Pridhvi Asset Reconstruction And Securitization Company Ltd. vs M/s Khwaja Exports Pvt. Ltd. & Ors.

This Transfer Petition is filed for transferring the SA 314/2015 on the file of DRT-I at Karnataka at Bengaluru to DRT-2 at Karnataka at Bengaluru.

Learned Senior Counsel for Applicant submitted that SA 314/2015 is filed by the borrower/guarantor challenging Possession Notice dated 02.07.2015 issued under Section 13(4) of SARFAESI Act, 2002. When the matter was first taken up on 16.07.2016, Learned Presiding Officer passed an interim order directing the parties to maintain status quo with regard to physical possession subject to Respondents depositing Rs.25 Lakhs within 7 days. Thereafter, the matter was reposted on mis-representation of the borrower that Hon’ble High Court of Karnataka stayed all further proceedings. Therefore, the SA was pending for 10 years without any progress. During subsistence of status quo order, first Respondent M/s. Khwaja Exports Pvt. Ltd. executed lease agreement in favour of M/s. Sundaram Toyota. Therefore, the Applicant issued notice dated 25.04.2025 objecting to the lease and caused publication in the Deccan Herald and Samyuktha Karnataka newspaper dated 26.04.2025, warning the public not to deal with the property. The Applications in IA 2625/2025, 2626/2025 and 2627/2025 were filed seeking vacation of the status quo, reopening of pleading and production and examination of the impugned lease. By order dated 17.10.2025, Leaned Presiding Officer allowed the Applications in IA 2626/2025 and 2627/2025 and dismissed the Application in IA 2625/2025, and expanded the scope of the original status quo by restraining the Applicant from taking any coercive action. Learned Presiding Officer had mechanically exercised his discretionary power. The Applicant filed an Application for impleading the lessee, M/s. Sundaram Toyota was dismissed. However, by the order passed by Learned Presiding Officer, Learned Presiding Officer validated the lease deed by restraining the Applicant from proceeding further under SARFAESI Act. Learned Presiding Officer chosen to protect the violator rather than the secured creditor. This order is unsustainable in law resulting in grave miscarriage of justice. The Applicant is justified in believing that it may not receive fair consideration and justice before the Tribunal, therefore, transfer is sought.

In reply, Learned Senior Counsel for Respondents submitted that, in this case, serious fraud was committed by State Bank of India and that followed by Applicant, assignee from State Bank of India, as evidenced from forensic audit report. It is further submitted that the Respondents are empowered to lease the property during the subsistence of mortgage. Therefore, there is no infirmity in the order passed by Learned Presiding Officer and there is no grounds exist to transfer the SA.

Considered the rival submissions and perused the records.

This Tribunal passed an order in MA( SA) 81/2025 and MA(SA) 82/2025 by setting the order passed by Learned Presiding Officer. In the Application filed for vacating the status quo order, Learned Presiding Officer approved the lease agreement, which had come into existence against the provisions of Section 13(13) of the SARFAESI Act, 2002 and restrained the Applicant from proceedings further with issuance of sale notice and sale certificate etc. The orders passed by the Learned Presiding Officer, DRT-I, Bengaluru, are against the law. However, the said orders have now been set aside as not in accordance with law and beyond the scope of the Applications filed and the prayer in Securitisaton Application. Therefore, this Tribunal finds merit in the submissions of Learned Senior Counsel for Applicant that Securitisation Application has to be heard by another Tribunal for proper appreciation of facts and law. Accordingly, this Tribunal orders the transfer of SA 314/2015 to DRT-II, Bengaluru.

Therefore, the Registry DRT-I, Bengaluru is directed to send the records in SA 314/2015 with proper index to the DRT-II, Bengaluru, within a period of two weeks from the date of receipt of copy of this order. On receipt of the documents in SA 314/2015, Learned Presiding Officer, DRT-II, Bengaluru, shall decide SA 314/2015, on merits and in accordance with law, as expeditiously as possible, after giving opportunity to both parties,.

In the result: Application in T.P:21/2025 is allowed. Both the parties shall bear their own costs. All pending IAs, if any, stand closed.