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B.S. Sheshagiri Setty & Ors. etc. v. State of Karnataka & Ors. etc.

Civil Appeal · Neutral citation not assigned (Civil Appeal Nos. 8663-8664 of 2015)Decided 15 Oct 2015
Civil Appeal Nos. 8663-8664 of 2015
Justice T.S. Thakur · Justice V. Gopala Gowda

Background

Small farmers mortgaged their land to a cooperative land development bank for a loan. An arbitrator passed an ex parte award in 1975, and the land was auctioned in 1981. The farmers repaid the entire principal by June 1983 under a state scheme that waived interest, but the auction sale was confirmed in December 1985 without taking this repayment into account. Later, the State's Minister of Cooperation set aside the confirmation of sale in 2004, and the High Court held that the revision was time-barred.

Decision Breakdown

The Supreme Court allowed the farmers' appeals and restored the Minister's order. It held that the State's power to revise an order under Section 108 of the Karnataka Cooperative Societies Act is not bound by a strict limitation period, and that any delay could be condoned because the State can rely on the Limitation Act's provisions for special statutes. Technical objections could not be used to defeat a correction of a clear miscarriage of justice against poor farmers, whose land was their livelihood protected under Article 21 of the Constitution. The auction purchaser could not be treated as a bona fide purchaser, because the sale was confirmed only after the loan had been repaid. The purchaser was directed to return possession, and the bank was directed to refund the sale amount of Rs. 40,050 to him within six weeks, failing which coercive steps could be taken.

Lesson Learnt

Technical rules such as limitation should not be used to uphold an unfair result against people who have been deprived of their land or livelihood. A person who buys property at a public auction should check whether the sale has been properly completed and whether the mortgagor has already paid the dues.

Official source (sci.gov.in)View Judgment (PDF)

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