPRESENTED BY ITS PARTNER,
MIS. GOWRI.R,
D/O. T. S. RAMACHANDRA RAO,
AGED ABOUT 24 YEARS,
R/AT NO. 77/8, 2ND MAIN ROAD,
VYALIKAVAL,
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NC: 2025:KHC:45490
WP No. 40198 of 2014
C/W WP No. 3853 of 2024
HC-KAR
MALLESHWARAM,
BENGALURU-560 003.
...PETITIONER
(BY SRI. RAJESHA SHETTIGARA., ADVOCATE)
AND
1. STATE OF KARNATAKA
REPRESENTED BY ITS PRINCIPAL SECRETARY,
DEPARTMENT OF CO-OPERATIVE SOCIETIES,
VIKASA SOUDHA,
DR. B. R. AMBEDKAR VEEDHI,
BANGALORE-560 001.
2. THE REGISTRAR
THE DEPARTMENT KARNATAKA
CO-OPERATIVE SOCIETIES,
ALI ASKAR ROAD,
BANGALORE-560 001.
3. THE ASSISTANT REGISTRAR CO-OPERATIVE SOCIETIES
AND SALE OFFICER,
REGISTRAR OFFICE OF THE ASSISTANT
REGISTRAR OF CO-OPERATIVE SOCIETIES,
KODAGU, FORT,
MADIKERI-571 201.
4. M/S. BAPUJI GRIHA NIRMANA SAHAKARA
SANGHA NIYAMITHA
NO.107/B, BAPUJINAGARA,
BANGALORE-560 026,
REPRESENTED BY ITS SECRETARY.
(REGISTERED UNDER CO-OPERATIVE SOCIETY ACT)
5. MR. K. S. GANAPATHI
S/O. LATE SUBBAIAH,
AGED ABOUT 70 YEARS,
R/AT NO. 323, 6TH MAIN ROAD,
OPP. J. P. PARK,
VIJAYANAGAR,
BANGALORE NORTH-560 040.
.... RESPONDENTS
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NC: 2025:KHC:45490
WP No. 40198 of 2014
C/W WP No. 3853 of 2024
HC-KAR
(BY SRI. HARISH A.S., AGA FOR R1 TO R3;
SRI. MAHESH KIRAN SHETTY., ADVOCATE FOR R4;
SRI. VENKATESH R. BHAGATH., ADVOCATE FOR R5)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA PRAYING TO ISSUE WRIT OF MANDAMUS
OR ANY OTHER WRIT DIRECTING THE R1 TO 3 TO EXECUTE THE
REGISTERED SALE DEED IN FAVOUR OF PETITIONER AS PER
REPRESENTATION DATED 28/08/2014 (ANNEXURE-J) MADE BY THE
PETITIONER UNDER THE PROVISIONS OF 38(4) OF THE KARNATAKA
STATE CO-OPERATIVE SOCIETIES ACT. AND ETC.
THESE WRIT PETITIONS COMING ON FOR ORDERS AND
HAVING BEEN RESERVED FOR ORDERS ON 23.10.2025, THIS DAY,
THE COURT PRONOUNCED THE FOLLOWING:
CORAM: HON'BLE MR. JUSTICE SURAJ GOVINDARAJ
CAV ORDER
1. The Petitioners in W.P.No.40198/2014 are before this
Court seeking for the following reliefs:
a. Call for the records pertaining to the sale notice
dated 21.07.2014 at Annexure-A published in
Shakthi Daily having circulation in Kodagu District.
b. Issue a writ of certiorari or any other writ Quashing
the sale notice dated 21.07.2014 vide Annexure-A
published in Shakthi Daily dated 31.07.2014 in so far
as the property belonging to the petitioners more
fully described in the Schedule hereunder situated at
Maragodu Village, Madikeri Taluk, to an extent of 5
acres.
c. Pass such other order or directions as this Hon'ble
Court deems fit in the interest of justice and equity.
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NC: 2025:KHC:45490
WP No. 40198 of 2014
C/W WP No. 3853 of 2024
HC-KAR
2. The Petitioners in W.P.No.3853/2024 are before this
Court seeking for the following reliefs:
a. Issue a writ of mandamus or any other writ directing
the R1 to R3 to execute te registered sale deed in
favour of petitioner as per representation dated
28.08.2014 (Annexure-J) made by the petitioner
under the provisions of 38(4) of the Karnataka State
Co-operative Societies Act.
b. Pass such other order or directions as this Hon'ble
Court deems fit in the interest of justice.
Facts in WP No.40198/2014:
3. The petitioners claim to be the absolute owners in possession of property bearing Sy.No.1/98 measuring 5 acres of Maragodu village, Madikeri taluk, Kodagu district and purchased the same under a sale deed dated 09.04.2014, which earlier belonged to Smt.D.Komalakshi, who had acquired the same under a registered gift deed dated 29.09.2001. It is claimed that the property was originally purchased by one D.Rajkumar, husband of D.Komalakshi, under a sale deed dated 16.08.1995. The said D.Rajkumar had executed a registered gift -6- NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR deed on 29.09.2001 in favour of D.Komalakshi. The petitioners claim that the sale deed in their favour has been executed by both the donor and the donee, the petitioners have purchased the property after due verification of the documents, and as such, they are bona fide purchasers for consideration. The only amount which were due was to the Indian Overseas Bank, Madikeri branch, which has been paid; apart from that, there is no other encumbrance which has been found in the encumbrance certificate, and it is in that background that the petitioners are before this Court challenging the auction notification. This Court had directed the auction to go on, but stayed the confirmation of the sale.
FACTS IN WP 3853/2024:
4. The petitioner claims to be a company that had entered into an agreement of sale with D.Rajkumar and Smt.D.Komalakshi, in pursuance of which the petitioner had issued a public notice on 10.01.2014 -7- NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR inviting claims or objections, there being no claim except from one Mr.K.S.Ganapathi. The petitioner has entered into a registered agreement of sale dated 1.04.2013, agreeing to purchase the same for a sum of Rs.22,50,000/- towards which K.S.Ganapathi has consented, he having received a sum of Rs.5,00,000/- It is in that background that the petitioner is before this Court seeking for the aforesaid reliefs.
5. Submission of Sri. Venkatesh R.Bhagat, learned Counsel for the petitioners in WP No.40198 of 2014 is that:
5.1. The petitioners are bona fide purchasers for consideration, having no information about any attachment. There is no encumbrance which has been reflected in the encumbrance certificate. The only amount due to Indian Overseas Bank, Medikeri, has been paid, and a discharge deed has been executed by the bank;-8-
NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR there is no one else whose claim is reflected in the public documents. The petitioners, having come across an auction notification of the property belonging to the petitioners, are before this Court challenging the auction notification.
5.2. There is no attachment of the property purchased by the petitioners reflected in any of the public documents; hence, there is no charge which can be said to have been created over the property of the petitioners, and hence, the auction sale notification is invalid and illegal.
5.3. If the respondents had verified the revenue documents, they would have seen the gift deed executed by Sri.D.Rajkumar is in favour of Smt.D.Komalakshi and the sale deed executed by her in favour of the petitioners, much prior to issuing the auction notification. -9-
NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR 5.4. His submission is that the mandatory procedure under the Karnataka Co-operative Societies Act, 1959 ['KCS Act' for short] and the Karnataka Co-operative Society Rules, 1960 ['KCS Rules' for short] have not been followed. The Society cannot have a claim over the property which belongs to the petitioners. Any claim that the Society has can be against the personal properties of D.Rajkumar and not the property which have been sold by him. Whether D. Rajkumar was guilty of any misappropriation, the enquiry was made or not, is between the Society and D. Rajkumar. The petitioners' property cannot be brought for sale on account of the dues of D.Rajkumar.
5.5. He relies upon the decision in Lingabhatta -v-
M/s Saravana Enterprises and another1, 1 [AIR 2003 Karnataka 128]
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR more particularly para 10 and 14 thereof, which are reproduced hereunder for easy reference:
10. The Counsel also relied on the ruling of the Supreme Court in Indira Devi Arya v. Bajrang Lal Khaitan, 2001 AIR SCW 4665. In paras 2 and 3 the following observations are made at page 4666 :
"2. The short question that arises for consideration is whether on the dismissal of the execution case, the attachment order also stood vacated and would not revive on the restoration of the execution case ? Order 21, Rule 57 provides that where any property has been attached in execution of a decree and the Court for any reason passes an order dismissing the execution of the decree, the Court shall direct whether the attachment shall continue or cease and shall also indicate the period up to which such attachment shall continue or the date on which such attachment shall cease. Sub-rule (2) of Rule 57 further provides that if the Court omits to give such direction, the attachment shall be deemed to have been ceased. Order 38, Rule 11- A, Sub-rule (2) provides that an attachment made before judgment in a suit which is dismissed for default shall not be revived merely by reason of the fact that the order for the dismissal of the suit for default has been set aside and the suit has been restored.
3. In the present case, we find that at the time when execution case was dismissed for default, the executing Court did not pass any order extending the period of attachment. Therefore, after the restoration of the execution case, the order of attachment remained non-existent and could not have been automatically revived on the restoration of execution case. We are, therefore, of the view that in law earlier order of attachment, if not extended by the Court, stood vacated and would not revive on restoration of the execution case."
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR
11. The Counsel relied on the Division Bench ruling of this Court in Vijaya College Trust v. Kumta Co- operative Arecanut Sales Society, wherein the ratio of this Court reported in AIR 1970 Mysore 152 is reiterated in para 12 which reads thus :
"Learned Counsel for the respondents relied on AIR 1920 Madras 358, Subramania Pathar v. Appur Mudaliar, wherein it has been held that the removal of an application for the execution of a decree, for statistical purpose, from the file is not a judicial termination of application, that the application was still pending and the Court should be moved to deal with it and to terminate it legally; and that no fresh application was necessary in such a case either under Article 181 or under Article 182 of the Limitation Act (9 of 1908). But in AIR 1970 Mysore 152, Byrappa (deceased) by L.Rs. Smt. Munisanjeevamma v. S. Amni the question whether the attachment still subsists if such a case has been dealt with. In that Ruling it has been held as follows :
"The words "where any property has been attached in execution of a decree" in the rule should not be interpreted too literally. They have to be understood as referring to an attachment in enforcement of which the decree could be executed and in the case of an attachment in enforcement of which the decree could be executed and in the case of an attachment before judgment it is that attachment which assumes the character of an attachment in execution of a decree and so becomes capable of enforcement in an execution proceeding."
"The rule thus governs not only an attachment before judgment. Whether, therefore, it is an attachment before judgment which becomes an attachment in execution or whether it is an attachment made in execution proceeding that attachment ceases to subsist under the rule when an execution application is dismissed for decree-holder's default."
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR In view of this position of law, it will have to be held that the attachment ceases on the closure of the Execution Petition on 9-1-1982. Learned Counsel for the respondents submitted that any transfer of property made after issue of a certificate is void against the Co-operative Society. Section 101-A of the Act provides that any private transfer or delivery of or encumbrance or charge on, property made or created after the issue of the certificate of the Registrar or any person authorised by him in this behalf under Section 101 shall be null and void as against the Co-operative Society in whose application the said certificate was issued. Section 99 lays down as to how the charge created on the property under Sub-section (1) of Section 32 of the Act has to be enforced.
14. The first respondent had purchased the property in dispute under a registered sale deed from the second respondent on 24-11-1983. It was the contention of the first respondent that the property has been purchased for a valid consideration when there was no valid attachment order subsisting. Therefore the decree-holder cannot proceed against the property in question. In view of the facts and proposition of law discussed above, the objection of the first respondent has to be upheld and I do not find any error in the view taken by the trial Court in this regard.
5.6. By relying on Lingabhatta's case, he submits that the property has been purchased by the petitioners under a valid registered sale deed, at which time there being no attachment, the decree holder cannot proceed against that
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR property in question, which was sold prior to the decree.
5.7. He relies upon the decision of the Hon'ble Apex Court in D.L.Sridhar -v-
C.R.Chandramohan2, more particularly Para 6 thereof, which is reproduced hereunder for easy reference:
6. A reference could be made to the decision rendered in the case of Lingabhatta alias Thammaiah -v- M/s Sharavana Enterprises, reported in AIR 2003 Kar 128:2003 AIR -Kant HCR 270, whereini thas been held as follows:-
"O.21, R.30 and R.54- Recovery of decretal amount - Attachment of property in execution - Property in question has been purchased under registered sale deed for valid consideration when there was no valid attachment order subsisting -Decree-holder cannot proceed against property in question."
5.8. Para 6 is a reiteration of the decision in Lingabhatta's case supra.
5.9. He submits that pursuant to the sale deed executed by D.Rajkumar and D.Komalakshi in favour of K.S.Ganapathi and M.M.Bharathi on 9.04.2014, the said K.S.Ganapathi and 2 ILR 2008 KAR 591/[LAWS (KAR) 2007 384]
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR M.M.Bharathi are the absolute owners of the said property, having been put in possession of the said property, the suo moto surcharge proceedings initiated by the Deputy Registrar of Co-operative Societies [DRCS] in which vide order dated 18.02.2002 notice of judgment before attachment was issued. Subsequently, on 23.03.2002, a confirmation of attachment before judgment was passed. The surcharge proceeding ending in passing an award on 27.05.2002 for recovery of Rs.4,59,69,000/- along with interest at 18% p.a. It is in pursuance of that award that execution proceedings had been initiated in Ex.No.6161/2004-05, which came to be transferred to the ARCS, Madikeri. It is challenging the same that K.S.Ganapati and M.M.Bharathi preferred a writ petition in W.P.No.40198/2014 before this Court.
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR 5.10. He submits that as on the date on which the gift deed was executed on 29.09.2001, by D.Rajkumar in favour of D.Komalakshi, there was no surcharge proceedings which were pending and as such, there was no legal impediment for D.Rajkumar to gift the same to D.Komalakshi. The surcharge proceeding, which had been initiated in the year 2002, much after the gift deed, would have no relevance as regards the validity of the gift deed. 5.11. The attachment before judgment order dated 18.02.2002 and confirmation of attachment before judgment dated 23.03.2022 are subsequent to the registered gift deed dated 29.09.2001 and, as such, have been passed after D.Rajkumar had gifted the property to his wife D.Komalakshi.
5.12. His submission is that the earlier gift deed prevails over the attachment order which has
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR been passed subsequently. In this regard, he relies upon the decision in D.R.Sridhar's case supra.
5.13. His submission is that D.Rajkumar was not a party to the surcharge proceedings and or order of attachment before judgment nor K.S.Ganapathi and M.M.Bharathi were parties to the said proceedings. Therefore, nobody else claiming thereafter are bound by the same, and they cannot claim any interest contrary thereto. As of the date on which the registered sale deed was executed in favour of the petitioners, i.e., on 9.04.2014, D. Rajkumar had no manner of title or estate, since a registered gift deed dated 29.09.2001 had already been executed and acted upon.
5.14. The award under Section 103 of the KCS Act was passed on 18.02.2002, whereas the gift deed in favour of D.Komalakshi was executed
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR on 29.09.2001, thus, the attachment being subsequent would have no bearing on the title of the property. The proceedings have been initated by the Authorities as regard property which is not belonging to D.Rajkumar is void interms of Subsection (1) of Section 32 and Subsection (3) of Section 103 of the KCS Act. Subsection (1) of Section 32 is reproduced hereunder for easy reference:
32. First charge of co-operative Society on certain assets.-
(1) Notwithstanding anything contained in any law for the time being in force, but subject to any prior claim of the Government in respect of land revenue or any money recoverable as land revenue, any debt or outstanding demand owing to a co-operative society by any member or past member or deceased member shall be a first charge upon the crops and other agricultural produce, cattle, fodder for cattle, agricultural or industrial implements or machinery, raw materials for manufacture and any finished products manufactured from such raw materials, belonging to such member, past member or forming part of the estate of the deceased member, as the case may be.
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR 5.15. By relying on Subsection (1) of Section 32 of the KCS Act submission made is that a charge would be created on the property of any Member, past member or deceased member, if there is any money recoverable from such past member or deceased member.
5.16. Subsection (3) of Section 103 of the KCS Act is reproduced hereunder for easy reference:
103. Attachment of property before award or order.-
(1) Xxx (2) Xxx (3) Attachment made under this section shall not affect the rights, subsisting prior to the attachment of the property, of persons not parties to the proceedings in connection with which the attachment is made, or bar any person holding a decree against the person whose property is so attached from applying for the sale of the property under attachment in execution of such decree.
5.17. By relying on Subsection (3) of Section 103 of the KCS Act, submission is that it is only the subsisting rights prior to the attachment which should not get effected by such attachment.
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR Once an attachment is made any transaction could be subject to the attachment. 5.18. By relying on Subsection (3) of Section 103 of the KCS Act, he submits that there is no charge on the property of D.Komalakshi which could be claimed by the Co-operative Society, the Co- operative Society could claim interest only as regards the property belonging to the member or past member or deceased member. Komalakshi not being a member, no such claim could be made.
5.19. By referring to Subsection (3) of Section 103, he submits that the attachment made under that provision would not have any effect on any subsisting rights prior to the attachment of the property and as such, he submits that K.S.Ganapati and M.M.Bharathi having purchased the property before the attachment,
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR the attachment cannot have any effect on them.
5.20. He refers to Rule 38 of the KCS Rules and submits that there is a violation of the said rules. None of the mandatory provisions of Subrule (2) of Rule 38 has been followed before issuing the impugned auction notification. He submits that the valuation report of the property has not been obtained, which goes to the root of the matter. His submission is that K.S.Ganapati and M.M.Bharathi, having purchased the property before the surcharge proceedings, no right could be claimed by the Society.
6. Sri. Mahesh Kiran Shetty, learned Counsel for Respondent No. 1, Society would submit that:
6.1. His submission is that petitioners have suppressed true and correct facts before this Court. The petitioners claim the alleged sale
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR deed is void ab initio since the property was attached way back on 18.02.2002, and under Section 103 of the KCS Act, 1959, they were made part of the surcharge proceedings. He submits that the Society, being a House Building Corporate Society, D. Rajkumar was the former president of the Society, who was involved in a series of omissions and commissions, as also misappropriated the funds of the Society. Having collected monies in the name of the Society, he had purchased properties in his own name in Bengaluru and Madikeri, including the subject property. 6.2. The JRCS had initiated a suo motu inspection under section 65 of the KCS Act, 1959, as per the order dated 16.10.2000. Inspector having been appointed, he completed the inspection on 31.05.2001 and submitted a detailed report, categorically indicating that D.Rajkumar had
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR misappropriated an amount of Rs.4,59,69,000/- The report categorically indicates that D.Rajkumar had collected sital deposits from its members and misappropriated those sital deposits by purchasing properties in his own name.
6.3. Based on the inspection report, an order dated 02.08.2001 under Section 68 of the KCS Act, 1959 was passed, directing the committee members to rectify the defect that was pointed out. Failure thereof resulted in surcharge proceedings under Section 69 of the KCS Act, 1959 and the properties belonging to D.Rajkumar and one other director, Rudrachar, were attached before judgment under Section 103 of the KCS Act, which came to be confirmed by the final decree, passed on 27.05.2002. The order under Section 68 having been passed on 2.08.2001, the gift deed was
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR executed on 29.09.2001, i.e., subsequent to the attachment order, the sale deed was executed much subsequently on 09.04.2014. Though some of the properties belonging to D.Rajkumar were brought to auction, D.Rajkumar had approached the Karnataka Appellate Tribunal in Appeal No. 306 of 2005, wherein there was a direction to deposit a sum of Rs.25,00,000/- which was not complied. Against this order of KAT had approached this Court in WP No.12666 of 2005, which came to be dismissed on 6.04.2005, holding that all alienations that were made subsequent to the initiation of proceedings by the Society were void and the property standing in the name of D.Rajkumar as on the date of inspection would have to be considered.
6.4. His submission, therefore, is that the order of inspection having been passed on 16.10.2000,
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR inspection having been completed on 31.05.2001, any property standing in the name of D.Rajkumar as on that date, could be subject to surcharge proceedings. All actions which have taken place, including the gift deed executed on 29.09.2001, much less the sale deed executed on 09.04.2014 in favour of the petitioners, were much subsequent and as such, in terms of Section 103 of the KCS Act, it is the Society which has a charge over the property.
6.5. By referring to Section 105 of the KCS Act, he submits that any order passed under Section 103 or Section 69 of the KCS Act is one appealable under Section 105 and, as such, the present writ petition is not maintainable. 6.6. His submission is that the petitioners cannot claim to have acquired any title over the property.
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR 6.7. The contention of the petitioners in W.P. No.40198 of 2014 is contrary to the submissions made by the petitioner in W.P. No. 3853 of 2024, wherein Orchid Investment, the petitioner therein has claimed that the first petitioner, namely K.S. Ganapathi has executed an agreement of sale in favour of Orchid Investment, agreeing to transfer the interest of K.S.Ganapathi in the property to Orchid Investment. The right of K.S.Ganapathi being under an agreement of sale dated 1.04.2013, if K.S.Ganapathi had transferred all his interest in favour of Orchid Investment on 20.01.2014, the question of a sale deed being executed in favour of K.S.Ganapathi on 9.04.2014 would not at all arise.
6.8. Lastly, he submits that the amounts having been misappropriated by D.Rajkumar from poor members of the Society, the property of
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR D.Rajkumar would have to be sold and the losses caused to the poor members of the Society would have to be made good. 6.9. On the basis of the above, he submits that this petition is required to be dismissed.
7. Sri. Pavana Kumar Shetty, learned Counsel who appears for the auction purchaser, submits that he has complied with the due terms of the auction, he is the highest bidder for a sum of Rs.50,50,000/- and has made payment of Rs.7,75,500/- as 15% of the bid amount and he has been ready to make payment of the balance amount. Though the property has been auctioned in favour of the purchaser, no sale deed has been executed, nor has the purchaser been able to make use of the property. His submission is that even today, the auction purchaser is ready to make payment of the balance amount with interest at 6% per annum, and as such, he seeks a direction to be issued to the Society to register a sale deed in
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR favour of the auction purchaser after receiving the balance amount. On that basis, he submits that the repetition is also required to be dismissed.
8. Heard Sri.Venkatesh R.Bhagat, learned Counsel for the petitioners, Sri.Harish.A.S, learned AGA for respondents No.2 and 3, Sri.Mahesh Kiran Shetty, learned Counsel for respondent No.1, Sri.H.Pavana Chandra Shetty, learned Counsel for respondent No.4 in W.P. No.40198/2014 and Sri.Rajesh Shettigara, learned Counsel for the petitioner, Sri.Harish.A.S, learned AGA for respondents No.1 to 3, Sri.Mahesh Kiran Shetty, learned Counsel for respondent No.4, Sri.H.Pavana Chandra Shetty, learned Counsel for respondent No.4 and Sri.Venkatesh in W.P. No.3853/2024. Perused papers.
9. The points that would arise for consideration are:
i. Whether post the order passed under Section 68 of the KCS Act and or inspection being carried out by the Inspector appointed, could any sale be affected by a member of the board of director of the Society against
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR whom the allegations made of misappropriation?
ii. If any such alienation is carried out, what would be the validity of such sale? iii. Could a third party who claims to be an alienee of the alienee seek to establish any equity, In the present matter, is the gift deed executed by D.Rajkumar in favour of his wife, D.Komalakshmi on xxx blank and subsequently the sale deed jointly executed by D.Rajkumar and D.Komalakshmi in favour of K.S.Ganapathi and M.m.Bharathi are valid in the eyes of the law?
iv. What order?
10. I answer the above points as under
11. ANSWER TO POINT NO.1: Whether post the order passed under Section 68 of the KCS Act and or inspection being carried out by the Inspector appointed, could any sale be affected by a member of the board of director of the Society against whom the allegations made of misappropriation?
11.1. The relevant provisions have been extracted above what would have to be seen is the sequence of events as it has occurred. There being allegations regarding misappropriation by the office bearers of the Society. An inspection
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR was directed to be conducted vide order dated 16.10.2000. The inspection report was submitted on 31.05.2001. Subsequent thereto, a gift deed was executed by D. Rajkumar in favour of his wife, D.Komalakshi, on 29.09.2001. The DRCS initiated suo motu surcharge proceedings vide order dated 18.02.2002, where an attachment before the order was issued. On 23.03.2002, a confirmation of the attachment order was passed. An award was passed on 27.05.2002 for recovery of a sum of Rs.4,59,69,000/-. 11.2. Execution proceedings had been initiated in Execution No.6161/2004-05. D. Rajkumar had challenged the award in Appeal No.306/2005 before the Karnataka Appellate Tribunal, where a direction had been issued for the deposit of a sum of Rs.25,00,000/-, which was not complied with, but however, D. Rajkumar had filed a writ
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR petition in W.P.No.12666/2005, which came to be dismissed on 06.04.2005.
11.3. It is much subsequently that an agreement of sale came to be executed by D. Komalakshi and D.Rajkumar in favour of K.S.Ganapathi and M.M.Bharati, who are the Petitioners in W.P.No.40198/2014 on 01.04.2013. If indeed there was a valid gift in favour of D. Komalakshi, there was no need for D.Rajkumar also to be the vendor in the said sale deed. 11.4. Surprisingly, another agreement was entered into in favour of Orchid Investment on 20.01.2014 with K.S.Ganapathi transferring his interest under the agreement of sale in favour of Orchid Investment. However, a sale deed came to be executed in favour of K.S.Ganapathy and M.M.Bharati on 09.04.2014. 11.5. Orchid Investment is the petitioner in WP.No.3853/2024, contending that
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR K.S.Ganapathi, having assigned all his interest under the agreement of sale, no sale deed could have been executed in favour of K.S.Ganapathi.
11.6. The sequence of events as narrated above would indicate that many of the activities or actions had occurred in the year 2000-2001 and knowing fully well, the surcharge proceedings had been initiated, D.Rajkumar had executed a registered gift deed in favour of his wife D.Komalakshi on 29.09.2001. This gift, obviously on the face of records, is a fraudulent gift deed executed by D.Rajkumar in favour of his wife trying to save his property, which he knew would be subject matter of the surcharge proceedings.
11.7. In terms of Sub-Section (3) of Section 103 of the KCS Act, the protection is granted to a third party and not to a related party, like the wife.
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR The transactions in favour of Ganapathi and Bharathi were entered into only in the year 2013 much after all the proceedings had culminated. The gift deed was executed on 29.09.2001, soon after the order under Section 68 had been passed on 02.08.2001. Thus, the proceedings have been undertaken against D.Rajkumar, D.Rajkumar, knowing fully well that his properties would be made subject matter of those proceedings, he has executed a gift deed in favour of his wife. Hence, the same cannot confer any right title or interest in favour of his wife, the same being a fraudulent transfer.
11.8. I answer point No.1 by holding that post the orders having been passed under Section 68 of the KCS Act and the inspection having been carried out, the inspection report having been submitted. Firstly, the gift deed in favour of the
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR wife of D.Rajkumar and, much subsequently, after more than a decade, in favour of Ganapathi and Bharathi is invalid. A member of the Board of Directors of the Society against whom allegations of misappropriation had been made could not have executed such a gift deed in favour of his wife, much less the sale deed, until all the proceedings had concluded.
12. ANSWER TO POINT NO.2: If any such alienation is carried out, what would be the validity of such sale?
12.1. I have dealt with much of this aspect in answer to point No.1. Suffice it to say that the alienation which had been carried out by way of a gift not being valid, the same would not confer any right, title or interest to the donee under the said gift deed.
12.2. Hence, I answer point No.2 by holding that any alienation by way of gift or otherwise, once proceedings under Section 68 of the KCS Act
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR had been initiated, would be invalid and would not confer any right, title or interest on such alienee, donee or the like.
13. ANSWER TO POINT NO.3: Could a third party who claims to be an alienee of the alienee seek to establish any equity, In the present matter, is the gift deed executed by D.Rajkumar in favour of his wife, D.Komalakshmi on xxx blank and subsequently the sale deed jointly executed by D.Rajkumar and D.Komalakshmi in favour of K.S.Ganapathi and M.m.Bharathi are valid in the eyes of the law?
13.1. The sequence of events have been detailed out in answer to point No.1 above, which makes it very clear that the proceedings had been initiated in the year 2000-2001, the gift deed had been executed on 29.09.2001, the agreement of sale in favour of the Petitioners in W.P.No.40198/2014 had been executed on 01.04.2013 and sale deed in their favour came to be executed on 09.04.2014, which is much after the award had been passed on 27.05.2002. The challenge to the same before
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR the KAT had failed and the writ petition filed before this Court, came to be dismissed on 06.04.2005.
13.2. Insofar as Orchid Investments, the petitioner in W.P.No.3853/2024 is concerned, it is only an agreement holder and no rights have been created in favour of Orchid Investments, the auction having been conducted and culminated. 13.3. Respondent No.4 in W.P.No.40198/2014, being the successful bidder, neither D. Komalakshi nor the petitioners in both the above writ petitions can claim any right, title or interest in the said properties. As such, I answer point No.3 by holding that K.S.Ganapathi and M.M.Bharathi, the petitioners in W.P.No.40198/2014 and the Orchid Investment and the petitioners in W.P.No.3853/2024, cannot claim any right, title or interest in the property of D.Rajkumar, which had been made
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NC: 2025:KHC:45490 WP No. 40198 of 2014 C/W WP No. 3853 of 2024 HC-KAR part of the surcharge proceedings. The auction which has been carried out is proper and correct and the auction purchaser would have all right, title and interest in the said properties.
14. ANSWER TO POINT NO.4: What Order? 14.1. In view of my answers to point Nos.1 to 3
above, no grounds being made out, the petition stands dismissed.
SD/-
(SURAJ GOVINDARAJ) JUDGE LN,KTY List No.: 2 Sl No.: 1