IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 18^TH DAY OF FEBRUARY, 2026 BEFORE THE HON'BLE MR. JUSTICE ASHOK S.KINAGI WRIT PETITION NO. 3317 OF 2023 (GM-DRT)

BETWEEN:

1. MR.DILIP KUMAR A SHAH S/O LATE ANANTH SHAH AGED ABOUT 74 YEARS, R/AT: NO. 519, 11^th A CROSS, RJMAHAL VILAS EXTENSION, BNEGALURU - 560 080.

2. MR. ASHOK BALSARA S/O LATE NAROTHAM AGED ABOUT NO. 34, 2^ND CROSS, BELLARY RAOD, GANGANAGAR, BENGALURU - 560 032.

…PETITIONERS Digitally signed by (BY SRI. SHREYAS JAYASIMHA.,ADVOCATE)

SUNITHA K S Location:

HIGH COUR T AND:

OF KARNATAKA

1. UNION OF INDIA MINISTRY OF FINANCE, NORTH BLOCK, NEW DELHI -110 001.

2. INDUSTRIAL DEVELOPMENT BANK OF INDIA PRIVATE LIMITED, IDBI HOUSE NO.58 MISSION ROAD, BENGALURU -560 027.

3. RECOVERY OFFICER - II DEBT RECOVERY TRIBUNAL BANGALORE II NO.4 RESIDENTY ROAD, LIC JEEVAN MANGAL BUILDING, HAYES ROAD, BENGLAURU 560 025.

4. M/S MASTER STRIPES PRIVATE LTD., A COMPANY REGISTERED UNDER THE COMPANIES ACT, 1956 REG. OFFICE AT NO.68 B, BOMMASANDRA INDUSTRIAL AREA, ANEKAL TALUK, BENGALURU 562 158.

5. COATWELL STRIPS PVT LTD., A COMPANY REGISTERED UNDER THE COMPANIES ACT, 1956 REGD. OFFICE AT NO. 68A, BOMMASANDRA INDUSTRIAL AREA ANEKAL TALUK, BENGALURU 562 158. 6. UNION OF INDIA MINISTRY OF LAW AND JUSTICE

4^TH FLOOR, A WING, SHASTRI BHAWAN NEW DELHI- 110 001.

REPRESENTED BY ITS SECRETARY (AMENDED/IMPLEADED AS PER ORDER DATED

16.10.2024)

…RESPONDENTS (BY SRI. SHANTHI BHUSHAN H.,DSGI FOR R1, SRI.T.P. MUTHANNA, ADVCOATE FOR R2, R3-SERVED)

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO-QUASH THE SECTION OF 21 AND SECTION 30-A OF THE RECOVERY OF DEBTS TO BANKS AND FINANCIAL INSTITUTIONS ACT, 1993 (RDBI ACT) AS BEING ULTRA VIRES THE CONSTITUTION OF INDIA.CQUASH THE DEMAND NOTICE DATED 16/03/2022 ISSUED BY THE R-2 ANNEXED AS ANNEXURE-D.

THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE ASHOK S.KINAGI

ORAL ORDER

1. The petitioners filed this writ petition challenging the demand notice dated 16.03.2022 issued by the respondent No. 2 vide Annexure-D.

2. Brief facts, leading rise to the filing of this writ petition are as follows:

3. Respondent No.4 is a company registered under the Companies Act, 1956. The petitioners and respondent No.5 are the guarantors for the loan transaction. Respondent No.4 executed a loan agreement dated 09.02.1993 in favour of respondent No.2 in connection with the grant of loan of ₹ 474 lakhs to respondent No.4. In pursuant to the aforesaid loan agreement in order to create security, respondent No.4 as security for the said loan, by executing the deed of hypothecation dated 09.02.1993 in favour of respondent No.2 in connection with the first loan agreement. The petitioners and respondent No.5 have jointly guaranteed the repayment and discharge of the amount due under the aforesaid first loan agreement for consideration and on the terms executed deeds of guarantee dated 11.02.1993 and deed of Corporate Guarantee Agreement dated 11.02.1993 executed by respondent No.5 in favour of respondent No.2 regarding the first loan agreement.

4. Respondent No.4 executed second loan agreement dated 30.11.1994 in favor of respondent no. 2 and subsequently, in pursuance of second loan agreement, respondent no. 4, to create a security for the said loan hypothecated on first charge basis, the whole of the involved properties described in the Schedule A hypothecated property in favour of respondent no.2. By executing the deed of hypothecation dated 30.11.1994.

5. The petitioners and respondent no. 5 have jointly guaranteed the repayment and discharge of the amounts due under the aforesaid second loan agreement for the consideration and on the terms and conditions executed a deed of guarantee dated 30.11.1994 and deed of corporate guarantee agreement dated 30.11.1994 executed by respondent no. 5 in favour of respondent no. 2 regarding second loan agreement.

6. Respondent No.4 defaulted in re-payment of loan and therefo