AI Insights
The case involves two writ petitions filed by the Bank of Baroda and A. Naveen Bhandary against the orders of the Debt Recovery Appellate Tribunal, Chennai. The Bank sought to challenge the setting aside of an auction sale of mortgaged properties, while Bhandary contested the confirmation of the sale in his favor. The properties in question were initially agricultural lands mortgaged to secure a loan by M/s. United Distilleries, which defaulted. The bank initiated recovery proceedings, leading to multiple auctions. The main legal issues revolved around the validity of the auction process, the status of the land as agricultural or non-agricultural, and the rights of subsequent purchasers.
Appeal Details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 821547 (HC-KARNATAKA)
Assessee PAN
Bench
Appeal Number
CRN Number
Appellant
Respondent
Appeal Type
Others
Pronouncement Date
03-12-2025
Assessment Year
misc
Judgement Text
" - 1 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 3RD DAY OF DECEMBER, 2025 PRESENT THE HON'BLE MR. JUSTICE D K SINGH AND THE HON'BLE MR. JUSTICE VENKATESH NAIK T WRIT PETITION NO.36440 OF 2014 (GM-DRT) C/W WRIT PETITION NO.52283 OF 2013 (GM-DRT) IN W.P.No.36440/2014: BETWEEN: BANK OF BARODA ASSET RECOVERY MANAGEMENT BRANCH PRIME ROSE ROAD BANGALORE-560 001 REPRESENTED BY ITS CHIEF MANAGER …PETITIONER (BY SRI UDAYA HOLLA, SENIOR COUNSEL FOR SRI NAGARAJ DAMODAR, ADVOCATE) AND: 1. G.S. SRINIVAS GUPTA SON OF G.N. SHANKAR NARAYAN PARTNER, M/S. GUPTA BUILDERS & DEVELOPERS NO.45, K. KAMARAJ ROAD BANGALORE-560 042. 2. DR. C.N. VISHWANATH NO.446, 17TH CROSS 35TH MAIN, J.P. NAGAR 6TH PHASE, BANGALORE-560 078. 3. DR. RAMACHANDRA HEGDE D-4, TEJASWI APARTMENTS 74/75, GOVINDAPPA ROAD R Printed from counselvise.com Digitally signed by MOUNESHWARAPPA NAGARATHNA Location: High Court of Karnataka - 2 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 BASAVANAGUDI BANGALORE-560 004. 4. ASLAM BASHA SON OF DHOODAJAN NO.6, SHAKE NAVAB LANE OLD CEMETRY ROAD SHIVAJINAGAR BANGALORE-560 001. 5. MRS. SHASHIKALA NO.12, 3RD CROSS 4TH MAIN, HBR LAYOUT BANGALORE-560 043. 6. M/S. UNITED DISTILLERIES VENGALLPURA, POST ERANHIKKAL CALICUT (KERALA) 7. B.A. RAM SINCE DEAD BY HIS LR's 7(a) SMT. PALLAVI RAM WIFE OF LATE B.A. RAM AGED ABOUT 60 YEARS 7(b) SRI DHANUSH RAM SON OF LATE B.A. RAM AGED ABOUT 31 YEARS REPRESENTED BY HIS POWER OF ATTORNEY HOLDER I.E., HIS MOTHER, I.E., SMT. PALLAVI RAM 7(c) SRI VIDHUSH RAM SON OF LATE B.A. RAM AGED ABOUT 26 YEARS ALL ARE RESIDING AT NO.194, TOWN-1 PEBBLE BAY APARTMENT 1ST MAIN ROAD, RMV 2ND STAGE BENGALURU - 560 094. 8. B.A. LAXMAN SON OF P.R. ANJANAPPA NO.2, LAVELLE ROAD BANGALORE - 560 001. Printed from counselvise.com - 3 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 9. A. NAVEEN BHANDARI NO.SB-22, VIJAYA ENCLAVE SRS NAGAR, BTM 4TH STAGE BANGALORE - 560 076. 10. MRS. JYOTHI WIFE OF SRI KEERTHI D. SHAH NO.420, 10TH CROSS, 17TH MAIN II PHASE, J.P. NAGAR BANGALORE-560 078. 11. SMT. TANUJA H. DHARAMSHI WIFE OF LATE HIREN K. DHARMASHI NO.420, 10TH CROSS, 17TH MAIN II PHASE, J.P. NAGAR BANGALORE-560 078. …RESPONDENTS (BY SRI H.T. NATARAJ, ADVOCATE FOR R1 TO R5, R7(A-C); SRI A. MADHUSUDHANA RAO, ADVOCATE FOR R8; SMT. LATHA SHETTY, ADVOCATE FOR R9; NOTICE R6, R10, R11 ARE SERVED AND UNREPRESENTED; VIDE COURT ORDER DATED 18-09-2017 NOTICE TO R3 IS COMPLETE BUT UNREPRESENTED) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF CONSTITUTION OF INDIA PRAYING TO SET ASIDE THE ORDER DATED 23-08-2013 PASSED BY THE HON'BLE DEBT RECOVERY APPELLATE TRIBUNAL, CHENNAI IN M.A. NO.138 OF 2008 VIDE ANNEXURE-A AND CONSEQUENTLY SET ASIDE THE ORDER DATED 07-03-2008 PASSED BY THE HON'BLE DEBT RECOVERY TRIBUNAL, BANGALORE IN A.O.R. NO.2 OF 2003 AS PER ANNEXURE-B AND THEREBY ALLOW THE M.A. NO. 138/2008 ON THE FILE OF HON'BLE DEBT RECOVERY APPELLATE TRIBUNAL, CHENNAI AND ETC., IN W.P.NO.52283/2013: BETWEEN: MR. A. NAVEEN BHANDARY SON OF LATE A.L. BHANDARY AGED ABOUT 62 YEARS RESIDING AT NO.SB-22 VIJAYA ENCLAVE, SRS NAGAR, B.T.M 4TH STAGE, BANGALORE-560 076. ...PETITIONER Printed from counselvise.com - 4 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 (BY SRI BIPIN HEGDE, ADVOCATE FOR SMT. ANUPARNA BARDOLOI, ADVOCATE) AND: 1. THE DEBT RECOVERY APPELLATE TRIBUNAL REPRESENTED BY ITS REGISTRAR 4TH LOOR, INDIAN BANK CIRCLE OFFICE 55 ETHIRAJ SALAI, CHENNAI - 600 008. 2. THE DEBT RECOVERY TRIBUNAL BY ITS REGISTRAR KRUSHI BHAVAN HUDSON CIRCLE BANGALORE - 560 027. 3. M/S. BANK OF BARODA ASSET RECOVERY MANAGEMENT BRANCH GROUND FLOOR, PUBLIC UTILITY BUILDING MAYO HALL, M. G. ROAD BANGALORE - 560 001 REPRESENTED BY ITS CHIEF MANAGER. 4. SRI G.S. SRINIVASA GUPTA SON OF SRI G.N. SHANKAR NARAYAN PARTNER M/S. GUPTA BUILDERS AND DEVELOPERS NO 45, K. KAMARAJA ROAD BANGALORE - 560 042. 5. DR. C.N. VISHWANATH 446, 17TH CROSS, 35TH MAIN J.P. NAGAR, 6TH PHASE BANGALORE - 560 078. 6. DR. RAMACHANDRA HEGDE D-4, TEJASVI APARTMENT 74/75, GOVINDAPPA ROAD BASAVANAGUDI BANGALORE - 560 004. 7. SRI HIREN K. DHARMASHI SON OF SRI KEERTHI D. SHAH NO.420, 10TH CROSS, 17TH MAIN II PHASE, J.P. NAGAR BANGALORE - 560 078. Printed from counselvise.com - 5 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 8. SRI ASLAM BASHA SON OF SRI DHOODAJAN 6, SHAKE NAVAB LANE OLD CEMETERY ROAD SHIVAJINAGAR BANGALORE 560 001. 9. SMT. SHASHIKALA 12, 3RD CROSS, 4TH MAIN H.B.R. LAYOUT, BANGALORE-560 043. 10. M/S. UNITED DISTILLERIES VENGALIPARA, POST ERANHIKKALI CALICUT (KERALA)-673 303. 11. SRI B.A. RAM SON OF SRI P.R. ANJANAPPA DEAD BY HIS LR's 11(A) SMT. PALLAVI RAM W/O LATE B.A. RAM AGED ABOUT 60 YEARS 11(B) SRI DHANUSH RAM S/O LATE B.A. RAM AGED ABOUT 31 YEARS 11(C) SRI VIDHUSHI RAM S/O LATE B.A. RAM AGED ABOUT 26 YEARS ALL ARE RESIDING AT NO.194, TOWN-1, PEBBLE BAY APARTMENT 1ST MAIN ROAD, RMV 2ND STAGE BENGALURU - 560 094. (VIDE ORDER DATED 17.09.2025) 12. SRI B.A. LAXMAN S/O SRI P.R. ANJANAPPA 2, LAVELLE ROAD BANGALORE - 560 001. 13. SMT. JYOTI K. DHARMASHI W/O KIRTI D. SHAH NO.420, 10TH CROSS 17TH MAIN, II PHASE, Printed from counselvise.com - 6 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 J.P. NAGAR, BANGALORE-560 078. 14. SMT. TANU H. DHARMASHI W/O LATE HIREN K. DHARMASHI NO.420, 10TH CROSS, 17TH MAIN II PHASE, J.P. NAGAR BANGALORE - 560 078. ...RESPONDENTS (BY SRI UDAYA HOLLA, SENIOR COUNSEL FOR SRI NAGARAJ DAMODAR, ADVOCATE FOR R3; SRI GAUTAM BHARDWAJ, ADVOCATE FOR R10; SRI H.T. NATARAJ, ADVOCATE FOR R4, R5, R6, R8, R9 AND R11 (A-C) SRI A. MADHUSUDHANA RAO, ADVOCATE FOR R12; NOTICE R1, R7, R13, R114 ARE SERVED AND UNREPRESENTED; VIDE COURT ORDER DATED 25-07-2018 NOTICE TO R2 IS DISPENSED WITH) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO SET ASIDE THE ORDER DATEDED 23-08-2013 PASSED BY THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI IN M.A.378/2010 DISMISSING THE APPEAL FILED BY THEHE PETITIONER CHALLENGING THE ORDER DATED 07-03- 2008 PASSED BY T THE LEARNED PRESIDING OFFICER, DRT BANGALORE IN A.O.R.NO.2/OF 2003 SOLELY ON THE BASIS OF THE DISMISSAL OF MA 138 OF 2008 FILED BY THE 3RD RESPONDENT BANK VIDE ANNEXURE-A AND ETC., THESE WRIT PETITIONS, HAVING BEEN HEARD AND RESERVED ON 24-9-2025 COMING ON FOR PRONOUNCEMENT OF ORDER, THIS DAY, VENKATESH NAIK T. J., PRONOUNCED THE FOLLOWING: CORAM: HON'BLE MR. JUSTICE D K SINGH and HON'BLE MR. JUSTICE VENKATESH NAIK T Printed from counselvise.com - 7 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 ORAL ORDER (PER: HON'BLE MR. JUSTICE VENKATESH NAIK T) WP No.36440 of 2014 and WP No.52283 of 2013 WP No.36440 of 2014 has been filed by the Bank of Baroda erstwhile (Vijaya Bank) to set aside the order dated 23.08.2013 passed by the Debt Recovery Appellate Tribunal, Chennai, (for short, 'the Tribunal') in MA No.138 of 2008 and to set aside the order dated 07.03.2008 passed by the Debt Recovery Tribunal, (for short 'DRT') Bengaluru in AOR No.2 of 2003 and thereby allow the Miscellaneous Appeal No.138 of 2008 on the files of the Debt Recovery Appellate Tribunal, Chennai. 2. Whereas, WP No.52283 of 2013 is filed by the petitioner, auction purchaser, A. Naveen Bhandary, to set aside the order dated 23.08.2013 passed by the Debt Recovery Appellate Tribunal, Chennai in Miscellaneous Appeal No.378 of 2010, wherein, the tribunal dismissed the appeal filed by the petitioner, which was filed challenging the order dated 07.03.2008 passed by the Debt Recovery Tribunal(for short 'DRT'), Bengaluru in AOR No.2 of 2003. Printed from counselvise.com - 8 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 Brief facts of the case in W.P.No.36440/2014 and W.P.No.52283/2013 herein are as under: 3. The 6th/10th respondent, M/s. United Distilleries had availed a temporary overdraft facility to the limit of Rs.20,00,000/- from the Bank of Baroda(hereinafter referred to as 'bank'), Gandhi Bazaar Branch, Bengaluru, on 13.06.1991. The property measuring an extent of 1 acre 30 guntas in Survey No.122/1 of Gottigere Village, Uttarahalli Hobli, Bengaluru South Taluk owned by 7th/11th respondent, Sri. B.A. Ram, and another property measuring 3 acres 18 guntas in Survey No.122/2 of Gottigere Village, Uttarahalli Hobli, Bengaluru South Taluk owned by the 8th/12th respondent, Sri. B.A. Laxman, had mortgaged with the bank as collateral security by deposit of the title deeds to secure the said facility availed by the 6th/10th respondent M/s. United Distilleries. The mortgage was created by depositing of title deeds, on 09.07.1991, in favour of the Bank by Sri B.A. Ram and Sri. B.A. Laxman. On account of the default in repayment of the dues, the bank filed OA No.36 of 1996 before the Debt Recovery Tribunal, Bengaluru, against M/s. United Distilleries, Sri. B.A. Ram and Sri. B.A. Laxman and five others, for recovery of a sum of Rs.45,48,567.80 paise together with Printed from counselvise.com - 9 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 interest and also for sale of the mortgaged properties. The Debts Recovery Tribunal, Bengaluru by its order dated 28.02.1997 allowed OA No.36 of 1996 and declared that the applicant bank is entitled to recover from defendant Nos.1 to 8 therein jointly severally and personally a sum of Rs.45,48,567.80 paise with costs and interest at 24.50% p.a. 4. In terms of the order passed by the DRT, Bengaluru, the Recovery Officer, issued notice for settling sale proclamation dated 29.06.1998 and on 22.09.1998, order of attachment of immovable property of Sri. B.A. Ram and Sri. B.A. Laxman was made by Recovery Officer and on 16.10.1998, a proclamation of sale was issued by the Recovery Officer. Pursuant to the recovery certificate, the bank initiated further recovery proceedings for sale of the mortgaged properties. The mortgaged properties were brought to sale in the said recovery proceedings on two occasions, which was not fruitful as there were no bidders. In the meanwhile, the mortgaged properties were notified for acquisition by the Bengaluru Development Authority (BDA). Thereafter, the property in Sy.No.122/1 measuring an extent of 1 acre 30 guntas (Item No.1) in the schedule of the original application was acquired and the other property in Printed from counselvise.com - 10 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 Sy.No.122/2 measuring 3 acres 18 guntas (Item No.2) in the schedule of the original application was de-notified, as the same was already converted for non-agricultural residential use, pending mortgage with the bank. 5. Finally, a third auction was conducted in respect of land in Survey No.122/2 alone on 28.11.2002 fixing the offset price at Rs.34,00,000/-. In the said auction, the petitioner(W.P.No.52283/2013), auction purchaser, Naveen Bhandary participated and was declared as the highest bidder for a sum of Rs.38,00,000/- and the auction purchaser had also paid a sum of Rs.38,00,000/- being the sale proceeds, and the same was upheld by the Recovery Officer. Accordingly, the certificate of sale was issued in favour of the auction purchaser, Sri Naveen Bhandary. 6. In the meanwhile, respondents viz., G.S. Srinivas Gupta, Aslam Basha, Ramachandra Hegde, Sashikala, C.N. Vishwanath and Sri Hiren K. Dharamshi, who claimed right over the mortgaged properties, which were sold in auction, filed a memorandum of objections as claimants, before the Recovery Officer of the Debt Recovery Tribunal, Bengaluru, on the basis that, they are bona fide purchasers of Printed from counselvise.com - 11 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 individual house/sites in the mortgaged properties during the year 1995. In the claim or objections made before the Recovery Officer, respondent No.5 Sri. Dr. C.N. Vishwanath and Sri Hiren K. Dharamshi sought for setting aside the auction sale dated 28.11.2002 and to release the said property in their favour. The Recovery Officer, after consideration of the facts and circumstances, passed a detailed order dated 23.12.2002 and dismissed the objections raised by the Objectors. 7. Being aggrieved by the order passed by the Recovery officer of DRT, Bengaluru, Dr. P.V. Narayana Rao (one of the claimant) filed AOR No.1 of 2003 and respondents herein viz., Sri. G.S. Srinivas Gupta, Dr. C.N. Vishwanath, Dr. Ramachandra Hegde, Sri. Hiren K. Dharamshi, Sri. Aslam Basha and Smt. Sashikala filed AOR No.2 of 2003 before the Debts Recovery Tribunal, Bengaluru, seeking to set aside the order of the Recovery Officer dated 23.12.2002. In turn, the Debt Recovery Tribunal, Bengaluru, vide order dated 30.09.2003 dismissed AOR No.1 of 2003 filed by Dr. P.V. Narayana Rao and allowed AOR No.2 of 2003 by order dated 07.03.2008 by setting aside the order passed by the Recovery Officer dated 23.12.2002, and the Recovery Officer of DRT was directed to proceed against the main borrowers Printed from counselvise.com - 12 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 personally as well as against the individual properties forthwith. 8. Thus, the Bank filed an appeal in MA No.138 of 2008 before the Debt Recovery Appellate Tribunal, Chennai, being aggrieved by the order dated 07.03.2008 passed by the DRT, Bengaluru. The petitioner, A. Naveen Bhandary, filed an appeal in MA.No.378/2010 before DRAT, Chennai. The Appellate Tribunal dismissed the appeal in MA No.138 of 2008 by its order dated 23.08.2013, and confirmed the order passed by DRT, Bengaluru in AOR No.2 of 2003 dated 07.03.2008. Thus, the Bank being aggrieved by the order dated 07.03.2008 in AOR No.2 of 2003 and order dated 23.08.2013 passed in MA No.138 of 2008, filed WP No.36440 of 2014 (GM-DRT), whereas, the auction purchaser, Naveen Bhandary filed WP No.52283 of 2013, challenging the impugned order. 9. We have heard the learned Senior counsel/learned counsel for the petitioners and learned counsel for the respondents respectively. 10. Sri Udaya Holla, learned Senior Counsel representing Sri. Nagaraj Damodar on behalf of the petitioner/Bank vehemently contended that, the DRT and the Appellate Printed from counselvise.com - 13 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 Tribunal have totally ignored the fact that the charge created in respect of the mortgaged property in favour of the bank is lawful, and that the bank has every right to auction and realise its dues by bringing the mortgaged property to sale. The bank need not proceed personally against the borrowers, when the valuable property mortgaged for securing the loan is available for auction. Secondly, the DRT and the Appellate Tribunal completely ignored the fact that the mortgaged property although was agricultural land at the time it was mortgaged in favour of the bank, but when the said property was brought for auction by the Recovery Officer, the same was converted for non-agricultural and residential purpose by the mortgager or who are owners of the mortgaged property. 11. Thirdly, the DRT and the Appellate Tribunal have erroneously given a finding that the mortgaged property which was brought for auction by the Recovery Officer is an agricultural land and the auction purchaser being the retired employee of the bank, hence, is not a competent person to participate in the public auction and under Section 79A of Karnataka Land Reforms Act, 1961 to purchase the mortgaged land, which is erroneous one, by totally ignoring the fact that the very same land mortgaged in favour of the bank has been Printed from counselvise.com - 14 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 converted from agricultural to non-agricultural use by formation of residential sites thereon. 12. Fourthly, the DRT and the Appellate Tribunal ought to have given liberty to the bank to approach the Recovery Officer for bringing the property lawfully mortgaged to it for auction to realize the amount due to it. Thus, the impugned order passed by the DRT as well as Appellate Tribunal is perverse and without application of mind. 13. Fifthly, the bank being the prior mortgage holder is entitled to enforce the same in preference to the claim of G.S. Srinivas Gupta, Aslam Basha, Ramachandra Hegde, Sashikala,C.N. Vishwanath and Mr. Hiren K. Dharamshi, who are only subsequent purchasers of the property pending the mortgage. 14. Sixthly, the DRT and the Appellate Tribunal ought to have appreciated the fact that the first respondent by name G.S. Srinivas Gupta, who was only the Power of Attorney holder of respondent Nos.6 and 7 Sri. B.A.Ram and B.A. Laxman, who are the absolute owners/mortgagers of the property and as such, Sri G.S. Srinivas Gupta cannot have any right in derogation to the rights of his Principal. As an agent, Printed from counselvise.com - 15 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 Sri. G.S. Srinivas Gupta is only bound by the Act of his Principal viz., Sri. B.A. Ram and Sri. B.A. Laxman and therefore Sri. B.A. Laxman cannot contend that they have sold and converted the mortgaged property as residential sites in favour of respondent Nos.1 to 5 Sri. G.S. Srinivas Gupta, Sri. Aslam Basha, Sri. Ramachandra Hedge, Smt. Sashikala, Sri. C.N. Vishwanath and Sri Hiren K. Dharamshi. 15. Seventhly, the order passed by the Debt Recovery Tribunal, Bengaluru, is in contravention to the order dated 30.09.2003 passed in AOR No.1 of 2003, whereby, the Debt Recovery Tribunal has already upheld the order of Recovery Officer in DCP No.206 dated 23.12.2002 and being aggrieved by the same, no appeal was filed and thus, the said order has attained finality. As such, no subsequent order could have been passed in derogation to the earlier order. The Debt Recovery Tribunal has seriously erred in allowing AOR No.2 of 2003, as respondent Nos.1 to 5 and Sri Hiren K. Dharamshi had subsequent right, based on GPA executed by respondent No.7 and respondent No.8, Sri B.A. Ram and Sri B.A. Laxman, in fact, they had played fraud and cheated them. The remedy of respondent Nos.1 to 5 and Sri Hiren K. Dharamshi will lie only against those persons who have defrauded them by Printed from counselvise.com - 16 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 initiating appropriate proceedings before a competent forum. A mere contention that they are bona fide purchasers for valuable consideration, respondent Nos.1 to 5 and Sri Hiren K. Dharamshi cannot seek setting aside of the sale in question. The sale was made by Recovery Officer in the recovery proceedings by following the recourse provided under law for realization of the legitimate dues of the bank. WP No 52283 of 2013 16. Sri. Bipin Hegde, learned counsel representing Smt. Anuparna Bardoloi, learned counsel on behalf of the petitioner Sri Naveen Bhandary, the auction purchaser, contended that, the order passed by the Debt Recovery Tribunal and the Appellate Tribunal are contrary to law and material available on record. The DRT while passing the impugned order dated 07.03.2008 committed an error by holding that the Recovery Officer failed to investigate the claims of the respondents, which is nothing but based on assumptions and presumptions. In fact, the respondents have no valid title to the sites purchased by them and they have no locus standi to challenge the order of the Recovery Officer passed in AOR 2 of 2003. It is an admitted fact that the Printed from counselvise.com - 17 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 respondents/purchasers have purchased the alleged sites subsequent to the date of the mortgage of property in question. Under such circumstances, the purchasers have purchased the mortgaged property and they stepped into the shoes of the mortgager as defined under Section 58 of the Transfer of Property Act, 1882. Further, the order dated 28.02.1997 passed by the DRT in OA No. 36/1996 has not been challenged and the same has reached its finality and as per the sale certificate, the property was auctioned in the public and the petitioner, Naveen Bhandary being the highest bidder has deposited the entire auction sale consideration, sale was confirmed, registered sale deed was executed in his favour and possession was also handed over to him. Accordingly, the revenue records were also changed in the name of the auction purchaser. 17. It is further contended that, the DRT failed to consider that in view of Section 26(1) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (in short 'RDB Act'), the validity of the recovery certificate cannot be challenged before the Recovery Officer. Therefore, the appeal filed in AOR No.2 of 2003 is unsustainable in law. The finding of the tribunal is that, bringing the property to auction by Printed from counselvise.com - 18 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 Recovery Officer is in violation of the provisions of The Karnataka Land Reforms Act. Since, the land was not purchased for a specific prohibited purpose, the Debt Recovery Tribunal, Bengaluru and the Debt Recovery Appellate Tribunal, Chennai lost sight of the fact that, the Bengaluru Development Authority had notified for acquisition of the property comprised in Sy.No.122/1 measuring 1 acre 30 guntas and land bearing Sy.No.122/2 measuring 3 acres and 18 guntas and later, 3 acres and 18 guntas were de-notified. In the said acquisition proceedings also, the land in question was acquired for formation of a residential layout. In view of the same, the finding of the DRT, Bengaluru and DRAT, Chennai, that land in question was agricultural land is highly erroneous. It is contended that respondents by name Sri.G.S. Srinivas Gupta, Aslam Basha, Ramachandra Hegde, Sashikala, C.N. Vishwanath have purchased the property in question in the year 1995 from the Power of Attorney Holder of respondent Nos.11 and 12/respondent Nos.7 and 8 Sri. B.A. Ram and Sri. B.A. Laxman. The mortgage in favour of the bank was of the year 1991 and therefore, respondents G.S. Srinivas Gupta, Aslam Basha, Ramachandra Hedge, Sashikala, C.N. Vishwanath are not bona fide purchasers, more Printed from counselvise.com - 19 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 particularly, when original title deeds are in the custody of the bank. Neither the respondents nor the subsequent purchasers are the bona fide purchasers of the property in question, which was fully mortgaged in favour of the bank, since they have not scrutinized and verified the original title deeds, which were in the custody of the bank before purchasing the property in question. Respondent Nos.4 and 5/respondent Nos.1 and 2 being the agents of respondent Nos.11 and 12/respondent Nos.7 and 8 cannot have independent right or a remote standing to challenge the order of the Recovery Officer, therefore, the impugned order dated 07.03.2008 made in AOR 2 of 2003 and also order passed by the DRT, Bengaluru and DRAT, Chennai are unsustainable and liable to be set aside. Hence, prayed to allow the petitions. 18. In support of their contentions, learned counsel for the petitioner in W.P.No.36440/2014 relied upon the following decisions:- 1. ITC Limited vs. Blue Coast Hotels Ltd., & Ors., reported in 2018 SCC Online SC 237; 2. Indian Bank v. K. Pappireddiyar reported in 2018 SCC Online SC 743; Printed from counselvise.com - 20 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 3. Valley Iron & Steel Company Limited v. State of Himachal Pradesh and Others reported in 2016 SCC Online HP 2375; 4. A. Parvatham v. Bank of Baroda represented by its Branch Manager, Tiruppur and 4 Others reported 2000 SCC Online Mad 276; 5. Bank of Baroda, Through its Branch Manager v. Gopal Shriram Panda and Another reported in 2021 SCC Online Bom 466; 6. Smt. Madhukanta Patadia, W/o. Late Harajeevandas v. The State of Karnataka, W.P.No.147188 of 2020 DD 16.07.2020; 7. Tamil Chelvan v. State of Karnataka and Others in WP No.38276/2013 and W.P.No.38702- 38703/2013 dated 25.05.2016; 8. Sri. B.M. Upendra Kumar v. State of Karnataka reported in 2016 SCC Online Kar 855; 9. Sri. R. Raghu v. Sr. G.M. Krishna and Another in Civil Appeal 8544 of 2024. 19. Sri. H.T. Nataraj, the learned counsel for respondent Nos.1 to 5 and 7(a-c)(in W.P.No.36440/2014 and for respondent Nos.4, 5, 6, 8, 9 and 11(A-C) in W.P.No.52283/2013 vehemently contended that the respondent/G.S. Srinivasa Gupta was a builder and developer. In the year 1991, he entered into an Agreement for purchase Printed from counselvise.com - 21 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 of land bearing Sy.Nos.122/1 and 122/2 of Gottigere village, Uttarahalli Hobli, Bengaluru South Taluk measuring 1 acre 30 guntas and 3 acres 18 guntas respectively from respondents Sri. B.A. Ram and Sri. B.A. Laxman and pursuant to said Agreement, he was put in possession and enjoyment of the property with all liberty to develop the land and to make improvement thereon. The respondent G. S. Srinivasa Gupta made complete payment as consideration to its owners, formed private layout on the said property after obtaining permission from the village administration on 15.11.1991. The respondents Dr. C.N. Vishwanath, Dr. Ramachandra Hegde, Hiren K. Dharamshi, Sri. Aslam Basha and Smt. Sashikala are the owners of the residential plots formed in the layout in those survey numbers, who are in possession of the property since 1995, on which date, they were put in possession and sale deeds were executed in their favour. According to the respondent/G.S. Srinivasa Gupta, M/s. United Distilleries had borrowed a sum of Rs.20.00 lakhs in the year 1991 from the Bank. Accordingly, respondents B.A. Ram and B.A. Laxman deposited the title deeds of the land in respect of above survey numbers, as collateral security. Since M/s. United Distilleries(respondent No.10/respondent No.6) committed Printed from counselvise.com - 22 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 default, the Bank initiated recovery proceedings in OA No.36/1996 before the Tribunal. The Tribunal passed the order dated 28.02.1997 and accorded three months' time to M/s. United Distilleries to pay the amounts due, failing which, the Bank was permitted to sell the mortgage properties of Sri B.A. Ram and Sri. B. A. Laxman. In pursuance of the order passed in O.A. 36/1996, the Recovery Officer initiated recovery proceedings in DCP No.206 in O.A.No.36/1996. Thus, the Recovery Officer brought the aforesaid property for sale on 28.11.2002 and public auction was held. The petitioner/Naveen Bhandary was the highest bidder, who was offered to purchase the said property for Rs.38,00,000/-. Hence, respondent Nos.1 to 5 filed objections before the Recovery Officer with a request not to confirm the sale and the property in question should not be sold, as the objectors are absolute owners of the property and none of the persons have the right over the said property. It is further contended that the Recovery Officer failed to appreciate the fact that the land, which was subject matter of mortgage was an agricultural land. The land which is being brought to sale is a converted land and fully developed layout. Thus, it comprises of more than 100 residential plots and each plot has been sold to individual persons and objectors, who are Printed from counselvise.com - 23 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 the purchasers of said residential plots formed in the said layout and they are in peaceful possession of the same. It is further contended that the Recovery Officer ought to have considered that the respondents M/s. United Distilleries, Sri. B. A. Ram and Sri.B.A. Laxman are owning many movable and immovable properties. Thus, without proceeding against them, they proceeded against the property in question, which is a converted land, purchased by respondent Nos.1 to 5 herein. The Recovery Officer ought to have proceeded in accordance with the provisions of Code of Civil Procedure, by arresting and detaining the defaulters in civil prison, so that they will voluntarily pay the entire mortgage amount. Further, the land owners Sri. B. A. Ram and Sri. B.A. Laxman played fraud and cheated the prospective purchasers of residential plots by selling the same knowingly that the property is the subject matter of mortgage with the bank for discharge of debt. Therefore, respondent Nos.1 to 5 and 7 prayed to dismiss the petitions filed by the petitioners. 20. In support of their case, learned counsel for respondent Nos.1 to 5 and LRs of respondent No.7 in W.P.No.36440/2014 relied on the following decisions:- Printed from counselvise.com - 24 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 1. Narayan Deorao Javle(deceased) through Legal Representatives v. Krishna and Others reported in (2021) 17 SCC 626; 2. Mathew Varghese v. Amritha Kumar and Others reported in (2014) 5 SCC 610; 3. Vasu CoCo Resorts Pvt Ltd., and Others v. The Authorised Officer, State Bank of India and Others; 4. ARCE Polymers Private Limited v. M/s. Alphine Pharmaceuticals Private Limited & Others, Civil Appeal No.7372/2021 disposed of 03.12.2021; 5. Ram Kishun and Others v. State of Uttar Pradesh and Others, (2012) 11 SCC 511. 21. Sri. A. Madhusudhana Rao, learned counsel for respondent No.8/respondent No.12 Sri. B.A. Laxman vehemently contended that, respondent No.8, who is the mortgager/guarantor had also sought for an opportunity for one time settlement and had also deposited initial amount of Rs.6,75,000/- at that time and the same was not considered by the Bank. Further, respondent Nos.7 and 8 had executed a Power of Attorney in favour of Sri. G.S. Srinivas Gupta and in- turn, he sold sites to other respondents on the basis of said Power of Attorney. As such, in the proceedings initiated by Sri. G.S. Srinivas Gupta and other purchasers of sites, Sri. B.A. Laxman alongwith his deceased brother Sri. B.A. Ram(respondent No.7) had also filed objection to the Printed from counselvise.com - 25 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 claim of the purchasers and had contested the matter. Hence, Sri. B.A. Laxman has substantial interest in the controversy involved in the case. Further, Rule 61 of the Income Tax Rules, clearly enable the defaulter or any person whose interest are affected by same, to seek for setting aside the sale. It is further contended that the auction sale in favour of the auction purchaser, is in violation of the provisions of Rule 9 (2) of the SARFAESI Rules, which provides that, when the reserve price of the property proposed to be sold, the notice regarding the same should be given by the Recovery Officer to the mortgager. The reserve price was reduced from Rs.42.00 lakhs to Rs.34 lakhs and the property was sold to the auction purchaser in the subsequent auction at Rs.38.00 lakhs. Admittedly, no notice was given to respondent No.8- B.A. Laxman, regarding reduction of reserve price by the Recovery Officer. In this background, the very sale proceedings are illegal and the same have been rightly set aside. Further, the entire sale proceedings have been conducted in a malafide manner, without fixing the reserve price, taking into account the actual nature and location of the land as on the date of the auction. The Recovery Officer, without proper publication reduced the reserve price, only with Printed from counselvise.com - 26 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 an intention to facilitate the auction purchaser, who is none other than an ex-employee of the same bank, and also a Director of the Bank Employees' House Building Co-operative Society. The petitioner Naveen Bhandary, was the only bidder in the impugned auction. The Debt Recovery Tribunal in the order dated 07.03.2008 passed in AOR No.2/2003 has extensively dealt with the aforesaid illegalities committed by the Recovery Officer during the auction sale in paragraph No.6 of the said order and the same has been confirmed by the Debt Recovery Appellate Tribunal, Chennai. It is further contended that the orders passed by the Debt Recovery Tribunal, Bengaluru and Debt Recovery Appellate Tribunal, Chennai do not suffer from any error of jurisdiction and the same do not call for interference under Article 227 of the Constitution of India, 1950. 22. The learned counsel in support of this argument relied upon the judgment of the Hon'ble Supreme Court in the case of Delhi Development Authority v. Corporation Bank and Ors, reported in 2025 INSC 1161(Civil Appeal No.11269/2016) disposed of on 25.09.2025), wherein the Hon'ble Supreme Court in paras 23 to 25 has reiterated the Printed from counselvise.com - 27 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 principles relating to the procedure to be followed while conducting the sale in terms of the provisions of Income Tax Act, 1961 and the provisions of Recovery of Debts and Bankruptcy Act, 1993. The Hon'ble Supreme Court has categorically referred to the fact that at the time of the proclamation of sale, a notice has to be issued to the defaulter, and in the proclamation of sale, the time and place has to be specified, the details of the property has to be stated and also any other materials, which is required to assess the nature and value of the property. Whereas, in the instant case, the sale proclamation that has been issued by the Recovery Officer does not satisfy these requirements and the sale in favour of the auction purchaser is in violation of these provisions. 23. In view of the submissions made by both the parties, in both the petitions, the following points which would arise for our consideration is as under:- \"Whether the order passed by the Debt Recovery Appellate Tribunal, Chennai is contrary to law and thus calls for interference by this Court?\" 24. In the instant case, the Bank challenged the impugned order passed by DRT, Bengaluru and DRAT, Chennai Printed from counselvise.com - 28 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 and to allow MA No.138/2008, whereas, the auction purchaser also filed writ petition to set-aside the impugned order passed by DRAT, Chennai in MA No.378/2010. 25. A reading of the final order passed in OA No.36/1996 reveals that the 9th respondent Sri. B.A. Laxman being the owner of land bearing Sy.No.122/2 of Gottigere village, stood as guarantor to the loan transaction of M/s. United Distilleries and had created an equitable mortgage of his land by deposit of title deeds in favour of the Bank. As the principal borrower M/s. United Distilleries failed to clear the loan, the bank proceeded for auction of the mortgaged properties belonging to Sri. B.A. Laxman. Accordingly, the Recovery Officer brought the said land for sale and the Bank had also got the land valued by an approved valuer and the approved valuer has described the property as a 'dry land suitable for forming layout' and also stated that it is a 'vacant land' i.e., agricultural land and it has been subsequently converted into a non- agricultural land and made into several plots. Hence, it is just and necessary to analyse the term 'land'. The word 'Land' as defined in Section 2(A)(18) of the Karnataka Land Reforms Act, 1961 reads as follows: Printed from counselvise.com - 29 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 \"Land\" means agricultural land, that is to say, land which is used or capable of being used for agricultural purposes or purposes subservient thereto and includes horticultural land, forest land, garden land, pasture land, plantation and tope but does not include house-site or land used exclusively for non agricultural purposes;\" Therefore, from the above, it can be seen that the land in this case is an agricultural land. 26. As per the objection statement of the Bank, the Village Administrator, Gottigere Village had issued no objection for formation of sites, however, he is not a competent authority to approve the residential layout plan and that the layout plan is null and void as the same is unauthorised one. 27. Therefore, from a combined reading of the description of the property in the OA, the approved valuer's report, the order of the learned Presiding Officer, DRT Bangalore in AOR No.1/2003 and the objection statement to the appeal in AOR No.2/2003 under Section 30 of RDDB & FI Act filed by the Bank, it reveals that the land in question was an agricultural land and converted into layout without sanction or approval of competent authorities. Printed from counselvise.com - 30 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 28. The bank as well as auction purchaser have taken the contention that the Recovery Officer was directed to proceed against the main borrowers personally as well as against their individual properties forthwith. In fact, the charge created in respect of mortgaged property in favour of the bank, is in accordance with statutory provisions and therefore, the bank has every right to auction and realise its dues by bringing the mortgaged property to sale. Further, the mortgaged property was agricultural land at the time it was mortgaged in favour of the bank. But, when the said property was brought for auction by the Recovery Officer, the same was converted for non-agricultural and residential purposes by the Mortgager or who are the owners of the mortgaged property. Thus, the Appellate Tribunal ought to have given liberty to the bank to approach the Recovery Officer for bringing the property lawfully mortgaged to it, for auction to realise the amount due to it. The Bank being the prior mortgage holder is entitled to enforce the same in preference to the claim of respondent Nos.1 to 5, 7 and Mr. Hiren K. Dharamshi, who are only subsequent purchasers of the property pending the mortgage. Respondent No.1/respondent No.4 Sri. G.S. Srinivas Gupta, who was only Power of Attorney Holder of Sri. B.A. Ram and Printed from counselvise.com - 31 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 Sri. B.A. Laxman and as such, Sri. G.S. Srinivas Gupta, is only bound by the act of his principal i.e., they stepped into the shoes of mortgager by virtue of Section 58 of the Transfer of Property Act and thus, Sri. B.A. Ram and Sri. B.A. laxman cannot contend that they have sold and converted the mortgaged property as residential sites in favour of respondent Nos.1 to 5, 7 and Sri. Hiren K. Dharamshi. Therefore, the remedy of respondent Nos.1 to 5, 7 and Hiren K. Dharamshi will lie only against those persons, who have defrauded them by initiating appropriate proceedings before a competent forum. Hence, it is just and necessary to analyse Sections 59A, 60 and 91 of the Transfer of Property Act, 1882 and Order 34, Rule 1 of Code of Civil Procedure, 1908. “59-A. References to mortgagors and mortgagees to include persons deriving title from them.—Unless otherwise expressly provided, references in this Chapter to mortgagors and mortgagees shall be deemed to include references to persons deriving title from them respectively. 60. Right of mortgagor to redeem.—At any time after the principal money has become due, the mortgagor has a right, on payment or tender, at a proper time and place, of the mortgage-money, to require the mortgagee (a) to deliver to the mortgagor the mortgage-deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee, (b) where the mortgagee is in possession of the mortgaged property, to deliver possession thereof to the Printed from counselvise.com - 32 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 mortgagor, and (c) at the cost of the mortgagor either to re-transfer the mortgaged property to him or to such third person as he may direct, or to execute and (where the mortgage has been effected by a registered instrument) to have registered an acknowledgment in writing that any right in derogation of his interest transferred to the mortgagee has been extinguished: Provided that the right conferred by this section has not been extinguished by act of the parties or by decree of a court. The right conferred by this section is called a right to redeem and a suit to enforce it is called a suit for redemption. Nothing in this section shall be deemed to render invalid any provision to the effect that, if the time fixed for payment of the principal money has been allowed to pass or no such time has been fixed, the mortgagee shall be entitled to reasonable notice before payment or tender of such money. Redemption of portion of mortgaged property.—Nothing in this section shall entitle a person interested in a share only of the mortgaged property to redeem his own share only, on payment of a proportionate part of the amount remaining due on the mortgage, except only where a mortgagee, or, if there are more mortgagees than one, all such mortgagees, has or have acquired, in whole or in part, the share of a mortgagor. 91. Persons who may sue for redemption.— Besides the mortgagor, any of the following persons may redeem, or institute a suit for redemption of, the mortgaged property, namely— (a) any person (other than the mortgagee of the interest sought to be redeemed) who has any interest in, or charge upon, the Printed from counselvise.com - 33 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 property mortgaged or in or upon the right to redeem the same; (b) any surety for the payment of the mortgage-debt or any part thereof; or (c) any creditor of the mortgagor who has in a suit for the administration of his estate obtained a decree for sale of the mortgaged property.” Order 34 Rule 1 CPC, 1908: “1. Parties to suits for foreclosure, sale and redemption.—Subject to the provisions of this Code, all persons having an interest either in the mortgage-security or in the right of redemption shall be joined as parties to any suit relating to the mortgage. Explanation.—A puisne mortgagee may sue for foreclosure or for sale without making the prior mortgagee a party to the suit; and a prior mortgage need not be joined in a suit to redeem a subsequent mortgage.” Thus, the equity of redemption is a right which is subsidiary to the right of ownership. Such right is not over and above the right of ownership purchased by respondents herein. The expression \"equity of redemption\" is a convenient maxim, but, an owner, who has stepped into the shoes of the mortgager, after the purchase from the mortgager, but, before filing a suit for foreclosure is entitled to redeem the property in terms of Section 60 of Transfer of Property Act. Once Printed from counselvise.com - 34 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 subsequent purchaser had purchased the mortgaged property, the right of redemption is a part of the title and as an owner, he could seek redemption of the suit land in view of Section 91 of Transfer of Property Act. Similar ratio is laid down by the Hon'ble Supreme Court in the case of Narayan Deorao Javle (Deceased) through LRs v. Krishna and Others, reported in (2021) 17 SCC 626. 29. The guarantor, respondent No.8/respondent No.12 B.A. Laxman has taken the contention that, the auction sale in favour of the auction purchaser is in violation of the provisions of Rule 9(2) of SARFAESI Rules, which provides that, when the reserve price of the property proposed to be sold, the notice regarding the same should be given by the Recovery Officer to the mortgager. 30. Admittedly, in these cases, the reserve price was reduced from Rs.42.00 lakhs to Rs.34.00 lakhs and the property was sold to the auction purchaser at Rs.38.00 lakhs. Infact, no notice was given to respondent No.8/respondent No.12 regarding reduction of reserve price by the Recovery Officer. In this background, respondent No.8/respondent No.12 contended that the very sale proceedings are illegal. Hence, it Printed from counselvise.com - 35 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 is just and necessary to analyse Section 9(2) of SARFAESI Rules, 2002. \"Rule 9(2) of the SARFAESI Act states that the sale of a secured asset is confirmed in favour of the highest bidder, subject to the secured creditor's approval. It also mandates that the sale price must be at least equal to the reserve price to be confirmed. The rule outlines the process for sale confirmation, including the condition that the bid must be higher than the reserve price.\" 31. The Hon'ble Apex Court in the case of Mathew Varghese v. A. Amritha Kumar and Others reported in (2014) 5 SCC 610, held that under SARFAESI Act, the Recovery Officer shall comply mandatory procedures viz., 30 days' clear notice to borrower of date of sale and there is mandatory requirement of adjournment/postponement of sale for a period of more than one month and no sale or transfer of secured asset to be made on any subsequent date without notifying borrower afresh with 30 days' clear individual notice of the fresh date of sale and thus, any sale or transfer of secured asset under SARFAESI Act in violation of the above mandatory requirements would be held invalid. Therefore, it appears that, the entire sale proceedings have been conducted in a malafide manner, without fixing the Printed from counselvise.com - 36 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 reserve price taking into account the actual nature and location of the land as on the date of auction, without there being proper publication, by reducing the reserve price, with an intention to facilitate the auction purchaser, who is none other than an ex-employee of the same bank and also a Director of the Bank Employees House Building Co-operative Society, who was the only bidder in the impugned auction. The aforesaid mandatory requirement was extensively dealt with by DRT, Bengaluru and DRAT, Chennai. 32. Further, at the time of proclamation of sale, a notice has to be issued to the defaulter and in the proclamation of sale, the time and place has to be specified, the nature and value of the property has to be stated. In this regard, the Hon'ble Apex Court in the case of Delhi Development Authority v. Corporation Bank and Ors. reported in 2025 INSC 1161 at paras 23 to 25 has held as under:- \"23. Section 29 of the 1993 Act deals with application of certain provisions of Income-tax Act. It provides that provisions of Second and Third Schedules to the Income Tax Act, 1961 and the Income Tax (Certificate Proceedings) Rules, 1962, as in force from time to time, shall as far as possible, apply with necessary modifications as if the said provisions and the Rules referred to the amount of debt due under this Act instead of to the Income-tax. The Second Schedule provides for Printed from counselvise.com - 37 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 procedure of recovery of tax, whereas the Third Schedule deals with procedure for distraint by Assessing Officer or Tax Recovery Officer. Rule 53 of Second Schedule to 1961 Act deals with contents of proclamation. It provides that a proclamation of sale of immovable property shall be drawn up after notice to the defaulter, and shall state the time and place of sale, and shall specify, as fairly and accurately as possible:- \"(a) The property to be sold; (b) The revenue, if any, assessed upon the property or any part thereof; (c) The amount for the recovery of which the sale is ordered. (d) Any other thing which the Tax Recovery Officer considers it material for a purchaser to know, in order to judge the nature and value of the property.\" 24. Thus, Rule 53 mandates the Recovery Officer to mention in the proclamation of sale any other thing which he considers material for purchaser to know in order to judge the nature and value of the property. 25. In exercise of powers under Section 295(1) of the 1961 Act and Rules 91 and 92 of the Second Schedule of the 1961 Act, the Central Board of Revenue has made the Rules namely, the Income Tax (Certificate Proceedings), Rules 1962. Rule 16 of the Rules empowers the Recovery Officer to summon any person whom he thinks necessary to summon and may examine him in respect of any matters relevant to the proclamation and require him to produce any document in his possession or power relating thereto.\" Printed from counselvise.com - 38 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 33. Hence, in this case, the Recovery Officer has not complied the mandatory strict compliance under SARFAESI Rules and any infraction of the Rules would be detrimental to the whole exercise of disposing of the secured Asset for realising the outside secured creditor. 34. Admittedly, the Debt Recovery Tribunal (DRT) cannot adjudicate civil rights such as those involving the declaration of a sale deed's validity because these matters fall outside its limited jurisdiction under the SARFAESI Act. The DRT's role is primarily for expediting debt recovery and enforcing security interests, not for resolving complex title disputes, which remain the purview of civil courts, whereas, the Recovery Officer of DRT, Bengaluru conducted auction sale which is contrary to the provisions of law and which is against the interest of respondents Sri. B.A. Ram and Sri. B.A. Laxman and no notice was served upon them while reducing price of the land in question. 35. It is contended that the schedule property comprises of more than 100 residential plots and each plot has been sold to individuals and objectors, thus they are in possession of the property. Printed from counselvise.com - 39 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 36. The auction purchaser has taken the contention that the validity of certificate issued by Recovery Officer cannot be challenged. Hence, it is just and necessary to analyse Section 26 of RDB Act, 1993, which reads as under:- 26. Validity of certificate and amendment thereof.— (1) It shall not be open to the defendant to dispute before the Recovery Officer the correctness of the amount specified in the certificate, and no objection to the certificate on any other ground shall also be entertained by the Recovery Officer. (2) Notwithstanding the issue of a certificate to a Recovery Officer, the Presiding Officer shall have power to withdraw the certificate or correct any clerical or arithmetical mistake in the certificate by sending an intimation to the Recovery Officer. (3) The Presiding Officer shall intimate to the Recovery Officer any order withdrawing or cancelling a certificate or any correction made by him under sub- section (2). 37. There is no dispute about the essential facts. The property was sold in pursuance to the public auction. Mere fact that the auction purchaser is not an agriculturist and he was a former employee of the Bank and thus, there was bar against him to purchase the land, itself leads to an irreversible conclusion that the sale transaction is vitiated. Printed from counselvise.com - 40 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 38. The petitioner bank has taken contention that the Appellate Tribunal rejected the claim of the bank on the ground that, the auction purchaser was barred in purchasing agricultural land as there is bar under Section 79-A and 79-B of The Karnataka Land Reforms Act, 1961. 39. We have perused the judgments relied upon by the petitioner Bank in the case of Smt. Madhukanta Patadia, Tamil Chelvan, B.M. Upendra Kumar and R. Raghu's referred supra, wherein it is held that amendment provision to Section 79A and B of the KLR Act are retrospective in nature and hence the restrictions imposed in the earlier section has been lifted by virtue of an amendment dated 13.08.2015. There is no dispute as to the said proposition and lifting of restrictions under the KLR Act. However, the fact remains that the Recovery Officer conducted auction proceedings which are contrary to the rules and not in the bonafide manner. 40. Admittedly, M/.s United Distilleries had availed temporary overdraft facility from the Bank on 13.06.1991 and a mortgage was created by the deposit of title deeds in favour of the bank by Sri. B.A. Ram and Sri. B.A. Laxman. Later, they executed a Power of Attorney in favour of Sri. G.S. Srinivas Printed from counselvise.com - 41 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 Gupta, inturn, he developed the land in question, secured permission from the Village Administrator, formed sites and sold the sites to prospective purchasers on the basis of Power of Attorney. Hence, the land in question do not remain as agricultural land. 41. The bank has relied upon the decision in the case of Indian Bank v K. Pappireddiyar reported in 2018 SCC Online SC 743, wherein the Apex Court held that the question as to whether the land is agricultural has to be determined on the basis of totality of facts and circumstances including the nature an character of the land, the use to which, it was put and the purpose and intent of the parties on the date on which the security interest was created. 42. Apart from the above, the only ground that is now urged in the petitions is, as on the date of the auction purchase, the auction purchaser was a retired employee of the Bank. It appears that he has actively involved himself in the process of auction purchase. In addition, the Court draws support from the provisions of the Code of Civil Procedure, 1908, and finds that there is no clear proof of material irregularity and are of substantial injury to either the Printed from counselvise.com - 42 - WP No. 36440 of 2014 C/W WP No. 52283 of 2013 mortgager or the Bank Authority, as a result of the said sale for what is termed as inadequate price. The land in question is situated within the city limits of Bengaluru. The present cost of the land would run to crores of rupees and thus, there is allegation of reference of fraud and collusion. There is no merit in the writ petitions and the petitions are liable to be dismissed. Accordingly, the writ petitions are dismissed and we upheld the orders dated 23.08.2013 passed by Debt Recovery Appellate Tribunal, Chennai in M.A.No.138/2008 and M.A.No.378/2010. In view of dismissal of the petitions, pending IAs, if any, stands disposed of. Sd/- (D K SINGH) JUDGE Sd/- (VENKATESH NAIK T) JUDGE MN/- Printed from counselvise.com "
Other Referred Cases
ITC Limited vs. Blue Coast Hotels Ltd., Indian Bank v. K. Pappireddiyar, Valley Iron & Steel Company Limited v. State of Himachal Pradesh, A. Parvatham v. Bank of Baroda, Bank of Baroda v. Gopal Shriram Panda, Smt. Madhukanta Patadia v. The State of Karnataka, Tamil Chelvan v. State of Karnataka, Sri. B.M. Upendra Kumar v. State of Karnataka, Sri. R. Raghu v. Sr. G.M. Krishna
Laws Referred To
Constitution of India, Karnataka Land Reforms Act, 1961, Recovery of Debts due to Banks and Financial Institutions Act, 1993, Transfer of Property Act, 1882, Code of Civil Procedure, 1908, SARFAESI Act
1:1 Consultation on Tax Litigation
₹1
1:1 Consultation on SME Listing
₹0
1:1 Consultation on Tax Litigation
₹0
Rectification Letter - Application for rectification of mistake under Section 154 of I.T. Act
Mehul₹0
Shipping and Logistics Agreement
₹0
Residency Rules: Income Tax Act, 1961 vs Income Tax Bill, 2025 — A Subtle Yet Significant Shift!
Team Counselvise - February 18, 2026
Finance Bill, 2026: Key Direct Tax Amendments on Assessments and Appeals
Team Counselvise - February 06, 2026
Finance Bill, 2026: Key GST Reforms that will Reshape Compliance and Cash Flows
Team Counselvise - February 03, 2026