- 1 - HC-KAR NC: 2026:KHC:25641 WP No. 11167 of 2021 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND DAY OF JUNE, 2026 BEFORE THE HON'BLE MR. JUSTICE M.G.S. KAMAL WRIT PETITION NO. 11167 OF 2021 (GM-KSFC) BETWEEN: SANTOSH L KRISHNA, S/O K.LAKSHMINARAYANA, AGED 37 YEARS, M/S. SHIVASHAKTHI INDUSTRIES, NO.20/3, 2ND MAIN ROAD, 8TH CROSS, BEHIND GOVERNMENT SCHOOL, SHIVA NAGAR, RAJAJINAGAR, BANGALORE - 560 010. …PETITIONER (BY SRI. KESHAVA BHAT A., ADVOCATE) AND: 1. KARNATAKA STATE FINANCIAL CORPORATION (KSFC), HEAD OFFICE, NO.1/1, THIMMAIAH ROAD, NEAR CANTONMENT RAILWAY STATION, BANGALORE - 560 052. REPRESENTED BY ITS MANAGING DIRECTOR. 2. KARNATAKA STATE FINANCIAL CORPORATION (KSFC), BRANCH OFFICE, NO.9/1, SAHUKAR CHENNAIAH ROAD, SARASWATHIPURAM, MYSORE - 570 009. REPRESENTED BY ITS Digitally signed by SUMA B N Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2026:KHC:25641 WP No. 11167 of 2021 ASSISTANT CHIEF EXFECUTIVE OFFICER. 3. ABDUL KHADER N.P., MAJOR IN AGE, PROPRIETOR, M/S. ROYAL STEEL AND METAL INDUSTRIES, MADAHALLI, GUNDLUPET POST, CHAMARAJANAGAR DISTRICT - 571 111. …RESPONDENTS (BY SRI.P.S.MALIPATIL, ADVOCATE FOR R1 AND R2) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO CALL FOR THE ENTIRE RECORDS PERTAINING TO DATED 09.04.2021 AND 12.04.2021 AND THE ENTIRE RECORDS PERTAINING TO SEIZURE AND SALE OF THE SCHEDULE PROPERTY FROM THE FILE OF THE R2 AND ON PERUSAL OF THE SAME AND ETC., THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE M.G.S. KAMAL ORAL ORDER Petitioner being aggrieved by the process initiated by respondent No.2 - KSFC in recovering its dues by auctioning the petition schedule property is before this Court seeking following reliefs: - 3 - HC-KAR NC: 2026:KHC:25641 WP No. 11167 of 2021 "Wherefore, it is prayed that this Hon'ble Court may be pleased to call for the entire records pertaining to KARaAaSamShala:My:SaPraVya:2020-21/35 dated 09.04.2021 and 12.04.2021 and the entire records pertaining to seizure and sale of the schedule property from the file of the Respondent No.2 and on perusal of the same. (i) Issue a writ of certiorari or any other appropriate writ, order or direction, setting aside the sale of the schedule property conducted by the Respondent No.2 commencing from 25.01.2021 to 21.02.2021 as intimated to the petitioner in KARaAaSamShala:My:SaPraVya:2020-21/35 dated 09.04.2021 and 12.04.2021 vide Annexure-A. (ii) Pass such other order or direction as this Hon'ble Court deems fit in the interest of justice." 2. Petitioner was initially sanctioned a loan of Rs.106.00 lakhs and an additional amount of Rs.25 lakhs during the year 2011. It appears, he had defaulted in servicing the loan. On 05.01.2017 possession of petition schedule property being the secured assets was taken over by respondent No. 2 on the premise of petitioner being defaulted in repayment of the loan amount and his - 4 - HC-KAR NC: 2026:KHC:25641 WP No. 11167 of 2021 account having been classified as NPA. Thereafter, respondent No.2 had initiated the proceedings under Section 29 of the Karnataka State Financial Corporations Act, 1951 (for short, 'KSFC Act'), which culminated in sale of the schedule property in favour of respondent No. 3 for a total sum of Rs. 232.75 lakhs. Being aggrieved by the same, petitioner is before this Court. 3. Learned counsel for the petitioner taking this Court through the records submits that the only grievance of the petitioner is that the respondent No.2 had proceeded to auction the petition schedule property in a hurried manner, without providing him an opportunity to repay the loan even through One Time Settlement process. He submits that the sale of the schedule property ought to have been done in a transparent manner. The schedule property has been undervalued, which would otherwise have fetched higher rate and thus, legal injury has been caused to the petitioner in the light of - 5 - HC-KAR NC: 2026:KHC:25641 WP No. 11167 of 2021 respondent No. 2 auctioning the schedule property without due process of law. 4. Per contra, learned counsel appearing for respondent No. 2 taking this Court through the statement of objections submitted that the petitioner was provided several opportunities including opportunities for exploring the possibility of One Time Settlement. He submitted that the show-cause notice was issued to the petitioner on 15.11.2012 before initiating the actions. Since there was no constructive steps taken by the petitioner, DRC in its meetings held on 19.11.2012 and 04.12.2012 respectively, had accorded permission to takeover the schedule property in terms of Section 29 of the KSFC Act. The primary assets were brought for sale through E- auction and advertisement issued on 26.03.2013 in Deccan Herald, Vijaya Vani and Star of Mysore daily newspapers. 5. Petitioner/borrower had requested to reschedule the loan facility subsequent to the issuance of - 6 - HC-KAR NC: 2026:KHC:25641 WP No. 11167 of 2021 the E-auction advertisements, which was also considered and his request for rescheduling was also accorded extending the time. Yet again the petitioner had failed to comply even the rescheduled repayment facility. Another show cause notice dated 16.08.2013 was issued. In response to which the petitioner had issued a cheque dated 30.09.2013 for Rs.7,01,637/-, which was returned unpaid resulting in the initiation of proceeding under Section 138 of Negotiable Instruments Act, 1881 in PCR No. 3539/2013. Under the circumstances, the loan account of the petitioner was treated as a sub-standard on 31.10.2013 and an order under Section 29 of the KSFC Act was passed to take over the unit and was approved by the Managing Director on 21.11.2013. The petitioner/borrower had arranged payment of Rs.2,00,000/- during November- December 2013 and Rs.1,90,000/- during January 2014. As such, recovery action was deferred at his instance. DRC called for another meeting on 17.01.2014. However, the petitioner remained absent. Thereafter, petitioner and - 7 - HC-KAR NC: 2026:KHC:25641 WP No. 11167 of 2021 the guarantor approached the respondent No.2 and agreed to arrange for payment of Rs.20,00,000/- on or before 30.06.2014 which was also agreed and acceded by the authorities by withdrawing the proceedings initiated earlier under Section 138 of the NI Act. The petitioner failed to pay even the said sum of Rs.20,00,000/- as agreed. Once again the show cause notice dated 02.12.2014 was issued to the petitioner. Petitioner came out with a reason of his mother being indisposed and he not being able to repay the loan amount. Considering his request, the respondent No.2 had given an option of paying 50% of the interest dues within February 2015 and the balance 50% of the interest dues by March 2015. Even this concession was also not availed by the petitioner. The One Time Settlement scheme offered by the petitioner and the personal guarantor was also considered. One more show cause notice dated 29.11.2016 was issued. As there was no response, the respondent Nos. 1 and 2 proceeded to take over the unit and issued fresh advertisements for sale - 8 - HC-KAR NC: 2026:KHC:25641 WP No. 11167 of 2021 through E-auction on 17.03.2017, 24.06.2017, 13.01.2018 and 17.01.2019. In the meanwhile, the petitioner had made a representation to the Chief Minister requesting grant of 3 months time to close the account on One Time Settlement basis. Yet again the petitioner and the personal guarantor were called for a meeting on 18.02.2019. A detailed report was sent by the Head Office to the Managing Director in view of the representation made by the petitioner to the Chief Minister. It was suggested that the One Time Settlement proposal of the petitioner could be considered if he pays Rs.35 lakhs within 10 days. There is no response even to the said offer. In the circumstances, the respondent No.1 and 2 issued further advertisement on 21.06.2019, for E-auctioning the schedule property, reserving the fair price at Rs. 220.50 lakhs. Petitioner again made representation on 14.06.2019 requesting the branch to permit him to close the account at 4% interest per annum on One Time Settlement - 9 - HC-KAR NC: 2026:KHC:25641 WP No. 11167 of 2021 scheme. Since there is no provision to accord such request, the same was not accepted. 6. Valuation of the property was obtained as per the report dated 20.06.2019. The market value of the property/asset was Rs. 216.25 lakhs. The external valuation of the primary asset was arrived at Rs.220.00 lakhs. The primary assets of the unit was sold in E-auction dated 02.02.2021 with a reserve price of Rs.163 lakhs. The highest bid was 232.75 lakhs. The purchaser had deposited EMD of Rs. 35 lakhs before participating in the E-auction and the amount was deposited on 03.02.2021. The sale proposal was approved by the competent authority on 08.02.2021. The purchaser has remitted the entire sale consideration with applicable GST at 18% on value of plant and machinery on 18.02.2021. Possession of the plant and machinery was handed over to the purchaser on 19.02.2021 and letter dated 23.02.2021 in this regard had been sent to the Secretary, KIADB Zonal - 10 - HC-KAR NC: 2026:KHC:25641 WP No. 11167 of 2021 Office, Mysore, requesting for execution of necessary deed of sale. 7. Thus, referring to the aforesaid factual aspects of the matter, learned counsel for the respondent Nos. 1 and 2 submits that the grievance of the petitioner that he not having been provided sufficient opportunity, cannot be countenanced. He also further submits that as on the date of the auction, the total outstanding amount after auction was Rs.336,54,511.88/-. As against which the respondent No.2 has recovered Rs.232.75 lakhs through E-auction and the petitioner is still due and liable to pay Rs.103,79,511,88/-. Hence, he seeks for dismissal of the petition. 8. Heard the learned counsel for the parties and perused the records. 9. As already noted above, the only grievance of the petitioner is that respondent No. 2 allegedly conducting the E-auction and conveying the property - 11 - HC-KAR NC: 2026:KHC:25641 WP No. 11167 of 2021 through public auction to respondent No.3 without providing him sufficient opportunity. The facts and circumstances narrated in statement of objections as noted above are not disputed by the petitioner. As such the grounds urged cannot be countenanced in the light of the undisputed facts placed on record. Petition therefore fails and stands dismissed. SD/- (M.G.S. KAMAL) JUDGE BSV/List No.: 1 Sl No.: 10