CANARA BANK vs M/S SLN HOLLOW BLOCKS AND EARTH MOVERS

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WA No. 1948 of 2025



TH
RESERVED ON 15 JULY 2026

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

TH
DATED THIS THE 28 DAY OF JULY, 2026

PRESENT

THE HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE

AND

THE HON'BLE MRS. JUSTICE K.S. HEMALEKHA

WRIT APPEAL NO.1948 OF 2025 (GM-RES)

BETWEEN
:












1. CANARA BANK
D'COSTA SQAURE BRANCH
NO.98/1-2,
WHEELERS ROAD EXTENSION
COOKE TOWN
BANGALORE - 560 005
REP. BY ITS CHIEF MANAGER/
AUTHORIZED OFFICER
P. THANGARAJ
S/O P.V. PALANICHAMY
AGED 45 YEARS
…APPELLANT
(BY SRI VIKRAM UNNI RAJAGOPAL, ADVOCATE)








Digitally
signed by
AMBIKA H B
Location:
High Court
of Karnataka

AND:

1. M/S. SLN HOLLOW BLOCKS AND
EARTH MOVERS
NO.75/1, YARAPANAHALLI MAIN ROAD
BIDARHALLI HOBLI
SURVEY NO.99
KANNUR P.O. & VILLAGE
BANGALORE - 562 149
REP. BY ITS PROPRIETOR
MR RAJANNA R

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2. MR RAJANNA R
S/O LATE RAMAIAHA
AGED ABOUT 57 YEARS
R/AT KUNNUR POST AND VILLAGE
SLN HOLLOW BLOCK
BANGALORE - 562 149
…RESPONDENTS
(BY SRI. PRAKASH T, ADVOCATE)

THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE
KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE
ORDER DATED 11.08.2025 IN W.P.No.23835/2022 (GM-RES) AND
DISMISS THE WRIT PETITION BEARING W.P.No.23835/2022 (GM-
RES).


THIS WRIT APPEAL HAVING BEEN HEARD AND RESERVED
FOR JUDGMENT, COMING ON FOR PRONOUNCEMENT THIS DAY,
JUDGMENT WAS PRONOUNCED AS UNDER:

CORAM: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE
and
HON'BLE MRS. JUSTICE K.S. HEMALEKHA

C.A.V. JUDGMENT
(PER: HON'BLE MR. VIBHU BAKHRU ,CHIEF JUSTICE)
1. The appellant [ Bank ] has filed the present appeal impugning
an order dated 11.08.2025 passed by the learned Single Judge in
Writ Petition No.23835/2022 (GM-RES). The respondents had filed
the said petition impugning the order dated 13.03.2020 passed by
the Chief Judicial Magistrate, Bengaluru Rural District, Bengaluru
[ Judicial Magistrate ] under Section 14 of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 [ SARFAESI Act ] in Crl.Misc. No.115/2020.

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2. The respondents had availed financial assistance from the
Bank. They state that they had availed OCC loan to the extent of
` 20,00,000/- (Rupees Twenty lakh only) and OD loan for a sum of
` 55,00,000/- (Rupees Fifty five lakh only). They had created a
security interest over the subject property by executing a
Memorandum of Deposit of Title Deeds dated 16.03.2018 over the
1
land measuring 2 acres and 8 / guntas out of 4 acres 17 guntas
2
comprising in Survey No.99/1 of Kannur Village, Bidarahalli Hobli,
Bengaluru East Taluk, Bengaluru [ subject property ] and also
deposited the title deeds in respect of the subject property.
Admittedly, the respondents defaulted in their repayment
obligations to the Bank. Resultantly, on 30.05.2019, the Bank
classified the respondents' loan account as a Non Performing
Asset [ NPA ]. Thereafter, the Bank issued a notice dated
29.07.2019 under Section 13(2) of the SARFAESI Act calling upon
the respondents to pay an outstanding amount of ` 76,62,623/-
(Rupees Seventy Six Lakh Sixty Two Thousand Six Hundred and
Twenty Three only) within a period of sixty days from the date of
the said notice.

3. Concededly, the respondents failed to pay the amount as
demanded within the stipulated period. Accordingly, the Bank

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issued a notice dated 23.01.2020 under Section 13(4) of the
SARFAESI Act and took over symbolic possession of the subject
property. On 18.02.2020, the Bank filed Crl.Misc. No.115/2020
before the learned Judicial Magistrate under Section 14 of the
SARFAESI Act, inter alia, praying for a direction for taking
possession of the subject property; a direction to the jurisdictional
police authority to assist the Bank in taking over the possession;
and an order appointing an Advocate Commissioner for taking over
possession of the subject property. The said application was
allowed by an order dated 13.03.2020, and the learned Judicial
Magistrate appointed an Advocate Commissioner to take over
possession of the subject property and deliver the same to the
Bank. The respondents filed the writ petition impugning the said
order.

4. The respondents claim that they had approached the Bank
for a One Time Settlement [ OTS ] of the outstanding liability and
had agreed to pay a sum of ` 58,00,000/- (Rupees Fifty Eight Lakh
only) in full and final settlement of the loan amount. They had paid
a sum of ` 20,000/- on the spot on 02.08.2021 and according to
them, their offer was accepted by the Bank. They claim that
subsequently on 25.02.2022, they paid a further sum of ` 5,00,000/-

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towards the OTS amount. The respondents contend that thereafter
they had sought time from the Bank to make further payments on
the ground that the mother of respondent No.2 was aged about 95
years old and he was involved in taking care of her. Therefore, he
was unable to carry on the business and arrange the funds for
repayment of the loan amount. The respondents claim that their
request was disregarded and the Bank had proceeded to take
possession and issue an auction notice dated 18.11.2022 for
auctioning the subject property on 21.12.2022.

5. The Bank filed the statement of objections and contested the
said petition. The Bank claimed that respondent No.2 had visited
the regional office on 02.08.2021 and had met the regional office
head, and he was permitted to clear 50% of the liability by
29.11.2021 and the remaining amount by 28.02.2022. Thus, the
respondents were granted ample opportunity to settle the dues but
had failed to do so.

6. On 29.11.2022, the learned Single Judge passed an interim
order restraining the Bank from precipitating the matter. The said
interim order was extended from time to time.

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7. The Bank, in its statement of objections, filed on 18.07.2023,
had quantified the total amount payable by the respondents at
` 1,01,00,000/- (Rupees One Crore and One Lakh only), and the
said amount was not deposited. The respondents' case was that
the Bank had agreed to settle the amount under an OTS for a sum
of ` 58,00,000/-. In this context, the learned Single Judge observed
that the respondents could not be permitted the benefit of an
interim order unconditionally and directed them to deposit a sum of
` 40,00,000/- in two instalments; ` 20,00,000/- within four weeks
from the said date and the balance ` 20,00,000/- within two weeks
thereafter. The learned Single Judge further clarified that if the
respondents failed to make the payments as directed, the interim
order would stand vacated.

8. The respondents deposited the amounts as directed.
However, there was a delay of one day in complying with the time
schedule. The Bank claims that on account of the said delay, the
interim order stood vacated.

9. On 01.04.2024, the learned Single Judge passed an order
accepting the Bank's contention that a one-day delay had resulted
in the interim order being vacated. However, the learned Single

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Judge passed an ad interim order extending the interim protection,
as the respondents had deposited a sum of ` 54,44,900/- by that
date.

10. While the respondents contended that they had arrived at
`
OTS amount of 58,00,000/-, the Bank disputed that the parties
had entered into an OTS. The Bank claimed that the handwritten
notation "Accepted for OTS", appearing on the offer letter dated
02.08.2021, along with signature of the branch official, was a
mistake on the part of the Bank branch. However, the learned
Single Judge was sceptical in accepting the said explanation as
there was no communication issued by the Bank rejecting the OTS
offer. The learned Single Judge also granted the Bank further time
to place on record any communication rejecting the OTS offer
before the next date of hearing, which was scheduled on
23.04.2024. The Bank acknowledged that there was no
communication rejecting the OTS. However, the Bank submitted
that the Bank officer who had acknowledged the respondents' OTS
letter had no authority to accept the proposal for OTS. The offer
letter for the OTS was not placed before the competent authority,
and as such it had no occasion to reject the same.

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11. The petition was finally heard and disposed of in terms of the
impugned order.

IMPUGNED ORDER
12. The learned Single Judge noted the Bank's contention that in
terms of the Bank's Master Circular, the OTS amount had to be
paid within a period of ninety days and that the payments had been
made by the respondents beyond the said period. The learned
Single Judge declined to reject the petition on the ground of an
alternate remedy being available. Whilst the learned Single Judge
accepted the contention that the respondents had an alternate
remedy under Section 17 of the SARFAESI Act, the court decided
to entertain the petition on the basis that certain developments had
taken place during the course of the proceedings. The learned
Single Judge rejected the contention that the payments were to be
made within a period of ninety days, on the ground that no such
condition had been communicated to the respondents, and held
that the OTS amount was required to be paid within a reasonable
period. The learned Single Judge reasoned that since the same
had not been paid within a reasonable period, the respondents
were liable to pay interest at the rate of 12% per annum from
01.01.2022 till the date of the first payment and 12% on the

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reducing balances till payment. The learned Single Judge further
directed the respondents to pay the amount within a period of three
months from the date of the order and restrained the Bank from
proceeding with further action.

REASONS AND CONCLUSIONS
13. The learned counsel appearing for the Bank has assailed the
impugned order on three fronts. First, he contended that in view of
the efficacious alternate remedy available under Section 17 of
SARFAESI Act against an order passed under Section 14 of the
said Act, the writ petition ought not to have been entertained and
was liable to have been rejected. Second, he submitted that the
terms of the OTS could not be modified. He contended that the
parties had not entered into an OTS and that the notation in the
letter to the effect that the OTS was accepted was a mere
acknowledgement, which was issued without any authority. The
branch official who had signed the said letter was not authorised to
enter into any OTS on behalf of the Bank with the respondents and,
therefore, the same was not binding on the Bank. However, even if
it is accepted that the Bank had entered into an OTS, there was
admittedly a delay in payment of the OTS amount and, therefore,
the Bank could not be compelled to be bound by the said terms.

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He contended that the learned Single Judge has modified the
terms of the OTS and has compelled the Bank to accept the
delayed payments along with interest.

14. Third, he submitted that the impugned order was beyond the
relief as prayed for in the writ petition. He contended that the writ
petition was confined to challenging the order dated 13.03.2020
passed by the learned Judicial Magistrate under Section 14 of the
SARFAESI Act. However, the learned Single Judge has effectively
directed the closure of the loan account on the terms that were
disputed by the Bank.

15. We find considerable merit in all the three contentions
advanced on behalf of the Bank.

16. Section 34 of the SARFAESI Act, expressly bars the
jurisdiction of the civil courts to entertain any suit or proceedings in
respect of any matters which the Debts Recovery Tribunal or the
Appellate Tribunal is empowered to consider. It is also relevant to
refer to Section 35 of the SARFAESI Act which contains a non-
obstante clause, thus positing that the provisions of the SARFAESI
Act would have an overriding effect over any other law to the extent
it is inconsistent with the SARFAESI Act.

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17. Sections 34 and 35 of the SARFAESI Act are set out below:
" 34. Civil court not to have jurisdiction.— No civil
court shall have jurisdiction to entertain any suit or
proceeding in respect of any matter which a Debts
Recovery Tribunal or the Appellate Tribunal is
empowered by or under this Act to determine and no
injunction shall be granted by any court or other
authority in respect of any action taken or to be taken
in pursuance of any power conferred by or under this
Act or under the Recovery of Debts Due to Banks and
Financial Institutions Act, 1993 (51 of 1993).
35. The provisions of this Act to override other
laws .—The provisions of this Act shall have effect,
notwithstanding anything inconsistent therewith
contained in any other law for the time being in force
or any instrument having effect by virtue of any such
law."

18. It is clear from the above that the legislative intent is to
preclude any intervention of the civil courts in the matters which
can be considered by the Debts Recovery Tribunal or the Appellate
Tribunal. Although the said provisions do not exclude the remedies
available under Article 226 of the Constitution of India, it is well
settled that in a case where the relevant statute provides an
alternate remedy, the High Court would ordinarily refrain from

exercising the said jurisdiction.

1
19. In United Bank Of India vs. Satyawati Tondon , the
Supreme Court had faulted the High Court in entertaining a petition
under Article 226 of the Constitution of India against a notice

1
(2010) 8 SCC 110

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issued under Section 13(4) of the SARFAESI Act and order under
Section 14 of the SARFAESI Act. The relevant extract of the said
decision, which is instructive, is set out below:
“ 42 . There is another reason why the impugned
order should be set aside. If Respondent 1 had any
tangible grievance against the notice issued under
Section 13(4) or action taken under Section 14, then
she could have availed remedy by filing an application
under Section 17(1). The expression “any person” used
in Section 17(1) is of wide import. It takes within its fold,
not only the borrower but also the guarantor or any
other person who may be affected by the action taken
under Section 13(4) or Section 14. Both, the Tribunal
and the Appellate Tribunal are empowered to pass
interim orders under Sections 17 and 18 and are
required to decide the matters within a fixed time
schedule. It is thus evident that the remedies available
to an aggrieved person under the SARFAESI Act are
both expeditious and effective.
43 . Unfortunately, the High Court overlooked the
settled law that the High Court will ordinarily not
entertain a petition under Article 226 of the Constitution
if an effective remedy is available to the aggrieved
person and that this rule applies with greater rigour in
matters involving recovery of taxes, cess, fees, other
types of public money and the dues of banks and other
financial institutions. In our view, while dealing with the
petitions involving challenge to the action taken for
recovery of the public dues, etc. the High Court must
keep in mind that the legislations enacted by
Parliament and State Legislatures for recovery of such
dues are a code unto themselves inasmuch as they not
only contain comprehensive procedure for recovery of
the dues but also envisage constitution of quasi-judicial
bodies for redressal of the grievance of any aggrieved
person. Therefore, in all such cases, the High Court
must insist that before availing remedy under Article
226 of the Constitution, a person must exhaust the
remedies available under the relevant statute.

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44 . While expressing the aforesaid view, we are
conscious that the powers conferred upon the High
Court under Article 226 of the Constitution to issue to
any person or authority, including in appropriate cases,
any Government, directions, orders or writs including
the five prerogative writs for the enforcement of any of
the rights conferred by Part III or for any other purpose
are very wide and there is no express limitation on
exercise of that power but, at the same time, we cannot
be oblivious of the rules of self-imposed restraint
evolved by this Court, which every High Court is bound
to keep in view while exercising power under Article
226 of the Constitution.
45 . It is true that the rule of exhaustion of
alternative remedy is a rule of discretion and not one of
compulsion, but it is difficult to fathom any reason why
the High Court should entertain a petition filed under
Article 226 of the Constitution and pass interim order
ignoring the fact that the petitioner can avail effective
alternative remedy by filing application, appeal,
revision, etc. and the particular legislation contains a
detailed mechanism for redressal of his grievance.
*
55 . It is a matter of serious concern that despite
repeated pronouncement of this Court, the High Courts
continue to ignore the availability of statutory remedies
ARFAESI
under the DRT Act and the S Act and exercise
jurisdiction under Article 226 for passing orders which
have serious adverse impact on the right of banks and
other financial institutions to recover their dues. We
hope and trust that in future the High Courts will
exercise their discretion in such matters with greater
caution, care and circumspection.”

20. Clearly, the decision of the learned Single Judge to entertain
the writ petition and to pass the impugned order therein runs
contrary to the principle of self-restraint as enunciated by the
Supreme Court in Satyawati Tondon ( supra )

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21. In South Indian Bank Limited and Others vs. Naveen
2
Mathew Philip and Another , the Supreme Court referred to the
earlier decisions including the decision in Satyawati Tandon
( supra ) and held as under:
"18. While doing so, we are conscious of the fact that
the powers conferred under Article 226 of the
Constitution of India are rather wide but are required
to be exercised only in extraordinary circumstances in
matters pertaining to proceedings and adjudicatory
scheme qua a statute, more so in commercial matters
involving a lender and a borrower, when the
legislature has provided for a specific mechanism for
appropriate redressal."

22. It would also be instructive to refer to the later decision of the
Supreme Court in PHR Invent Educational Society vs. UCO
3
Bank and Others . In the said case, the Supreme Court after
referring to its earlier decisions, had noted certain exceptions to the
general rule of self-restraint which ordinarily precludes the
entertaining of a petition under Article 226 of the Constitution of
India where an alternate remedy is available. The relevant extract
of the said decision is set out below:
"37. It could thus clearly be seen that the Court has
carved out certain exceptions when a petition under
Article 226 of the Constitution could be entertained in
spite of availability of an alternative remedy. Some of
them are thus:

2
(2023) 17 SCC 311
3
(2024) 6 SCC 579

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( i ) where the statutory authority has not acted in
accordance with the provisions of the enactment in
question;
( ii ) it has acted in defiance of the fundamental
principles of judicial procedure;
( iii ) it has resorted to invoke the provisions which are
repealed; and
( iv ) when an order has been passed in total violation
of the principles of natural justice.
38. It has however been clarified that the High Court
will not entertain a petition under Article 226 of the
Constitution if an effective alternative remedy is
available to the aggrieved person or the statute under
which the action complained of has been taken itself
contains a mechanism for redressal of grievance.
39. Undisputedly, the present case would not come
under any of the exceptions as carved out by this
Court in Chhabil Dass Agarwal [ CIT v. Chhabil Dass
Agarwal , (2014) 1 SCC 603] .
40. We are therefore of the considered view that the
High Court has grossly erred in entertaining and
allowing the petition under Article 226 of the
Constitution."

23. It is relevant to note that the Supreme Court also once again
highlighted the observations made by the Supreme Court in the
decision in Satyawati Tondon ( supra ) and referred to the
observations made by the Supreme Court in paragraph 55 of the
decision in Satyawati Tondon ( supra ) which is set out
hereinbefore.

24. The challenge in the present case is not covered under any
of the exceptions mentioned in PHR Invent Educational Society

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( supra ). Therefore, the writ petition ought not to have been
entertained on the ground of alternate remedy. The impugned
order is liable to be set aside for this reason alone.

25. The impugned order is also unsustainable as, in effect, it
seeks to impose a contract between the parties. The impugned
order is also unsustainable for the reason that it effectively
adjudicates a factual dispute that involves questions of fact. It was
the case of respondent No.2 that he had visited the office of the
Bank and had furnished an OTS proposal. The offer letter
submitted by respondent No.2 is set out below:
"OFFER LETTER
Place: Bengaluru
Date: 02/08/2021
From:
Name: Rajanna
Address: S/O Late Ramalah

To:
The Manager
Canara Bank

SUB: 0432256000392 & 0432261000373

I have availed subject loan/s from your Bank. I could
not repay the loan/s in time as agreed for reasons:

1. Business loss due to Covid.
2.

Now, I am agreeable to settle the dues with the Bank
under compromise with an OTS offer of Rs.58,00,000/-
in full and final settlement and payable as under:

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1. Spot payment Rs 20,000/-
2.

I am willing to abide by terms and conditions stipulated
by the Bank in this regard.

Yours faithfully,
Sd/-
(BORROWER)"


26. The said letter has a handwritten notation on the lower
portion, which reads as "Accepted for OTS for Rs.58,00,000/-," and
the signature of one of the Bank officials. It is material to note that
the said offer letter is claimed to have been handed over at the
counter of the bank branch to the concerned official. It is also
relevant to note that the offer letter, dated 02.08.2021, was
submitted after the learned Judicial Magistrate's order dated
13.03.2020, which was impugned in the writ petition. It is also to
be noted that the offer letter appears to be a standard-format letter
in which the details of the name of the borrower, address, date,
subject, reasons for non-payment, and the manner of payment are
left blank. These details have been filled up by hand.

27. It is also material to note that although the offer letter states
that the respondents were agreeable to settle the dues under a
`
compromise with an OTS of 58,00,000/- in full and final
settlement, the manner in which the said amount was to be paid

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has been left incomplete inasmuch as it refers only to a spot
payment of ` 20,000/-. Although the offer letter is also worded to
provide the manner of payment, the relevant details have not been
filled in by the respondents. The letter itself is incomplete.
However, the letter also states that the respondents are willing to
abide by the terms and conditions stipulated by the Bank in regard
to OTS. The circular issued by the Bank for settlement of NPAs
contains provisions regarding the special scheme for settlement of
NPAs in the micro, small and medium enterprises sector, which
sets out the formula for computing the net worth of the borrower
and for arriving at the settlement amount. The payment conditions
set out in the said circular are reproduced below:
" III. PAYMENT CONDITIONS:
a) The amount of settlement arrived at as above,
should be paid preferably in one lump sum,
immediately on receipt of sanction.

b) In deserving cases where borrowers are unable to
pay the entire amount in one lump sum, Bank may
consider recovering 25% of the amount of settlement
upfront at the time of sanction and the balance
amount of 75% should be recovered within a period
of 3 months from the date of sanction. However, if
the parties request for further time, another 3 months
time can be permitted subject to recovering interest
@ One Year MCLR (prevailing as at 01.04.2021) +
0.50% from the date of sanction of OTS till the date
of final payment."

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28. The said circular also provides that the decision on the OTS
and the consequent sanction of waiver of unapplied interest and /
or write off shall be taken by the competent authority in accordance
with the delegation of powers under the Loan Recovery Policy of
the bank (Circular No.284/2021 dated 03.05.2021), and that such
decisions are subject to reporting and review.

29. In view of the above, the dispute as to whether the parties
had entered into a OTS would necessarily require examination of,
first, whether the official who is said to have signed the notation on
the offer letter was authorised to enter into a OTS on behalf of the
Bank; and second, whether the letter of offer, which is ex facie
incomplete, was capable of acceptance at all and if so, upon what
payment conditions. However, the learned Single Judge has not
examined the question whether the official was authorised to enter
into a OTS with the respondents. The court proceeded on the basis
that since there was no further communication, the Bank would be
bound by the acceptance recorded on the offer letter. Given the
nature of the dispute, it is also essential to examine the other
factual aspects.

30. The learned Single Judge concluded that although the
parties had agreed to the OTS amount, no time was fixed for its

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payment, as the Bank had not communicated the payment
schedule. In our view, this conclusion is ex facie erroneous. The
OTS offer contains a stipulation as to the manner in which the
payment was to be made; however, that portion of the letter has
been left blank. At the same time, it also records that the
respondents are agreeable to the Bank’s terms and conditions in
this regard. In this view of the matter, it was necessary to examine
the other terms and conditions. Given the nature of the enquiries, it
was not apposite for the court to render a summary decision.

31. There is merit in the contention that the learned Single Judge
has effectively imposed a contract on the Bank. It is rightly pointed
out that if all the assumptions and conclusions of the learned Single
Judge are accepted – that (i) there was a binding OTS for a sum of
` 58,00,000/- between the parties; (ii) there was no stipulation as to
the time period within which the OTS was to be paid; (iii) the
payment of the OTS amount was to be made within a reasonable
time; and (iv) the respondents had failed to make the payments
‒
within the reasonable period it does not follow that the Bank
would be bound to accept the OTS along with interest. Clearly, if
the OTS is not paid within the time period agreed (or as held by the
learned Single Judge within a reasonable period), the Bank has the

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right to terminate the OTS. We are unable to accept that there is
any principle that would compel the Bank to accept belated
instalments of OTS on payment of interest. The learned counsel
appearing for the Bank had rightly pointed out that the impugned
order proceeds beyond the relief as sought for in the petition, which
was confined to challenging the order issued under Section 14 of
the SARFAESI Act.

32. In view of the above, the impugned order is set aside.

33. We clarify that this judgment will not preclude the parties
from availing their remedies, including in respect of the OTS
proposal. All rights and contentions of the parties are reserved.

34. The appeal is allowed in the aforesaid terms.

35. Pending interlocutory applications stand disposed of.


Sd/-
(VIBHU BAKHRU)
CHIEF JUSTICE


Sd/-
(K.S. HEMALEKHA)
JUDGE
AHB