- 1 - HC-KAR NC: 2025:KHC:41012 WP No. 15683 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 14TH DAY OF OCTOBER, 2025 BEFORE THE HON'BLE SMT. JUSTICE LALITHA KANNEGANTI WRIT PETITION NO. 15683 OF 2024 (GM-DRT) BETWEEN: 1. SRI K S NAGARAJU S/O LATE A D SUBEEGOWDA AGED ABOUT 68 YEARS, COFFEE PLANTER, R/O YASHA NILAYA CHANNAPURA ROAD, KOTE VINAYAKA NAGAR, CHIKMAGALUR- 577 101 REP BY GPA HOLDER TO PETITIONER NO. 2 AND 3 2. SRI. K S MURTHY S/O LATE A D SUBBEGOWDA, AGED ABOUT 67 YEARS, COFFEE PLANTER, CHANNPURA ROAD, KOTE VINAYAKA NAGAR, CHIKMAGALUR- 577 101 3. SRI. S VIJAYENDRA S/O LATE A D SUBEEGOWDA AGED ABOUT 64 YEARS, COFFEE PLANTER, R/O YASHA NILAY, CHANNPURA ROAD, KOTE VINAYAKA NAGAR, CHIKMAGALUR- 577 101. …PETITIONERS (BY SRI. RAMESH BABU R., ADVOCATE) Digitally signed by MEGHA MOHAN Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:41012 WP No. 15683 of 2024 AND: UNION BANK OF INDIA A BODY CORPORATE CONSTITUTED UNDER THE BANKING COMPANIES (ACQUISITION AND TRANSFER OF UNDERTAKINGS) ACT, 1980 HAVING ITS HEAD OFFICE AT UNION BANK BHAVAN, 239, VIDHAN BHAVAN MARG, NARIMAN POINT, MUMBAI, MAHARASHTRA, INDIA, PIN CODE- 400021 AND HAVING AMONG OTHER BRANCHES A BRANCH AT CHIKKAMAGALUR M G ROAD, CHIKKMAGALUR- 577 101 REPRESENTED BY ITS CHIEF MANAGER. …RESPONDENT (BY SRI. VIGNESH SHETTY, ADVOCATE) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH DEMAND NOTICE DATED 4/9/2023 BEARING NO.0812/AGRI/NPA 02/2023-24 SECTION 13(2) UNDER SARFAESI ACT AT ANNEXURE- P., AND ETC. THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE SMT. JUSTICE LALITHA KANNEGANTI - 3 - HC-KAR NC: 2025:KHC:41012 WP No. 15683 of 2024 ORAL ORDER The present writ petition is filed to quash the Demand Notice dated 04.09.2023 which is issued under Section 13 (2) of SARFAESI Act. 2. It is the case of the petitioners that they have borrowed loan from the respondent/Bank. Loan was sanctioned with loan Account CCCK/01/121040 on 18.09.2012 for an amount of Rs.5,56,000/- for the purpose of growing plantation crops. The interest for this loan is 10.50% per annum. The main security given to this loan is by hypothecation of crops grown on the land and as collateral security to have charge on the crops. The said land was mortgaged to the bank by deposit of title deeds on 18.09.2012 with another loan sanctioned on 25.09.2012 for an amount of Rs.10,20,000/- for the purpose of water pond and renovation of labour quarters in the land. The interest for this loan is 10.50% per annum which is repayable within 10 years in yearly installment of Rs.1,02,000/- along with interest per year for a period of 10 years from the date of sanction of loan. Loan Account CKVLY/01/140007 is the vehicle loan which was sanctioned on 29.05.2014 for an amount of Rs.11,90,000/- to purchase vehicle for the agricultural purpose. - 4 - HC-KAR NC: 2025:KHC:41012 WP No. 15683 of 2024 The interest for this loan is 10.25% per annum. The security given to this loan is by hypothecation of vehicle on hire purchase terms. 3. It is the case of the petitioners that they were paying the loan installments regularly but later from 2015 onwards became defaulters due to the natural calamities. As per the RBI guidelines if one account is NPA, other loan accounts will automatically become NPA. In the year 2015 the entire crop and coffee plants were completely destroyed due to natural calamities, as such they could not pay the loan installments. It is stated that from 2015 till 2023-2024 every year continuously the petitioners' area was hit by natural calamities like draught, land slide, excess rain etc. The State Government had issued notification to that effect declaring the area as affected by natural calamity. The respondent had issued the impugned notification under Section 13(2) of the SARFAESI Act. 4. Learned counsel appearing for petitioners submits that the Demand Notice at Sl.No.1 pertains to the loan that is taken for the purpose of purchasing the vehicle, under Securitization Act they cannot recover the loan. It is submitted that Sl.Nos.2 - 5 - HC-KAR NC: 2025:KHC:41012 WP No. 15683 of 2024 and 3 pertains to the loan taken for the purpose of developing the coffee estate which is the agricultural purpose. It is submitted that even that also under the Securitization Act they cannot recover the amount. It is submitted that the petitioners have no other alternative remedy but to approach this Court as Section 13(2) Demand Notice cannot be questioned before the DRT under Section 17 of the Act. 5. Learned counsel appearing for the respondent/Bank submits that the loan is taken for the purpose of developing the coffee estate. It cannot be considered as agricultural purpose as per the Judgment in case U.M. Ramesh Rao and others Vs. Union Bank of India arising out of WP.No.12461/2020 dated 13.11.2020 which is affirmed by the Division Bench of this court in W.A.No.538/2020 c/w W.A.No.545/2020 dated 29.01.2021. 6. Learned counsel submits under Section 13(3A) once a notice is issued under Section 13(2), any objections that the borrower has, he has to give a representation to the bank and if the bank fails to consider the said representation then he would have a remedy to come before the Court. It is submitted - 6 - HC-KAR NC: 2025:KHC:41012 WP No. 15683 of 2024 that without even exhausting the said remedy the petitioners have come before this Court by filing the writ petition and the writ petition is not maintainable. It is submitted that on this ground alone the writ petition has to be dismissed. 7. Having heard the learned counsel on either side, perused the material on record. As rightly pointed out by the learned counsel for the respondent under Section 13(3A) on receipt of a notice under Section 13(2), if the borrower makes any representation or raise any objection that has to be considered by the secured creditor. In this case, the petitioners have not made any such representation or raised any objection to the Demand Notice issued under Section 13(2) of the SARFAESI Act by the bank. According to the petitioners, the loan was obtained for the agricultural purpose. According to the respondent/bank, it is a coffee estate and it cannot be considered as an agricultural purpose. It is a commercial activity. Further, in Sl.No.1, the loan was granted for the purpose of purchasing a vehicle. Admittedly, that cannot be recovered under the SARFAESI Act. In these circumstances, this Court is passing the following: - 7 - HC-KAR NC: 2025:KHC:41012 WP No. 15683 of 2024 ORDER i. The Demand Notice dated 04.09.2023 issued under Section 13(2) of SARFAESI Act is set aside. ii. The respondent/bank is at liberty to issue a fresh notice under Section 13(2) of SARFAESI Act within a period of one week from the date of receipt of copy of this order and the petitioners/borrowers shall give the representation, if any under Sec.13 (3) (a). iii. The respondent bank shall consider the same in accordance with law. iv. Thereafter, the aggrieved party is at liberty to avail the appropriate remedy. Till such time the bank shall not take cake coercive steps. v. The amount already deposited must be appropriated to the mortgage account. vi. Accordingly, the writ petition is disposed of. vii. All pending IAs in this writ petition shall also stand closed. SD/- (LALITHA KANNEGANTI) JUDGE RJ, List No.: 1 Sl No.: 1