[Cites 26, Cited by 0]
Karnataka High Court
Dr. Viswanatha Bheemashankara Deepali vs The Competent Authority on 2 February, 2026
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MFA No. 7997 of 2024
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 2ND DAY OF FEBRUARY, 2026
PRESENT
THE HON'BLE MRS. JUSTICE ANU SIVARAMAN
AND
THE HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL
MISCELLANEOUS FIRST APPEAL NO. 7997 OF 2024 (KPIDFA)
BETWEEN:
DR. VISWANATHA BHEEMASHANKARA DEEPALI
S/O DR. B.C. DEEPALI,
HOUSE NO.527, 1ST MAIN,
8TH CROSS, 16TH WARD,
BASAVESHWARA EXTENSION,
HOSAPETE, VIJAYANAGARA DISTRICT.
...APPELLANT
(BY SRI. DESHPANDE ANOOP GOPALRAO, ADVOCATE)
AND:
Digitally signed by 1. THE COMPETENT AUTHORITY
RUPA V FOR AHANA SOUHARDHA CREDIT
HIGH COURT OF CO-OPERATIVE SOCIETY LTD., HOSAPETE,
KARNATAKA
VIJAYANAGARA DISTRICT, 3RD FLOOR,
MINI V.V. TOWER, PODIUM BLOCK,
DR. AMBEDKAR VEEDHI
BENGALURU - 560001
REPRESENTED BY ITS COMPETENT AUTHORITY,
S.N. SUBRAMANYA, ASSISTANT COMMISSIONER
AGED ABOUT 57 YEARS.
2. AHANA SOUHARADHA CREDIT CO-OPERATIVE
SOCIETY LTD., HOSAPETE,
VIJAYANAGARA DISTRICT
REPRESENTED BY ITS CHIEF EXECUTIVE OFFICER
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MFA No. 7997 of 2024
HC-KAR
SHRI RAGHAVENDRARAO
SS/O GURURAJARAO, HOSURU
CHITTAVADAGI POST - 583 221
HOSAPETE TALUK, VIJAYANAGARA DISTRICT.
...RESPONDENTS
(BY SRI. VEERESH R. BUDIHAL, ADVOCATE FOR C/R1;
R-2 SERVED)
THIS MFA IS FILED U/S. 16 OF THE KARNATAKA
PROTECTION OF INTEREST OF DEPOSITORS IN FINANCIAL
ESTABLISHMENTS ACT, AGAINST THE ORDER DATED
05.1.2024. PASSED IN MISC.NO.715/2023 ON THE FILE OF
THE XCI ADDITIONAL CITY CIVIL AND SESSIONS JUDGE AND
SPECIAL JUDGE FOR KARNATAKA PROTECTION OF INTEREST
OF DEPOSITORS IN FINANCIAL ESTABLISHMENTS (KPIDFE)
CASES, BENGALURU, (CCH-92) AND ETC.
THIS APPEAL HAVING BEEN HEARD AND RESERVED ON
19.01.2026, COMING ON FOR PRONOUNCEMENT OF
JUDGMENT, THIS DAY VIJAYKUMAR A. PATIL J., DELIVERED
THE FOLLOWING:
CORAM: HON'BLE MRS. JUSTICE ANU SIVARAMAN
and
HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL
CAV JUDGMENT
(PER: HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL)
This appeal is filed by the appellant under Section 16
of the Karnataka Protection of Interest of Depositors in
Financial Establishments Act, 2004 (hereinafter referred to
as 'the Act') challenging the order dated 05.01.2024
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passed in Misc.No.715/2023 by the XCI Additional City
Civil and Sessions Judge and Special Judge for KPIDFE
Cases, Bengaluru (hereinafter referred to as 'the Trial
Court').
2. The brief facts leading to the filing of this
appeal are that the respondent No.2-Society is registered
under Section 5 of the Karnataka Souharda Sahakari Act,
1997, on 23.10.2013. A complaint was filed against the
respondent No.2 alleging misuse and misappropriation of
the deposits and failure to return the said deposits to the
depositors. The Government, pursuant to the said
complaint initiated proceedings under the provisions of the
Act and appointed the respondent No.1 as the Competent
Authority under the Act. In furtherance of exercising its
powers under the Act, the Government ordered for
attachment of the properties of the respondent No.2. As
the properties, in the name of the respondent No.2 was
found to be insufficient to meet the claims of the
depositors, which stood around Rs.42.72 Crores, the
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properties of the Directors and the associated persons
were also attached by the Government. The appellant is
one of the Directors of the respondent No.2, whose
properties were provisionally attached. The respondent
No.1, in pursuance to the said provisional attachment,
filed a petition in Misc.No.715/2023 under Section 5(2) of
the Act, seeking to make the interim order of attachment,
absolute. The Trial Court, after considering the material
on record allowed the said petition, making the
attachment absolute and also ordered for realization of the
said property through a public auction. Being aggrieved
by the said order, the appellant is in appeal.
2. Sri.Deshpande Anoop Gopalrao, learned counsel
appearing for the appellant submits that the Trial Court
has failed to consider the material on record in its proper
perspective and erroneously allowed the petition. It is
submitted that the Trial Court failed to take into
consideration that the appellant had submitted the
resignation to the post of the Director of the respondent
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No.2-Society on 04.02.2015 and the same was accepted
on 09.02.2015. It is further submitted that the petition
schedule property was only purchased by the appellant
after his resignation as the Director and hence, the same
cannot be attached to realize the dues of the depositors.
It is also submitted that the Trial Court considered the
case of the former Directors and dismissed the
miscellaneous petition filed by the Competent Authority in
Misc.715/2023. However, the same principle was not
applied in the case of the appellant, who is also a former
Director. It is contended that the petition under Section
5(2) of the Act has been preferred by the respondent No.1
after a delay of 61 days, and the said delay is non-
condonable as there is an express limit of thirty days to
file the petition as per Section 5(2) of the Act. It is further
contended that the Trial Court has erroneously applied the
Limitation Act, 1973 (for short 'Limitation Act') and
condoned the delay of 61 days in filing the petition. It is
also contended that the respondent No.1 has failed to
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produce any material before the Court to show the liability
of the respondent No.2-Society as Rs.42.72 Crores and
unless such aspects are determined, the property cannot
be attached. Hence, he seeks to allow the appeal and set
aside the order of the Trial Court.
3. Per Contra, Sri.Veeresh R. Budihal, learned
counsel appearing for the respondent-Authority supports
the impugned order of the Trial Court and submits that the
Trial Court has passed the impugned order after detailed
consideration of the material available on record. Hence,
he seeks to dismiss the appeal.
4. We have heard the arguments advanced by the
learned counsel appearing for the appellant, learned
counsel appearing for the respondent No.1 and perused
the material available on record. We have given our
anxious consideration to the submissions advanced on
both sides.
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5. The point that arises for consideration in this
appeal is:
"Whether the impugned order of the Trial
Court calls for any interference?"
6. The pleading on record indicates that the
respondent No.2-Society is registered under Section 5 of
the Karnataka Souhardha Sahakari Act, 1997, on
23.10.2013 in the office of the Assistant Registrar of Co-
operatives, Hosapet Sub-Division, Hosapet. A complaint
was registered in Hosapet Rural police station in FIR
No.26/2021 on 03.04.2021 against the Directors of the
respondent No.2-Society for the offences punishable under
Sections 406, 415, 417, 419, 420, 465, 467, 470, 471,
477(A), 149 of the Indian Penal Code, 1860 and under
Section 9 of the Act, for having committed irregularities in
violation of the Karnataka Souharadha Co-operatives Act
and the bye-laws of the Society, for misuse and
misappropriation of the deposits collected from the
depositors and failing to return the said deposits. The
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Government, in pursuance to the said complaint, initiated
action under the provisions of the Act. The respondent
No.1 was duly appointed as the Competent Authority for
the respondent No.2 by the Government under Section
5(1) of the Act vide Notification No.E-RD.82.GRC.2022,
Bengaluru dated 28.06.2022. The Government, in further
exercise of its power under Section 3(2) of the Act,
provisionally attached the properties belonging to the
respondent No.2 and its associated persons. The property
standing in the name of the respondent No.2 was found to
be insufficient to meet the claims of the depositors, due to
which the properties of the Directors of the respondent
No.2 and associated persons were provisionally attached
by the Government vide Notification bearing No.E-
RD.82.GRC.2022 Bengaluru dated 08.02.2023. The
appellant herein is one of the Directors and the properties
acquired by him under the registered deed dated
07.06.2019 were provisionally attached. It would be
useful to mention that the provisional order of attachment
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was duly published as per law. However, no objection was
placed by the appellant to such provisional attachment.
The respondent No.1 being the Competent Authority filed
the petition in Misc.No.715/2023 under Section 5(2) of the
Act, seeking to make the order of interim attachment
absolute in respect of the property attached vide
notification dated 08.02.2023. The Trial Court, on
considering the petition with the material on record passed
the impugned order with detailed reasons, thereby making
the attachment of the property absolute and ordered the
respondent No.1 to realize the same through a public
auction and the said order of the Trial Court is under
challenge in this appeal.
7. The contention of the appellant is that he had
resigned on 04.02.2015 and the same was accepted on
09.02.2015. The Trial Court, in its order at paragraph
14(q) on perusal of the records, has recorded a specific
finding that the resignation afforded by the appellant was
only to the position of the Vice-President of the respondent
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No.2 and not to the post of the Director. The Trial Court
has rightly recorded the finding that the post of Vice-
President and the post of Director are distinct and
separate. It has also been clearly held that no material is
placed on record to indicate that the appellant has given
resignation to the post of the Director of the respondent
No.2. The said finding of the Trial Court is on proper
consideration of the material on record and the same does
not call for any interference. Hence, the contention that
the property was purchased after resignation to the post
of the Director and cannot be attached, does not hold
good and is required to be rejected. The contention that
the former Director's case was considered by the Trial
Court and the application for making the attachment was
rejected, cannot be a ground for the appellant to seek for
similar relief. In the case on hand, the Trial Court has
recorded a clear finding that the appellant was a Director
during the relevant period and his property is liable to be
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attached. Hence, the said contention is also required to be
rejected.
8. The other contention of the appellant is that the
delay of 61 days in filing the petition under Section 5(2) of
the Act is non-condonable as the Act expressly mentions
the period for filing the petition as 30 days and that the
application of the provisions of the Limitation Act to
condone the said delay is erroneous. Section 5(2) of the
Act provides a period of 30 days from the date of the order
made under Section 3 of the Act, for the Competent
Authority to apply to the Special Court for making an order
of attachment absolute. A further proviso is also added by
way of the Karnataka Act No.06 of 2021, wherein an
extension of 15 days can be sought by the Competent
Authority to the Secretary to the Government, Revenue
Department.
9. It would be useful to refer to paragraphs 26 to
31 of the decision of this Court in the case of SMT.
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YASHODA AND OTHERS Vs. THE COMPETENT
AUTHORITY FOR M/s. SRI VASISTA CREDIT
SOUHARDA CO-OPERATIVE LTD. AND ANOTHER1
which is extracted hereinbelow:
"26. Section 5(2) of the Act provides a
period of 30 days from the date of the order
made under Section 3 of the Act for the
Competent authority to apply to the Special Court
for making the order of attachment absolute. A
proviso has been added to sub-Section 5(2) by
the Karnataka Act No.06 of 2021, providing as
follows:-
"Provided that, the Secretary to
Government, Revenue Department, may
on the request of the Competent
Authority, extend this period by another
fifteen days in cases having valid reasons
and based on the merits of the case."
27. It is to be noticed here that there is
no provision in the KPIDFE Act excluding the
provisions of the Limitation Act for filing
applications under the KPIDFE Act. The High
Court of Madras in a series of decisions has held
that where the applications are to be filed before
a Special Court and where there is no express
exclusion of the provisions of the Limitation Act,
MFA No.380/2025 dtd 20.01.2026
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then, the Limitation Act is applicable. The
enactment being considered was the TNPID Act,
which was in pari materia to the provisions of the
KPIDFE Act before its amendment by introduction
of the proviso to Section 5(2) of the KPIDFE Act.
28. The Apex Court in K.K. Baskaran v.
State Represented by its Secretary, Tamil
Nadu and others reported in (2011) 3 SCC
793, upheld the legal validity of the TNPID Act
and held that the object of the Act to safeguard
the interest of the gullible depositors from
fraudulent activities of the financial
establishments. It further held at Paragraphs
No.28 to 30, which reads as follows:-
"28. In the case of the Tamil Nadu
Act, the attachment of properties is
intended to provide an effective and
speedy remedy to the aggrieved
depositors for the realisation of their
dues. The offences dealt with in the
impugned Act are unique and have been
enacted to deal with the economic and
social disorder in society, caused by the
fraudulent activities of such financial
establishments.
29. Under Sections 3 and 4 of
the Tamil Nadu Act, certain properties
can be attached, and there is also
provision for interim orders for
attachment after which a post-decisional
hearing is provided for. In our opinion
this is valid in view of the prevailing
realities.
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30. The Court should interpret the
constitutional provisions against the
social setting of the country and not in
the abstract. The Court must take into
consideration the economic realities and
aspirations of the people and must
further the social interest which is the
purpose of the legislation, as held by
Holmes, Brandeis and Frankfurter, JJ. of
the US Supreme Court in a series of
decisions. Hence the courts cannot
function in a vacuum. It is for this reason
that courts presume in favour of
constitutionality of the statute because
there is always a presumption that the
legislature understands and correctly
appreciates the needs of its own people."
29. We notice that the proviso to Section
5(2) of the KPIDFE Act gives the Government in
the Revenue Department a right to extend the
period of 30 days by 15 more days for the
Competent Authority to move the Special Court.
However, such power given to the Government to
extend the time by 15 more days cannot be
construed as being a bar on the power of the
Special Court under Section 5 of the Limitation
Act. We are of the clear opinion that the proviso
granting a power to the Government dehors the
power of the Special Court to extend the time for
making the application before the Special Court
cannot, in any way, limit the powers of the
Special Court.
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30. The Special Court is constituted under
Section 10 of the KPIDFE Act. Such Court is
clearly a "Court" for the application of the
Limitation Act. As such, the Special Court
exercises its power under Section 5 of the KPIDFE
Act by virtue of its status as a Court. The time
period provided under the Act and the power
provided to the Government to extend the time
for a period of 15 days thereafter cannot
therefore, be construed as limiting the powers of
the Special Court under Section 5 of the
Limitation Act.
31. Further, we notice that the Special
Court has considered the specific grounds raised
in the application for condonation of delay and
has found that in the nature of the application
under Section 5(2) of the KPIDFE Act, sufficient
cause has been shown to condone the delay in
filing the application. To arrive at this conclusion,
the Special Court has specifically considered the
nature of the statute under which the proceedings
are filed and the consequences of the rejection of
Section 5(2) of the KPIDFE Act application on the
ground of delay. We are of the opinion that such
considerations cannot be totally lost sight of and
the order of the Special Court cannot be said to
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be illegal or invalid due to the consideration of
the said grounds."
10. The aforesaid enunciation of law by this Court
makes it clear that the contention that the Limitation Act is
not applicable to the Act is erroneous in law as the
discretionary power of the Trial Court for condoning the
delay in filing the applications under the Act, cannot be in
anyway limited. It is also clearly held that there is no
provision in the KPIDFE Act that expressly excludes the
provisions of the Limitation Act from applying to the
applications filed under the KPIDFE Act. Therefore, the
contention of the appellant that the delay of 61 days in
filing the petition under Section 5(2) of the Act is non-
condonable, is required to be rejected.
11. Insofar as the contention of the appellant that
the assets and liabilities of the respondent No.2 have not
been determined and unless the same is determined, the
property cannot be attached is concerned, the same is
required to be rejected. The Trial Court, in paragraph
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14(aa) of the impugned order has made a clear finding
that the respondent No.1 had filed Misc.No.1080/2022 to
submit the report regarding the assets and liabilities of the
respondent No.2 as required under the Section 7(1) of the
Act, and along with the said report, the respondent No.2
has also filed a separate report as to the assets and
liabilities of respondent No.2. The Trial Court, on perusal
of the report has clearly noticed that the assets of the
respondent No.2 is Nil and the liabilities of the respondent
No.2 is Rs.42,72,44,027/-. Hence, the contention of the
appellant that the details of assets and liabilities are not
produced and the same is required to be determined, is
rejected.
12. The contention of the appellant is that the term
of his position as a Director has already expired.
However, the merit of the said contention cannot be gone
into at this stage, especially since the said contention has
not been raised before the Trial Court and is required to be
rejected.
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13. For the aforementioned reasons, we do not find
any merit in this appeal. Accordingly, the appeal is
dismissed. Consequently, the pending applications stand
disposed of.
Sd/-
(ANU SIVARAMAN)
JUDGE
Sd/-
(VIJAYKUMAR A. PATIL)
JUDGE
RV
List No.: 3 Sl No.: 3
