- 1 - HC-KAR NC: 2025:KHC:39057-DB WP No. 31897 of 2018 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26TH DAY OF SEPTEMBER, 2025 PRESENT THE HON'BLE MR. JUSTICE JAYANT BANERJI AND THE HON'BLE MR. JUSTICE UMESH M ADIGA WRIT PETITION NO. 31897 OF 2018 (GM-DRT) BETWEEN: 1. KHUSHALCHAND D SHAH S/O DHANANJI KALYANJI, AGED ABOUT 66 YEARS 2. NALINI KHUSHALCHAND DHARMSHI W/O. KHUSHALCHAND D SHAH AGEDF ABOUT 65 YEARS 3. RAHUL K DARMSHI S/O KHUSHALCHAND D SHAH AGED ABOUT 44 YEARS. 4. MEHUL K DHARMSHI S/O KHUSHALCHAND D SHAH AGED ABOUT 40 YEARS ALL ARE RESIDING AT NO.898, 10TH CROSS, 22ND MAIN, J.P NAGAR, 2ND PHASE, BANGALORE-560 007. …PETITIONERS (BY SRI. NARAYANAN M R., ADVOCATE) AND: 1. K.S. AMARNATH S/O KATTA SURIAHSHETTY SREERAM 'UNNATHI' NO.1089, 35TH 'D' CROSS, Digitally signed by ANNAPURNA G Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:39057-DB WP No. 31897 of 2018 26TH MAIN, 4TH 'T' BLOCK, JAYANAGAR, BANGALORE-560 041. 2. K.S.BADRINATH S/O KATTA SURIAHSHETTY SREERAM, NO.523, 8TH CROSS, 7TH BLOCK, JAYANAGAR (WEST), BANGALORE-560 082. 3. STANDARD CHARTERED BANK 3RD FLOOR, EAST WING, NO.26, RAHEJA TOWERS, M.G.ROAD, BANGALORE-560 001. REPRESENTED BY ITS AUTHORISED OFFICER MR.MURUGESAN SENTHIL KUMAR. …RESPONDENTS (BY SRI. KEERTHI PRASAD D.C.,ADVOCATE FOR R1(VC), SRI. MANMOHAN P.N., ADVOCATE FOR R2, SMT. BHAVYA MOHAN, ADVOCATE FOR R3) THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO SET ASIDE THE IMPUGNED ORDER PASSED BY THE HON'BLE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI VIDE ITS COMMON ORDER DTD 25.01.2018 VIDE ANNX-C AND CONSEQUENTLY DECLARE AS FRAUDULENT AND ILLEGAL AND UNLAWFUL AND SET ASIDE THE SALE CERTIFICATE DTD 27.02.2013 EXECUTED BY THE RESPONDENT BANK IN FAVOUR OF THE RESPONDENT AUCTION PURCHASERS NO.1 & 2 WHICH IS EXECUTED AS PER APPENDIX V READ WITH RULE 9(6) OF THE SECURITY INTEREST (ENFORCEMENT) RULES 2002, WHICH IS REGISTERED IN THE OFFICE OF THE SUB REGISTRAR BANASHANKARI BANGALORE VIDE ANNX-A. THIS PETITION, COMING ON FOR DISPOSAL, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: - 3 - HC-KAR NC: 2025:KHC:39057-DB WP No. 31897 of 2018 CORAM: HON'BLE MR. JUSTICE JAYANT BANERJI and HON'BLE MR. JUSTICE UMESH M ADIGA ORAL ORDER (PER: HON'BLE MR. JUSTICE JAYANT BANERJI) Heard learned counsel for the petitioners and learned counsel appearing for the respondents. 2. This petition has been filed seeking the following reliefs: Wherefore, it is most humbly prayed that this Hon'ble Court may be pleased to: 1. set aside the impugned Order passed by the Hon'ble Debt Recovery Appellate Tribunal at Chennai vide its Common Order dated 25.01.2018 in RSA No.RA(SA)-145/2013 & RA(SA)-2/2014 i.e., Annexure C. 2. Consequently declare as fraudulent and illegal and unlawful and set aside the Sale Certificate dated 27.02.2013 executed by the Respondent Bank in favour of the Respondent Auction Purchasers No.1 & 2 which is executed as per Appendix V read with Rule 9(6) of the Security Interest (Enforcement) Rules 2002, which is registered in the Office of the Sub Registrar Banashankari Bangalore as Document No.BSK-1- 12561/2012-13 of Book I stored in CD No.BSKD198, i.e., Annexure A. 3. Such other reliefs as this Hon'ble Tribunal may deem fit in the interest of justice and equity. - 4 - HC-KAR NC: 2025:KHC:39057-DB WP No. 31897 of 2018 3. Four contentions that have been advanced by learned counsel for the petitioners: i. That no notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act1 was served on the petitioners, ii. No notice of the sale proceedings was received by him, iii. The sale notice gave erroneous description of the properties that were auctioned, in as much as instead of one commercial property, three separate buildings were shown, which were reflected as a residential properties whereas the properties were actually commercial, and, iv. The valuation report was incorrect and despite there being on record a valuation report containing a higher valuation, 1 SARFAESI Act, 2002 - 5 - HC-KAR NC: 2025:KHC:39057-DB WP No. 31897 of 2018 valuation report furnished by the valuer which was lower in valuation was chosen. 4. Learned counsel has sought to refer to various observations made by the Presiding Officers of the Debt Recovery Tribunal in support of his contentions. 5. The aforesaid submissions on behalf of the petitioners has been strongly opposed by the learned counsel for the respondents stating that submissions are baseless and contrary to the records. They have sought to refer to various records that have been filed by them in their respective statement of objections. 6. As far as the first contention is concerned regarding non-service of notice/demand notice under Section 13(2) of the Act, it appears that the first demand notice came to be issued by the respondent-Bank on 25.07.2011 and the same was replied by the applicants on 29.08.2011. Thus, the allegations that no notice was received by the petitioners under Section 13(2) of the Act, is incorrect. As a matter of fact they have even replied to the same. - 6 - HC-KAR NC: 2025:KHC:39057-DB WP No. 31897 of 2018 7. As far as the contention regarding the non- receipt of sale notice is concerned, it appears from the record that the sale notice was published in two newspapers by the name of "Business Standard" and "Samyuktha Karnataka" on the same day. The Debt Recovery Tribunal has analysed this contention by noting that a cryptic statement of the appellants made was that said two newspapers were not widely circulated but the appellants had not produced any documentary evidence in support of their contention. As such, the objection was discarded. It is not the contention of learned counsel for the petitioners that the notices did not reflect the correct date of the auction. 8. As far as the third contention that the sale notices furnished in the newspapers contains an inaccurate description of the properties, as is evident from the demand notice dated 25.07.2011 that has been enclosed as annexure - R1 to the statement of objections filed on behalf of the respondent - Bank, the descriptions of the properties are specified therein. - 7 - HC-KAR NC: 2025:KHC:39057-DB WP No. 31897 of 2018 9. We note that the properties have been described in the notice as non-residential and not residential properties, contrary to what the learned counsel for the petitioners would have us believe. This is the notice sent by the Bank to the petitioners under Section 13(2) of the Act which, as per the own case of the petitioners, was replied to by them on 29.08.2011. Nothing has been pointed out to us to demonstrate that an objection was taken with regard to the descriptions of the properties therein. We also find from the possession notice that appears on page No.26 of statement of objections of the respondent - Bank, that the properties are described as non-residential. The auction sale notice, which is enclosed as annexure - R5 to the statement of objection also describes the properties as non-residential. 10. As far as the last contention of the learned counsel for the petitioners that the Bank has chosen the lower valued Valuation Report, we find that the same is baseless. On internal page No.40 of the order of the Debt Recovery Tribunal, it is evident that two valuation report was submitted. One M/s. VECon Consultants dated - 8 - HC-KAR NC: 2025:KHC:39057-DB WP No. 31897 of 2018 12.12.2012 showing the value of the property as Rs.3,93,16,000/-, and, another valuation report dated 17.12.2012 given by M/s. N.G. Sheshagiri Rao & Associates, wherein the property was valued at Rs.4,26,00,460/-. 11. The respondent - Bank fixed the valuation provided by the valuer M/s. N.G. Sheshagiri Rao & Associates as it was the highest valuation when compared with the other valuer. 12. The Debt Recovery Appellate Tribunal has noted in its order impugned that no objection was filed to the valuation report of the borrowers. Moreover, the petitioner has not been able to demonstrate whether any objections was filed with regard to the valuation reports or that the petitioners had filed their own valuation report. 13. The Debt Recovery Appellate Tribunal observed as under: "16. Capacity and intention of the borrower/guarantor become the main consideration. In SARFAESI matters, Banks/Financial Institutions are expected to ensure fair play. Tribunals need to strike a - 9 - HC-KAR NC: 2025:KHC:39057-DB WP No. 31897 of 2018 balance between borrower and the banking institutions. Duties and bonafides of the Bank will be assessed and ascertained on the basis of evidence available on record. No evidence is available on record to show that Bank acted in illegal manner and adopted a short cut to give undue benefit to the Auction Purchasers with a pre-determined and dishonest mind. Whereas, sufficient material is available to show the delaying tactics and attitude of the defaulter. It is very easy to find fault. In the name of right of litigation, things cannot be prolonged to indefinite period. Ultimately, the question to be decided will be whether defaulter had an intension to pay the borrowing or they are only interested in gaining time. 17. In view of the facts and circumstances of the case, it can safely be inferred that Memorandum of Understanding dated 9.3.2012 will not give a fresh cause of action to the defaulter. Otherwise, there will be no difference in all other delaying tactics and signing of MOU. In so far as variance in Valuation Reports is concerned, record reveals that property has fetched maximum possible money out of the present sale. Defaulters have no other option with them also so that some more money can be offered for this property. Hence, on the basis of technical objections of Valuation Report, SARFAESI proceedings should not have been vitiated. 18. In view of the aforesaid, auction sale should not have been set aside on these grounds. No evidence is available to presume any fraud or collusion between R1 Bank and the Auction Purchasers. On the other hand, in view of the non-compliance of Memorandum of Understanding clauses also by the defaulter, steps taken by Bank in SARFAESI Act should have been protected and honoured. Record reveals that sale was conducted in fair and legal manner". - 10 - HC-KAR NC: 2025:KHC:39057-DB WP No. 31897 of 2018 14. Therefore, from perusal of the above, we find that no material has been produced and established so as to record a finding as to any fraud being played by the Bank in either non-service of notice or in preparation and reliance on valuation reports or in the process of auction. 15. This Court in exercise of jurisdiction under Article 226 is not sitting as a Court of appeal. 16. The order of the Debt Recovery Appellate Tribunal is sound and does not require any interference. This petition is therefore dismissed. Sd/- (JAYANT BANERJI) JUDGE Sd/- (UMESH M ADIGA) JUDGE AG List No.: 1 Sl No.: 11