Partly allowed¶66

Smt Lakshmi K Lakshman v. Canara Bank

Karnataka HC20 Jan 2026WP/9999/2023

Case brief

AI extract

What is this about?

SARFAESI Section 13(2) possession notice dated 13.04.2023 quashed on full compliance with One Time Settlement of Rs.70,00,000/-; Article 226 writ petition; alternate remedy under Section 17 noted; Canara Bank J P Extension Branch Davanagere; four loan accounts; fourth education loan account Rs.32,97,671/- linked to secured asset with liberty to proceed; petition partly allowed; Karnataka HC 2026; GM-RES.

What did the court decide?

Impugned notices at Annexures A and B quashed in respect of the first three loan accounts settled and complied with under the OTS; respondent-bank granted liberty to initiate proceedings afresh in respect of the fourth (education loan) account if so advised. ¶66

Smt Lakshmi K Lakshman Vs Canara Bank — Writ and Judicial Review | Karnataka HC (2026)

What the court decided

AI extract

Outcome

¶66

Issue for consideration

Whether, upon the petitioners' admitted full compliance with the One Time Settlement of Rs.70,00,000/- for the first three loan accounts, the impugned possession notice dated 13.04.2023 (Annexure-B) can still be sustained qua those accounts; and how the fourth (education loan) account is to be treated.

¶22

Court's answer

Although the petitioners had an effective alternate remedy under Section 17 of the SARFAESI Act, the writ petition was entertained for the limited purpose of considering the One Time Settlement arrived at between the parties and admittedly complied with by the petitioners.

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Ratio / Principle

In light of the admitted fact that the petitioners paid Rs.70,00,000/- on the dates mentioned in the compliance memo, in fulfilment of the OTS scheme agreed between the parties, the Court found no reason to sustain the impugned notice at Annexure-B to the extent of the said three loan accounts.

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Key takeaways

The impugned notices at Annexures A and B are quashed to the extent of the three OTS-settled loan accounts.ratio¶65
As regards the respondent-bank's claim on the fourth account, stated to be the education loan of the petitioners' daughter, the bank is at liberty to proceed in accordance with law if so advised.ratio¶65

Detailed headnote1 paragraphs

Karnataka High Court (M.G.S. Kamal, J.) — Writ petition under Article 226 of the Constitution challenging a possession notice dated 13.04.2023 issued under Section 13(2) of the SARFAESI Act, 2002 by Canara Bank, Davanagere, for recovery dues of Rs.1,20,38,785.90p. Petitioners held four loan accounts with the bank. By letter dated 27.06.2024 they offered a One Time Settlement of Rs.70,00,000/- for the first three accounts, which the bank accepted (email dated 25.06.2024; memo dated 02.07.2024 with Document No.2; order dated 02/07/2024). By memo dated 20.01.2026, supported by bank statements, petitioners reported full compliance, having paid the entire Rs.70,00,000/- on 28/06/2024 and 18/09/2024. Though the petitioners had an effective alternate remedy under Section 17 of the Act, the petition was entertained solely to consider the admittedly complied OTS. Holding that no reason existed to sustain the impugned notice qua the three settled accounts, the Court quashed the notices at Annexures A and B to that extent; the bank was left free to proceed in accordance with law on the fourth account, an education loan of Rs.32,97,671/- of the petitioners' daughter said to be linked to the secured asset. Petition partly allowed.

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NC: 2026:KHC:3154 WP No. 9999 of 2023

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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 20^TH DAY OF JANUARY, 2026

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BEFORE

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THE HON'BLE MR. JUSTICE M.G.S. KAMAL

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WRIT PETITION NO. 9999 OF 2023 (GM-RES)

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BETWEEN:

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SMT LAKSHMI K LAKSHMAN W/O SRI SREERAM D.K., AGED ABOUT 56 YEARS,

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SRI SREERAM D.K., S/O D N KRISHNAMURTHY, AGED ABOUT 61 YEARS,

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Digitally signed by SUMA B N Location: HIGH COURT OF KARNATAKA

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MISS POOJA D K D/O SRI SREERAM D K, AGED ABOUT 26 YEARS, ALL ARE RESIDING AT NO 2971/9, 6^TH MAIN, MCC B BLOCK, DAVANAGERE 577001 …PETITIONERS (BY SMT. NANDITA HALDIPUR, ADVOCATE) AND:

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CANARA BANK J P EXTENSION BRANCH, DAVANAGERE - 577 001, DAVANAGERE DISTRICT, REPRESENTED BY ITS AUTHORIZED OFFICER …RESPONDENT (BY MISS PREETHU, ADVOCATE FOR SRI. VIGNESH S. SHETTY, ADVOCATE)

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NC: 2026:KHC:3154 WP No. 9999 of 2023

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HC-KAR

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THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE POSSESSION NOTICE DATED 13.04.2023 ISSUED BY THE RESPONDENT BANK TO TAKE THE POSSESSION OF THE SCHEDULE PROPERTY VIDE ANNEXURE-K.

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THIS PETITION, COMING ON FOR PRELIMINAY HEARING IN 'B' GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE M.G.S. KAMAL

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ORAL ORDER

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Though this petition is filed by the petitioners being aggrieved by the issuance of notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, in and by which the respondent-bank has initiated the proceedings under Section 13 in respect of the secured asset and in the process of recovery of its dues in a sum of Rs.1,20,38,785.90p and though the petitioners have effective alternate remedy under Section 17 of the Act, this petition is entertained for the limited purpose of considering the `One Time Settlement' which was arrived at between the petitioners and the respondent and which is admittedly complied by the petitioners.

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NC: 2026:KHC:3154 WP No. 9999 of 2023

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HC-KAR

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Admittedly petitioners had 4 loan accounts opened

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with the respondent-bank namely;

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SL. NO.	LOAN ACCOUNT NUMBER	DATE OF LOAN	LOAN AMOUNT IN RS.
1	0591605000002	29.10.2015	96,00,000.00
2	0591605000003	03.06.2016	50,00,000.00
3	0591704000001	30.03.2021	4,47,258.00
4	0591651005433	27.10.2016	19,00,000.00

¶29

The one time settlement proposal offer was made by the petitioners to the respondent-bank in respect of first three of the aforesaid loan accounts as per letter dated 27.06.2024 for a total sum of Rs.70,00,000/- in terms of which petitioners agreed to pay a sum of Rs.35,00,000/- on or before 27.06.2024 and remaining sum of Rs.35,00,000/- on or before 22.09.2024. The said proposal was accepted by the respondent- bank on the following terms of payment as evidenced by document No.2 produced along with the memo dated 02.07.2024 which reads as under:

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¶31

NC: 2026:KHC:3154 WP No. 9999 of 2023

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HC-KAR

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SL. NO.	LOAN ACCOUNT NUMBER	DATE OF LOAN	LOAN AMOUNT IN RS.	PRESENT LIABILITY IN RS
1	0591605000002	29.10.2015	96,00,000.00	44,38,873.90
2	0591605000003	03.06.2016	50,00,000.00	41,98,554.47
3	0591704000001	30.03.2021	4,47,258.00	94,811.05
4	0591651005433	27.10.2016	19,00,000.00	32,97,671.11

¶34

Accepted OTS offer of Rs.70,00,000/- in full and final settlement of the above mentioned accounts. This was followed by an email correspondence dated 25.06.2024 by the recovery section of the respondent-Canara Bank which is produced as Document No.3 to the said memo which reads as under:

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"With reference to above letter from the borrower, you may inform her that the down-payment of Rs.35,00,000/- should be paid by 27.06.2024 and for balance of Rs.35,00,000/- she can be given time upto 22.09.2024."

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Today learned counsel for petitioners has filed a memo dated 20.01.2026 reporting full compliance of One Time Settlement which reads as under:

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MEMO OF COMPLIANCE

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" The undersigned humbly submits that as per the terms of One Time settlement Scheme (OTS) dated 28/06/2024 and the order dated 02/07/2024 passed by this

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5 - NC: 2026:KHC:3154 WP No. 9999 of 2023

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HC-KAR

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Hon'ble Court, the Petitioner has paid the entire OTS amount sum of Rs.70,00,000/- (Rupees Seventy Lakhs only) on the following dates:

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SCHEDULE OF PAYMENTS MADE BY THE PETITIONER TO THE RESPONDENT BANK

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Sl. No.	Date	Loan Account Number	Amount in Rs.
1	28/06/2024	0591704000001	96,180/-
2	28/06/2024	0591605000002	17,03,819/-
3	28/06/2024	0591605000003	17,00,000/-
4	18/09/2024	0591605000002	18,00,000/-
5	18/09/2024	0591605000003	17,00,000/-
	Total p	ayment	70,00,000/-

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It is further submitted that the undersigned also furnishes the loan account statements disclosing aforesaid payment transactions for kind perusal of this Hon'ble Court.

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1) Copy of Statement of accounts in Loan Account No. 0591704000001.

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2) Copy of Statement of accounts in Loan Account No. 0591605000002.

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3) Copy of Statement of accounts in Loan Account No. 0591605000003.

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Wherefore, it is prayed that this Hon'ble Court be pleased to take the Memo on record and pass necessary orders in the interest of justice and equity."

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The said memo is also enclosed with a bank

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statement evidencing the payment of Rs.70,00,000/- as stated in the memo. Thus, referring to the above, learned counsel for

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NC: 2026:KHC:3154 WP No. 9999 of 2023

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HC-KAR

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petitioners submits that the impugned notice as per Annexure-

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B to the extent of the said three accounts be quashed .

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In response, learned counsel for the respondent-bank drawing attention of this Court to the very same documents produced by the petitioners referred to above submit that admittedly petitioners are holding four accounts. Fourth one being the Education Loan account (EL account) towards which petitioners are liable to pay Rs.32,97,671/- and that one of the terms of acceptance of OTS was earlier closure of the said education loan. She submitted that the said education loan has

¶57

not been closed till date and that the education loan of the petitioner's daughter was linked to the secured asset. She also refers to the memo which was filed today by the petitioners and submit that even according to the petitioners there is no payment made towards the said education loan of the daughter of petitioners. Therefore she submits that the OTS settlement cannot be accepted and accounts cannot be closed. However, she fairly submits that if liberty is reserved to the respondent-

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bank to initiate the proceedings afresh in respect of aforementioned education loan of the daughter of the

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7 - NC: 2026:KHC:3154 WP No. 9999 of 2023

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HC-KAR

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petitioners, respondent-bank has no objection in closing the

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first three of the four accounts.

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Submission taken on record.

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In the light of the aforesaid admitted fact of petitioners having paid a sum of Rs.70,00,000/- on the dates mentioned in the memo extracted hereinabove, in compliance to the One Time Settlement scheme agreed to between the petitioners as well as the respondent-bank, this Court do not see any reason to sustain the impugned notice at Annexure-B to the extent of said three loan accounts.

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Impugned notices at Annexures A and B to the said extent, are quashed. As regards the claim of the respondentbank in respect of fourth account which is stated to be education loan of the daughter of petitioners, respondent-bank is at liberty to proceed in accordance with law if so advised.

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With the above, petition is partly allowed .

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SD/(M.G.S. KAMAL) JUDGE

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SBN

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List No.: 1 Sl No.: 31

Smt Lakshmi K Lakshman v. Canara Bank

Case brief

What is this about?

What did the court decide?

Smt Lakshmi K Lakshman v. Canara Bank

Case brief

What is this about?

What did the court decide?

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