SRI K N SURAG vs. CORPORATION BANK

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 10TH DAY OF DECEMBER, 2015 BEFORE THE HON’BLE MR. JUSTICE ANAND BYRAREDDY WRIT PETITION Nos.14919 AND 15263-15267 OF 2015 (GM-DRT)

BETWEEN: Sri. K.N.Surag, Son of K.S.Narayanaswamy, Aged about 23 years, Residing at No.2, 33rd Cross, 11th Main, Vijayanagar, Bangalore 560 041.

Presently at: Roman Street, 23rd Leicester, LA30BD, England.

Represented by his S.P.A.Holder Sri. A.M.Raghunath Reddy. …PETITIONER

(By Shri B.N.Shivanna, Advocate)

AND:

Sadashivanagar Branch,

Bangalore 560 001.

Represented by Manager.

Private Limited,

A Company incorporated

Under Companies Act,

Having its Registered Office

At Sri. Krishna Mansion,

131, 6th ‘C’ Main,

2nd Floor, 4th Block,

Jayanagar,

Bangalore 560 011,

Represented by C.E.O.

K.S.Narayanaswamy.

Son of Late Chowdappa,

Aged 51 years,

Residing at No.133,

3rd Cross, 3rd Main,

Dollars Colony,

4th Phase, J.P.Nagar,

Bangalore 560 078.

Wife of K.S.Narayanaswamy,

Aged 45 years,

Residing at No.133,

3rd Cross, 3rd Main,

Dollars Colony,

4th Phase, J.P.Nagar,

Bangalore 560 078.

3 5. Sri. K.N.Suhas,

Son of K.S.Narayanaswamy,

Aged about 25 years,

Residing at No.133,

3rd Cross, 3rd Main,

Dollars Colony,

4th Phase, J.P.Nagar,

Bangalore 560 078. …RESPONDENTS (By Shri Sursh D Deshpande, Advocate for Respondent No.1; Respondent Nos. 2 and 5 served)

*****

These Writ Petitions filed under Articles 226 and 227 of the Constitution of India praying to quash the order passed by the Debt Recovery Tribunal on I.A.No.1324/2015 in S.A.No.149/2015 vide order dated 64.2015 vide Annexure-A and etc;

These Writ Petitions coming on for Orders this day, the court made the following:

O R D E R

The petitioner is said to be the son of Respondents 3 and 4. Respondents 3 and 4 had offered the residential premises said to be the self-acquired property of the said respondents as security for a loan from Respondent No.1 and they having defaulted in the loan transaction, proceedings have been

4 initiated under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the SARFAESI Act’, for brevity). 2. The petitioner is said to have filed a suit for partition. In the partition suit, the civil court has taken a view that since the property is offered as security to the respondent – Bank, the petitioner would do well to approach the Debts Recovery Tribunal (DRT) under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as ‘the DRT Act’, for brevity). The petitioner having filed an application before the Tribunal and the same having been rejected, the present petitions are filed.

5 therefore, the proceedings should await the adjudication of his right. 4. However, the provisions of Section 17 of the DRT Act would indicate that the Tribunal has limited jurisdiction of addressing applications from banks and financial institutions for recovery of debts. There is no scope for adjudication of third party rights. However, in the scheme of things, Schedule-II of the Income Tax Act, 1961 provides the procedure for recovery of tax and the same is made applicable to proceedings pursuant to the recovery certificate issued by the DRT. When that is so, the procedure if considered, provides for adjudication by Recovery Officer of any third party claim before the property is brought to sale. Hence, the petitioner would have the remedy of approaching the Recovery Officer and filing his claim. Without deciding the same, the Recovery Officer would not be in a position to bring the property to sale. Therefore, the petitioner being provided with adequate remedy, there is no warrant for

6 this court to exercise any jurisdiction over the matter. Rule 11 under Schedule-II of the Income Tax Act, 1961 prescribes the said procedure where the Tax Recovery Officer is bound to investigate the claim and pass orders. Therefore, the petitioner is left to his remedies before the said authority. The petitions are disposed of without prejudice to the claim of the petitioner. In the meanwhile, the Bank is restrained from taking any post-haste action, before the petitioner could lodge his claim before the Recovery Officer.

I.A.2/2015 for early hearing is thus disposed of.

Sd/-

JUDGE