- 1 - HC-KAR NC: 2025:KHC:34126 WP No. 17681 of 2025 C/W WP No. 19517 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 1ST DAY OF SEPTEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 17681 OF 2025 (GM-RES) C/W WRIT PETITION NO. 19517 OF 2024 (GM-RES) IN WP No. 17681/2025 BETWEEN: SRI ARUN KUMAR S SON OF SRI. BHOJA RAJU, AGED ABOUT 46 YEARS, RESIDING AT NO.8, 2ND MAIN ROAD, RMV EXTENSION II STAGE, 3RD BLOCK, BENGALURU 560 094. …PETITIONER (BY SMT. ZAINAB HUSAIN, ADVOCATE FOR SRI. RAMESH T, ADVOCATE) AND: 1. SRI RAGHU A K SON OF LATE AV KRISHNAMARAJU, AGED ABOUT 47 YEARS, RESIDING AT NO. 2, 8TH MAIN LANE, NEAR INDIAN OVERSEAS BANK, BALAJI LAYOUT, KODIGEHALLI MAIN ROAD, Digitally signed by VANAMALA N Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:34126 WP No. 17681 of 2025 C/W WP No. 19517 of 2024 BANGALORE 560 092. 2. MR. SHIVAKUMAR, SON OF VITHAL TOGALURE AGED ABOUT 38 YEARS, RESIDING AT NO. 42, 2ND FLOOR, 1ST MAIN ROAD, KRISHNAIYYAPALYA, BYAPPANAHALLI, BANGALORE - 560002. 3. STATE BANK OF INDIA, RETAIL ASSETS CENTRAL PROCESSING CENTRE BANGALORE CENTRAL, LC ROAD, SHIVAJINAGAR, BENGALURU- 560001 REPRESENTED BY ITS AUTHORISED OFFICER/CHIEF MANAGER …RESPONDENTS (BY SRI. T. P. MUTHANNA, ADVOCATE) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH AND SETT ASIDE THE IMPUGNED POSSESSION NOTICE DATED JANUARY 18, 2025 (ANNEXURE A), ISSUED UNDER RULE 9 OF THE SECURITY INTEREST (ENFORCEMENT) RULES 2002; DIRECT RESTRAINING THE RESPONDENT NO.3 FROM INITIATING OR CONTINUING ANY PROCEEDINGS AGAINST THE PETITIONER UNDER THE SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF - 3 - HC-KAR NC: 2025:KHC:34126 WP No. 17681 of 2025 C/W WP No. 19517 of 2024 SECURITY INTEREST ACT 2002 OR UNDER ANY OTHER LAW TIME BEING IN FORCE, IN RESPECT OF THE SUIT SCHEDULE PROPERTY. IN WP NO. 19517/2024 BETWEEN: SRI MURALI MOHAN Y V S/O YV VENKATESH AGED ABOUT 46YEARS, PREVIOUS ADDRESS AS NO. 85 KODIGEHALLI OLD VILLAGE, SAHAKARANAGAR POST, BANGALORE NORTH, BANGALORE 560 092 PRESENTLY RESIDING AT FLAT NO. F301 3RD FLOOR, SHRI SAI SHANTHI NILAYA KODIGEHALLI VILLAGE, BADRAPPA LAYOUT NEAR NARAYANA SCHOOL SAHAKARANAGAR POST, BANGALORE-560 092 ...PETITIONER (BY SRI. CHOWDAREDDY T. M, ADVOCATE) AND: 1. SRI RAGHU A K S/O LATE A V KRISHNAMARAJU, AGED ABOUT 47 YEARS RESIDING AT NO.2, 8TH MAIN LANE, - 4 - HC-KAR NC: 2025:KHC:34126 WP No. 17681 of 2025 C/W WP No. 19517 of 2024 NEARINDIAN OVERSEAS BANK BALAJI LAYOUT, KODIGEHALLI MAIN ROAD SAHAKARANAGAR POST BANGALORE 560 092. 2. SMT. S DEEPA W/O. MAHENDRA KUMAR D/O SHANKARAPPA AGED ABOUT 42 YEARS RESIDING AT 002/004, BINDUJEERAWALA RESIDENCY, 4TH BLOCK, RAJAJIJNAGAR, BANGALORE PIN- 560 010. 3. THE NATIONAL CO OPERATIVE BANK LIMITED NO. 73/1, GANDHI BAZAAR MAIN ROAD BANGALORE 560 004 HAVING ITS BRANCH OFFICE AT SADASHIVANAGAR BANGALORE 560 080 REPRESENTED BY ITS AUTHORIZED OFFICER/CHIEF MANAGER ...RESPONDENTS (BY SRI. T.P.MUTHANNA, ADVOCATE FOR R3) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED POSSESSION NOTICE DTD 18.06.2024 ISSUED UNDER RULE 9 OF THE SECURITY INTEREST (ENFORCEMENT) RULES 2002, FOUND AT ANNEXURE-A; DIRECT THE RESPONDENTS NOT TO PROCEED AGAINST THE PETITIONER UNDER THE SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND - 5 - HC-KAR NC: 2025:KHC:34126 WP No. 17681 of 2025 C/W WP No. 19517 of 2024 ENFORCEMENT OF SECURITY INTEREST ACT 2002 OR ANY OTHER LAW TIME BEING IN FORCE. THESE PETITIONS, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD ORAL ORDER The petitioners have purchased apartments bearing Nos. G-03 and 301 in the complex called "Shri Sai Shanthi Nilaya" at Kodigehalli Village, Yelahanka Hobli, Bengaluru North Taluk and they have availed financial assistance to purchase these properties. The petitioners are aggrieved because another financial Institution has chosen to initiate proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ['the SARFAESI Act'] as against their respective properties. 2. The petitioners have purchased their apartments from Mr. Raghu A.K. [the common first - 6 - HC-KAR NC: 2025:KHC:34126 WP No. 17681 of 2025 C/W WP No. 19517 of 2024 respondent] under the separate Sale Deeds dated 20.09.2019 and 22.11.2019. If the petitioner in W.P.No.17681/2025 has availed assistance from M/s State Bank of India [the Bank], the other petitioner in W.P. No.19517/2024 has availed assistance from M/s. National Cooperative Bank Ltd [the Co-operative Bank]. It is undisputed that these petitioners are promptly repaying the loans to their respective Bankers and there is no default. 3. The petitioners' constraints are in similar circumstances. Mr. Raghu A.K, after executing the respective Sale Deeds as aforesaid in favour of these petitioners, has executed the Sale Deeds dated 09.12.2019 and 19.10.2019 in favour of Mrs. S. Deepa and Mr. Shivakumar. If Mrs. S. Deepa has availed a loan from the Co-operative Bank, Mr. Shivakumar has availed a loan from the Bank, and they have defaulted in repaying the loans - 7 - HC-KAR NC: 2025:KHC:34126 WP No. 17681 of 2025 C/W WP No. 19517 of 2024 resulting in the impugned proceedings by both the Bank and the Co-operative Bank. 4. The learned counsel for the petitioners, relying upon the afore, submit that Mr. Raghu A.K. could not have transferred the property after executing the corresponding Sale Deeds dated 20.09.2019 and 22.11.2019, and if he could not have, the purchasers could not have created any charge over the property in favour of their respective Bank/Cooperative Bank. They also submit that the petitioners are not uniquely placed inasmuch as there is a modus in Mr. Raghu A.K. executing similar Deeds after transfer resulting in a charge being created by other Institutions, and that Mr. Raghu A.K. has been prosecuted but today he is absconding. 5. Mr. T. P. Muthanna, the learned counsel who appears for the Bank, cannot deny the afore assertions but seeks to justify the decision to extend the loan to Mr. Shivakumar stating that the property - 8 - HC-KAR NC: 2025:KHC:34126 WP No. 17681 of 2025 C/W WP No. 19517 of 2024 that is the subject matter of the Sale Deed dated 20.09.2019 is described as G-03 and the property that is transferred in favour of Mr. Shivakumar is described as GF03. This Court is not persuaded by this argument. The common transferor [Mr. Raghu A.K.] could not have executed Sale Deeds post the Sale Deeds dated 20.09.2019 and 22.11.2019 executed respectively in favour of the petitioners. 6. Further, this Court must observe that it was incumbent upon the Bank/the Co-operative Bank to ensure that there was due verification of the properties before extending loans based on the subsequent Sale Deeds; and even if there is negligence [as against complicity], the asset will not be secured in favour of these Institutions. The proceedings under SARFAESI Act by the Bank and Cooperative Bank based on such nebulous security cannot be sustained. Therefore, this Court must intervene in both these proceedings observing that if - 9 - HC-KAR NC: 2025:KHC:34126 WP No. 17681 of 2025 C/W WP No. 19517 of 2024 the Bank/Co-operative Bank proposes to enforce its alleged security, it must seek vindication of its interest and must also take suitable action against all the concerned including penal proceedings if warranted on due preliminary enquiry. In the light of the afore, the following ORDERS The petitions are allowed quashing the impugned notices dated 18.06.2024 and 18.01.2025 declaring that the Bank/the Co- operative Bank cannot have recourse to the SARFAESI Act unless there is clear vindication of its charge in a properly instituted proceedings. Sd/- (B M SHYAM PRASAD) JUDGE RB