Karnataka High Court
The Competent Authority For vs Sri Balappa Padamanna on 13 May, 2025
Author: H.P.Sandesh
Bench: H.P.Sandesh
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WA No. 749 of 2025
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 13TH DAY OF MAY, 2025
PRESENT
THE HON'BLE MR JUSTICE H.P.SANDESH
AND
THE HON'BLE MR JUSTICE RAMACHANDRA D. HUDDAR
WRIT APPEAL NO. 749 OF 2025 (GM-RES)
BETWEEN:
THE COMPETENT AUTHORITY FOR
S.M.N CREDIT SOUHARDA
SAHAKARI NIYAMITHA
VIJAYAPURA
REPRESENTED BY ITS
COMPETENT AUTHORITY
DR. SHANMUKHA D
ADDITIONAL REGIONAL
COMMISSIONER, BANGALORE
DIVISION, BMTC BUILDING
2ND FLOOR, K.H.ROAD
SHANTHI NAGAR
BANGALORE-560 027
...APPELLANT
Digitally signed
by SHAKAMBARI
(BY SRI. VEERESH RACHAPPA BUDIHAL, ADVOCATE)
Location: High
Court of
Karnataka AND:
1. SRI. BALAPPA PADAMANNA
PUJARI
S/O PADAMANNA PUJARI
OCC:FARMER
AGED ABOUT 56 YEARS
R/AT SHAPURA AGASI
GAVALI GALLI
VIJAYAPURA-586 101
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WA No. 749 of 2025
2. SRI. SUNIL BALAPPA PUJARI
S/O BALAPPA PADAMANNA PUJARI
AGED ABOUT 32 YEARS
R/AT SHAPURA AGASI
GAVALI GALLI
VIJAYAPURA-586 101
3. THE STATE OF KARNATAKA
REP. BY ITS SECRETARY
DEPARTMENT OF REVENUE
5TH FLOOR, M.S.BUILDING
DR. AMBEDKAR VEEDI
BANGALORE-560 001
4. THE REVENUE DEPARTMENT
SPECIAL CELL
GOVERNMENT OF KARNATAKA
REP. BY IT IS UNDER SECRETARY
M.S.BUILDING
DR.AMBEDKAR VEEDI
BANGALORE-560 001
...RESPONDENTS
(BY SRI. SRINATH KULKARNI, ADVOCATE FOR R2;
SRI. MOHAMMED JAFFAR SHAH, AGA FOR R3 & R4)
THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO CALL FOR THE RECORDS IN WP
No.8901/2025 AND SET ASIDE THE IMPUGNED ORDER DATED
08.04.2025 PASSED BY THE LEARNED SINGLE JUDGE IN WP
No.8901/2025 AND RESTORE THE PROCEEDINGS INITIATED
BY THE APPELLANT BEFORE THE HON'BLE COURT OF THE Ld
XCI ADDITIONAL CITY CIVIL AND SESSIONS JUDGE
BENGALURU (CCH-92) IN MISC No.1/2025 AND ETC.
THIS APPEAL, COMING ON FOR ORDERS, THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE H.P.SANDESH
and
HON'BLE MR JUSTICE RAMACHANDRA D. HUDDAR
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WA No. 749 of 2025
ORAL JUDGMENT
(PER: HON'BLE MR JUSTICE H.P.SANDESH)
Heard learned counsel for the appellant and the
learned counsel for respondents.
2. This writ appeal is filed against the order of the
Single Judge passed in WP No. 8901 of 2025 connected
with WP No. 7899 of 2025 wherein the petitioners had
sought for quashing of Notification dated 11-11-2021
(Annexure-B) issued by the 4th respondent-authority in the
said Writ Petition.
3. Sri Veeresh R. Budihal, learned counsel for the
appellant would vehemently contend that the learned
Single Judge has committed an error in appreciating the
material on record both on factual aspects as well as on
question of law and also counsel brought to this Court's
notice that, though discussion was made in paragraph
No.3 wherein the ground which has been urged by the
respondents herein was taken note of and the reason
assigned in paragraph No.6 that the Competent Authority
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can spring into action only after registration of a crime and
the very reasoning given by the Single Judge is erroneous
and also an observation made that the sword of crime is
no more hanging on the head of the petitioners and in that
light, permitting further proceedings against the
petitioners therein before any fora, initiated on the basis of
the crime, would become contrary to law. The counsel also
brought to notice of this Court that already the competent
authority has sought for attachment of property invoking
Section 13 of the protection of Karnataka Protection Of
Interest Of Depositors in Financial Establishment Act, 2004
(in short `the KPID Act'). The very reasoning given by the
learned Single Judge is erroneous and it is for the
petitioners to pursue their remedy before the concerned
Court and thus, the learned Single Judge committed an
error. The two-fold argument of counsel for the appellant
is that there was a factual error and also contrary to law.
4. Per contra, the counsel appearing for the
respondent Nos. 1 and 2 vehemently contend that the
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very contention that there was a malafide transfer cannot
be a ground to initiate the proceedings against the
respondent Nos. 1 and 2; the counsel also would contend
that the said property is an ancestral property; counsel
would also vehemently contend that property was gifted in
favour of his son from father prior to initiation of
attachment notification, and also prior to the registration
of FIR.
5. Sri Mohammed Jaffar Shah, learned AGA
appearing for the State i.e. respondent Nos. 3 and 4 would
submit that the very approach of the Single Judge is
erroneous and only they are the competent authority
appointed in accordance with law.
6. Having heard the learned counsel appearing for
the parties, the material on record discloses that the writ
petitions are filed praying to quash the notification dated
11.11.2021 issued by the second respondent therein and
also the other reasoning given by the Single Judge that
the sword of crime is no more hanging on the head of the
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petitioners in view of filing of the charge sheet and making
them as witnesses and not as the accused and whatever
may be the reason, the grounds which have been urged by
the counsel appearing for the respondents have been
making a hue and cry that they have nothing to do with
the financial establishment and whether they have done
nothing to do anything is the matter to be considered by
the Special Court and grounds which have been urged by
the respondents could be looked into by the Special Court
whether the transfer is on account of defeating the very
claim of the depositors or not and those grounds can be
urged before the Special Court by the respondents. This
observation made by the learned Single Judge is
erroneous in law in view of Section 13 of the said Act with
regard to attachment of property. This Court would like to
extract Section 13 of the KPID Act.
"13. Attachment of property of
malafide transferees.- (1) Where the assets
available for attachment of a Financial
Establishment or other person referred to in
section 3 are found to be less than the amount
or value which such Financial establishment is
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required to repay to the depositors and where
the Special Court is satisfied, by affidavit or
otherwise, that there is reasonable cause for
believing that the said Financial Establishment
has transferred (whether before or after the
commencement of this Act) any of the property
otherwise than in good faith or for proper
consideration, the Special Court may, by notice,
require any transferee of such property
(whether or not he received the property
directly from the said Financial Establishment)
to appear on a date to be specified in the notice
and show cause why so much of the
transferee's property as is equivalent to the
proper value of the property transferred should
not be attached. (2) Where the said transferee
does not appear and show cause on the
specified date, or where after investigation in
the manner provided in sub-section (5) of
section 12 the Special Court is satisfied that the
transfer of the property to the said transferee
was not in good faith or for proper
consideration, the Special court shall order
attachment of so much of the said transferee's
property as is in the opinion of the Special Court
equivalent to the proper value of the property
transferred."
7. In view of the above, the observation made by
the given by the single judge that the sword of crime is no
more hanging on the head of the petitioners in view of
filing of the charge sheet and making them as witnesses
and not as the accused is erroneous in law and merely
making the petitioners as witnesses and the reasons are
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contrary to law and no prohibition to invoke Section 13 of
the Act.
8. Having considered the reason given by this
Single Judge as erroneous both on law and on facts, as
rightly pointed out by the counsel appearing for the
appellant that the Single Judge committed an error on
facts of the case as well as contrary to law and when that
no condition precedent for initiating proceedings under
Section 13 that there must be a criminal case, the
reasoning given by the Single Judge that the competent
authority can spring into action only after registration of a
crime is erroneous and this reasoning is not sustainable in
the eye of law. Even otherwise also, there is reasonable
cause for believing that the said financial establishment
has transferred any of the property otherwise than in good
faith or for proper consideration, whether or not received
the property directly from the said financial establishment,
to appear on a date to be specified in the notice and show
cause why such transfer of property is equivalent to the
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proper value of the property transfer should not be
attached and also clause No.(2) is also very clear with
regard to satisfaction and the very object of the act is also
with an intention to protect the interest of the depositors
and the same to be considered by the Special Court.
Hence, the order passed by the Single Judge is required to
be set aside. In view of the discussions made above, we
pass the following:
ORDER
(i) Appeal is allowed.
(ii) Impugned order passed by the Single
Judge is hereby set aside.
(iii) The other contentions raised by the both
parties are kept open and the same can
be urged before the Special Court.
(iv) The Special Court is directed to expedite
the matter and the appellants and
respondents shall assist the Special Court
in disposal of the same at the earliest.
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(v) Parties shall appear before the Special
Court on 05.06.2025 without expecting
any notice from the Special Court.
Sd/-
(H.P.SANDESH)
JUDGE
Sd/-
(RAMACHANDRA D. HUDDAR)
JUDGE
SK
