Sri T S Nataraj Vs State Bank of India — Writ and Judicial Review | Karnataka HC (2025)

Sri T S Nataraj Vs State Bank of India — Writ and Judicial Review | Karnataka HC (2025)

What the court decided

AI extract

Outcome

Dismissed

Issue for consideration

Whether the impugned order passed by the learned Single Judge calls for any interference? +5 more

Court's answer

The impugned order of the learned Single Judge does not call for interference; considering all the issues raised, the Single Judge assigned detailed reasons for dismissing the writ petition, and the writ appeal is devoid of merits and is rejected.

Ratio / Principle

The right to seek redemption stands extinguished on execution of the transfer deed; the writ petition having been filed by the appellants only after the auction notice and registered sale certificate had already been issued, no relief can be granted to them on the ground of redemption.

Key takeaways

No writ of mandamus can be issued to financial institutions and banks to consider OTS positively; whether to grant OTS is left to the commercial wisdom of the bank, as consideration of OTS is not a matter of right.ratio¶183
The respondent-Bank meticulously complied with the requirements of the SARFAESI Act and the Security Interest (Enforcement) Rules; no procedural error was found in the actions undertaken by the bank, and therefore the decisions relied on by the appellants (Ram Kishun, K. Kumara Gupta, M/s. Palpap Ichinichi Software International Ltd.) would not help them.ratio¶188

Detailed headnote1 paragraphs

SARFAESI - e-auction and sale certificate - right of redemption - OTS - Writ Appeal No.139/2023 (GM-RES), High Court of Karnataka (Division Bench: Anu Sivaraman and Vijaykumar A. Patil JJ.; judgment per Vijaykumar A. Patil J.), decided 18.11.2025. Borrowers' intra-court appeal against the learned Single Judge's dismissal (order dated 14.12.2022 in W.P.No.19756/2021) of their challenge to the e-auction notice dated 08.09.2021 and the registered sale certificate dated 07.10.2021 in favour of the auction purchaser (respondent No.4) is rejected. Holding: (i) the right to seek redemption stands extinguished on execution of the transfer deed; the writ petition was filed after the auction notice and registered sale certificate, so no relief lies on that ground (relying on Celir LLP v. Sumati Prasad Bafna, 2024 SCC OnLine SC 3727; Suraksha Ventures LLP v. G. Lokesh, W.A.No.170/2025; Authorized Officer, State Bank of Travancore v. Mathew K.C., (2018) 3 SCC 85; Dwarika Prasad v. State of U.P., (2018) 5 SCC 491; Allokam Peddabbayya v. Allahabad Bank, (2017) 8 SCC 272; K. Chidambara Manickam v. Shakeena, 2007 SCC OnLine Mad 675); (ii) no writ of mandamus can be issued to a bank to consider or grant OTS, which is left to the bank's commercial wisdom and is not a matter of right (Bijnor Urban Cooperative Bank Ltd. v. Meenal Agarwal, (2023) 2 SCC 805); (iii) the bank meticulously complied with the SARFAESI Act and the Security Interest (Enforcement) Rules, 2002 and no procedural error was found, so Ram Kishun, K. Kumara Gupta and Palpap Ichinichi do not assist the borrowers; (iv) sale of the entire secured asset was justified, the bank having attempted sale on four occasions (2018-2021) without bidders and having proportionately reduced the reserve price from Rs.9,37,00,000 to Rs.5,78,00,000 (land and building) and Rs.23,00,000 (plant and machinery); respondent No.4's accepted bid was Rs.5,82,81,000. Appeal dismissed/rejected.

Issues for consideration

6 issues framed by the court

AI extract

1.
Whether the impugned order passed by the learned Single Judge calls for any interference?¶85
The court held
The impugned order of the learned Single Judge does not call for interference; considering all the issues raised, the Single Judge assigned detailed reasons for dismissing the writ petition, and the writ appeal is devoid of merits and is rejected.ratio¶189
2.
Whether the sale of the secured asset at Rs.5,78,00,000 against an initial valuation/reserve price of Rs.9,37,00,000 amounted to fraudulent undervaluation by the bank in collusion with the buyer.medium confidence¶37
The court held
The contention of fraudulent undervaluation of the secured asset did not succeed: the learned Single Judge had recorded a clear finding, supported by a chart, explaining why the reserve price came to be progressively reduced after four unsuccessful sale attempts, and the Division Bench found no error in the bank's action warranting interference.ratio¶97
3.
Whether the borrower's right of redemption survives issuance and registration of the sale certificate after the e-auction.medium confidence¶40
The court held
The right to seek redemption stands extinguished on execution of the transfer deed; the writ petition having been filed by the appellants only after the auction notice and registered sale certificate had already been issued, no relief can be granted to them on the ground of redemption.ratio¶181
4.
Whether the Court could direct the bank, by writ of mandamus, to consider the borrowers' request for a One Time Settlement (OTS).medium confidence¶92
The court held
No writ of mandamus can be issued to financial institutions and banks to consider OTS positively; whether to grant OTS is left to the commercial wisdom of the bank, as consideration of OTS is not a matter of right.ratio¶183
5.
Whether the bank complied with the statutory requirements under the SARFAESI Act and the Enforcement Rules as a condition precedent before disposing of the secured asset.medium confidence¶185
The court held
The respondent-Bank meticulously complied with the requirements of the SARFAESI Act and the Security Interest (Enforcement) Rules; no procedural error was found in the actions undertaken by the bank, and therefore the decisions relied on by the appellants (Ram Kishun, K. Kumara Gupta, M/s. Palpap Ichinichi Software International Ltd.) would not help them.ratio¶188
6.
Whether the bank ought to have sold only a portion of the secured asset sufficient to recover its dues instead of selling the whole property.medium confidence¶40
The court held
The contention that the bank ought to have sold only a portion of the secured asset has no merit: the bank endeavoured to realise the security from 2018 to 2021 on four occasions without any bidder coming forward, and the confirmed sale to respondent No.4 followed the required procedure, so there is no error in the bank's action.ratio¶189

Procedural history

How this case reached the court

AI extract

Order under challenge
Order dated 14.12.2022 of the learned Single Judge in W.P.No.19756/2021 dismissing the appellants' writ petition challenging the e-auction notice dated 08.09.2021 and the sale certificate dated 07.10.2021 issued in favour of respondent No.4, and refusing a mandamus to consider OTS.¶32
High Court of Karnataka (learned Single Judge) · 14.12.2022
Prior proceeding
Appellants borrowed from erstwhile State Bank of Mysore, Tumakuru branch: cash credit limit of Rs.2,00,00,000 and term loan of Rs.30,00,000; repayments made till September 2017, after which the account was classified as a Non-Performing Asset (NPA).¶33
Prior proceeding
After NPA classification, respondent No.3-Bank issued notice under Section 13(2) of the SARFAESI Act calling upon the appellants to discharge their liability, and symbolic possession of the schedule property was taken under Section 13(4) of the Act.¶89
Prior proceeding
On 30.05.2019 the Deputy Commissioner, Tumakuru passed an order under Section 14(1) of the Act for handing over physical possession of the schedule property to the respondent-bank.¶89
Prior proceeding
Appellants assailed the bank's action in S.A.No.174/2018 and S.A.No.212/2019 before the Debt Recovery Tribunal; both applications were dismissed on 31.10.2020.¶36
Prior proceeding
Respondent No.1-Bank issued notice of sale under Rule 6(2), Rule 8(6) read with Rule 6(2) and 9(1) of the Security Interest (Enforcement) Rules, 2002, along with the e-auction notice, and on 07.10.2021 issued a sale certificate in favour of respondent No.4.¶36
Prior proceeding
The bank attempted to sell the property on four earlier occasions (sale notices dated 12.07.2018, 21.11.2019, 26.11.2020 and 29.07.2021); on each occasion the reserve price was proportionately reduced from Rs.9,37,00,000 to Rs.6,50,00,000 for land and building and Rs.27,00,000 for plant and machinery, but no bidders came forward.¶101
Prior proceeding
Pursuant to sale notice dated 08.09.2021, e-auction was conducted on 29.09.2021 at a reserve price of Rs.5,78,00,000 for land and building and Rs.23,00,000 for plant and machinery; respondent No.4 bid Rs.5,82,81,000, which was accepted and the sale was confirmed in its favour.¶101
Prior proceeding
Respondent No.4 deposited the entire bid amount within the stipulated time; certificate of sale was issued on 07.10.2021 and registered with the Sub-Registrar, Tumakuru on 11.10.2021.¶104
Prior proceeding
Physical possession of the property was given to respondent No.4 on 12.10.2021; thereafter the appellants filed the writ petition on 28.10.2021 challenging the bank's action.¶104