IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS ON THE 16TH DAY OF JULY, 2003
THE HON’BLE MR. JUSTICE H RANGAVITTALACHAR
WRIT PETITION 14127 / 1997 (GM-KSFC)
Smt Chanchal W/o Parasmal
R/o 93/3, BSA Road,
3rd cross, Basappa Lane
Bangalore – 560005 Petitioner
(By Sri M G Kumar, Adv)
1) Karnataka State Financial Corporation
By its Managing Director
1/1, Thimmaiah Road,
Bangalore- 560 052
2) Special Tahsildar, KSFC
Kolar 563 101
3) Dy. Manager (Legal & Recovery)
KSFC, Kolar Branch,
(By Sri K Gopal Hegde, Adv)
This Writ Petition is filed under Articles 226 /227 of the Constitution praying to direct R1 to rectify the recovery certificate – annexure Q and include the (a) mortgaged industrial property No.43/3, New No 1, 6th Cross, Lorry Stand, Godown Street, Mahalaxmipuram, Yeshwanthapur, Bangalore, etc
This Writ Petition coming on for Hearing this day, the Court made the following
Petitioner is a partner of one Sri Hanuman Enterprises, Mulbagal, a partnership firm constituted on 20/09/1978 The firm was sanctioned a loan of Rs. 5 25 lakhs on 27/02/1977 by the Karnataka State Financial Corporation. As security for the due repayment of the loan, the firm had mortgaged the industrial property – site No.43/3 (New No. 1), 1 cross, RE Stand, Goown Street, Yeshwanthapur, 32 guntas of land in Sy No 571, Mulbagal Town The firm committed default in repaying. The Corporation initially proceeded against the mortgaged property by bringing it to sale. The said sale was questioned in WP 7570/1997 on the main ground that it was not preceded by a notice which was also upheld by the Division Bench in WAs 1620-21/1998. After the disposal of the writ appeals, according to the corporation, (the memo is now filed in the Court ), formalities of issuing notice to the defaulters was completed and a recovery certificate has also been issued for the jurisdictional Tahsildar to take action to recover the loan. Since the Tahsidar has not taken any action, Corporations wants to now proceed against the petitioner’s personal property i.e., a residential house. This action is questioned in this petition.
Contention of the petitioner’s counsel is, having regard to the language of Sec 4  [b] of the Karnataka Public Moneys (Recovery of Dues) Act, 1979, the Corporation is obliged to proceed first against the mortgaged properties before proceeding against the individual properties of the petitioner. Having not done so, the Corporation cannot now try to recover the money from the petitioner.
Sri Gopal Hegde, Counsel appearing for the Corporation defended the action of the Corporation stating that it has already initiated proceedings against the mortgaged properties though the same is not culminated because of the inaction of the Tahsildar.
Under Sec 4 [b] of the Act, the Corporation has to first proceed against the mortgaged property. It is only when the Deputy Commissioner certifies that there is no prospect of realization of the entire sum due by selling the mortgaged property within a reasonable time, Corporation is given the option to proceed against the defaulters personally. Admittedly in this case, no such certificate has been obtained by the Deputy Commissioner before proceeding against the petitioner’s property. Therefore, the action of the Corporation cannot be sustained.
Reserving liberty to the Corporation after completion of the formalities under Sec 4 [b] to proceed against the petitioner or such other persons who may be liable under the loan transaction, this petition is allowed and the Corporation is prohibited against the petitioner’s personal property until the condition under Sec 4[b] is fulfilled.
Petitioned is allowed