Disposed

Smt. Chikkamma v. Mahila Co. Operative Bank Ltd.

Karnataka HC26 Mar 2024WP/1786/2023

Case brief

AI extract

What is this about?

Borrowers challenged the bank's SARFAESI auction of their property held after a sale notice, seeking to quash the proceedings. As the sale certificate had been issued and possession handed to the auction purchaser who paid the entire amount, the court declined to interfere and directed the petitioners to the Debts Recovery Tribunal, granting three weeks with delay not to be an obstacle.

What did the court decide?

Petition disposed; interim orders dissolved; liberty granted to approach DRT within three weeks, DRT directed to consider merits without rejecting for delay.

Smt. Chikkamma Vs Mahila Co. Operative Bank Ltd. — Banking and Recovery | Karnataka HC (2024)

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NC: 2024:KHC:12357 WP No. 1786 of 2023

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 26^TH DAY OF MARCH, 2024

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BEFORE

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THE HON'BLE MR JUSTICE M.NAGAPRASANNA WRIT PETITION NO. 1786 OF 2023 (GM-RES)

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BETWEEN:

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SMT. CHIKKAMMA, W/O LATE MALLAIAH, AGED ABOUT 70 YEARS, R/A NO.52, 2^ND CROSS, KANTEERAVA NAGARA, NANDINI LAYOUT, BENGALURU – 560 096.

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Digitally signed by NAGAVENI Location: HIGH COURT OF KARNATAKA

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SMT. MAHADEVI, W/O SHIVA, AGED ABOUT 50 YEARS, R/A NO.52, 2^ND CROSS, KANTEERAVA NAGARA, NANDINI LAYOUT, BENGALURU – 560 096.

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SMT. UMADEVI, W/O LATE R.MALLAIAH, AGED ABOUT 45 YEARS, R/A NO.52, 2^ND CROSS, KANTEERAVA NAGARA, NANDINI LAYOUT, BENGALURU – 560 096.

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SMT. SHOBHA K, W/O LATE SHIVAKUMAR, AGED ABOUT 32 YEARS,

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2 - NC: 2024:KHC:12357 WP No. 1786 of 2023

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R/A NO.52, 2^ND CROSS, KANTEERAVA NAGARA, NANDINI LAYOUT, BENGALURU – 560 096.

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MASTER NITHIN, S/O LATE SHIVAKUMAR, AGED ABOUT 10 YEARS, MINOR REPRESENTED BY HIS MOTHER AND NATURAL GUARDIAN, SMT.SHOBHA K, R/A NO.52, 2^ND CROSS, KANTEERAVA NAGARA, NANDINI LAYOUT, BENGALURU – 560 096.

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…PETITIONERS

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(BY SRI. HARSHA KUMAR GOWDA H R., ADVOCATE FOR P1 TO P3)

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AND:

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MAHILA CO-OPERATIVE BANK LTD., R/A A.O. #14, SOUTH END ROAD, SHESHADRIPURAM, BANGALORE – 560 020.

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REPRESENTED BY ITS AUTHORIZED OFFICER/MANAGER.

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SMT. SHASHIKALA S, W/O DEEPAK P, AGED NOT KNOWN TO PETITIONER, R/AT NOT KNOW TO PETITIONER, C/O MAHILA CO-OPERATIVE BANK LTD., R/A A.O.#14, SOUTH END ROAD,

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NC: 2024:KHC:12357 WP No. 1786 of 2023

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SHESHADRIPURAM, BANGALORE – 560 020.

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…RESPONDENTS

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(BY SRI. RAMA BHAT K., ADVOCATE FOR R1; SRI.RAVINDRANATH K., ADVOCATE FOR R2)

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THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE AUCTION PROCEEDINGS HELD ON 15.11.2022 AT THE INSTANCE OF THE R1 BANK, IN RESPECT OF SCHEDULE PROPERTY, PURSUANT TO NOTICE AT ANNEXURE - F TO THE WRIT PETITION AND ETC.,

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

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ORDER

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The petitioners are before this Court calling in question the entire auction proceedings that have taken place on 15.11.2022.

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Heard Sri. Harsha Kumar Gowda H.R., learned counsel appearing for petitioner Nos.1 to 3, Sri. Rama Bhat K., learned counsel appearing for respondent No.1, Sri. Ravindranath K., learned counsel appearing for respondent No.2 and have perused the material on record.

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4 - NC: 2024:KHC:12357 WP No. 1786 of 2023

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The petitioners are the borrowers borrow finance

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from respondent No.1 - Bank. Default in payment which leads the Bank to initiate proceedings under the provisions of SARFAESI Act, 2002. Respondent No.2 is the successful auction purchaser. The sale notice was issued on 17.10.2022 and the property was sold on 15.11.2022. After the said sale, the petitioners knocked at the doors of this Court.

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This Court on 23.01.2023 in order to protect the interest of the petitioners, had passed the following order:

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"Heard Smt. B.V.Vidyulatha, learned counsel for the petitioner.

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Learned counsel for the petitioner submits that the petitioners, who are living, are ready and willing to discharge the debt that is created by the persons who are no more, the husband and children of petitioner No.1.

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The submission is placed on record.

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Learned counsel for the petitioner is directed to serve a copy of the petition papers upon any of the panel counsel representing the respondent and file an acknowledgement to that effect.

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Learned counsel for the petitioner submits that the bank has informed the petitioners that the sale has already taken place.

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Therefore, status quo shall be maintained by the parties concerning the property of the petitioners, as on today, till the next date of hearing.

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Hand delivery of the order is permitted."

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NC: 2024:KHC:12357 WP No. 1786 of 2023

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No condition was imposed, but the interim order was

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continued from time to time.

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On 08.06.2023, the following order was passed:

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"The Memo of Calculation filed by the counsel for Respondent No.2 is taken on record.

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Call this matter next week since voice of the counsel for respondent-bank is weak & mean.

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Interim order granted earlier to continue till next date of hearing."

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On 18.07.2023, the following order was passed:

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"Interim order earlier granted shall continue for one week. The petitioner to come forward as to the plan of repayment of the loan within the shortest possible time and also selling property to the auction buyer who has already deposited Rs.44,53,000/with the respondent/bank. List this matter on 25^th July 2023."

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and on 13.12.2023, the following order was passed:

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"Learned counsel for the petitioners files a memo for retirement dated 11.12.2023 along with a copy of letter dated 25.09.2023, postal receipts, postal acknowledgement, track report of consignment by the postal department and also the copy of the returned postal envelops and seeks for permission to retire from the matter.

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Learned counsel for the respondent-Bank and respondent-Purchaser vehemently submits that the petitioners having obtained unconditional status-quo order, cannot be permitted to enjoy the benefit of the interim order at the cost of the public money.

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Submission is taken on record.

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In view of the fact that the petitioners counsel filed memo of retirement seeking retirement by enclosing the

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NC: 2024:KHC:12357 WP No. 1786 of 2023

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letter along with the postal receipts, in the interest of justice, as a last chance notice is directed to be issued to the petitioners.

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Issue notice to the petitioners.

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Memo will be considered thereafter.

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List this matter on 10.01.2024."

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From 13.12.2023 till 20.03.2024, there was a vacuum as

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the interim order was not extended. The order sheets would also depict that the interim order was not extended and when it was brought to the notice of the Court on 20.03.2024 that the interim order was not extended, this Court directed status-quo as on 20.03.2024 to be maintained by the parties. By then, all proceedings were over. All proceedings would be that issuance of sale certificate and handing over the possession of the property to the hands of the auction purchaser. The sale has taken place 16 months ago and the property is now handed over to the auction purchaser. The circumstance of vacuum has created the problem. This Court, at this juncture, cannot step in and consider the grievance of the petitioners or direct the Bank to receive the money more so in the light of the auction purchaser paying the entire amount and being put in possession.

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NC: 2024:KHC:12357 WP No. 1786 of 2023

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Learned counsel appearing for petitioner Nos.1 to 3

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seeks to project that a property of more than Rs.4.00 crores is sold at Rs.1.7 crores. Be those submissions as they are.

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In the light of all proceedings getting over, if this Court would step in, it would run foul of the judgment of the Apex Court in the case of CELIR LLP V. BAFNA MOTORS (MUMBAI) (P) LTD. ,¹ .

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Therefore, I decline to interfere reserving liberty to

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the petitioners to approach the Debts Recovery Tribunal ('the DRT' for short) to vent out their grievance.

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In the event the petitioners would approach the DRT within three weeks from today, the DRT shall not reject the application on the ground of delay, as the matter was pending before this Court.

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The DRT shall consider the same on its merit and

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also take note of the fact of the submission of the learned counsel appearing for petitioner Nos.1 to 3 that the property has been under sold.

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1 2023 SCC OnLine SC 1209

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NC: 2024:KHC:12357 WP No. 1786 of 2023

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For all the aforesaid reasons, the following:

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ORDER

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i. The petition stands disposed.

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ii. The interim order of any kind stands dissolved.

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iii. The petitioners are granted three weeks time to approach the DRT venting out their grievance.

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iv. If the petitioners would approach the DRT within three weeks from the date of receipt of a copy of this order, the DRT shall consider the case on its merit without reference to delay.

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Sd/JUDGE

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SJK List No.: 1 Sl No.: 7

Smt. Chikkamma v. Mahila Co. Operative Bank Ltd.

Case brief

What is this about?

What did the court decide?

Smt. Chikkamma v. Mahila Co. Operative Bank Ltd.

Case brief

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What did the court decide?

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