The Davanagere Urban Co Operative ... vs Ramesh
2023 Latest Caselaw 6589 Kant

                            1


     IN THE HIGH COURT OF KARNATAKA AT BENGALURU

      DATED THIS THE 19TH DAY OF SEPTEMBER, 2023

                         BEFORE

         THE HON'BLE MR. JUSTICE K. NATARAJAN

           REGULAR FIRST APPEAL NO.608 OF 2017
BETWEEN:

THE DAVANAGERE URBAN CO-OPERATIVE BANK LTD.,
P.B. ROAD,
DAVANAGERE,
REPRESENTED BY ITS
GENERAL MANAGER.
                                        ... APPELLANT
(BY SRI BASAVARAJ T, ADVOCATE)

AND:

1.    RAMESH
      S/O. DAMODAR RAIKAR,
      AGED ABOUT 46 YEARS,
      NO.264/1, OKKALIGARA PETE,
      DAVANAGERE CITY - 577 001.

2.    KUMAR
      S/O. MAHABALESHWAR RAIKAR,
      AGED ABOUT 47 YEARS,

3.    ANAND
      S/O. MAHABALESHWAR RAIKAR,
      AGED ABOUT 57 YEARS,

     R2 AND R3 ARE RESIDENTS OF T.M. ROAD,
     HONNALI TOWN,
     DAVANAGERE DISTRICT.
                                         ...RESPONDENTS
(BY SRI G. CHANDRASHEKARAIAH, ADVOCATE)
                               2


      THIS REGULAR FIRST APPEAL IS FILED UNDER SECTION
96 OF CPC., AGAINST THE JUDGMENT AND DECREE DATED
18.01.2017 PASSED IN OS.NO.102/2013 ON THE FILE OF THE
SENIOR CIVIL JUDGE, HARIHARA, DECREEING THE SUIT FOR
MANDATORY INJUNCTION.

     THIS REGULAR FIRST APPEAL HAVING BEEN HEARD AND
RESERVED FOR JUDGMENT ON 13.9.2023 THIS DAY, THE
COURT PRONOUNCED THE FOLLOWING:


                    JUDGMENT

This appeal is filed by the appellant under Section 96

of CPC for setting aside the judgment and decree dated

18.01.2017 passed in O.S. No.102/2013 by the Senior

Civil Judge, Harihara.

2. Heard the arguments of learned counsel

appearing for the appellant and the learned counsel

appearing for the respondents.

3. The appellant was the defendant and respondents

were the plaintiffs before the trial Court. The rank of the

parties before the trial Court is retained for convenience.

4. The case of plaintiffs before the trial Court is that

the defendant was the Co-operative Bank and the property

site bearing Municipal khatha No.20, measuring East-West

25 feet and North-South 70 feet, more-fully described in

the schedule, (hereinafter referred to as 'suit schedule

property') belongs to the defendant. The defendant

advertised for selling of the suit schedule property in a

public auction. Accordingly, the plaintiffs also jointly

participated in the public auction as a single bidder on

15.03.2006 and the plaintiffs were the highest bidders.

Accordingly, they have to pay Rs.14,93,000/- as sale

consideration, out of which, 25% was paid on the same

day. Rs.10,000/- was paid before participation in the

auction and subsequently, deposited the remaining

amount. Except Rs.2,93,000/-, all the amounts were paid.

The defendant-Bank, without executing the sale deed,

dragged the matter. Hence, the plaintiffs issued notice to

the defendant, who gave evasive reply. There was

encroachment over the suit schedule property by the

owner of the adjacent property and hence, the plaintiffs

requested for clearing the encroachment, but the

defendant denied. Therefore, the plaintiffs were

constrained to file the suit.

5. In pursuance of summons, the defendant-Bank

appeared through its learned counsel and filed written

statement by admitting the fact of public auction, the

payment made by the plaintiffs, but contended that as per

the agreement between them, the plaintiffs were required

to pay Rs.4,10,000/- towards 25% of the sale

consideration on the same day of auction and it was paid

by them and the remaining amount had to be paid within

30 days of the auction, which was not paid by the

plaintiffs. Therefore, the defendant issued notice to the

plaintiffs to pay the remaining amount, otherwise, the

defendant would forfeit the amount paid by the plaintiffs.

It was further contended in the written statement that the

plaintiffs did not pay the remaining balance amount and

therefore, the defendant issued notice for the 2nd public

auction. Hence, the suit came to be filed. It was also

contended in the written statement that there was

violation of conditions by the plaintiffs and therefore, the

plaintiffs were not entitled for the relief.

6. The defendant further took up the specific

contention that the suit schedule property was purchased

by the defendant from one K. Sulochana under the sale

deed dated 07.05.2001, the public auction was on

15.03.2006, the plaintiffs not paid the remaining amount

within the specified time and hence, the defendant-bank

forfeited the amount of Rs.12,00,000/- and the suit was

barred by limitation. The defendant also took contention

that the suit was not maintainable without issuing the

notice under Section 125 of Co-operative Societies Act

(hereinafter referred to as 'Act'). Hence, prayed for

dismissing the suit.

7. Based upon the pleadings, the trial Court framed

the following issues:

1. Whether the plaintiffs prove that they are entitled to get execute registered sale

deed in favour of them from the defendant in respect of suit schedule property ?

2. Whether the plaintiffs prove that they are entitled for mandatory injunction in favour of them ?

3. What order or decree ?

8. In order to prove the case, the plaintiff No.2

himself examined as P.W.1 and got marked 9 documents

as per Exs.P.1 to 9, and on behalf of the defendant, 3

witnesses have been examined as per D.Ws.1 to 3 and got

marked 3 documents as per Exs.D.1 to 3. After hearing

the arguments, the trial Court answered issue Nos.1 to 3

in the affirmative and decreed the suit and directed the

defendant to execute the sale deed. Being aggrieved by

the same, the defendant has filed this appeal.

9. The learned counsel for the appellant has

seriously objected the judgment of the trial Court mainly

on three grounds, that the defendant is the Co-operative

Bank and there is no notice issued to the defendant under

Section 125 of the Act, and therefore, the suit is not

maintainable. The second limb of argument of the learned

counsel is that the auction sale was on 15.03.2006 and the

amount was also paid in the year 2006, but no suit was

filed within three years, but the suit was filed in the year

2013. Therefore, the suit is barred by limitation. The third

ground of argument is that as per the agreement-Ex.P.1

between the plaintiffs and defendant on 15.03.2006 and as

per the clause in the agreement, the plaintiff were

required to pay 25% of the sale consideration on the same

date of auction and they have paid it and as per clause-3

of the agreement, the remaining amount shall be paid

within 30 days, but the plaintiffs have not come forward to

pay the same within the prescribed time and the defendant

was forced to issue notice on 17.08.2006 to the plaintiffs

for making the remaining payment, in spite of the same,

there was no response from the plaintiffs. Therefore, the

amount has been forfeited due to violation of the terms of

the agreement and the plaintiffs are not entitled for

execution of the sale deed. Even otherwise, the plaintiffs

have not paid the remaining amount, and therefore,

defendant was constrained to go for the second auction

sale. It is contended that the suit itself is not

maintainable, both on the limitation and the legal

infirmities, and the trial Court ought not have passed the

judgment in favour of the plaintiffs. Hence, prayed for

allowing the appeal and to dismiss the suit.

10. Per contra, learned counsel for the respondents-

plaintiffs has supported the judgment and decree passed

by the trial Court and contended that the matter is

between the plaintiffs and defendant as purchasers and

seller and it is not touching the management and business

of the Bank. Therefore, the notice under Section 125 of

the Act is not necessary. It is further contended that the

defendant has not cancelled the auction sale and no

intimation was given to the plaintiffs regarding cancelling

the auction sale and forfeiting the amount. Therefore, the

defendant cannot take advantage of clause-3 of the

agreement. It is further contended that subsequent to the

lapse of three months, the defendant-Bank received the

amount and without cancelling the auction sale of the

plaintiffs, the defendant tried to alienate the property by

public auction in the year 2013. Therefore, the suit is

maintainable, a notice was issued to the defendant. It is

further contended that the suit is not barred by limitation

and it is maintainable, as the plaintiffs continuously

requesting the defendant-Bank for removing the

encroachment in order to execute the sale deed, but the

defendant-Bank has ignored. Hence, prayed for dismissing

the appeal.

11. Having heard the arguments of learned counsel

for the parties, perused the records.

12. The points that arise for consideration in this

appeal are:

(i) Whether the suit is not maintainable in view of non issuing the notice

to the defendant-bank under Section 125 of the Co-operative Societies Act ?

            (ii)     Whether the        suit   is   barred by
      limitation ?
            (iii)    Whether the defendant waived off
      clause 3 of the sale agreement in view of

receiving the balance amount subsequent to the due date ?

            (iv)     Whether the judgment and decree
      calls for interference?

13. On perusal of the entire documents and the

evidence on record, both P.W.1 and D.W.1, it is an

admitted fact that the defendant-Bank was the owner of

the suit schedule property and there was auction sale held

on 15.03.2006. The plaintiffs were the highest bidders for

purchasing the suit schedule property for Rs.14,93,000/-.

The plaintiffs also deposited Rs.10,000/- prior to

participating the auction and as on the date of auction,

they paid Rs.4,10,000/- as 25% of the bid amount. It is

also an admitted fact that there is an agreement between

plaintiffs and defendant regarding the auction sale as per

Ex.D.1. It is also referred in clause-3 of the agreement

that the purchaser shall pay the remaining amount of the

bid within 30 days. Admittedly, the plaintiffs have paid

Rs.4,10,000/- as 25% of the bid amount, on the date of

auction sale, and they have not paid the remaining amount

within 30 days. Further, the plaintiffs have paid the

amount subsequent to the due date on 18.05.2006 for

Rs.3.00 lakhs, Rs.1.00 lakh on 25.08.2006 and Rs.4.00

lakhs on 09.09.2006, totally Rs.12.00 lakhs paid in the

year 2006.

14. Re. Point No.1:

The 1st contention of the appellant is that the notice

under Section 125 of Act is not issued prior to filing of the

suit, and therefore, the suit is not maintainable. The

learned counsel for the respondents-plaintiffs has

contended that the suit property belongs to the Bank and

they have sold the property and it does not come under

the business or management of the Bank in order to issue

notice under Section 125 of the Act and it is the civil

dispute. It is also contended that even otherwise, prior to

filing of the suit, the plaintiffs issued notice to the

defendant on 20.06.2012 and thereafter, filed the suit.

Therefore, though the notice was not named as statutory

notice under Section 125 of the Act, but the notice was

issued.

15. Admittedly, Ex.P.6 is the notice issued by the

respondents-plaintiffs to the defendant-Bank calling upon

the Bank to execute sale deed in respect of auction sale

otherwise, the plaintiffs would be constrained to file the

suit. Of course, the defendant-Bank contended that selling

the property was for their business affairs. On perusal of

the written statement, it is specifically contended at para

19A that the defendant-bank was the owner of the

schedule property which was purchased from one K.

Sulochana and her children on 28.02.2001 and the sale

deed was registered for Rs.5,80,000/- before the Sub-

Registrar on 07.05.2001 and in order to sell the property,

the Bank called for public auction on 15.03.2006. On the

back ground of this pleading, it reveals that the defendant-

bank purchased the property in the year 2001 and the

property was advertised for selling by public auction.

Therefore, the property owned by the Bank, if sold to any

person, that cannot be considered as day to-day affairs of

the banking business or touching the management of the

Bank in order to issue a statutory notice under Section 125

of the Act.

16. It is not the case of the defendant-Bank that

during the course of recovery of loan, the Bank intended to

sell the borrower's pledged or mortgaged property in

public auction in order to bring under the business or

affairs of the Co-operative Bank for the purpose of issuing

statutory notice. Therefore, to the facts of the case, the

statutory notice under Section 125 of the Act is not

necessary. Even otherwise, the plaintiffs issued the notice

at Ex.P.6 on 20.06.2012, four months prior to filing of the

suit. Therefore, the contention of the appellant's counsel

cannot be acceptable. Hence, point No.1 is answered in

the negative, and it is observed that the suit is

maintainable and the trial Court has rightly held that the

statutory notice is not required in this case.

17. Re. Point Nos.2 and 3:

It is contended by the learned counsel for the

appellant-defendant that the public auction was held on

15.03.2006 and the payment was made within the year

2006 and the suit was filed in the year 2013, and thereby,

the suit was barred by limitation, and also there was

violation of conditions of clause-3 of the agreement.

Therefore, the amount of Rs.12.00 lakhs paid by the

plaintiffs was forfeited. The contention of the learned

counsel for respondents-plaintiffs was that there was no

forfeiture of the amount even after due date, the

defendant-Bank received the amount of Rs.8.00 lakhs and

there was no intimation of canceling the auction sale. In

this regard, the learned counsel for the defendant-bank

contended that even though there was delay, the

defendant issued notice on 17.08.2006 as per Ex.P.2

calling upon the plaintiffs to pay the remaining amount,

other wise, they will forfeit the amount.

18. It is pertinent to note that in Ex.P.2, the

defendant has referred that the plaintiffs have paid

Rs.7,10,000/-. Subsequent to the notice, again the

plaintiffs paid another Rs.5.00 lakhs on two dates i.e. on

25.08.2006 for Rs.1.00 lakhs and on 09.09.2006 for

Rs.4.00 lakhs and it was admitted by the defendant-bank

by issuing certificate and the same was credited to their

account. Therefore, the plaintiffs have paid Rs.12,10,000/-

to the defendant-Bank. Admittedly, the defendant-Bank

has not issued any notice for cancellation of auction sale

by passing any resolution and intimated to the plaintiffs

that they have cancelled the agreement-Ex.D.1 for non

payment. On the other hand, the defendant-Bank

proceeded to sell the property to the third person by public

auction. No documents have been produced by the

defendant-Bank for having cancelled the agreement and

forfeiting the amount of Rs.12,10,000/- paid by the

plaintiffs. It is the case of the plaintiffs that after making

the payment, it was found that the suit schedule property

was encroached by the adjacent land owner. Therefore,

they requested the defendant to clear the encroachment

as per Ex.P.3 dated 20.07.2011, but the defendant ignored

it. Therefore, a notice was issued to the defendant-Bank,

but the defendant-bank replied that it was not responsible.

The reply of the defendant is marked as Ex.P.4 dated

05.08.2011. Even in the reply, the defendant-Bank has

not stated that the agreement has been cancelled and the

amount has been forfeited. On the other hand, the

defendant-Bank has stated that the Bank is not responsible

for the same. These documents show that there was

encroachment by the third parties and therefore, the

plaintiffs requested the defendant-Bank to clear the

encroachment. Therefore, the plaintiffs have not paid the

remaining amount for getting the sale deed executed. On

the other hand, the defendant-Bank neither cancelled the

auction sale nor forfeited the amount by giving reply to the

plaintiffs. The defendant received Rs.12,10,000/- and it

has to receive only Rs.2,83,000/- from the plaintiffs. Such

being the case, I am of the view that the agreement was

kept alive because of encroachment of the land. There

was correspondence between the parties and the

defendant waived clause-3 of the agreement regarding

cancellation of auction sale or forfeiting the amount.

Therefore, the question of claiming that there was default

on the part of the plaintiffs, does not arise. Maximum bid

amount has been paid and the agreement was kept alive.

Therefore, the suit came to be filed after refusal of the

defendant-Bank for clearing the encroachment. Therefore,

the suit is not barred by limitation and the contention of

the appellant-defendant that the auc0tion sale was

cancelled and the amount was forfeited, cannot be

acceptable. Hence, I answer point No.2 in the negative

and point No.3 in the affirmative in favour of plaintiff..

19. The plaintiffs have not paid the remaining

balance of Rs.2,83,000/- and the learned counsel for the

plaintiffs submitted that the plaintiffs are ready to pay the

remaining amount with interest.

20. Considering the facts and circumstances of the

case, the trial Court after considering all the aspects has

rightly decreed the suit, directing the defendant-Bank to

execute the sale deed. Therefore, the judgment and

decree passed by the trial Court does not call for any

interference.

21. Accordingly, the appeal filed by the appellant-

defendant is hereby dismissed.

22. The respondent-plaintiffs are directed to deposit

the amount of Rs.2,83,000/- together with interest at 18%

p.a. from 15.03.2006 before the trial Court, within four

weeks from the date for receipt of copy of this judgment.

23. Office is directed to send the copy of this

judgment and the trial Court records to the Court

concerned.

Sd/-

JUDGE

CS CT-SG