MS BANGALORE TILES INDIA PVT LTD vs CANARA BANK on 31 July 2025

1. 1. M/s Bangalore Tiles India Private Limited, 13/09/10, HSMI Estate, 2^nd Stage, 5^th Cross, Okalipuram, Bengaluru, Karnataka – 560021, represented by its Directors.

2. 2. Rajesh M Gandhi, (Director, M/s Bangalore Tiles India Private Limited), 35/1, Ranka Nest Apartment, 231, 3^rd Floor, Okalipuram, Bengaluru, Karnataka – 560021.

3. 3. Sunil M Gandhi, (Director, M/s Bangalore Tiles India Private Limited), 35/1, Ranka Nest Apartment, 231, 3^rd Floor, Okalipuram, Bengaluru, Karnataka – 560021. ....Petitioners/applicants

And

The authorised officer, Canara Bank, Majestic, World Trade Centre, K G Road, Bengaluru, Karnataka – 560009. .... Respondent/defendant This Miscellaneous Application having been heard on 15.04.2025 in the presence of Advocates M/s M A Rajendra and Ravikumara P for the petitioners/applicants and Advocates M/s H S Rukkoji Rao and Hemanth R Rao for the respondent/defendant, and stood over to this day for consideration, the Tribunal delivered the following:- Typed by: Sangeeta MA 2/2024 in SA 82/20222**ORDER**

Miscellaneous Application (MA) 2/2024 was filed on 30.09.2022 praying for a compensation to the tune of ₹6 crores in order to reimburse the loss incurred by the petitioners on account of the measures taken under S.13(4) of the Act by the respondent/defendant. The petitioners are none other than the applicants in SA No.82/2022. IA 2509/2022 was filed on 30.09.2022 under S.5 of the Limitation Act, 1993 r/w S.24 of the Recovery of Debts and Bankruptcy Act, 1993 (as amended from time to time) – for short 'the RDB Act' - praying to condone the delay of 51 days in presenting MA 2/2024 before this Tribunal. The petitioners are none other than the applicants in SA 82/2022.

2. The case set out by the petitioners/applicants through the notary attested affidavit of the 2^nd petitioner/2^nd applicant accompanying IA 2509/2022 in brief is as follows:- SA 82/2022 was allowed as per the final order dated 06.06.2022 setting aside the order dated 16.10.2021 and 18.02.2022 passed by the 39^th Additional Chief Metropolitan Magistrate, Bengaluru under S.14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (as amended from time to time) – for short 'the Act' and granting liberty to the respondent/defendant to take fresh measures in accordance with law. But the respondent/defendant did not restore the possession of the schedule immovable property to the petitioners/applicants despite their assurance and hence the delay.

3. The respondent/defendant filed statement of objection contending as follows:- There is a delay of 93 days in filing the petition. Pursuant to the final order dated 06.06.2022 in SA 82/2022, the possession of the schedule immovable property was restored to the applicants on 23.06.2022 and the same is acknowledged by the applicants. On the above contentions, the respondent/defendant prayed for dismissal of the IA/MA with costs.

Typed by Kuj

4. The petitioners/applicants also filed IA 2510/2022 along with MA 2/2024 praying for a compensation to the extent of ₹6 crores for the reasons stated in the affidavit accompanying the IA. The petitioners/applicants on 30.09.2022 filed MA 2/2024 praying for awarding a compensation to the extent of ₹6 crores in order to reimburse the loss incurred by them on account of the measures taken under S.13(4) of the Act by the respondent/defendant.

5. Heard both sides. Perused records. On the rival contentions, the only point arises for consideration is as to whether the petitioners/defendants are entitled to the relief prayed for in all the aforesaid applications?

6. The Point:- The petitioners/applicants on 28.02.2022 filed SA 82/2022 under S.17(1) of the Act praying to set aside the orders dated 16.10.2021 and 18.02.2022 in CrI Misc No.3752/2021 passed by the 39^th Additional Chief Metropolitan Magistrate, Bangalore under S.14 of the Act in respect of the schedule immovable property. The aforesaid SA was allowed as per the final order dated 06.06.2022 passed by this Tribunal. The relevant portion reads thus:- *"In the result, SA No.82/2022 stands allowed quashing and setting aside the orders dated 16.10.2021 and 18.02.2022 passed by the Ld 39^th Additional Chief Metropolitan Magistrate, Bengaluru under S.14 of the Act in CrI Misc No.3752/2021. Respondent bank is at liberty to take fresh measures in accordance with law."*

7. It may be noted that no provision has been given under the Act and the Rules made thereunder for any aggrieved person (including borrower) to file an application under S.19 of the Act praying for compensation on the ground that the measures taken by the secured creditor or its authorised officer under S.13(4) of the Act are not in accordance with the provisions of the Act. In the above circumstances, the question of limitation or delay in filing such an application does not arise at all.

8. S.19 of the Act deals with right of borrower to receive compensation and costs in certain cases and it reads thus:- *"If the Debts Recovery Tribunal or the Court of District Judge, on an application made under S.17 or S.17A or the Appellate Tribunal or the High Court on an appeal preferred under S.18 or S.18A,*

Typed by: RGP

*holds that the possession of secured assets by the secured is not in accordance with the provisions of this Act and rules made thereunder and directs the secured creditors to return such secured assets to the concerned borrowers or any other aggrieved person, who has filed the application under S.17 or S.17A or appeal under S.18 or S.18A, as the case may be, the borrower or such other person shall be entitled to the payment of such compensation and costs as may be deterred by such Tribunal or Court of District Judge or Appellate Tribunal or the High Court referred to in S.18B."*

9. The words 'shall be entitled to' only means that the payment of costs and compensation is not mandatory but only discretion of the Tribunal or District Judge or High Court or Appellate Tribunal in cases which deemed fit to it. It does not mandate but only enables such authority to grant compensation if necessary. The pre-requisite in the Section demands that if a final order in an application filed under S.17 or 17A or 18 or 18A holds that the possession of the secured asset by the secured creditors is not in accordance with the provisions of the Act and the Rules made thereunder and ordered to restore repossession, then only the applicant is entitled to compensation and costs. The question of compensation arises only when the finding with regard to the relief prayed for in such application is found affirmative on merits of the case. To put it differently, the entire process of the measures taken under S.13(4) of the Act by the secured creditor or its authorised officer should be found not in accordance with the provisions under the Act and the Rules made thereunder, then only the applicant would be entitled to seek for compensation. It is not like a counter claim which shall have the effect as a cross suit, which warrants for a separate adjudication as entitled to be filed under sub-section (8) of S.19 of the RDB Act. It is also entirely different from the compensation for loss or damage as defined under S.73 of the Indian Contract Act, 1872.

10. The Hon'ble Gujarat High Court in Sumankuamr Dilipkumar Jha v Punjab National Bank [reported in AIR 2023 Guj 157 : III (2023) BC 277 (Guj) : MANU/GJ/0237/2023] has held that the words 'shall be entitled to the payment of such compensation and costs' specified in S.19 of the Act would clearly indicate that they are enabling words and it would indicate that they would only confer power or authority and imply discretion having vested with the Tribunal to award compensation and costs to Typed by Kga

5

such borrower or any other aggrieved person who has filed an application under S.17 of the Act. The relevant portion reads thus:- "13. A plain reading of S.19 would indicate where the Debts Recovery Tribunal or the court of District Judge on an application made under S.17 or 17A or the Appellate Tribunal under S.18 or 18A, holds that the possession of the secured asset by the secured creditor is not in accordance with the provisions of the Act and the rules made thereunder and directs the creditor to return such secured assets to the concerned borrower or any other aggrieved person who has filed an application under S.17 or 17A or appeal under S.18 or 18A as the case may be, shall also order for payment of such compensation and costs as may be determined by the Tribunal or District Judge or Appellate Tribunal or the High Court. The words and expression 'shall be entitled to the payment of such compensation and costs' specified therein would clearly indicate that they were enabling words and it would indicate that they would only confer power or authority and imply discretion having vested with the Tribunal to award compensation and costs to such borrower any other aggrieved person who has filed an application under S.17 of the SARFAESI Act. The expression 'shall be entitled to the payment of such compensation and costs' found in S.19 would indicate that they are used in the statute to indicate something that may be done by the Tribunal while adjudicating an application under S.17. The use of the words 'shall be entitled to the payment of compensation and costs' are not the words of compulsion and they are only enabling words. Generally, a power conferred on an authority by use of the word 'may' on a particular matter does not mandate compulsion on such Tribunal to award compensation and costs. When a capacity or power is given to an authority, there may be circumstances which couple with the power and duty to exercise it or the manner in which it may only be exercised. In other words, the legal and factual context in which the power is to be exercised may combine the power with an obligation to exercise it even though it is conferred by use of word 'may'.

14. A power conferred by a statute having regard to its object cannot be treated as power simpliciter, but it is a power coupled with a duty or so it is the duty of the Tribunal to make sure that where it arrives at a conclusion that the measures taken by the secured creditors is invalid or contrary to the provisions of the SARFAESI Act, then necessarily the Tribunal has to make an order for payment of such compensation and costs as may be determined. When a statute confers an authority to do a judicial act in such case, it is imperative on those so authorised to exercise authority, it is in this background that S.19 will have to be examined.

15. Thus, it will have to be seen whether the borrower or any person aggrieved by the action of the secured creditor, who files an application under S.17 before the Tribunal would have right to receive compensation as a consequential relief or it will have to be determined on a separate application filed under S.19 as a consequence of adjudication done under S.17(3). .....

17. Thus, it became clear that the rules provide for specific and detailed forms in which applications are to be made and fee payable on such application has also been provided for. It is worth notable that conspicuously absent in the rules is a form for an application to be filed under S.19 of the SARFAESI Act. No fees, obviously, has also been provided for such an application. Thus, it can be reasonably inferred that the legislature did not contemplate that an application had to be separately filed under S.19 of the SARFAESI Act.

18. A wholesome reading of Ss.17 and 19 along with the Rules would indicate that no procedure has been set out in the Act and the rules as regards the borrower's right to receive compensation and costs as it has been done in case of an application filed under S.17. If the legislature intended to provide for a separate adjudication as to compensation and costs, definitely it would have provided some foundation in terms of procedure, forms, appeals, etc also. The very fact that there is no separate appeal mechanism provided further goes to show that the legislature did not intend to enable a party to file a separate application or an independent application seeking compensation and costs. ....

20. While adjudicating the application filed under S.17 by the borrower or any other aggrieved person, if the Tribunal were to hold that (a) the possession of the secured assets by the secured creditor is not in accordance with the provisions of the Act and the Rules made thereunder; and (b) pass a direction to the secured creditor to return such secured assets to the to the borrower and in such situation where both the ingredients viz (a) and (b) are satisfied, the borrower/any other aggrieved person shall be entitled to the payment of such compensation and costs as may be determined by such Tribunal or Court of District Judge or Appellate Tribunal or the High Court referred to in S.18B as the case may be. The phrase and expression 'shall be entitled' requires to be noticed. In other words, it enables the borrower or such other person to seek for payment and costs and compensation in the event of jurisdictional prerequisite 

Typed by Kagi

*being satisfied. The only inquiry or determination that Tribunal or the Court will have to undertake is for determining the quantum of costs and compensation. In the event of Tribunal arriving at a conclusion that such borrower or aggrieved person is entitled to payment of costs and compensation then he would not be required to make separate application claiming for such compensation. The Tribunal or the Court may order for compensation in favour of the borrower or other aggrieved person and it is a discretionary power vested with the Tribunal or the High Court and necessarily after conducting such inquiry as it deems fit for deciding the quantum of compensation."*

11. The scheme of the Act and the Rules made thereunder do not clothe the borrower with a right to claim either set off or counter claim against the claim made by the secured creditor. The petitioners/applicants have no case that the pre-requisites for awarding compensation have been met with by them and thus they are entitled to such compensation. It may be noted that the petitioners/applicants had filed an unregistered IA on 08.07.2022 in SA 82/2022 praying for compensation to the tune of ₹6 crores to them, whereas the final order had already been pronounced on 06.06.2022. It does not mean that the borrower or any aggrieved person is entitled to compensation in all the cases where the possession of the secured asset has been taken not in accordance with law, but it is only the discretion of the Tribunal depending upon the circumstances and nature of the case. Going by the final order dated 06.06.2022, the Tribunal was not inclined to grant an additional relief to the petitioners/applicants under S.19 of the Act exercising its discretion thereunder as there was no such jurisdictional prerequisites for passing of an order of compensation in its view.

12. In the above premises, the petitioners/applicants are not entitled to the relief prayed for in the aforesaid applications and, therefore, they are liable to be dismissed.

13. In the result, MA 2/2024 is dismissed and all pending IAs stand closed. No costs.

*[Dictated to my PA, transcribed by him, corrected and pronounced by me in the open Tribunal on this the 31^st day of July, 2025]*

[ IMTIAZ ALI ]

Typed by: Ragu

IN THE DEBTS RECOVERY TRIBUNAL - 1, KARNATAKA AT BANGALORE

PRESENT: SRI IMTIAZ ALI PRESIDING OFFICER

Dated the 31^st day of July, 2025

**MISCELLAENOUS APPLICATION NO.2 OF 2024** **IN** **SECURITISATION APPLICATION NO.82 OF 2022**

Between

M/s Bangalore Tiles India Private Limited, 13/09/10, HSMI Estate, 2^nd Stage, 5^th Cross, Okalipuram, Bengaluru, Karnataka – 560021, represented by its Directors and two others. ....Petitioners/applicants

And

The authorised officer, Canara Bank, Majestic, World Trade Centre, K G Road, Bengaluru, Karnataka – 560009. .... Respondent/defendant

**ORDER**

31.7.25