- 1 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 11TH DAY OF AUGUST, 2025 BEFORE THE HON'BLE MR. JUSTICE R. NATARAJ WRIT PETITION No. 23835 OF 2022 (GM-RES) BETWEEN: 1. M/s. SLN HOLLOW BLOCK AND EARTH MOVERS No.75/1, YARAPANAHALLI MAIN ROAD, BIDARAHALLI HOBLI SURVEY No.99, KANNUR P.O & VILLAGE BANGALORE - 562 149. REP. BY ITS PROPRIETOR MR. RAJANNA .R PROPRIETORSHIP CONCERN 2. MR. RAJANNA. R S/O LATE RAMAIAH AGED ABOUT 57 YEARS R/AT KUNNUR POST AND VILLAGE SLN HOLLOW BLOCK BANGALORE - 562 149. …PETITIONERS (BY SRI T PRAKASH, ADVOCATE) AND: CANARA BANK D' COSTA SQUARE BRANCH No.98/1-2, WHEELERS ROAD EXTENSION, COOK TOWN BANGALORE - 560 005. REP. BY ITS CHIEF MANAGER/ AUTHORISED OFFICER Digitally signed by SUMA Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 MR. I. SATYANARAYANA RAO S/O KANAKAYYA I AGED ABOUT 50 YEARS. …RESPONDENT (BY SRI SHETTY VIGNESH SHIVARAM, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED ORDER DATED 13.03.2020 PASSED BY THE CHIEF JUDICIAL MAGISTRATE, BANGALORE RURAL DISTRICT, BANGALORE IN CRIMINAL MISCELLANEOUS PETITION No.115/2020 VIDE ANNEXURE-D AND ETC. THIS PETITION COMING ON FOR HEARING THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE R. NATARAJ ORAL ORDER 1. Petitioners have challenged an order dated 13.03.2020 passed by the Chief Judicial Magistrate, Bengaluru Rural District, Bengaluru, in Crl.Misc. No. 115/2020 under Section 14 of the SARFAESI Act. 2. Petitioners contend that they had availed OCC loan of Rs.20,00,000/- and OD loan of a sum of Rs.55,00,000/- from the respondent – Bank and had executed required mortgage deed dated 16.03.2018 and deposited the title deeds of the property. They contend that due to various reasons, they could not carry out the business effectively and could not pay the - 3 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 installments in time. The respondent – Bank, therefore, initiated proceedings under the SARFAESI Act and later initiated proceedings under Section 14 of the SARFAESI Act in Crl.Misc. No. 115/2020 to take possession of the secured asset. The Magistrate passed order dated 13.03.2020 permitting the respondent – Bank to take out possession of the mortgage asset and the jurisdictional Police was directed to provide assistance. Petitioners thereafter approached the respondent – Bank for One Time Settlement (OTS) of the loan amount and after discussions, it was agreed that the petitioners shall pay a sum of Rs.58,00,000/- in full and final settlement of both the loan accounts. Petitioners were directed to pay a sum of Rs.20,000/- on the spot towards OTS. Thereafter petitioners paid a sum of Rs.5,00,000/- on 25.02.2022. They contend that they had requested the respondent – Bank to grant more time to pay the loan amount since the mother of petitioner No. 2 was suffering from age related ailments and she had to be looked after. However, the respondent – Bank instead of granting time, approached the Court and filed a memo for appointment of Court Commissioner to execute the order dated 13.03.2020. The Court had also passed an order dated - 4 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 21.04.2022 appointing the Commissioner and authorized the respondent – Bank to issue e-auction sale notice by fixing the auction date as 21.12.2022. Petitioners contend that when Court Commissioner went near the mortgaged asset and the respondent – Bank tried to take possession of the property, the petitioners came to know of the impugned order. Hence, petitioners are therefore before this Court. 3. Learned counsel for petitioners contended that respondent – Bank had not stipulated any time within which OTS amount had to be paid. He contends that petitioners have paid the entire sum of Rs.58,00,000/- and therefore, the respondent – Bank cannot proceed against the mortgaged asset and the respondent – Bank is bound to cancel the mortgage and return the property documents. Learned counsel has taken the Court through the various interlocutory orders passed by this Court. He invited the attention of the Court to the order dated 15.12.2023 which reads as follows: "This Court by Order dated 29.11.2022, had restrained the respondent-Bank from precipitating in the matter. The said Order has been extended time to time, respondent-Bank has filed statement - 5 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 of objection on 18.07.2023, indicating as on the said date the total outstanding amount payable by the petitioner is about Rs.1,01,00,000/- (One Crore and One Lakh Rupees). 2. Learned counsel for the petitioner though does not dispute the said amount submits that there was a proposal for one time settlement, in which the petitioner proposed to pay Rs.58,00,000/- (Rupees Fifty Eight Lakhs Only). 3. Learned counsel for the respondent submits that, OTS proposal has not been materialized on account of non-compliance by the petitioner. However, if better offer is made same will be considered. 4. Be that as it is. 5. Petitioner cannot be allowed to have the benefit of the interim order without any conditions. In that view of the matter, petitioner shall deposit a sum of Rs.40,00,000/- in two installments, Rs.20,00,000/- within a period of four weeks from today and remaining Rs.20,00,000/- within a period of two weeks thereafter. If the - 6 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 petitioner fails to make the payments, the interim order stands vacated. In the meanwhile, parties are at liberty to explore the settlement of the matter amicably. 4. He further invited the attention of the Court to the order dated 18.04.2024 which reads as follows: "The petitioners are before this Court calling in question an order dated 13.03.2020 passed by the learned Magistrate under Section 14 of the SARFAESI Act, 2002. This Court in order to protect the interest of the petitioners as well as of the Bank, had passed certain interim order on certain conditions. The interim order granted on 15.12.2023, reads as follows: "This Court by Order dated 29.11.2022, had restrained the respondent-Bank from precipitating in the matter. The said Order has been extended time to time, respondent-Bank has filed statement of objection on 18.07.2023, indicating as on the said date the total outstanding amount payable by the petitioner is about - 7 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 Rs.1,01,00,000/- (One Crore and One Lakh Rupees). 2. Learned counsel for the petitioner though does not dispute the said amount submits that there was a proposal for one time settlement, in which the petitioner proposed to pay Rs.58,00,000/- (Rupees Fifty Eight Lakhs Only). 3. Learned counsel for the respondent submits that, OTS proposal has not been materialized on account of non-compliance by the petitioner. However, if better offer is made same will be considered. 4. Be that as it is. 5. Petitioner cannot be allowed to have the benefit of the interim order without any conditions. In that view of the matter, petitioner shall deposit a sum of Rs.40,00,000/- in two installments, Rs.20,00,000/- within a period of four weeks from today and remaining Rs.20,00,000/- within a period of two weeks thereafter. If the petitioner fails to make the payments, the interim order stands vacated. In the meanwhile, parties are at - 8 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 liberty to explore the settlement of the matter amicably." The petitioners have complied with the interim order. On 01.04.2024, this Court noticing the compliance, has passed the following order: "Learned counsel for the petitioners has brought to the notice of this Court that there is a delay of one day in depositing the amount as directed by this Court. The Bank taking cognizance of one day delay has taken precipitative action and possession notice is issued. The order passed by this Court clearly indicates that if compliance is not made within the period stipulated, the interim order stands vacated. Even if there is a day’s delay, technically the interim order stands vacated as indicated by this Court vide order dated 15.12.2023. Be that as it may, since petitioner has deposited in all Rs.54,44,900/- in two installments, I deem it fit to extend protection till the next date of hearing. - 9 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 Re-list this matter in preliminary hearing on 08.04.2024 in the fresh matters list. Till then, the respondents are hereby directed not to take any precipitative action." Learned counsel appearing for the respondent- Bank submits that the petitioners have paid only the amount under the one time settlement and not the total amount in due in terms of the interim order. The petitioners appears to have offered a one time settlement on 02.08.2021. The one time settlement offer reads as follows: "OFFER LETTER From: Name: Rajanna Address: S/O Late Ramalah To: The Manager Canara Bank SUB: 0432256000392 & 0432261000373 I have availed subject loan /s from your Bank. I could not repay the loan/s in time as agreed for reasons: - 10 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 1. Business loss due to Covid. 2. Now, I am agreeable to settle the dues with the Bank under compromise with an OTS offer of Rs. 58,00,000/- in full and final settlement and payable as under: 1. Spot payment Rs 20,000/- 2. I am willing to abide by terms and conditions stipulated by the Bank in this regard, Yours faithfully, sd/- (BORROWER)" The acknowledgment for receipt of the said application for one time settlement reads as follows: "Accepted for OTS sd/-" The acknowledgment is accepted for one time settlement for Rs.58.00 lakhs, it bears signature of the concerned Manager. The petitioners as on today completely paid Rs.58.00 lakhs is his - 11 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 submission and it is disputed by the learned counsel appearing for the respondent. Therefore, the respondent shall project what is remaining to be paid out of Rs.58.00 lakhs. Learned counsel, Sri Vignesh Shetty appearing for the respondent submits that there is a mistake on the part of the branch for having acknowledged as accepted for one time settlement of Rs.58.00 lakhs instead of received. If that be so, any rejection of communication to the petitioners should have been made. Learned counsel appearing for the petitioners submits that till today there is no order of rejection of the one time settlement that was submitted on 02.08.2021. Therefore, it is presumed, prima facie that the one time settlement is accepted for that amount without any condition. If at all anybody has to be blamed, it is the Officer who has accepted the one time settlement, for a particular amount. Sri Vignesh Shetty, learned counsel shall place on record any communication of rejection of one time settlement to the petitioners till today and the same having been delivered or received by the petitioners. List the matter on 23.04.2024 in the fresh matters list. - 12 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 The interim order granted earlier is extended till the disposal of the petition.” 5. He further invited the attention of the Court to the order dated 24.04.2024 which reads as follows: This Court on 29.11.2022, had passed the following order: “Heard the learned counsel for the petitioners. Sri Vignesh Shetty, learned counsel is directed to take notice on behalf of the respondent. Learned counsel for the petitioners is directed to serve a copy of the notice upon Sri Vignesh Shetty, learned counsel for the respondent, forthwith. List the matter on 02.12.2022. The respondent - Bank is restrained from precipitating the matter, till the next date of hearing.” The said order was continued from time to time. On 15.12.2023, the following order is passed: “This Court by Order dated 29.11.2022, had restrained the respondent-Bank from precipitating in the matter. The said Order has been extended time to time, respondent- Bank has filed statement of objection on - 13 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 18.07.2023, indicating as on the said date the total outstanding amount payable by the petitioner is about Rs.1,01,00,000/- (One Crore and One Lakh Rupees). 2. Learned counsel for the petitioner though does not dispute the said amount submits that there was a proposal for one time settlement, in which the petitioner proposed to pay Rs.58,00,000/- (Rupees Fifty Eight Lakhs Only). 3. Learned counsel for the respondent submits that, OTS proposal has not been materialized on account of non-compliance by the petitioner. However, if better offer is made same will be considered. 4. Be that as it is. 5. Petitioner cannot be allowed to have the benefit of the interim order without any conditions. In that view of the matter, petitioner shall deposit a sum of Rs.40,00,000/- in two installments, Rs.20,00,000/- within a period of four weeks from today and remaining Rs.20,00,000/- within a period of two weeks thereafter. If the petitioner fails to make the payments, the interim order stands vacated. In the meanwhile, parties are at liberty to - 14 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 explore the settlement of the matter amicably.” On 01.04.2024, the following order is passed. “Learned counsel for the petitioners has brought to the notice of this Court that there is a delay of one day in depositing the amount as directed by this Court. The Bank taking cognizance of one day delay has taken precipitative action and possession notice is issued. The order passed by this Court clearly indicates that if compliance is not made within the period stipulated, the interim order stands vacated. Even if there is a day’s delay, technically the interim order stands vacated as indicated by this Court vide order dated 15.12.2023. Be that as it may, since petitioner has deposited in all Rs.54,44,900/- in two installments, I deem it fit to extend protection till the next date of hearing. Re-list this matter in preliminary hearing on 08.04.2024 in the fresh matters list. Till then, the respondents are hereby directed not to take any precipitative action.” - 15 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 The afore-quoted orders were noticed and a detailed order was passed by this Court, on 18.04.2024, which reads as follows: “The petitioners are before this Court calling in question an order dated 13.03.2020 passed by the learned Magistrate under Section 14 of the SARFAESI Act, 2002. This Court in order to protect the interest of the petitioners as well as of the Bank, had passed certain interim order on certain conditions. The interim order granted on 15.12.2023, reads as follows: "This Court by Order dated 29.11.2022, had restrained the respondent-Bank from precipitating in the matter. The said Order has been extended time to time, respondent-Bank has filed statement of objection on 18.07.2023, indicating as on the said date the total outstanding amount payable by the petitioner is about Rs.1,01,00,000/- (One Crore and One Lakh Rupees). 2. Learned counsel for the petitioner though does not dispute the said amount submits that there was a proposal for one time settlement, in which the petitioner proposed to pay Rs.58,00,000/- (Rupees Fifty Eight Lakhs Only). - 16 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 3. Learned counsel for the respondent submits that, OTS proposal has not been materialized on account of non-compliance by the petitioner. However, if better offer is made same will be considered. 4. Be that as it is. 5. Petitioner cannot be allowed to have the benefit of the interim order without any conditions. In that view of the matter, petitioner shall deposit a sum of Rs.40,00,000/- in two installments, Rs.20,00,000/- within a period of four weeks from today and remaining Rs.20,00,000/- within a period of two weeks thereafter. If the petitioner fails to make the payments, the interim order stands vacated. In the meanwhile, parties are at liberty to explore the settlement of the matter amicably." The petitioners have complied with the interim order. On 01.04.2024, this Court noticing the compliance, has passed the following order: "Learned counsel for the petitioners has brought to the notice of this Court that there is a delay of one day in depositing the amount as directed by this Court. The Bank taking - 17 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 cognizance of one day delay has taken precipitative action and possession notice is issued. The order passed by this Court clearly indicates that if compliance is not made within the period stipulated, the interim order stands vacated. Even if there is a day’s delay, technically the interim order stands vacated as indicated by this Court vide order dated 15.12.2023. Be that as it may, since petitioner has deposited in all Rs.54,44,900/- in two installments, I deem it fit to extend protection till the next date of hearing. Re-list this matter in preliminary hearing on 08.04.2024 in the fresh matters list. Till then, the respondents are hereby directed not to take any precipitative action." Learned counsel appearing for the respondent- Bank submits that the petitioners have paid only the amount under the one time settlement and not the total amount in due in terms of the interim order. The petitioners appears to have offered a one time settlement on 02.08.2021. The one time settlement offer reads as follows: "OFFER LETTER From: - 18 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 Name: Rajanna Address: S/O Late Ramalah To: The Manager Canara Bank SUB: 0432256000392 & 0432261000373 I have availed subject loan /s from your Bank. I could not repay the loan/s in time as agreed for reasons: 1. Business loss due to Covid. 2. Now, I am agreeable to settle the dues with the Bank under compromise with an OTS offer of Rs. 58,00,000/- in full and final settlement and payable as under: 1. Spot payment Rs 20,000/- 2. I am willing to abide by terms and conditions stipulated by the Bank in this regard, Yours faithfully, sd/- (BORROWER)" The acknowledgment for receipt of the said application for one time settlement reads as follows: "Accepted for OTS sd/-" - 19 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 The acknowledgment is accepted for one time settlement for Rs.58.00 lakhs, it bears signature of the concerned Manager. The petitioners as on today completely paid Rs.58.00 lakhs is his submission and it is disputed by the learned counsel appearing for the respondent. Therefore, the respondent shall project what is remaining to be paid out of Rs.58.00 lakhs. Learned counsel, Sri Vignesh Shetty appearing for the respondent submits that there is a mistake on the part of the branch for having acknowledged as accepted for one time settlement of Rs.58.00 lakhs instead of received. If that be so, any rejection of communication to the petitioners should have been made. Learned counsel appearing for the petitioners submits that till today there is no order of rejection of the one time settlement that was submitted on 02.08.2021. Therefore, it is presumed, prima facie that the one time settlement is accepted for that amount without any condition. If at all anybody has to be blamed, it is the Officer who has accepted - 20 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 the one time settlement, for a particular amount. Sri Vignesh Shetty, learned counsel shall place on record any communication of rejection of one time settlement to the petitioners till today and the same having been delivered or received by the petitioners. List the matter on 23.04.2024 in the fresh matters list. The interim order granted earlier is extended till the disposal of the petition.” Sri Vignesh Shetty, learned counsel for the respondent – bank was specifically directed to place on record if there is any communication of rejection of the proposal of one time settlement proposed by the petitioner. Learned counsel for respondent – bank is candid but seeks to defend that the proposal submitted to the bank officer, who had no authority to accept the proposal of one time settlement, and the one time settlement did not reach the competent authority, and the competent authority who had no occasion to reject the proposal of one time settlement. It is the submission of the learned counsel for petitioner, that there is no rejection of the offer of - 21 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 one time settlement, no such communication, is even received by the petitioners, but the amount in terms of the interim order have all been complied by the petitioners. In the light of the aforesaid submissions, the matter requires consideration. Issue Rule. The interim order granted earlier, is made absolute. Post the matter for hearing in the usual course. 6. He further invited the attention of the Court to the order dated 06.12.2024 which reads as follows: "Learned counsel for the respondent - bank once again seeks to reiterate that the officer of the bank who had accepted the one time settlement on part of the petitioner was not so authorized. The said condition has already been rejected by a Coordinate Bench of this Court in various orders passed earlier. Hence, it would not lie for the Respondent bank to again reiterate this contention. Such a contention can only be said to be based on malafide instructions. 2. If the same way to be persisted with necessary orders would have to be passed. 3. Re-list on 13.12.2024." - 22 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 7. He therefore contends that the impugned order passed by the Court has spent in itself in view of the petitioners paying the entire amount of OTS. 8. Per contra, learned counsel for respondent – Bank has opposed the writ petition inter alia contending that after the petition under Section 14 of the SARFAESI Act was filed and the respondent – Bank was allowed to take possession of the secured asset, the petitioners approached the respondent - Bank on 02.08.2021 and had a meeting with the regional head where he was permitted to clear 50% liability by 29.11.2021 and the remaining on 28.02.2022. He contended that the petitioners have now challenged the order dated 13.03.2020 without complying the directions of the Regional Office. He has contended that the petitioners have alternative remedy of appeal against the order passed under Section 14 of the SARFAESI Act before the DRT and therefore, this Court should not exercise its jurisdiction. 9. Learned counsel for petitioners and respondent – Bank reiterated the above contentions. Learned counsel for respondent – Bank specifically submitted that the petitioners were bound to pay the amount under the OTS within a period - 23 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 of 90 days as per the Master Circular issued by the respondent – Bank and therefore, belated payment was not acceptable and amount so paid by the petitioners was appropriated towards the loan outstanding. Thus he contends that the petitioner cannot be granted relief on the footing that the OTS was cleared. He further contends that the person who accepted the OTS offer of the petitioners was not authorized to do so as per the Master Circular and that the said Manager is proceeded against departmentally. 10. The contention of the learned counsel for respondent – Bank that petitioners had alternate remedy of appeal under Section 17 of the SARFAESI Act against the order passed under Section 14 of SARFAESI Act is just and proper. However, post the order dated 13.03.2020, some developments have taken place, namely, that the petitioners had availed the OTS formulated by the respondent – Bank and based on the discussion between the petitioners and the respondent – Bank, a sum of Rs.58,00,000/- was payable by the petitioners. In the letter which is marked as Annexure E, where the respondent – Bank had agreed for the OTS, the petitioners were not informed about the time within which they - 24 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 had to pay the OTS amount. It may be that it is mentioned in the Master Circular that the borrower has to pay the OTS amount within a period of 90 days. However, unless the same was put on notice to the petitioners, it cannot lie in the mouth of the respondent – Bank that the petitioners were bound to pay the OTS amount within a period of 90 days from the date of OTS. Now that the petitioners have paid Rs.58,00,000/- as agreed, the respondent – Bank is bound in law to accept the said amount towards OTS. Though no time was fixed, the petitioners unconditionally agreed as follows: “ I am willing to abide by terms and conditions stipulated by the Bank in this regard”. If we take this into account, petitioners were bound to pay the amount within reasonable time. Since the same is not done, petitioners are bound to and are accordingly directed to pay interest at the rate of 12% per annum on Rs.58,00,000/- from 01.01.2022 till the date when the first payment was made and thereafter at the rate of 12% per annum on the balance till payment. This shall be complied within 3 months from the date of receipt of a copy of this order. After the petitioners pay the interest as stated above, the respondent – Bank shall return the documents forthwith without any further delay. The - 25 - HC-KAR NC: 2025:KHC:30949 WP No. 23835 of 2022 respondent – Bank shall not proceed with any further action in the meanwhile but its right to proceed against the petitioners and the secured asset is reserved to recover the interest as stated above. 11. In terms of the above, writ petition is disposed off. Sd/- (R. NATARAJ) JUDGE LRS List No.: 1 Sl No.: 24