- 1 - HC-KAR NC: 2026:KHC:15172 WP No. 16559 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 13TH DAY OF MARCH, 2026 BEFORE THE HON'BLE SMT. JUSTICE LALITHA KANNEGANTI WRIT PETITION NO. 16559 OF 2023 (GM-DRT) BETWEEN: 1. M/S FOUNDATION FOR EDUCATION FOR ALL (A REGISTERED PUBLIC CHARITABLE TRUST) NO.551, 2ND MAIN ROAD 9TH CROSS, J P NAGAR III PHASE BENGALURU - 560 078 REPRESENTED BY ITS HONORARY CHAIRMAN AND MANAGING TRUSTEE DR S MAHALINGAM 2. DR S MAHALINGAM S/O SRI V SHANMUGAM AGED ABOUT 72 YEARS R/A FLAT NO.4, ASHRAYA RESIDENCY 27TH MAIN, BTM 1ST STAGE BENGALURU - 560 068 3. MRS MOHANA KUMARI W/O DR S MAHALINGAM AGED ABOUT 62 YEARS R/A FLAT NO.4 ASHRAYA RESIDENCY 27TH MAIN, BTM IST STAGE Digitally signed by SUVARNA T Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2026:KHC:15172 WP No. 16559 of 2023 BENGALURU - 560 068 …PETITIONERS (BY SRI. SHERWIN DSOUZA, ADVOCATE FOR SRI. S. SHAKER SHETTY, ADVOCATE) AND: 1. BANK OF BARODA NO.23/24, INFANTRY ROAD BENGALURU-560001 REPRESENTED BY ITS AUTHORIZED OFFICER …RESPONDENT (BY SRI. VIGNESH SHETTY, ADVOCATE) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO SETTING ASIDE THE ORDER DATED 19.06.2023 IN MA NO. 22/2022 PRONOUNCED BY THE HONBLE TRIBUNAL AT ANNX-H AND CONSEQUENTLY ALLOW THE APPLICATION FILED BY THE PETITIONER AT ANNX-G DATED 15.06.2023. THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE SMT. JUSTICE LALITHA KANNEGANTI - 3 - HC-KAR NC: 2026:KHC:15172 WP No. 16559 of 2023 ORAL ORDER The present writ petition is filed seeking the following prayers: "a) setting aside the order dated 19.06.2023 in M.Α. No.22/2022 pronounced by the Hon'ble Tribunal at Annexure-H and consequently allow the application filed by the Petitioners at Annexure-G dated 15.06.2023; and b) be pleased to pass an Order as to costs of the Writ Petition with such other relief or reliefs as this Hon'ble Court deems fit in the circumstances of the case." 2. It is the case of the petitioners that petitioner No.1 is registered Public Charitable Trust constituted for the purpose of providing quality driven education to the citizens. The petitioners have borrowed loan a sum of Rs.40.00 lakhs from the respondent/Bank for purchase of the equipment, furniture and other materials as advised by the University of Mysore. The said equipment, furniture and materials so procured were duly hypothecated to the respondent/Bank. The petitioners have paid an aggregate amount of Rs.10,42,338/- towards the loan - 4 - HC-KAR NC: 2026:KHC:15172 WP No. 16559 of 2023 dues. The respondent/Bank at the time of sanction of the credit facility had obtained the insurance policy according to its lending policy from the petitioner No.1, thereby protecting its lending amount of Rs.40,00,000/- along with matching margin money contribution of Rs.22,00,000/- made by the petitioner No.1, compensating to cover any loss of the hypothecated assests in the event of any fire, theft and other calamities. The respondent/Bank has kept the insurance policy in its safe custody. 3. It is submitted that due to financial difficulties faced by the institution, they could not repay the EMI. Consequently, the respondent/Bank classified the loan account as a Non- Performing Asset (for short ‘NPA’). It is further submitted that without giving an opportunity to the petitioners, it has been declared as an NPA. 4. Thereafter, the respondent/Bank initiated proceedings before the Debt Recovery Tribunal (for short, ‘DRT’) in O.A. No. 1236/2019, without the knowledge of the petitioners and allegedly by suppressing material facts, during the COVID-19 pandemic period. An ex parte order came to be passed on 29.01.2021, granting a Recovery Certificate for a - 5 - HC-KAR NC: 2026:KHC:15172 WP No. 16559 of 2023 sum of Rs. 44,10,506.36/- along with interest at the rate of 13.20% per annum. 5. The petitioners, being completely unaware of the said proceedings, subsequently approached the DRT and filed M.A. No. 22/2022 seeking to set aside the ex parte judgment. The Tribunal, after considering the facts and circumstances of the case and being satisfied that there was no proper service of notice on the petitioners and that there was a violation of the principles of natural justice, was pleased to allow the application by order dated 31.05.2023. However, while allowing the application, the Tribunal imposed a condition directing the petitioners to deposit a sum of Rs. 10,00,000/- along with costs of Rs. 3,500/- on or before 15.06.2023 and made it clear that the ex parte judgment would be set aside only on the foregoing compliance. 6. It is submitted that the petitioners have deposited a sum of Rs. 5,00,000/- along with the costs of Rs. 3,500/- within the short notice granted by the DRT. However, due to paucity of funds and the abrupt closure of the institution’s operations, the petitioners were unable to deposit the - 6 - HC-KAR NC: 2026:KHC:15172 WP No. 16559 of 2023 remaining amount. Hence, the petitioners have come before this Court. 7. Learned counsel appearing for the petitioners submits that petitioner No.1 is a charitable institution and, on account of financial difficulties, the petitioners were unable to pay the required amount. Hence, it is prayed that the order passed by the DRT be modified and the matter be remitted back to the DRT, so as to enable the petitioners to effectively contest the matter. 8. Learned counsel appearing for the respondent/Bank submits that an order had already been passed in the O.A., and subsequently, on an application filed by the petitioners, the Tribunal considered the matter and set aside the ex parte order subject to the condition that the petitioners deposit a sum of Rs. 10,00,000/-. It is further submitted that though the petitioners have deposited an amount of Rs. 5,00,000/-, the remaining amount has not been paid. It is further submitted that the order passed in the Original Application has attained finality, as the conditional order was not complied with. It is further submitted that the matter has been pending before this Court since the year 2022 and till date, no further payments - 7 - HC-KAR NC: 2026:KHC:15172 WP No. 16559 of 2023 have been made. As on date, the outstanding amount is Rs. 95,00,000/-. 9. Having heard the learned counsel on either side, perused the material on record. The petitioners has not paid any amount from the year 2023 and as on today, the outstanding amount is Rs. 95,00,000/-. This Court has asked the learned counsel for the petitioners to deposit the amount as ordered by the Court, so as to enable this Court to remand the matter and direct the DRT to consider the case of the petitioners on merits. It is submitted by the learned counsel for the petitioners that, due to financial difficulties, the petitioners could not pay the amount. It is submitted that now they are ready to pay the amount. 10. Considering the submission of the learned counsel for the petitioners and by balancing the interest of both the parties, this Court is passing the following: ORDER i. The petitioners shall deposit a sum of Rs.5,00,000/- within a period of one week from the date of receipt of a copy of this order. Upon such deposit, the DRT shall - 8 - HC-KAR NC: 2026:KHC:15172 WP No. 16559 of 2023 consider the O.A., on merits and dispose of the same as expeditiously as possible. Ii. The DRT is requested to dispose of the O.A. within a period of two months from the date of receipt of the copy of the order. iii. According, the writ petition is disposed of. iv. Pending IAs., if any, shall stand closed. SD/- (LALITHA KANNEGANTI) JUDGE SMC List No.: 1 Sl No.: 5