Disposed

M/S. Kuberakshi Hotels (P) Ltd., v. the Reserve Bank of India

Karnataka HC11 Oct 2023WP/21046/2023

Case brief

AI extract

What is this about?

High Court disposed of a writ petition seeking release of collateral documents tendered as security. Court granted liberty to petitioners to clear outstanding loans including those by a third company against which the proprietor was personally liable, upon which condition the bank must release title deeds.

What did the court decide?

Liberty granted to clear all outstanding loans; respondents directed to return original title deeds upon clearance and not insist on their retention pending the loan of the third company.

M/S. Kuberakshi Hotels (P) Ltd., Vs the… — Contract and Commercial Disputes | Karnataka HC (2023)

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1 - NC: 2023:KHC:37085 WP No. 21046 of 2023

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 11^TH DAY OF OCTOBER, 2023

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BEFORE

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THE HON'BLE MR JUSTICE R DEVDAS WRIT PETITION NO. 21046 OF 2023 (GM-RES)

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BETWEEN:

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M/S. KUBERAKSHI HOTELS (P) LTD., A COMPANY REGISTERED UNDER THE COMPANIES ACT, HAVING ITS OFFICE AT NO. 90/6, KATHA NO. 208, MUNNE KOLALU VILLAGE, VARTHUR HOBLI, BENGALURU EAST TALUK, BENGALURU - 560 001. REPRESENTED BY ITS MANAGING DIRECTOR, SRI. SHASHIKANTH. M.K.

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Digitally signed by DHARMALINGAM Location: HIGH COURT OF KARNATAKA

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M/S. SRI. RANGANATHA ENTERPRISES 105/2, 2ND CROSS, A BLOCK, APMC YARD, BANDIPALYA, MYSURU - 570 001, (REGISTERED UNDER COMMERCIAL ESTABLISHMENT AND KARNATAKA SHOPS AND COMMERCIAL ESTABLISHMENT ACT 1961) REPRESENTED BY ITS PROPRIETOR, SRI. SHASHIKANTH M.K.

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M/S. SRI SAI FILLING STATION NO. 88, BILIKERE, HUNSUR TALUK, HUNSUR, MYSURU DISTRICT - 570 001,

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2 - NC: 2023:KHC:37085 WP No. 21046 of 2023

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REPRESENTED BY ITS PROPRIETOR, SRI. SHASHIKANTH. M.K., (REGISTERED UNDER COMMERCIAL ESTABLISHMENT ACT, 1961)

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…PETITIONERS

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(BY SRI. SANGAMESH R.B, ADVOCATE)

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AND:

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THE RESERVE BANK OF INDIA, OPP. TO ST. MARTHA'S HOSPITAL, 10/3/8, NRUPATHUNGA ROAD, AMBEDKAR VEEDHI, BENGALURU - 560 001. (REPRESENTED BY ITS DIVISIONAL MANAGER)

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CANARA BANK,

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MSME SECTION (SME), (SME SULABH) CIRCLE OFFICE, 86, M.G. ROAD, BENGALURU - 560 001. (REPRESENTED BY ITS MANAGER)

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THE CANARA BANK, MYSURU MAIN BRANCH, NO. 40, NEW STATUE SQUARE, MYSURU - 570 001. (REPRESENTED BY ITS MANAGER)

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THE ICICI HOME FINANCE, ICICI BANK TOWERS, BANDARA, KURLA COMPLEX, MUMBAI - 400 051. (REPRESENTED BY ITS MANAGER)

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…RESPONDENTS

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(BY SRI. T.P. MUTHANNA, ADVOCATE FOR R2 AND R3)

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3 - NC: 2023:KHC:37085 WP No. 21046 of 2023

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THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO i) DIRECTING THE R2 AND 3 HEREIN TO RELEASE THE ORIGINAL DOCUMENTS PERTAINING TO THE SCHEDULE PROPERTY, IN RESPECT OF LOAN ACCOUNT BEARING NO. 170000940535 HELD BY PETITIONER NO. 1 WITH RESPONDENT NO. 3 BANK HEREIN (ANNX-D1) AND ETC.,

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THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:

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ORDER

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R.DEVDAS J., (ORAL):

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The petitioners, more particularly, Sri.M.K.

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Shashikanth, who is said to be the Managing Director of petitioner No.1-Company and proprietor of petitioner Nos. 2 and 3, are before this Court seeking a direction to respondents Nos.2 and 3-Canara Bank to release the original documents tendered by the petitioners as collateral security for several loans obtained at the hands of the respondent-Bank.

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4 - NC: 2023:KHC:37085 WP No. 21046 of 2023

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On the previous occasion, the learned counsel for the petitioners had submitted that petitioner No.1 had cleared all the loans obtained by petitioner No.1 from the respondent-Canara Bank and therefore, the prayer was to direct the respondent-Bank, to return the original documents. Learned counsel for the respondent-Bank was directed to secure instructions and make submissions.

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Learned counsel for the respondent-Canara Bank submits on instructions that no doubt petitioner No.1 has paid the outstanding amount of Rs.8.25 Crores as on 30.07.2023 after obtaining a loan from respondent No.4ICICI Home Finance Limited. However, the said Sri. M.K. Shashikanth, is also the proprietor of petitioner No.2 M/s. Sri.Ranganatha Enterprises, on whom there is an outstanding loan amount of Rs.1,83,01,163 to be paid along with interest and the said person is also the Director of the M/s. Blueclif Apparels India Private Limited where there is an outstanding loan amount of Rs. 732.03 Lakhs.

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NC: 2023:KHC:37085 WP No. 21046 of 2023

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Learned counsel for the petitioners submits that the petitioner, Sri. M.K. Shashikanth, is no more a director in the said company as on 01.11.2021. Learned counsel submits that in terms of the provisions of the companies Act, the petitioner has come out of the company, and therefore, there cannot be any liability on the petitioners, insofar as the loan was obtained by M/s. Blueclif Apparels India Private Limited.

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Having regard to the submissions made by the learned counsel for the petitioners as well as the learned counsel for the respondent-Canara Bank, this Court is of the considered opinion that if the petitioners clear all the outstanding loan amount in respect of the three petitioners are concerned, then respondent Nos.2 and 3-Canara Bank is bound to release the original documents which was tendered by the petitioners as collateral security for the loan obtained by the petitioners. As regards the petitioners Sri. M.K. Shasikanth, being held responsible and liable as a personal guarantor insofar as M/s. Blueclif

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NC: 2023:KHC:37085 WP No. 21046 of 2023

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Apparels India Private Limited is concerned, it is contended that the respondent-Canara Bank has not secured the immovable properties belonging to the petitioner Nos.1 to 3 insofar as the loan obtained by the said company and it is only a personal guarantee. If the petitioners have come out of the said company in accordance with law and the same is registered with the registrar of companies, the respondent-Canara Bank cannot be permitted to hold the original title deeds tendered by the petitioners for the loan obtained by M/s. Blueclif Apparels India Private Limited.

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Consequently, the writ petition stands disposed of granting liberty to the petitioners to clear all the outstanding loan amounts in the accounts of petitioners Nos.1 to 3 with the respondent-Canara bank. If the loan amounts, as indicated by the respondent-Canara Bank, in respect of petitioner Nos.1 to 3 are cleared by the petitioners, the respondent-Canara bank shall return all the original title deeds tendered by the petitioners with the

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NC: 2023:KHC:37085 WP No. 21046 of 2023

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said bank and shall not insist that the same will be kept pending, in the matter of the loan obtained by M/s. Blueclif Apparels India Private Limited.

Order accordingly.

Sd/JUDGE

CT: BHK

M/S. Kuberakshi Hotels (P) Ltd., v. the Reserve Bank of India

Case brief

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M/S. Kuberakshi Hotels (P) Ltd., v. the Reserve Bank of India

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