Karnataka High Court
Sri D K Shivanagouda vs The Managing Director on 19 April, 2023
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WP No. 101145 of 2023
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
DATED THIS THE 19TH DAY OF APRIL, 2023
BEFORE
THE HON'BLE MR JUSTICE SACHIN SHANKAR MAGADUM
WRIT PETITION NO. 101145 OF 2023 (GM-KSFC)
BETWEEN:
1. SRI D.K. SHIVANAGOUDA
AGE: 41 YEARS, OCC: BUSINESS,
R/O. JAMAKHANDI, TQ: JAMAKHANDI,
DIST: BAGALKOT-587301.
2. SRI SANJEEV S/O. TIMMANNA NINGARADDI
AGE: 36 YEARS, OCC: COOLIE,
R/O. SHIROL VILLAGE, TQ: MUDHOL,
DIST: BAGALKOT-587313.
...PETITIONERS
(BY SRI HARSHAWARDHAN M. PATIL, ADVOCATE)
AND:
1. THE MANAGING DIRECTOR
KARNATAKA STATE FINANCIAL CORPORATION,
YASHAVANT
R/O. HEAD OFFICE 1/1 THIMAIYA ROAD, KFC BHAVAN,
NARAYANKAR
BENGALURU-560052.
Digitally signed by
YASHAVANT
NARAYANKAR
Location: High Court
of Karnataka, Dharwad
Bench 2. THE EXECUTIVE DIRECTOR
KARNATAKA STATE FINANCIAL CORPORATION,
R/O. HEAD OFFICE 1/1 THIMAIYA ROAD,
KFC BHAVAN, BENGALURU-560052.
3. THE GENERAL MANAGER
KARNATAKA STATE FINANCIAL CORPORATION,
R/O. HEAD OFFICE 1/1 THIMAIYA ROAD,
KFC BHAVAN, BENGALURU-560052.
4. ASSISTANT GENERAL MANAGER / BRANCH MANAGER,
KARNATAKA STATE FINANCIAL CORPORATION,
BELAGAVI BRANCH, NEAR SANMAN HOTEL,
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WP No. 101145 of 2023
BELAGAVI-590001.
5. THE SUB-REGISTRAR
SUB-REGISTRAR OFFICE,
BELAGAVI-590001.
6. MAHADEV S/O. CHINNAPPA BANDIWADAR
AGE: 43 YEARS, OCC: BUSINESS,
R/O. WARD NO. 3, SAIDAPUR GALLI,
TQ: MUDHOL, DIST: BAGALKOT.
...RESPONDENTS
(BY SRI SHARAD V. MAGADUM, ADV. FOR R1 TO R4;
SRI PRASHANT V. MOGALI, HCGP FOR R5;
SRI G.S. KAMBLE, ADV. FOR R6)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE WRIT
IN THE NATURE OF CERTIORARI BY QUASHING THE
ENDORSEMENT ISSUED BY THE RESPONDENT NO. 5 ON THE
LETTER OF THE RESPONDENT NO. 4 VIDE ANNEXURE-C.
THIS PETITION, COMING ON FOR PRELIMINARY HEARING,
THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
The captioned writ petition is filed feeling aggrieved by the endorsement issued by respondent No.5/Sub- Registrar declining to discharge charge reflected on the property bearing Plot Nos.5, 6, 7 and 8 inspite of correspondence made by respondent No.1/Corporation vide Annexure-C, which is addressed to respondent No.5/Sub-Registrar.
-3-WP No. 101145 of 2023
2. A short point that needs consideration at the hands of this Court is as to whether the petitioners are entitled to seek discharge of Corporation Boja which was reflected in the property extracts on account of loan availed by one Anil Paragowda Patil and Ismail Saheb M Kesari. The petitioners during the pendency of recovery proceedings have purchased the property from borrower under the registered Sale Deeds dated 18.09.2017 and 28.03.2019. Respondent/Corporation however, proceeded to auction the property under the provisions of SARFAESI Act. Respondent No.6 herein was successful bidder and respondent/Corporation executed sale deed in favour of respondent No.6.
3. Feeling aggrieved by the sale deed executed by respondent/Corporation, the present petitioners who have purchased the property directly from the borrower assailing the auction of sale, preferred writ petition in WP No.104290/2022. A co-ordinate Bench of this Court on examining the material on record has held that the -4- WP No. 101145 of 2023 present purchasers are bonofide purchasers and therefore, equities lean in favour of the petitioners herein. Consequently, co-ordinate Bench of this Court while allowing the said writ petition set-aside auction and the property was ordered to be restored to the petitioners. Consequently, sale notice and auction conducted on 13.12.2021 in respect of Plot Nos.5, 6, 7 and 8 was set- aside and sale deed executed by the Corporation in favour of respondent No.6 herein was also set-aside.
4. Respondent No.6 herein feeling aggrieved by the of co-ordinate bench of this Court preferred writ appeal in WA No.100094/2023. It is stated across the bar that Division Bench has dismissed the said writ appeal.
5. If these significant details are looked into, question that survives for consideration is as to whether respondent No.5/Sub-Registrar could have issued endorsement calling upon the petitioners to place on record relinquishment/reconveyance deed to delete Boja. -5- WP No. 101145 of 2023
6. It would be useful for this Court to cull out relevant Clause 1.1 of Recovery Manual under Chapter IX, which reads as under:
1. Returning of Title Deeds and Security Documents.
1.1 After the loan account is closed to the satisfaction of the Corporation by the borrower, it is the responsibility of the Corporation to return the title deeds to the borrower/surety/other charge holder. If the security offered to the Corporation by way of an registered mortgage/registered equitable mortgage then the Corporation has to execute and register the release deed/reconveyance deed in favour of borrower
7. On examination of the material on record and also relevant clause 1.1 of Recovery Manual, which is culled out above, the endorsement issued by respondent No.5/Sub-Registrar is patently erroneous. If respondent/Corporation has issued endorsement which is communicated to respondent No.5 indicating that respondent No.5/Sub-Registrar may take appropriate action to discharge charge of Corporation in respect of the -6- WP No. 101145 of 2023 property in question, respondent No.5/Sub-Registrar has erred in insisting for release deed to clear charge.
8. Learned counsel for respondent/Corporation has made statement on instruction, that this endorsement is issued without executing the deed, because subsequent purchaser does not fall within the definition of 'Borrower'. Therefore, under the Recovery Manual, there is no procedure to execute relinquishment deed or mortgage deed in favour of subsequent purchaser. Therefore, respondent/Corporation claims that endorsement is issued which is addressed to respondent No.5/Sub-Registrar. If legally recoverable amount insofar as subject properties are concerned is discharged by subsequent purchaser and if communication is sent to Sub-Registrar, he cannot insist to secure Release deed. It is the Corporation which alone can raise objection in regard to discharge of KSFC Boja. If KSFC itself has come forward requesting to discharge Boja, respondent No.5 has not examined the contents of communication vide Annexure-C. It is not the petitioners -7- WP No. 101145 of 2023 who are requesting to discharge Boja, but request to discharge Boja is made by Corporation itself. Therefore, the impugned endorsement made on the communication is liable to be quashed.
9. For the foregoing reasons, I proceed to pass the following:
ORDER
a) Writ Petition stands allowed.
b) The impugned endorsement issued by respondent No.5 on the letter of respondent No.4 vide Annexure-C is hereby quashed.
c) Respondent No.5/Sub-Registrar shall forthwith pass order to remove Boja in respect of Plot Nos.5, 6, 7 and 8. This exercise shall be completed within two weeks from the date of receipt of certified copy of this order.
d) If the petitioners submit an application seeking return of original documents, respondent/Corporation in the light of -8- WP No. 101145 of 2023 endorsement issued vide Annexure-C, is under bounden duty to return all original title documents to the petitioners.
SD/-
JUDGE JTR List No.: 1 Sl No.: 14