Karnataka High Court
M/S Chamundeshwarishrri vs Canara Bank on 4 February, 2026
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NC: 2026:KHC:6652
WP No. 39471 of 2025
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 4TH DAY OF FEBRUARY, 2026
BEFORE
THE HON'BLE MR. JUSTICE ASHOK S.KINAGI
WRIT PETITION NO. 39471 OF 2025 (GM-DRT)
BETWEEN:
1. M/S CHAMUNDESHWARISHRRI
(M/S S R INDUSTRIES)
( A PROPRIETORSHIP CONCERN)
REPRESENTED BY THE SOLE PROPRIETOR,
SRI UTTAMCHAND JAIN
S/O MOOLCHAND JAIN,
AGED ABOUT 56 YEARS,
RESIDING AT NO. 43/1,
2ND FLOOR, SM LANE, AKKIPET,
BANGALORE-53.
2. M/S KALPATHARU
Digitally (A REGISTERED PARTNERSHIP FIRM),
signed by SRI UTTAMCHAND JAIN
KIRAN S/O MOOLCHAND JAIN,
KUMAR R
AGED ABOUT 56 YEARS,
Location: RESIDING AT NO. 43/1, 2ND FLOOR,
HIGH COURT
OF SM LANE, AKKIPET,
KARNATAKA BANGALORE-53.
...PETITIONERS
(BY SRI. SUBRAHMANYA BHAT M., ADVOCATE)
AND:
1. CANARA BANK
SME BRANCH, PEENYA
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NC: 2026:KHC:6652
WP No. 39471 of 2025
HC-KAR
D-473, 13TH CROSS, 4TH PHASE,
PEENYA INDUSTRIAL AREA,
BENGALURU-560058,
REPRESENTED BY ITS MANAGER.
2. CHIEF MANAGER,
CANARA BANK, ASSET MANAGEMENT
BRANCH-II, MG ROAD,
BANGALORE-01.
...RESPONDENTS
(BY SRI. NATESH N MURTHY., ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF
THE CONSTITUTION OF INDIA PRAYING TO CALL FOR
RELEVANT RECORDS. QUASH THE ENDORSEMENT ISSUED BY
THE RESPONDENT COMMUNICATION BEARING REF. NO.
ARMII/SRIND/LTR/02/2025-26 DATED 16.12.2025 (ANNX-F)
TO THE EXTENT OF REJECTION OF THE OTS PROPOSED BY THE
PETITIONERS, AS THE SAME IS HIGHLY ARBITRARY
IRRATIONAL AND CAPRICIOUS. DIRECT THE RESPONDENT
BANK TO RECONSIDER THE OFFER OF OTS OFFERED BY THE
PETITIONERS VIDE LETTER MAIL DATED 15.12.2025 (ANNX-E).
THIS PETITION, COMING ON FOR ORDERS, THIS DAY,
ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE ASHOK S.KINAGI
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WP No. 39471 of 2025
HC-KAR
ORAL ORDER
1. The petitioners filed this writ petition challenging the Endorsement dated 16.12.2025, wherein the petitioners submitted an application requesting for One Time Settlement (hereinafter referred to as 'OTS' for brevity).
2. The said application was rejected by the respondent
-Bank as per communication dated 16.12.2025 vide Annexure-F and also sought a mandamus directing the respondent-Bank to reconsider the offer of OTS offered by the petitioners as per letter/email dated 15.12.2025 vide Annexure E.
3. Brief facts leading rise to filing of this petition are as follows:
4. The petitioners had obtained a loan from the respondent-Bank and failed to repay the loan amount. The Bank initiated the recovery proceedings under the Securitisation and Reconstruction of -4- NC: 2026:KHC:6652 WP No. 39471 of 2025 HC-KAR Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'SARFAESI Act' for brevity) and filed O.A. No.396 of 2019 against petitioner No.1 and in O.A. No. 372 of 2019 against petitioner No.2 on the file of the learned Debts Recovery Tribunal-I, Karnataka at Bengaluru (for short, 'the Tribunal').
5. The said applications in O.A. No. 396 of 2019 and O.A. No. 372 of 2019 came to be allowed by the Tribunal vide orders dated 24.08.2019 and 31.10.2019 respectively.
6. The petitioners have challenged these orders and submitted an application for One Time Settlement. The said representation was rejected by the Bank and communicated the same to the petitioners on 28.11.2025.
7. The petitioners again submitted a representation and offered the Bank for one time settlement. However, -5- NC: 2026:KHC:6652 WP No. 39471 of 2025 HC-KAR the respondent Bank did not consider the same and issued a communication to the petitioner rejecting the OTS on 16.12.2025. Hence, this writ petition.
8. Heard the arguments of the learned counsel for the petitioners and the learned counsel for the respondent-Bank.
9. Learned counsel for the petitioners submits that the petitioners are ready to settle the outstanding dues, if the respondent-Bank accepts the proposal of the petitioners for one time settlement. Hence, prays to allow the writ petition.
10. Per contra, learned counsel for the respondent-Bank submits that the respondent-Bank has already initiated recovery proceedings under the SARFAESI Act by filing O.A. Nos.396 of 2019 and 372 of 2019. The said applications came to be allowed. The petitioners without challenging the orders passed in the said Original Applications filed this petition. She -6- NC: 2026:KHC:6652 WP No. 39471 of 2025 HC-KAR also submits that the representation of the petitioners was considered and the bank rejected the representation. She also submits that there is no OTS scheme available at present. Hence, on these grounds, she prays to dismiss the petition.
11. Perused the records, and considered the submissions of the learned counsel for the parties.
12. At the outset, it has to be stated here that the said issue is clearly covered by the judgment of the Hon'ble Apex Court in case of Bijnor Urban Co- operative Bank Ltd. Bijnor and others v. Meenal Agarwal and others, reported in (2021) SCC Online SC 1255 wherein it has been held as follows:
"11. While passing the impugned judgment and order, the High Court, in response to the submissions on behalf of the Bank that, there are all possibilities of recovery of the loan amount and the efforts are being made to recover the amount by initiating proceedings under -7- NC: 2026:KHC:6652 WP No. 39471 of 2025 HC-KAR the SARFAESI Act and that the properties mortgaged can be auctioned, has observed that the proceedings under the SARFAESI Act have remained pending for seven years and the Bank has been unable to recover its dues and therefore the hope of recovery is illusory. This conclusion is not supported by any material on record. Merely because the proceedings under the SARFAESI Act have remained pending for seven years, the Bank cannot be held responsible for the same. No fault of the Bank can be found. What is required to be considered is a conscious decision by the Bank that the Bank will be able to recover the entire loan amount by auctioning the mortgaged property and a due application of mind by the Bank that there are all possibilities to recover the entire loan amount, instead of granting the benefit under the OTS Scheme and to recover a lesser amount. It is ultimately for the Bank to take a conscious decision in its own interest and to secure/recover the outstanding debt. No bank can be compelled to accept a lesser amount -8- NC: 2026:KHC:6652 WP No. 39471 of 2025 HC-KAR under the OTS Scheme despite the fact that the Bank is able to recover the entire loan amount by auctioning the secured property/mortgaged property. When the loan is disbursed by the bank and the outstanding amount is due and payable to the bank, it will always take a conscious decision in the interest of the bank and in its commercial wisdom.
xxx
14. The sum and substance of the aforesaid discussion would be that no writ of mandamus can be issued by the High Court in exercise of powers under Article 226 of the Constitution of India, directing a financial institution/bank to positively grant the benefit of OTS to a borrower. The grant of benefit under the OTS is always subject to the eligibility criteria mentioned under the OTS scheme and the guidelines issued from time-to- time. If the bank/financial institution is of the opinion that the loanee has the capacity to make the payment and/or that the bank/financial institution is able to recover the entire loan amount even -9- NC: 2026:KHC:6652 WP No. 39471 of 2025 HC-KAR by auctioning the mortgaged property/secured property, either from the loanee and/or guarantor, the bank would be justified in refusing to grant the benefit under the OTS scheme. Ultimately, such a decision should be left to the commercial wisdom of the bank whose amount is involved and it is always to be presumed that the financial institution/bank shall take a prudent decision whether to grant the benefit or not under the OTS scheme, having regard to the public interest involved and having regard to the factors which are narrated hereinabove.
15. In view of the aforesaid discussion and for the reasons stated above, we are of the firm opinion that the High Court, in the present case, has materially erred and has exceeded in its jurisdiction in issuing a writ of mandamus in exercise of its powers under Article 226 of the Constitution of India by directing the appellant Bank to positively consider/grant the benefit of OTS to the original writ petitioner. The impugned judgment and order [Meenal
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NC: 2026:KHC:6652 WP No. 39471 of 2025 HC-KAR Agarwal v. State of U.P., 2021 SCC OnLine All 989] passed by the High Court is hence unsustainable and deserves to be quashed and set aside and is accordingly quashed and set aside."
(Emphasis supplied)
13. The Hon'ble Apex Court in the case of State Bank of India v. Arvindra Electronic Private Limited reported in (2023) 1 SCC 540, following the decision rendered in Meenal Agarwal's case (supra) has held as under:
"14. While considering the aforesaid issue the recent decision of this Court in Meenal Agarwal is required to be referred to.
15. In Meenal Agarwal, this Court answered the following two questions :
(SCC para 6) "6.1. (i) Whether benefit under the OTS Scheme can be prayed as a matter of right?
6.2. (ii) Whether the High Court in exercise of powers under Article 226 of the Constitution of India can issue a writ of mandamus directing the Bank to positively
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NC: 2026:KHC:6652 WP No. 39471 of 2025 HC-KAR consider the grant of benefit under the OTS Scheme and that too dehors the eligibility criteria mentioned under the OTS Scheme?"
16. On a detailed analysis of the OTS Scheme, it is observed and held by this Court in Meenal Agarwal that:
(i) No borrower can, as a matter of right pray for a grant for the benefit of One-Time Settlement scheme;
(ii) No writ of mandamus can be issued by the High Court in exercise of Article 226 of the Constitution of India, directing the financial institution/bank to positively grant a benefit of OTS to a borrower;
(iii) The grant of benefit of OTS Scheme is subject to the eligibility criteria and the guidelines issued from time to time.
17. Though the decision of this Court in Meenal Agarwal was specifically pressed in service on behalf of the Bank and was pointed out to the High Court, the High Court instead following the binding decision of this Court in Meenal Agarwal has not followed the same by observing that the earlier decision of this Court in Sardar Associates [Sardar
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NC: 2026:KHC:6652 WP No. 39471 of 2025 HC-KAR Associates v. Punjab & Sind Bank, (2009) 8 SCC 257 : (2009) 3 SCC (Civ) 350] is more elaborate. We do not approve such an observation by the High Court and not following the subsequent binding decision of this Court which as such was on the point. Being a subsequent decision on the point/issue, the High Court was bound to follow the same."
14. The sum and substance of the aforesaid decisions would be that no writ of mandamus can be issued by the High Court in exercise of powers under Article 226 of the Constitution of India, directing a financial Institution/Bank to positively grant the benefit of OTS to a borrower. The grant of benefit under the OTS is always subject to the eligibility criteria mentioned under the OTS scheme and the guidelines issued from time to time. If a Bank/financial institution is of the opinion that the loanee has a capacity to make a payment and/all that the Bank or/financial institution is able to recover the entire
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NC: 2026:KHC:6652 WP No. 39471 of 2025 HC-KAR loan amount even by auctioning the mortgage property/secured property, either from the loanee and/all the Guarantor, then the Bank would be justified in refusing to grant the benefit under the OTS scheme. Ultimately, such a decision should be left to the commercial wisdom of the bank whose amount is involved and it is always to be presumed that the financial institution/bank shall take a prudent decision whether to grant the benefit or not under the OTS scheme, having regard to the public interest involved and having regard to the factors on which narrated hereinabove.
15. The Apex Court has further held that High Court has materially erred and exceeded its jurisdiction in issuing a writ of mandamus in exercise of its powers under Article 226 of the Constitution of India by directing the appellant Bank in the case referred supra to positively consider/grant the benefit of OTS to the original writ petitioner.
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16. Admittedly, in the instant case the petitioners have submitted an application for consideration of OTS scheme and the said application/representation was rejected by the respondent Bank by issuing an endorsement dated 16.12.2025 vide Annexure "F" and further, the Bank has also requested the petitioners to provide the account details for refund of ₹25,00,000/- remitted by the petitioners in November 2022 towards OTS upfront.
17. The respondent Bank has already rejected the request of the petitioners. Hence, the question of once again directing the Bank to consider the representation for OTS would not arise. The Bank has rightly declined to accept the application / representation of the petitioners for OTS.
18. I do not find any grounds to interfere with the impugned endorsement dated 16.12.2025 vide Annexure 'F'.
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19. Accordingly, I proceed to pass the following order:
ORDER (I) The Writ petition is dismissed.
(II) In view of the dismissal of the writ petition, pending interlocutory applications, if any, do not survive for consideration and are accordingly disposed of.
Sd/-
(ASHOK S.KINAGI) JUDGE SKS,RK CT:KHV List No.: 2 Sl No.: 13