Writ Petition No. 56339 of 2017 · The High Court
Case Details
- 1 - NC: 2025:KHC:16098 WP No. 56339 of 2017 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 16TH DAY OF APRIL, 2025 BEFORE THE HON'BLE MR JUSTICE SURAJ GOVINDARAJ WRIT PETITION NO. 56339 OF 2017 (CS-RES) ...PETITIONER BETWEEN MALNADU ARECA MARKETING CO-OPERATIVE SOCIETY LIMITED, POST BOX NO.13, A.P.M.C. YARD, SHIMOGA, REPRESNTED BY ITS MANAGING DIRECTOR. (BY SRI. M.S. RUDRAIAH., ADVOCATE ) AND 1. M/S SIDDALINGESHWARA ARECANUT STORES, ARECANUT TRADERS, MARKET ROD, SAGAR-5775401, REPRESNTED BY ITS PROPRIETOR, SRI M.RAJSHEKHAR, S/O VEERABADRAPPA 2. SRI M RAJASHEKAR(DECEASED) BY LR’s R2(A) SMT. SUVARNA AGED ABOUT 73 YEARS W/O LATE M. RAJASHEKAR SRI. SIDDALINGESWARA NILAYA HOUSE NO. C-3, S.N. NAGARA 1ST CROSS, NEAR RAKTHESHWARA TEMPLE SAGAR-577401 SHIMOGA DISTRICT. R2(B) SRI. M. SHIVABASAPPA AGED ABOUT 45 YEARS S/O LATE M. RAJASHEKAR NO.1, SHIVABASAYYA TRADERS Digitally signed by SHWETHA RAGHAVENDRA Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC:16098 WP No. 56339 of 2017 MARKET ROAD, SAGAR-577401 SHIMOGA DISTRICT. R2(C) SRI SIDDALINGESHWARA AGED ABOUT 50 YEARS S/O LATE M. RAJASHEKAR SRI. SIDDALINGESWARA NILAYA HOUSE NO. C-3, S.N. NAGARA 1ST CROSS, NEAR RAKTHESHWARA TEMPLE SAGAR-577401 SHIMOGA DISTRICT. 3. THE ADDITIONAL REGISTRAR OF COP-OOPPERATIVE SOCIETIES, (C & M) O/O REGISTRAR OF CO-OPERATIVE SOCIETIES, NO.1, ALI ASKER ROAD, BENGALURU-560052.
Legal Reasoning
(BY SRI. YOGESH D. NAIK., AGA FOR R3; SRI. MUNIYAPPA., ADVOCATE FOR R1, R2(A-C) SERVED) RESPONDENTS THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF CERTIORARI OR ANY OTHER APPROPRIATE WRIT, ORDER OR DIRECTION QUASHING THE IMPUGNED ORDER DTD 22.9.2017 [ANNEXURE-L] PASSED IN THE APPEAL NO.292/2011 BY THE KARNATAKA APPELLATE TRIBUNAL, BENGALURU AND THE IMPUGNED AWARD BEARING NO. A (C & M)/DIS/D-7/973/2005-06 DATED 18.2.2011 [ANNEXURE-H] PASSED BY THE DRCS, ON REFERENCE BY THE ADDITIONAL REGISTRAT OF CO-OPERATIVE SOCIETIES [C&M] BENGALURU U/S.71 [1][b] OF THE ACT AND ETC. THIS WRIT PETITION COMING ON FOR ORDERS AND HAVING BEEN RESERVED FOR ORDERS ON 03.04.2025, THIS DAY, THE COURT PRONOUNCED THE FOLLOWING: CORAM: HON'BLE MR JUSTICE SURAJ GOVINDARAJ - 3 - NC: 2025:KHC:16098 WP No. 56339 of 2017 CAV ORDER 1. The Petitioner is before this court, she will be for the following reliefs; i. ii. iii. [Annexure-L] passed Issue a writ of certiorari or any other appropriate writ, order or direction quashing the impugned order dated 22.9.2017 the Appeal No.293/2011 by the Karnataka Appellate Tribunal, Bengaluru and the impugned award dated 18.2.2011 [Annexure-H] passed by the DRCS, on reference by the Additional Registrar of Co-operative Societies [c&m] Bengaluru U/s.71[1][b] of the Act. in Allow the dispute claim as in dispute petition bearing No.A(C & M)/DIS/D-7/973/2005-06 before respondent No.3 Additional Registrar of Co-operative Societies [C and M], Bengaluru; Grant such other reliefs or reliefs as this Hon’ble Court may deem fit in the facts and circumstance of the case, as the same is essential in the interest of justice and equity. 2. Petitioner- Malnadu Areca Marketing Co-operative Society Limited is a Co-operative Society having its branches in Shimoga, Tharikere, Channagiri, Sringeri, Koppa, Theerthahalli, Hosanagara, Sagara, Bhadravathi and Birur established with the intention to encourage areca growing farmers to trade areca through the petitioners’ society. The areca growing - 4 - NC: 2025:KHC:16098 WP No. 56339 of 2017 farmers approach the petitioner-society to sell their areca nuts, the Society puts up this areca nut for auction through tender notification. One such notification having been issued Respondent No.1 had participated in the said tender on 31.03.2002. 3. Respondent No.1 had made an amount of Rs.6,54,931/- towards 425 bags of areca nut. Though substantial areca nuts had been lifted and payment made, 80 bags had not been lifted. Finally, the same was lifted and the payment was made thereafter. 4. The petitioner raised a dispute under Section 70 (2) on the grounds that there is a delay in lifting the areca nut which had been purchased by respondent No.1 and for this delay period interest at the rate of 17% per annum would have to be paid in terms of letter of undertaking dated 29.11.1989. The said dispute came to be dismissed vide order dated 18.02.2011, the said order was challenged before the Karnataka Appellate Tribunal in Appeal No.293/2011 - 5 - NC: 2025:KHC:16098 WP No. 56339 of 2017 which also came to be dismissed vide order dated 22.09.2017. It is challenging the both the orders, that the petitioner is before this Court seeking for aforesaid reliefs. 5. The submission of Sri.M.S.Rudraiah., learned counsel for the petitioner is that; 5.1. The delay in lifting of the areca nut which had been purchased under a tender is not in dispute and therefore the respondent No.1 ought to have in terms of letter of undertaking dated 29.11.1989 which had been produced at Exhibit P1 required to make payment of interest at the rate of 17% per annum. 5.2. The delay not being in dispute there was a committed obligation on part of respondent No.1 to make payment of the interest amount. This aspect not having been considered merely taking into consideration that the entire payment as bid in the tender have been paid, the claim of the petitioner has been dismissed. - 6 - NC: 2025:KHC:16098 WP No. 56339 of 2017 This aspect is also not looked into and considered properly by the Karnataka Appellate Tribunal inasmuch as the Appellate Tribunal has again come to a conclusion that there is no evidence which has been laid to indicate the liability on part of the respondent to make payment of interest without referring to Exhibit P1 which indicated that interest is to be paid. 5.3. On the basis of the above he submits that the above petition is required to be allowed and direction issued to the respondents to make payment of the interest for the delayed period at rate of 17% per annum. 6. Sri.Muniyappa., learned counsel for respondent No.1 submits that; 6.1. Insofar as the tender is concerned there is no particular Clause requiring interest to be paid. What has been relied upon is a letter of undertaking of the year 1989, whereas the tender was issued in the year 2002, the letter - 7 - NC: 2025:KHC:16098 WP No. 56339 of 2017 of undertaking of 1989 would not apply to the tender of 2002 and in this regards he relies upon the decision of the Co-ordinate Bench of this Court in M/s U.Basappa & Sons & others vs. The Additional Registrar of Co- operative Societies & another1, more particularly paragraph 10 thereof, which is reproduced hereunder for easy reference; learned counsel 10. Although for respondents specifically submitted that letter dated 14.8.1990 was not in dispute and was indeed admitted by petitioners in the course of cross-examination and therefore, petitioners shall not be permitted to resile from the undertaking given in that letter for payment of interest, as rightly held by the Deputy Registrar there is no connection to the letter dated 14.8.1990 and the transaction of the years 2001-02 to 2004-05. If the Society wants to recover interest at 17% for the sale made in the year 2001-02 it should establish by producing cogent evidence that there was an agreement regarding payment of specific interest for the goods sold or that bye-laws of the society, the rules and regulations framed under the APMC Act authorized them to collect interest at a particular percentage. Xerox copy of the letter dated 14.8.1990 cannot form basis for collecting interest at 17% for a transaction which has taken place nearly after 12 years from the date of such letter. There is no link established by the letter of 1990 and the Society between the 1 WP No.2934-2936/2017 dated 7.10.2017 - 8 - NC: 2025:KHC:16098 WP No. 56339 of 2017 transaction of the years 2001-02 to 2004-05. This approach of the Deputy Registrar was right and justified and was the result of appreciation of evidence on the part of both the parties. The Karnataka Appellate Tribunal has reversed this order without analyzing its proper perspective and without bestowing its attention to the nature of the document of the year 1990 as to how it establishes link to the present transaction. the matter in 6.2. By relying on M/s U.Basappa & Son’s case, he submits that it is required for an agreement as regards interest to be contained in the tender document. A letter of undertaking or the like which was issued 12 years earlier and in this case 13 years earlier cannot be the basis of imputing liability of interest on the tenderer. The tender being silent on the aspect of interest, no interest could be awarded; as such, the concerned authorities have rightly considered the matter and rejected the claim for interest. 6.3. He submits that the said decision, M/s U.Basappa & Sons’ case was taken up - 9 - NC: 2025:KHC:16098 WP No. 56339 of 2017 on appeal by the petitioner-herein who was the respondent-therein in WA No.6488/2017 which came to be dismissed vide order dated 10.4.2019 on the very same ground as made clear by the learned Single Judge. 6.4. He therefore submits that no interest can be levied or proposed to be levied by the petitioner on such a tender document without a tender document having a Clause for interest. 7. Sri.M.S.Rudraiah., learned counsel for the petitioner in reply; 7.1. Relies upon the decision in R.B.Somappa vs. Mysuru Co-operative Appellate Tribunal2, more particularly para 7 thereof, which is reproduced hereunder for reference; 7. The next question is about the correctness of the rate and the period for which the interest was awarded. The arbitrator has given interest at 12 per cent for the entire period upto the recovery of the award amount. It may be relevant to state that though the Society claimed the sum as its loss occasioned by the petitioner in supplying the rice, in 2 1972 (2) Mys. L.J. 430 - 10 - NC: 2025:KHC:16098 WP No. 56339 of 2017 substance, it was a claim for damages arising out of a breach of the agreement. In Union of India v. The West Punjab Factories Ltd., AIR 1966 SC 395, the Supreme Court has clearly laid down that interest cannot be awarded by way of damages for the period upto the date of the suit. At paragraph 16, it is stated thus:— “The next contention is that no interest could be awarded for the period before the suit on the amount of damages decreed. Legal position with respect to this is well settled: (See Bengal Nagpur Rly. Co. Ltd. v. Ruttanji Ramji, 65 Ind App. 66 : (AIR 1938 PC 67)). That decision of the Judicial Committee was relied upon by this Court in 1955-2 SCR 48 : (AIR 1955 SC 468). The same view was expressed by this Court in Union of India v. A.L. Rallia Ram(1964) 3 SCR 164 : (AIR 1963 SC 1685). In the absence of any usage or contract express or implied, or of any provision of law to justify the award of interest, it is not possible to award interest by way of damages. Also see recent decision of this Court in Union of India v. Watkins Mayor and Co., Civil Appeals Nos. 43 and 44 of 1963. D/- 10-3-1965 : (reported in AIR 1966 SC 275). In view of these decisions no interest could be awarded for the period upto the date of the suit and the decretal amount in the two suit will have to be reduced by the amounts of such interest awarded.” If the court cannot award interest by way of damages upto the date of the suit, much less could the Arbitrator do so by the principles of Section 34 of the Code of Civil Procedure. It therefore, follows that the sum of Rs. 1352/- being the interest awarded upto the date of filing the dispute must be held to be illegal and without jurisdiction. But that principle does not come in the way of the Arbitrator awarding future interest on the award amount. But that power is subject to the limitations imposed by Section 34 of the Code of Civil Procedure. He cannot award future - 11 - NC: 2025:KHC:16098 WP No. 56339 of 2017 interest at a rate exceeding 6 per cent per annum. The impugned award therefore must be modified by reducing the rate of interest from 12 per cent to 6 per cent. 7.2. By referring to R.P.Somappa's case, his submission is that even if the agreement did not provide for interest, there being a delay, the arbitrator could have exercised powers under Section 34 of the Code of Civil Procedure and awarded interest, the same not having been done, this Court could exercise powers under Section 34 and direct payment of interest. 8. Heard Sri.M.S.Rudraiah., Learned counsel appearing for the petitioner, Sri.Yogesh D.Naik., learned AGA for respondent No.3, Sri.Muniyappa., learned counsel appearing for respondent No.1. Perused papers. 9. The points that would arise for consideration by this Court are; 1. Whether the impugned orders passed by the ARCS on 18.02.2011 at Annexure-H and the confirmatory order passed by the on Karnataka Appellate Tribunal - 12 - NC: 2025:KHC:16098 WP No. 56339 of 2017 22.09.2017 in Appeal No. 293/2011 suffer from any infirmity requiring this Court to excise jurisdiction to set aside the said orders? 2. What order? 10. I answer the above points as under: 11. Answer to point No.1: Whether the impugned orders passed by the ARCS on 18.02.2011 at Annexure-H and the confirmative order passed by the Karnataka Appellate Tribunal on 22.09.2017 in Appeal No. 293/2011 suffer from any infirmity requiring this Court to excise jurisdiction to set aside the said orders? 11.1. As could be seen from the facts narrated above, a letter of undertaking is said to have been issued by respondent No.1 on 29.11.1989. However, the subject matter of the dispute is a tender issued on 31.03.2002. It is only in the letter of undertaking that the interest of 17% has been mentioned, in the tender there are no details of interest required to be paid which has been mentioned. - 13 - NC: 2025:KHC:16098 WP No. 56339 of 2017 11.2. The letter of undertaking cannot obviously make a reference to a subsequent tender. But what is more important is the tender does not make any reference to the letter of undertaking dated 29.11.1989. Thus, there is no scope for including the interest referred to in the letter of undertaking in the tender issued in the year 2002 by way of reference as contended by Sri.Rudraiah., learned counsel for the petitioner. This aspect has also been dealt in sufficient detail by a coordinate Bench of this Court in M/s U.Basappa & Sons’ case and this Court in a similar matter filed by the very same petitioner has come to a conclusion that there is no link between the letter of undertaking and the tender. 11.3. Insofar as the contention of Sri.Rudraiah., learned counsel for the petitioner by relying on R.P.Somappa's case, that the Arbidtrator and - 14 - NC: 2025:KHC:16098 WP No. 56339 of 2017 the KAT could have excised powers under Section 34 of the Code of Civil Procedure. Section 34 is reproduced hereunder for easy reference; Section 34: Pendentelite and Post-decretal interest to be increased from 6% to 12% and Section 34(2): Section 34 of the Code of Civil Procedure, 1908 deals with award of interest by the Court in suits for money. It reads as follows: "34. Interest.- (1) Where and in so far as a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate not exceeding six per cent, per annum, as the Court deems reasonable on such principal sum, from the date of the decree to the date of payment, or to such earlier date as the Court thinks fit. Provided that where the liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed six per cent, per annum, but shall not exceed the contractual rate of interest or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalized banks in relation to commercial transactions. - 15 - NC: 2025:KHC:16098 WP No. 56339 of 2017 11.4. Section 34 provides for power to the Court if it deems reasonable to award interest on the principle sum adjudged from the date of the suit to the date of the decree, in addition to any interest adjudged on such principle sum for any period prior to the institution of suit, with further interest at such rate not exceeding 6% per annum, as the Court deems reasonable on such principle sum. This power under Section 34 is a discretionary power to be exercised by the Court. For such exercise of discretionary power, it was required of the petitioner to have made such a request to the Court. 11.5. In the present case, the petitioner only contended that in view of the letter of undertaking of the year 1989, 17% interest as to be awarded. The alternative under Section 34 was neither pleaded nor argued before the Arbitrator as also before the KAT. The petitioner cannot now contend that discretionary power - 16 - NC: 2025:KHC:16098 WP No. 56339 of 2017 under Section 34 would have to be exercised by this Court at this stage so as to claim that interest till now. 11.6. In that view of the matter, I am of the considered opinion that the impugned orders passed by the ARCS on 18.02.2011 at Annexure-E and the confirmatory order passed by the Karnataka Appellate Tribunal on 22.09.2017 do not suffer from any infirmity, requiring this Court to exercise jurisdiction to set aside those orders. 12. Answer to point No.2: What order?
Decision
No grounds being made out, the writ petition stands dismissed. SD/- (SURAJ GOVINDARAJ) JUDGE SR List No.: 2 Sl No.: 2