Failure to honour a deposit undertaking warrants dismissal of writ challenges to cooperative loan recovery.

Hidayat, the principal borrower, obtained a cash-credit facility of ₹3 crore from Shantika Souharda Sahakari Niyamita.

Following non-payment, recovery proceedings under Section 39 of the Karnataka Souharda Co-operative Act, 1997 resulted in an order dated 21 June 2024 directing Hidayat and two others to pay ₹3,43,49,136 with interest at 14% per annum, recoverable through attachment and sale of the scheduled property.

No appeal was filed against the order; Hidayat instead challenged it by writ petition.

The petitioners in the connected writ petition claimed to have purchased flats in a residential complex constructed on the scheduled property and challenged a sale notice issued in the recovery proceedings.

In Hidayat’s writ petition, the Court had granted interim relief on his undertaking to deposit ₹1.5 crore by 18 December 2025.

That undertaking was not fulfilled; Hidayat’s counsel later stated that ₹44 lakh had been paid.

Whether Hidayat was entitled to writ relief against the recovery order despite not appealing it and failing to comply with his undertaking to deposit ₹1.5 crore.

Whether the flat purchasers were entitled to relief against the sale notice concerning the property in recovery proceedings.

The recovery proceedings were initiated under Section 39 of the Karnataka Souharda Co-operative Act, 1997, and the resulting order provided for recovery of the dues through attachment and sale of property.

The petitions invoked Articles 226 and 227 of the Constitution.

The Court cited no precedent and did not formulate a general rule on the maintainability or merits of either writ challenge; its decision rested on the circumstances before it, including the absence of an appeal against the recovery order, the unfulfilled undertaking, and the need not to impede recovery of public dues.

The Court noted that Hidayat had not pursued an appeal against the recovery order and had instead obtained interim protection on a specific undertaking to deposit ₹1.5 crore.

That undertaking remained unfulfilled despite extensions, and the claimed payment of ₹44 lakh did not persuade the Court to grant further indulgence in light of the recovery amount, which had exceeded ₹4 crore.

The Court considered that continuing relief would impede enforcement of the award and recovery of the dues.

In those circumstances, it dismissed both the borrower’s challenge and the flat purchasers’ challenge to the sale notice.

The Court left the petitioners at liberty to approach the co-operative bank to seek resolution by repayment; if they did so, the bank was directed to provide the account details and outstanding amount requested.

Pending applications were disposed of.