Allowed

Mr Ramesh Gowda and Mrs Ramya Gc v. Karnataka Bank Limited

DRAT9 Sept 2025REGULAR APPEAL/55/2025

Case brief

AI extract

What is this about?

The Tribunal set aside an order setting aside a property sale. It held the one-day shortfall in notice was immaterial given the borrowers' conduct. Confirming the sale in favor of the second highest bidder was valid as the first bidder failed to pay. Borrowers' right to challenge was deemed waived.

What did the court decide?

Order setting aside sale confirmed; sale in favor of auction purchaser D.L. Vijayakumar upheld; appeals by Bank and Purchaser allowed; borrowers' appeal dismissed.

Mr Ramesh Gowda and Mrs Ramya Gc versus Karnataka Bank Limited — Cheque Dishonour | DRAT (2025)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 09th September, 2025

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PRESENT: Hon’ble Mr. Justice G. Chandrasekharan CHAIRPERSON

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RA (SA) 114/2024, R.A(S.A):13/2025 and R.A (S.A):55/2025 (SA 77/2021 on the file of DRT -I, Bengaluru)

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RA (SA) 114/2024

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Between

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Karnataka Bank Limited A company incorporated under The Indian Companies Act, 1913 Havings its head office at P.B. No. 599, Mahaveera Circle Kankanady Mangaluru- 575002 Represented by its Chief Manager

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The Authorised Officer Karnataka Bank Limited Asset Recovery Branch Karnataka Bank Building Kodialbail, Mangaluru- 575 003

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And

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Ramesh B Gowda S/o Sri. Bomme Gowda, 325/1, 14^th Main, 5^th Cross, R.M.V. Extension, Sadashivanagar, Bengaluru- 560 080

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Ramya G. C. W/o Mr. Ramesh B. Gowda 325/1, 14^th Main, 5^th Cross, R.M.V. Extension, Sadashivanagar, Bengaluru- 560 080

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Kumaraswamy A.B. S/o Boregowda A.L., Aladahalli Village, DabbegattaHobli, Turuvekere Tumakuru- 576 224

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Dr. D.L. Vijayakumar, S/olate D.R. LingeGowda, Naidu Street, Chikkamagalur- 577101.

… Respondent

R.A(S.A):13/2025

Between

Dr. D.L. Vijayakumar, S/o late D.R. Linge Gowda, Residing at PB No. 77, Naidu Street, Near Head Post Office, Chikkamangalur – 577101

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And

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Sri. Ramesh B Gowda S/o Bomme Gowda, No. 325/1, 14^th Main, 5^th Cross, RMV Extension,Sadashivanagar, Bengaluru- 560 080

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Ramya G C W/o Mr. Ramesh B. Gowda, No. 325/1, 14^th Main, 5^th Cross, RMV Extension, Sadashivanagar, Bengaluru- 560 080

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The Authorized Officer Karnataka Bank Limited A company incorporated under The Indian Companies Act, 1913 Asset Recovery Branch, Karnataka Bank Building, Kodialbail, Mangaluru- 575 003

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Kumaraswamy A.B. S/o Boregowda A.L., Aladahalli Village, Dabbegatta Hobli, TuvekereTaluk, Tumkur- 576 224.

… Respondent

R.A(S.A):55/2025

Between

Mr. Ramesh B Gowda S/o Sri. Bomme Gowda, Aged about 50 years, Residing at No. 325/1, 14^th Main, 5^th Cross, R.M.V. extension, Sadashivanagar, Bangalore- 560 080

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Mrs. Ramya G C W/o Mr. Ramesh B. Gowda Aged about 44 years, Residing at No. 325/1, 14^th Main, 5^th Cross, R.M.V. extension, Sadashivanagar, Bangalore- 560 080

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And

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1 The Authorised Officer, Karnataka Bank Ltd, Asset Recovery Branch, Karnataka Bank Building, Kodialbail, Mangaluru- 575 003

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2 Kumaraswamy A.B. Aged 38 years, Son of Boregowda A.L., Aladahalli Village, DabbegataHobli, Turvekere Taluk, Tumakuru- 572 224

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Dr. D.L. Vijaya Kumar, Aged 65 years, Son of Late D.R. Linge Gowda, Residing at Naidu Street, Chikmagalur Town … Respondent

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Counsel for Bank : M/s. Preeti Mohan Counsel for Auction Purchaser : M/s. B Deepak Narayan Counsel for the Borrowers : M/.s Frontline Law Partners

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COMMON ORDER

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These Appeals arose out of order passed by Learned Presiding Officer, DRT-I, Karnataka at Bengaluru in SA 77/2021, on 06.10.2023.

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SA 77/2021 was filed by the borrowers i) Ramesh B. Gowda and 2) Ramya G.C., against i) Authorised Officer, Karnataka Bank Ltd. 2) Kumaraswamy A.B and 3) D.L. Vijayakumar.

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Parties are hereinafter referred to as Borrowers, Bank and Auction Purchaser for easy understanding.

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The facts leading to filing of the Securitisation Application is that the borrowers availed credit facilities from Karnataka Bank Limited by creating collateral security over the Schedule immovable property. They could not repay the loan due, and therefore, the Bank issued Demand Notice

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under Section 13 (2) of the SARFAESI Act, 2002. The Demand Notice was neither served nor published in newspaper. The date of classification of account as NPA and the redemption clause are not incorporated in the Demand Notice. The amount claimed in the Demand Notice is not correct. Without clear 30 days’ of notice, Sale Notice dated 08.01.2021 was given and the sale was held. The Possession Notice was also not served in accordance with the provisions of the Act and Rules. The sale was held unlawfully without following the proper procedures. Therefore, the Securitisation Application was filed to set aside Sale Notice dated 08.01.2021.

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After contest, Learned Presiding Officer allowed the SA 77/2021 by declaring that the measures taken by the Bank under Section 13(4) of SARFAESI Act, 2002, are invalid and sale held in favour of Respondent No.3 is null and void . There was also a direction to the Bank for reverse of costs, charges and expenses incurred in the sale of property and

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the Bank shall not claim them as legally recoverable debt from the borrowers. The Bank was also given liberty to take measures for re-sale of the property afresh in accordance with the provisions of the SARFAESI Act and Rules. Challenging this order, the Bank filed RA (SA) 114/2024, the Auction Purchaser filed RA (SA) 13/2025 and the borrowers filed RA (SA) 55/2025. When the Bank and the Auction Purchaser filed Appeals in RA (SA) 114/2024 and RA (SA) 13/2025, respectively against the order setting aside the sale, the borrowers filed Appeal in RA(SA) 55/2025 for restoring the possession of the property to them. Since, these Appeals arose out of the order passed in SA 77/2021, all these Appeals are taken up together for consideration.

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6. Learned Counsel for Bank submitted that the sale was

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set aside mainly on the ground that there was no clear 15 days’ of notice prior to the date of sale and that when a successful bidder namely Mr. Kumaraswami A.B. failed to deposit 25% of the bid amount, the Bank should have taken

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steps for re-sale of the property, instead of confirming the sale in favour of the next highest bidder Mr. D.L. Vijaykumar. Though there are other grounds raised, those grounds were not considered in favour of the borrowers.

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6.1 The Borrowers availed loan of Rs.1,16,25,000/- on 04.10.2016. The loan account was classified as NPA on 02.01.2019, followed by issuance of Demand Notice under Section 13 (2) of SARFAESI Act, 2002, on 04.04.2019. Possession Notice dated 06.06.2019 was issued. Thereafter, the first Sale Notice dated 02.11.2019 was issued. The Borrowers challenged the first Sale Notice in SA 586/2019 and an interim order was passed to deposit Rs.15 Lakhs and Rs.10 Lakhs within a specified time. Borrowers did not comply with this direction. SA was disposed of for the reason that no sale had been taken place.

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6.2 On 29.01.2020, an order in a proceedings initiated under Section 14 of the SARFAESI Act, 2002, was passed.

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The second Sale Notice dated 09.10.2020 was issued. Challenging second Sale Notice, the Borrowers filed SA 218/2020. An interim order was passed directing the Borrowers to deposit Rs.32 Lakhs. This amount was not deposited. Since, no auction was held, the SA 218/2020 was dismissed as infructuous on 12.11.2020. Thereafter, the impugned Sale Notice dated 08.01.2021 was issued fixing the sale on 30.01.2021. The sale was held on 30.01.2021. The sale was confirmed on 02.02.2021, and sale certificate was issued on 06.03.2021.

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6.3 He further submitted that the Sale Notice dated 08.01.2021 was dispatched on 12.01.2021 and was received by Borrowers on 15.01.2021. The paper publications were issued in English and vernacular language on 12.01.2021 and the affixture was also made on the same date.

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6.4 The Borrowers sent letter dated 30.01.2021 to the

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Bank authorising one Mr. K.N. Praveen to review the auction

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process. Accordingly, Mr. K.N. Praveen was permitted to review auction proceedings. As seen from the proceedings of the auction, Mr. Kumaraswami A. B, was the highest bidder in the auction. He was asked to make deposit 25% of the sale consideration. It was clearly stated in the sale proceedings letter that in the event of non-payment, the sale will be confirmed in favour of the next highest bidder. The said Mr. Kumaraswami A.B. has not paid 25% of the bid amount. Dr. D.L. Vijayakumar offered to pay the bid amount. Therefore, sale was confirmed in his favour. When the Borrowers nominated a representative to watch the sale proceedings, it is not open to the Borrowers to contend that there is no clear 15 days, of notice. Similarly, when there is a condition in the sale proceedings letter 30.01.2021 that in the event of failure of the successful bidder to pay 25% of bid amount, the Authorised Officer has right to allot the property to the next highest bidder and when the first highest bidder had deliberately not paid the amount, the Authorised Officer is empowered to allot the property to the next highest bidder

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who in this case, is D. L. Vijayakumar. Therefore, sale in favour of D.L. Vijaykumar cannot be found fault with.

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6.5 It is his further submission that the Securitization Application in SA 77/2021 was filed on 15.02.2021, challenging the Sale Notice dated 08.01.2021 and the Bank filed its objections on 20.07.2021. When the SA 77/2021 was filed on 15.02.2021, the sale was successfully concluded. Without challenging the sale, the Sale Notice alone was challenged in the Securitisation Application. Nearly after 2 years, an Application in IA 333/2022 was filed for amending the prayer for including the prayer to challenge the sale. That amendment Application was filed beyond the period of limitation. Objection to the amendment Application was filed raising the point of limitation. There was no order passed in the amendment Application. While disposing of the SA 77/2021 on 06.10.2023, all Interlocutory Applications, including the amendment Application, were closed. Thus, without any amendment in the prayer to challenge the sale,

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Learned Presiding Officer set aside the sale. This is against

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the law.

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6.6 The successful Auction Purchaser took possession of

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the property and running a Nursing College. There is no prejudice made out by Borrowers in view of lack of clear 15 days’ notice of sale. When the Borrowers nominated a representative to watch the sale proceedings, when publications and affixture of Sale Notice have been properly done, and when no prejudice is made out, setting aside the sale on the ground that there is no clear 15 days of notice, is not correct. It is not a first sale attempt. Only on third sale attempt, the property was sold. Borrowers had been watching the sale proceedings sitting on the fence, without taking any effort to settle the loan dues and filing Securitisation Application challenging the sale measures, for scuttling the process of recovery. Thus, he submitted that the order passed by Learned Presiding Officer setting aside the sale is not appropriate and correct, and in accordance with law.

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6.7 He relied on the judgment of Hon’ble High Court of Punjab and Haryana in the case of V.R.A. Cotton Mills P. Ltd. Vs. Union of India and Ors., reported in 2011 SCC Online P&H 13458, for the proposition that the date of receipt of notice by the addressee is not relevant to determine, as to whether the notice has been issued within the prescribed period of limitation. The expression ‘serve’ means the date of issue of notice. The date of receipt of notice cannot be left to be undetermined dependent upon the will of the addressee. Therefore, to bring certainly and to avoid attempts of the addressee to evade the process of receipt of notice, the purpose of the statute will be better served, if the date of issue of notice is considered as compliance of the requirement of proviso to Section 143(2) of Income Tax Act, 1961.

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6.8 Order in WP (C) No. 26290/2014 (I) in Roger P. Mathew Vs. The South Indian Bank Limited and Ors. , is

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relied for the proposition that when sale of immovable property is postponed for want of a bid in less than the

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reserve price, it shall be open for secured creditor to authorize an officer to bid for the immovable property on behalf of secured creditor.

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6.9 The judgement in General Manager, Sri Siddeshwara Co-operative Bank Limited and Anr. reported in (2013) 10 SCC 83 , is relied for the proposition that when there was no objection raised for conduct of sale, before the expiry of 30 days, it amounts to waiver of the right available to challenge the sale. This judgement is relied for the reason that when the borrowers had nominated their representative to review the sale proceedings without any objection for the conduct of sale without a clear 15 days notice, it is not open to the borrowers to challenge the sale now.

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6.10 The order in WP (C) No. 34506/2008 (G) in Abdul Salam Vs. Authorised Officer, Indian Bank and Ors., is relied for the proposition that when there is provision for inter se bidding and confirming the bid in favour of second highest bidder, there cannot be challenge against the

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confirmation of sale in favour of the second highest bidder. For the same proposition, order of Hon’ble High Court of Madras in PNL Depositors’ Welfare Association Vs. Union of India by Secretary to the Government, Ministry of

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Finance, reported in 2005 (4) CTC 469 is relied.

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The Auction Purchaser supported the arguments of the Learned Counsel for Bank. In addition to that, he submitted that the property was taken possession by Auction Purchaser and a Nursing College is being run. There are 40 students studying in the Nursing College. In the letter given by the Borrowers, authorizing a representative to participate in auction, there is no mention/objection with regard to no clear 15 days of notice. In the said proceedings, which had the clause for confirmation of sale in favour of the second highest bidder, in the event of failure of 1^st sale bidder, to pay 25% of bid amount, Borrowers’ representative had subscribed his signature. There is no pleading in the Securitisation Applications with regard to the absence of clear 15 days of notice. Learned Presiding Officer had not

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considered the aspects of sale, issuance of sale certificate, and handing over possession, in proper prospective. Therefore, it is not open to the Borrowers to challenge the sale and seek possession.

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7.1 He relied on the order of Hon’ble High Court in Palpap

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Ichinichi Software International Ltd. Vs. Indian Bank reported in MANU/TN/4080/2011 for the proposition that when the successful bidder failed to pay the amount, the Authorised Officer can confirm the auction in favour of second highest bidder instead postponing the auction and reducing the upset price.

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7.2 The judgement in L&T Housing Finance Ltd. Vs. Trishul Developers and Ors., reported in

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MANU/SC/0793/2020 is relied for the proposition that SARFAESI action cannot be held to be bad in law on trivial objection unless it is shown substantial prejudice was caused on account of procedural lapse as prescribed under

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the Act and Rules. This judgement is relied for the

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proposition that the borrowers have not shown any prejudice on account of conduct of sale without clear 15 days of notice and the confirmation of sale on the second highest bidder. Therefore, borrowers cannot challenge the sale.

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7.3 The judgement in Celir LLP Vs. Bafna Motors (Mumbai) Pvt. Ltd., reported in MANU/SC/1042/2023 is relied for the proposition that the right of redemption available to the borrowers is lost once publication of auction notice as required under Section 13(8) of SARFASI Act, 2002,

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is made and the borrowers failed to exercise right of redemption prior to the issuance of auction notice. This judgement is also relied for the proposition that the courts should zealously protect the sanctity of any auction conducted and loath in interfering with auctions. Otherwise, it would frustrate the very object and purpose behind the auctions and deter the public confidence and participation.

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Learned Counsel for the Borrowers submitted that even

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at the time of filing Securitisation Application, challenge was

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made to the Sale Notice dated 08.01.2021 and sale conducted on 30.01.2021 along with the prayer to restore the physical possession to the Borrowers. When the sale measures are not in accordance with the scheme of the Act, especially, when the Sale Notice was not issued following the provisions of the SARFAESI Act, 2002, the Sale Notice would have to necessarily be set aside, resulting in setting aside the sale. That was the reason why the amendment Application was not pressed. Even otherwise, a composite prayer was asked in the Securitisation Application. The Tribunal under Section 17(3) of the SARFAESI Act, 2002, can pass any order to meet the ends of justice. Only from the counter filed by the Bank, the Borrowers came to know about the confirmation of sale in favour of D.L. Vijayakumar. That was the reason why, sale was not specifically challenged in the Securitisation Applications. Clear 15 days of notice is necessary for sale of the property. The date of service of notice is the criteria for calculating the 15 days of notice. The representative was authorized only to review the auction

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process, and he had not participated in the sale process.

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Therefore, there is no question of waiving the right of the Borrowers in challenging the sale.

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8.1 There was a status quo order passed that there should be no construction to be undertaken by any of the parties. Then, it is not known as to how the Auction Purchaser claims that a Nursing College is being run.

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8.2 Learned Counsel for the Borrowers relied on the

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judgment in Celir LLP Vs. Bafna Motors (Mumbai) Pvt. Ltd. and Ors. , reported in 2024 (2) SCC for the proposition that that merely because the borrowers appointed their representative to review the auction, it does not mean that borrowers waived their right of challenging the sale held in violation of Rules.

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8.3 He also relied on the judgments in Vasu P. Shetty vs M/S Hotel Vandana Palace & Ors., reported in 2014 (5) SCC 660, for the same proposition and for the proposition that borrowers’ effort to thwart for sale of property cannot be

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taken as waiver of mandatory requirement under Rule 8(6)

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and Rule 9(1) of the SIE Rules, 2002. If the sale was held without following timeline given under Rule 8(6) and 9(1) of SIE Rules, 2002, sale has to fail.

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8.4 The judgement of S. V. Ramaswamy and Ors. Vs. M/s.

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H and m Infrastructures in WP No. 20361/2024 is relied for the proposition that on failure of the highest bidder depositing 25% of the sale price, the property should be resold.

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8.5 Order in E.K. Rajan Vs. Authorised Officer, Canara

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Bank reported in 2022 SCC OnLine Ker 2484, is relied to reiterate that the compliance of Rules 8(6) and 9(1) SIE Rule, 2002, in terms of 30 days and 15 days notice respectively is mandatory. Violation thereof would result in failure of the sale measure.

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8.6 Order in M/s. Lakshmi Shankar Mills (P) Ltd. & Ors.

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Vs. The Authorised Officer/Chief Manager, Indian Bank &

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Ors., reported in 2008-2-L.W. 381 is relied for the

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proposition that under Section 17(3) of the SARFAESI Act, the Tribunal has power to restore the possession to the borrowers/guarantors who were dispossessed. For the same proposition the order in Authorised Officer, Indian Overseas Bank and Anr. Vs. Ashok Saw Mill reported in (2009) 8 SCC 366, is relied.

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In reply, Learned Counsel for Auction Purchaser submitted that, there was no further construction was made.

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Considered the rival submissions and perused the record.

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From the case set out by the parties and records produced, there is absolutely no dispute with regard to the factum of Borrowers availing of loan facilities from Karnataka Bank Limited and that classification of loan account as NPA on account of failure of the Borrowers in servicing the loan. Copy of Demand Notice dated 04.04.2019 and Possession Notice dated 06.06.2019 are made available for perusal of

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this Tribunal. First Sale Notice dated 02.11.2019 and proceedings of Learned District Magistrate,

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Chikkamangaluru dated 31.01.2020 under Section 14 of the SARFASEI Act, 2002 for taking possession of the property are also produced. There was no sale held in pursuance of first Sale Notice dated 02.11.2019. It was followed by second Sale Notice dated 09.10.2020. Sale could not be concluded on the basis of this notice also. The impugned Sale Notice dated 08.01.2021 was issued fixing the sale on 30.01.2021. This notice was pasted on 12.01.2021. Postal receipts are produced for perusal. Photographs depicting affixture of this notice in Schedule property on 12.01.2021 is also produced. Publication of this Sale Notice in English and vernacular language are also produced. Except the ground taken by Borrowers that the personal service of notice had not given by clear 15 days time prior to sale, it is established by the Bank that service of Sale Notice in respect of affixture and publication is proved.

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On 30.01.2021, on the date of sale, the Borrower Mr. Ramesh B Gowda sent a letter to Chief Manager/Authorised Officer of the Karnataka Bank Ltd., stating that, as owner of the property, he would like to authorize his nominee Sri Praveen K. N. to represent and be allowed to be seated to review the whole auction sale process of the secured asset. There was also a request to oblige and make arrangement to ensure the whole auction process is done as per the guidelines.

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The proceedings of the auction sale, held on 30.01.2021 is made available. It is seen from this proceedings that Mr. Kumaraswamy A.B and Dr. D. L. Vijaykumar offered their bid in auction and Mr. Kumaraswamy A.B was the highest bidder for Rs.1,93,40,000/- . In this proceedings, there is a specific mention in condition No.4 that successful bidder has to pay 25% of the bid amount immediately on sale being knocked down and the balance shall be paid within 15 days from the date of auction, failing which, the amount paid so far shall be forfeited and the Authorised Officer shall have

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the right to allot the property to the next highest bidder or cancel the same. The said condition is repeated in para 13. Both the bidders and the nominee of the Borrowers, Mr.

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Praveen K.N. had signed the auction sale proceedings.

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Thereafter, the Bank gave letter to Mr. Kumaraswamy A.B. on 30.01.2021 informing that he is the successful bidder and he has to pay 25% of the bid amount on 30.01.2021, failing which the EMD amount would be forfeited. On 01.02.2021, the Bank sent a letter to Mr. Kumaraswamy A.B., stating that he failed to pay 25% of

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the bid amount, and therefore, EMD amount deposited by him was forfeited and that the Authorised Officer would exercise option to call the second highest bidder, if he is interested to pay the bid amount and become a successful

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bidder. The Auction Purchaser sent a letter on 01.02.2021 expressing his willingness to stand with bid amount for Rs.1,93,30,000/-. Accordingly, sale was confirmed in his favour followed by confirmation of sale and issuance of sale

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certificate. This is the background of the sale held and confirmed in favour of Auction Purchaser.

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The two grounds of which the Securitisation Application was allowed are, i) there was no clear 15 days of notice and ii) on the successful bidder failing to deposit 25% of bid amount, on the date of sale, sale should not have been confirmed in favour of second highest bidder.

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As per records made available, it is seen that, the impugned Sale Notice dated 08.01.2021 was pasted on 12.01.2021, and received by the Borrowers on 15.01.2021. The date of sale was 30.01.2021. There is shortage of one day for meeting the mandatory clear 15 days of notice prior to sale as required under Rule 9(1) of SIE Rules, 2002. Whether this shortfall of one day would affect the sale? To decide this, we have to consider the entire background of the case and the consequence of events that happened prior to impugned Sale Notice, sale and what had happened subsequent to the sale.

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After reserving the order on 02.06.2025, while perusing the record, this Tribunal had gone through the letter dated 01.02.2021, addressed by the Bank to Kumaraswamy A.B. In the said letter, it was stated that Mr. Kumaraswamy A.B. had been the Advocate of Mr. Ramesh B. Gowda and he was aware about the background of the suit by Mangala. He was using Mr. Praveen K.N. as informer of the suit to suppress his knowledge. He appeared along with Mr. Praveen K.N. before the Bank on several occasions on behalf of Borrower, Mr. Ramesh B. Gowda. During second auction held on 28.10.2020, Kumaraswamy A.B. participated as witness in the auction representing Mr. Ramesh B. Gowda. Therefore, this Tribunal listed the matter again on 11.07.2025, for seeking clarification on the contents of the aforesaid letter dated 01.02.2021.

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On 11.07.2025, there was no appearance on behalf of Borrowers and the Bank, but Learned Counsel for Auction Purchaser was present through Video Conferencing. Thus,

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the matter was posted again on 14.07.2025, for appearance

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of Learned Counsel for the Bank and Borrowers. On 14.07.2025, Learned Senior Counsel for Bank and Learned Counsel for Auction Purchaser were present. However, there was no representation for the Borrowers. This Tribunal wanted to know whether Mr. Kumaraswamy A. B. was a legal practitioner or just a person advocating the cause of Borrowers, Mr. Ramesh B. Gowda. Learned Senior Counsel for the Bank informed that Mr. Kumaraswamy A. B. was a legal practitioner and appeared before the Tribunal below on behalf of the Borrower, Mr. Ramesh B. Gowda. Since there was no representation for the Borrowers, the case was adjourned to 15.07.2025, for the hearing the submission of Learned Counsel for Borrowers. Again on 15.07.2025, though Counsel for the Bank and Auction Purchaser were present through Video Conferencing, there was no representation for Borrowers. Thus, the matter was adjourned to 21.07.2025, for the hearing of Counsel for the Borrowers as a final opportunity.

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On 21.07.2025, Learned Counsels for the Borrowers,

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Auction Purchaser were present. There was no representation for the Bank. Learned Counsel for Borrowers strongly disputed the contents of the letter dated 01.02.2021, especially, the contention that he appeared on behalf of Mr. Ramesh B. Gowda, in the second auction. Therefore, Counsel for Bank was directed to produce proof in support of the contention made in letter dated 01.02.2021 and posted the matter to 23.07.2025. On 23.07.2025, Counsel for all the parties appeared. The matter was adjourned to 31.07.2025, for producing the evidence in support of the contention made in letter dated 01.02.2021. On 31.07.2025, the Affidavit of the Borrower, Mr. Ramesh B. Gowda dated 18.07.2025 and type set of documents of Bank dated 23.07.2025 and 31.07.2025, have been filed before this Tribunal. Thus, orders were reserved again on 31.07.2025 after hearing the Counsel for the parties.

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In the Affidavit of the Borrower, Mr. Ramesh B. Gowda, the Borrower expressed shock of the listing of matter on

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11.07.2025, 14.07.2025 and 15.07.2025 without notice and

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it would amount to grave prejudice and injustice and is against the principles of natural justice. On the clarification sought by this Tribunal, on contents of the letter dated 01.02.2021, it is averred that Borrower neither engaged services of Mr. C. Kumaraswamy in the Mangala Suit nor services of Mr. C. Kumaraswamy before DRT, Bangalore in SA 77/2021. It is also averred that Mr. B. Sivaiah, Chief Manager, at the time of sale confirmation, was a tenant of Mr. D.L. Vijayakumar, and therefore, sale was confirmed in favour of D. L. Vijayakumar, violating the law. This Tribunal wanted to verify whether Kumaraswamy A. B., who was a bidder in the auction sale held on 30.01.2021 was an Advocate of Mr. Ramesh B. Gowda. But, the Affidavit of the Borrower mentions of Mr. C. Kumaraswamy. There is no denial of the fact that Kumarasawmy A.B. was the Advocate of the Borrower, Mr. Ramesh B. Gowda on the Affidavit.

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It is seen from the additional documents produced in the form of typed set on 23.07.2025 and 31.07.2025, that

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Mr. Kumaraswamy A.B.’s photo taken from Karnataka State Bar Council is produced. His photo taken when he appeared for participating in auction on 30.01.2021 is also produced. A bare look at the photographs shows that the person representing as Kumaraswamy A.B., found in both the photographs, is one and the same person.

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There was a sale held on 28.10.2020 in pursuance of second sale notice dated 09.10.2020. Even in the said sale, Mr. D.L. Vijayakumar was the successful bidder. However, the Borrower filed SA 218/2020 on the file of DRT-I, Bangalore, and an interim order was passed. In view of the interim order passed, the successful bidder, Mr. D.L. Vijayakumar, withdrew from further participation.

¶149

The minutes of the auction proceedings dated 28.10.2020 reads that when auction proceedings was initiated on 28.10.2020, one Mr. Kumaraswamy A.B. claiming himself as an Advocate of Mr. Ramesh B. Gowda, visited the Branch Office and served the stay order copy to

¶150

¶151

the Branch as well Authorised Officer. Therefore, the intending bidder refused to proceed with his participation in the auction and withdrew the sealed cover due to stay on confirmation of sale as per DRT-I, order dated 27.10.2020 in SA No. 218/2020. Mr. Ramesh B. Gowda paid Rs.10 Lakhs on 27.10.2020.

¶152

The Bank has also produced the visitor’s entry dated 20.01.2021 along with a covering letter dated 18.02.2021 to show that Mr. Ramesh B. Gowda and Mr. Kumaraswamy A.B., visited the Branch and signed the Register in proof of their visit. The perusal of the extract of the copy of the Register shows that on 20.01.2021, Mr. Ramesh B. Gowda and Mr. Kumaraswamy A.B., visited the Bank and in proof of their visit, they signed in the Register. Signature of Mr. Kumaraswamy A.B., in the Register and in the sale proceedings dated 30.01.2021 are identical. Thus, from the available material, it can be safely concluded that Mr. Kumaraswamy A.B., the successful bidder, is the Advocate of the Borrower, Mr. Ramesh B. Gowda, and he represented Mr.

¶153

¶154

Ramesh B. Gowda, in SA 218/2020, with or without Vakalat, he visited the Bank along with Mr. Ramesh B. Gowda, on 20.01.2021, prior to the impugned sale. There is no denial of the fact that he participated in the auction held on 30.01.2021 and was the highest bidder. After bidding the property for the highest price, he retracted and failed to pay 25% of sale consideration. Thus, it is clear as crystal that the Borrower, Mr. Ramesh B. Gowda and his Counsel Mr. Kumaraswamy A.B., had planned in advance that Mr. Kumaraswamy A.B., the advocate of Mr. Ramesh B. Gowda to bid for the highest price, and then, withdraw from auction by not depositing 25% of the bid amount. In the said process, they wanted the sale to fail and to initiate fresh sale with the issuance of fresh sale notice. It is a deliberate attempt on the part of the Borrower along with his Advocate Kumaraswamy A.B. to stall recovery proceedings. If this kind of tactics is adopted by Borrower with the help of a willing Advocate or a willing collaborator, no sale under SARFAESI proceedings would succeed.

¶155

¶156

Though there is no specific mention in the impugned Sale Notice that in the event of failure of the highest bidder to pay 25% bid amount, the second successful bidder would be confirmed as a successful bidder, there is a specific condition incorporated in the sale proceedings dated 30.01.2021 that in the event of failure of the highest bidder to deposit 25% of the bid amount, the Authorised Officer can allot the property to the second highest bidder or cancel the sale or conduct a fresh auction. On highest bidder i.e. Mr. Kumaraswamy A.B., failing to pay the highest amount in terms of minutes of the proceedings, the Authorised Officer chose to confirm the sale in favour of the second highest bidder i.e. D.L. Vijayakumar, which, in the circumstances stated above, cannot be found fault with. In case of fresh auction, there is possibility of reduction of reserve price. We have seen in Palpap Ichinichi case, the Hon’ble High Court of Madras held that, in case of successful bidder failure to pay the amount, the sale can be confirmed in favour of the second highest bidder, to avoid the reduction of reserve price.

¶157

¶158

The property is not sold in the first auction sale. Previous two sale attempts had failed, especially, second sale failed because of the interim order granted by DRT on the Securitisation Application filed by the Borrowers. Even in the impugned sale, the notice is short by just one day prior to sale. Borrower authorized and nominated his representative Mr. Praveen K. N., to review the auction. There was no objection taken prior to the auction, that that auction proposed on 30.01.2021 was without clear 15 days notice, is illegal, and therefore, auction should not be held. This objection was not raised either by Borrower or by his representative Mr. Praveen K. N., at any point, either prior to auction or during or immediately after conclusion of auction. It is not established that there was collusion between the Bank officials and the Auction Purchaser in concluding the sale in favour of the Auction Purchaser, except a bald allegation, which is not supported by concrete evidence.

¶159

¶160

Taking into consideration the totality of the

¶161

circumstances where the Borrowers had deliberately delayed the sale process, either by filing Securitisation Application or by appointing their Advocate to participate in the auction to bid for the highest, later withdrew from it, this Tribunal is of the view that the shortfall of one day to satisfy the Rule, as required under Rule 9(1) of SIE Rules, 2002, will not affect the sale. Planting of Mr. Kumaraswamy A.B. to scuttle the sale process is evident on the face of record, and there is specific clause of confirming the sale in favour of the second highest bidder, on the failure of the first highest bidder to pay 25% of the sale amount. Thus, confirmation of sale on the second highest bidder, on the considered view of this Tribunal, is correct and cannot be faulted with.

¶162

In this view of the matter, this Tribunal sets aside the order passed by Learned Presiding Officer in SA 77/2021 and sale held in favour of Auction Purchaser, Mr. D.L. Vijayakumar is confirmed. Consequently, SA 77/2021 is dismissed. Accordingly, the Appeals filed by the Bank and

¶163

¶164

the Auction Purchaser in RA (SA) 114/2024 and RA (SA) 13/2025 respectively, are allowed with the costs of the Appellants. The Appeal filed by the Borrower in RA (SA) 55/2025 is dismissed with the costs of the Respondents. All pending IAs, if any, stand closed.

¶165

[Dictated to Athistamani, PS, transcribed by her, corrected and signed by me this 09^th of September, 2025]

¶166

[ Justice G. Chandrasekharan]

¶167

CHAIRPERSON

¶168

Mr Ramesh Gowda and Mrs Ramya Gc v. Karnataka Bank Limited

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Mr Ramesh Gowda and Mrs Ramya Gc v. Karnataka Bank Limited

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