Karnataka High Court
M/S Sir M Visveshvaraya Co-Operative ... vs M/S Pinakini Educational Trust on 2 July, 2024
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WA No. 937 of 2024
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 2ND DAY OF JULY, 2024
PRESENT
THE HON'BLE MR. N. V. ANJARIA, CHIEF JUSTICE
AND
THE HON'BLE MR. JUSTICE K. V. ARAVIND
WRIT APPEAL No. 937 OF 2024 (GM-DRT)
BETWEEN:
M/S SIR M. VISVESHVARAYA
CO-OPERATIVE BANK LTD.,
No.109, CORPORATE OFFICE,
2ND FLOOR, SHANKARMUTTA ROAD, SHANKARPURAM,
BENGALURU-560004.
REPRESENTED BY CHIEF MANAGER AND AUTHORISED
OFFICER,
MR. B. A. SREEDHAR.
...APPELLANT
(BY SRI LOKESH K. V., ADVOCATE)
AND:
Digitally
signed by
VALLI M/S PINAKINI EDUCATIONAL TRUST,
MARIMUTHU GOWRIBIDANUR-561208.
Location: REPRESENTED BY
High Court of
Karnataka SMT. ASHA REDDY TRUSTEE.
...RESPONDENT
THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE
KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE
IMPUGNED ORDER DATED 10/06/2024 PASSED BY THE LEARNED
SINGLE JUDGE IN WP No.14734/2024.
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WA No. 937 of 2024
THIS WRIT APPEAL COMING ON FOR PRELIMINARY
HEARING THIS DAY, JUDGMENT WAS DELIVERED THEREIN, AS
UNDER:
CORAM: HON'BLE THE CHIEF JUSTICE MR. JUSTICE
N. V. ANJARIA
and
HON'BLE MR. JUSTICE K. V. ARAVIND
ORAL JUDGMENT
(PER: HON'BLE MR. JUSTICE K. V. ARAVIND) This appeal under Section 4 of the Karnataka High Court Act, 1961, by respondent in Writ Petition No.14734/2024, dated 10.06.2024.
2. The respondent herein is a private Trust engaged in imparting education. The respondent borrowed money from the appellant-Bank. It is the case of the respondent that a sum of Rs.50.00 lakhs was deposited in Fixed Deposit account with the appellant-Bank to safeguard the interest of the respondent from declaring the account as Non-Performing Asset [NPA]. It is stated that though the Bank enchased the Fixed Deposit by utilizing the pre-signed documents, has not adjusted the same towards monthly EMIs. In view of non-adjustment of the Fixed Deposit towards -3- NC: 2024:KHC:24787-DB WA No. 937 of 2024 monthly EMIs, the appellant-Bank classified the respondent's account as NPA.
3. It is the case of the appellant-Bank that the respondent has defaulted in paying monthly EMIs. The account was classified as NPA. As a consequence, proceedings were initiated under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [hereinafter referred to as 'SARFAESI Act' for short].
4. The appellant-Bank filed petition under Section 14 of the SARFAESI Act before the jurisdictional Magistrate at Chikkaballapura and physical possession of the residence of the Trustee of the respondent-Institution was taken. Challenging the said action, the respondent filed S.A.No.27/2023 before the Debts Recovery Tribunal-I, Bangalore [hereinafter referred to as 'DRT' for short].
5. It is borne out from the record that during the pendency of S.A.No.27/2023, evidence of the Bank Manager was recorded by learned XL Additional Chief Metropolitan Magistrate, Bengaluru, in a complaint filed by the Bank under Section 138 of the Negotiable -4- NC: 2024:KHC:24787-DB WA No. 937 of 2024 Instruments Act, 1881. The statement of the Bank Manager with reference to Fixed Deposit of Rs.50.00 Lakhs was relevant to the proceedings pending before the DRT. It is further stated that the Registrar of Co-operative Societies initiated proceedings under the Co-operative Societies Act to enquire the correctness of classifying the account of the respondent as NPA. In the said proceedings, certain findings were recorded. The said findings were relevant for matter pending before the DRT in S.A.No.27/2023.
6. It is to be noted that during the pendency of S.A.No.27/2023, both parties have approached this Hon'ble Court in different writ petitions seeking various reliefs. Reference to the said writ petitions may not be of much relevance. Hence, the same are not detailed herein.
7. The respondent during the pendency of S.A.No.27/2023 filed I.A.No.880/2024 seeking amendment of the pleadings, I.A.No.1074/2024 for production of additional documents and I.A.No.1087/2024 for advancement of the case to bring on record certain pleadings and documents which were subsequent to filing of S.A.No.27/2023.
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8. The DRT by order dated 31.05.2024 rejected the application by holding that the applications were filed to protract the proceedings. In the same order, the DRT rejected the S.A.No.27/2023 filed by the respondent upholding the proceedings initiated by the jurisdictional Magistrate at Chikkaballapur in Criminal Misc. Petition No.5/2021.
9. The respondent aggrieved against the order of DRT preferred Writ Petition No.14734/2024. Learned Single Judge, by order dated 10.06.2024, held that the amendment and additional documents sought to be produced were subsequent events after filing of S.A.No.27/2023 before the DRT. It is further held that amendment would not prejudice the case of the Bank. Learned Single Judge by allowing interlocutory applications, permitted amendment of the pleadings, set aside the order dated 31.05.2024 and remitted the matter to the DRT for fresh consideration. Learned Single Judge further reserved liberty to the appellant-Bank to file additional objections to the amended petition. In order to protect the interest of both parties, learned Single Judge directed the DRT to conclude the proceedings on or before 05.08.2024. -6-
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10. Learned counsel for the appellant submits that the applications were filed when the matter was at the final hearing stage with an intention to protract the proceedings. The DRT has rightly rejected the applications. It is further contended that the writ petition is not maintainable against the order passed by the DRT. The order impugned in the writ petition is appealable before the Debts Recovery Appellate Tribunal. On the above submissions, sought to quash the order of learned Single Judge.
11. We have considered the contentions and perused the writ papers.
12. Learned Single Judge after noticing the nature of amendment and the documents sought to be produced in the pending S.A.No.27/2023 has held that the amendment was necessiated due to subsequent development after the filing of S.A.No.27/2023 before the DRT. It is further held that the amendment would not prejudice the rights of the Bank. Learned Single Judge in order to protect the interest of the appellant from protraction of proceedings by the respondent has fixed the date for filing of the amended petition. Further opportunity has been -7- NC: 2024:KHC:24787-DB WA No. 937 of 2024 granted to the Bank to file additional objections to the amended petition. The remand proceedings before the DRT are directed to be concluded on or before 05.08.2024.
13. We have perused the amendment application, finding recorded by the DRT and learned Single Judge. The amendment sought in the application and the additional documents sought to be produced are subsequent events. The same would not alter the relief sought for in the pending application nor prejudice the interest of the Bank. Further, the interest of the Bank has been protected by reserving liberty to file additional objections to the amended petition. Further, to avoid any protraction of the proceedings by the respondent, the respondent has been directed to file amended petition on 24.06.2024 and the DRT has been directed to quash the proceedings on or before 05.08.2024.
14. In view of the above finding, we see no error in the order of remand passed by learned Single Judge. This Court is not inclined to interfere with the order of learned Single Judge. Hence, the writ appeal is dismissed.
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NC: 2024:KHC:24787-DB WA No. 937 of 2024 In view of dismissal of the appeal, pending interlocutory application does not survive for consideration and the same is disposed of.
Sd/-
(N. V. ANJARIA) CHIEF JUSTICE Sd/-
(K. V. ARAVIND) JUDGE MV List No.: 1 Sl No.: 22