- 1 - NC: 2025:KHC:8247-DB WA No. 3830 of 2019 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF FEBRUARY, 2025 PRESENT THE HON'BLE MR JUSTICE K.SOMASHEKAR AND THE HON'BLE MR JUSTICE VENKATESH NAIK T WRIT APPEAL NO.3830 OF 2019 (GM-RES) BETWEEN: 1. MR. RACHIT GARG S/O. AMRISH KUMAR AGARWAL AGED ABOUT 35 YEARS RESIDING AT GMTCI, CREATOR, ITPL WHITEFIELD MAIN ROAD BENGALURU-560 066. 2. MR. GAURAV GUPTA S/O. LATE MR. ASHOK KUMAR GUPTA AGED ABOUT 38 YEARS NOW RESIDING AT 4111, ATS DOLCE SECTOR ZETA 1, GREATER NOIDA 201 306 NOW REPRESENTED BY HIS POA HOLDER MR. RACHIT GARG (APPELLANT NO.1 HEREIN). 3. VASIM AHMED SIDDQUI S/O. MR. NASEEM AHMED SIDDIQUI AGED ABOUT 45 YEARS NOW RESIDING AT E 702 SAMUDHARA SIKHARAM ASHARAM ROAD, SEEGEHALLI BENGALURU-49. Digitally signed by SUMATHY KANNAN Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC:8247-DB WA No. 3830 of 2019 4. MR. VIDYASAGAR NOOKALA S/O. SATYANARAYANA NOOKALA AGED ABOUT 38 YEARS NOW RESIDING AT 21 ROYAL CREST DR APT 9, MARLBOROUGH, MA USA 01752 REPRESENTED BY HIS POA MR. PRASHANT GUPTA. (APPELLANT NO.5 HEREIN). 5. MR. PRASHANT GUPTA S/O. MR. PRABHAKARA GUPTA AGED ABOUT 38 YEARS RESIDING AT C35 TRIVENI GILBERT HILL ROAD ANDHERI WEST MUMBAI-400 058. 6. MR. ANISH THOMAS S/O. P.G. THOMAS AGED ABOUT 40 YEARS NOW RESIDING AT HOUSE OF HIRANANDANI CLUB MEADOWS A-1101, AKSHAY NAGAR OFF BANERGHATTA ROAD BENGALURU-560 076. 7. MR. KRISHNAN PARAMESWARAN S/O. K. PARAMESWARAN AGED ABOUT 46 YEARS RESIDING AT #997 5TH A CROSS, 1ST BLOCK RING ROAD SERVICE ROAD KALYANANAGAR BENGALURU-560 043. 8. MR. RAJNISH KUMAR S/O. D.N.P BURNWAL AGED ABOUT 38 YEARS NOW RESIDING AT - 3 - NC: 2025:KHC:8247-DB WA No. 3830 of 2019 D-1102, MANTRI WEB CITY APARTMENTS HENNUR MAIN ROAD BENGALURU-560 043. 9. MR. RAVI SHANKAR PRASAD S/O. LALAN PRASAD AGED ABOUT 36 YEARS NOW RESIDING AT 160 LOCKSUNART WAY APT 19, SUNNYVALE CALIFORNIA, USA-94087 REPRESENTED BY HIS POA HOLDER MR. RAJNISH KUMAR (APPELLANT NO.8 HEREIN) 10. MR. GAURAV MAHESHWARI S/O. M.M. MAHESHWARI AGED ABOUT 37 YEARS NOW RESIDING AT 170 LOCKSUNART WAY APT 8, SUNNYVALE CALIFORNIA, USA-94087 REPRESENTED BY HIS POA HOLDER MR. SAURAV MAHESHWARI 217 DWARKA TRINITY SEEGEHALLI K.R. PURAM BENGALURU-560 049. 11. MR. VISHAL RATHI S/O. OMPRAKASH RATHI AGED ABOUT 37 YEARS SYNOPSIS INDIA PVT LTD. TOWER A, RMZ INFINITY 3RD FLOOR, OLD MADRAS ROAD BENGALURU-560 016 NOW REPRESENTED BY HIS POA HOLDER MR. RAJNISH KUMAR (APPELLANT NO.8 HEREIN) 12. MR. SIDDHARTH VERMA S/O. LATE SH. JAYANT KUMAR VERMA AGED ABOUT 36 YEARS RESIDING AT 10252 CAMINO RUIZ - 4 - NC: 2025:KHC:8247-DB WA No. 3830 of 2019 APT 85 SAN DIEGO, CA, USA-92126. NOW REPRESENTED BY HIS POA HOLDER MR. TAPESH MAHESHWARI (APPELLANT NO.13 HEREIN) 13. MR. TAPESH MAHESHWARI S/O. LATE H.S. MAHESHWARI AGED ABOUT 36 YEARS NOW RESIDING AT AB901 SALARPURIA SATVA GREENAGE NEXT TO OXFORD COLLEGE HOSUR ROAD BENGALURU-560 068. 14. MR. SUBHARNAD MAJUMDAR S/O. KAJAL KANTI MAJUMDAR AGED ABOUT 41 YEARS NOW RESIDING AT B702 SETHNA POWER TOWER BABUSAPALYA BENGALURU-560 043. 15. MR. PARTHA SARATHI GHOSH S/O. NIROD BARAN GHOSH AGED ABOUT 41 YEARS RESIDING AT 96 MIRABELLI CIR SAN JOSE CALIFORNIA, USA, 95134 REPRESENTED BY HIS POA HOLDER MR. SUBHARNAB MAJUMDAR (APPELLANT NO.14 HEREIN) 16. ARIJIT GHOSH S/O. PULAK GHOSH AGED ABOUT 37 YEARS NOW RESIDING AT S2 NEERAJA HOMES, AMAR RESIDENCY HORAMAVU ROAD BENGALURU-560 043. - 5 - NC: 2025:KHC:8247-DB WA No. 3830 of 2019 17. MR. GAURAB DEY S/O. GAUTAM PRASAD DEY AGED ABOUT 39 YEARS SAMHITA AMRIT FLAT NO.201, SHIRDISAI TEMPLE ROAD MUNNEKULALA, MARATHALI BENGALURU-560 037. 18. MR. PRAMOD KUMAR S/O. RAMACHANDRA NAIDU AGED ABOUT 48 YEARS RESIDING AT NO.44/28 3RD CROSS, 4TH BLOCK KUMARA PARK WEST, SHESHADRIPURAM BENGALURU-560 020. REPRESENTED BY HIS POA MR. B.K. NAGESWAR S/O. LATE MR. B.S. KRISHNASWAMY AGED 70 YEARS RESIDING AT C-311, 3RD FLOOR SENA VIHAR, KAMMANAHALLI MAIN ROAD KALYAN NAGAR P.O. BENGALURU-560 043. 19. MR. SUJIT KUMAR DHAR S/O. D.C. DHAR AGED ABOUT 74 YEARS G-2 SHAKTIPRIDE APARTMENTS 4-D CROSS, 2ND MAIN KASTURINAGAR BENGALURU-560 043. 20. MR. PRAMOD T.P S/O. PRABHAKARAN T.K. AGED ABOUT 42 YEARS NOW RESIDING AT 207 LEEPAKSHI BLOCK MOUNIKA ESPANCIA, BANJARA LAYOUT HORAMAVU AGARA BENGALURU-560 043. - 6 - NC: 2025:KHC:8247-DB WA No. 3830 of 2019 21. MR. SRIVATHSA K. S/O. SRINIVASA RAO K. AGED ABOUT 39 YEARS NOW RESIDING AT G07 WHITESTONE VEROSO K. DOMMASANDRA MEDAHALLI TO BELATHUR ROAD BENGALURU-560 049. …APPELLANTS (BY Ms. PARINA LALLA, ADVOCATE) AND: 1. RESERVE BANK OF INDIA WITH ITS REGIONAL OFFICE AT NO.10/3/8 NRUPATUNGA ROAD BENGALURU-560 001 REPRESENTED BY THE GOVERNOR. 2. CHIEF GENERAL MANAGER DEPARTMENT OF BANKING SUPERVISION/CENTRAL OFFICE PRIVATE SECTOR BANKS MONITORING DIVISION RESERVE BANK OF INDIA WORLD TRADE CENTRE, CENTRE I CUFFE PARADE, COLABA MUMBAI-400 005. 3. DEPUTY GENERAL MANAGER RESERVE BANK OF INDIA DEPARTMENT OF BANKING SUPERVISION 10/3/8, NRUPATHUNGA ROAD BENGALURU-560 001. 4. KARNATAKA BANK LIMITED KORAMANGALA BRANCH NO.652, 17TH MAIN, 3RD BLOCK KORAMNGALA LAYOUT BENGALURU-560 034 REPRESENTED BY ITS CHIEF MANAGER - 7 - NC: 2025:KHC:8247-DB WA No. 3830 of 2019 5. SOVEREIGN DEVELOPERS & INFRASTRUCTURE LTD. A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956 HAVING ITS REGISTERED OFFICE AT NO.16, 2ND & 3RD FLOOR NEW BEL ROAD, JALADHARSHINI LAYOUT BENGALURU-560 054 NOW REPRESENTED BY RESOLUTION PROFESSIONAL BALAKRISHNAN V. RESIDING AT GF 02 ITTINA PADMA-1 5TH MAIN, RAMAMURTHY NAGAR BENGALURU-43. 6. PHOENIX ARC PRIVATE LIMITED A COMPANY INCORPORATED UNDER THE COMPANIES ACT HAVING ITS OFFICE AT 7TH FLOOR DANI CORPORATE PARK 158, CST ROAD, KALINA SANTA CRUZ EAST MUMBAI-400 098 NOW REPRESENTED BY ITS MANAGING DIRECTOR. …RESPONDENTS (BY SRI R.V.S. NAIK, SENIOR COUNSEL FOR SRI V. VINAY GIRI, ADVOCATE FOR R-1 TO R-3; SRI Y.P. GOKUL, ADVOCATE, FOR R-4; SMT. SUMANA NAGANAND, ADVOCATE FOR R-6; R-5 ARE SERVED AND UNREPRESENTED) * * * THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE HIGH COURT OF KARNATAKA ACT, 1961, PRAYING TO SET ASIDE THE IMPUGNED ORDER DATED 23.08.2019 PASSED BY THE LEARNED SINGLE JUDGE DISMISSED W.P.NOS.39472- 39476 AND 40625-40640/2016 AND THEREBY ALLOW THE PRAYERS SOUGHT IN W.P.NOS.39472-39476 AND 40625- 40640/2016. - 8 - NC: 2025:KHC:8247-DB WA No. 3830 of 2019 THIS WRIT APPEAL IS COMING ON FOR FINAL HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE K.SOMASHEKAR and HON'BLE MR JUSTICE VENKATESH NAIK T ORAL JUDGMENT (PER: HON'BLE MR JUSTICE K.SOMASHEKAR) This appeal is preferred by the appellants seeking to set aside the impugned order dated 23.08.2019 passed by a learned Single Judge of this Court dismissing the petitions in W.P.Nos.39472-476/2016 and connected matters and thereby to allow the prayer sought for in the said petitions, for the grounds urged therein. 2. We have heard the learned counsel Ms. Parina Lalla for the appellants, the learned Senior Counsel Shri R.V.S. Naik representing the learned counsel Shri V. Vinay Giri for Respondent Nos.1 to 3, the learned counsel Shri Y.P. Gokul for Respondent No.4 and the learned counsel Smt. Sumana Naganand for Respondent No.6 and perused the material on record. 3. The factual matrix of the appeal is as under: - 9 - NC: 2025:KHC:8247-DB WA No. 3830 of 2019 It is the case of the appellants that the appellants herein are allottees of apartments in the project known as ‘Sovereign Unnathi’ which was developed and constructed by Respondent No.5 / Builder. Respondent No.4 / Bank is said to have financed the project in part, for construction of the project. It is stated that the appellants later learnt that Respondent No.5 / Builder had mortgaged the project land in addition to the entire constructed area proposed to be built, with Respondent No.4 / Bank, but did not disclose the said fact to the allotees / appellants herein. 4. Accordingly, it is stated that the Association of Allottees known by the name of ‘Sovereign Unnathi Apartment Allottees Welfare Association’ (‘SUAAWA’ for short), of the said project, had submitted complaints with the RBI / Respondent No.1 with regard to statutory violations having been committed by Respondent Nos.4 and 5, thus adversely affecting the interest of the allottees. However, since Respondent No.1 / RBI had failed to act on the said complaints, the SUAAWA had initiated W.P.No.60457/2014 espousing the cause of its members in relation to the violations committed by Respondent Nos.4 and 5 and the inaction on the part of Respondent No.1 / - 10 - NC: 2025:KHC:8247-DB WA No. 3830 of 2019 RBI. The appellants herein being allottees, were impleaded as co-appellants to the said writ petition and hence connected numbers were allotted to the said petition. This Court, by its order dated 29.10.2015 disposed of the said petitions with an observation that it is for the petitioners to file an appropriate suit for damages and in the meanwhile to secure possession of the property, if they are in possession of the same. The learned Single Judge had also made certain observations that the RBI is required to examine the allegations made by the petitioners and take appropriate action if necessary. Thereafter, in compliance of the observations, it is stated that Respondent No.2 after conducting inquiry, passed an order dated 17.03.2016. However, the said order dated 17.03.2016 was challenged by the petitioners by filing W.P.No.39472- 39476/2016 and connected petitions seeking to set aside the order dated 17.03.2016 and to direct Respondent No.1 / RBI to initiate requisite proceedings against Respondent No.4 / Bank for violating the provisions of the Master Circulars. 5. A learned Single Judge of this Court, after hearing the counsel for the parties and on a thorough examination of the records, by its order dated 23.08.2019, has proceeded to - 11 - NC: 2025:KHC:8247-DB WA No. 3830 of 2019 dismiss the said petitions, however granting liberty to the petitioners to initiate appropriate proceedings, in accordance with law. It is the said order which is under challenge in the present appeal by urging various grounds. 6. Learned counsel Ms. Parina Lalla for the appellants is present before the Court physically and prays for consideration of the various grounds urged in this appeal and thereby to set aside the order dated 23.08.2019 passed by the learned Single Judge in W.P.Nos.39472-39476/2016 and connected matters. In support of their case, the learned counsel for the appellants has referred to a judgment rendered by the Hon'ble Supreme Court of India in the case of Central Bank of India Vs. Ravindra and Others (AIR 2001 SC 3095) wherein, the Apex Court has addressed the scope of Section 34 of the Code of Civil Procedure. At Headnote (A) of the said judgment, it is stated that, “Decree for payment of money - Interest - Expression "the principal sum adjudged" occurring in Section 34 – Includes the amount of interest, charged on periodical rests, and capitalized with the principal sum actually advanced, so as to become an amalgam of principal in such cases where it is permissible as per contract between parties or an established - 12 - NC: 2025:KHC:8247-DB WA No. 3830 of 2019 Bank practice – The principal sum (on the date of suit) so adjudged, shall be treated as “principal sum” within meaning of Section 34 on which interest pendente lite and future interest i.e., post-decree interest may be awarded by Court.” 7. Learned counsel for the appellants has also referred to a judgment of the High Court of Gujarat in the case of ASHOKBHAI D. NAIK vs. RESERVE BANK OF INDIA AND ORS. (2009 SCC Online GUJ 10448), in support of her case. Hence, she prays to allow this appeal and to set aside the impugned order dated 23.08.2019 passed by a learned Single Judge of this Court dismissing the petitions in W.P.Nos.39472- 476/2016 and connected matters and thereby to allow the prayer sought for in the said petitions, considering the grounds urged therein. 8. On the other hand, the learned Senior Counsel Sri. R.V.S. Naik representing respondent Nos.1 to 3 is present before the Court and emphasizes the material available on record and supports the observations made by the learned Single Judge in its order dated 23.08.2019 passed in W.P.Nos.39472-39476/2016 and connected matters. The - 13 - NC: 2025:KHC:8247-DB WA No. 3830 of 2019 learned Senior Counsel contends that the learned Single Judge has considered the matter and has rightly passed a reasoned order, dismissing the petitions. In view of the fact that the subject matter of the writ petitions involved adjudication of complicated and disputed questions of facts, the learned Single Judge had observed that the same cannot be gone into under Article 226 of the Constitution of India and has rightly dismissed the petitions. Further, the learned Single Judge has rightly held that the petitioners ought to approach the competent Civil Court in accordance with law. Previously in the order dated 29.10.2015 passed by the learned Single Judge in W.P.No.60457/2014 and connected matters itself, it is observed that, “it would at best be possible for the petitioners to file an appropriate suit for damages and in the meanwhile to secure their possession of the property, if they are in possession of the same”. It is contended by the learned Senior Counsel that as observed by the learned Single Judge in its order dated 23.08.2019 itself, the previous order dated 29.10.2015 passed by a learned Single Judge in W.P.No.60457/2014 and connected matters having not been challenged, the same has become final and binding on the - 14 - NC: 2025:KHC:8247-DB WA No. 3830 of 2019 petitioners / appellants herein. On the said ground alone, the present appeal requires to be dismissed. 9. The learned Senior Counsel has facilitated a judgment rendered by the Hon'ble Supreme Court of India in the case of Suresh Chand Goutam Vs. State of Uttar Pradesh and others ((2016) 11 SCC 113)) and particularly refers to paragraph No.42 that one of the conditions for exercising the power under Article 226 of the Constitution of India for issuance of Mandamus is that the Court must come to the conclusion that the aggrieved person has a legal right which entitles him to any of the rights and such right has been infringed. It is further observed that ‘Mandamus’ is a command issued to direct any person, Corporation, inferior Courts or Government, requiring him or them to do some particular thing specified therein which appertains to his or their Office and is in the nature of a public duty. Also, the judgment in the case of Kalyan Singh vs. State of Uttar Pradesh and others (AIR 1962 SC 1183) has been referred to. Paragraph No.42 of the judgment in Suresh Chand case has been emphasized by the learned Senior counsel representing Respondents No.1 to 3. - 15 - NC: 2025:KHC:8247-DB WA No. 3830 of 2019 10. As regards taking action against the RBI, it is contended that the RBI being the regulator of the banking system in India, has acted in an impartial and transparent manner taking all relevant factors from the regulatory and supervisory angles into consideration and has rightly passed the order dated 17.03.2016. It is contended that the RBI frames broad guidelines, which the Banks are expected to follow while dealing with individual cases and does not and cannot be expected to look into the day-to-day functioning of the Banks. It is further contended that the order dated 17.03.2016 was passed by the appropriate competent authority at a highly Senior level in the Department of Banking Supervision of the RBI and it cannot be said that the RBI has shielded Respondent No.4 as alleged. 11. It is the further contention of the learned Senior Counsel that as regards the case in Central Bank of India vs. Ravindra relied upon by the appellants which is referred to supra, it is stated that the facts of the said case are clearly distinguishable from the present case and does not come to the aid of the appellants. In the said case, the Hon’ble Supreme Court was called upon to interpret whether the phrases - 16 - NC: 2025:KHC:8247-DB WA No. 3830 of 2019 “principal sum adjudged” and “such principal sum” occurring in Section 34 of the CPC includes pendente lite interest. In this backdrop, the Court observed that contraventions of RBI directives which are statutory in nature, is punishable under Section 46(4) of the Banking Regulations Act and that the Court can act on the assumption that the accounts have been maintained by Banks in conformity with such directives. It is hence reiterated that the power of the RBI to levy penalty, is discretionary in nature. Hence, it is contended by the learned Senior Counsel for Respondent Nos.1 to 3 that the grounds urged in this regard are vexatious, frivolous, devoid of merits and ought to be rejected. On all these grounds, the learned Senior Counsel for Respondent Nos.1 to 3 prays to dismiss the appeal as being devoid of merits. 12. In the context of the contentions raised by the learned counsel for both the parties, it is relevant to state that the appellants were the allottees of apartments in the project known as ‘Sovereign Unnathi’ which was developed and constructed by Respondent No.5 / Builder and Respondent No.4 / Bank is said to have financed the project in part, for construction of the project. Since the appellants later learnt - 17 - NC: 2025:KHC:8247-DB WA No. 3830 of 2019 that Respondent No.5 / Builder had mortgaged the project land in addition to the entire constructed area proposed to be built, with Respondent No.4 / Bank without disclosing the said fact to the allotees / appellants, their Association SUAAWA submitted complaints with the RBI / Respondent No.1 with regard to statutory violations having been committed by Respondent Nos.4 and 5, thus adversely affecting the interest of the allottees. However, since Respondent No.1 / RBI had failed to act on the said complaints, the SUAAWA had previously initiated W.P.No.60457/2014 before a learned Single Judge of this Court espousing the cause of its members in relation to the violations committed by Respondent Nos.4 and 5 and the inaction on the part of Respondent No.1 / RBI. This Court, by its order dated 29.10.2015 disposed of the said petitions with an observation that it is for the petitioners to file an appropriate suit for damages and in the meanwhile to secure possession of the property, if they are in possession of the same. The learned Single Judge had also made certain observations that the RBI is required to examine the allegations made by the petitioners and take appropriate action if necessary. Thereafter, in compliance of the observations, Respondent No.2, after - 18 - NC: 2025:KHC:8247-DB WA No. 3830 of 2019 conducting inquiry, has passed an order dated 17.03.2016, which was challenged by the petitioners / appellants herein, by filing W.P.No.39472-39476/2016 and connected petitions seeking to set aside the order dated 17.03.2016 and to direct Respondent No.1 / RBI to initiate requisite proceedings against Respondent No.4 / Bank for violating the provisions of the Master Circulars. The said petition when came up before a learned Single Judge of this Court, the said Court, after hearing the counsel for the parties and on a thorough examination of the records, by its order dated 23.08.2019, has proceeded to dismiss the said petitions, however granting liberty to the petitioners to initiate appropriate proceedings, in accordance with law. Again, the said petitioners have initiated the present appeal seeking to set aside the impugned order dated 23.08.2019 passed by the learned Single Judge of this Court dismissing the petitions in W.P.Nos.39472-476/2016 and connected matters and thereby to allow the prayer sought for in the said petitions. 13. However, it is relevant to state that in the impugned order dated 23.08.2019 passed by the learned Single Judge in W.P.Nos.39472-39476/2016 and connected matters which is - 19 - NC: 2025:KHC:8247-DB WA No. 3830 of 2019 under challenge in this appeal, it is observed that, since there are disputed facts arising in the petitions, it requires evidence to be recorded which this Court cannot adjudicate upon in exercise of powers under Article 226 of the Constitution of India. It is also relevant to note that as regards the previous order dated 29.10.2015 passed by the learned Single Judge in W.P.No.60457/2014 and connected matters, the finding rendered that it is appropriate for the petitioners to file a suit for damages, has attained finality. Hence, the petitioners were granted liberty to approach the competent civil Court for damages against the fifth respondent, in accordance with law. 14. However, though it has been observed by both the learned Single Judges of this Court in the above stated orders passed in W.P.No.60457/2014 and W.P.Nos.39472-39476/2016 to approach the Civil Court to adjudicate their rights in view of the fact that this Court cannot adjudicate the matter in exercise of powers under Article 226 of the Constitution of India, the appellants without exhausting the remedy available to them by filing a Civil Suit for damages, have again approached this Court claiming relief. At the cost of repetition, it is observed that the learned Single Judge by order dated 23.08.2019, has - 20 - NC: 2025:KHC:8247-DB WA No. 3830 of 2019 addressed the issues between the petitioners and the respondents extensively and has granted liberty to the petitioners / appellants herein to initiate appropriate proceedings in accordance with law, which is again reiterated by this Court. Hence, we find no illegality or absurdity in the order dated 23.08.2019 rendered by the learned Single Judge of this Court in W.P.Nos.39472-39476/2016 and connected matters. Accordingly, we proceed to pass the following: ORDER The appeal is dismissed and the order dated 23.08.2019 passed by the learned Single Judge in W.P.Nos.39472- 39476/2016 and connected matters, is confirmed. Sd/- (K.SOMASHEKAR) JUDGE Sd/- (VENKATESH NAIK T) JUDGE KS List No.: 1 Sl No.: 13