- 1 - HC-KAR NC: 2025:KHC:22973 WP No. 9346 of 2022 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 30TH DAY OF JUNE, 2025 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 9346 OF 2022 (GM-RES) BETWEEN: 1. MR BAPURAM PURUSHOTHAM REDDY AGED ABOUT 69 YEARS, S/O SRI B.V. R REDDY, 2. MRS BAPURAM VISALAKSHI AGED ABOUT 64 YEARS, W/O MR. B. PURUSHOTHAMA REDDY, BOTH ARE RESIDING AT PLOT NO.279, MLA AND MPS COLONY ROAD, NO.10C, JUBILEE HILLS HYDERABAD 500033 SENIOR CITIZEN BENEFIT NOT CLAIMED. …PETITIONERS (BY SRI. K S BHEEMAIAH., ADVOCATE) AND: 1. THE ASSISTANT GENERAL MANAGER PUNJAB NATIONAL BANK, CIRCLE SASTRA CENTRE, BANGALORE EAST 1ST FLOOR, RAHEJA TOWERS, 26-27, M.G.ROAD, BANGALORE-560001. 2. M/S SVR HOUSING A REGISTERED PARTNERSHIP FIRM HAVING ITS OFFICE AT DOOR NO.21, 33 A 11TH MAIN JAYANAGAR 4TH T BLOCK, BANGALORE-560041. REPRESENTED BY ITS Digitally signed by VIDYA G R Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:22973 WP No. 9346 of 2022 MANAGING PARTNER, MR. S. SRI.HARSHA. 3. MR S SRI HARSHA AGED ABOUT 52 YEARS, S/O MR. S. VENKATARAMAYYA, 4. MRS S SUJATHA AGED ABOUT 46 YEARS, W/O S. SRI HARSHA, BOTH 3 & 4 ARE RESIDING AT NO.14-484 A GANDHI ROAD, MADANAPALLI, CHITTOOR DISTRICT, A P 517325. 5. RESPONDENT-5 DELETED VIDE ORDER DATED 07.06.2023) …RESPONDENTS (BY SRI. VIGNESH SHETTY., ADVOCATE FOR C/R1; R3 AND R4 ARE SERVED) THIS WP IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE NOTICES DTD 14.01.2022 BEARING NO. REC/NC/403/2022 AND REC/NC/303/2022, ISSUED BY THE R1 BANK TO THE PETITIONERS HEREIN WHICH IS AT ANNEXURES-H AND J. THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S SUNIL DUTT YADAV ORAL ORDER Petitioners have sought for issuance of writ of certiorari to set aside the notices dated 14.01.2022 issued by respondent No.1 - Bank at Annexures-H and J. - 3 - HC-KAR NC: 2025:KHC:22973 WP No. 9346 of 2022 2. In terms of Annexure-H, the respondent - Bank has issued notice / communication to petitioner No.1 calling upon him to cancel the purported sale deed executed in respect of Flat No.403 and on failure to do so, necessary proceedings would be invoked. Annexure-J is the notice / communication to petitioner No.2 on same lines with respect to Flat No.303. 3. It is the case of the petitioners that they have purchased Flat Nos. 403 and 303 by way of registered sale deeds executed by respondents 2 to 4 on 17.03.2021 which were preceded by registered agreements of sale dated 13.09.2019. It is the further case of the petitioners that respondent - Bank while issuing notice to the petitioners to cancel the sale deeds had approached this Court and had obtained interim order on the basis of an undertaking by the respondent - Bank that the property which is the subject matter of the petition would not be put for auction till the next date. It is further submitted that the said interim order has been extended and during - 4 - HC-KAR NC: 2025:KHC:22973 WP No. 9346 of 2022 the pendency of such interim order, violating the undertaking, respondent - Bank has auctioned the property in which the impleading applicant had purchased the entire building in which the petitioners' flats are constituent flats. 4. It is the case of the petitioners that they undertook due diligence before entering into the registered sale agreements and absolute sale deeds and were not aware of any registered instrument that is now sought to be relied on by the respondent - Bank. It is submitted that in terms of encumbrance certificate at Annexure-F, there was no entry regarding any registered mortgage. It is the case of the petitioners that fraud has been played by the Bank in collusion with the auction purchaser, the developer and the owner of the property and accordingly, necessary proceedings ought to be initiated against them. 5. Learned counsel for the respondent - Bank would submit that there was memorandum of deposit of - 5 - HC-KAR NC: 2025:KHC:22973 WP No. 9346 of 2022 title deeds by the owner of the land by way of a registered mortgage deed executed on 05.12.2015. It is submitted that in light of registered mortgage being of the year 2015, all other conveyance subsequently entered into with the petitioners are subservient to the overriding charge by the Bank and accordingly, sale deeds in favour of petitioners would not convey any title. 6. It is submitted by the impleading applicant while adopting the arguments of the learned counsel for the respondent - Bank that they are the auction purchaser and their title would supersede with petitioners and once auction sale has been conducted and notice is issued, right of redemption is lost. It is also submitted that sale certificate is also issued. 7. After hearing the matter for sometime, it is to be noticed that the petitioners have substantive remedy under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest - 6 - HC-KAR NC: 2025:KHC:22973 WP No. 9346 of 2022 Act (for short 'the Act') insofar as any measures under Section 13 of the Act. It is to be noticed that the question that arises is as to whether the registered mortgage deed would have the overriding charge. The point that is required to be answered is as to the rights of the petitioners when they are the purchasers through registered conveyance deed without notice of the prior registered mortgage. The controversy on hand requires factual adjudication as well. Taking note of the subsequent developments as well, the petitioners are relegated to avail of the substantive remedy as is available under Section 17 of the Act. 8. Learned counsel for the petitioners would strenuously contend that the auction by the Bank was during the pendency of the interim order and for such violation of the interim protection, the petitioners have instituted proceedings of contempt. However, it must be noticed that mere disposal of the writ petition would not have the effect of wiping out the contempt proceedings - 7 - HC-KAR NC: 2025:KHC:22973 WP No. 9346 of 2022 and it is open to the appropriate Court to take note of the violation of the order if any in pending proceedings. 9. It is relevant to take note of the observations of the Apex Court in the case of Union 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 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 - 8 - HC-KAR NC: 2025:KHC:22973 WP No. 9346 of 2022 contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi- judicial 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. 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 - 9 - HC-KAR NC: 2025:KHC:22973 WP No. 9346 of 2022 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." 10. In light of the observations made by the Apex Court, it can be noticed that several factual contentions raised by the petitioners are the matters that cannot be adjudicated in the present proceedings. 11. Accordingly, the petition is disposed off relegating the petitioners to avail of the substantive - 10 - HC-KAR NC: 2025:KHC:22973 WP No. 9346 of 2022 remedy as regards the impugned proceedings. All contentions of both the sides are kept open. 12. 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. 13. The interim protection granted under this order is only to enable the petitioners 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 petitioners may approach are to look at the matter afresh uninfluenced by the observations made herein. 14. 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. - 11 - HC-KAR NC: 2025:KHC:22973 WP No. 9346 of 2022 15. I.A.1/2025 filed for impleading is disposed off as not calling for adjudication as the petitioners are being relegated to avail of the substantive remedy. Needless to state, in the event the petitioners were to initiate proceedings before the DRT, the impleading applicant will have to be necessarily made a party. 16. In light of the above, petition is disposed off. Sd/- (S SUNIL DUTT YADAV) JUDGE VP