M/S Safe vs State Of Karnataka
2023 Latest Caselaw 1617 Kant

                                          -1-
                                                        WA No.1207 of 2021




                     IN THE HIGH COURT OF KARNATAKA AT BENGALURU
                       DATED THIS THE 28TH DAY OF FEBRUARY 2023
                                        PRESENT
                         THE HON'BLE MR. JUSTICE ALOK ARADHE
                                          AND
                       THE HON'BLE MR. JUSTICE VIJAYKUMAR A PATIL
                          WRIT APPEAL NO.1207 OF 2021 (GM-CFA)
                BETWEEN:

                1.   M/S SAFE
                     REP. BY ITS PROPRIETOR
                     S. NARMADA
                     W/O DR. T N CHANDRAKANTH
                     NO.271/1, 14TH CROSS
Digitally            C M H ROAD, INDIRANAGAR
signed by
RUPA V               BENGALURU-560038.
Location:
High Court of   2.   S. NARMADA
Karnataka            AGED ABOUT 59 YEARS
                     W/O DR. T N CHANDRAKANTH
                     R/AT NO.13, SAI CHANDAN
                     1ST CROSS, ESHWARI LAYOUT
                     LBS NAGAR, INDIRA NAGAR II STAGE
                     BENGALURU-560038.

                                                             ...APPELLANTS
                (BY SRI. JAYA KUMAR S. PATIL, SR. COUNSEL FOR
                    SRI. CHANDRASHEKARA REDDY M V, ADV.,)

                AND:

                1.   STATE OF KARNATAKA
                     REP BY ITS SECRETARY
                     DEPARTMENT OF CO-OPERATION
                     M S BUILDING, BENGALURU-560001.

                2.   THE JOINT REGISTRAR OF CO-OPERATIVE
                     SOCIEITIES, BANGALORE ZONE
                     SAHAKARA SOUDHA
                            -2-
                                        WA No.1207 of 2021




     3RD FLOOR, 3RD MAIN, 8TH CROSS
     MARGOSA ROAD, MALLESHWARAM
     BENGALURU-560003.

3.   THE DEPUTY REGISTRAR OF CO-OPERATIVE
     SOCIETIES AND CHIT FUNDS-1
     3RD ZONE, SAHAKARA SOUDHA
     MARGOSA RPAD, MALLESHWARAM
     BENGALURU-560003.

4.   M/S. SURABHI CHITS PRIVATE LTD
     NO.5, GAJENDRA TOWERS
     1ST FLOOR, 11TH MAIN, 4TH BLOCK
     JAYANAGAR, BENGALURU-560011
     REP. BY ITS ASSOCIATE VICE PRESIDENT/
     GPA HOLDER SRINIVASA RAO.

                                              ...RESPONDENTS
(BY SRI. B. RAJENDRA PRASAD, HCGP FOR R1-R3
    SRI. T.P. VIVEKANANDA, ADV., C/R4)

      THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER DATED
16.09.2021 PASSED BY THE LEARNED SINGLE JUDGE OF THIS
HON BLE COURT IN W.P. NO.10260/2021 (GM-CFA) BY
ALLOWING THE ABOVE APPEAL, CONSEQUENTLY.               ALLOW
THE WRIT PETITION IN W.P. NO.10260/2021 (GM-CFA) AS
PRAYED    FOR,   AND    REMAND   THE    MATTER        TO    THE
RESPONDENT NO. 3 FOR PRAYED FOR, AND REMAND THE
MATTER TO THE RESPONDENT         NO. 3 FOR DECIDING THE
PROCEEDINGS      IN    ACCORDANCE      WITH     LAW        AFTER
AFFORDING OPPORTUNITY TO BOTH PARTIES & ETC.

      THIS APPEAL COMING ON FOR PRELIMINARY HEARING,
THIS DAY ALOK ARADHE J., DELIVERED THE FOLLOWING:
                            -3-
                                         WA No.1207 of 2021




                        JUDGMENT

This intra Court appeal emanates from an order

dated 16.09.2021 passed by the learned Single Judge by

which writ petition preferred by the appellants has been

dismissed and the orders dated 05.01.2017 and

23.03.2021 passed by the Deputy Registrar and Joint

Registrar of Co-operative Societies, have been upheld.

2. Facts giving rise to filing of this appeal briefly

stated are that M/s. Surabhi Chits Private Limited

(hereinafter referred to as 'the Company') is a chit

Company. The appellant No.2 and her husband

Dr.T.N.Chandrakanth subscribed for several chits and

were successful bidders. The appellants received money

from the Company and defaulted in repayment of the

amount.

WA No.1207 of 2021

3. The appellants thereupon entered into a

compromise with the Company. Under the aforesaid

agreement, the appellants agreed to pay a sum of

Rs.3,50,00,000/- and issued ten Cheques. The

Company thereupon agreed to release the property in

favour of the appellants. However, the appellants did

not annul the commitment of repayment and the

Cheques issued by the appellants were dishonored on

account of insufficiency of funds. Thereupon, the

Company issued a notice. The appellants sent a reply

on 30.04.2016 in which it was stated that the Company

should infact initiate the proceedings under the Chit

Funds Act, 1882 inspite of initiating proceedings under

the Negotiable Instruments Act, 1881. The appellants,

after a period of ten months from entering into

compromise with the Company i.e. some time in August

2016, filed an application seeking to set aside the

compromise arrived at between the parties on

29.10.2015. The Deputy Commissioner, by an order

WA No.1207 of 2021

dated 05.01.2017, dismissed the application preferred

by the appellants. The aforesaid order was affirmed in

an appeal by an order dated 23.03.2021 passed by the

Joint Registrar. The appellants thereupon challenged

the order in a writ petition. The learned Single Judge,

by an order dated 16.09.2021, has dismissed the writ

petition. In the aforesaid factual background, this

appeal arises for our consideration.

4. Learned Senior counsel for the appellants

submitted that the appellants are willing to deposit the

remaining amount of Rs.40,00,000/- as directed by this

Court by an order dated 21.07.2022. Learned Senior

counsel for the appellants, at the outset, submitted that

the attempts to arrive at an amicable settlement, have

failed. It is further submitted that the appellants be

granted time till 13.03.2023 and the appellants shall

deposit the remaining amount of Rs.40,00,000/- as

WA No.1207 of 2021

directed vide order dated 21.07.2022. It is further

submitted that the order passed by the Deputy

Registrar and the Joint Registrar are cryptic and suffer

from the vice of non-application of mind. It is

contended that in the facts of the case, the claim of the

appellants seeking recall of the compromise arrived at

between the parties deserves to be enquired into.

5. On the other hand, learned counsel for the

Company has submitted that the appellants had

entered into a compromise with the Company which is

in their own volition and it is not the case of the

appellants that either threat, coercion or

misrepresentation was effected by the Company while

entering into a compromise. It is pointed out that after

a period of ten years by way of an afterthought,

appellants had filed a petition before the Deputy

Registrar seeking recall of the order. It is also urged

WA No.1207 of 2021

that having taken advantage of the compromise and

having sold the property which was released in favour of

the appellants in pursuance of the compromise, the

appellants are not justified in seeking to recall the

compromise arrived at between the parties.

6. We have considered the submissions made on

both sides and have perused the record. Admittedly, in

the proceedings before the Deputy Registrar of Co-

operative Societies, an application under Order 23 Rule

3 which was duly signed by the parties, was filed on

13.10.2015. The compromise arrived at between the

parties was recorded by the Deputy Registrar. Acting

under the compromise, the appellants got the property

situated at Malleshwaram, released on 15.10.2015 and

within a period of two days, sold the same on

17.10.2015. Thereafter, it is also pertinent to note that

the appellants had entered into a memorandum of

WA No.1207 of 2021

understanding with the Company on 14.10.2015. In

the aforesaid memorandum of understanding, the

appellants had clearly admitted that they are defaulters

and they owed a sum of Rs.3,50,00,000/- to the

Company. The aforesaid memorandum of

understanding was an independent contract apart from

the compromise.

7. It is pertinent to note that it is not the case of

the appellants that any fraud, misrepresentation or

coercion was exercised on them by the Company while

entering into either the compromise or memorandum of

understanding. The appellants had taken advantage of

the compromise and got released the property at

Malleshwaram and immediately within two days, sold

the same. After a period of ten months, sometime in the

month of August 2016, the appellants filed an

application seeking recall of the compromise. Thus, the

WA No.1207 of 2021

aforesaid application was clearly based on an after

thought. It is pertinent to note that a Bench of this

Court, by an order dated 21.07.2022, had directed the

appellants to pay a further sum of Rs.50,00,000/-

before the Joint Registrar. However, despite

opportunities being granted to the appellants, the

appellants have only deposited a sum of Rs.10,00,000/-

and till today has not deposited the amount of

Rs.40,00,000/-. Therefore, the appellants have not

complied with the interim order passed by this Court.

The Deputy Registrar as well as the Joint Registrar who

are the fact finding authorities, have concurrently found

that no case for setting aside the compromise petition

between the parties is made out. The aforesaid

concurrent finding of fact has not been demonstrated to

be perverse in this intra Court appeal which has also

been upheld by the learned Single Judge. The conduct

of the appellants, in taking advantage of the

compromise and in alienating the property and

- 10 -

WA No.1207 of 2021

thereafter not complying with the interim order passed

by this Court on 21.07.2022 disentitles to any relief in

exercise of extraordinary jurisdiction of this Court.

For the aforementioned reasons, we do not find

any ground to differ with the conclusion arrived at by

the learned Single Judge.

In the result, the appeal fails and is hereby

dismissed.

Consequently, the pending interlocutory

application is also dismissed.

Sd/-

JUDGE

Sd/-

JUDGE

RV