- 1 - HC-KAR NC: 2025:KHC:37760 WP No. 28567 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 19TH DAY OF SEPTEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 28567 OF 2025 (GM-RES) BETWEEN: 1. M/S VISHNUPRIYA CASHEW INDUSTRIES (BORROWER) A REGISERED PARTNERSHIP FIRM DOOR NO 13/8A 4 KADABETTU CROSS KADABETTU VILLAGE BANTWAL TALUK DAKSHINA KANNADA KARNATAKA 574211 2. MR T VARADARAJA PAIT (GUARANTOR AND MORTAGAGOR) (MANAGING PARTNER OF M/S VISHNUPRIYA CASHEW INDUSTRIES) AGE ABOUT 46 YEARS S/O SRI RAGHUNATHPAI T DOOR NO 1-83/4A, SY NO 43-2-API CHENNAITHODY VILLAGE MAVINAKATTE VAMADAPADAVU BANTWALL TALUK DAKSHINA KANNADA KARNATAKA 574324 …PETITIONERS Digitally signed by VANAMALA N Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:37760 WP No. 28567 of 2025 (BY SRI. RUDRABHUSHAN C BENAKANALLI, ADVOCATE) AND: THE AUTHORIZED OFFICER CANARA BAML ARM BRANCH CIRCLE OFFICE CANARA BANK BUILDING OPP ROOPA HOTEL BALLMATTA ROAD MANGALURU KARNATAKA 575003 REP BY ITS CHIEF MANAGER SMT SHIMNA HARIDAS …RESPONDENT (BY SRI. PRASAD HEGDE, ADVOCATE) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF CERTIORARI OR ANY OTHER APPROPRIATE WRIT, ORDER OR DIRECTION QUASHING THE CLASSIFICATION OF THE PETITIONERS LOAN ACCOUNTS AS NON- PERFORMING ASSETS (NPAS) BY THE RESPONDENT BANK, BEING ARBITRARY, ILLEGAL, CONTRARY TO RBI GUIDELINES; QUASH AND SET ASIDE THE DEMAND NOTICE DATED 16.04.2024 VIDE ANNEXURE-A ISSUED UNDER SECTION 13(2) OF THE SARFAESI ACT, 2002, ON THE GROUND OF - 3 - HC-KAR NC: 2025:KHC:37760 WP No. 28567 of 2025 NON-COMPLIANCE WITH MANDATORY PROVISIONS OF LAW, DEFECTIVE SERVICE, INFLATED CLAIMS, AND RESTRUCTURING REQUESTS. THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD ORAL ORDER The first petitioner is a borrower and a Micro, Small and Medium Enterprise [MSME]. The second petitioner is its authorized representative being the Managing Partner. The petitioners are aggrieved by [a] the classification of the loan accounts as Non- Performing Assets [NPA], [b] the demand notice dated 16.04.2024 under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [the SARFAESI Act] and [c] the sale notice dated 08.09.2025 under the Security Interest (Enforcement) Rules, 2002. - 4 - HC-KAR NC: 2025:KHC:37760 WP No. 28567 of 2025 2. Mr. Rudrabhushan C. Benakanalli, the learned counsel for the petitioners, submits that this Court must intervene because [a] the respondent has classified the petitioner’s loan as NPA without restructuring the loan facility despite causing an E-mail on 09.06.2021 with the petitioner responding positively to such offer, [b] the impugned demand under Section 13(2) of the SARFAESI Act cannot be called in question under Section 17 of the SARFAESI Act, [c] the petitioners have called in question the respondent's action to bring certain other secured assets for sale before this Court and such writ petition is pending consideration, and [d] the respondent has notified Plant and Machinery [Lot 2 of the notice] though such property is not hypothecated to the respondent. 3. Mr. Prasad Hegde, the learned counsel who is permitted to enter appearance for the respondent, is heard and the records perused. The - 5 - HC-KAR NC: 2025:KHC:37760 WP No. 28567 of 2025 respondent, proceeding based on the petitioners' account being declared NPA and the demand under Section 13(2) of the SARFAESI Act, has issued the impugned sale notice scheduling auction of certain immovable properties on 17.10.2025 for the recovery of Rs.12,66,22,870.15. This Court must opine that if there is a challenge to the impugned notice dated 08.09.2025, the Debt Recovery Tribunal [DRT] under Section 17 of the SARFAESI Act, will have to examine whether such notice is in accordance with the due procedure as also whether the action is to bring to sell only such assets which are secured. 4. This Court’s attention is not drawn to any impediment in law for the DRT to examine all questions, including the questions that could be about the petitioners’ account being declared as NPA. Therefore, this Court opines that the petitioners have an alternative and efficacious remedy under Section 17 of the SARFAESI Act. The petition stands disposed - 6 - HC-KAR NC: 2025:KHC:37760 WP No. 28567 of 2025 of permitting the petitioners subject to all just exceptions, to avail such remedy leaving open all questions to be considered in such proceedings. The petitioners will also be at liberty to seek exclusion of the time spent in prosecuting this petition. SD/- (B M SHYAM PRASAD) JUDGE RB