Disposed

Shri Suresh Sebastian D Souza v. Canara Bank

Karnataka HC16 Feb 2026WP/36779/2025

Case brief

AI extract

What is this about?

Auction purchaser of an industrial shed sold in recovery proceedings never obtained possession because KSSIDC claimed ownership of the property. The High Court declined other reliefs but directed the Recovery Officer to return the bid amount with accrued interest within four weeks.

What did the court decide?

Respondent No.2 directed to return the entire bid amount with accrued interest to the petitioner within four weeks; all other reliefs declined.

Shri Suresh Sebastian D Souza Vs Canara Bank — Banking and Recovery | Karnataka HC (2026)

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NC: 2026:KHC:9497 WP No. 36779 of 2025

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HC-KAR

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 16^TH DAY OF FEBRUARY, 2026

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BEFORE

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THE HON'BLE SMT. JUSTICE LALITHA KANNEGANTI

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WRIT PETITION NO. 36779 OF 2025 (GM-DRT)

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BETWEEN:

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SHRI SURESH SEBASTIAN D SOUZA S/O VINCENT D SOUZA AGED ABOUT 51 YEARS, R/AT NO. 2/6/305, OPP. A.J. HOSPITAL, KUNTIKANA-BEJAI PASS, MANGALURU 575 004

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…PETITIONER

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(BY SRI. ABDUL JABBAR M., ADVOCATE)

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AND:

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Digitally signed by SUVARNA T Location: HIGH COURT OF KARNATAKA

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CANARA BANK

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(FORMERLY SYNDICATE BANK) REPRESENTED BY CHIEF GENERAL MANAGER, NO. 6648, 112 J.C. ROAD, (P.B.) HALSURPET, NAGARATHPETE, BENGALURU 560001

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RECOVERY OFFICER - II DEBTS RECOVERY TRIBUNAL - 1, RAJ BHAVAN ROAD, BENGALURU 560001

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KARNATAKA STATE SMALL INDUSTRIES DEVELOPMENT

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CORPORATION (KSSIDC) REP. BY ITS

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NC: 2026:KHC:9497 WP No. 36779 of 2025

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HC-KAR

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MANAGING DIRECTOR, RAJAJINAGAR, BENGALURU 560010

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RESERVE BANK OF INDIA REPRESENTED BY ITS REGIONAL DIRECTOR 10/3/8, NRUPATHUNGA ROAD BENGALURU 560001

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…RESPONDENTS

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(BY SRI.VIGNESH SHETTY, ADVOCATE FOR R1; SRI M.N.KUMAR, ADVOCATE FOR R2; SMT. MANJULA N.TEJASWI, ADVOCATE FOR R3)

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THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF CONSTITUTION ON INDIA, PRAYING TO ISSUE A WRIT OF CERTIORARI OR ANY DIRECTION TO QUASH THE SALE CERTIFICATE R.C.NO.6838/2012 O.A.NO.941/1995 DATED 16.05.2025 VIDE ANNEXURE A AND ORDER OF CONFIRMATION OF SALE DATED 16.05.2025 VIDE ANNEXURE A2 ISSUED BY THE RESPONDENT NO. 2 IN FAVOUR OF THE PETITIONER AND ETC.

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THIS PETITION, COMING ON FOR PART HEARD, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE SMT. JUSTICE LALITHA KANNEGANTI

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NC: 2026:KHC:9497 WP No. 36779 of 2025

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HC-KAR

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ORAL ORDER

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The present writ petition is filed seeking the following

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prayer:

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"i. To issue a Writ of Certiorari or any direction to quash the sale certificate R.C.No.6838/2012 O.A.No.941/1995 dated 16.05.2025 vide Annexure - A and order of confirmation of sale dated 16.05.2025 vide Annexure - A2 issued by the Respondent No.2 in favour of the Petitioner.

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ii. Issue a Writ of Mandamus or any other appropriate writ, order or direction declaring that the purported auction sale of Industrial Shed No. C-4, situated at Yeyyadi Industrial Estate, Mangaluru, conducted by Respondent Nos.1 and 2 in R.C.No.6838/2012, is void ab initio, illegal, unconditional, and unenforceable for want of transferable and marketable title;

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iii. To direct Respondent No.1 and 2 to refund the sum of Rs.45,92,000/- (Rupees Forty-five lakhs ninety two thousand only) paid by the Petitioner towards the purchase of the schedule property within 3 months along with applicable rate of interest of 24% compounding from the date of deposit of the amount till date of disbursement and incidental charges.

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iv. Direct the Respondents to pay compensation to the Petitioner for the immense financial injury, loss of business opportunity, deprivation of livelihood prospects, and loss of potential employment and tax-generating industrial activity which would have accrued had the property been lawfully conveyed in 2016;

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v. Direct the Respondents to further compensate the Petitioner for the severe mental agony, harassment, humiliation, and suffering caused over nearly a decade due to the Respondents' illegal acts, suppression of facts, and willful retention of the Petitioner's life savings;

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NC: 2026:KHC:9497 WP No. 36779 of 2025

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HC-KAR

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vi. Award litigation cots of Rs.10,00,000/(Rupees Ten Lakhs only) payable jointly and severally by Respondent No.1 and Respondent No.2, considering the prolonged, avoidable, and mala fide litigation imposed on the Petitioner;

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vii. Direct Respondent Nos.1 and 2 to produce the entire original records relating to the auction proceedings, title documents, correspondence with KSSIDC, internal approvals, and all files forming the basis of the sale proclamation, bid confirmation, and sale certificate;

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viii. Pass such other or further orders, directions or reliefs as this Hon'ble Court may deem fit, necessary, and proper in the interest of justice, equity, and good conscience."

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It is the case of the petitioner that the petitioner is a bonafide auction purchaser of industrial Shed No.C-4, Yeyyadi Industrial Estate Mangaluru, through a statutory auction conducted by respondent No.2 in RC No. 6838/2012 arising out of O.A. No.941/1995. The respondent No.1 - bank initiated recovery proceedings against the borrower by filing O.A No.941/1995. A recovery certificate dated 12.09.2012 was subsequently issued in R.C. No. 6838/2012. Pursuant to the recovery certificate, respondent No. 2 issued a sale proclamation dated 11.02.2016 fixing the reserve price at Rs.45,42,000/-. The petitioner participated in the said auction on 18.05.2026 and become a highest bidder and his bid was accepted. The petitioner deposited the entire sale consideration

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NC: 2026:KHC:9497 WP No. 36779 of 2025

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HC-KAR

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on 30.05.2016. The borrower has filed W.P. No.18116/2016 challenging the auction. Initially an interim order was granted in the said writ petition and later it was vacated on 11.01.2017 and the writ petition was dismissed on 11.06.2018. The bank and the recovery officer repeatedly delayed issuance of the sale certificate citing pending cases. Then the petitioner has come before this Court by filing W.P. No.21058/2023. By order dated 28.08.2024 this Court has directed issuance of sale certificate upon the petitioner filing the undertaking. The petitioner has filed an undertaking on 30.09.2024 as per the orders passed in W.P.No.21058/2023. Thereafter the recovery officer has passed an order on 07.03.2025 under Section 26 of the Recovery of Debts and Bankruptcy Act, 1993 and issued the order of confirmation of sale on 16.05.2025 and also sale certificate was issued on 16.05.2025. Then, on 16.05.2025, respondent No.3 - KSSIDC issued the communication dated 08.10.2025, stating that the industrial shed No.C-4 exclusively belongs to respondent No.3 - KSSIDC. It has never been allotted or conveyed to any borrower and consequently KSSIDC cannot execute any sale deed in favour of the petitioner.

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NC: 2026:KHC:9497 WP No. 36779 of 2025

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HC-KAR

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It is the grievance of the petitioner that he has paid

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sum of Rs.45,92,000/- on 25.10.2016 but so far the petitioner could not enjoy the fruits of the same. Hence, the petitioner is constrained to come before this Court seeking the prayers as extracted above.

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The learned counsel appearing for respondent No.2, on instructions, submits that the Recovery Officer-II has deposited the amount in a fixed deposit with the bank in the name of the Recovery Officer. Learned counsel appearing for

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the Bank submits that, insofar as the title of respondent No.3/KSSIDC is concerned, bank has no instructions. It is submitted that the bank is acting strictly in terms of the recovery certificate and has no other instructions with regard to the ownership claimed by respondent No.3/KSSIDC. Learned counsel appearing for respondent No.1/Bank submits that, if at all the petitioners have any grievance they could have availed the remedy against the Recovery Officer under Section 30 of

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the Recovery of Debts and Bankruptcy Act, 1993 and therefore, submits that the writ petition is not maintainable. The learned counsel appearing for respondent No.3 submits that the

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NC: 2026:KHC:9497 WP No. 36779 of 2025

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HC-KAR

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property exclusively belongs to respondent No.3. It is contended that the said property was never mortgaged in favour of the bank and that it does not belong either to the petitioner or to the borrower. In such circumstances, it is submitted that the property cannot be sold nor can it be transferred in favour of the petitioner. In response to that the learned counsel appearing for respondent No1- Bank submits that in fact in the earlier round of litigation there was a finding by the Court with regard to the title of the borrower and hence the contention of the respondent No. 3 is not correct.

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Having heard the learned counsels on either side, perused the entire material on record. The admitted facts in this case are that the petitioner is the highest bidder and paid bid amount of Rs.45,92,000/- as far back as in the year 2016. According to the respondent No.3, they are the owners of the property and from the year 2016 till date, the petitioner could not obtain possession of the property despite having been issued a sale certificate, inasmuch as the property is claimed by respondent No.3 and is in the possession of respondent No.3.

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NC: 2026:KHC:9497 WP No. 36779 of 2025

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HC-KAR

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The submission of the bank with regard to the

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availability of an alternative remedy is concerned. However this Court would hesitate to accept the said submission, having regard to the fact that a person who participated in the auction in the year 2016, has, till date, not been put in possession of the property, for the reason that the respondent No.3 is claiming title over the same. It is the responsibility of the Recovery Officer to put the petitioner in possession of the property, which has not been done from the year 2016. In that view of the matter availability of alternative remedy cannot be a ground. If the auction is conducted in this manner and the auction purchaser is not put in possession of the property, no person would come forward to participate in the auction, and the very purpose of conducting the auction stand defeated.

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Accordingly this Court is passing the following:

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ORDER

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i. The writ petition is disposed of , directing the respondent No.2 to return the entire amount along with accrued interest to the petitioner within a period of 04 weeks from the date of receipt of a copy of the order.

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NC: 2026:KHC:9497 WP No. 36779 of 2025

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HC-KAR

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ii. As far as other reliefs are concerned, this Court is not inclined to grant any relief to the petitioner.

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iii. The respondent No.2 is permitted to file memo of appearance within 02 weeks from today.

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iv. All I.As. in this petition shall stand closed.

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SD/(LALITHA KANNEGANTI) JUDGE

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List No.: 1 Sl No.: 26

Shri Suresh Sebastian D Souza v. Canara Bank

Case brief

What is this about?

What did the court decide?

Shri Suresh Sebastian D Souza v. Canara Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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