Disposed

M. Thangavelu v. Karnataka State Financial Corporation

Karnataka HC1 Mar 2024WP/4211/2024

Case brief

AI extract

What is this about?

A guarantor challenged a SARFAESI sale notice and auction sale by writ petition against Karnataka State Financial Corporation's recovery proceedings for loans to borrowers. The court, noting the property was sold and full auction price paid, held the petition lay before the Debts Recovery Tribunal and disposed of it reserving liberty to pursue such remedy.

What the court decided

AI extract

M. Thangavelu Vs Karnataka State Financial Corporation — Banking and Recovery | Karnataka HC (2024)

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NC: 2024:KHC:8743 WP No. 4211 of 2024

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 1^ST DAY OF MARCH, 2024

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BEFORE

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THE HON'BLE MR JUSTICE M.NAGAPRASANNA WRIT PETITION NO. 4211 OF 2024 (GM-RES)

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BETWEEN:

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M.THANGAVELU S/O LATE MUNUSAMY AGED ABOUT 85 YEARS NO. 34, 11^TH CROSS NANJAPPA LAYOUT NEW BOMMASANDRA VIDYARANYAPURA BENGALURU - 560 097.

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…PETITIONER

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(BY SRI. RAHUL S.REDDY, ADVOCATE)

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AND:

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Digitally signed by NAGAVENI Location: HIGH COURT OF KARNATAKA

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KARNATAKA STATE FINANCIAL CORPORATION REPRESENTED BY ITS AUTHORIZED OFFICER CENTRAL BRANCH, GROUND FLOOR KSFC BHAVANA, 1/1, THIMMAIAH ROAD NEAR CANTONMENT RAILWAY STATION BENGALURU - 560 052.

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M/S. OM GRAPHICS REP. BY ITS PROPRIETOR SMT. SELVI W/O P.C.GANESH AGE: MAJOR R/AT NO. 204, RMV ORCHARDS SEENAPPA LAYOUT, RMV 2^ND STAGE

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NC: 2024:KHC:8743 WP No. 4211 of 2024

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NEW BEL ROAD BENGALURU - 560 094 REGISTER UNDER COMPANIES ACT.

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M/S. OM PACKAGING INDUSTRIES REP. BY ITS MANAGING DIRECTOR P.C.GANESH

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S/O G.CHENGAVALARAYAN R/AT NO.204, RMV ORCHARDS SEENAPPA LAYOUT, RMV 2^ND STAGE NEW BEL ROAD BENGALURU - 560 094 REGISTER UNDER COMPANIES ACT.

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…RESPONDENTS

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(BY SRI. DR.T.SOMASHEKAR, ADVOCATE FOR C/R1)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE SALE NOTICE DTD 28.12.2023 AND ALSO THE SALE PROCEEDINGS HELD ON 22.01.2024, ARISING OUT OF THE SALE NOTICE DTD 28.12.2023 TO THE SCHEDULE PROPERTY ISSUED BY THE R1 VIDE ANNEXURE-C AND C1 IN SO FAR AS PETITIONER CONCERNED.

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

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ORDER

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The petitioner is before this Court seeking the following order:

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“a) Issue a Writ of Certiorari by quashing the sale notice dated 28/12/2023 and also the sale proceedings held on 22/01/2024, arising out of the Sale notice dated 28/12/2023 to the schedule property issued by the 1^st respondent vide Annexure C & C1 insofar as petitioner concern

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NC: 2024:KHC:8743 WP No. 4211 of 2024

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b) Issue a Writ of Mandamus by directing the Respondent bank to receive the Reserve Price fixed for the schedule property and release the schedule property belonging to the petitioner.

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c) Grant such other reliefs that this Hon’ble Court deems fit to be grant in the facts and circumstances of the case, in the interest of Justice and Equity.”

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Heard Sri Rahul S. Reddy, learned counsel for

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petitioner and Dr. T. Somashekar, learned counsel for respondent No.1.

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The petitioner is the guarantor and respondent Nos.2 and 3 are the borrowers. Respondent No.1 – Karnataka State Finance Corporation (for short ‘the Corporation’) is the lender. In the year 2004, an amount of Rs.50/- lakhs and on 20.09.2008, an amount of Rs.20/- lakhs, totally to Rs.70/lakhs was sanctioned to respondent Nos.2 and 3. The borrowers defaulted in payment of loan, which lead the Corporation to initiate steps under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The petitioner challenge the proceedings before the Debts Recovery Tribunal in S.A.No.321/2012. The application was allowed by setting

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NC: 2024:KHC:8743 WP No. 4211 of 2024

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aside the sale. The borrowers again defaulted in payment, which lead the Corporation to take steps yet again, which forms the present proceedings.

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Learned counsel for the petitioner submits that the petitioner is now 85 years old, the present proceedings are causing grave hardship and therefore, seeks indulgence at the hands of this Court.

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Learned counsel for the Corporation would submit that the property is now put to sale for the 12^th time on 28.12.2023, the sale was held on 22.02.2024 and now the auction purchaser is identified has paid the entire amount of Rs.1,01,50,000/- on 28.02.2024. Therefore, the petition in the form that is presented just after the sale dated 22.02.2024 would not be entertainable in terms of the judgment of the Apex Court rendered in the case of CELIR LLP VS. BAFNA MOTORS (MUMBAI) PVT. Ltd., reported in 2023 SCC OnLine SC 1209 , the petition would undoubtedly lie before the Debts Recovery Tribunal and not before this Court.

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NC: 2024:KHC:8743 WP No. 4211 of 2024

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