- 1 - HC-KAR NC: 2025:KHC:43666 WP No. 32520 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 31ST DAY OF OCTOBER, 2025 BEFORE THE HON'BLE SMT. JUSTICE LALITHA KANNEGANTI WRIT PETITION NO. 32520 OF 2025 (GM-DRT) BETWEEN: 1. MR RAMACHANDRA S/O GUJJAPPA, AGED ABOUT 57 YEARS, 2. MR PRAKASH R S/O RAMACHANDRA, AGED ABOUT 47 YEARS, 3. MR HARISH R S/O RAMACHANDRA, AGED ABOUT 46 YEARS, THE PETITIONERS NO.1 TO 3 ARE RESIDING AT NO. 42, 1ST FLOOR, SRI LAKSHMI VENKATESHWARA NILAYA, 9TH MAIN ROAD, NEAR ICICI BANK ATM, HONGASANDRA NORTH, BENGALURU 560 048. …PETITIONERS (BY SRI. SRIKANTH A., ADVOCATE) Digitally signed by MEGHA MOHAN Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:43666 WP No. 32520 of 2025 AND: M/S TUMKUR GRAIN MERCHANTS CO-OPERATIVE BANK LTD ADMIN OFFICE, BH ROAD, TUMKUR 572103. IFSC CODE: TGMB0000001 REP. BY ITS AUTHORIZED OFFICER, MR RAJASHEKAR …RESPONDENT (BY SRI. K.V. LOKESH., ADVOCATE C/R (CP NO.23378/2025)) THIS WRIT PETIION IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO SET ASIDE THE IMPUGNED E AUCTION SALE NOTICE PASSED BY THE RESPONDENT BANK DATED 15/10/2025 AS PER ANNEXURE-J AND GRANT AN INTERIM PRAYER TO STAYING THE OPERATION OF E AUCTION SALE NOTICE DATED 15.10.2025 PASSED BY THE RESPONDENT BANK VIDE ANNEXURE-J AND ALL THE CONSEQUENTIAL PROCEEDINGS. THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE SMT. JUSTICE LALITHA KANNEGANTI - 3 - HC-KAR NC: 2025:KHC:43666 WP No. 32520 of 2025 ORAL ORDER The present writ petition is filed seeking the following prayer: WHEREFORE, the Petitioners most respectfully pray that, this Hon’ble Court may be pleased to pass an order to: "(a) Issue a writ, in the nature of writ of certiorari or any other appropriate writ, order to set aside the impugned e-Auction Sale Notice bearing No.TGMCB/SEC/62/2025-26 passed by respondent Bank dated 15.10.2025 as per Annexure-J; (b) grant such other relief or reliefs as this Hon'ble Court may deem fit to grant under the facts and circumstances of the case, in the interest of Justice and Equity". 2. The brief facts of the case are that, petitioner No.1 has purchased the property in question under a registered sale deed dated 06.05.2013. The petitioners had availed loan of Rs.1.25 Crores by mortgaging the said property on 05.09.2014. It is stated that the petitioners have been repaying the loan dues from 2014. Due to COVID-19 they have incurred huge loss in their business and they could not repay the loan. During the year 2020, the petitioner No.1 met with an accident and had been admitted in the hospital as in-patient and - 4 - HC-KAR NC: 2025:KHC:43666 WP No. 32520 of 2025 therefore, they were not able to repay the due to the Bank. The petitioners have filed several representations including a representation dated 22.05.2025 to different Branches and two Final Representations on 21.06.2025. The respondent/Bank had not given any opportunity and also there is no response from the respondent/Bank to the petitioners to settle the dues. 3. It is further stated that the respondent/Bank has issued the E-Auction Notice dated 04.09.2025 through WhatsApp on 06.06.2025 to one of the petitioners mobile number by fixing the sale on 09.10.2025. The notice was not issued to all the petitioners by the respondent/Bank through the Indian Postal Department. In the Notice dated 12.12.2024, it is stated that the outstanding amount as on 02.09.2025 is Rs.5,63,24,620/- which is not correct. It is stated that as on 30.04.2019, the total amount due payable by the petitioners as per the agreed terms and conditions is Rs.3,88,47,445/-. It is further stated that the amount has been recovered by the respondent/Bank in earlier E-Auction Sale Notice on 05.03.2025 for different properties and the Sale Certificate was issued on 05.03.2025. The respondent/Bank did not disclose - 5 - HC-KAR NC: 2025:KHC:43666 WP No. 32520 of 2025 the fact that whatever amount that has been recovered in the earlier E-Auction Sale Notice and how much is deducted from the total outstanding amount. It is further submitted that the petitioners have challenged the E-Auction Sale Notice dated 04.09.2025 before Debt Recovery Tribunal-II (for short, 'DRT') by filing S.A.No.334/2025. The Tribunal had passed the interim order in S.A.No.334/2025 on 29.09.2025 staying the E-Auction Sale Notice with a condition that the petitioners shall pay a sum of Rs.1 Crore on or before 09.10.2025 i.e., on the day when the E-Auction was fixed by the respondent/Bank. 4. The petitioners have carried this matter to this Court by filing a writ petition i.e., W.P.No.30478/2025 challenging the interim order granted by the DRT in S.A.No.334/2025. This Court after hearing both the parties, has disposed of the said writ petition while extending the time granted by the DRT till 16.10.2025 and also directed the petitioners to pay a sum of Rs.25,00,000/- before 05.00 p.m. on 09.10.2025. It is submitted that as per the order passed by this Court, the petitioners have deposited an amount of Rs.25,00,000/-. The DRT has fixed the date for hearing on 14.10.2025. On that - 6 - HC-KAR NC: 2025:KHC:43666 WP No. 32520 of 2025 day, the DRT has closed S.A.No.334/2025 on the ground that the Bank did not conduct E-Auction. It is submitted that the petitioners have not received any notices including E-Auction Sale Notice dated 15.10.2025 and which is not sent through the speed post. But, it is received on 21.10.2025 through WhatsApp of one of the petitioners' mobile number. It is submitted that the notice is defective in nature and again the petitioners are disputing the outstanding amount. The respondents only with vengeance and with a deliberate attempt to cause hardship to the petitioners, they issued the E-Auction Sale Notice without issuing a demand notice under Section 13(2) or 13(4) of the SARFEASI Act, 2002. Hence, the petitioners having no other alternative and efficacious remedy have come before this Court. 5. Further, in support of the grounds, it is stated that the action of the bank in issuing the E-Auction notice is contrary to the SARFAESI Act and the Rules. The respondent/Bank has totally violated the procedures prescribed under the Act and they illegally invoked the provisions of the SARFAESI Act. The Bank is obligated to comply with Section 14 of the Act. The - 7 - HC-KAR NC: 2025:KHC:43666 WP No. 32520 of 2025 action of the Bank is not in accordance with law and the Bank has failed to calculate the date of NPA while starting the recovery proceedings. The Bank has proceeded to auction the scheduled property below the Market value and guidance value of the Government without obtaining the valuation report of the property. In view of these circumstances, the E-Auction Sale Notice needs to be set aside. 6. Learned Counsel appearing for the petitioners submits that, petitioners along with the Advocate have approached the CEO of the bank and the CEO has assured that for an amount of Rs.1.25 Crores, they will settle the loan. Learned Counsel submits that as the entire procedure is contrary to the provisions of the SARFAESI Act, the notice needs to be set aside and that apart they are ready to pay the entire amount of Rs.1.25 Crores as assured by the CEO within a period of 15 days, as such the auction may be stayed. Thereafter, they will approach the DRT and at this point of time approaching the DRT is not an effective and alternative remedy. It is submitted that due to financial conditions, the petitioners could not repay the loan. Now, as there is clear violation of the statutory rules - 8 - HC-KAR NC: 2025:KHC:43666 WP No. 32520 of 2025 under the SARFAESI Act, the petitioners forced to come before this Court. It is further submitted that under these circumstances, though there is an alternative remedy, still this Court can entertain the writ petition. Learned Counsel for the petitioners prays that there shall be a direction to the respondent/Bank not to conduct the auction. 7. Learned Counsel appearing for the respondent/Bank submits that all the submissions that were made before this Court are contrary to the record. It is submitted that the bank has followed the procedures as contemplated under the SARFAESI Act. They have issued notice under Section 13(2) and 13(4) of the Act and it is served on the petitioners. They have placed before this Court the notices, the postal receipt and also the acknowledgment to show that the notices are served as long back on 01.11.2019. Further, he has placed before this Court the paper publication and the possession notice. It is submitted that when the petitioners have questioned the earlier Sale Notice before the DRT, DRT has directed them to pay an amount of Rs.1.00 Crore. Challenging the said order, the petitioners have come before this Court and - 9 - HC-KAR NC: 2025:KHC:43666 WP No. 32520 of 2025 the same was reduced to Rs.25.00 Lakhs. The liberty was given to the petitioners to approach the DRT. It is submitted that the proceedings were initiated in the year 2019. Except the amount of Rs.25 Lakhs, as per the order in the writ petition, no other amounts are paid by the petitioners. If there is any irregularity in conducting the sale and issuing notices under Sections 13(2) and 13(4) of the Act, the petitioners can go before the DRT and raise all these grounds. 8. Learned Counsel appearing for the respondent/Bank on instructions submits that when the petitioners have approached the respondent/Bank stating that they are ready to pay an amount of Rs.1.25 Crores, the Bank has rejected the said proposal and his instructions are that the bank is not ready to accept the proposal for a sum of Rs.1.25 Crores as ‘One Time Settlement’ as offered by the petitioners when the outstanding amount during the year 2019 is Rs.3.00 Crores and odd. It is stated that the bank has not offered Rs.1.25 Crores as 'One Time Settlement'. Learned Counsel submits that from the year 2019 till now, the Bank is not able to realize the loan amount. - 10 - HC-KAR NC: 2025:KHC:43666 WP No. 32520 of 2025 9. Learned Counsel appearing for the respondent/Bank relied upon the judgment of the Hon’ble Apex Court in the case of PHR Invent Educational Society Vs. Uco Bank and others, arising out of SLP No.8867/2022, dated April 10, 2024. It is submitted that the Hon’ble Apex Court in the said judgment while considering various other judgments of the Apex Court held that the petition under Article 226 of the Constitution would be entertained, in spite of availability of an alternative remedy, where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or it has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice. Learned Counsel has also relied on the judgment of the Hon’ble Apex Court in case of Arce Polymers Private Limited Vs. Alphine Pharmaceuticals Private Limited and Others1. He has relied on paragraph Nos.12, 13, 15, 16 and 17, which reads as under: 1 (2022) 2 SCC 221 - 11 - HC-KAR NC: 2025:KHC:43666 WP No. 32520 of 2025 "12. On the second question, reference was made to Section 17(1) of the SARFAESI Act which deals with the right of appeal by a party aggrieved by the measures referred to in sub- section (4) to Section 13. Relying on the decision of this Court in Indian Overseas Bank v. Ashok Saw Mill [Indian Overseas Bank v. Ashok Saw Mill, (2009) 8 SCC 366 : (2009) 3 SCC (Civ) 403] , it was held that the series of steps from the date of auction by the secured creditor under Section 13(2) of the SARFAESI Act up to the date of auction and sale confirmation can be challenged by the borrower when it challenges the measures referred to in sub-section (4) to Section 13 under Section 17 of the SARFAESI Act. In this view of the matter, the High Court with respect to the second issue held that though the OA was filed on 1-10-2018, the borrower can challenge the possession notice issued on 3-3- 2017, taking of symbolic possession, taking of physical possession in May 2017, the sale notice issued on 2-7-2018, and the sale certificate dated 27-9-2018 as they all form part of the same cause of auction. Consequently, it was observed that challenge to the auctions/measures prior to 2-7-2018 would not be barred by limitation. 13. In view of the factual matrix of the present case, which has been set out in detail above and the aspect of waiver and estoppel discussed subsequently, it is not necessary for us to examine the question of violation of Section 13(3-A) of the SARFAESI Act and also whether the cause of auction from the date of issue of notice under Section 13(2) of the SARFAESI Act till the issuance of the sale certificate is a continuing cause of auction. Suffice it would be to observe that in ITC Ltd. [ITC Ltd. v. Blue Coast Hotels Ltd., (2018) 15 SCC 99 : (2018) 4 SCC (Civ) 793] , this Court in spite of holding that there was violation of Section 13(3-A) of the SARFAESI Act and consequently the notice of possession under Section 13(4) was vitiated, had allowed the appeal in view of the attendant - 12 - HC-KAR NC: 2025:KHC:43666 WP No. 32520 of 2025 circumstances set out in sub-paragraphs of para 30 on the ground that the debtor, post the notice under Section 13(4) of the SARFAESI Act, had given proposals with assurances, letter of undertaking for repayment of the mortgage debt, pursuant to which time was granted and consequently the sale notice was deferred. Only when payments were not made as promised that the creditor had proceeded to recover the dues. 14. ... ... ... 15. We would like to elaborate on the aforesaid principle as the dictum, as declared in ITC Ltd. [ITC Ltd. v. Blue Coast Hotels Ltd., (2018) 15 SCC 99 : (2018) 4 SCC (Civ) 793] , will equally apply to proceedings before the Debts Recovery Tribunal and the Appellate Tribunal under the SARFAESI Act. The principle applied is that of waiver and estoppel. 16. Waiver is an intentional relinquishment of a known right. Waiver applies when a party knows the material facts and is cognizant of the legal rights in that matter, and yet for some consideration consciously abandons the existing legal right, advantage, benefit, claim or privilege. Waiver can be contractual or by express conduct in consideration of some compromise. However, a statutory right may also be waived by implied conduct, like, by wanting to take a chance of a favourable decision. The fact that the other side has acted on it, is sufficient consideration. 17. It is correct that waiver being an intentional relinquishment is not to be inferred by mere failure to take auction, but the present case is of repeated positive acts post the notices under Sections 13(2) and (4) of the SARFAESI Act. Not only did the borrower not question or object to the auction of the Bank, but it by express and deliberate conduct had asked the Bank to compromise its position and alter the contractual terms. The borrower wrote repeated request letters for restructuring of loans, which - 13 - HC-KAR NC: 2025:KHC:43666 WP No. 32520 of 2025 prayers were considered by the Bank by giving indulgence, time and opportunities. The borrower, aware and conscious of its rights, chose to abandon the statutory claim and took its chance and even procured favourable decisions. Even if we are to assume that the borrower did not waive the remedy, its conduct had put the Bank in a position where they have lost time, and suffered on account of delay and laches, which aspects are material. Auction on the subject property was delayed by more than a year as at the behest of the borrower, the Bank gave them a long rope to regularise the account. To ignore the conduct of the borrower would not be reasonable to the Bank once third- party rights have been created. In this background, the principle of equitable estoppel as a rule of evidence bars the borrower from complaining of violation". 10. Relying on the above judgments, the learned Counsel submits that the petitioners have approached the DRT at the earlier point of time and notice under Sections 13(2) and 13(4) of the Act which were issued to them were not questioned before the DRT and they have relinquished their rights. When the matter has come up to the stage where the Auction Notice is issued at this point of time, it is not permissible for the petitioners to raise all those grounds which they have waived and relinquished. He submits that in the light of the settled law, the interference of this Court under 226 - 14 - HC-KAR NC: 2025:KHC:43666 WP No. 32520 of 2025 of the Constitution of India is not permissible and the petitioners shall be relegated to the DRT. 11. Having heard the Counsels on either side, perused the material on record. In the light of the judgment of the Hon’ble Apex Court in the case of PHR Invent Educational Society, referred supra, the parameters that are laid down by the Hon'ble Apex Court with regard to the interference of this Court in a matter pertaining to securitization in SERFEASI Act is very clear when the whole purpose of constituting the Tribunal for specific claims is for the purpose of getting a timely justice to the parties. The petitioners have borrowed the loan in the year 2014. Right from the year 2019, they have not paid any amount till an order is passed in the writ petition in the year 2024 and only an amount of Rs.25.00 Lakh is paid. The grounds that are raised by the petitioners prima facie this Court is not able to appreciate. On 13.02.2024 the material that is placed before the Court shows that the Notice is served on the petitioners way back in the year 2019. From the year 2019, till they approached the DRT, by filing the S.A., what were the petitioners doing is not forthcoming, with regard to the - 15 - HC-KAR NC: 2025:KHC:43666 WP No. 32520 of 2025 outstanding amount of Rs.1.25 Crores according to the petitioners, Bank has given an offer. According to the learned Counsel appearing for the Bank, such offer was not given. Now, with regard to the irregularity that has taken place in an earlier sale, it is always open to the petitioners to question that there is a fraud played by the Bank. But the same was not questioned by the petitioners and they kept quiet. Learned Counsel appearing for the respondent/Bank submits that they have followed the procedures as prescribed under law. If there is any procedural violation by the respondent/Bank, it is a fit case for the petitioners to approach the DRT and the DRT would consider all the relevant factors. 13. In the considered opinion of this Court, this Court's interference in the petition of this nature is most unwarranted and the petitioners are liberty to approach the DRT. Accordingly, this Court is passing the following: ORDER (i) Accordingly, the writ petition is dismissed. (ii) Liberty is reserved to the petitioners to avail the alternative remedy. - 16 - HC-KAR NC: 2025:KHC:43666 WP No. 32520 of 2025 (iii) Pending Interlocutory Applications, if any, stand disposed of. SD/- (LALITHA KANNEGANTI) JUDGE DL CT: JL