Karnataka High Court
The Chife Manager / Branch Manager vs Mahalingappa on 4 April, 2025
Author: K Natarajan
Bench: K Natarajan
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WA NO.200076/2025
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CCC NO.200034 OF 2025
IN THE HIGH COURT OF KARNATAKA
KALABURAGI BENCH R
DATED THIS 04TH DAY OF APRIL, 2025
PRESENT
THE HON'BLE MR. JUSTICE K NATARAJAN
AND
THE HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL
WRIT APPEAL NO. 200076 OF 2025
C/W
CIVIL CONTEMPT PETITION NO. 200034 OF 2025
IN WA NO.200076/2025:
BETWEEN:
1. THE CHIEF MANAGER / BRANCH MANAGER
STATE BANK OF INDIA
SHAHABAD BRANCH, SHAHABAD
Digitally signed
by RAMESH DISTRICT KALABURAGI - 585228.
MATHAPATI
Location: HIGH 2. THE REGIONAL MANAGER
COURT OF
KARNATAKA STATE BANK OF INDIA
KALABURAGI - 585102.
3. THE DIVISIONAL MANAGER
STATE BANK OF INDIA
KALABURAGI - 585102.
...APPELLANTS
(BY SRI S.S. ASPALLI, ADVOCATE)
AND:
1. MAHALINGAPPA
S/O CHANNAPPA INGINASHETTY
AGED ABOUT 68 YRS.
OCC: BUSINESS & PROPRIETOR
M/S SRI VEERABHADRESHWAR DALL INDUSTRIES,
R/O NO.16/38/1, MAIN ROAD
-2-
WA NO.200076/2025
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CCC NO.200034 OF 2025
SHASTRI CHOWK, SHAHABAD
DIST. KALABURAGI - 585228.
2. SRI DHANAPPA
S/O MAHALINGAPPA INGINASHETTY
AGED ABOUT 39 YRS.
OCC: BUSINESS & PROPRIETOR
M/S SRI VEERABHADRESHWAR DALL INDUSTRIES,
R/O NO.16/38/1, MAIN ROAD
SHASTRI CHOWK, SHAHABAD
DIST. KALABURAGI - 585228.
3. SRI ISHWAR RAJ
S/O MAHALINGAPPA INGINASHETTY
AGED ABOUT 36 YRS.
OCC: BUSINESS & PROPRIETOR
M/S SRI VEERABHADRESHWAR DALL INDUSTRIES,
R/O NO.16/38/1, MAIN ROAD
SHASTRI CHOWK, SHAHABAD
DIST. KALABURAGI - 585228.
4. SRI NAGESH
S/O MAHALINGAPPA INGINASHETTY
AGED ABOUT 33 YRS.
OCC: BUSINESS & PROPRIETOR
M/S SRI VEERABHADRESHWAR DALL INDUSTRIES
R/O NO.16/38/1, MAIN ROAD
SHASTRI CHOWK, SHAHABAD,
DIST. KALABURAGI - 585228.
5. THE DEPUTY COMMISSIONER
KALABURAGI - 585102.
6. THE TAHASILDAR
SHAHABAD, KALABURAGI - 585102.
...RESPONDENTS
(BY SRI S.M. PATIL, ADV. FOR
SRI SHIVALING N. PADSHETTY, ADVS., FOR R1 TO R4;
SRI SHIVKUMAR TENGLI, AGA FOR R5 & R6)
THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE
KARNATAKA HIGH COURT ACT, R/W RULE 10(4)(I)(A) OF THE
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WRIT PROCEEDINGS RULES, PRAYING TO ALLOW THIS APPEAL
AND SET - ASIDE THE FINAL ORDER DATED: 20.06.2024
PASSED BY THE LEARNED SINGLE JUDGE IN
W.P.NO.201339/2021 (GM-RESPONDENT) AND TO PASS ANY
SUCH APPROPRIATE ORDERS AS THIS HON'BLE COURT MAY
DEEM FIT TO GRANT IN THE FACTS AND CIRCUMSTANCES OF
THE CASE.
IN CCC NO.200034/2025:
BETWEEN:
1. MAHALINGAPPA
S/O CHANNAPPA INGINASHETTY
AGED ABOUT 68 YRS.
OCC: BUSINESS & PROPRIETOR
M/S SRI VEERABHADRESHWAR DALL INDUSTRIES,
R/O NO.16/38/1, MAIN ROAD
SHASTRI CHOWK, SHAHABAD
DIST. KALABURAGI - 585228.
2. SRI DHANAPPA
S/O MAHALINGAPPA INGINASHETTY
AGED ABOUT 39 YRS.
OCC: BUSINESS & PROPRIETOR
M/S SRI VEERABHADRESHWAR DALL INDUSTRIES,
R/O NO.16/38/1, MAIN ROAD
SHASTRI CHOWK, SHAHABAD
DIST. KALABURAGI - 585228.
3. SRI ISHWAR RAJ
S/O MAHALINGAPPA INGINASHETTY
AGED ABOUT 36 YRS.
OCC: BUSINESS & PROPRIETOR
M/S SRI VEERABHADRESHWAR DALL INDUSTRIES,
R/O NO.16/38/1, MAIN ROAD
SHASTRI CHOWK, SHAHABAD
DIST. KALABURAGI - 585228.
4. SRI NAGESH
S/O MAHALINGAPPA INGINASHETTY
AGED ABOUT 33 YRS.
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WA NO.200076/2025
C/W
CCC NO.200034 OF 2025
OCC: BUSINESS & PROPRIETOR
M/S SRI VEERABHADRESHWAR DALL INDUSTRIES
R/O NO.16/38/1, MAIN ROAD
SHASTRI CHOWK, SHAHABAD,
DIST. KALABURAGI - 585228.
...PETITIONERS
(BY SRI S.M. PATIL & SHIVLING N. PADSHETTY, ADVS.,)
AND:
SATISH RATHOD
THE CHIEF MANANGER / BRANCH MANAGER,
STATE BANK OF INDIA,
SHAHABAD BRANCH, SHAHABAD,
DIST: KALABURAGI - 585228
...RESPONDENT
(BY SRI S.S. ASPALLI, ADVOCATE)
THIS CIVIL CONTEMPT PETITION IS FILED UNDER
SECTION 11 & 12 OF CONTEMPT OF COURT ACT, 1971 R/W
ARTICLE 215 OF CONSTITUTION OF INDIA, PRAYING TO
INITIATE CONTEMPT PROCEEDINGS AGAINST THE ALLEGED
CONTEMNOR / RESPONDENT FOR WILLFULLY AND
DELIBERATELY DISOBEYING THE DIRECTION OF THIS HON'BLE
COURT VIDE FINAL ORDER DATED 20.06.2024 PASSED IN
WRIT PETITION NO.201339/2021 (GM-RES).
THIS PETITION AND APPEAL HAVING BEEN HEARD AND
RESERVED FOR JUDGMENT ON 27.03.2025, COMING ON FOR
"PRONOUNCEMENT OF JUDGMENT" THIS DAY, THE COURT,
PRONOUNCED THE FOLLOWING:
CORAM: HON'BLE MR. JUSTICE K NATARAJAN
AND
HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL
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CAV JUDGMENT
(PER: HON'BLE MR JUSTICE VIJAYKUMAR A. PATIL) This intra-court appeal is filed by the appellants - State Bank of India (herein after referred to as Bank) challenging the order of the learned Single Judge dated 20.06.2024 passed in W.P.No.201339/2021 (GM-RES), wherein the writ petition filed by respondent Nos.1 to 4 was allowed.
The contempt petition in CCC No.200034/2025 is filed by respondent Nos.1 to 4/writ petitioners alleging willful disobedience of the order dated 20.06.2024 passed in W.P.No.201339/2021 (GM-RES) by the learned Single Judge.
Brief facts:
2. The respondent Nos.1 to 4/petitioners (borrowers) availed term loan of Rs.1,50,00,000/- from the appellants-Bank on 08.02.2017 by mortgaging the immovable property as a security for the said loan. The -6- WA NO.200076/2025 C/W CCC NO.200034 OF 2025 borrowers could not repay the loan as per the schedule.
The appellants-Bank issued notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (for short, 'SARFAESI Act'). The appellants-Bank took symbolic possession and thereafter the borrowers submitted a letter for One Time Settlement (hereinafter referred to as 'OTS', for short) agreeing to make full payment of Rs.1,30,00,000/- before 31.12.2019. The borrowers failed to pay the said amount within the stipulated time. The appellants-Bank approached the District Magistrate under Section 14 of the SARFAESI Act to take possession of the secured assets. Respondent No.6-Tahasildar by order dated 07.07.2021 fixed the date as 15.07.2021 to take physical possession of the secured asset. The borrowers filed writ petition challenging the order/communication dated 07.07.2021 of respondent No.6 and sought mandamus to the appellants to accept the balance amount of Rs.20,00,000/- as agreed under the OTS. The learned Single Judge allowed the writ petition by directing the -7- WA NO.200076/2025 C/W CCC NO.200034 OF 2025 appellants-Bank to appropriate Rs.22,00,000/- deposited by the borrowers pursuant to the order of this Court dated 14.07.2021 and a sum of Rs.1,80,000/- deposited by the borrowers before the appellants-Bank under OTS settlement and directed to adjust Rs.3,80,000/- towards the interest payable on Rs.1,10,00,000/- from 31.12.2019 to 05.03.2020. It was further directed that the borrowers were to pay interest on Rs.20,00,000/- from 31.12.2019 till August 2021 and thereafter, directed the appellants- Bank to release mortgaged assets and return the original documents of title by closing the loan account of the borrowers. Being aggrieved, this appeal by the appellants- Bank.
Submissions:
3. Sri. S. S. Aspalli, learned counsel appearing for the appellants-Bank submits that the learned Single Judge has failed to appreciate the settled position of law that the writ petition cannot be entertained against the action initiated by the Bank under the provisions of the SARFAESI -8- WA NO.200076/2025 C/W CCC NO.200034 OF 2025 Act. It is submitted that the learned Single Judge has allowed the writ petition by directing the Bank to accept Rs.20,00,000/- from the borrower which they have failed to deposit within 31.12.2019 with interest. The exercise undertaken by the learned Single Judge is impermissible.
The appellants-Bank accepted the OTS of the borrowers as per the request of the borrowers dated 03.10.2019, however the borrowers could not adhere to the terms of the OTS by paying the entire amount within the stipulated time. However, the learned Single Judge directed the appellants-Bank to accept the balance amount of the OTS, which amounts to altering the OTS scheme by the learned Single Judge, which is impermissible. The learned Single Judge has interpreted the agreement and calculated the interest on Rs.20,00,000/- which is impermissible. The learned Single Judge has further directed to close the loan account of the borrowers by returning the original title deposits of the borrowers without considering the fact that the very same property has been furnished as a security by the respondent No.4 for another loan transaction. In -9- WA NO.200076/2025 C/W CCC NO.200034 OF 2025 support of his contention, he placed reliance on the following judgments:
i. United Bank of India vs. Satyawati Tondon and others reported in (2010) 8 SCC 110.
ii. Authorized officer, State Bank of Travancore and another vs. Mathew K.C. reported in (2018) 3 SCC 85.
iii. K.Virupaksha and another vs. State of Karnataka and another reported in (2020) 4 SCC 440.
iv. Phoenix ARC Private Limited vs. Vishwa Bharati Vidya Mandir & Ors. in Civil Appeal Nos.257-259 of 2022 disposed of by the Hon'ble Supreme Court on 01.12.2022.
v. M/s.Talampally Venture Pvt. Ltd. vs. Sri.Anant Kumar Sakhare and another in W.A.No.200178/2021 C/w W.A.No.200194/2021 disposed of by this Court on 22.07.2022. Hence, he seeks to allow the appeal.
4. Per contra, Sri. S.M.Patil, learned counsel appearing on behalf of Sri. Shivaling N.Padshetty, learned counsel for respondent Nos.1 to 4/writ petitioners supports the order of the learned Single Judge and submits that the
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C/W CCC NO.200034 OF 2025 respondent Nos.1 to 4/borrowers have deposited Rs.22,00,000/- in compliance with the direction in the writ petition and also deposited Rs.1,80,000/- before the appellant-Bank. The amount agreed under the OTS has been paid by borrowers and the learned Single Judge has further directed to pay interest for the delayed payment and there is no loss as such to the appellants. Hence, he seeks to dismiss the appeal by punishing the appellants for willful disobedience of the order of the learned Single Judge.
Analysis:
5. We have heard the arguments of the learned counsel for the appellants, the learned counsel for respondent Nos.1 to 4, learned Additional Government Advocate for respondent Nos.5 & 6 and meticulously perused the material available on record. We have given our anxious consideration to the submissions advanced and the material available on record. The points that arise for our consideration in this appeal are as under:
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i) Whether entertaining the writ petition under Article 226 of the Constitution of India is proper, in view of availability of alternate and efficacious remedy under the provisions of the SARFAESI Act?
ii) Whether the writ of mandamus can be issued to accept payment after the last date as per OTS Scheme or agreement between the parties?
6. The answer to the above said questions are negative for the following reasons:
i) The records indicate that respondent Nos.1 to 4 borrowed a sum of Rs.1,50,00,000/- from the appellant-
Bank on 08.02.2017 for the purpose of its business. The respondent Nos.1 to 4/borrowers mortgaged property bearing CMC No.15-359 (Old), part of property No.15-167, 15-184/1 (New) at Sy.No.201 Shahabad and a commercial property bearing No.16-38 situated at Shahabad. Admittedly, the account of borrowers became a Non- Performing Asset (NPA) for non payment of dues. The
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C/W CCC NO.200034 OF 2025 appellant-Bank issued a demand notice dated 04.05.2019 under Section 13(2) of the SARFAESI Act. As per the demand notice, the aggregate outstanding dues was Rs.1,52,00,088/- as on 04.05.2019. The appellant-Bank issued legal notice dated 09.05.2019 to the borrowers calling upon them to repay outstanding dues. Thereafter, the appellant-Bank issued possession notice taking symbolic possession of the secured assets on 29.07.2019. The said notice came to be published in a daily newspaper on 01.08.2019.
ii) Thereafter the borrowers submitted a letter for OTS to the appellant-Bank. It was agreed between the borrowers and the appellant-Bank that the borrowers would pay Rs.1,30,00,000/- before 31.12.2019. The communication dated 05.03.2020 indicates that the borrowers had paid only Rs.1,10,00,000/- till the said date and have failed to pay the full compromised amount within the accepted time and failing to comply the terms and conditions of the compromise, the appellant-Bank
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C/W CCC NO.200034 OF 2025 continued the proceedings under the SARFAESI Act. The borrowers sent a communication dated 06.03.2020 informing that they need time to deposit Rs.20,00,000/- till 31.03.2020. Further, communication dated 20.03.2021 at Annexure G indicates that the borrowers could not pay Rs.20,00,000/- due to COVID-19 pandemic and personal problems and requested to allow to pay the said amount and to close the account. The appellant-Bank vide communication dated 06.04.2021 informed the borrowers that the competent authority has declined their request and requested to close the account immediately otherwise they will be constrained to take physical possession of the secured assets. The borrowers filed a writ petition on 13.07.2021 seeking the following reliefs:
"a. Quash the order passed by the 2nd respondent dated 07.07.2021 bearing No.KAM/D.C.B/03/2021-22 produced at Annexure-A. b. Direct the respondents No.3 to 5 to accept the balance of Rs.20 Lakhs as agreed under the One Time Settlement on 3.10.2019 and close the loan account."
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iii) The borrowers have sought the prayer to quash order dated 07.07.2021 at Annexure-J issued by respondent No.6-Tahasildar. The said communication of respondent No.6 indicates that, a request is made to the borrowers to present on 15.07.2021 at 11:00a.m. to implement the order of the District Magistrate passed under Section 14 of the SARFAESI Act. The further prayer of borrowers was to direct the appellant-Bank to accept Rs.20,00,000/- as agreed under OTS and close the loan account. The prayer in the writ petition is with regard to the challenge to the communication of respondent No.6- Tahasildar seeking for handover of the physical possession of secured assets and the prayer to accept the balance amount under the OTS. The contention of appellant-Bank that the Writ Petition under Article 226 of the Constitution of India seeking such reliefs is not maintainable. Hence, to appreciate such contention it would be useful to refer some of the decisions of the Hon'ble Supreme Court. In the case of United Bank of India vs. Satyawati Tondon
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C/W CCC NO.200034 OF 2025 and others referred supra, wherein at para Nos.5, 42 and 43, the Hon'ble Supreme Court has held as under:
"5. An analysis of the provisions of the DRT Act shows that primary object of that Act was to facilitate creation of special machinery for speedy recovery of the dues of banks and financial institutions. This is the reason why the DRT Act not only provides for establishment of the Tribunals and the Appellate Tribunals with the jurisdiction, powers and authority to make summary adjudication of applications made by banks or financial institutions and specifies the modes of recovery of the amount determined by the Tribunal or the Appellate Tribunal but also bars the jurisdiction of all courts except the Supreme Court and the High Courts in relation to the matters specified in Section 17. The Tribunals and the Appellate Tribunals have also been freed from the shackles of procedure contained in the Code of Civil Procedure.
42. There is another reason why the impugned order should be set aside. If Respondent 1 had any tangible grievance against the notice issued under Section 13(4) or action taken under Section 14, then she could have availed remedy by filing an application under Section 17(1). The expression "any person" used in Section 17(1) is of wide import. It takes within its fold, not only the borrower but also the guarantor or any other person who may be affected by the action taken under Section 13(4) or Section 14. Both, the Tribunal and the Appellate Tribunal are empowered to pass interim orders under Sections 17 and 18 and are required to decide the matters within a fixed time schedule. It is thus evident that the remedies available to an aggrieved person under the SARFAESI Act are both expeditious and effective.
43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the
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C/W CCC NO.200034 OF 2025 public dues, etc. the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute."
[Emphasis Supplied]
iv) In the case of Authorized officer, State Bank of Travancore and another vs. Mathew K.C., referred supra, the Hon'ble Supreme Court at para Nos.10 to 13 has held as under:
10. In Satyawati Tondon [United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110 : (2010) 3 SCC (Civ) 260] the High Court had restrained [Satyawati Tondon v. State of U.P., 2009 SCC OnLine All 2608] further proceedings under Section 13(4) of the Act. Upon a detailed consideration of the statutory scheme under the SARFAESI Act, the availability of remedy to the aggrieved under Section 17 before the Tribunal and the appellate remedy under Section 18 before the Appellate Tribunal, the object and purpose of the legislation, it was observed that a writ petition ought not to be entertained in view of the alternate statutory remedy available holding: (SCC pp. 123 & 128, paras 43 & 55) "43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this Rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc. the High Court must keep in mind that
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C/W CCC NO.200034 OF 2025 the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute.
***
55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection."
11. In Union Bank of India v. Panchanan Subudhi [Union Bank of India v. Panchanan Subudhi, (2010) 15 SCC 552 :
(2013) 2 SCC (Civ) 221] , further proceedings under Section 13(4) were stayed in the writ jurisdiction subject to deposit of Rs 10,00,000 leading this Court to observe as follows: (SCC pp. 553-54, para 7) "7. In our view, the approach adopted by the High Court was clearly erroneous. When the respondent failed to abide by the terms of one-time settlement, there was no justification for the High Court to entertain the writ petition and that too by ignoring the fact that a statutory alternative remedy was available to the respondent under Section 17 of the Act."
12. The same view was reiterated in Kanaiyalal Lalchand Sachdev v. State of Maharashtra [Kanaiyalal Lalchand Sachdev v. State of Maharashtra, (2011) 2 SCC 782 : (2011) 1 SCC (Civ) 570] , observing: (SCC p. 789, para 23) "23. In our opinion, therefore, the High Court rightly dismissed [Kanaiyalal Lalchand Sachdev v. State of Maharashtra, 2009 SCC OnLine Bom 2388] the petition on the ground that an efficacious remedy was available to the appellants under Section 17 of the Act. It is well settled that ordinarily relief under Articles 226/227 of the
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C/W CCC NO.200034 OF 2025 Constitution of India is not available if an efficacious alternative remedy is available to any aggrieved person. (See Sadhana Lodh v. National Insurance Co. Ltd. [Sadhana Lodh v. National Insurance Co. Ltd., (2003) 3 SCC 524 : 2003 SCC (Cri) 762] , Surya Dev Rai v. Ram Chander Rai [Surya Dev Rai v. Ram Chander Rai, (2003) 6 SCC 675] and SBI v. Allied Chemical Laboratories [SBI v. Allied Chemical Laboratories, (2006) 9 SCC 252] .)"
13. In Ikbal [Sri Siddeshwara Coop. Bank Ltd. v. Ikbal, (2013) 10 SCC 83 : (2013) 4 SCC (Civ) 638] it was observed that the action of the bank under Section 13(4) of the SARFAESI Act available to challenge by the aggrieved under Section 17 was an efficacious remedy and the institution directly under Article 226 was not sustainable, relying upon Satyawati Tondon [United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110 : (2010) 3 SCC (Civ) 260] observing: (Ikbal case [Sri Siddeshwara Coop.
Bank Ltd. v. Ikbal, (2013) 10 SCC 83 : (2013) 4 SCC (Civ) 638] , SCC pp. 94-95, paras 27-28) "27. No doubt an alternative remedy is not an absolute bar to the exercise of extraordinary jurisdiction under Article 226 but by now it is well settled that where a statute provides efficacious and adequate remedy, the High Court will do well in not entertaining a petition under Article 226. On misplaced considerations, statutory procedures cannot be allowed to be circumvented.
28. ... In our view, there was no justification whatsoever for the learned Single Judge [Ikbal v. Registrar of Coop. Societies, 2011 SCC OnLine Kar 4456] to allow the borrower to bypass the efficacious remedy provided to him under Section 17 and invoke the extraordinary jurisdiction in his favour when he had disentitled himself for such relief by his conduct. The Single Judge was clearly in error in invoking his extraordinary jurisdiction under Article 226 in light of the peculiar facts indicated above. The Division Bench [Sri Siddeshwara Coop. Bank Ltd. v. Ikbal, 2012 SCC OnLine Kar 8816] also erred in affirming the erroneous order of the Single Judge."
[Emphasis Supplied]
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v) In the case of Phoenix ARC Private Limited vs. Vishwa Bharati Vidya Mandir & Ors. referred supra, the Hon'ble Supreme Court at para 13 has held as under:
"13. Now, so far as the submission on behalf of the borrowers that in exercise of the powers under Article 226 of the Constitution, this Court may not interfere with the interim/interlocutory orders is concerned, the decision of this Court in Mathew K.C. [State Bank of Travancore v. Mathew K.C., (2018) 3 SCC 85 : (2018) 2 SCC (Civ) 41] is required to be referred to.
13.1 In the case of Mathew K.C. [State Bank of Travancore v. Mathew K.C., (2018) 3 SCC 85 : (2018) 2 SCC (Civ) 41] after referring to and/or considering the decision of this Court in Chhabil Dass Agarwal [CIT v. Chhabil Dass Agarwal, (2014) 1 SCC 603], it was observed and held in para 5 as under :
"5. We have considered the submissions on behalf of the parties. Normally this Court in exercise of jurisdiction under Article 136 of the Constitution is loath to interfere with an interim order passed in a pending proceeding before the High Court, except in special circumstances, to prevent manifest injustice or abuse of the process of the court. In the present case, the facts are not in dispute. The discretionary jurisdiction under Article 226 is not absolute but has to be exercised judiciously in the given facts of a case and in accordance with law. The normal rule is that a writ petition under Article 226 of the Constitution ought not to be entertained if alternate statutory remedies are available, except in cases falling within the well-defined exceptions as observed in CIT v. Chhabil Dass Agarwal [CIT v. Chhabil Dass Agarwal, (2014) 1 SCC 603] , as follows : (SCC p. 611, para 15) "15. Thus, while it can be said that this Court has recognised some exceptions to the rule of alternative remedy i.e. where the statutory authority has not acted in accordance with the provisions of the enactment in
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C/W CCC NO.200034 OF 2025 question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, the proposition laid down in Thansingh Nathmal case [Thansingh Nathmal v. Supt. of Taxes, AIR 1964 SC 1419] , Titaghur Paper Mills case [Titaghur Paper Mills Co. Ltd. v. State of Orissa, (1983) 2 SCC 433 : 1983 SCC (Tax) 131] and other similar judgments that the High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance still holds the field. Therefore, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation."
13.2 Applying the law laid down by this Court in Mathew K.C. [State Bank of Travancore v. Mathew K.C., (2018) 3 SCC 85 : (2018) 2 SCC (Civ) 41] to the facts on hand, we are of the opinion that filing of the writ petitions by the borrowers before the High Court under Article 226 of the Constitution of India is an abuse of process of the court. The writ petitions have been filed against the proposed action to be taken under Section 13(4). As observed hereinabove, even assuming that the communication dated 13-8-2015 was a notice under Section 13(4), in that case also, in view of the statutory, efficacious remedy available by way of appeal under Section 17 of the SARFAESI Act, the High Court ought not to have entertained the writ petitions. Even the impugned orders passed by the High Court directing to maintain the status quo with respect to the possession of the secured properties on payment of Rs 1 crore only (in all Rs 3 crores) is absolutely unjustifiable. The dues are to the extent of approximately Rs 117 crores. The ad interim relief has been continued since 2015 and the secured creditor is deprived of proceeding further with the action under the SARFAESI Act. Filing of the writ petition by the borrowers before the High Court is nothing but an abuse
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C/W CCC NO.200034 OF 2025 of process of court. It appears that the High Court has initially granted an ex parte ad interim order mechanically and without assigning any reasons. The High Court ought to have appreciated that by passing such an interim order, the rights of the secured creditor to recover the amount due and payable have been seriously prejudiced. The secured creditor and/or its assignor have a right to recover the amount due and payable to it from the borrowers. The stay granted by the High Court would have serious adverse impact on the financial health of the secured creditor/assignor. Therefore, the High Court should have been extremely careful and circumspect in exercising its discretion while granting stay in such matters. In these circumstances, the proceedings before the High Court deserve to be dismissed."
[Emphasis Supplied]
vi) Keeping in mind the trite position of law, we are of the considered view that the writ petition under Article 226 of the Constitution of India cannot be entertained in view of availability of alternate remedy under the SARFAESI Act. The prayer sought in the writ petition is with regard to action initiated by appellant-Bank under the provisions of the SARFAESI Act and such a 'measure' taken by the Bank to enforce the security interest to recover its dues, the remedy would be under Section 17 of the SARFAESI Act and not under Article 226 of the Constitution of India. It would be useful to extract Section 17 of the SARFAESI Act, which is as under:
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C/W CCC NO.200034 OF 2025 "17. Application against measures to recover secured debts.--(1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this Chapter,1 [may make an application along with such fee, as may be prescribed,] to the Debts Recovery Tribunal having jurisdiction in the matter within fortyfive days from the date on which such measure had been taken:
[Provided that different fees may be prescribed for making the application by the borrower and the person other than the borrower.] [Explanation.--For the removal of doubts, it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under sub- section (1) of section 17.] [(1A) An application under sub-section (1) shall be filed before the Debts Recovery Tribunal within the local limits of whose jurisdiction--
(a) the cause of action, wholly or in part, arises;
(b) where the secured asset is located; or
(c) the branch or any other office of a bank or financial institution is maintaining an account in which debt claimed is outstanding for the time being.] [(2) The Debts Recovery Tribunal shall consider whether any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder.
[(3) If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub-section (4) of section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made thereunder, and require restoration of the management or restoration of possession, of the secured assets to the borrower or other aggrieved person, it may, by order,--
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(a) declare the recourse to any one or more measures referred to in sub-section (4) of section 13 taken by the secured creditor as invalid; and
(b) restore the possession of secured assets or management of secured assets to the borrower or such other aggrieved person, who has made an application under sub-section (1), as the case may be; and
(c) pass such other direction as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditor under sub-section (4) of section 13.] (4) If, the Debts Recovery Tribunal declares the recourse taken by a secured creditor under sub-section (4) of section 13, is in accordance with the provisions of this Act and the rules made thereunder, then, notwithstanding anything contained in any other law for the time being in force, the secured creditor shall be entitled to take recourse to one or more of the measures specified under sub-section (4) of section 13 to recover his secured debt.
[(4A) Where--
(i) any person, in an application under sub-section (1), claims any tenancy or leasehold rights upon the secured asset, the Debt Recovery Tribunal, after examining the facts of the case and evidence produced by the parties in relation to such claims shall, for the purposes of enforcement of security interest, have the jurisdiction to examine whether lease or tenancy,--
(a) has expired or stood determined; or
(b) is contrary to section 65A of the Transfer of Property Act, 1882 (4 of 1882); or
(c) is contrary to terms of mortgage; or
(d) is created after the issuance of notice of default and demand by the Bank under subsection (2) of section 13 of the Act; and
(ii) the Debt Recovery Tribunal is satisfied that tenancy right or leasehold rights claimed in secured asset falls under the sub-clause (a) or sub-clause (b) or sub-clause
(c) or sub-clause (d) of clause (i), then notwithstanding anything to the contrary contained in any other law for the time being in force, the Debt Recovery Tribunal may pass such order as it deems fit in accordance with the provisions of this Act.]
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C/W CCC NO.200034 OF 2025 (5) Any application made under sub-section (1) shall be dealt with by the Debts Recovery Tribunal as expeditiously as possible and disposed of within sixty days from the date of such application:
Provided that the Debts Recovery Tribunal may, from time to time, extend the said period for reasons to be recorded in writing, so, however, that the total period of pendency of the application with the Debts Recovery Tribunal, shall not exceed four months from the date of making of such application made under sub-section (1).
(6) If the application is not disposed of by the Debts Recovery Tribunal within the period of four months as specified in sub-section (5), any part to the application may make an application, in such form as may be prescribed, to the Appellate Tribunal for directing the Debts Recovery Tribunal for expeditious disposal of the application pending before the Debts Recovery Tribunal and the Appellate Tribunal may, on such application, make an order for expeditious disposal of the pending application by the Debts Recovery Tribunal.
(7) Save as otherwise provided in this Act, the Debts Recovery Tribunal shall, as far as may be, dispose of the application in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and the rules made thereunder.]
vii) Sub-section (2) makes it very clear that the DRT can examine whether the measures taken under Section 13(4) are in accordance with the provisions of the Act. According to Sub-section(3), the DRT can examine the facts and circumstances of the case and also evidence produced by the parties. After examining the facts, circumstances and evidence, DRT can declare any of the measures taken under Section 13(4) as invalid; it can restore the possession of secured assets or the
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C/W CCC NO.200034 OF 2025 management to the borrower or other aggrieved persons and it can also issue any other directions as found to be appropriate. This being the scope of Section 17, the borrower could have urged all the grounds that he had taken in the writ petition before the DRT by making an application under Section 17 of the Act. Therefore we are of the clear opinion that the writ petition filed by the borrower could not have been entertained.
viii) Insofar as issuing a mandamus to the appellant-Bank to accept the balance of Rs.20,00,000/- with interest is concerned, in our considered view would be contrary to the settled position of law. The Hon'ble Supreme Court in the case of Bijnor Urban Cooperative Bank Ltd., Bijnor and ors. vs. Meenal Agarwal and ors.1 has held that:
"12. Even otherwise, as observed hereinabove, no borrower can, as a matter of right, pray for grant of benefit of one-time settlement scheme. In a given case, it may happen that a person would borrow a huge amount, for example, Rs 100 crores. After availing the loan, he may deliberately not pay any amount towards instalments, 1 (2021) SCC OnLine SC 1255
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C/W CCC NO.200034 OF 2025 though able to make the payment. He would wait for the OTS scheme and then pray for grant of benefit under the OTS scheme under which, always a lesser amount than the amount due and payable under the loan account will have to be paid. This, despite there being all possibility for recovery of the entire loan amount which can be realised by selling the mortgaged/secured properties. If it is held that the borrower can still, as a matter of right, pray for benefit under the OTS scheme, in that case, it would be giving a premium to a dishonest borrower, who, despite the fact that he is able to make the payment and the fact that the bank is able to recover the entire loan amount even by selling the mortgaged/secured properties, either from the borrower and/or guarantor. This is because under the OTS scheme a debtor has to pay a lesser amount than the actual amount due and payable under the loan account. Such cannot be the intention of the bank while offering OTS scheme and that cannot be the purpose of the scheme which may encourage such a dishonesty.
13. If a prayer is entertained on the part of the defaulting unit/person to compel or direct the financial corporation/bank to enter into a one-time settlement on the terms proposed by it/him, then every defaulting unit/person which/who is capable of paying its/his dues as per the terms of the agreement entered into by it/him would like to get one-time settlement in its/his favour. Who would not like to get his liability reduced and pay lesser amount than the amount he/she is liable to pay under the loan account? In the present case, it is noted that the original writ petitioner and her husband are making the payments regularly in two other loan accounts and those accounts are regularised. Meaning thereby, they have the capacity to make the payment even with respect to the present loan account and despite the said fact, not a single amount/instalment has been paid in the present loan account for which original petitioner is praying for the benefit under the OTS Scheme.
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
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C/W CCC NO.200034 OF 2025 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 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 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]
ix) The Hon'ble Supreme Court in the case of State Bank of India vs. Arvindra Electronics Pvt. Ltd.,2 has held that:
"22. Even otherwise as rightly submitted on behalf of the Bank directing the Bank to reschedule the payment under OTS would tantamount to modification of the contract which can be done by mutual consent under Section 62 of the Contract Act. By the impugned judgment and order rescheduling the payment under the OTS Scheme and 2 (2022) SCC OnLine SC 1522
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C/W CCC NO.200034 OF 2025 granting extension of time would tantamount to rewriting the contract which is not permissible while exercising the powers under Article 226 of the Constitution of India.
23. It is required to be noted that under the OTS Scheme which was originally sanctioned in the year 2017 the borrower was required to pay Rs 10,53,75,069.74 against the outstanding of Rs 13,99,89,273.99. Therefore, under the original sanctioned OTS Scheme the borrower was getting the substantial relief of approximately Rs 3 crores. The Bank agreed and accepted the OTS offer on the terms and conditions mentioned in the letter dated 21-11-2017. In the sanctioned letter dated 21-11-2017 it was specifically mentioned in Clause (iv) that the entire payment under the OTS Scheme was to be made by 21-5-2018, otherwise OTS would be rendered infructuous. Therefore, the borrowers were bound to make the payment as per the sanctioned OTS Scheme. Therefore, the High Court ought not to have granted further extension dehors the sanctioned OTS Scheme while exercising the powers under Article 226 of the Constitution of India."
[Emphasis Supplied]
x) The Hon'ble Supreme Court in the aforesaid judgments has made it clear that no mandamus can be issued by the High Court in exercise of power under Article 226 of the Constitution of India directing the Banks to consider OTS or extend the time for payment of balance amount after the last date for payment of entire amount as agreed between the parties. Such exercise by the writ Court is tantamount to rewriting the contract, between the parties, which is impermissible under Article 226 of the
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C/W CCC NO.200034 OF 2025 Constitution of India. In view of the enunciation of law laid down by the Hon'ble Supreme Court in the aforesaid decisions, the direction of the learned Single Judge to accept Rs.20,00,000/- with interest after last date under the OTS agreement would be contrary to the settled position of law and liable to be set aside.
xi) The contention of the appellant that the direction of the learned Single Judge to release the original title documents deposited by the borrower with the appellant is beyond the prayer in the writ petition and without considering the objection on record. Admittedly, the prayer in the writ petition is to quash the communication issued by 6th respondent Tahasildar requesting to hand over the physical possession of the property and further prayer to accept the balance Rs.20,00,000 as agreed under the OTS on 03.10.2019. The material available on record indicates that the borrower more particularly the respondent No.4 in the appeal has another loan account and for the said loan, the
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C/W CCC NO.200034 OF 2025 very secured assets have been furnished as security. Hence, direction of the learned Single Judge to return the original title deed would not arise.
7. In view of the settled position of law and for the aforementioned reasons, we are of the considered view that the learned Single Judge has clearly erred in allowing the writ petition by directing the bank to accept balance amount of OTS beyond the time stipulated in the OTS between the parties. For the said reasons, the appeal deserves to be allowed. The contempt petition does not survive for consideration and hence liable to be dropped.
8. For the aforementioned reasons, we proceed to pass the following:
ORDER
i) W.A.No.200076/2025 is allowed.
ii) The order of the learned Single Judge dated 20.06.2024 passed in W.P.No.201339/2013 (GM-RES) is set aside, consequently, writ
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C/W CCC NO.200034 OF 2025 petition filed by the borrower is hereby dismissed.
iii) CCC No.200034/2025 is dropped.
iv) No orders to cost.
Sd/-
(K NATARAJAN)
JUDGE
Sd/-
(VIJAYKUMAR A. PATIL)
JUDGE
BSR
CT: PS