BENGALURU: In a landmark decision that could influence numerous cooperative housing cases, the Karnataka High Court has ruled that the additional registrar of cooperative societies has the authority to revoke even a registered sale deed if it stems from an illegal allotment by a cooperative society.
Justice Suraj Govindaraj issued this ruling while rejecting a petition from Suresha, a Bengaluru resident who challenged the registrar’s power to intervene post-registration of a sale deed. The court clarified that after invalidating an illegal allotment, the registrar has the right to instruct the local sub-registrar to take necessary actions, but emphasized the importance of adhering to due process.
“The registrar can send necessary notifications to the jurisdictional sub-registrar following such cancellations, but it’s crucial to hear the individual who benefited from the illegal allotment,” the judge remarked. He further clarified that the registrar’s powers under Section 70 of the Karnataka Cooperative Societies (KCS) Act are not boundless.
“Jurisdiction under Section 70 cannot address transactions between members or between a member and an external entity unless there are allegations of violations of the KCS Act, KCS Rules, or the society’s bylaws,” he added.
Background of the Dispute
The case pertains to a 4,026-sqft plot in Channasandra village, Bengaluru South, initially allocated by the BEML Employees Cooperative Society to member BM Yogesh. A sale deed was recorded on January 19, 2013. Shortly after, the plot changed hands to Suresha and another buyer, Bhaskar.
In 2015, after Bhaskar withdrew his interest, Suresha became the sole proprietor and initiated construction on the site. The cooperative society later contended that Yogesh’s original allotment was unlawful due to violations of seniority protocols. They approached the additional registrar to cancel the sale deed and reclaim over Rs 62 crore, plus 18% interest, from then-office bearers J. Munnagappa (president) and N. Ramakrishna (vice president) who had executed the deed for Yogesh. The additional registrar denied the request, leading the Karnataka Appellate Authority to order on July 9, 2020, for a fresh evaluation of the issue by the additional registrar.
In challenging this order before the high court, Suresha argued that the additional registrar lacked jurisdiction over registered sale deeds and that he and Bhaskar were not members of the society. The society countered that only a civil court had the authority to adjudicate since the governing body had acted improperly, asserting the registrar’s intervention was warranted.
However, Justice Govindaraj determined that the society couldn’t demand a civil suit to address the misconduct of its governing body. He noted that the additional registrar retains authority under the Act notwithstanding the registration of the sale deed. To accept the contrary would essentially reward the illegal actions of the governing board and the beneficiary, who was aware that proper procedures, including seniority regulations, had not been followed, the judge concluded, emphasizing that the additional registrar can consider all claims made by the petitioner.
