IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 5TH DAY OF NOVEMBER, 2019 BEFORE THE HON'BLE MR.JUSTICE P.S. DINESH KUMAR WRIT PETITION No.8543 OF 2016 (GM-RES) BETWEEN:
M/S MANJUNATHA TRADERS BASAVAPATNA CHANNAGIRI TALUK DAVANAGERE DISTRICT REPRESENTED BY ITS PROPRIETOR SRI. HOOVOJI RAO G.M S/O G. MANJUNATHA RAO AGED ABOUT 43 YEARS …PETITIONER (BY SHRI. HAREESH BHANDARY T, FOR SHRI. S. VISHWAJITH SHETTY, ADVOCATES) AND:
1. CANARA BANK BASAVAPATNA CHANNAGIRI TALUK DAVANAGERE DISTRICT REPRESENTED BY ITS AUTHORISED OFFICER 2. SRI. K.G. SHIVANAGOUDA S/O K.G. RAMAPPA MAJOR SAGARPETE SHIMOGA-577 201 3. DISTRICT MAGISTRATE DAVANAGERE DISTRICT DAVANAGERE-577 002 4. SHIVANNA D @ SHIVAPPA D S/O D. BANAPPA BASAVAPATNA, CANARA BANK ROAD CHENNAGIRI TALUK DAVANGERE DISTRICT [AMENDED WITH PERMISSION OF HON’BLE COURT] ... RESPONDENTS (BY SHRI. T.P. MUTHANNA, ADVOCATE FOR R1; SMT. M.C. NAGASHREE, AGA FOR R3; SHRI. B.M. AKSHAYA, ADVOCATE FOR R4; VIDE ORDER DTD.9.1.2019 PETITION ABATED AGAINST R2) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH ORDER ANNEX- A DATED 26.10.2015 MADE BY R-3.
THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER Heard Shri Hareesh Bhandary T, learned advocate for the petitioner, Shri T.P.Muthanna, learned advocate for respondent No.1, Smt.M.C.Nagashree, learned AGA for respondent No.3 and Shri Akshaya B.M., learned advocate for respondent No.4.
2. Petitioner has challenged order dated 26th October 2015 passed by the District Magistrate, Davanagere, directing him to hand over possession of property in question to Canara Bank under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’ for short).
3. Shri Hareesh Bhandary T, learned advocate for the petitioner urged two grounds namely, that on 19th August 2014, bank has already taken possession of the property in question. Therefore, application before the District Magistrate was not maintainable. Secondly, that bank has sold the property for Rs.19,40,000/- and petitioner is entitled for refund of Rs.9,15,173.85.
4. Shri T.P.Muthanna, learned advocate for the Bank placing reliance on the decision of Hon’ble Supreme Court in ITC Limited Vs. Blue Coast Hotels Ltd.1 (paragraphs No.48 and 50) submits that bank had taken symbolic possession on 19th August 2014. The property in question is a open site. Bank has sold the property in favour of fourth 1 AIR 2018 SC 3063 respondent. Petitioner has also filed a suit in O.S.No.255/2014 against the bank. In the circumstances, the bank was compelled to file the application under Section 14 of the SARFAESI Act.
5. Shri Akshaya B.M., learned advocate for fourth respondent also argued opposing the petition.
6. I have carefully considered rival submissions and perused the records.
7. The grounds urged on behalf of petitioner in support of this petition is that possession was taken by the bank as per Annexure-C dated 19th August 2014 and therefore, application was not maintainable. It is petitioner’s case that possession was already taken by the bank. If that be so, petitioner cannot have any grievance against the impugned order passed by the District Magistrate pursuant to second application filed by the bank.
8. In ITC Ltd., it is held as follows:
“48. The question, however, whether the creditor could maintain an application of possession under Section 14 of the Act; even though it had taken over only symbolic possession before the sale of the property to the auction purchaser, depends on whether it remained a secured creditor after having done so.
Section 2(d) of the Act defines `secured creditor’ to mean a "banking company" having the meaning assigned to it in clause (c) of section 5 of the Banking Regulation Act, 1949;
Clause 2(L) includes debts or receivables and any right or interest in the security whether full or part underlying such debt or receivables or any beneficial interest in property vide (L)(i)(iv) & (v).
Sub-section (6) of Section 13 posits that the transfer of the secured asset by the secured creditor shall vest in the transferee all the rights as if the transfer had been made by the owner of the secured asset.
50. In this case, the creditor did not have actual possession of the secured asset but only a constructive or symbolic possession. The transfer of the secured asset by the creditor therefore cannot be construed to be a complete transfer as contemplated by Section 8 of the Transfer of Property Act. The creditor nevertheless had a right to take actual possession of the secured assets and must therefore be held to be a secured creditor even after the limited transfer to the auction purchaser under the agreement. Thus, the entire interest in the property not having been passed on to the creditor in the first place, the creditor in turn could not pass on the entire interest to the auction purchaser and thus remained a secured creditor in the Act.”
(Emphasis Supplied) 9. So far as Shri Bhandary’s contention that as on date of taking possession as per Annexure-C, the debt was only Rs.8,34,183/- and therefore petitioner is entitled for refund of balance money, it is to be noted that the quantum of debt is not the subject matter of this writ petition. Hence, the said question is left open.
10. So far as challenge to annexure-A is concerned, the same is untenable.
11. For the reasons stated hereinabove, this petition fails and it is accordingly dismissed. So far as quantum of debt is concerned, the parties are at liberty to agitate the same in the appropriate court.
No costs.
Sd/- JUDGE Yn.