ARECANUT PROCESSING AND SALES CO OPERATIVE SOCIETY LTD., vs ASSISTANT REGISTRAR OF CO OPERATIVE SOCIETIES

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

TH
DATED THIS THE 29 DAY OF OCTOBER, 2026

PRESENT


THE HON'BLE MRS. JUSTICE ANU SIVARAMAN

AND

THE HON'BLE MR. JUSTICE K.S.BHARATH KUMAR


WRIT APPEAL NO.121 OF 2024 (CS-RES)


BETWEEN:

ARECANUT PROCESSING AND SALES CO-OPERATIVE



SOCIETY LTD.

APMC YARD

SAGAR

SHIVAMOGGA DISTRICT-577 401

BY ITS SECRETARY


…APPELLANT
Digitally
signed by
PAVITHRA N
Location:
High Court
of Karnataka

(BY SRI. JAYAPRAKASH R. V., ADV.)


AND:

1. ASSISTANT REGISTRAR OF CO-OPERATIVE

SOCIETIES
KUVEMPU ROAD
SHIVAMOGGA-577 201

2. ASHWINI KUMAR
S/O S R THIMMAPPA
AGED ABOUT 62 YEARS

2

OCC: ARECANUT MERCHANT
R/O NO.5
APMC YARD
SAGAR
SHIVAMOGGA DISTRICT-577 401

…RESPONDENTS
(BY SRI. N.BYREGOWDA, AGA FOR R1;
SRI. S.V. PRAKASH, ADV. FOR R2)

THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE
KARNATAKA HIGH COURT ACT, 1961, PRAYING TO ALLOW THE
ABOVE APPEAL AND SET ASIDE THE ORDER DATED 17.11.2023
IN WP NO.34535/2018 PASSED BY THE LEARNED SINGLE JUDGE.

THIS WRIT APPEAL HAVING BEEN HEARD AND RESERVED
FOR JUDGMENT ON 12.10.2026 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 MR. JUSTICE K.S.BHARATH KUMAR

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CAV JUDGMENT

(PER: HON'BLE MRS. JUSTICE ANU SIVARAMAN)
This writ appeal is filed challenging the order dated
17.11.2023 passed by the learned Single Judge in Writ
Petition No.34535/2018 (CS-RES).
2. We have heard Shri. Jayaprakash R.V, learned
counsel appearing for the appellant, Shri. N. Byregowda,
learned Additional Government Advocate appearing for
respondent No.1 and Shri. S.V. Prakash, learned counsel
appearing for respondent No.2.
3. The appellant is a co-operative society registered
under the Karnataka Co-operative Societies Act, 1959,
engaged in arranging the marketing of agricultural produce
of its members. Respondent No.2 is an arecanut trader who
had been transacting with the appellant since 1997–98.
Between 03.11.2001 and 08.03.2002, respondent No.2
purchased 728 bags of arecanut from the appellant for a
total consideration of Rs.46,55,606/-. Since respondent No.2
failed to pay the purchase price and lift the stock within the
stipulated time despite repeated notices, the appellant re-

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tendered the stock on 30.06.2004 with the permission of the
Agricultural Produce Market Committee ('APMC'). The re-
tender fetched Rs.38,24,426.40/-, which was credited to his
account. The difference between the purchase price and the
re-tender proceeds was Rs.8,31,179.60/-.
4. The appellant raised a dispute under Section 70
of the Karnataka Co-operative Societies Act, 1959, in
Dispute No.DRS/6/2004-05, seeking recovery of the shortfall
together with Rs.17,63,784.40/- claimed towards interest.
The dispute was referred to the Assistant Registrar of Co-
operative Societies, who held an enquiry. Respondent No.2
contested his liability to pay the interest claimed. By award
dated 29.06.2007, the Assistant Registrar of Co-operative
Societies, directed respondent No.2 to pay Rs.8,31,179.60/-
with interest at 6% per annum from 01.07.2004 till
realisation. The additional claim for interest was rejected on
the ground that there was no agreement between the
parties for payment of interest.
5. Aggrieved by the rejection of its claim for interest
at 15% per annum, the appellant preferred Appeal

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No.718/2007 before the Karnataka Appellate Tribunal. The
said appeal was considered along with Appeal No.198/2012
filed by respondent No.2 concerning his separate claim
arising from the same transaction. By a common judgment
dated 09.02.2018, the Tribunal dismissed both the appeals.
Aggrieved by the dismissed of the appeal, the appellant filed
Writ Petition No.34535/2018.
6. The learned Single Judge held that though the
writ petitioner relied on the Trade Rules providing for
interest at the rate determined by its Board, it had not
produced documentary evidence establishing that the Board
had resolved to charge interest at 15% per annum during
the relevant period or that the rate had been communicated
to respondent No.2. Holding that oral evidence alone did not
establish the writ petitioner's entitlement to interest at the
claimed rate, the learned Single Judge upheld the rejection
of the claim for interest at 15% per annum by the Assistant
Registrar and the Tribunal.
7. With regard to the writ petitioner's reliance on the
Interest Act, 1978, the learned Single Judge observed that a

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claim under the Interest Act had neither been pleaded in the
original dispute nor urged in the appeal before the Tribunal
or in the grounds of the writ petition and had been advanced
for the first time during arguments. The contention that it
could nevertheless be considered as a question of law was
rejected, holding that the basis of the claim ought to have
been specifically pleaded to afford respondent No.2 an
adequate opportunity to contest it. Finding that the writ
petitioner had failed to establish its entitlement to the
interest claimed or any error warranting interference with
the orders of the authorities, the learned Single Judge
dismissed the writ petition.
8. The learned counsel appearing for the appellant
contends that the authorities erroneously construed the
Trade Rules framed in 1997–98 as being applicable only to
transactions during that year. It is contended that the Rules
came into force on 01.04.1997 and governed all transactions
undertaken with the Society thereafter, including the
purchases made by respondent No.2 during 2001–02. It is
contended that the learned Single Judge failed to decide this

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material question, while the Tribunal affirmed the rejection
of its claim without properly examining the scope and
contents of the Rules.
9. It is further contended that Clauses 4, 5 and 6 of
the Trade Rules provide for the levy of interest on
outstanding amounts from the date of purchase, while Rule
16 obliges a purchaser who fails to lift the stock within the
stipulated period to pay interest at the rate fixed by the
Board of Directors. It is contended that the Board had fixed
the rate at 15% per annum and that respondent No.2,
having been furnished with the Rules and having accepted
their terms before participating in the tenders, was bound by
them. It is contended that the absence of a separate
agreement for payment of interest could not justify rejection
of the claim for interest.
10. It is also contended that the appellant had paid
the agriculturists the value of the produce at the rates
quoted by respondent No.2, whereas respondent No.2 failed
to pay the corresponding purchase price. It is contended
that the re-tender proceeds were adjusted partly towards

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interest and the balance towards the amount outstanding
purcahse price and that the remaining liability reflected in
respondent No.2’s account was recoverable under the Trade
Rules.
11. The learned counsel appearing for respondent
No.2, on the other hand, contends that the appellant has not
established any statutory or contractual right to recover
interest at 15% per annum. It is contended that no such
power is traceable to the provisions of the Karnataka Co-
operative Societies Act, the Rules framed thereunder, or the
applicable bye-laws. It is further contended that the
appellant has not established that the Trade Rules were
furnished to respondent No.2, that he had signed and
accepted their terms or that the Board of Directors had fixed
interest at 15% per annum. It is therefore contended that
the entries in his account do not, by themselves, establish
liability for the additional interest claimed.
12. It is further submitted that respondent No.2 was
ready to pay the C-Bill amount and take delivery of the
arecanut, but the appellant insisted upon payment of

9

interest as a condition for releasing the stock. It is also
contended that the appellant thereafter re-auctioned the
728 bags on 30.06.2004 without proper intimation or notice
or hearing and in violation of the procedure prescribed under
the APMC Act and the applicable bye-laws. It is contended
that the re-auction at a lower price caused him loss, for
which he had separately raised Dispute
No.DRS/DIS:75/2008-09 claiming Rs.35,64,241.60. It is
also submitted that the entire amount payable under the
award has been paid.
13. The learned counsel appearing for respondent
No.2 places reliance on the judgment dated 01.09.2026
passed by a co-ordinate Bench of this Court in Malnadu
Areca Marketing Co-operative Society Limited v. M/s.
Siddalingeshwara Arecanut Stores in Writ Appeal
No.864/2025 (CS-RES) .
14. We notice that the issue of payment of interest on
the successful bidder refusing to lift the produce within the
time provided has been specifically considered and answered
by a Division Bench of this Court in Writ Appeal

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No.864/2025. The question whether the provisions of the
Interest Act which had never been raised before the KRCS,
the Karnataka Administrative Tribunal as well as the learned
Single Judge could be raised in the writ appeal was also
considered and answered in the 'Negative'. The plea of the
appellant that interest ought to have been awarded under
Section 34 of the Code of Civil Procedure, 1908 was also
considered and it was found that the principal amount had
already been paid and the dispute being essentially as to the
claim of interest, Section 34 of the Code of Civil Procedure
would also not be applicable.
15. In the instant case as well, the contention is that
728 bags of arecanut was purchased by the respondent from
the appellant - Society costing Rs.46,55,606/-. It is also an
admitted fact that the respondent did not lift the articles and
the same were re-tendered and sold on 30.06.2004 for an
amount of Rs.38,24,426/-. The KRCS allowed the dispute
partially awarding an amount of Rs.8,31,179.60/- with
interest at 6% per annum from 01.07.2004 till realisation.
This amount has admittedly been paid by the respondent.

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16. The main contention urged before us today is that
the Society had framed Trade Rules which was produced as
an Annexure 'F' and the said Rules provided for payment of
interest. However, we notice that the Trade Rules produced
as Annexure 'F' are the Rules of the Society for the year
1997-98 and there is nothing placed on record to show that
the Rules had been extended or made applicable for the
period from 03.11.2001 to 08.03.2002 when the articles
were purchased by respondent No.1 herein. It is pertinent to
note that even in those Rules, it is specifically provided that
if the stock purchased by the buyer is not released within
the stipulated period, the Committee of Management shall
take action to sell the said stock through re-tender as per
Rules. It is further submitted that if there is loss on such
sale, the purchaser who first bought it will be liable to
compensate the Society. This compensation has been made
good by the order of the KRCS.
17. The learned Single Judge considered the
contentions and found that there is nothing whatsoever on
record in support of the claim made by the Society for

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interest at 15%. The applicability of the Trade Rules was
also specifically considered and found against. Even if the
Trade Rules are applicable, it was found that there was
nothing on record to suggest that the Board of the appellant
had fixed interest at the rate of 15% per annum and this
fact was informed to the respondent.
18. In the above factual situation, we are of the
opinion that there is no merit in the contentions raised by
the appellant. The appeal fails and the same is accordingly
dismissed .
All pending interlocutory applications shall stand
disposed of.


Sd/-
(ANU SIVARAMAN)
JUDGE


Sd/-
(K.S.BHARATH KUMAR)
JUDGE


PN