Shobha Shekar Reddy Vs the Authorized Officer — Banking and Recovery | Karnataka HC (2025)

Shobha Shekar Reddy Vs the Authorized Officer — Banking and Recovery | Karnataka HC (2025)

What the court decided

AI extract

Outcome

Petition disposed of, relegating the petitioner to the substantive remedy (before the Debt Recovery Tribunal) as regards the impugned proceedings; respondent - Bank restrained from taking precipitative steps for four weeks; all contentions of both sides kept open; time spent before this Court to be taken note of for limitation purposes before the DRT.

Issue for consideration

Whether the writ petition under Articles 226 and 227 challenging the Section 14 SARFAESI order and the possession notice should be adjudicated on its merits, or whether the petitioner, having an effective statutory remedy, should be relegated to the substantive remedy before the Debt Recovery Tribunal under Section 17 of the SARFAESI Act.

Court's answer

In view of the observations of the Apex Court in United Bank of India v. Satyawati Tondon and Others, several factual contentions raised by the petitioner cannot be adjudicated in the present writ proceedings, and the petitioner is relegated to avail of the substantive remedy as regards the impugned proceedings; all contentions of both sides are kept open.

Ratio / Principle

The respondent - Bank was directed not to take any precipitative steps for a period of four weeks; upon lapse of the stipulated time the protection ceases to operate, and the authorities before whom the petitioner may approach are to look at the matter afresh, uninfluenced by the observations made in this order.

Key takeaways

The interim protection granted is only to enable the petitioner to avail of the substantive remedy and must not be considered an order passed on the basis of adjudication on merits.ratio¶55
While considering the aspect of limitation, in the event proceedings are instituted before the DRT, the time spent before this Court may be taken note of appropriately.ratio¶60

Detailed headnote1 paragraphs

Writ petition under Articles 226 and 227 of the Constitution seeking quashing of the order of the IX Addl. Chief Judicial Magistrate at Bangalore in Crl. Misc. No. 2782/2023 passed under Section 14 of the SARFAESI Act and the possession notice dated 16.10.2023 (Annexure-B) issued by the Authorized Officer of Indostar Capital Finance Ltd. Following the Apex Court's observations in United Bank of India v. Satyawati Tondon and Others, (2010) 8 SCC 110 on exhaustion of statutory remedies, the Court held that several factual contentions of the petitioner could not be adjudicated in writ proceedings and disposed of the petition, relegating the petitioner to the substantive remedy before the Debt Recovery Tribunal under Section 17 of the SARFAESI Act, keeping all contentions open. Interim protection was granted: the respondent - Bank was directed not to take precipitative steps for four weeks; such protection was purely enabling, not merits-based, and ceases on lapse of time, with authorities to examine the matter afresh. Time spent before the High Court may be reckoned for limitation in DRT proceedings. Petitioner had paid Rs.50,00,000/- after filing and offered to clear dues.

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 15^TH DAY OF JULY, 2025

BEFORE

THE HON'BLE MR. JUSTICE S SUNIL DUTT YADAV

WRIT PETITION NO. 35992 OF 2024 (GM-RES)

BETWEEN:

SHOBHA SHEKAR REDDY W/O H S SHEKAR REDDY AGED 45 YEARS RESIDING AT NO.168/8 BEGUR MAIN ROAD SRINIVASA REDDY LAYOUT HONGASANDRA, BOMMANAHALLI BANGALORE - 560 068

… PETITIONER

(BY SRI. V B RAVISHANKER., ADVOCATE)

Digitally signed by PRAKASH N Location: HIGH COURT OF KARNATAKA

AND:

THE AUTHORIZED OFFICER INDOSTAR CAPITAL FINANCE LTD., REGISTERED AND CORPORATE OFFICE: UNIT NO.505, 5^TH FLOOR CORPORARATE AVENUE, WING 2/E, ANDHERI-GHATKOPAR LINK ROAD CHAKALA, ANDHERI (EAST) MUMBAI - 400 093 REGISTERED UNDER COMPANIES ACT, 1956

… RESPONDENT

(BY SRI. PATIL J M., ADVOCATE)

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THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO i) TO QUASH THE ORDER OF THE IX ADDL. CHIEF JUDICIAL MAGISTRATE AT BANGALORE IN CRL. MISC. NO. 2782/2023 AND ALSO THE POSSESSION NOTICE DATED 16.10.2023 VIDE ANNEXURE-B AND ETC.

THIS PETITION, COMING ON FOR FRESH MATTER LIST THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE S SUNIL DUTT YADAV

ORAL ORDER

Petitioner has sought for setting aside of the order of

the Additional Chief Metropolitan Magistrate under Section

14 of the SARFAESI Act in Crl.Misc.No.2782/2023.

Petitioner submits that after filing of the petition, an amount of Rs.50,00,000/- has been paid. Various contentions have been raised regarding the procedural lapses. Petitioner further submits that he is ready to clear the dues, if time is granted.

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Learned counsel for the respondent submits

that the petitioner is to be relegated to avail of the substantive remedy under Section 17 of the SARFAESI Act.

In light of the contentions raised, it is relevant

to take note of the observations of the Apex Court in the

case of United Bank of India v. Satyawati Tondon and

Others - (2010) 8 SCC 110 that the appropriate remedy would be to relegate the petitioner to seek for substantive remedy before the Debt Recovery Tribunal. The relevant observations of the Apex Court are as follows:

"43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc. the High Court must keep in

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mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasijudicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute.

44. While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of the Constitution to issue to any person or authority, including in appropriate cases, any Government, directions, orders or writs including the five prerogative writs for the enforcement of any of the rights conferred by Part III or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, we cannot be oblivious of the rules of self-imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution.

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45. It is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance.

55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the Sarfaesi Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection."

In light of the observations made by the Apex

Court, it can be noticed that several factual contentions raised by the petitioner are the matters that cannot be adjudicated in the present proceedings.

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Accordingly, the petition is disposed off

relegating the petitioner to avail of the substantive remedy as regards the impugned proceedings. All contentions of both the sides are kept open.

In light of disposal of writ petition, it would meet the ends of justice by directing the respondent - Bank not to take any precipitative steps for a period of four weeks from today.

The interim protection granted under this order is only to enable the petitioner to avail of the substantive remedy and must not be considered to be an order passed on the basis of adjudication on merits. Upon the lapse of the time stipulated, the protection granted would cease to operate and the authorities before whom petitioner may approach are to look at the matter afresh uninfluenced by the observations made herein.

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Needless to state that while considering the

aspect of limitation, in the event the proceedings are instituted before the DRT, time spent before this Court may be taken note of appropriately

Sd/(S SUNIL DUTT YADAV) JUDGE

VP