- 1 - HC-KAR NC: 2026:KHC:26405-DB WP No. 31357 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 4TH DAY OF JUNE, 2026 PRESENT THE HON'BLE MR. JUSTICE D K SINGH AND THE HON'BLE MR. JUSTICE T.M.NADAF WRIT PETITION NO. 31357 OF 2025 (GM-DRT) BETWEEN: MR. C.K.HARSHA AGED ABOVE 49 YEARS NO.2265/19, BHARATHI NO.6TH CROSS, 2ND MAIN, VINAYAKA NAGAR, MYSORE - 570 012 …PETITIONER (BY MS. VINITHRA SRINIVASAN.,ADVOCATE) AND: 1. M/S MAHADESHWARA BRICKS PROPRIETOR MR. MAHADEVA S/O. LATE KARIGOWDA, MADAGALLI VILLAGE, BELAWADI POST, YELAVALA HOBLI, MYSORE TALUK - 570 018. 2. MR. MAHADEVA, S/O. LATE KARIGOWDA MADAGALLI VILLAGE, BELAWADI POST, YELAVALAHOBLI, MYSORE TALUK - 570 018. 3. MRS. LAKSHMAMMA, W/O. LATE PAPEGOWDA BELAWADI VILLAGE, Digitally signed by REKHA R Location: High Court of Karnataka - 2 - HC-KAR NC: 2026:KHC:26405-DB WP No. 31357 of 2025 BELAWADI POST, YELAVALAHOBLI, MYSORE TALUK - 570 180. 4. THE KARNATAKA BANK LIMITED ASST. RECOVERY MANAGEMENT BRANCH NO. 105, 3RD FLOOR, MOHAN MANSION, KASTURIBA ROAD, BANGALORE, REPRESENTED BY ITS AUTHORIZED OFFICER …RESPONDENTS THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO PASS AN ORDER SETTING ASIDE THE IMPUGNED ORDER DATED 20.08.2025 PASSED BY THE HON’BLE DRAT, CHENNAI IN R.A. No. 133 OF 2013 (ANNEXURE-A) UPHOLDING THE ORDER PASSED BY THE HONBLE DRT, BENGALURU IN S.A. No. 465/2012 AND THEREBY, UPHOLD THE SALE CONDUCTED BY THE BANK AND THE SALE CERTIFICATE DATED 29.10.2011 ISSUED IN FAVOUR OF THIS PETITIONER/AUCTION PURCHASER. THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE D K SINGH and HON'BLE MR. JUSTICE T.M.NADAF - 3 - HC-KAR NC: 2026:KHC:26405-DB WP No. 31357 of 2025 ORAL ORDER (PER: HON'BLE MR. JUSTICE T.M.NADAF) This Writ Petition is filed invoking the extraordinary jurisdiction of this Court under Articles 226 and 227 of the Constitution of India, by the auction purchaser assailing the order dated 20.08.2025 passed by the Debt Recovery Appellate Tribunal1, Chennai in R.A.No.133/2013 (Annexure-A). 2. The DRAT under the impugned order, dismissed the appeal filed by the Bank, upholding the order passed by the Debt Recovery Tribunal, Bengaluru2 dated 21.10.2013 in S.A No.465/2012. 3. Facts germane to file this Writ Petition are as under: 3.1 As per the petitioner, respondents 1 and 2 herein are the borrowers. The proceedings contemplated under the provisions of the Securitisation and 1 the DRAT, for short 2 the DRT, for short - 4 - HC-KAR NC: 2026:KHC:26405-DB WP No. 31357 of 2025 Reconstruction of Financial Assets and Enforcement of Security Interest Act, 20023 was initiated against them, which has ended in auctioning of the property in favor of the petitioner. 3.2 Respondents 1 and 2 - borrowers approached the DRT, Bengaluru in S.A No.465/2012 calling in question the auction sale in favor of the petitioner herein. 3.3 The DRT, after contest, allowed the application and held that the Bank has not replied to the representation submitted by the borrowers on 05.05.2010 against the notice issued under Section 13(2) of the SARFAESI Act. 3.4 Further, the Possession Notice & Sale Notice were not served on the borrowers and mainly on the ground that the property were sold for excess than what is required to meet the debt due and only single bidder participated in the auction and the properties were 3 the SARFAESI Act, for short - 5 - HC-KAR NC: 2026:KHC:26405-DB WP No. 31357 of 2025 undervalued. With this, the DRT allowed the application filed by the borrowers which was assailed by the Bank before the DRAT. 3.5 The DRAT upon consideration of rival submissions has observed that no valuation report was produced before the DRT. The reserve price was fixed as Rs.70,00,000/-, however in the impugned Sale Notice, the reserve price was fixed as Rs.50,00,000/. The valuation was fixed for both land and the building. The land was valued at Rs.35,00,000/- per acre and the building was valued at Rs.3,20,000/-, totaling to Rs.73,20,000/- as per the valuation of the Bank. 3.6 The property in question is fetching more value i.e., in crores of rupees, but sold to a paltry sum i.e., lesser price of Rs.50,50,000/- that too for loan of Rs.11,00,000/- and odd. 3.7 The DRAT observed that the Bank has produced Valuation Report obtained prior to sale and reserved - 6 - HC-KAR NC: 2026:KHC:26405-DB WP No. 31357 of 2025 price fixed at first sale was reduced to Rs.50,00,000/- in the impugned sale notice after intimation the reduction of price to the borrowers, as per the contention of the Bank. However, to the query of the DRAT as to why those documents relating to sale of property had not been produced before the DRT, learned counsel for the appellant - Bank submitted that there were no pleadings before the DRT in the SA at all with regard to not sending reply under Section 13(2) notice by the Bank under Section 13(3A), challenge to valuation report, excessive execution by sale of both properties, single bid, etc. However, what was pleaded was only possession and sale notices were not served. As no other grounds were pleaded, there was no occasion for the Bank to produce these documents before the DRT. The DRAT however, on this has observed that the documents filed along with the application - 7 - HC-KAR NC: 2026:KHC:26405-DB WP No. 31357 of 2025 required to be permitted to be brought on record by allowing the application for additional documents. 3.8 The DRAT, on the settled proposition of law has held that the Secured Creditor is like a trustee holding the property, taking into consideration the welfare of both the secured creditors and the borrowers. Secured creditor should not act like a recovery agent for realization of debt due to it. Every effort should be made to see that the secured asset gets the best price so that the secured creditor recovers its dues and the balance goes to the borrower. Unfortunately, Authorized Officer has not followed this basic and settled principle in determining the market value of the property, reserve price, while selling the property, that is required for realizing the debt. 3.9 The DRAT further observed that the photocopy of the affixture of sale notice dated 12.09.2011 said to have been affixed on 06.09.2011 produced in the appeal at page No.105 is not clear and unreadable. Further - 8 - HC-KAR NC: 2026:KHC:26405-DB WP No. 31357 of 2025 observed that, this document will not help the Secured Creditor to prove that the said sale notice was affixed in the secured asset or not. The DRAT further observed, one of the reason for the DRT to allow the application was not proving affixture of sale notice. The Appellant - Bank has miserably failed in this regard. As such, the said document produced would not enure to the benefit of the appellant Bank to come to a conclusion that the appellant has complied with the affixture of sale notice in the secured asset. 3.10 So far as the contention regarding non-furnishing of the documents on the contention that there was no pleading, the DRAT referring to the Judgment of the Supreme court in RE. BHAGWATI PRASAD VS. CHANDRAMAUL4, at paragraph No.28 and 29 has held as under: 4 1965 SCC ONLINE SC 111 - 9 - HC-KAR NC: 2026:KHC:26405-DB WP No. 31357 of 2025 "28. In this regard, it is pertinent to refer to the judgment reported in Judgment reported in 1965 SCC Online SC 111 in re, Bhagwati Prasad Vs. Chandramaul, referred supra, the relevant portion of which, is extracted hereunder. "10. But in considering the application of this doctrine to the facts of the present case, it is necessary to bear in mind the other principle that considerations of form cannot over-ride the legitimate considerations of substance. It a plea is not knew that the said plea was involved in the trial, then the mere fact that the plea specifically made and yet it is covered by an issue by implication and the parties from relying upon it if it is satisfactorily proved by evidence. The general rule no was not expressly taken in the pleadings would not necessarily disentitle a party doubt is that the relief should be founded on pleadings made by the parties. But where the substantial matters relating to the title of both parties to the suit are touched, though indirectly or even obscurely, in the issues, and evidence has been led about them, then the argument that a particular matter was not expressly taken in the pleadings would be purely formal and technical and cannot succeed in every case. What the Court has to consider in dealing with such an objection is: did the parties know that the matter in question was involved in the trial and did they lead evidence about it? if it appears that the parties did not know that the matter was in issue at the trial and one of them has had no opportunity to lead evidence in respect of it, that undoubtedly would be a different matter. To allow one party to rely upon a matter in respect of which the other party did not lead evidence and has had no opportunity to lead evidence, would introduce - 10 - HC-KAR NC: 2026:KHC:26405-DB WP No. 31357 of 2025 considerations of prejudice, and in doing justice to one party, the Court cannot do injustice to another." 29. It is seen from this judgment that if the parties knew that particular plea involved in the Trial, then, mere fact that that plea was not expressly taken the pleadings would not necessarily disentitle the party from relying upon it, if it is satisfactorily proved by evidence. Here, in this case, it is primarily the duty of the bank to ensure that measures have been taken in accordance with law, irrespective of omission to plead any defect in the measures taken. Thus, it is evident, as discussed above, that affixture of sale notice was not proved, valuation of the property was not properly done and undervalued and property was sold in excess." 3.11 In view of its reasons and findings assigned which starts from Paragraph No.18 to 30 of the impugned order, the DRAT dismissed the appeal by the Bank, confirming the order passed by the DRT in SA No.465/2012 dated 21.10.2013. It is this order passed by the DRAT is called in question in this Writ Petition. - 11 - HC-KAR NC: 2026:KHC:26405-DB WP No. 31357 of 2025 4. Heard, Ms.Vinithra Srinivasan, learned counsel appearing for the petitioner -Bank. 5. Ms.Vinithra Srinivasan, with all vehemence referring to Paragraph Nos.19 and 20 of the Judgment submitted that the Bank has complied with the provisions contained under the SARFAESI Act and Rules, more particularly Second proviso to Sub-rule(2) of Rule 9 of the Security Interest (Enforcement) Rules, 2002 and contended that the Bank by means of issuing of intimation and affixture of the same in Page No.199 of the petition at Annexure-X intimated the borrower regarding the reduced price. This complies with the second proviso to Sub-rule (2) of Rule 9 of the Rules. The Appellate Authority has failed to consider this important aspect of the matter and thus, endorsed the order passed by the DRT, the same required to be set-aside and matter requires a remand for re-hearing. 6. We have considered the submission made by Ms.Vinithra Srinivasan and perused Rule 9. It is apt to - 12 - HC-KAR NC: 2026:KHC:26405-DB WP No. 31357 of 2025 extract the entire Rule 9 of the Security Interest (Enforcement) Rules, 2002 for easy reference, which reads as under: "9. Time of sale, Issue of sale certificate and delivery of possession, etc.- (1) No sale of immovable property under these rules, in first instance shall take place before the expiry of thirty days from the date on which the public notice of sale is published in newspapers as referred to in the proviso to sub-rule (6) of rule 8 or notice of sale has been served to the borrower: Provided further that if sale of immovable property by any one of the methods specified by sub rule (5) of rule 8 fails and sale is required to be conducted again, the authorized officer shall serve, affix and publish notice of sale of not less than fifteen days to the borrower, for any subsequent sale. (2) The sale shall be confirmed in favour of the purchaser who has offered the highest sale price in his bid or tender or quotation or offer to the authorised officer and shall be subject to confirmation by the secured creditor: Provided that no sale under this rule shall be confirmed, if the amount offered by sale price is less than the reserve price, specified under sub-rule (5) of rule 8: Provided further that if the authorised officer fails to obtain a price higher than the reserve price, he may, - 13 - HC-KAR NC: 2026:KHC:26405-DB WP No. 31357 of 2025 with the consent of the borrower and the secured creditor effect the sale at such price. (3) On every sale of immovable property, the purchaser shall immediately, i.e. on the same day or not later than next working day, as the case may be, pay a deposit of twenty five per cent. of the amount of the sale price, which is inclusive of earnest money deposited, if any, to the authorized officer conducting the sale and in default of such deposit, the property shall be sold again (4) The balance amount of purchase price payable shall be paid by the purchaser to the authorised officer on or before the fifteenth day of confirmation of sale of the immovable property or such extended period 21[as may be agreed upon in writing between the purchaser and the secured creditor, in any case not exceeding three months]. (5) In default of payment within the period mentioned in sub-rule (4), the deposit shall be forfeited [to the secured creditor] and the property shall be resold and the defaulting purchaser shall forfeit all claim to the property or to any part of the sum for which it may be subsequently sold. (6) On confirmation of sale by the secured creditor and if the terms of payment have been complied with, the authorised officer exercising the power of sale shall issue a certificate of sale of the immovable property in favour of the purchaser in the Form given in Appendix V to these rules. (7) Where the immovable property sold is subject to any encumbrances, the authorised officer may, if he - 14 - HC-KAR NC: 2026:KHC:26405-DB WP No. 31357 of 2025 thinks fit, allow the purchaser to deposit with him the money required to discharge the encumbrances and any interest due thereon together with such additional amount that may be sufficient to meet the contingencies or further cost, expenses and interest as may be determined by him. [Provided that if after meeting the cost of removing encumbrances and contingencies there is any surplus available out of money deposited by the purchaser such surplus shall be paid to the purchaser within fifteen day, from date of finalisation of the sale.] (8) On such deposit of money for discharge of the encumbrances, the authorised officer [shall] issue or cause the purchaser to issue notices to the persons interested in or entitled to the money deposited with him and take steps to make, the payment accordingly. (9) The authorised officer shall deliver the property to the purchaser free from encumbrances known to the secured creditor on deposit of money as specified in sub-rule (7) above. (10) The certificate of sale issued under sub-rule (6) shall specifically mention that whether the purchaser has purchased the immovable secured asset free from any encumbrances known to the secured creditor or not. 7. The second proviso to Sub-rule (2) to Rule 9 is very specific in its language, which says that the sale will not be confirmed if the authorized officer fails to obtain a - 15 - HC-KAR NC: 2026:KHC:26405-DB WP No. 31357 of 2025 price higher than the reserve price, he may with the consent of the borrower and the secured creditor effect the sale at such price. As contended by Ms.Vinithra Srinivasan, intimation by the Bank to the borrower is more than sufficient to hold the reducing of reserve price from Rs.75,00,000/- to Rs.50,00,000/-. As such in view of the compliance of Rules, there cannot be any exception taken against such sale with reduced reserve price. This argument of learned counsel for the Bank cannot be countenanced as the same is against the proviso itself. 8. The proviso used the word 'Consent'. As held by the DRT, there is nothing produced to show that the Bank did in fact affixed the said notice or served the intimation on the borrower. Even if the notice of intimation is sent and the same is received as contended by the petitioner by affixing the signature of the party, the same cannot be construed as the consent for reduction. Intimation is different and distinct from a consent. The word used in the said proviso contemplates that there must be deliberation - 16 - HC-KAR NC: 2026:KHC:26405-DB WP No. 31357 of 2025 on the said reduced price with the Bank-Secured Creditor and borrower. There is no such consent finds place in the record. In these circumstances, the contention urged cannot be countenanced. We have perused the entire order passed by the DRAT. We find no infirmity to take any exception with the well reasoned order passed by the DRAT, more especially recorded in Paragraph No.24, which reads as under: "24. It is a settled proposition of law that secured creditor is like a trustee holding the property, taking into consideration the welfare of both the secured creditor and the borrowers. Secured Creditor should not act like a recovery agent for realization of due debt due to it. Every effort should be made to see that secured asset gets the best price so that the secured creditor recovers its dues and the balance goes to the borrower. Unfortunately, Authorized Officer has not followed this basic and settled principle in determining the market value of the property, reserve price while selling the property, that is required for realizing the debt." we find no merits in this petition. The Writ Petition sans merits and is accordingly, dismissed. - 17 - HC-KAR NC: 2026:KHC:26405-DB WP No. 31357 of 2025 9. In view of dismissal of Writ Petition, pending interlocutory applications, if any, stand disposed of. Sd/- (D K SINGH) JUDGE Sd/- (T.M.NADAF) JUDGE TKN List No.: 1 Sl No.: 6