Petitioner, an educational trust facing SARFAESI sale notices, sought quashing of notices and reinstatement of OTS pending before bank. Court granted one-month extension to deposit amount before DRT, restraining coercive steps until then.
Extension of one month to deposit Rs.4,36,48,000/- to DRT; no coercive steps by bank until then.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 19TH DAY OF SEPTEMBER, 2022
BEFORE
THE HON’BLE MRS. JUSTICE K.S. HEMALEKHA
WRIT PETITION No.18580/2022 (GM-RES)
BETWEEN:
K.S. GOWDA EDUCATION TRUST, (REGD.) REP. BY ITS PRESIDENT SRI K.S. ASHOK KUMAR S/O. SRI SHEENAPPA GOWDA AGED 54 YEARS, NINTHIKALA POST, ENMUR, SULLIA TALUK – 574 328 D.K. DISTRICT. ... PETITIONER
(BY SMT. SANDHYA U. PRABHU, ADVOCATE)
AND:
THE AUTHORIZED OFFICER REPRESENTED BY MANAGER CANARA BANK ARM BRANCH-II, 2ND FLOOR, CIRCLE OFFICE, SPENCER TOWERS, NO.86, M.G. ROAD, BANGALORE – 560 001. ... RESPONDENT (BY SRI VIGNESH SHETTY, ADVOCATE FOR C/R CCP.Nos.12327/2022 & 12326/2022)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE SALE NOTICE DATED 01.09.2022 BEARING NO.ARM-2/K S GOWDA EDUCATIONAL TRUST/2022 ISSUED BY RESPONDENT BANK IN RESPECT OF SCHEDULE PROPERTY Nos.1 TO 3 PRODUCED AT ANNEXURE-J; AND QUASH TH SAME NOTICE DATED 01.09.2022 BEARING NO.ARM-2/K S GOWDA EDUCATIONAL TRUST/2022
ISSUED BY RESPONDENT BANK IN RESPECT OF SCHEDULE PROPERTY NO.4 PRODUCED AT ANNEXURE-K. THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:-
O R D E R
The petitioner in this petition is seeking quashing of notices dated 01/09/2022 bearing No.ARM-2/K S Gowda Educational Trust/2022 issued by respondent/bank in respect of schedule property Nos.1 to 3 (Annexure – J) and schedule property No.4 (Annexure – K) and also seeking a writ of mandamus directing the respondent-bank to revive the OTS proposal given by the petitioner vide Annexure – C dated 09/06/2022.
submit that in view of the possession and sale notices
issued by the respondent-bank, the petitioner, which is an educational charitable trust approached the Debt Recovery Tribunal (“DRT”) and the Tribunal granted stay of confirmation of sale subject to condition that the petitioner shall pay 25% of the claim amount i.e., Rs.4,36,48,000/- within one month in two equal installments of Rs.2,18,24,000/each. First installment to be paid on or before 02/09/2022 and the second installment to be paid on or before 16/09/2022. Further, learned counsel for the petitioner submitted that the said interim order could not be complied with, as the President of the petitioner-trust was diagnosed with viral hepatitis. It is submitted by learned counsel that the DRT further extended the time to pay the installments. However, when the order was in force and one time settlement proposal was pending consideration, the bank is proceeding to issue sale notice. It is further
submitted that if some time is granted, the petitioner is ready to deposit the amount as directed by the DRT.
gathered from the facts is that, the petitioner is a charitable trust created for improving the education
level of the underprivileged children and also running an industrial training institute and also a school for classes LKG to 10th Standard in a remote area of Dakshina Kannada District, borrowed loan for construction of building to house the school and the industrial training institute from 2006 to 2010 and the loan was to start three years after the date of sanction of the loan and that only after construction of buildings and getting approval from the authorities, the students could be admitted and the repayments are linked to the fees and is to be paid by the students and all the classes could not be started at the same time as students had to be promoted from one class to the higher class, which could result in students’ strength. Thus, there has been a delay in obtaining the permissions from the authorities to start the classes which resulted in delay in payment of the loan. Hence, the respondent-bank initiated SARFAESI
proceedings under the SARFAESI Act and sale notices were issued to the petitioner.
circumstances of the case and in view of the one time settlement (“OTS”) pending consideration before the respondent-bank and though the petitioner has approached the DRT, the present writ petition is entertained by this Court for a limited purpose giving breathing time, taking into consideration that the petitioner is an educational trust, time is extended to deposit the amount as directed by the Tribunal to the tune of Rs.4,36,48,000/- within a period of one month from the date of receipt of a copy of this order. Till then, no coercive steps will be taken by the respondent-bank.
circumstances, this Court is only extending time for a
period of one month from the date of receipt of a copy of this order and further extension would be left to the discretion of the DRT, where the application filed by the petitioner is pending consideration.
terms.
SD/JUDGE
S*
2 issues framed by the court
Whether the High Court can entertain a writ petition seeking quashing of sale notices and direction to revive OTS proposal despite DRT stay when petitioner is a charitable educational trust.
Whether the petitioner is entitled to an extended time to comply with DRT directions given peculiar circumstances of the trust.
2 provisions across 2 enactments
K.S. GOWDA EDUCATION TRUST
THE AUTHORIZED OFFICER REPRESENTED BY MANAGER CANARA BANK
K.S. HEMALEKHA
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
