RAMANATH S/O VINAYAK NAYAK vs THE STATE BANK OF MYSORE

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HC-KAR
NC: 2026:KHC-D:17009-DB
WA No. 100032 of 2024


CNR: KAHC020008362024


IN THE HIGH COURT OF KARNATAKA AT DHARWAD

TH
DATED THIS THE 13 DAY OF OCTOBER, 2026

PRESENT

THE HON'BLE MR. JUSTICE M.NAGAPRASANNA

AND

THE HON'BLE MRS JUSTICE HEMA KULKARNI

WRIT APPEAL NO.100032 OF 2024 (GM-RES)

BETWEEN:

RAMANATH S/O. VINAYAK NAYAK,
AGE: 56 YEARS,
OCC: CIVIL ENGINEER AND CONTRACTOR
ST
R/O: 1 FLOOR, VINAYAK COMPLEX,
OPPOSITE TO TOWN HALL,
J.C.NAGAR, HUBLI DIST: DHARWAD – 580 119.





…APPELLANT
(BY SRI. SHIVARAJ P. MUDHOL A/W MS. SANJANA MUDHOL,
ADVOCATES)

AND:

1. THE STATE BANK OF MYSORE,
HUBLI MAIN BRANCH, COEN ROAD, HUBLI,
REPRESENTED BY ITS BRANCH MANAGER.






2. MANAGING DIRECTOR,
STATE BANK OF MYSORE,
HEAD OFFICE, K.G.ROAD,
BANGALORE – 560 001.
Digitally signed
by RAKESH S
HARIHAR
Location: High
Court of
Karnataka,
Dharwad Bench

…RESPONDENTS
(BY SRI. S.K. HEGDE, ADVOCATE)

THIS WRIT APPEAL IS FILED U/S.4 OF KARNATAKA HIGH
COURT ACT, 1961, PRAYING TO CALL FOR RECORDS AND TO
SET-ASIDE THE ORDER DATED 04/12/2023 IN WRIT PETITION
NO.76967/2013 PASSED BY THE LEARNED SINGLE JUDGE AND TO
ALLOW THE WRIT PETITION FILED BY THE APPELLANT BY ALLOWING
THIS WRIT APPEAL IN THE INTEREST OF JUSTICE AND EQUITY.

THIS WRIT APPEAL, COMING ON FOR PRELIMINARY HEARING
THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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WA No. 100032 of 2024


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CORAM: HON'BLE MR. JUSTICE M.NAGAPRASANNA
AND
HON'BLE MRS JUSTICE HEMA KULKARNI

ORAL JUDGMENT
(PER: HON'BLE MR. JUSTICE M.NAGAPRASANNA )
The appellant is before the Court calling in question an
order passed by the learned Single Judge in Writ Petition
No.76967/2013, dated 04.12.2023.

2. The facts in brief, germane, are as follows:
The appellant is the borrower, who borrowed certain
finance from the then State Bank of Mysore in two installments
and in two different transactions, one of Rs.4,00,000/- and the
other of Rs.3,30,000/-. Therefore, there were two separate
loans. The loans are said to have become sticky, therefore, the
Bank seeks to initiate proceedings under demand notice on
11.11.2011 for an amount of Rs.2,01,298/-. The appellant
fulfilled the demand by way of a demand draft on 12.12.2011.
This closes one loan that was taken of Rs.4,00,000/-. What
remains was the loan of Rs.3,30,000/-. Another demand notice
comes to be issued on the appellant on 04.01.2012 demanding
an amount of Rs.2,31,656/- in one transaction and Re.1 in the
other. The appellant immediately fulfills the demand on

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16.01.2013. Therefore, both the demand notices were fulfilled
by the appellant. After having fulfilled, it transpires that
another communication is issued of an amount of
Rs.19,79,289/- in all to be paid by the appellant, on account of
his default. This is notwithstanding the aforesaid amount. The
appellant then calls in question the said communication dated
14.02.2013. The learned Single Judge, by his order dated
04.12.2023, dismissed the petition passing the following order:
“ Petitioner had borrowed loan from respondent
Bank and the Bank initiated proceedings against the
petitioner, against which the present writ petition is
filed.
The case of the petitioner is that, he has paid the
entire amount due to the Bank and in spite of it,
respondent Bank has initiated further proceedings. The
issue on hand involves disputed question of fact, which
cannot be adjudicated upon by this Court in exercise of
its powers under Articles 226 of the Constitution of
India.
For that reason, writ petition is hereby dismissed. ”


3. It is this that has driven the appellant to this Court
in the subject petition.


4. The learned counsel Sri.Shivaraj P Mudhol along
with Ms.Sanjana Mudhol appearing for the appellant would take

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this Court through the documents appended to the
Memorandum of the Appeal to demonstrate that every demand
made by the Bank has been fulfilled by making payment in full
and final. The Bank after receipt of the said amount issues
another communication that Rs.19,79,289/- is still due from
the hands of the appellant, that too after a month of issuance
of two demand notices. The learned counsel submits that the
Bank cannot now register a fresh claim for recovery of money,
notwithstanding the fact that the entire amount had been paid
through by fulfilling two demand notices.


5. Per contra, the learned counsel appearing for the
respondent/Bank would submit that it is true that two demand
notices were issued by the officers of the bank after due
verification, but the quantum of interest was not added in those
notices and therefore, the quantum of interest is now added
and Rs.19,79,289/- is demanded from the hands of the
appellant. He would submit that the appellant is availed loan of
Rs.7,30,000/- and paid back close to Rs.9,00,000/-. It is not
the amount of another Rs.19,79,289/- that has to be paid by
the appellant.

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6. We have given our anxious consideration to the
submissions made by the respective learned counsel and have
perused the material on record.


7. The appellant is the borrower and as observed
hereinabove, borrows an amount of Rs.4,00,000/- and
Rs.3,30,000/- in two separate transactions. After about 10
years of such borrowing, it transpires that the loan becomes
sticky and slips into becoming a non-performing asset. Owing
to the said act, the respondent/Bank issues a demand notice on
11.11.2011. The amount demanded in the said notice was
Rs.2,01,298/-. The appellant pays the said amount by the
following instrument:
BANKERS CHEQUE/NOT TRANSFERABLE

Date 12/12/2011

PAY Tum loan A/C 54045155510/SB,-Hbli/Rv Nayak ONLY
RUPEES Two Lakhs One thousand Two Hundred And Ninety Eight Only


Rs.2,01,298/-
nd
CTS No. 4620, J C Nagar 2 Cross (Near Hotel Ananth
Residency), Hubli – 580 020.
for CITY UNION BANK LIMITED


SD/-
Authorized Signatory

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8. Thus, the demand notice so issued is fulfilled by
the appellant and the demand was the outstanding loan.
Towards the second transaction, another notice is issued by the
Bank invoking provisions of the SARFAESI Act. The said notice
reads as follows:
“ To

SRI RAMANATH V NAYAK
VINAYAK COMPLEX, OPP TOWN HALL
J.C.NAGAR
HUBLI

Sub: Notice u/s 13(2) of Securitization and Reconstruction of
Financial Assets Enforcement of Security Interest Act 2002
(hereinafter called 'the Act

Dear Sir,

The undersigned being the Authorized Officer of State Bank of
Mysore. RASMECCC/SARC, Hubli, appointed under the
Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002, hereby issue the
following notice:

1. At your request, you have been granted by the Bank,
through it's COEN ROAD Branch, Hubli, from time to time,
various credit facilities by way of financial assistance against
various assets creating security interest in favour of the Bank
for which various loaning documents were executed by you and
your guarantor. The relevant particulars of the said credit
facilities and the amount outstanding repayable by you as on
the date of this notice is/are as stated in schedule 'A'. which
include interest and other charges debited to your account upto
28.02.07. You have availed the financial assistance with an
undertaking for repayment of the said financial assistance in
terms of the agreement(s)/document(s) duly executed in
favour of the Bank.

2. You have also created mortgage by way of deposit of title
deeds/Equitable mortgage creating security interest in favour of
the Bank. The relevant particulars of the secured assets are
specifically stated in Schedule 'B'

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3. You have also acknowledged subsistence of the liability in
respect of the aforesaid credit facilities by executing
confirmation of balances and revival letters and other
documents from time to time.
4. The operation and conduct of the accounts in respect of the
above said financial assistance/credit facilities have become
irregular and the debt has been classified as Non-Performing
Assets as on 27.03.2007 in accordance with the
directives/guidelines relating to asset classifications issued by
the Reserve Bank of India consequent to the default committed
by you in repayment of principal debt and interest thereon
5. The said financial assistance is also secured by the personal
guarantee of:
a) Sri K.T.SHETTY S/O THIMAPPA SHETTY, 2A,
PRIYADARSHINI COLONY GOKUL ROAD, Hubli.
6. Despite repeated requests, you have failed and neglected to
repay the said dues/outstanding liabilities.
7. Therefore, the Bank hereby calls upon you under
Section13(2) of the Securitization and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002
by issuing this notice to discharge in full your liabilities stated
hereunder to the Bank within 60 days from the date of this
notice.
8. Your outstanding liabilities(in aggregate) due and owing to
the Bank are in the sum of RS 2,31,657-00 (RUPEES TWO
LAKHS THIRTY ONE THOUSAND SIX HUNDRED AND FIFTY
SEVEN ONLY) (EXCLUSIVE OF INTEREST FROM DT 01.03.07)
and other charges You are also liable to pay future interest at
the contractual rate on the aforesaid amount together with
incidental expenses, cost, charges etc.
9. If you fail to repay to the Bank the aforesaid sum of RS
2,31,657-00 (RUPEES TWO LAKHS THIRTY ONE THOUSAND SIX
HUNDRED AND FIFTY SEVEN ONLY) with further interest from
01.03.2007, and incidental expenses, and costs as stated above
in terms of this notice u/s 13(2) of the Act, the Bank will
exercise all or any of the rights detailed under sub-section (4)
of Section 13 and under other applicable provisions of the said
Act.
10. You are also put on notice that in terms of section 13(13)
you shall not transfer by way of sale, lease or otherwise the

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said secured assets detailed in Schedule 'B' of this notice
(otherwise than done in ordinary course of business) without
obtaining written consent of the Bank.
11. You are also put on notice that any contravention of this
statutory injunction/restraint, as provided under the said Act, is
an offence
12. If for any reason, the secured assets are sold or leased out
in the ordinary course of business, the sale proceeds or income
realized shall be deposited/ remitted with/to the Bank. You will
have to render proper account of such realization/income.
13. The Bank reserves its right to call upon you to repay the
liabilities that may arise under the outstanding bills discounted,
Bank Guarantees and Letter of Credit issued and established on
your behalf as well as other contingent liabilities
14. This notice is without prejudice to the Bank's right to
initiate such other actions or legal proceedings as it deems
necessary under any other applicable provisions of Law
15. Please comply with the demand under this notice and avoid
all unpleasantness. in case of
non-compliance, further needful action will be resorted to,
holding you liable for all costs and consequences
16. Copy of this notice is endorsed to co-mortgagors and your
guarantor -
Schedule 'A' (details of loan/s)

Sl. Nature of facility Amount o/s
No.
01 PER-ALL PUPOSE MORTGAGE LOAN
LOAN LIMIT; RS 4,00,000-00 (RS
FOUR LAKHS ONLY)
Rs.1.00 (RUPEES ONE ONLY)
as on 18.08.2012 (exclusive
of interest from 01.03.07)
and other charges

02 CASH CREDIT LOAN LIMIT;
RS,3,30,000-00 (RS THREE LAKHS
THIRTY THOUSAND ONLY)
A/C HU/101/54045121251
RS 2,31,656-00(RUPEES
TWO on LAKHS THIRTY ONE
THOUSAND SIX HUNDRED
AND FIFTY SIX ONLY) as dt
18.08.2012 (exclusive of
interest from 01.03.07) and
other charges
TOTAL OF TWO A/C RS 2,31,656-00(RUPEES
A/C NO HU/ 62/54045155510 TWO on LAKHS THIRTY ONE

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A/C HU/101/54045121251 THOUSAND SIX HUNDRED
AND FIFTY SIX ONLY)as dt
18.08.2012 (exclusive of
interest from 01.03.07) and
other charges

9. The appellant by the following instruments paid the
amount:


10. After the entire demand even in terms of the
demand of the Bank being fulfilled, comes the impugned
communication. The impugned communication reads as
follows:

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No .HBL.ADV:2012-13: DATE:14.02.2013
“

Sri Ramanath Vinayak Nayak. BY REGD. POST
Ist floor, Vinayak Complex,
Opposite to Town Hall, JC Nagar,
HUBLI 580 020.

Dear Sir

YOUR APML & WORKING CAPITAL CREDIT LIMITS WITH US

we acknowledge receipt of your letter dated 16-01-2013 along-
with the Banker's cheque for Rs. 231656.00 & Rs. 124264.00
towards credit of your Cash Credit Account No. 54045121251,
letter dated 10-12-2012 along-with Banker's Cheque for Rs.
5.00 towards credit of your Term Loan (APML) Account No.
54045155510 and your letter dated 04-02-2013.

In this connection, we wish to inform you as under:

1. Total amount payable in respect of Cash Credit
account No. 54045121251 as on date is Rs. 7, 63,
079.48 and interest calculation sheet is enclosed
for your ready reference. Despite this, you have
sent banker's cheque for part payment towards
Cash Credit and we have credited the amount
under protest to the said account. Hence, your
request for full and final settlement by sending
part payment is not acceptable. You are advised
to remit the remaining outstanding of Rs. 763079
48+ future interest at 15.25% p.a. from 15-03-
2013 till closure of Cash Credit account
immediately.

2. In respect of Term Loan (APML) Account No.
54045155510, here also, you have sent part
payment through Banker's cheque for Rs. 5.00 as
against total amount due Rs. 12,16,202.33 (as on
14-02-2013). We have credited the proceeds to
your said loan account under protest. Hence, your
request for full and final settlement by sending
part payment is not acceptable. You are advised
to remit the remaining amount of Rs.
12,16,202.33 + future interest at 16.00% p.a. till
closure of loan account immediately

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Please acknowledge receipt and arrange for closure of
the both the loan accounts immediately.
”


11. The impugned communication indicates that the
appellant is still in due of Rs.19,79,289/- notwithstanding the
aforesaid amount and what the Bank would communicate is
that the amount of interest was forgotten by the bank officials
to be included in the demand notices earlier. This would fly foul
on a clear perusal at the communication itself, as the loan
amount, the notices included the interest as was applicable as
on the date of issuance of a notice in both these cases.
volte-face
Therefore, the Bank could not have done a to what
they had earlier indicated in the demand notices and those
demand notices being fulfilled. The action of the Bank did merit
appropriate consideration at the hands of the learned Single
Judge. The learned Single Judge has declined to interfere on
the score that there are seriously disputed questions of fact,
while there are no disputed questions of fact in the case at all,
as the documents would speak for itself and the loan was
completely paid by the appellant.

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12. In that light, the order of the learned Single Judge
warrants appropriate interference and the communication of
the Bank is to be obliterated.


13. In the light of the aforesaid reasons, the following:
ORDER

i) Writ Appeal is allowed;

ii) The impugned order of the learned Single
Judge is set- aside;

iii) The communication of the Bank impugned
before the learned Single Judge is
obliterated and,

iv) The appellant shall be entitled to all
consequential benefits.

Sd/-
(M.NAGAPRASANNA)
JUDGE


Sd/-
(HEMA KULKARNI)
JUDG

JTR/CT: ASC
List No.: 1 Sl No.: 31