Disposed

Sri H.J. Rajesh Gowda, v. Canara Bank

Karnataka HC17 Jan 2024WP/8510/2023

Case brief

AI extract

What is this about?

A borrower sought to quash notices issued by Canara Bank for auctioning gold pledged against his agri-gold loan. Counsel for the bank undertook to withdraw the auction. The court disposed of the petition directing that the pledged gold not be auctioned unless warranted by proceedings in the companion petition.

What did the court decide?

Petition disposed; respondents directed not to put the pledged gold to auction subject to the companion petition's proceedings.

Sri H.J. Rajesh Gowda, Vs Canara Bank — Banking and Recovery | Karnataka HC (2024)

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NC: 2024:KHC:2185 WP No. 8510 of 2023

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 17^TH DAY OF JANUARY, 2024

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BEFORE

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THE HON'BLE MR JUSTICE M.NAGAPRASANNA

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WRIT PETITION NO. 8510 OF 2023 (GM-RES)

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BETWEEN:

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SRI H.J. RAJESH GOWDA, S/O JAVARE GOWDA, AGE ABOUT 55 YEARS, OCCUPATION: AGRICULTURIST AND CONSTRUCTION CONTRACTOR, R/O. NO.14, 9^TH CROSS, 6^TH MAIN ROAD, RPC LAYOUT, BENGALURU - 560040

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…PETITIONER

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(BY SRI. HEGDE PRAKASH R., ADVOCATE)

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AND:

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Digitally signed by PADMAVATHI B K Location: HIGH COURT OF KARNATAKA

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CANARA BANK CONSTITUTED UNDER THE BANKING COMPANIES (ACQUISITION AND TRANSFER OF UNDERTAKINGS) ACT 1970, HAVING HEAD OFICE AT NO.112, NAGARATHPETE, J.C ROAD, BENGALURU - 560002 AND A BRANCH KNOWN AS BASAVESHWARA ROAD BRANCH, AT SONA TOWERS-GROUND FLOOR, MILLARS ROAD, BENGALURU - 560052 REPRESENTED BY ITS CHIEF MANAGER

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THE AUTHORIZED OFFICER OF CANARA BANK/CHIEF MANAGER, BASAVESHWARA ROAD BRANCH, SONA TOWERS-GROUND FLOOR MILLARS ROAD, BENGALURU - 560052 NAMELY, MR RAJENDRA TRIPATHY

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…RESPONDENTS

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(BY SRI.FRANCIS XAVIER, ADV. FOR R1 AND R2)

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NC: 2024:KHC:2185 WP No. 8510 of 2023

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THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO A.QUASH THE IMPUGNED NOTICE, DTD.29.03.2023 PASSED BY THE R2 BEARING NO.REF.10448/NDC/10448, (ANNX-N) AND CONSEQUENTLY; B. DIRECT THE RESPONDENT BANK TO RETURN THE PLEDGED GOLD ORNAMENTS DESCRIBED IN GOLD AUCTION NOTICE, DATED 17.03.2023 BEARING NO. REF.13/RAJ/10448/02 ISSUED BY THE R2 (ANNX-G) IN THE MATTER OF AGRI GOLD LOAN ACCOUNTS OF THE PETITIONER.

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THIS PETITION, COMING ON FOR PRELIMINARY HEARING - 'B' GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:

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ORDER

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The petitioner is before this Court calling in question a notice dated 29.03.2023 issued by respondent No.2 and a auction notice dated 17.03.2023 seeking to auction the gold that was pledged to the Bank as security towards the loan that is availed by the petitioner, which is the subject matter in the companion petition W.P.No.20737/2023.

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Heard the learned counsel Sri.Hegde Prakash R., appearing for the petitioner and the learned counsel Sri.Francis Xavier, appearing for respondent Nos.1 and 2.

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Learned counsel Sri.Francis Xavier would take this Court through the contract signed between the petitioner and the respondent, which empowers the Bank to hold the gold

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NC: 2024:KHC:2185 WP No. 8510 of 2023

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articles still the loan in the companion petition are cleared. The agreement reads as follows:

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"As security for repayment of the outstanding balance of the loan/OD accounts which you may grant to me/us or to any person at my/our instance for whom I/we stand as guarantor/s or coobligant/s. I/we here by pledge with you gold jewellery as mentioned in the schedule D herein below. I/We undertake to repay the amount outstanding in my/our loan/OD account/s on demand at any time and in case of failure on my/our part to repay the loan/OD account/s and/or monthly /quarterly/ half yearly interest, the Bank is authorized to dispose off the securities described in the schedule D and shortfall after adjustment of the net sale proceeds shall be repaid by me/us on demand by the Bank. The balance of sale proceeds after appropriation of my/our dues, if any, may be held by you, in our……………………. account with you or sent to me/us at our cost. You are further entitled to hold and sell and appropriate the proceeds of this security to all or any other liability/ies payable by me/us, in respect of any advance/financial assistance granted/to be granted hereafter and owing and that may be owing hereafter to the Bank at any office of the Bank or on any account whatsoever, whether solely or jointly with others and whether as Principal debtor or surety. "

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In the light of the said agreement, the Bank is entitled to hold the gold, as a security.

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Learned counsel for the respondents would submit

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that putting up the gold for auction was erroneous and it would be withdrawn, forthwith and would not put the gold to auction,

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NC: 2024:KHC:2185 WP No. 8510 of 2023

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without the situation warranting, which would be subject to the proceedings in the companion petition.

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These submissions are placed on record.

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With the aforesaid observations, it would suffice for

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the present to dispose of the petition, reserving liberty to the petitioner to avail of such remedy, as is available in law, in the event, the situation warrants in future.

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Therefore, the petition is disposed with a direction that the respondents shall not put up the gold to auction, as it is held as security towards the loan, in the companion petition, as the putting up of gold to auction, is only a consequence of failure on the part of the petitioner to discharge the loan in the companion petition and not otherwise.

Ordered accordingly.

Sd/JUDGE

List No.: 1 Sl No.: 6

Sri H.J. Rajesh Gowda, v. Canara Bank

Case brief

What is this about?

What did the court decide?

Sri H.J. Rajesh Gowda, v. Canara Bank

Case brief

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What did the court decide?

What the court decided

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