Dismissed

Mr Ehtesham Ui Haq H K and Others v. Karnataka Bank Limited

DRT30 Jan 2026SA/16/2025

Case brief

AI extract

What is this about?

In SA No. 16 of 2025, applicants challenging Section 14 orders obtained by Karnataka Bank Ltd. appeared before the Debt Recovery Tribunal in Bangalore. The Tribunal examined the legality of recovery measures, including notice service and compliance with statutory rules regarding possession and affixture. The applicants claimed failure to serve notices and non-compliance with RBI directives, but pr

What did the court decide?

SA No. 16 of 2025 dismissed; all pending IAs closed.

Mr Ehtesham Ui Haq H K and Others versus Karnataka Bank… — Execution and Attachment | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL-II, BANGALORE

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Dated of 30^th day of January, 2026

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PRESENT: SHRI T. RAJESH Hon’ble Presiding Officer

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S.A.No.16 of 2025

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Mr. Ehtesham Ui Huq HK, (Prop./Borrower).

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Kuthiaja Mohammedi (Co-Borrower).

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Both are residing at #No.2646, Sy.No.285, Abdul Nazeer Sab Road, Gundlupet, Chamarajnagara District. PIN – 571 111.

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. . . Applicants.

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Versus

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The Authorised Officer, Karnataka Bank Ltd., Reg. Head Office: #599, Mahaveer Circle, Kankandy, Mangaluru – 575 002. . . . Respondent.

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Ld. Counsels on record/appeared :-

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Counsel for Applicants :- Sri M.A.Rajendra. Counsel for Respondent :- Sri K.V.Shyamaprasada. (CAVEAT) : - O R D E R - :

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The Securitization Application, SA is filed under section 17 of the

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Securitization And Reconstruction Of Financial Assets And Enforcement

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2 SA No. 16/2025

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Of Security Interest Act; herein after been referred to as SARFAESI Act or the Act, as the case be challenging the measures leading to the procurement of Section 14 orders by the respondent in Crl.Misc. No.24/2024 dt.07.12.2024 passed by Hon’ble Chief Judicial Magistrate, Chamarajanagara.

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The 1^st applicant is a proprietor of M/s.HKB Traders Co., and 2^nd applicant is his wife and the co-applicant. The firm is engaged in the business of wholesale dealers in vegetables. It is contended that the applicants approached the respondent bank for Overdraft of Rs.55.00 lakhs and Rs.49.00 lakhs & Rs.14.44 lakhs in Housing Loan facilities and offered four properties as collateral security out of which three residential properties are also there which are the subject matter of this SA. The applicants have challenged the impugned order passed by the CJM, Mysuru against the property of applicants situated at Mysuru before this Tribunal in SA No.264/2024 and interim stay was granted in that SA subject to the condition that the applicants pay Rs.31.00 lakhs in three instalments. The applicants complied with 1^st instament and the matter is still pending adjudication and interim stay is still in force. The same properties described in the schedule annexed to the petition before the CJM at Mysuru have also been included in the petition before the CJM at

SA No. 16/2025

Chamarajanagara which results in the principle of res judicata and functus officio. It is also contended that instead of sanctioning both OD loan and Housing Loan, the respondent bank sanctioned a Term Loan of Rs.1,25,19,951.49 to meet the working capital and to construct their house and also collected premium for Life Group Protect Scheme loans. The borrowers were regular in their repayments but they had suffered heavy loss in their business due to COVID-19 disasters and hence the loan account of the applicants was classified as Non Performing Assets on 30.11.2021. The Applicants case is that the respondent initiated further measures by issuance of demand notices u/s.13(2) of the Act on 08.04.2022 and 25.04.2022 pertaining to loan account of 2^nd applicant and also the possession notice u/s.13(4) of the Act which the applicant claimed is not served on the applicants. It is the case of the applicants that the respondent ought to have registered the security interest created over the property with the Central Registry, the respondent issued possession notice dt.23.03.2023 based on the two demand notices dt.08.04.2022 and 25.04.2022. It is also the case of the applicants that the respondent failed to serve copy of demand notice as well as possession notice to all the borrowers and failed in following the affixture and publication of the same in two leading newspapers. It is also the case

SA No. 16/2025

of the applicants that though they are eligible for the benefits extended with regard to COVID relief package scheme released by Reserve Bank of India, the same is not extended to the applicants. In the grounds to the SA the applicants are reiterating the contentions as stated above and prayed to set aside the impugned Section 14 order procured by the respondent.

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Along with SA, the Applicants had produced the following documents:

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i) Copy of the impugned order dt.07.12.2024 and the petition copy of the respondent bank.

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ii) Copy of the Sanction Letter and the copy of the scheme. iii) Copy of the possession notice dt.23.03.2023.

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The respondent filed their statement of objection admitting the availment of Term Loan and Housing Loans by applicants and the properties mortgaged by them but the other contentions that the properties mentioned in sec.14 petition before CJM at Mysore and Chamarajnagar Court are one and the same is denied. It is further contended that the SA 264/2024 challenging the order passed in Crl.Misc.74/2024 by Ld. II Addl. Senior Civil Judge and CJM at Mysore in respect of mortgaged property situated at Mysore only whereas the order passed in Crl.Mis.24/2024 is by the Ld. Senior Civil Judge and CJM at Chamarajnagar. The respondent denies the allegation of the applicants

SA No. 16/2025

that the respondent bank erred in sanctioning the mortgage loan of Rs.49 lakhs and Rs.44.14 lakhs towards the housing construction and development of house and contended that the respondent bank has sanctioned the loan as required by the applicant from time to time. The respondent also denied the allegation of the applicants that instead of sanctioning overdraft loan, a term loan was sanctioned. The respondent had denied the contentions of the applicants that they suffered heavy loss due to COVID-19 and that COVID-19 relief package scheme and benefits under the said scheme are not extended to them. It is contended that the benefit accrued to the eligible borrower were granted as per the guidelines of RBI. The respondent further denied the contentions of the applicants that the security interest was not registered. The respondent contended that the applicants are intentional defaulters and not repaying the loan amount and the respondent with an intention to recover its dues initiated the recovery proceedings as per law and also followed all the procedures as required under the SARFAESI Act before seeking an order u/s.14 of the SARFAESI Act. The respondent also contended that they acted within the scope of law and prayed for dismissing the SA.

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Along with objection, the respondent had produced the following documents:

SA No. 16/2025

i) Copy of Demand Notice u/s.13(2) of SARFAESI Act, 2002 dt.25.04.2022.

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ii) Copy of Postal Receipts for item no.1.

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iii) Copy of Postal Acknowledgements for item no.1.

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iv) Copy of Possession Notice dt.23.03.2023.

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v) Copy of Postal Receipts for item no.4.

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vi) Served and postal acknowledgements for item no.4.

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vii) Copy of Paper Publication of Possession Notice dt.24.03.2023 published in Prajavani, Kannada daily Newspaper on 29.03.2023.

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viii) Copy of Paper Publication of Possession Notice dt.24.03.2023 published in Deccan Herald daily English Newspaper on 29.03.2023.

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ix) Proof of Affixture of possession notice to the mortgaged property.

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Heard the Ld. counsel for both sides.

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The only issue that arises for consideration is as to the legality of measures initiated and continued leading to the procurement of section 14 orders.

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The applicant is having no dispute as to the availment of the credit facility, creation of Security Interest in lieu of the security and is also admitting the defaults occurred in the account though the same is attributed to Covid 19. The applicant though is contending that the respondent failed

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to extent the RBI directions as to the Covid-19, which mandates reschedulment of credit facilities, no such directives by RBI is produced by the applicant evidencing their entitlement for the above claim. In view of

SA No. 16/2025

the above, this Tribunal is not inclined to accept the contention of the applicant in this regard.

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The next contention taken by the applicant is that there is no service of demand notice and possession notice. This contention is successfully countered by the respondent as the proof as to the despatch and service of demand notice and possession notice were produced. In view of the production of the proof as to the service of notices, there is no force in the contention of the applicant that there is no service of demand notice and possession notice on the applicant.

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The next contention of the applicant as to the issuance of two demand notice is also to be negated as the respondent is justified as there is no illegality in issuance of separate demand notices in respect of different accounts.

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The compliance as to rule 8(1) and 8(2) of Security Interest (Enforcement) Rules is produced by the respondent as the proof of dispatch, affixture and publication as to the possession notice is produced by the respondent. Even otherwise the issuance of possession notice is not sinequanon for initiation of section 14 measures.

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Hence on consideration of the discussions as held in aforementioned

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paragraphs and findings therein, this Tribunal is satisfied that the

SA No. 16/2025

measures initiated and continued by the Authorised officer is in accordance with statute. The applicant had failed in putting forward any valid challenges against the measures and hence this SA is liable to be dismissed.

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