Karnataka High Court
Sri T S Nataraj vs State Bank Of India on 18 November, 2025
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W.A. No.139/2023
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 18TH DAY OF NOVEMBER, 2025
PRESENT
THE HON'BLE MRS. JUSTICE ANU SIVARAMAN
AND
THE HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL
WRIT APPEAL NO.139/2023 (GM-RES)
BETWEEN:
1. SRI. T.S. NATARAJ
S/O LATE C. SHIVAKUMAR
AGED ABOUT 62 YEARS
R/AT NO.9, PREETHI COTTAGE
6TH MAIN ROAD, MAHALAKSHMI NAGAR
TUMKURU-572103.
Digitally signed 2. SRI. HARSHA .N
by RUPA V S/O T.S. NATARAJ
Location: High AGED ABOUT 35 YEARS
Court Of R/AT NO.9, PREETHI COTTAGE
Karnataka 6TH MAIN ROAD, MAHALAKSHMINAGAR
TUMKUR-572103.
3. SMT. N. SEEMA
S/O T.S. NATARAJ
AGED ABOUT 31 YEARS
R/AT NO.9, PREETHI COTTAGE
6TH MAIN ROAD, MAHALAKSHMINAGAR
TUMKUR-572103.
...APPELLANTS
(BY SRI. B.N. MAHESH CHANDRA, ADV., FOR
SRI. NAVEEN GUDIKOTE S, ADV.,)
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AND:
1. STATE BANK OF INDIA
STRESSED ASSETS RECOVERY BRANCH (05173)
NO.11/90, 3RD FLOOR
NEAR OLD SHIVAJI THEATRE
J C ROAD, BENGALURU-560002
REPRESENTED BY ITS CHIEF MANAGER.
2. AUTHORIZED OFFICER
STRESSED ASSETS RECOVERY BRANCH (05173)
STATE BANK OF INDIA
NO.11/90, 3RD FLOOR
NEAR OLD SHIVAJI THEATRE
J C ROAD, BENGALURU-560002.
3. STATE BANK OF INDIA
SME BRANCH, 4TH CROSS
ASHOKA NAGAR, TUMKUR-572103
REP. BY ITS CHIEF MANAGER.
4. M/S. SHRI CHAAMUNDI ALDEHYDES
R/AT PLOT NO.5
KIDBA INDUSTRIAL LAYOUT
SATYAMANGALA, TUMKUR-572104
REP. BY ITS PARTNER N. SRINIVAS
...RESPONDENTS
(BY SRI. B.N. THULASI KUMAR, ADV., FOR C/R1
SRI. S. RAJENDRA, ADV., FOR
SRI. VIVEK HOLLA, ADV., FOR R3
R2 SERVED)
THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT, 1961 PRAYING TO ALLOW THIS WRIT APPEAL.
SET ASIDE THE ORDER PASSED BY THE LEARNED SINGLE JUDGE
IN WP No.19756/2021 DATED 14.12.2022 AND CONSEQUENTLY
ALLOW THE W.P. IN THE INTEREST OF JUSTICE AND EQUITY.
THIS WRIT APPEAL HAVING BEEN HEARD AND RESERVED
ON 10.11.2025, COMING ON FOR PRONOUNCEMENT OF
JUDGMENT, THIS DAY VIJAYKUMAR A. PATIL J., DELIVERED
THE FOLLOWING:
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W.A. No.139/2023
HC-KAR
CORAM: HON'BLE MRS. JUSTICE ANU SIVARAMAN
and
HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL
CAV JUDGMENT
(PER: HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL) This intra Court appeal is filed under Section 4 of the Karnataka High Court Act, 1961, challenging the order dated 14.12.2022 passed the learned Single Judge in W.P.No.19756/2021.
2. Brief facts leading to the filing of this appeal are that the appellants applied for loan with respondent No.1- Bank, wherein the cash credit limit of Rs.2,00,00,000/- and term loan of Rs.30,00,000/- was sanctioned. Thereafter, the account of the appellants became a Non- Performing Asset (NPA) due to non-repayment of loan amount. Thereafter, respondent No.3 issued notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'The Act' for short) and the possession of the secured asset was symbolically -4- NC: 2025:KHC:47425-DB W.A. No.139/2023 HC-KAR taken under Section 13(4) of the Act. The respondent No.3-Bank issued notice to auction the property fixing the reserve price of the property as Rs.9,37,00,000/-. The action of the bank was assailed by appellants in S.A.No.174/2018 and S.A.No.212/2019. Both the applications were dismissed by the Debt Recovery Tribunal (DRT) on 31.10.2020. The respondent No.1-Bank issued a notice of sale under Rule 6(2), Rule 8(6) read with Rule 6(2) and 9(1) of the Security Interest (Enforcement) Rules, 2002 (for short 'The Rules'), along with copy of e- auction notice to appellants. The respondent No.1-Bank, on 07.10.2021, issued sale certificate in favour of respondent No.4, which was assailed by the appellants before the learned Single Judge in W.P.No.19756/2021, which came to be dismissed. Being aggrieved this appeal.
3. Sri.B.N.Mahesh Chandra, learned counsel appearing for the appellants submits that the property was valued by the respondent-Bank at Rs.9,37,00,000/-, however, it was fraudulently sold at Rs.5,78,00,000/-. It is -5- NC: 2025:KHC:47425-DB W.A. No.139/2023 HC-KAR submitted that the officials of respondent-Bank, in collusion with the buyer, sold the property worth Rs.15,00,00,000/- at Rs.5,78,00,000/-, which amounts to fraud. It is further submitted that the respondent-Bank ought to have sold only a portion of the property to recover their dues instead of selling the whole property. It is also submitted that the borrower has right to seek redemption at any stage in view of non-compliance of the Rules. It is contended that the learned Single Judge has failed to consider that it was the duty of the secured creditor to ensure that the maximum price is received from the secured asset instead of clandestinely selling the property for a meagre sum. It is further contended that even after the sale certificate is issued, the owner of the property has an opportunity to redeem the mortgaged property, otherwise injustice would be caused to the borrower. It is also contended that the learned Single Judge has failed to appreciate that the property is under- valued and sold to respondent No.4 for a meagre sum, -6- NC: 2025:KHC:47425-DB W.A. No.139/2023 HC-KAR which is not even 1/3rd of the market value of the secured asset. In support of his contentions, he placed reliance on the following decisions:
i. CELIR LLP. VS. SUMATI PRASAD BAFNA AND OTHERS1 ii. RAM KISHUN AND OTHERS VS. STATE OF UTTAR PRADESH AND OTHERS2 iii. K.KUMARA GUPTA VS. SRI MARKENDAYA AND SRI OMKARESWARA SWAMY TEMPLE AND OTHERS3 iv. UNITED BANK OF INDIA VS. SATYAWATI TONDON AND OTHERS4 v. M/S.PALPAP ICHINICHI SOFTWARE INTERNATIONAL LIMITED VS.5
M/S.INDIAN BANK Hence, he seeks to allow the appeal.
4. Per contra, Sri.S.Rajendra, learned counsel appearing for respondent No.4-buyer supports the 1 2024 SCC OnLine SC 3727 2 (2012) 11 SCC 511 3 (2022) 5 SCC 710 4 (2010) 8 SCC 110 5 2011 SCC OnLine Mad 1502 -7- NC: 2025:KHC:47425-DB W.A. No.139/2023 HC-KAR impugned order of the learned Single Judge and submits that the property was brought for sale on five occasions and there were no bidders, hence the reserve price was reduced and the answering respondent has participated in the bid process and his bid was accepted and thereafter sale certificate was issued, which came to be registered. It is submitted that the right to seek redemption of mortgaged property stands extinguished once the registered sale certificate is issued, hence, question of entertaining this appeal would not arise. It is further submitted that the learned Single Judge considered all the issues raised by the appellants and answered the same by giving detailed reasons, and the same does not call for any interference. Hence, he seeks to dismiss the petition. In support of his contentions, he placed reliance on the following decisions:
i. SURAKSHA VENTURES LLP. VS.
MR.G.LOKESH AND ANOTHER6
6
W.A.No.170/2025 DTD.16.09.2025
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ii. UNITED BANK OF INDIA VS. SATYAWATI
TONDON AND OTHERS7
iii. AUTHORIZED OFFICER, STATE BANK OF TRAVANCORE AND ANOTHER VS. MATHEW K.C.8 iv. DWARIKA PRASAD VS. STATE OF UTTAR PRADESH AND OTHERS9 v. ALLOKAM PEDDABBAYYA AND ANOTHER VS. ALLAHABAD BANK AND OTHERS10 vi. K.CHIDAMBARA MANICKAM VS.
SHAKEENA AND OTHERS11 vii. BIJNOR URBAN COOPERATIVE BANK LIMITED, BIJNOR AND OTHERS VS.
12MEENAL AGARWAL AND OTHERS
5. We have heard the arguments of the learned counsel appearing for the appellants, learned counsel for the respondent No.4 and meticulously perused the 7 (2010) 8 SCC 110 8 (2018) 3 SCC 85 9 (2018) 5 SCC 491 10 (2017) 8 SCC 272 11 2007 SCC OnLine Mad 675 12 (2023) 2 SCC 805 -9- NC: 2025:KHC:47425-DB W.A. No.139/2023 HC-KAR material available on record. We have given our anxious consideration to the material available on record and the judgments relied on by both the sides.
6. The point that arises for consideration in this appeal is:
"Whether the impugned order passed by the learned Single Judge calls for any interference?"
7. The parties are not in dispute that the appellants borrowed a loan from erstwhile State Bank of Mysore, Tumakuru branch, for an amount which consists of Rs.2,00,00,000/- cash credit limit and term loan of Rs.30,00,000/-. It is averred that the re-payments were made as per the terms of loan agreement till September 2017 and thereafter, due to market fluctuation, the appellants suffered a loss and could not continue to re-pay the loan amount. The respondent No.3-Bank treated the loan as a NPA and thereafter issued notice under Section 13(2) of the Act calling upon the appellants to discharge
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NC: 2025:KHC:47425-DB W.A. No.139/2023 HC-KAR their liability. The records indicate that the symbolic possession of the schedule property was taken under Section 13(4) of the Act. On 30.05.2019, the Deputy Commissioner, Tumakuru passed an order under Section 14(1) of the Act for handing over the physical possession of the schedule property to the respondent-bank. Thereafter, the respondent-bank has put the property for auction, fixing the reserve price at Rs.9,37,00,000/-. The records further indicate that the Bank has offered One Time Settlement (OTS) to the appellants, but the same was not availed by the appellants. The appellants challenged the action of the respondent-Bank in S.A.174/2018 and S.A.212/2019 before the DRT challenging the notice issued under Section 13(4) of the Act, which came to be dismissed on 31.10.2020. Thereafter, the respondent-Bank took further steps to sell the property to realize the dues. Several attempts were made and finally, sale notice dated 08.09.2021 was issued, sale scheduled on 29.09.2021 was conducted and
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NC: 2025:KHC:47425-DB W.A. No.139/2023 HC-KAR the respondent No.4 became the successful bidder in the said process. It is noticed that the respondent-Bank reduced the reserve price of the schedule property taking note of the fact that on earlier four sale notices, no response had been received. The records also indicate that the respondent No.4 has deposited the entire sale consideration after which sale certificate came to be issued and subsequently registered in its favour as per law. With these background, the appellant-borrower filed the writ petition before this Court challenging the e-auction notice issued by the respondent No.2 dated 08.09.2021, sale certificate issued by the respondent No.2 dated 07.10.2021 which is registered at the Sub-Registrar, Tumakuru and further sought a writ of mandamus to the respondent Nos.1 and 2 to consider the petitioners' request for OTS. The learned Single Judge entertained the writ petition and recorded a clear finding that there remained no property mortgaged to be redeemed once the property is auctioned and the sale certificate is issued and
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NC: 2025:KHC:47425-DB W.A. No.139/2023 HC-KAR registered. It is further observed that every action of the respondent-Bank was within the knowledge of the appellants and yet they did not come forward to pay the reserve price and clear the property from being auctioned. It was also observed that the respondent-Bank obtained independent valuation, affixed the notice in the conspicuous place of the property, publications were made and thereafter, sale was conducted and there cannot be any direction to consider the OTS and proceeded to dismiss the writ petition.
8. The appellant contended that the reserve price was fixed by the respondent-Bank at Rs.9,37,00,000/-, but the same has been fraudulently sold by undervaluing the price of the property. The said contention was also canvassed before the learned Single Judge, wherein the learned Single Judge, at paragraphs 13 and 14 has recorded a clear finding as to why the reserve price came to be reduced and extracted a chart which indicates the action of the respondent-Bank for reduction of reserve
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NC: 2025:KHC:47425-DB W.A. No.139/2023 HC-KAR price. The aforesaid finding of the learned Single Judge is based on appreciation of the material placed before him as the respondent-Bank made an attempt to sell the property on four occasions earlier i.e. by issuing sale notice dated 12.07.2018, 21.11.2019, 26.11.2020, 29.07.2021 and on all earlier four occasions the reserve price was proportionately reduced from Rs.9,37,00,000/- to Rs.6,50,00,000/- for land and building and Rs.27,00,000/- for plant and machinery. However, no bidders had come forward to purchase the schedule property. Hence, the respondent-Bank issued a sale notice dated 08.09.2021 and the sale was conducted on 29.09.2021 at a reserve price of Rs.5,78,00,000/- for land and building and Rs.23,00,000/- for plant and machinery. The respondent No.4 participated in the e-auction held by the respondent- Bank and he bid for Rs.5,82,81,000/- which was accepted by the respondent-Bank and the sale was confirmed in its favour. The respondent No.4 deposited the entire bid amount as per the terms of e-auction notice with the
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NC: 2025:KHC:47425-DB W.A. No.139/2023 HC-KAR respondent-Bank within the stipulated time and on 07.10.2021, a certificate of sale was issued in favour of the respondent No.4 and the said sale certificate was registered with the Sub-Registrar, Tumakuru on 11.10.2021. The records also indicate that the respondent-Bank put the respondent No.4 in physical possession of the property in question on 12.10.2021. Thereafter, the appellants filed the writ petition on 28.10.2021 seeking to challenge the action of the respondent-Bank.
9. The Hon'ble Supreme Court and other Courts have considered the issues raised in this appeal. In the case of SATYAWATI TONDON referred supra, at paragraph Nos.42, 43 & 55, it was held as under:
"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
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NC: 2025:KHC:47425-DB W.A. No.139/2023 HC-KAR 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 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.
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."
10. In the case of AUTHORIZED OFFICER, STATE BANK OF TRAVANCORE AND ANOTHER VS. MATHEW K.C.
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NC: 2025:KHC:47425-DB W.A. No.139/2023 HC-KAR referred supra at paragraph Nos.7, 15 & 18, it was held as under:
"7. The Section 13(4) notice along with possession notice under Rule 8 was issued on 21-4-2015. The remedy under Section 17 of the Sarfaesi Act was now available to the respondent if aggrieved. These developments were not brought on record or placed before the Court when the impugned interim order came to be passed on 24-4-2015. The writ petition was clearly not instituted bona fide, but patently to stall further action for recovery. There is no pleading why the remedy available under Section 17 of the Act before the Debts Recovery Tribunal was not efficacious and the compelling reasons for by-passing the same. Unfortunately, the High Court also did not dwell upon the same or record any special reasons for grant of interim relief by direction to deposit.
15. It is the solemn duty of the court to apply the correct law without waiting for an objection to be raised by a party, especially when the law stands well settled. Any departure, if permissible, has to be for reasons discussed, of the case falling under a defined exception, duly discussed after noticing the relevant law. In financial matters grant of ex parte interim orders can have a deleterious effect and it is not sufficient to say that the aggrieved has the remedy to move for vacating the interim order. Loans by financial institutions are granted from public money generated at the taxpayer's expense. Such loan does not become the property of the person taking the loan, but retains its character of public money given in a fiduciary capacity as entrustment by the public. Timely repayment also ensures liquidity to facilitate loan to another in need, by circulation of the money and cannot be permitted to be blocked by frivolous litigation by those who can afford the luxury of the same. The caution required, as expressed in Satyawati Tondon [United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110 : (2010) 3 SCC (Civ) 260] , has also not been kept in mind before passing the impugned interim order: (SCC pp. 123-24, para 46) "46. It must be remembered that stay of an action initiated by the State and/or its
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NC: 2025:KHC:47425-DB W.A. No.139/2023 HC-KAR agencies/instrumentalities for recovery of taxes, cess, fees, etc. seriously impedes execution of projects of public importance and disables them from discharging their constitutional and legal obligations towards the citizens. In cases relating to recovery of the dues of banks, financial institutions and secured creditors, stay granted by the High Court would have serious adverse impact on the financial health of such bodies/institutions, which (sic will) ultimately prove detrimental to the economy of the nation. Therefore, the High Court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters. Of course, if the petitioner is able to show that its case falls within any of the exceptions carved out in Baburam Prakash Chandra Maheshwari v. Antarim Zila Parishad [Baburam Prakash Chandra Maheshwari v. Antarim Zila Parishad, AIR 1969 SC 556] , Whirlpool Corpn. v. Registrar of Trade Marks [Whirlpool Corpn. v. Registrar of Trade Marks, (1998) 8 SCC 1] and Harbanslal Sahnia v. Indian Oil Corpn. Ltd. [Harbanslal Sahnia v. Indian Oil Corpn. Ltd., (2003) 2 SCC 107] and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order."
18. The impugned orders are therefore contrary to the law laid down by this Court under Article 141 of the Constitution and unsustainable. They are therefore set aside and the appeal is allowed."
11. The aforesaid decisions makes it very clear that the writ Court should not entertain the writ petitions challenging the action initiated by the banks and financial institutions under the provisions of the Act and the parties invariably shall be remitted back to the DRT unless a case
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NC: 2025:KHC:47425-DB W.A. No.139/2023 HC-KAR is made out to entertain the writ petition on settled principles of law. In the instant case, the learned Single Judge has entertained the writ petition, answered all the issues raised by the appellants by considering the law laid down by the Hon'ble Supreme Court.
12. In the case of DWARIKA PRASAD referred supra at paragraph No.9 it was held as under:
"9. In the present case, the appellant failed to comply with the provisions of Section 13(8). The statute mandates that it is only where the dues of the secured creditor are tendered together with costs, charges and expenses before the date fixed for sale or transfer that the secured asset is not to be sold or transferred. The appellant was aware of the proceedings initiated by the Bank for asserting its right to recover its dues by selling the property. The appellant moved the DRT in Securitisation Application No. 176 of 2015. During the pendency of those proceedings, orders were passed by the Tribunal on 1-2-2016 and 3-2-2016. The appellant moved the Allahabad High Court which by its order dated 9-3-2016 [Dwarika Prasad v. State of U.P., 2016 SCC OnLine All 2564] restrained the Bank and the auction- purchaser from executing the sale deed until 15-3-2016. The stay was extended till 28-3-2016 by which date the appellant was to deposit an amount of Rs 7,00,000. The balance was required to be deposited by 30-4-2016. While the appellant deposited an amount of Rs 7,00,000 with the Bank, he failed to deposit the balance in accordance with the provisions of Section 13(8). Even after the writ proceedings before the High Court were withdrawn, the appellant did not deposit the balance due together with the costs, charges and expenses. The sale was confirmed, a sale certificate was issued and a registered sale deed was executed on 12-4-2016. The
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NC: 2025:KHC:47425-DB W.A. No.139/2023 HC-KAR appellant failed to ensure compliance with Section 13(8). The right to redemption stands extinguished on the execution of the registered sale deed. This is also the view which has been expressed in the judgment in Mathew Varghese [Mathew Varghese v. M. Amritha Kumar, (2014) 5 SCC 610 : (2014) 3 SCC (Civ) 254] ."
13. In the case of ALLOKAM PEDDABBAYYA referred supra at paragraph No.23 it was held as under:
"23. The aforesaid discussion leads to the conclusion that the plaintiffs lost the right to sue for redemption of the mortgaged property by virtue of the proviso to Section 60 of the Act, no sooner that the mortgaged property was put to auction-sale in a suit for foreclosure and sale certificate was issued in favour of Defendant 2. There remained no property mortgaged to be redeemed. The right to redemption could not be claimed in the abstract."
14. In the case of K.CHIDAMBARA MANICKAM referred supra, the Hon'ble Madras High Court, at paragraph No.52 has held as under:
"52. Fourthly, the right to redeem the mortgage, as provided in section 60 of the Transfer of Property Act, is, of course, a very valuable right possessed by the mortgagor. At the same time, such a right to redeem the mortgage can be exercised before it is foreclosed, or the estate is sold. It has been held that the mortgagor can adopt the course provided under section 60 of the Transfer of Property Act only before the mortgagee has filed a suit for enforcement of the mortgage and not thereafter, vide Poulose v. State Bank of Travancore, AIR 1989 Ker 79. In this case, as discussed earlier, the borrowers approached the second respondent-bank only after initiation of the proceedings under section 13(4) of the SARFAESI Act, and that too after the property was
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NC: 2025:KHC:47425-DB W.A. No.139/2023 HC-KAR sold in public auction and the sale was confirmed in favour of the appellant."
15. In the case of BIJNOR URBAN COOPERATIVE BANK LIMITED referred supra at paragraph No.8,12 to 14 it was held as under:
"8. Therefore, as per the guidelines issued, the grant of benefit of OTS Scheme cannot be prayed as a matter of right and the same is subject to fulfilling the eligibility criteria mentioned in the scheme. The defaulters who are ineligible under the OTS Scheme are mentioned in Clause 2, reproduced hereinabove. A wilful defaulter in repayment of loan and a person who has not paid even a single instalment after taking the loan and will not be able to pay the loan will be considered in the category of "defaulter" and shall not be eligible for grant of benefit under the OTS Scheme. Similarly, a person whose account is declared as "NPA" shall also not be eligible. As per the guidelines, the Bank is required to constitute a Settlement Advisory Committee for the purpose of examining the applications received and thereafter the said Committee has to take a decision after considering whether a defaulter is entitled to the benefit of OTS or not after considering the eligibility as per the OTS Scheme. While making recommendations, the Settlement Advisory Committee has to consider whether efforts have been made to recover the loan amount and the possibility of recovery has been minimised, meaning thereby if there is possibility of recovery of the amount, either by initiating appropriate proceedings or by auctioning the property mortgaged and/or the properties given as a security either by the borrower and/or by guarantor, the application submitted by the borrower for grant of benefit under the OTS Scheme can be rejected.
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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, 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
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NC: 2025:KHC:47425-DB W.A. No.139/2023 HC-KAR 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 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."
16. In the case of Suraksha Ventures LLP v Mr.G Lokesh referred supra, the division Bench of this Court, at paragraph No.9 has held as under:
"9. In CELIR LLP v. Bafna Motors (Mumbai) Private Limited and others : (2024) 2 SCC 1, the Supreme Court had authoritatively held that the provisions of Section 13(8) of the SARFAESI Act
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NC: 2025:KHC:47425-DB W.A. No.139/2023 HC-KAR would override Section 60 of the Transfer of Property Act, 1882 [TP Act]. The relevant extract of the said decision reads as under:
65. The SARFAESI Act is a special law containing an overriding clause in comparison to any other law in force. Section 60 of the 1882 Act, is a general law vis-à-vis the amended Section 13(8) of the SARFAESI Act which is special law. The right of redemption is clearly restricted till the date of publication of the sale notice under the SARFAESI Act, whereas the said right continues under Section 60 of the 1882 Act till the execution of conveyance of the mortgaged property. The legislative history has been covered in the preceding paragraphs of this judgment and how Parliament desired to have express departure from the general provision of Section 60 of the 1882 Act. The SARFAESI Act is a special law of recovery with a paradigm shift that permits expeditious recovery for the banks and the financial institutions without intervention of courts.
Similarly, Section 13(8) of the SARFAESI Act is a departure from the general right of redemption under the general law i.e. the 1882 Act. Further, the legislature has in the Objects and Reasons while passing the amending Act specifically stated "to facilitate expeditious disposal of recovery applications, it has been decided to amend the said Acts...". Thus, while interpreting Section 13(8) vis-àvis Section 60 of the 1882 Act, an interpretation which furthers the said Objects and Reasons should be preferred and adopted. If the general law is allowed to govern in the manner as sought to be argued by the borrowers, it will defeat the very object and purpose as well as the clear language of the amended Section 13(8).
66. In Mathew Varghese [Mathew Varghese v. M. Amritha Kumar, (2014) 5 SCC 610 :
(2014) 3 SCC (Civ) 254] this Court had interpreted the unamended Section 13(8) of the
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NC: 2025:KHC:47425-DB W.A. No.139/2023 HC-KAR SARFAESI Act and Section 60 of the 1882 Act respectively. However, thereafter the legislature amended Section 13(8) of the SARFAESI Act. Thus, on this score, the decision in Mathew Varghese [Mathew Varghese v. M. Amritha Kumar, (2014) 5 SCC 610 : (2014) 3 SCC (Civ) 254] could be said to have been partially legislatively overruled as the substratum of the verdict stands altered/amended.
67. Even otherwise, we should not lose sight of the fact that in Mathew Varghese [Mathew Varghese v. M. Amritha Kumar, (2014) 5 SCC 610 : (2014) 3 SCC (Civ) 254] the Court held in regard to the right of redemption that both the SARFAESI Act and the 1882 Act are complementary to each other and equally applicable. It had held this because, the words "before the date fixed for transfer" in the unamended Section 13(8), amongst other things also means and connotes the date of conveyance of the secured asset by a registered instrument (which is the ordinary process of extinguishment of right of redemption under the 1882 Act). Since, this Court observed that the stipulation or expression "date fixed for transfer" could also mean the date of conveyance/transfer of such secured asset and being so, is not much different from the ordinary process of redemption under the 1882 Act, it could not be said that there was any material inconsistency between the SARFAESI Act and the 1882 Act, and thus it found no reason or hesitation to hold that the 1882 Act is inapplicable and thus made an endeavour of harmonising the two.
68. It appears that while considering the right of redemption of mortgage under the unamended Section 13(8), this Court in Mathew Varghese [Mathew Varghese v. M. Amritha Kumar, (2014) 5 SCC 610 : (2014) 3 SCC (Civ) 254] only went so far to say that in the absence of any material inconsistency between the
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NC: 2025:KHC:47425-DB W.A. No.139/2023 HC-KAR SARFAESI Act and the 1882 Act, there was no good reason to hold that the 1882 Act would not be applicable and as such, held that general right of redemption of mortgage contained in Section 60 of the 1882 Act would apply even in respect of the SARFAESI Act.
69. However, with the advent of the 2016 Amendment, Section 13(8) of the SARFAESI Act now uses the expression "before the date of publication of notice for public auction or inviting quotations or tender from public or private treaty for transfer by way of lease, assignment or sale of the secured assets" which by no stretch of imagination could be said to be in consonance with the general rule under the 1882 Act that the right of redemption is extinguished only after conveyance by registered deed. Thus, in the light of clear inconsistency between Section 13(8) of the SARFAESI Act and Section 60 of the 1882 Act the former special enactment overrides the latter general enactment in light of Section 35 of the SARFAESI Act. Thus, the right of redemption of mortgage is available to the borrower under the SARFAESI Act only till the publication of auction-notice and not thereafter, in light of the amended Section 13(8)."
10. It is clear from the above, that the mortgagors have no right to insist that their offer for the amount be accepted after the notice of the auction has been issued for enforcement of the security interest under the SARFAESI Act."
17. The enunciation of law laid down by the Hon'ble Supreme Court, the coordinate bench of this Court and the decision of the Hon'ble Madras High Court referred supra makes it very clear that the right to seek redemption
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NC: 2025:KHC:47425-DB W.A. No.139/2023 HC-KAR stands extinguished on execution of the transfer deed. In the instant case, the writ petition is filed by the appellants after the auction notice and registered sale certificate had already been issued, hence, on this ground, no relief can be granted to the appellants. The Hon'ble Supreme Court in the case of BIJNOR URBAN COOPERATIVE BANK LIMITED referred supra, has held that no writ of mandamus can be issued to the financial institutions and the banks to consider OTS positively and such a decision should be left to the commercial wisdom of the banks as the consideration of OTS is not a matter of right.
18. Learned counsel for the appellants placing reliance on the decisions of RAM KISHUN AND OTHERS, K.KUMARA GUPTA and M/S.PALPAP ICHINICHI SOFTWARE INTERNATIONAL LIMITED referred supra, contend that before disposing the secured assets, it is a condition precedent to follow the statutory compliance. In the instant case, the respondent-Bank has meticulously complied with the requirements of the Act and the Rules
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NC: 2025:KHC:47425-DB W.A. No.139/2023 HC-KAR referred supra. We do not find any procedural error in the actions undertaken by the respondent-Bank, hence, the said decisions would not help the appellants.
19. The contention of the appellants that the respondent-Bank ought to have sold only a portion of the secured asset to realize their dues also has no merit. The respondent-Bank had made an effort to realize the security from 2018 to 2021 on four occasions, however no bidders have come forward to buy the schedule property. The respondent No.4 has participated in the e-auction process, conducted pursuant to sale notice dated 08.09.2021 and after following the required procedure, the sale is confirmed, sale certificate is issued, which was subsequently registered as per law in favour of respondent No.4. We do not find any error in the action of respondent- Bank. The learned Single Judge, considering all the issues raised, has assigned detailed reasons for dismissing the writ petition. Hence, we do not find any error in the impugned order calling for interference in this appeal.
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NC: 2025:KHC:47425-DB W.A. No.139/2023 HC-KAR Accordingly, the appeal is devoid of merits and the same is hereby rejected.
Sd/-
(ANU SIVARAMAN) JUDGE Sd/-
(VIJAYKUMAR A. PATIL) JUDGE BSR/RV List No.: 4 Sl No.: 1