Mysore Educational Trust Vs M/S Kotak Mahindra Bank… — Company and Corporate | Karnataka HC (2025)

Mysore Educational Trust Vs M/S Kotak Mahindra Bank… — Company and Corporate | Karnataka HC (2025)

What the court decided

AI extract

Outcome

Petitions disposed of with liberty to the petitioners to avail their remedy under Section 17 of the SARFAESI Act before the DRT, with all questions (including exclusion of the time spent in prosecuting these proceedings) left open to the DRT; interim protection — no precipitation against the Educational Institution and a similar arrangement for the Industrial Unit — conditional on availing the Section 17 remedy within eight weeks, with any continuation beyond eight weeks to be considered only by the DRT.

Issue for consideration

Whether the petitioners, aggrieved by the order dated 14.06.2024 passed under Section 14 of the SARFAESI Act, can obtain relief under Article 226/227 of the Constitution or must pursue the remedy under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal. +2 more

Court's answer

Holding the petitioners' stand — resting on PNB Housing Finance Ltd. v. Manoj Saha and the post-2016 Section 17(4A) scheme — to be reasonable, the Court disposed of the petitions with liberty to the petitioners to avail their remedy under Section 17 of the SARFAESI Act before the Debt Recovery Tribunal, leaving open all questions to be decided by the DRT, including whether the Educational Institution and the Industrial Unit are entitled to exclusion of the time spent in prosecuting these writ proceedings.

Ratio / Principle

Documents produced by the Educational Institution prima facie show that both the School and the Pre-University Institutions are being run with a substantial number of students on the Rolls, and therefore there should be no precipitation against it.

Key takeaways

The absence of precipitation is conditional on the Educational Institution availing its remedy under Section 17 of the SARFAESI Act within eight weeks from the date of this order.ratio¶125
Any continuation of the interim arrangement beyond this order must be considered only by the DRT, in light of the circumstances specific to the Educational Institution.ratio¶126
For the petitioner in W.P.No.30515/2024 (Industrial Unit), a similar interim arrangement would be just and reasonable, but continuation of the interim order beyond the period of eight weeks must be considered by the DRT in the circumstances specific to those petitioners.

Detailed headnote1 paragraphs

SARFAESI — Section 14 order by District Magistrate — maintainability of writ petition by lessees/sub-tenants of secured asset — Three connected writ petitions (GM-RES) Nos. 30518, 30515 and 30559 of 2024 by an educational trust running a school and pre-university institution, a company running an industrial unit, and associated sub-tenants/landlords, challenged the order dated 14.06.2024 in Misc.No.02/2024 passed by the Deputy Commissioner and District Magistrate, Mysore, under Section 14 of the SARFAESI Act at the instance of Kotak Mahindra Bank (secured creditor vis-a-vis Bells Control Limited's secured assets), and the consequential Tahsildar's notice dated 23.10.2024. Relying on PNB Housing Finance Ltd. v. Manoj Saha (2025 SCC OnLine SC 1443) and the post-2016 Section 17(4A) remedy, counsel did not press for Article 226 jurisdiction; the Court found the stand reasonable and disposed of the petitions with liberty to approach the DRT under Section 17 SARFAESI, leaving open all questions including exclusion of the time spent in the writ proceedings. Interim protection: no precipitation against the Educational Institution (documents prima facie showing substantial student enrolment) and a similar arrangement for the Industrial Unit, conditional on approaching the DRT within eight weeks; any continuation beyond eight weeks to be considered only by the DRT on circumstances specific to each petitioner. (B M Shyam Prasad, J.; decided 03.09.2025.)

NC: 2025:KHC:34629 WP No. 30518 of 2024 C/W WP No. 30515 of 2024 WP No. 30559 of 2024

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HC-KAR

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 3^RD DAY OF SEPTEMBER, 2025

BEFORE

THE HON'BLE MR. JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 30518 OF 2024 (GM-RES)

C/W

WRIT PETITION NO. 30515 OF 2024 (GM-RES) WRIT PETITION NO. 30559 OF 2024 (GM-RES)

IN WP No. 30518/2024

BETWEEN:

Digitally signed by VANAMALA N Location: HIGH COURT OF KARNATAKA

MYSORE EDUCATIONAL TRUST A REGISTERED TRUST HAVING OFFICE AT NO.123-127, METAGALLI, MYSORE-570016 REPRESENTED BY ITS SECRETARY, MR AMIR SADAN SAIFULLA.

…PETITIONER

(BY SRI. UDAYA HOLLA, SENIOR ADVOCATE FOR

SRI. RAJENDRA, ADVOCATE)

AND:

M/S KOTAK MAHINDRA BANK LIMITED HAVING ITS BRANCH OFFICE AT 6TH FLOOR, 12 BKC,

BANDRA KURLA COMPLEX,

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BANDRA (EAST) MUMBAI-400051 REPRESENTED BY ITS AUTHORISED OFFICER, MR PARAG B DHOLAKIA.

THE DEPUTY COMMISSIONER AND DISTRICT MAGISTRATE GIRIBHOVIPALYA, SIDDARTHANAGAR, MYSORE-570011

THE TAHSILDHAR AND TALUK MAGISTRATE VINOBA ROAD, MYSURU-570005

M/S BELLS CONTROL LIMITED REPRESENTED BY THE OFFICIAL LIQUIDATOR, HIGH COURT OF KOLKATA, NO.9, OLD POST OFFICE STREET, 4TH AND 5TH FLOOR, KOLKATA-700001

M/S KOLKATA M A BUSINESS CENTRE PRIVATE LIMITED PLOT NO.123-127, METAGALLI INDUSTRIAL AREA, KASABA HOBLI, METAGALLI, MYSORE-570016 REPRESENTED BY ITS DIRECTOR.

…RESPONDENTS

(BY SRI. DHYAN CHINNAPPA, SENIOR ADVOCATE FOR SMT. JAI M. PATIL, ADVOCATE)

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO

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HC-KAR

DIRECT QUASHING THE ORDER BEARING NO. MAG(3)MISC/02/2024 DTD 14.06.2024 PASSED BY THE DC AND DISTRICT MAGISTRATE, MYSORE DISTRICT, THE R-2 HEREIN (ANNEXURE-L); DIRECT QUASHING THE NOTICE/LETTER BERING NO. MAG/2/135/2024-25 E-1383587 DTD 23.10.2024 PASSED BY THE TAHSILDAR AND TALUK MAGISTRATE, MYSORE TALUK, THE R-3 HEREIN (ANNEXURE-M).

IN WP NO. 30515/2024

BETWEEN:

SAALFO TECH PRIVATE LIMITED A PRIVATE LIMITED COMPANY REGISTERED UNDER THE PROVISIONS OF COMPANIES ACT 2013 HAVING ITS REGISTERED OFFICE AT NO.123-127, METAGALLI INDUSTRIAL AREA, METAGALLI, MYSORE-570016 REPRESENTED BY ITS DIRECTOR, MR. AHMED ALI KHAN.

...PETITIONER

(BY SRI. UDAYA HOLLA, SENIOR ADVOCATE FOR

SRI. RAJENDRA, ADVOCATE)

AND:

M/S KOTAK MAINDRA BANK LIMITED HAVING ITS BRANCH OFFICE AT 6TH FLOOR, 12 BKC, BANDRA KURLA COMPLEX, BANDRA (EAST) MUMBAI-400051 REPRESENTED BY ITS AUTHORISED OFFICER, MR PARAG B DHOLAKIA.

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THE DEPUTY COMMISSIONER AND DISTRICT MAGISTRATE GIRIBHOVIPALYA, SIDDARTHANAGAR, MYSORE-570011

THE TAHSILDHAR

AND TALUK MAGISTRATE VINOBA ROAD, MYSURU-570005

M/S BELLS CONTROL LIMITED REPRESENTED BY THE OFFICIAL LIQUIDATOR, HIGH COURT OF KOLKATA, NO.9, OLD POST OFFICE STREET, 4TH AND 5TH FLOOR, KOLKATA-700001

M/S KOLKATA M A BUSINESS CENTRE PRIVATE LIMITED PLOT NO.123-127, METAGALLI INDUSTRIAL AREA, KASABA HOBLI, METAGALLI, MYSORE-570016 REPRESENTED BY ITS DIRECTOR.

...RESPONDENTS

(BY SRI. DHYAN CHINNAPPA, SENIOR ADVOCATE FOR SMT. JAI M PATIL, ADVOCATE FOR R1;

SRI. SHAMANTH NAIK, HCGP FOR R2 AND R3;

SRI. DEEPAK, ADVOCATE FOR R4)

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HC-KAR

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER BEARING NO. MAG(3)MISC/02/2024 DTD 14.06.2024 PASSED BY THE DEPUTY COMMISSIONER AND DISTRICT MAGISTRATE, MYSORE DISTRICT, THE R-2 HEREIN (ANNEXURE-K); QUASH THE NOTICE/LETTER BEARING NO. MAG/2/135/2024-25 E-1383587 DTD 23.10.2024 PASSED BY THE TAHSILDAR AND TALUK MAGISTRATE, MYSORE TALUK, THE R-3 HEREIN (ANNEXURE-L).

IN WP NO. 30559/2024

BETWEEN:

M/S M A COMPUTERS PVTLTD HAVING REGISTERED OFFICE AT PODDAR POINT, 113, PART STREET, GROUND FLOOR, KOLKATA 700016. REPRESENTED BY MR. MOHAMMAD IRFAN HAZI

M/S M A PROMOTERS PVT. LTD. HAVING REGISTERED OFFICE AT PODDAR POINT, 113, PART STREET, GROUND FLOOR, KOLKATA 700016.

KOLKATA M. A. BUSINESS CENTRE PVT. LTD. HAVING ITS REGISTERED OFFICE AT, NO. 113, PARK STREET, GROUND FLOOR, KOLKATA 700016.

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HC-KAR

REPRESENTED BY

MR. MOHAMMAD IRFAN HAZI

FUTURE FOUNDATION EDUCATIONAL TRUST HAVING REGISTERED OFFICE AT PREMISES NO. 123-127, METAGALLI INDUSTRIAL AREA, MYSURU 560016, REPRESENTED BY MRS. SYEDA GOWHAR SULTANA

MAYA CHARITABLE TRUST HAVING REGISTERED OFFICE AT PREMISES NO. 123-127, METAGALLI INDUSTRIAL AREA, MYSURU 560016, REPRESENTED BY MR. MOHAMMED SHAMEEL

...PETITIONERS

(BY SRI. B. VACHAN, ADVOCATE)

AND:

KOTAK MAHINDRA BANK LIMITED HAVING REGISTERED OFFICE AT, 27, BKC, G-BLOCK, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI 400051. REPRESENTED BY ITS MANAGING DIRECTOR

BELLS CONTROL LIMITED HAVING ITS REGISTERED OFFICE AT, 21, CAMAC STREET, 11TH FLOOR,

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KOLKATA 700016. REPRESENTED BY OFFICIAL LIQUIDATOR

...RESPONDENTS

(BY SRI. DHYAN CHINNAPPA, SENIOR ADVOCATE FOR SMT. JAI M PATIL, ADVOCATE FOR C/R1;

SRI. DEEPAK ADVOCATE FOR R2)

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED ORDER DTD 14.06.2024 (ANNEXURE-G) PASSED BY THE DISTRICT MAGISTRATE, MYSURU DISTRICT, MYSURU IN M.A.G(3) MIS.NO. 02/2024; QUASH THE IMPUGNED NOTICE DTD 23.10.2024 (ANNEXURE-H) PASSED BY THE TAHSILDAR AND TALUK MAGISTRATE, MYSURU TALUK (ANNEXURE-H) IN M.A.G/2/135/2024-25RESTRAIN THE R-1 OR ANYONE ACTING ON BEHALF OF OR UNDER THE AUTHORITY OR ANYONE ACTING UNDER THEM FROM FORCEFULLY DISPOSSESSING THE PETITIONER FROM THE LEASED PROPERTY PURSUANT TO THE IMPUGNED ORDER AND IMPUGNED NOTICE AT ANNEXURE-G AND H RESPECTIVELY.

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HC-KAR

THESE PETITIONS, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD

ORAL ORDER

The petitioners in W.P.No.30518/2024 and W.P.No.30515/2024 assert benefit of sub-lease of respective portions of a larger property/ies [ the secured asset/s ]. The petitioners' common grievance is against the order dated 14.06.2024 in Misc.No.02/2024 - a proceeding under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [for short, ' SARFAESI Act' ].

The petitioner in W.P.No.30518/2024 [ the Educational Institution ] contends that it is running a School and Pre-University Institution, and the petitioner in W.P.No.30515/2024 [ the Industrial Unit ] asserts that it is running Industrial Unit. The

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HC-KAR

petitioner in W.P.No.30559/2024 is also a sub-tenant and it asserts that it is also running an Educational Institution. This petitioner is joined by the landlords.

The Educational Institution, in terms of

the liberty that is granted by this Court during the previous hearing dates, has placed on record documents to demonstrate that it indeed is engaged in running Educational Institutions. Mr. Udaya Holla,

the learned Senior counsel for the Educational Institution, is heard on these documents and he has underscored:

[a] the petitioner's Pre-University College is admitted to Grant-in-aid by the State Government, which is kept in vogue with the necessary remittances and the students being enrolled;

[b] the petitioner in WP No. 30518/2024 is offering even Undergraduate courses and that if there is any immediate interference for dispossession, it would have a

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HC-KAR

deleterious effect insofar as the students as also the petitioner who asserts leasehold rights."

On the questions for consideration,

Mr.Udaya Holla learned counsel for the petitioners in

the afore two petitions, and Mr. B. Vachan, the learned counsel for the Industrial Unit, had canvassed the following, and this Court reserved liberty to elaborate:

[a] The petitioners, who are aggrieved by the orders under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [SARFAESI Act], cannot avail remedy under Section 17 thereof.

[b] In any event, this Court, even while relegating the petitioners to avail remedy under Section 17 of the SARFAESI Act, may have to protect the petitioners’ interests to the extent that would be just and reasonable because they are in the field of education or as an industry.

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Mr. B. Vachan places on record the

decision of the Apex Court in PNB Housing Finance Limited Vs. Manoj Saha and Another reported in 2025 SCC Online SC 1443 and submits that they would not request this Court to exercise jurisdiction under Article 226 of the Constitution of India in view of the following exposition by the Apex Court.

12. In 2016, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, was amended. By the amending Act, section 17(4A) was introduced with effect from September 1, 2016, enabling any person claiming to be lessees/tenants in respect of secured assets to approach the Debts Recovery Tribunal against measures under section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, including taking possession of the secured asset. Tribunal was empowered to declare such measures invalid and restore possession. The order of the Debts Recovery Tribunal was made appealable before the Appellate Tribunal under section 18 of the Securitisation and Reconstruction of

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Financial Assets and Enforcement of Security Interest Act. In light of the aforesaid statutory scheme, this Court repeatedly deprecated interference of High Courts under Article 226/227 in matters pertaining to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest.

Indeed, this is a reasonable stand, and

consequently, the petitions must be disposed of with liberty to the petitioners to avail their remedy under Section 17 of the SARFAESI Act with the Debt Recovery Tribunal [DRT] leaving open all questions to be decided by the DRT, including whether the Educational Institution and the Industrial Unit are entitled to the exclusion of the time spent in prosecuting these proceedings.

The other question for consideration is:

whether there must be any protection to the petitioners until they avail the remedy under Section 17 of the SARFAESI Act , provided they avail their remedy within

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a reasonable time . This Court is of the view that the Educational Institution has produced documents before this Court which prima facie show that both the School and the Pre-University Institutions are being run with a substantial number of students on its Rolls and that there should not be any precipitation if the petitioner avails remedy with under Section 17 of the SARFAESI Act within eight weeks from today.

This Court must also observe that any continuation of this interim arrangement must be considered only by the DRT but in the light of the circumstances specific to the Educational Institution. Insofar as the petitioner in W.P.No.30515/2024, this Court is of the view that a similar arrangement would be just and reasonable, but the continuation of the interim order beyond the period of eight weeks must be considered by the DRT in the circumstances specific to these petitioners.

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HC-KAR

The petitions stand disposed of with liberty and

observation as aforesaid,.

SD/(B M SHYAM PRASAD) JUDGE

RB