Karnataka High Court
Suraksha Ventures Llp vs Mr G Lokesh on 16 September, 2025
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WA No. 170 of 2025
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 16TH DAY OF SEPTEMBER, 2025
PRESENT
THE HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE
AND
THE HON'BLE MR. JUSTICE C M JOSHI
WRIT APPEAL NO. 170 OF 2025 (GM-RES)
BETWEEN:
SURAKSHA VENTURES LLP,
HAVING ITS REGISTERED OFFICE AT
NO.13, 2ND FLOOR, GREEN LEAF LAYOUT,
80 FT. ROAD, 4TH BLOCK, KORAMANGALA,
BANGALORE, KARNATAKA - 560 034.
REP. BY ITS PARTNER,
SRI. DINESH RAMACHANDRA.
...APPELLANT
(BY SRI ARJUN RAO, ADVOCATE)
AND:
1. MR. G LOKESH,
MAJOR,
Digitally signed S/O LATE GANGAIAH,
by NANDINI R NO.53, 5TH CROSS, BYRASANDRA,
Location: HIGH 1ST BLOCK, EAST, JAYANAGAR,
COURT OF
KARNATAKA BENGALURU-560 011.
2. THE AUTHORISED OFFICER,
CANARA BANK,
ARM BRANCH-II, 2ND FLOOR,
CIRCLE OFFICE, SPENCER TOWERS,
NO.86, MG ROAD, BENGALURU-560 001.
REP. BY ITS AUTHORISED OFFICERS
...RESPONDENTS
(BY SRI RAJENDRA M A, ADVOCATE FOR R-1;
SRI VIGNESH SHETTY, ADVOCATE FOR R-2)
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WA No. 170 of 2025
HC-KAR
THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO a) CALL FOR THE RECORDS IN WP
NO.35797/2024 b) SET ASIDE THE IMPUGNED JUDGEMENT DATED
15/01/2025 IN WP NO.35797/2024 c) DISMISS WP NO.35797/2024
AND d) PASS ANY OTHER ORDER.
THIS APPEAL, COMING ON FOR PRELIMINARY HEARING,
THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE
and
HON'BLE MR. JUSTICE C M JOSHI
ORAL JUDGMENT
(PER: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE)
1. The appellant has filed the present appeal impugning an
order dated 15.01.2025 passed by the learned Single Judge in
WP.No.35797/2024, whereby the said petition was disposed of by
granting liberty to respondent No.1 [Borrower] to deposit the entire
amount of `4,03,13,000/- with respondent No.2 [the Bank] by way
of a Demand Draft.
2. The Borrower had filed the aforementioned writ petition inter
alia praying that directions be issued to the Bank to consider his
representation dated 20.12.2024, whereby the Borrower had
offered to pay an amount equal to auction purchase price for the
secured assets.
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3. The controversy in the writ petition lies in a narrow compass.
The Borrower had availed of financial assistance by way of working
capital limit and a term loan from the Bank in the year 2017 and
had mortgaged immovable properties [subject properties] by
executing a memorandum of deposit of title deeds on 07.10.2017.
The borrower was unable to service the financial facility and its
account was declared as a NPA [Non Performing Asset] on
29.10.2018. Thereafter, on 03.11.2018, the Bank issued a notice
under Section 13(2) of the Securitization and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002
[SARFAESI Act] to the Borrower. This was followed by a notice
dated 10.01.2019 issued under Section 13(4) of the SARFAESI
Act. The possession notice with respect to the subject properties
was published on 12.01.2019 in two daily newspapers namely 'the
New India Express' and 'Kannada Prabha'.
4. The Borrower being aggrieved by the measures taken, filed
the Securitization Application [SA.No.238/2020] before the Debt
Recovery Tribunal [DRT], which was dismissed. On 08.12.2022,
the District Magistrate, Ramanagar, issued an order under Section
14 of SARFAESI Act for taking over physical possession of the
subject properties. On 24.10.2024, the Bank issued a notice for
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conducting the auction of the subject properties. The auction was
conducted on 27.11.2024. The appellant had participated in the
auction and his bid for `4,03,13,000/- was the highest bid.
Accordingly, he was declared as a successful bidder. In
accordance with the terms and conditions of the auction, the
appellant also remitted 25% of the final bid amount amounting to
`1,00,78,250/- after deducting the Earnest Money Deposit [EMD]
on the next working day. On receipt of the aforesaid amount, the
Bank confirmed the sale of the subject properties in favour of the
appellant in terms of a letter dated 28.11.2024. The Bank,
acknowledged the amount paid by the appellant, and reiterated that
the balance amount of `3,02,34,750/- is required to be paid by the
appellant on or before 12.12.2024.
5. The Borrower, once again, approached the DRT and the
DRT passed an interim order dated 02.12.2024 restraining the
Bank from issuing the sale certificate. Thereafter, the Borrower
issued a letter dated 20.12.2024 to the bank requesting for release
of the title deeds of the subject properties against payment of the
auction price of `4,03,13,000/-. Since the Bank had already
auctioned the properties, the Bank did not entertain the Borrower's
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offer. This led the Borrower to file the writ petition, which was
disposed of in terms of the impugned order.
6. A Plain reading of the impugned order indicates that the
learned Single Judge had proceeded on the basis that the
Borrower was entitled to redeem the subject properties on deposit
of the highest amount as offered by the auction purchaser, namely,
the appellant. The learned Single Judge observed that if the
Borrower was ready and willing to deposit the entire loan amount
as stated in his representation, then the appellant would be entitled
to the relief as available in law.
7. Plainly, the said view is erroneous. The Borrower cannot
exercise the right to redeem the mortgaged assets once an auction
had been conducted and the secured asset has been sold in
enforcement of the mortgage.
8. We may also note that Section 13(8) of the SARFAESI Act,
was substituted with effect from 01.09.2016 by virtue of the Act
No.44 of 2016. The same is set out below:
"13(8). Where the amount of dues of the secured creditor
together with all costs, charges and expenses incurred by him is
tendered to the secured creditor at any time before the date of
publication of notice for public auction or inviting quotations or
tender from public or private treaty for transfer by way of lease,
assignment or sale of the secured assets,--
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(i) the secured assets shall not be transferred by way of
lease assignment or sale by the secured creditor; and
(ii) in case, any step has been taken by the secured creditor
for transfer by way of lease or assignment or sale of the
assets before tendering of such amount under this sub-
section, no further step shall be taken by such secured
creditor for transfer by way of lease or assignment or sale of
such secured assets."
Prior to its substitution, Section 13(8) of the SARFAESI Act
read as under:
"13 (8). If the dues of the secured creditor together with all costs,
charges and expenses incurred by him are tendered to the
secured creditor at any time before the date fixed for sale or
transfer, the secured asset shall not be sold or transferred by the
secured creditor, and no further step shall be taken by him for
transfer or sale of that secured asset."
9. In CELIR LLP v. Bafna Motors (Mumbai) Private Limited
and others : (2024) 2 SCC 1, the Supreme Court had
authoritatively held that the provisions of Section 13(8) of the
SARFAESI Act would override Section 60 of the Transfer of
Property Act, 1882 [TP Act]. The relevant extract of the said
decision reads as under:
65. The SARFAESI Act is a special law containing an overriding
clause in comparison to any other law in force. Section 60 of the
1882 Act, is a general law vis-à-vis the amended Section 13(8)
of the SARFAESI Act which is special law. The right of
redemption is clearly restricted till the date of publication of the
sale notice under the SARFAESI Act, whereas the said right
continues under Section 60 of the 1882 Act till the execution of
conveyance of the mortgaged property. The legislative history
has been covered in the preceding paragraphs of this judgment
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and how Parliament desired to have express departure from the
general provision of Section 60 of the 1882 Act. The SARFAESI
Act is a special law of recovery with a paradigm shift that permits
expeditious recovery for the banks and the financial institutions
without intervention of courts. Similarly, Section 13(8) of
the SARFAESI Act is a departure from the general right of
redemption under the general law i.e. the 1882 Act. Further, the
legislature has in the Objects and Reasons while passing the
amending Act specifically stated "to facilitate expeditious
disposal of recovery applications, it has been decided to amend
the said Acts...". Thus, while interpreting Section 13(8) vis-à-
vis Section 60 of the 1882 Act, an interpretation which furthers
the said Objects and Reasons should be preferred and adopted.
If the general law is allowed to govern in the manner as sought
to be argued by the borrowers, it will defeat the very object and
purpose as well as the clear language of the amended Section
13(8).
66. In Mathew Varghese [Mathew Varghese v. M. Amritha
Kumar, (2014) 5 SCC 610 : (2014) 3 SCC (Civ) 254] this Court
had interpreted the unamended Section 13(8) of the SARFAESI
Act and Section 60 of the 1882 Act respectively. However,
thereafter the legislature amended Section 13(8) of
the SARFAESI Act. Thus, on this score, the decision in Mathew
Varghese [Mathew Varghese v. M. Amritha Kumar, (2014) 5
SCC 610 : (2014) 3 SCC (Civ) 254] could be said to have been
partially legislatively overruled as the substratum of the verdict
stands altered/amended.
67. Even otherwise, we should not lose sight of the fact that
in Mathew Varghese [Mathew Varghese v. M. Amritha Kumar,
(2014) 5 SCC 610 : (2014) 3 SCC (Civ) 254] the Court held in
regard to the right of redemption that both the SARFAESI Act
and the 1882 Act are complementary to each other and equally
applicable. It had held this because, the words "before the date
fixed for transfer" in the unamended Section 13(8), amongst
other things also means and connotes the date of conveyance of
the secured asset by a registered instrument (which is the
ordinary process of extinguishment of right of redemption under
the 1882 Act). Since, this Court observed that the stipulation or
expression "date fixed for transfer" could also mean the date of
conveyance/transfer of such secured asset and being so, is not
much different from the ordinary process of redemption under
the 1882 Act, it could not be said that there was any material
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inconsistency between the SARFAESI Act and the 1882 Act,
and thus it found no reason or hesitation to hold that the 1882
Act is inapplicable and thus made an endeavour of harmonising
the two.
68. It appears that while considering the right of redemption of
mortgage under the unamended Section 13(8), this Court
in Mathew Varghese [Mathew Varghese v. M. Amritha Kumar,
(2014) 5 SCC 610 : (2014) 3 SCC (Civ) 254] only went so far to
say that in the absence of any material inconsistency between
the SARFAESI Act and the 1882 Act, there was no good reason
to hold that the 1882 Act would not be applicable and as such,
held that general right of redemption of mortgage contained in
Section 60 of the 1882 Act would apply even in respect of
the SARFAESI Act.
69. However, with the advent of the 2016 Amendment, Section
13(8) of the SARFAESI Act now uses the expression "before the
date of publication of notice for public auction or inviting
quotations or tender from public or private treaty for transfer by
way of lease, assignment or sale of the secured assets" which
by no stretch of imagination could be said to be in consonance
with the general rule under the 1882 Act that the right of
redemption is extinguished only after conveyance by registered
deed. Thus, in the light of clear inconsistency between Section
13(8) of the SARFAESI Act and Section 60 of the 1882 Act the
former special enactment overrides the latter general enactment
in light of Section 35 of the SARFAESI Act. Thus, the right of
redemption of mortgage is available to the borrower under
the SARFAESI Act only till the publication of auction-notice and
not thereafter, in light of the amended Section 13(8)."
10. It is clear from the above, that the mortgagors have no right
to insist that their offer for the amount be accepted after the notice
of the auction has been issued for enforcement of the security
interest under the SARFAESI Act.
11. The learned counsel for the parties state that in the
meantime the Sale Certificate of the subject properties has already
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been issued to the appellant and the same has been registered.
The Borrower's application before the DRT has been dismissed
and the Borrower has appealed the same before the Debt
Recovery Appellate Tribunal [DRAT].
12. At this stage, the learned counsel for the Borrower submits
that in the aforesaid circumstances, the present appeal be allowed
and the impugned order be set aside. However, all rights and
contentions of the Borrower be left open to be urged in the pending
appeal before the DRAT. The learned counsel for the appellant has
no objection to the aforesaid course.
13. In view of the above, we set aside the impugned order. We
also clarify that all rights and contentions of the parties before the
DRAT are reserved.
14. The appeal is allowed in the aforesaid terms.
Sd/-
(VIBHU BAKHRU)
CHIEF JUSTICE
Sd/-
(C M JOSHI)
JUDGE
NR/-
