SMT SOUNDARYA T vs THE SPECIAL OFFICER AND COMPETENT
- Court
- Karnataka High Court
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HC-KAR
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MFA No. 6910 of 2026
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
TH
DATED THIS THE 6 DAY OF OCTOBER, 2026
BEFORE
THE HON'BLE MR. JUSTICE PRADEEP SINGH YERUR
MISCELLANEOUS FIRST APPEAL NO. 6910 OF 2026 (KPIDFA)
C/W
MISCELLANEOUS FIRST APPEAL NO. 6911 OF 2026 (KPIDFA)
IN MFA No. 6910/2026
BETWEEN:
SMT SOUNDARYA T
W/O.M.NARAYAN
AGED ABOUT 55 YEARS
NO.362, RR RESIDENCY
3RD CROSS, 401, 4TH FLOOR
RR NAGARA, BHA LAYOUT
PATTANAGARE
BENGALURU-560 098.
…APPELLANT
(BY SRI. AMIT ANAND DESHPANDE., ADVOCATE)
AND:
1. THE SPECIAL OFFICER AND
COMPETENT AUTHORITY
FOR IMA AND OTHER KPID CASES
OFFICE AT 3RD FLOOR,
MINI V.V TOWER
PODIUM BLOCK,
DR. AMBEDKAR VEEDHI,
BENGALURU-560 001
2. M/S. SIRI VAIBHAVA SAUHARDHA PATTINA
SAHAKARI NIYAMITA
Digitally
signed by
VINUTHA M
Location:
HIGH
COURT OF
KARNATAKA
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REP.BY ITS CEO
SRI.RAJESH V.R
OFFICE AT NO.18/19, 1ST FLOOR
MUNIRAMASWAMY BUILDING
OPP.MASALA HOTEL,
UTTARAHALLI MAIN ROAD,
CHIKKALLASANDRA
BENGALURU - 560 061.
…RESPONDENTS
(BY SRI.VEERESH R.BUDIHAL ., ADVOCATE FOR R-1;
NOTICE TO R-2 IS DISPENSED WITH V.O.D 19.09.2026)
THIS MFA IS FILED U/S.16 OF THE KARNATAKA
PROTECTION OF INTEREST OF DEPOSITORS IN FINANCIAL
ESTABLISHMENTS ACT, AGAINST THE ORDER DT. 25.06.2026
PASSED ON I.A.NO. 3 IN MISC.NO. 20/2026 ON THE FILE OF
THE XCI ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, AND
SPECIAL JUDGE FOR KPIDFE CASES, BENGALURU (CCH-92)
DISMISSING THE I.A.NO. 3 FILED UNDER ORDER XI RULE 12
AND 14.
IN MFA NO. 6911/2026
BETWEEN:
SMT SOUNDARYA T
W/O. M. NARAYAN,
AGED ABOUT 55 YEARS
NO.362, RR RESIDENCY,
3RD CROSS, 401,
4TH FLOOR, RR NAGARA
BHA LAYOUT, PATTANAGARE
BENGALURU-560 098.
...APPELLANT
(BY SRI.AMIT ANAND DESHPANDE., ADVOCATE)
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AND:
1. THE SPECIAL OFFICER AND
COMPETENT AUTHORITY FOR
IMA AND OTHER KPID CASES,
OFFICE AT 3RD FLOOR,
MINI V.V TOWER
PODIUM BLOCK,
DR. AMBEDKAR VEEDHI,
BENGALURU-560 001
2. M/S. SIRI VAIBHAVA SAUHARDHA
PATTINA SAHAKARI NIYAMITA
REP.BY ITS CEO
SRI. RAJESH V.R
OFFICE AT NO.18/19, 1ST FLOOR
MUNIRAMASWAMY BUILDING
OPP. MASALA HOTEL,
UTTARAHALLI MAIN ROAD,
CHIKKALLASANDRA
BENGALURU 560 061.
... RESPONDENTS
(BY SRI.VEERESH R.BUDIHAL .,ADVOCATE FOR R-1;
NOTICE TO R-2 IS DISPENSED WITH V.O.D 19.09.2026)
THIS MFA IS FILED U/S.16 OF THE KARNATAKA
PROTECTION OF INTEREST OF DEPOSITORS IN FINANCIAL
ESTABLISHMENTS ACT, AGAINST THE ORDER DT. 25.06.2026
PASSED ON I.A.NO. 2 IN MISC.NO. 20/2026 ON THE FILE OF
THE XCI ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, AND
SPECIAL JUDGE FOR KPIDFE CASES, BENGALURU.
THESE APPEALS, ARE COMING ON FOR ORDERS, THIS
DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:
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CORAM: HON'BLE MR. JUSTICE PRADEEP SINGH YERUR
ORAL JUDGMENT
These two separate appeals are preferred by the
appellant, who is respondent No.2, seeking to set aside the
impugned orders dated 25.06.2026 passed on I.A.No.3 and
I.A.No.2, respectively, in Misc.No.20/2026 on the file of XCI
Additional City Civil & Sessions Judge, Bengaluru.
2. With consent of learned counsel for both parties,
the matters are taken up for final disposal.
3. Respondent No.1, who is the petitioner before the
Special Court, is the Competent Authority under the Karnataka
Protection of Interest of Depositors in Financial Establishment
Act, 2004 (for short 'KPIDFE Act') and respondent No.2 herein
is respondent No.1 before the Special Court, is the Financial
Establishment.
4. The Government of Karnataka appointed a
Competent Authority exercising its powers under the provisions
of Section 5 of the KPIDFE Act in respect of respondent No.1-
Financial Establishment. The proceedings were initiated by the
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petitioner-respondent No.1 herein before the Special Court
against respondent No.1 and the appellant herein.
5. In the said proceedings i.e., Misc.No.20/2026, an
application-I.A.No.3 came to be filed by the appellant-
respondent No.2 under Order XI Rules 12 and 14 of CPC
seeking the following reliefs:
"a) To direct the petitioner No.1 to produce the
documents listed in paragraph 4 of this
application for inspection by the respondent
No.2 and her counsel;
b) To permit the respondent No.2 to take copies of
the said documents; and
c) To pass such other and further orders as this
Hon'ble Court deems fit and proper in the facts
and circumstances of the case, in the interest of
justice."
and the application-I.A.No.2 came to be filed by the
appellant-respondent No.2 under Section 7 of the KPIDFE Act
r/w Section 151 of CPC seeking the following reliefs:
"a) To conduct an enquiry into the liability, if any, of
the respondent No.2 towards the respondent
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No.1 financial establishment, limited to the
amount actually disbursed and received;
b) To set aside/vacate the interim order of
attachment against the scheduled property
belonging to the respondent No.2; and
c) To modify the order of attachment in terms of
the admitted liability, subject to the final
determination of this Court, and to pass such
other orders as deemed fit.."
6. The Competent Authority filed objections to the said
applications and sought for dismissal of the same.
7. In the application-I.A.No.3 filed by the appellant,
she sought the following documents:
"a) The complete and updated loan ledger account
of the Respondent No.2 as maintained by the
Respondent No.1 society from the date of
inception till date.
b) The bank account statements of the Respondent
No.1 society reflecting the alleged disbursement
of the loan amount of Rs.75,00,000/- to the
Respondent No.2.
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c) The relevant extracts of the cash book and day
book maintained by the Respondent No.1 society
pertaining to the alleged loan transaction.
d) The original loan sanction order, loan
agreement, and the corresponding disbursement
voucher(s) signed by the Respondent No.2.
e) The Memorandum of Deposit of Title Deeds, if
any, executed in relation to the said loan, along
with the complete loan account statement.
f) The statutory and internal Auditor's reports of
the Respondent No.1 society for the relevant
financial year, reflecting the loan transaction in
question."
8. It is contended by learned counsel for the appellant
that the appellant had not availed the loan of Rs.75,00,000/-
and only Rs.42,80,000/- was availed and paid to her and
remaining amount is not paid. Therefore, she sought for
production of documents under Order XI Rule 12 and 14 of
CPC. It is a contention of learned counsel for the appellant that
the impugned order passed by the learned trial Judge is
perverse, arbitrary and unsustainable in law and without
application of mind. It is also contended by the learned counsel
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that the provisional attachment in the specific case would be a
total infraction of the principles of natural justice before the
Competent Authority also before the Special Court. Though it is
vehemently contented by the learned counsel that the loan
amount sanctioned was Rs.75,00,000/-, but actually disbursed
is only Rs.42,80,000/-, this aspect would have to be necessarily
proved by the appellant before the Special Court by production
of the loan amount statements and other documents, which is
the subject matter of seizure by the CID police. Therefore, he
contends that the appellant has a right of defence seeking the
documents to fully justify her case and to establish her case
before the Special Court and she cannot be left without remedy
by not providing those documents and not hearing or providing
a suitable opportunity of producing those documents.
8.1. It is further contended by the learned counsel that
by the impugned order, no reasons are recorded by the Special
Court and on the basis of the mortgage deed dated
12.11.2020, the loan amount of Rs.75,00,000/- was to be
cleared in 120 instalments. It is recorded that the borrower will
have all the documents including loan documents and it is for
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the appellant to produce those documents. As such, the
application came to be rejected without proper reasoning or
finding given by the Special Court. Therefore, he seeks to set
aside the same.
8.2. Learned counsel further contends that if an
opportunity is not given to the appellant to establish the fact
that the actual amount that was disbursed was only
Rs.42,80,000/- and not Rs.75,00,000/- as stated in mortgage
deed and if the documents as sought for by her are not
furnished to her either by the Investigating Agency or by the
Competent Authority, then she would not be able to defend her
case and invariably there would be an attachment of her
property, which she is aggrieved. Therefore, he contends that
Special Court has not taken into consideration these crucial
aspects and has rejected the application filed by the appellant-
respondent No.2. Hence, he seeks to allow the appeal by
setting aside the impugned orders and consequently, allow the
applications challenged in both these appeals.
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9. Per contra , learned counsel Sri. Veeresh R.Budihal
appearing on behalf of respondent No.1-Competent Authority
vehemently contends that the Competent Authority is
constituted by the Government of Karnataka to initiate action
against the Financial Establishment for misappropriation, fraud,
violation and breach committed and it is in the interest of the
depositors that the Competent Authority came to be appointed
by the State Government. In Misc.No.20/2026, the appellant-
respondent No.2 has made application-I.A.No.3 seeking for
production of certain documents, which are not within the
custody of the Competent Authority. At the same time, he
contends that these documents may be with the appellant-
respondent No.2 or the Financial Establishment or for that
matter, is with the bank of the appellant-respondent No.2 to
show whether the Financial Establishment disbursed the said
amount of Rs.42,80,000/- to the appellant and if she is having
such documents, the onus is upon her and the burden of proof
is also upon her to produce the same before the Special Court
to prove her case that she was only disbursed with the said
amount of Rs.42,80,000/- and not the amount so mentioned in
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the mortgage deed i.e., Rs.75,00,000/-. Therefore, it would not
lie with the appellant-respondent No.2 to seek these documents
from the Competent Authority as the said documents are not
within the custody or possession of the Competent Authority.
9.1. Learned counsel further contends that the appellant
is at liberty to secure the same from the concerned Statutory
Authority, the Financial Establishment or for that matter, the
Investigating Agency; and produce the same before the Special
Court and seek necessary reliefs. On being satisfied, the same
would be considered by the Special Court and suitable orders
would be passed, which has not been done by the appellant
and rightfully, the Special Court has dismissed the applications
being not satisfied with the contentions so put forth by the
appellant in both the cases on hand. Hence, there is no
illegality or perversity in the impugned orders passed by the
Special Court. Consequently, he seeks dismissal of these
appeals.
10. I have heard learned counsel for the appellant and
learned counsel for respondent No.1.
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11. It is not in dispute that the case was filed before the
Special Court by the Competent Authority under Section 5(2) of
the KPIDFE Act to make absolute the ad-interim attachment
order passed by the Government of Karnataka vide Notification
dated 25.08.2025 in respect of the petition schedule properties
by contending that respondent No.1-Financial Establishment
has defrauded the depositors and the assets of the said
Financial Establishment is not sufficient to meet the depositors
liabilities. It is also seen that respondent No.2 is said to have
availed certain loan of Rs.75,00,000/- by mortgaging the
petition schedule property and has not repaid the loan and the
loan amount is paid out of the depositor's money. Therefore,
the petition schedule property was ordered to be attached to
realise the funds to satisfy the deposit liabilities. Accordingly,
the petition was filed before the Special Court.
12. In the meanwhile, respondent No.2, who had
availed the loan according to her Rs.42,80,000/- but as per the
mortgage agreement Rs.75,00,000/-, filed applications-
I.A.Nos.2 and 3 seeking production of certain documents.
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13. Apparently, it is contended by the Competent
Authority that these documents are not within the custody or
possession of the Competent Authority. Investigation is taken
up by the CID Police. It may be that the certain documents are
placed before the Investigating Agency as sought for by the
appellant-respondent No.2 in Crime No.139/2022.
14. It is the case of the appellant/respondent no.2 that
she has made good the amount of Rs.42,80,000/- which was
borrowed by her through the financial establishment and loan
amount of Rs.75,00,000/- was not availed by her by
mortgaging the petition schedule properties. It is for the
appellant to establish the same by producing relevant
documents from the custody of the concerned statutory
authority, the financial establishment or the bank or for that
matter, the investigating agency. When the competent
authority does not have these documents, it would not be
possible for the competent authority to produce these
documents for the mere asking of the appellant/respondent
no.2. All these contentions are taken into consideration by the
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learned Special Court and passed the order rejecting the
application.
15. I do not find any good ground or cogent reason to
interfere with impugned order passed by the learned Special
Judge. I am in agreement with the submissions made by
learned counsel for respondent no.1/competent authority that it
is open for the appellant to secure and procure these
documents from the concerned statutory authority including the
financial establishment or the bank or the investigating
agency and produce the same before the Special Court with
regard to the veracity and genuineness of the claim so made by
her and upon such claim being made, the same shall be
considered in accordance with law and suitable orders be
passed.
16. Be that as it may, coming back to the impugned
order herein, I do not find any good ground or cogent reason to
interfere with the impugned order passed by the learned
Special Judge.
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Hence, I pass the following:
O R D E R
1. The appeals are dismissed .
2. However, liberty is reserved to the appellant to make
necessary application before the concerned statutory
authority, the financial establishment or the bank or
for that matter, the investigation agency and procure
the necessary documents and place the same before
the Special Court for the necessary reliefs.
3. If any such claim is made by production of
documents, the Special Court shall consider the same
and pass suitable orders in accordance with law.
4. All contentions of the appellant and respondents are
kept open.
5. It is made clear that this Court has not expressed
any opinion on merits of the matter.
Sd/-
(PRADEEP SINGH YERUR)
JUDGE
paras 1 to 13 .. VM
14 to end .. GSS
List No.: 1 Sl No.: 20