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2026 Supreme(Online)(Kar) 22534

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

NC: 2026:KHC:16922

WP No. 38917 of 2016

DATED THIS THE 25TH DAY OF MARCH, 2026

BEFORE THE HON'BLE SMT. JUSTICE LALITHA KANNEGANTI

BETWEEN:

1. SRI PETER J R PRABHU

AGED ABOUT 71 YEARS,

S/O H.P.P.RODRIGUES

NO.78, KALMANE

LAVELLE ROAD,

BENGALURU-560 001

(SENIOR CITIZEN BENEFIT NOT CLAIMED)

…PETITIONER

AND:

1. M/S KARNATAKA FINANCIAL SERVICES LIMITED

NO.13, KRISHNA REDDY LAYOUT,

DOMLUR,

BENGALURU-560 071

REPRESENTED BY ITS OFFICIAL LIQUIDATOR

ATTACHED TO HIGH COURT OF KARNATAKA,

GOVERNMENT OF KARNATAKA

IV FLOOR, D&F WING,

KENDRYA SADAN,

KORMANGALA

BENGALURU-560 034

2. DEBS RECOVERY TRIBUNAL-I

AT NEW DELHI

SANSKRITI BHAWAN,

KESHAV KUNJ,

D.B.GUPTA ROAD,

JHANDWALA

NEW DELHI-110 007

REPRESENTED BY ITS REGISTRAR

3. RECOVERY OFFICER

DEBT RECOVERY TRIBUNAL-I

4TH FLOOR,

JEEVAN TARA BUILDING,

PARLIAMENT STREET

NEW DELHI-110 001

4. INDIAN RENEWABLE ENERGY

DEVELOPMENT AGENCY LIMITED,

EAST COURT, 1ST FLOOR,

CORE 4A,

INDIA HIBITAT CENTRE COMPLEX,

LODHI ROAD,

NEW DELHI-110 003

REPRESENTED BY ITS MANAGING DIRECTOR

5. COMMISSIONER OF POLICE

BENGALURU DISTRICT,

INFANTRY ROAD,

BENGALURU-560 001

6. UNION OF INDIA

DEPT. OF FINANCE & ECONOMIC AFFAIRS, NORTH

BLOCK, NEW DELHI 110001, REP. BY ITS SECRETARY

…RESPONDENTS

(BY SRI. ABHINAV R.,ADVOCATE)
(BY SRI. AGA FOR R5.,ADVOCATE)

Advocates:
For the Appellants/Petitioners: Abhinav R.
For the Respondents: AGA for R5

A writ petition challenging recovery proceedings initiated before a Debt Recovery Tribunal is not maintainable in a High Court outside the tribunal's jurisdiction where the petitioner has already participated in the proceedings, and the constitutional validity of the recovery provisions is already settled law.

Headnote:(A) Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Section 25(b) - Constitutional validity - Held, validated by Apex Court - Jurisdiction to entertain writ petition - Petitioner participated in proceedings before Debt Recovery Tribunal, Delhi and recovery proceedings initiated therefrom - Writ jurisdiction not to be exercised when efficacious statutory remedy is available before the DRT. (Paras 9, 13)

Facts of the case:
Petitioner, a former director of the 1st respondent company, challenged the issuance of an arrest warrant by the Recovery Officer of the Debt Recovery Tribunal, Delhi, in proceedings arising from a loan default. The petitioner further challenged the constitutional validity of Section 25(b) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, arguing that the recovery proceedings should have been handled by the local High Court or authorities given the company's liquidation status and his health condition.

Findings of Court:
The Court held that it lacked territorial and subject-matter jurisdiction to interfere with ongoing proceedings before the DRT, Delhi, where the petitioner had already participated. The Court noted that the constitutional validity of the relevant Act had already been upheld by the Supreme Court of India, and affirmed that the petitioner must pursue statutory remedies available before the DRT, Delhi.

Issues: Whether the High Court has jurisdiction to entertain a writ petition regarding ongoing recovery proceedings before a Debt Recovery Tribunal outside its jurisdiction and whether Section 25(b) of the 1993 Act is unconstitutional.

Ratio Decidendi: A petitioner who has already submitted to the jurisdiction of a DRT, Delhi, cannot bypass statutory appeal mechanisms by seeking redress under Article 226 of the Constitution of India in a different state; moreover, the constitutional validity of the impugned legislative provision stands already settled by the Apex Court.

Result: Petition disposed of with liberty to the petitioner to approach the recovery officer, DRT, Delhi, with a four-week protection from arrest.

THIS W.P. IS FILED PRAYING TO-DIRECT THE R-1 REPRESENTED BY ITS OFFICIAL LIQUIDATOR TO FURNISH THE AFFAIRS OF THE ASSETS OF THE R-1 COMPANY TO THE RECOVERY OFFICER, THE R-3 IN R.C.NO.81/2014 AT ANNX-M OF THE W.P.DECLARE THAT SECTION 25(b) OF THE RECOVERY OF DEBTS DUE TO BANKS AND FINANCIAL INSTITUTION ACT, 1993 [ACT 51 OF 1993] AT ANNX-N IS UNCONSTITUTIONAL AND STRIKE DOWN THE SAME.QUASH ALL PROCEEDINGS ON THE FILE OF THE R-3 IN R.C.NO.81/2014 AND CULMINATING THE ORDER DTD 01.06.2016 AT ANNX-M TO THE W.P.GRANT AN INTERIM ORDER TO RESTRAIN THE EXECUTION OF THE ARREST WARRANT ISSUED BY THE R-3 IN R.C.NO.81/2014 OF ORDER DTD 01.06.2016 AT ANNX-M TO THE W.P. THROUGH THE R-5 AND GRANT SUCH OTHER ORDERS AS MAY BE NECESSARY.

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

CORAM: HON'BLE SMT. JUSTICE LALITHA KANNEGANTI

ORAL ORDER

The present writ petition is filed seeking the following prayer:

“Wherefore, the Petitioner herein most respectfully prays that this Hon’ble Court be pleased to issue a writ, direction or order in the following manner:

(a) A Writ in the nature of mandamus, directing the 1st Respondent represented by its Official Liquidator to furnish the affairs of the assets of the 1st Respondent Company to the Recovery Officer, the 3rd Respondent in R.C.No.81/2014 at Annexure “M” of the Writ petition;

(b) Declare that Section 25(b) of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 [Act 51 of 1993] at Annexure-N is unconstitutional and strike down the same;

(c) Quash all proceedings on the file of the 3rd Respondent in R.C No.81/2014 and culminating the Order dated 01.06.2016 at Annexure-M to the Writ Petition;

(d) Grant costs; and

(e) Such other orders as this Hon’ble Court deems fit to grant in the facts and circumstances of the case. “

2. The case of the writ petitioner is that the 1st respondent company approached the 4th respondent company and submitted a loan application seeking for financial assistance for the installation of Solar Water Heating Systems/Devices. Loan was sanctioned on 20.03.1997, pursuant to the said sanction, a loan agreement was entered into between the 1st and 4th respondent company on 10.06.1997. In pursuant to the loan agreement dated 10.06.1997, 1st respondent executed a deed of Hypothecation dated 10.06.1997 in favour of the 4th respondent company, whereby first charge was created on the movable assets with respect to Solar Water Heating System/Devices of the 1st Respondent company. Also, two deeds of guarantee dated 10.06.1997 and 19.07.1997 was executed by the petitioner, one Sri.Ananth Bhat, Sri.Rajaram Khandige and the K.T.Vijay Krishna in favour of the 4th respondent. In addition to the said deed of Hypothecation and deeds of guarantee, Sri.Rajaram Khandige also executed a demand promissory note dated 10.06.1997 in favour of the 4th respondent company. As there is a default on the part of 1st respondent-company, 4th respondent sent a letter dated 28.02.2004 whereby they called upon the 1st respondent to pay the amounts due under the loan agreement. Thereafter, the 4th respondent instituted proceedings i.e., O.A.No.38/2006 before the Debt Recovery Tribunal, Delhi. It is stated that 2nd respondent without property appreciating the defence set out by the petitioner and without considering the factual scenario has passed an order dated 30.04.2014, whereby the Debt Recovery Tribunal held that the 1st respondent company, petitioner and the guarantor are jointly and severally liable to pay an amount of Rs.93,83,527/- with interest at 13% p.a., and the recovery certificate in this regard was also issued. It is stated that Sri.K.T.Vijay Krishna and Sri.Ananth Bhat were discharged from the liability under the deeds of guarantee executed in pursuance to the loan agreement and proceedings against Rajaram Khandige have not been initiated and only the petitioner has been singled out and arrest warrant has been issued against the petitioner.

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2026 Supreme(Online)(Kar) 22534

Cases Referred (1)