Karnataka High Court
Kanva Educational Trust vs The Competent Authority on 6 November, 2025
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 6TH DAY OF NOVEMBER, 2025
PRESENT
THE HON'BLE MRS. JUSTICE ANU SIVARAMAN
AND
THE HON'BLE DR. JUSTICE K.MANMADHA RAO
MISCELLANEOUS FIRST APPEAL NO.3669 OF 2025
(KPIDFA)
BETWEEN:
KANVA EDUCATIONAL TRUST
REPRESENTED BY ITS SECRETARY
MR. RAJATH P. GOWDA
AGED ABOUT 35 YEARS
RESIDING AT No.302
6TH MAIN ROAD
OPP. MLO CLUB
MAHALAKSHMI LAYOUT
BENGALURU-560 086
...APPELLANT
(BY SRI. D.R. RAVISHANKAR, SENIOR COUNSEL FOR
SRI. SIDDARTH U.B., ADVOCATE)
AND:
1. THE COMPETENT AUTHORITY
FOR SRI. KANVA SOUHARDHA CREDIT
CO-OPERATIVE LIMITED, AND
KANVA GROUP OF COMPANIES
BENGALURU AND
ADDITIONAL REGIONAL COMMISSIONER
OFFICE OF THE REGIONAL COMMISSIONER
BENGALURU DIVISION, BMTC BUILDING
2ND FLOOR, K.H. ROAD
SHANTHINAGAR
BENGALURU-560 027
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2
2. SRI. KANVA SOUHARDHA CREDIT
CO-OPERATIVE LIMITED AND
KANVA GROUP OF COMPANIES
REPRESENTED BY ITS CHAIRMAN
AND ADMINISTRATOR OF
THE BOARD OF ADMINISTRATORS
MR. JUSTICE K.N. KESHAVANARAYANA
FORMER JUDGE
HIGH COURT OF KARNATAKA
R/AT No.10/11, "MANASA"
SINGAPORE GARDENS
GREEN FIELDS, GUBBALALA GATE
KANAKAPURA ROAD
BENGALURU-560 062
3. SRI. N. NANJUNDAIAH
FOUNDER DIRECTOR/DIRECTOR AND
PROPRIETRIX
SRI. KANVA SOUHARDHA CREDIT
CO-OPERATIVE LIMITED AND
KANVA GROUP OF COMPANIES
AGED ABOUT 53 YEARS
S/O LATE NARAYANAPPA
R/AT. A408, BRIGADE APARTMENT
MALLESHWARAM
BENGALURU-560 003
...RESPONDENTS
(BY SRI. VEERESH RACHAPPA BUDIHAL, ADVOCATE FOR C/R1;
SRI. SHREERAM T. NAYAK, ADVOCATE FOR R3;
NOTICE TO R2 IS DISPENSED WITH)
THIS MFA IS FILED U/S.16 OF THE KARNATAKA
PROTECTION OF INTEREST OF DEPOSITORS IN FINANCIAL
ESTABLISHMENTS ACT, 2004, AGAINST THE ORDER DATED
09.01.2024 PASSED IN MISC. No.1204/2023 ON THE FILE OF
THE XCI ADDITIONAL CITY CIVIL AND SESSIONS JUDGE AND
SPECIAL JUDGE FOR KPIDFE CASES, BENGALURU, CCH-92,
ALLOWING THE PETITIONS FILED U/S.5(2) OF THE KPIDFE ACT,
2004 AND ETC.
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3
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 18.09.2025 AND COMING ON FOR
PRONOUNCEMENT OF JUDGMENT THIS DAY, ANU SIVARAMAN
J., PRONOUNCED THE FOLLOWING:
CORAM: HON'BLE MRS. JUSTICE ANU SIVARAMAN
and
HON'BLE DR. JUSTICE K.MANMADHA RAO
CAV JUDGMENT
(PER: HON'BLE MRS. JUSTICE ANU SIVARAMAN)
This Miscellaneous First Appeal is filed against the final
order dated 09.01.2024, passed by the XCI Additional City
Civil and Sessions Judge, Bengaluru ('Special Court' for
short) in Misc.No.1204/2023. By the said impugned order,
the Special Court made the ad-interim order of attachment
of properties, including the property on which the appellant's
school is situated, absolute.
2. We have heard Shri. D.R. Ravishankar, learned
senior counsel as instructed by Shri. Siddarth U.B, learned
advocate appearing for the appellant, Shri. Veeresh R.
Budihal, learned counsel appearing for respondent No.1 and
Shri. Shreeram T. Nayak, learned counsel appearing for
respondent No.3.
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3. It is submitted that the appellant, a registered
Educational Trust operates a school in a property taken on
30 year lease from respondent No.3 by a registered lease
agreement dated 05.03.2016.
4. Respondent No.1 - Competent Authority initiated
proceedings under the Karnataka Protection of Interest of
Depositors in Financial Establishments Act, 2004 ('KPIDFE
Act' for short) against respondent No.3 for his role in a
financial establishment. In these proceedings, the
government issued a notification dated 30.08.2023
attaching various properties, including the land leased to the
appellant.
5. The Competent Authority filed an application
under Section 5(2) of the KPIDFE Act as Misc.No.1204/2023
before the Special Court to make the attachment, absolute.
Though, the conduct of the School in the premises was
known to the Competent Authority, the appellant was not
made a party to the proceedings. The Special Court passed
the impugned order making the attachment absolute. Based
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on the said order, the Competent Authority issued a notice
dated 25.04.2025 to the appellant to vacate the school
premises. This appeal has been filed on receipt of the said
notice.
6. It is contended by the learned senior counsel
appearing for the appellant that the order which is passed
without making the appellant a party is violative of the
principles of natural justice and is void in law. It is also
contended that the Competent Authority had actual
knowledge of the fact that the appellant was in possession of
the premises as a lessee and that therefore, the refusal to
implead the appellant was deliberate. It is further contended
that public notice is not a substitute for direct notice to the
appellant.
7. The learned senior counsel would also contend
that since the lease agreement was executed on 05.03.2016
and since the property was in the possession of the
appellant, an order of confirmation of attachment could not
have been passed without the appellant being in the party
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array. It is further submitted that the school is a running
concern and that the future of approximately 450 students
and 25 teaching and 17 non-teaching staffs are put at risk
due to the wrong orders.
8. In support of the legal contentions urged, the
learned senior counsel would place reliance on the following
decisions:-
• Bangalore Medical Trust v. B.S. Muddappa
reported in (1991) 4 SCC 54;
• Harshad Govardhan Sondagar v.
International Assets Reconstruction
Company Limited and Others reported in
(2014) 6 SCC 1; and
• State of Uttar Pradesh v. Sudhir Kumar Singh
and Others reported in (2021) 19 SCC 706.
9. In reply, the learned counsel appearing for
respondent No.1 - Competent Authority would submit that,
the very contention of the appellant that it had entered into
a registered Lease Deed on 05.03.2016 for a period of 30
years for a sum of Rs.10,00,000/- as security deposit, is
incorrect and misleading. It is further contended that the
-
Scheme of the KPIDFE Act is that once there is a collection
of deposits from the public by a Financial Establishment and
an inability by the Establishment to repay the depositors,
the provisions of the Act are activated. A Notification under
Section 3(2) of the KPIDFE Act was published on 30.08.2023
in two newspapers having wide circulation and was also
affixed on the conspicuous places of the property in question
that the appellant cannot plead ignorance of the same.
10. Further, Section 12(3) of the KPIDFE Act provides
that it is for a person claiming any interest in the property
attached to make an objection before the Special Court,
even if no notice is served on him. It is submitted that since
the Section 3(2) Notification was given wide publicity, the
appellant was perfectly aware of the attachment and in the
light of the provisions of the Act, he can have no contention
that he was entitled to a personal notice. It is specifically
stated that the notice had been duly affixed on a
conspicuous place in the premises in question as well and
therefore the appellant's claim of ignorance is only to be
rejected. It is submitted that since the appellant has no
-
case that he was unaware of the proceedings, it was for him
to have come before the Special Court and place his
contentions on record. Since he refused to do so, he cannot
raise any claims with regard to the order of attachment
being made absolute.
11. It is further submitted that, the Apex Court held
in its judgment in Municipal Committee Katra and Ors v.
Ashwani Kumar in Civil Appeal No.14970-71/2017
dated 09.05.2024 that no one can be permitted to take
undue and unfair advantage of his own wrong to gain
favourable interpretation of law. It is a sound principle that
he who prevents a thing from being done shall not avail
himself of the non-performance he has occasioned.
12. It is further contended that the appellant was
informed by the respondent that the property can be
provided to the appellant on rent for a certain period of time
before the property was auctioned. Despite such an
assurance the respondent is taking steps to action the
property in question.
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13. We have considered the contentions advanced.
We notice that it is an admitted fact that an order of interim
attachment had been passed by the Government and
published as provided under Section 3(2) of the KPIDFE Act.
Thereafter, an application was also preferred by the
Competent Authority under Section 5(2) of the KPIDFE Act
before the Special Court. The appellant does not have a
contention that he was unaware either of the factum of the
attachment or the fact that an application had been moved
before the Special Court for making the order absolute. The
contention in the appeal is to the effect that he was not
made a party to the proceedings.
Section 3(2) of the KPIDFE Act reads as follows:-
"3. Attachment of properties on default of
return of deposits.-
(1) x x x x x
(2) Notwithstanding anything contained in any
other law for the time being in force,-
(i) where, upon complaint received from any
depositors or otherwise, the Government is
satisfied that any Financial Establishment has
failed -
(a) to return the deposit after maturity or
on demand by depositor: or
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(b) to pay interest or other assured
benefit: or
(c) to provide the service against such
deposit; or:
(ii) Where the Government has reason to believe
that any Financial Establishment is acting in
and detrimental to the interest of the
depositors with an intention to defraud them;
or
(iii) Where the Government is satisfied that such
Financial Establishment is not likely to return
the deposits or make payment of interest or
other benefits assured or to provide the
services against which the deposit is
received.
the Government may, in order to protect the
interests of the depositors of such Financial
Establishments, after recording reasons in writing,
issue an order by publishing it in the official
gazette, attaching the money or property believed
to have been acquired by such financial
establishment either in its own name or in the
name of any other person from and out of the
deposits collected by the financial establishments,
and where it transpires that such money or other
property is not available for attachment or not
sufficient for the repayment of the deposits, such
other property of the said financial establishments,
or the personal assets of the promoters, partners,
directors, managers or members or any other
person of the said Financial Establishments."
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Section 5(2) of the KPIDFE Act reads as follows:-
"5. Competent Authority.-
(1) x x x x x
(2) The Competent Authority shall within thirty
days from the date of receipt of the order made under
section 3, apply to the special Court for further order of
attachment absolute."
Section 12(3) of the KPIDFE Act reads as follows:-
"12. Powers of Special Court regarding
attachment.-
(1) x x x x x
(2) x x x x x
(3) Any person claiming an interest in the property
attached or any portion thereof may, notwithstanding
that no notice has been served upon him under this
section, make an objection as aforesaid to the Special
Court at any time before an order is passed under sub-
section (4) or sub-section (6)."
14. Section 5(3) of the KPIDFE Act provides for an
application supported by affidavits stating the grounds on
which the order is made under Section 3 and the amount of
money or other property believed to have been acquired
from out of the deposits and the details of persons in whose
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name such property is believed to have been invested or
acquired or any property attached under Section 3.
15. Section 7 of the KPIDFE Act provides for an
assessment of assets and deposit liabilities in respect of the
financial establishment and the submission of a report to the
Special Court.
16. It is therefore clear that on a provisional
attachment being made in respect of a property, notice is to
be issued to the financial establishment and to any other
person whose property is attached under Section 3. The
appellant on whose premises, an order of attachment had
admittedly been affixed cannot take a contention that he
was unaware of the attachment. It was therefore for him to
have approached the Special Court and raised his objections
as against making the order of attachment, absolute. In the
facts and circumstance of the case, we are of the opinion
that the contention that the appellant was not made a party
to the proceedings can make no difference to the situation.
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17. It is not in dispute that the appellant was put in
possession of the property by respondent No.3 and the
properties of respondent No.3 are liable for attachment
under Section 3(2) of the KPIDFE Act, if the jurisdictional
pre-requisites are met. Since, the appellant did not appear
before the Special Court and show cause as to why the
attachment should not be made absolute, we are of the
opinion that the appellant is not entitled to any further right
of hearing.
18. Further, the contentions raised by the appellant
that the appellant should be permitted to occupy the
premises on rent also cannot be accepted since the purpose
of the act is to attach the properties, which, after
confirmation of the attachment, vest in the Competent
Authority, who is then enabled to sell the properties in
auction to utilize the proceeds for making repayment to the
depositors.
19. In K.K.Baskaran v. State represented by its
Secretary, Tamil Nadu and others reported in (2011) 3
-
SCC 793, the Apex Court considered the challenge to the
provisions of the Tamil Nadu Protection of Interests of
Depositors (in Financial establishments) Act, 1997 and held
that the Act is a salutary measure to remedy a great social
evil and is not in violation of Articles 14, 19(1)(g) or 21 of
the Constitution of India.
This view was followed in Sonal Hemant Joshi and
others v. State of Maharashtra and others reported in
(2012) 10 SCC 601.
In State of Maharashtra v. 63 Moons Technologies
Limited reported in (2022) 9 SCC 457, the earlier
decisions were affirmed and it was held that the
Maharashtra Protection of Interests of Depositors (in
Financial establishments) Act, 1999, is constitutionally valid
and that strict provisions are required to meet the situations
of repeated financial fraud.
20. We notice that the Special Court has considered
all the relevant aspects of the matter and has come to the
conclusion that the property is liable to be attached and sold
to settle the claims of the depositors. No sustainable
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grounds have been raised in this appeal. The appeal
therefore fails and the same is dismissed.
All pending interlocutory applications shall stand
dismissed.
Sd/-
(ANU SIVARAMAN)
JUDGE
Sd/-
(DR. K.MANMADHA RAO)
JUDGE
cp*
