Shiva Prasad Bhat Vs the Authorized Officer — Banking and Recovery | Karnataka HC (2025)

Shiva Prasad Bhat Vs the Authorized Officer — Banking and Recovery | Karnataka HC (2025)

What the court decided

AI extract

Outcome

Both writ petitions allowed. Impugned entries of Respondent No.2's name in the property register for Sy.No.78/3(P) (15 cents and 7 cents), Kudupu village, ordered deleted; Respondent No.3 directed to enter the petitioners' names pursuant to the sale certificate dated 21.07.2012; Respondent No.2 at liberty to proceed against the borrowers in respect of other properties.

Issue for consideration

Whether the entries of the orders of attachment made in the khatas (property records) in favour of Respondent No.2 (Syndicate Bank, now Canara Bank) in respect of Sy.No.78/3(P), Kudupu village, Mangaluru Taluk, should be quashed and deleted, and Respondent No.3 directed (mandamus) to remove them. +1 more

Court's answer

Continuation of Respondent No.2's name in the property register extract maintained by Respondent No.3 in respect of the properties in question is not warranted, and consequently cannot be continued by Respondent No.3.

Ratio / Principle

Respondent No.2 did not have any security interest in the properties that were mortgaged in favour of Respondent No.1; it had merely obtained an order of attachment of those properties along with other properties of the borrowers.

Key takeaways

Even if there was an attachment of the properties in question in favour of Respondent No.2, it would be a second charge, the primary charge being that of Respondent No.1 (the mortgagee).ratio¶63
Respondent No.1 brought the properties to sale and appropriated the proceeds towards outstandings; as there were no excess funds left with Respondent No.1 after the sale, the attachment in favour of Respondent No.2 served no purpose.ratio¶63

Detailed headnote1 paragraphs

Writ petitions (Arts. 226 & 227) by two auction purchasers who bought Sy.No.78/3(P) (15 cents and 7 cents), Kudupu village, Mangaluru Taluk, at a sale conducted on 17.11.2011 by the Authorized Officer, State Bank of Mysore (now SBI) under the SARFAESI Act, 2002, and obtained sale certificates dated 21.07.2012, seeking deletion of khatha entries recording a charge in favour of Syndicate Bank (now Canara Bank) created pursuant to a DRT, Bengaluru interim attachment order dated 30.06.2009 in O.A.No.326/2009 (recovery certificate dated 28.10.2009 for Rs.13,48,475/-). Held: Syndicate Bank had no security interest in the mortgaged properties; its attachment would at best be a second charge behind the primary charge of the mortgagee bank; the sale proceeds having been fully appropriated with no surplus, the attachment served no purpose; continuation of its name in the property register is not warranted. Petitions allowed; entries ordered deleted; Respondent No.3 directed to enter the purchasers' names per the sale certificates; Syndicate Bank free to proceed against the borrowers in respect of other properties.

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 1^ST DAY OF DECEMBER, 2025

BEFORE

THE HON'BLE MR. JUSTICE R. NATARAJ WRIT PETITION NO. 45465 OF 2013 (LB-RES) C/W WRIT PETITION NO. 58776 OF 2013 (GM-RES)

IN WP No. 45465/2013

BETWEEN:

SHIVA PRASAD BHAT S/O LATE G.T. GOPAL BHAT AGED 41 YEARS RESIDING AT GURUPURA POST AND VILLAGE MANGALORE - 575009

…PETITIONER

(BY SRI. RAMANNA N.M., ADVOCATE ALONGWITH SMT. SANDHYA U PRABHU, ADVOCATE)

AND:

Digitally signed by MARKONAHALLI RAMU PRIYA Location: HIGH COURT OF KARNATAKA

THE AUTHORIZED OFFICER STATE BANK OF MYSORE, NOW STATE BANK OF INDIA, KOTTARA CHOWKI, MANGALORE -575001

THE AUTHORIZED OFFICER SYNDICATE BANK NOW CANARA BANK KULAI BRANCH MANGALORE -575004

THE ASSISTANT REVENUE OFFICER MANGALORE CITY CORPORATION MANGALORE-575003.

…RESPONDENTS

(BY SRI. B.M.BALIGA, ADVOCATE FOR RESPONDENT NO.2;

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SRI. K.V.NARASIMHAN, ADVOCATE FOR RESPONDENT NO.3; NOTICE SERVED ON RESPONDENT NO.1 AND UNREPRESENTED)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ENDORSEMENT MADE IN THE KHATHA WITH REGARD TO THE CHARGE CREATED TO THE SYNDICATE BANK IN ANNEXURE-F DATED 07.08.2012 IN PAGE NO.242 OF KUDUPU VILLAGE WARD 78 VIDE ANNEXURE-F AND ETC.

IN WP NO. 58776/2013

BETWEEN:

DINESH PEJITHRAYA S/O G.T.GOPAL BHAT, AGED 43 YEARS RESIDING AT GURUPURA POST AND VILLAGE MANGALORE-575008.

...PETITIONER

(BY SRI. RAMANNA N.M., ADVOCATE ALONGWITH SMT. SANDHYA U PRABHU, ADVOCATE)

AND:

THE AUTHORIZED OFFICER STATE BANK OF MYSORE, NOW PART OF STATE BANK OF INDIA, KOTTARA CHOWKI, MANGALORE-575001.

THE AUTHORIZED OFFICER SYNDICATE BANK, NOW PART OF CANARA BANK, KULAI BRANCH, MANGALORE-575004.

THE ASSISTANT REVENUE OFFICER MANGALORE CITY CORPORATION MANGALORE-575003.

...RESPONDENTS

(BY SRI. B.M.BALIGA, ADVOCATE FOR RESPONDENT NO.2;

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SRI. K.V.NARASIMHAN, ADVOCATE FOR RESPONDENT NO.3; NOTICE SERVED ON RESPONDENT NO.1 AND UNREPRESENTED)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ENDORSEMENT MADE IN THE KHATHA VIDE ANNEXURE-E WITH REGARD TO THE CHARGE CREATED TO THE SYNDICATE BANK AND ETC.

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

CORAM: HON'BLE MR. JUSTICE R. NATARAJ

ORAL ORDER

The petitioners in both these petitions have sought for a writ in the nature of certiorari to quash the entries of the orders of attachment made in the khatas in favour of properties bearing Sy.No.78/3(P) measuring 15 cents and 7 cents of Kudupu village, Mangaluru Taluk, Dakshina Kannada (henceforth referred to as the 'properties in question'). The petitioners have also sought for a writ in the nature of mandamus to direct the respondent No.3 to remove the entries regarding the attachment orders in favour of respondent No.2.

(i) In brief, the facts of the case are that the respondent No.1 had security interest in respect of the

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properties in question and on the failure of the borrowers to repay the loan, it brought those properties for sale on 17.11.2011. The petitioners were declared as highest bidders and their bid was accepted. Consequent thereto, the sale certificates of even dated 21.07.2012 were executed. Thereafter, when the petitioners attempted to get their names entered in the property register maintained by the respondent No.3, they came to know of an entry made in the name of respondent No.2.

(ii) The petitioners contend that they were unaware of any claim of the respondent No.2 and assuming that respondent No.2 had any claim, it had to get the same properly recorded so that, when the respondent No.1 proposed to sell the properties, it could have notified the purchasers about the claim of the respondent No.2. It is also contended that the respondent No.2 was not a secured creditor and therefore, it could not have taken any order of attachment of the properties that were already mortgaged in favour of respondent No.1. It is contended that assuming that respondent No.2 had an order in respect of the properties in question, the mortgage which is in violation of Section 19(16) of the Recovery of Debts due to

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Banks and Financial Institutions Act, 1993 being void, is unenforceable.

The learned counsel for the petitioners reiterated the above contentions.

The writ petition is opposed by the respondent No.2, who contends that the owners of the properties in question had borrowed money from it and that they fell in arrears resulting in recovery proceedings initiated before the Debt Recovery Tribunal, Bengaluru, in O.A.No.326/2009 and recovery certificate dated 28.10.2009 was issued for a sum of Rs.13,48,475/-. It is contended that the Tribunal had passed an interim order dated 30.06.2009 attaching the properties of the borrowers. It is claimed that respondent No.2 got the said order registered in the property register in respect of the khatas in question and therefore, the rights if any of the petitioners, are subject to the rights of the respondent No.2. In support of its contention, the respondent No.2 has placed on record an order of attachment issued by the Debt Recovery Tribunal dated 30.06.2009. An application for attachment, which is also filed as additional document shows that the

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properties purchased by the petitioners were also the subject matter of attachment.

The learned counsel for respondent No.2 reiterated the above contentions and submitted that the respondent No.2 had an order of attachment of the properties in question and therefore, entries in the name of respondent No.2 in the property register maintained by the respondent No.3 is just and proper and no interference is warranted in this writ petition.

The learned counsel for respondent No.3 submitted that the respondent No.3 has recorded the name of respondent No.2 based on the order passed by the Debt Recovery Tribunal and therefore, no fault could be found with it.

I have considered the submissions of the learned counsel for the petitioners as well as the learned counsel for the respondent No.2 and the learned counsel for respondent No.3.

It is not in dispute that the properties in question were mortgaged to respondent No.1. It may be that the borrowers also had raised some money from the respondent

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No.2. The respondent No.1 proceeded to recover the dues by proceeding against the properties that were mortgaged, by initiating proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and brought those properties for sale. In the meanwhile, the respondent No.2 obtained an order of attachment of the properties in question along with other properties of the borrowers. Therefore, it is clear that the respondent No.2 did not have any security interest in the properties that were mortgaged in favour of respondent No.1. Therefore, even if there was an attachment of the properties in question, that would be a second charge and the primary charge being that of the respondent No.1. The respondent No.1 has brought the properties for sale and has appropriated the proceeds towards outstandings. Assuming that the respondent No.2 had an order of attachment, as there was no excess funds in the hands of the respondent No.1 after selling the properties in question, the attachment served no purpose. Therefore, the continuation of the name of the respondent No.2 in the property register extract maintained by the respondent No.3 in respect of the properties in question, is not warranted.

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Consequently, the same cannot be continued by the respondent No.3.

In that view of the matter, both these petitions are

allowed . The impugned entries of the name of respondent No.2 in the property register in respect of the properties bearing Sy.No.78/3(P) measuring 15 cents and 7 cents of Kudupu village, Mangaluru Taluk, Dakshina Kannada, are ordered to be deleted. The respondent No.3 is directed to enter the names of the petitioners pursuant to the sale certificate dated 21.07.2012 issued in their favour. It is open for the respondent No.2 to proceed against the borrowers in respect of other properties.

Sd/(R. NATARAJ) JUDGE

PMR

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