Karnataka High Court Relegates Site Purchasers to Special Court Following Division Bench Verdict

The Karnataka High Court has cleared the path for site purchasers to assert their rights before the Special Court, reinforcing the necessity of due process in proceedings involving the attachment of properties under financial protection laws. In a significant procedural clarification, the Court emphasized that where a primary order of attachment has already been set aside by a higher bench, subsequent petitioners must be relegated to the original forum for fresh adjudication.

A Single Judge bench of Justice C.M. Poonacha heard a writ petition filed under Articles 226 and 227 of the Constitution of India by forty petitioners who had purchased various sites in Giddadakonenahalli Village. The petitioners challenged an order dated March 30, 2022, passed by the XCI Additional City Civil and Sessions Judge (Special Court) in Misc.No.438/2020, which had allowed an application under Section 5(2) of the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004.

Key Takeaways

Restoration of Due Process

Ensures that property owners who were not afforded a hearing during initial attachment proceedings are given a fresh opportunity to present their case.

Forum Selection for Intervenors

Clarifies that once an impugned order is set aside by a Division Bench, similarly situated parties should approach the Special Court rather than seeking redundant quashing in writ jurisdiction.

Strict Adherence to Section 16 Appeals

Highlights the procedural interplay between Section 16 appeals and writ petitions under the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004 framework when property rights are at stake.

Court Relegates Parties to Special Court

The Court observed that the very same order challenged by the petitioners had already been set aside by a Division Bench in Asha. N and other V.s Competent Authority and others. In that matter, the Division Bench had remanded the case back to the Special Court for fresh consideration because the true owners of the properties had not been afforded an opportunity for a hearing.

The Court has following directions:

"Without requirement of any further notice / intimation in that regard. The grievances as articulated by the petitioners shall also be adjudicated by the Special Court. The writ petition is disposed of in the aforementioned terms. All questions of the parties on merits of the mater are kept open to be decided by the Special Court."

The Court, in its reasoning, observed: "In view of the aforementioned, having regard to the fact that the impugned order dated 30.03.2022 passed in Misc.No.438/2020 has already been set aside by the Division Bench in the case of Asha. N (supra), the question of once again setting aside the order does not arise. The application filed under Section 5(2) of the Act has already ordered to be re-considered. Hence, the petitioners herein are also relegated to the proceedings before the Special Court for seeking proper reliefs."

Ratio

When a Division Bench has already set aside an order of attachment passed by a Special Court due to lack of notice to affected parties and remanded the matter for fresh consideration, subsequent writ petitions seeking the same relief are redundant; the appropriate remedy is for the petitioners to participate in the remanded proceedings before the Special Court to adjudicate their grievances on merits.

Background

The petitioners, having purchased sites through registered sale deeds in Sy.No.45/3 of Giddadakonenahalli Village, found their properties subject to attachment proceedings initiated by the Competent Authority for M/s. TGS Constructions Pvt. Ltd. The Special Court had initially confirmed the attachment under Section 5(2) of the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004. The petitioners contended they were bona fide purchasers who were never notified of the proceedings.

Respondent No. 1, the Competent Authority, argued that there was an inordinate delay in filing the writ petition, noting the gap between the 2022 order and the 2026 filing. However, the High Court noted that since the Division Bench in Asha. N and other V.s Competent Authority and others had already declared the Special Court's order bad in law for lack of notice and remanded the matter, the petitioners' rights were best protected by joining those remanded proceedings. The Court directed the petitioners to appear before the Special Court on September 23, 2026, keeping all merits of the case open for final adjudication.

Case Details:
Case No.: WP No. 28886 of 2026
Neutral Citation: 2026:KHC:51589
Case Title: Sri. Ravindra K. Havannavar and Others v. The Competent Authority for M/s. TGS Constructions Pvt. Ltd. and Others
Appearances:
For the Petitioner(s): Sri. Ashok Seshagiri, Advocate for Sri. T Seshagiri Rao, Advocate
For the Respondent(s): Sri. Veeresh R Budihal, Advocate for R1

Source: 2026 CaseBase(KAR) 21056