M/S SRI RENUKAMBA ASSOCIATES vs STATE BANK OF INDIA
- Court
- Karnataka High Court
- 1 -
NC: 2026:KHC:34362-DB
WP No. 10768 of 2021
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
TH
DATED THIS THE 7 DAY OF JULY, 2026
PRESENT
THE HON'BLE MR. JUSTICE D K SINGH
AND
THE HON'BLE MR. JUSTICE T.M.NADAF
WRIT PETITION NO. 10768 OF 2021 (GM-DRT)
BETWEEN:
1. M/S SRI RENUKAMBA ASSOCIATES,
BY ITS MANAGAING PARNTER,
SRI. S.B. MADHUCHANDRA,
OFFICE AT NO.36,
CORPORATION NO.1.,
EAST PARK ROAD,
KUMARA PARK EAST,
BENGALURU - 560 020.
2. SRI. S.B. MADHUCHANDRA,
S/O S. BANGARAPPA,
AGED ABOUT 55 YEARS,
TH
R/AT NO.55/11, 6 CROSS,
TH
8 MAIN, SADASHIVNAGAR
BENGALURU - 560 080.
…PETITIONERS
(BY SRI. MALIPATIL P.S., ADVOCATE)
Digitally
signed by
REKHA R
Location:
High Court
of Karnataka
AND:
1.
STATE BANK OF INDIA,
BY ITS CHIEF MANAGER
AND AUTHORIZED OFFICER,
SAM BRANCH,
BENGALURU - 560 030.
- 2 -
NC: 2026:KHC:34362-DB
WP No. 10768 of 2021
HC-KAR
2. STATE BANK OF INDIA,
BENGALURU CITY BRANCH,
BENGALURU - 560 002.
BY ITS MANAGER.
…RESPONDENTS
(BY SRI. FRANCIS XAVIER., ADVOCATE FOR R1 AND R2)
THIS WRIT PETITON IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH
THE ORDER DATED:29.12.2009 PASSED IN S.A.NO.386/2009
ON THE FILE OF DRT, BENGALURU AND ALSO QUASH THE
ORDER OF THE DEBT RECOVERY APPELLATE TRIBUNAL AT
CHENNAI IN RA(SA) 73/2011 DATED:11.10.2019 VIDE
ANNEXURES-J AND K AND ALSO SET ASIDE THE NOTICE
DATED:12.05.2009 ISSUED BY RESPONDENT U/W 13(4) OF
SARFAESI ACT VIDE ANNEXURE-H AND ETC.,
THIS PETITION, COMING ON FOR FINAL 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 -
NC: 2026:KHC:34362-DB
WP No. 10768 of 2021
HC-KAR
ORAL ORDER
(PER: HON'BLE MR. JUSTICE T.M.NADAF)
The applicants and appellants before the Debt
1
Recovery Tribunal, at Bengaluru in SA.386/2009 and
2
before the Debt Recovery Appellate Tribunal, at Chennai
in RA(SA).73/2011 are before this Court under Article 226
and 227 of Constitution of India, assailing the order dated
29.12.2009 passed by the DRT and the order dated
11.10.2019 passed by the DRAT.
2. Under the impugned orders, the DRT as well as
DRAT dismissed the application as well as the Appeal filed
against proceeding initiated by the Bank for recovery of
dues.
3. The parties are referred to as per their rankings
for the DRT.
4. Facts germane to file the present petition are as
under:
1
"DRT" for short
2
"DRAT" for short
- 4 -
NC: 2026:KHC:34362-DB
WP No. 10768 of 2021
HC-KAR
4.1 The applicants were before the DRT seeking to set
aside the possession notice dated 12.05.2009, issued
by the respondent-bank under the Securitization Act
and for other reliefs. It is the claim of the applicants
that, they are the absolute owners of the property.
They claim that the possession notice issued is
beyond the limitation prescribed in terms of law. The
borrowers obtained loan of Rs.20,00,000/- against
the mortgage of properties on 05.03.1987. In view of
non-payment of loan amount and due to frequent
defaults, the account was classified as NPA in the
year 1989.
4.2 It is their further case that, the respondent-bank
issued demand notice under Section 13(2) of
SARFAESI Act on 03.02.2009, the proceedings under
the SARFAESI Act initiated after 10 years of account
having been classified as NPA is beyond limitation on
the face of it. The applicants are in possession of the
property as on 1989 initially as tenants and
- 5 -
NC: 2026:KHC:34362-DB
WP No. 10768 of 2021
HC-KAR
thereafter as absolute owners under the registered
sale deed dated 15.03.1997. The mortgage was not
created properly on the suit schedule property, the
claim of the bank on the basis of the documents
secured from the borrowers were vague and
insufficient. The applicants have got a clear title
documents by way of registered sale deed.
Accordingly, they were before the DRT calling in
question the possession notice.
4.3 The respondent-bank upon notice appeared and
submitted that, a loan of Rs.20,00,000/- was
borrowed by M/s Amaravanam Bore Well Company
Private Limited through Mr.R.Shivaram and
Mr.K.Krishnamurthy. The sale deed dated
28.04.1961 was deposited to create a mortgage. In
the year 1989, the bank classified the account as
NPA. In the year 1992, the bank preferred a suit in
O.S.No.10596/1992 for recovery of dues. After
contest, the matter came to be decreed in favour of
- 6 -
NC: 2026:KHC:34362-DB
WP No. 10768 of 2021
HC-KAR
the respondent-bank on 22.06.2001, entitling the
respondent-bank for recovery of Rs.61,50,123/-. In
the interregnum, the applicants obtained sale deeds
from Mrs.Sumitra, wife of R.Shivaram, the borrower.
In that view of the matter, the demand notice issued
is well within the time and the mortgage has been
created properly on the basis of sale deed dated
28.04.1961.
4.4 The Presiding Officer of DRT, after considering the
rival submissions and perusal of documents,
dismissed the application, on the premise that the
bank continued its efforts of recovery from the date
of declaring NPA and moved Civil Court within the
time frame. Hence the SARFAESI proceedings are
also within the limitation and mortgage has been
created properly on the basis of signed documents of
borrowers/guarantors at the time of sanction of loan.
This was the subject matter before the DRAT in
RA(SA).73/2011.
- 7 -
NC: 2026:KHC:34362-DB
WP No. 10768 of 2021
HC-KAR
5. Both the parties reiterated their contentions
taken before the DRT, again before the DRAT. The DRAT,
after perusing the material and pleadings of the parties
and submission of respective counsels held that on
28.04.1961, Mrs.Sakkubai executed the sale deed in
favour of Mr.Shivaram and his brother Mr.R.S.Murthy in
respect of land in question. On 06.07.1962, Mr.R.S.Murthy
released all his rights, interest and title in the property in
favour of Mr.Shivaram. On behalf of the Borrower
Company, in March, 1987, Mr.Shivaram availed loan,
executed documents on deposit of the title deeds of 1961.
The applicants have occupied the scheduled property as
tenants of Mr.Shivaram in the year 1989. Mr.Shivaram
died leaving behind his wife and children Naga Prasad,
S.Sripriya and S.Srinath on 31.07.1990.
6. The applicants contended that the BDA
executed sale deed in favor of Smt.Sumitra, wife of Late
Shivaram on 25.03.1991, that is, much after 7 to 8
months of death of Mr.Shivaram, the borrower. On
- 8 -
NC: 2026:KHC:34362-DB
WP No. 10768 of 2021
HC-KAR
24.11.2000, the applicants have obtained registered gift
deed also from Kumara Bangarappa and all documents to
claim the rights.
7. The DRAT further observed that in the year
1997 or 2000 whatever documents obtained by the
applicants had been executed by successors of the
deceased, children who were exhibited during the
pendency of civil suit that was filed by the bank for
recovery of dues against them. The suit was ultimately
decreed and DCP was issued by the Recovery Officer. In
that background, the DRAT has observed that though the
sale deed was executed by the BDA in favour of
Smt.Sumitra, wife of late Shivaram, but there is a
stipulation/ reflection in the sale deed that BDA executed
documents in favor of Smt.Sumitra in the capacity of legal
representative of late Shivaram. In that view of the
matter, there is no independent right notified by the BDA
while executing the sale deed.
- 9 -
NC: 2026:KHC:34362-DB
WP No. 10768 of 2021
HC-KAR
8. Insofar as limitation ground is concerned, since
there is continuity in steps taken by bank for recovery and
the bank never slept over its right for recovery since
default in repayment of loan, the proceedings initiated
under SARFAESI Act is well within the time period. The
DRAT though has stated that the Presiding Officer of the
DRT has discussed the main issue in brief, it would have
been better if the same were discussed little elaborately,
however observed that, the Presiding Officer of DRT has
covered the core issue correctly and effectively. In that
view of the matter, the DRAT confirmed the order passed
by the DRT and dismissed the appeal. It is these orders
passed by both, the DRT and DRAT are called in question
in this petition.
9. Heard, Sri.Malipatil.P.S, learned counsel
appearing for petitioner and Sri.Francis Xavier, learned
counsel for respondent Nos.1 and 2.
- 10 -
NC: 2026:KHC:34362-DB
WP No. 10768 of 2021
HC-KAR
10. Though several grounds were urged on the
right of the bank to seek for recovery of the property, the
main ground urged by Sri.Malipatil.P.S is on the ground of
limitation.
11. Sri.Malipatil.P.S, referring to Section 13(4),
submits that, no Secured Creditor shall be entitled to take
any or all of the measures under sub-Section (4) of
Section 13, unless his claim in respect of financial asset is
made within the period of limitation prescribed under the
Limitation Act, 1963. Further, referring to Section 36 of
the SARFAESI Act, Mr.Malipatil submits that the Bank's
claim under the SARFAESI Act, independently satisfy the
requirements of Section 36, or that it may borrow
whatever limitation applicable under the Recovery of Debts
3
Due to Banks and Financial Institutions Act, 1993 .
Learned counsel further submits that the question
remains, whether the Recovery Certificate can carry a
twelve year execution period as a decree under Article 136
3
"
RDDBFI Act" for short
- 11 -
NC: 2026:KHC:34362-DB
WP No. 10768 of 2021
HC-KAR
of the Limitation Act, 1963, or a three year period under
Rule 68B of the Second Schedule to the Income Tax Act,
1961, as applied through Section 29 of the RDDBFI Act.
Further, he submits that whether the Recovery Certificate
constitutes a debt generating a fresh twelve-year cause of
action under Article 136 of the Limitation Act, 1963.
12. Referring to the judgment of Calcutta High
Court in DR.DIPANKAR CHAKRABORTY VS.
4
ALLAHABAD BANK AND OTHERS , Sri Malipatil would
submit that "a bank cannot take the benefit of the
pendency of the proceedings before the DRT to claim that
a proceeding under the Act of 2002, which is otherwise
barred by limitation can be validly instituted" and submits
that the claim of the bank is barred under law of limitation
and sought to allow the petition and set aside the order
passed by both the DRT and DRAT.
13. Mr.Francis Xavier with all vehemence submits
taking shelter under the judgment of the Bombay High
4
2017 SCC Online Cal 8742
- 12 -
NC: 2026:KHC:34362-DB
WP No. 10768 of 2021
HC-KAR
Court reported in the case of KOTAK MAHINDRA BANK
5
LTD. VS. STATE OF MAHARASHTRA AND OTHERS in
W.P.No.2233/2017 and other connected matters referring
to paragraph No.21, that once a recovery certificate was
issued, the bank would derive its authority to recover the
said amount within 12 years. In that view of the matter,
the claim of the bank under the SARFAESI Act is well
within the time prescribed under the Limitation Act, 1963
under Article 136 and sought to dismiss the petition,
confirming the order passed by DRT and DRAT.
14. Having considered the rival submissions, we
have perused entire writ petition papers along with the
judgments referred respectively by the learned counsel.
15. We find no infirmity in the order passed by the
DRT and DRAT with respect to the mortgage and bank
claim on deposit of title deeds, created by Late Shivaram.
Though the sale deed was executed in the year 1991 in
5
2018 SCC Online Bom 933
- 13 -
NC: 2026:KHC:34362-DB
WP No. 10768 of 2021
HC-KAR
favor of Sumitra, but the averments contained in the sale
deed clearly points out that the BDA executed the
document in favor of Sumitra in the capacity of legal
representative of late Shivaram and not identifying her
independent right so as to claim that the property is not
the property which was properly mortgaged to the bank
and claim security over that, and no security interest
created. In that view of the matter, the contention of
learned counsel Sri.Malipatil, fails.
16. So far as the point of limitation is concerned, it
is not open for the applicant to contend only on the point
that the Appellate Tribunal while observing that, the
Presiding Officer ought to have discussed the main issue
that is the point of limitation more elaborately rather brief.
The fact remains that both the DRT and DRAT concurrently
held that the claim made by the bank is well within the
time. In that view of the matter, the judgments relied on
by the learned counsel for the petitioner is distinguishable
on facts. However, the judgments relied on by the bank in
- 14 -
NC: 2026:KHC:34362-DB
WP No. 10768 of 2021
HC-KAR
the KOTAK MAHINDRA BANK supra by the High Court of
Bombay is applicable to the case on hand holding that the
Bank would derive its authority to recover the amount
within 12 years.
17. The High Court of Kerala at Ernakulam, in the
case of GEEVARGHESE P.JOHN AND OTHERS VS.
FEDERAL BANK LTD., NEDUMBASSERY BRANCH,
REPRESENTED BY CHIEF MANAGER, ASSET
RECOVERY BRANCH AND ANOTHER in OP(DRT)
No.446/2023 and other connected matters, disposed on
16.12.2024, which has been authored by one of us (By
Hon'ble Justice D.K.Singh), wherein it is clearly held that
period of limitation for recovery of dues of Banks/Financial
Institutions under Section 19 of the RDDB Act will be the
period of limitation prescribed under Article 136 of the
Schedule to the Limitation Act, 1963, and the time
provided under said Article 136 is 12 years, and
accordingly, held at paragraph No.24 as under:
- 15 -
NC: 2026:KHC:34362-DB
WP No. 10768 of 2021
HC-KAR
"24. The decisions in Bio Research Pharmaceuticals
(supra) and Paramsivam (supra) only establish
that the phrase "as far as possible: in Section
29 of RDDB Act does not mean that the
provisions of the Second Schedule to the
Income Tax act need not be followed at all or
can be deviated from at the whims and fancies
of the Recovery Officer. In other words, both
decisions only hold that where such provisions
are in tune with the Scheme of the RDDB Act,
they must be followed without departure.
24.1 It is held that the period of limitation for
recovery of the dues of the Banks/Financial
Institutions under Section 19 of the RDDB Act
will be the period of limitation prescribed in
Article 136 of the Schedule to the Limitation
Act, 1963.
24.2 The provisions of Rule 68B of the Second
Schedule to the Income Tax Act, 1961 is not
applicable to proceedings for recovery of
amounts determined as payable to a
Bank/Financial Institution under the provisions
of the RDDB Act.
24.3 In light of the aforementioned discussions and
reasoning, the petition filed by the
Bank/Financial Institution is allowed, and the
petitions filed by the borrowers/guarantors are
dismissed."
- 16 -
NC: 2026:KHC:34362-DB
WP No. 10768 of 2021
HC-KAR
18. In view of the point of law answered on
limitation holding that the provision of Rule 68B of Second
Schedule to the Income Tax Act, 1961, is not applicable to
the proceedings for recovery of amounts determined as
payable to the Bank/Financial Institution under the
Provisions of RDDB Act and the limitation provided under
Article 136 of Schedule to the Limitation Act, 1963 is
applicable for recovery of dues of the Banks/Financial
Institutions under Section 19 of the RDDB Act, which is 12
years, we find no infirmities in the order passed either by
the DRT or DRAT. Accordingly, the Writ Petition sans merit
and is, dismissed .
Sd/-
(D K SINGH)
JUDGE
Sd/-
(T.M.NADAF)
JUDGE
RR
List No.: 1 Sl No.: 29
ct-vn