M/S. MANTHAN CREATIONS v. ARSHIFA BAHAR KHANAM

THE COMPETENT AUTHORITY (SRI. KANVA SOUHARDA CO-OPERATIVE CREDIT LTD., KANVA GROUP OF COMPANIES) THE ADDITIONAL REGIONAL COMMISSIONER BANGALORE DIVISION, BMTC BUILDING 'C' BLOCK, II FLOOR, K.H ROAD SHANTHINAGAR, BANGALORE 560 027. (BY SRI. VEERESH RACHAPPA BUDIHAL, ADV.,) &RESPONDENT - 2 - NC: 2025:KHC:48527-DB M.F.A. No.3899/2025 HC-KAR THIS MFA IS FILED U/S.16 OF THE KARNATAKA PROTECTION OF INTEREST OF DEPOSITORS IN FINANCIAL ESTABLISHMENTS ACT, PRAYING TO SET ASIDE THE PASSED ON IMPUGNED ORDER DATED MAINTAINABILITY IN MISC.PETITION NO.377/2024, PASSED BY THE HON'BLE XCI ADDITIONAL CITY CIVIL AND SESSIONS JUDGE AND SPL. JUDGE FOR KPIDFE CASES BENGALURU (CCH-92) AND CONSEQUENTLY ALLOW THE PETITION & ETC.

25.04.2024 THIS MFA HAVING BEEN HEARD AND RESERVED ON 18.11.2025, COMING ON FOR PRONOUNCEMENT OF JUDGMENT, THIS DAY VIJAYKUMAR A. PATIL J., DELIVERED THE FOLLOWING: CORAM: HON'BLE MRS. JUSTICE ANU SIVARAMAN 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 25.04.2024 passed in Misc.No.377/2024 by the XCI Additional City Civil and Sessions Judge, Bengaluru and Special Judge for KPIDFE Cases, Bengaluru (hereinafter referred to as 'the Trial Court'). - 3 - NC: 2025:KHC:48527-DB M.F.A. No.3899/2025 HC-KAR

#2. Sri. Umesh.M.N, learned counsel appearing for the appellant submits that the appellant is undertaking business involving wholesale distribution of garments. The appellant supplied various products to M/s.Kanva Fashions and Kanva Garments Pvt. Ltd., on the basis of purchase orders and also raised invoice on the basis of the supply made. The appellant supplied garments worth Rs.2,86,47,278/- and Rs.11,47,841/- on credit basis. The M/s.Kanva Fashions and Kanva Garments Pvt. Ltd., failed to make the payment and later the appellant came to know that the properties of the said company were attached and public notice was invited from the depositors and creditors. The appellant requested for a claim form from the respondent-authority, however, the respondent issued endorsement that due to delay in submitting the claim form, the claim is rejected. It is submitted that the appellant filed miscellaneous petition before the trial Court which came to be dismissed. It is further submitted that the trial Court has erred in rejecting the petition, without - 4 - NC: 2025:KHC:48527-DB M.F.A. No.3899/2025 HC-KAR appreciating the appellant is required to be considered as a depositor. Hence, he seeks to condone the delay of 344 days in filing the appeal and seeks to allow the appeal on merits.

#3. Sri. Veeresh Rachappa Budihal, learned counsel appearing for the respondent-authority submits that there is no cause shown to condone the delay of 344 days in filing the appeal. Hence, solely on the ground of delay, the appeal is liable to be rejected. It is submitted that the definition of 'Depositor' under the Act clearly excludes the persons to whom credit is extended by a seller in the course of a sale of a property. The pleading on record clearly indicates that the appellant claims to have supplied the material to M/s.Kanva Fashions and Kanva Garments Pvt. Ltd., on credit basis. Hence, he seeks to dismiss the appeal.

#4. We have heard the arguments advanced by the learned counsel appearing for the appellant, learned - 5 - NC: 2025:KHC:48527-DB M.F.A. No.3899/2025 HC-KAR counsel appearing for the respondent and perused the material available on record. We have given our anxious consideration to the submissions advanced on both sides.

#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 appellant claims to be a creditor for having supplied the goods to M/s.Kanva Fashions and Kanva Garments Pvt. Ltd., on credit basis and based on such invoices he had sought to file a claim form before the competent authority. The competent authority issued endorsement dated

14.12.2023 indicating that there is delay in submitting the claim form and the request for claim form was rejected. The appellant approached the trial Court by filing the miscellaneous petition seeking direction to the respondent- authority to issue claim form. The trial Court after - 6 - NC: 2025:KHC:48527-DB M.F.A. No.3899/2025 HC-KAR considering the pleading and material on record framed the points for consideration and recorded a clear finding that the appellant is not a secured creditor and cannot be termed as a 'depositor' for the purposes of the Act. It has further recorded a finding that the appellant claims to have supplied apparels to M/s.Kanva Fashions and Kanva Garments Pvt. Ltd., on credit basis and as per the Explanation-II of Section 2(2) of the Act, the appellant cannot be considered as a 'depositor'. The explanation to the said section clearly states that any credit given by the seller to the buyer on the sale of any property, whether movable or immovable shall not be deemed to be depositor for the purpose of the definition of a 'depositor'. The said finding of the trial Court is based on the clear admission of the appellant that the appellant has supplied the apparels on credit basis. We do not find any error in the finding recorded by the trial Court calling for interference. - 7 - NC: 2025:KHC:48527-DB M.F.A. No.3899/2025 HC-KAR

#7. We perused affidavit accompanying the application for condonation of the delay of 344 days in filing the appeal. The only cause shown is that due to lack of awareness of the statutory provision for appeal under Section 16 of the Act, the appellant could not initiate the process within the prescribed time and that the delay is due to lack of knowledge and the Act is a beneficial legislation intended to protect the interests of the depositors and the creditors. It is to be noticed that the proceedings before the trial Court is not by the appellant in-person but rather he was duly represented by a counsel. Hence, the appellant cannot contend that he was not having any legal knowledge and the said explanation cannot be termed as 'sufficient cause' to condone the delay of 344 days in filing the appeal. We are of the considered view that the appellant has not made out any ground to interfere with the order of the trial Court as well as not shown sufficient cause to condone the - 8 - NC: 2025:KHC:48527-DB M.F.A. No.3899/2025 HC-KAR delay in filing the appeal. Therefore, the appeal is dismissed. Sd/- (ANU SIVARAMAN) JUDGE Sd/- (VIJAYKUMAR A. PATIL) JUDGE BSR List No.: 1 Sl No.: 5