Karnataka High Court
Amalor International Limited vs The Branch Head on 22 July, 2025
Author: S.Sunil Dutt Yadav
Bench: S.Sunil Dutt Yadav
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 22ND DAY OF JULY, 2025
BEFORE
THE HON'BLE MR. JUSTICE S SUNIL DUTT YADAV
WRIT PETITION NO. 6510 OF 2025 (GM-RES)
BETWEEN:
1. AMALOR INTERNATIONAL LIMITED
609, 6TH FLOOR,
HONG KONG PLAZA 188
CONNAUGHT ROAD WEST
HONG KONG - 999 077
22A, GUANDONG INVESTMENT TOWER
148 CONNAUGHT ROAD,
CENTRAL HONG KONG
REPRESENTED BY ITS
AUTHORIZED SIGNATORY
M RAMESH, S/O MUNISWAMY NAIDU
Digitally ... PETITIONER
signed by
PRAKASH N (BY SRI. D.R. RAVISHANKAR, SENIOR ADVOCATE FOR
Location: SRI V.R. VINAY KUMAR, ADVOCATE AND
HIGH
COURT OF SRI SHREERAM T. NAYAK., ADVOCATE)
KARNATAKA
AND:
1. THE BRANCH HEAD
CANARA BANK
HONG KONG BRANCH
NO.904, 9/FL
AON CHINA BUILDING
29, QUEENS ROAD CENTRAL,
HONG KONG - 999 076
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2. THE AUTHORIZED OFFICER
CANARA BANK
ARM-1 BRANCH
2ND FLOOR, NO.86,
SPENCER TOWER MG ROAD,
BANGALORE - 560 001
3. M/S. MSK SHELTERS
PARTNERSHIP FIRM
UNDER PARTNERSHIP ACT
AT NO.471, 39TH C CROSS ROAD
5TH BLOCK, JAYANAGAR
BANGALORE - 560 041
REPRESENTED BY ITS
MANAGING PARTNER
M SURESH KUMAR
... RESPONDENTS
(BY SRI. DHYAN CHINNAPPA., SENIOR ADVOCATE FOR
SRI VIGNESH SHETTY, ADVOCATE FOR R1 & R2;
SRI SHASHWATH S.P., ADVOCATE FOR R3)
THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF
THE CONSTITUTION OF INDIA, PRAYING TO - TO HOLD AND
DECLARE THAT THE ENTIRE ACTION INITIATED BY THE
RESPONDENT NO.2 UNDER THE PROVISIONS OF THE
SARFAESI ACT AS ILLEGAL AND ETC.
THIS PETITION HAVING BEEN HEARD AND RESERVED ON
01.07.2025 AND COMING ON FOR PRONOUNCEMENT OF
ORDERS THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE S SUNIL DUTT YADAV
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CAV ORDER
At the outset, it must be noticed that the petitioner is
the Principal Debtor, while the respondent No.3 is the
Guarantor and the property of Guarantor is the subject
matter of notice under the Securitization and
Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 [Hereinafter referred to as
"SARFAESI Act"]. The Sale Notice at Annexure-'R' dated
21.01.2025 relates to the property of the Guarantor.
2. It is to be noticed that on an earlier occasion,
the Guarantor (Respondent No.3) had approached this
Court by filing a Writ Petition No.4792/2025 [GM-RES]
challenging action under the SARFAESI Act as being void
ab initio, illegal and without jurisdiction and on such
grounds had challenged the Sale Notice dated 21.01.2025.
The said Writ Petition came to be disposed off without any
final adjudication after recording an observation that
another Guarantor had already approached the Debts
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Recovery Tribunal [Hereinafter referred to as "DRT"]. It is
stated that identical legal contentions as raised in the
present petition were raised by the respondent No.3 as
regards the Sale Notice dated 21.01.2025.
3. It is pertinent to notice that in the present
round of litigation, the very same Sale Notice of
21.01.2025 (Annexure-'R') is sought to be challenged.
W.P.No.4792/2025 having been disposed off on
24.02.2025, the action of respondent Bank is now
challenged in the present writ petition filed on 04.03.2025,
i.e., eight days after the disposal of the earlier Writ
Petition. There is nothing on record to evidence
respondent No.3 having approached the DRT invoking the
substantive remedy. The present effort of the Principal
Debtor must lead to the same conclusion of being
relegated to avail of the substantive remedy.
4. It must be noticed that the loan has been
sanctioned by Canara Bank, Hong Kong Branch. In the
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letter of sanction at condition No.(iii)(g) insofar as the
charge is concerned, there is a reference to property in
India. Such details are forthcoming from loan sanction
letter at Annexure-'C' dated 12.03.2018.
5. The Memorandum of Deposit of Title Deeds
executed on 22.12.2017 is one between respondent No.3
M/s. M.S.K. Shelters and the Canara Bank having its Head
Office at Bengaluru. The mortgage was executed by way
of security in the context of credit facilities of
Rs.32,50,00,000/- advanced to the petitioner.
6. The consideration for the mortgage is the
extension of credit facilities to the petitioner and is made
out from para-(I) of the Memorandum of Deposit of Title
Deeds (Annexure-'D'). Para I reads as follows:-
"WHEREAS on the request of M/s Amalor
International Limited., having registered office at
1005, South China Building 1, Wyndham Street,
Central, Hongkong (hereinafter referred to as the
borrower), the bank has sanctioned to it credit
facilities upto a limit of Rs. 32,50,00,000.00 (USD
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5 Million is covereted at INR 65.00 which is rate
as on date of deposit of title deeds) on condition
that repayment of it including principal, interest,
bank charges, costs of realization etc., shall be
secured by a mortgage of immovable
property/ies. "
7. It was noticed that the petition was pending
since 04.03.2025 and in light of insistence of a finding on
the point of jurisdiction, matter is adjudicated.
8. Though it is the contention of petitioner that the
respondent No.1 Bank could not have enforced security in
terms of the provisions of the SARFAESI Act, as loan
sanctioned documents point out to the terms of the
sanction letter being governed and construed in
accordance with the laws of Hong Kong with non-exclusive
jurisdiction to the Courts of Hong Kong Special
Administrative Region, it is necessary to notice that there
is no complete bar as regards enforcement of the credit
facilities. This becomes apparent on a plain reading of the
stipulation in the loan sanction document dated
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12.03.2018. The relevant Clause for reference reads as
follows:-
"The sanction letter shall be governed by and
construed in accordance with the laws of Hong Kong.
The parties hereto agree to submit to the non-
exclusive jurisdiction of the courts of Hong Kong
Special administrative Region but the facility may be
enforceable in any court of competent
jurisdiction."
(emphasis supplied)
9. It must be noticed that though it is admitted
that the extension of credit facility is by Canara Bank
(Hong Kong Branch), it is not in dispute that the security
for such loan advanced is the deposit of Title Deeds
evidencing the mortgage on 22.12.2017.
10. It is necessary to notice that the Memorandum
of Deposit of Title Deeds is entered into with respondent
No.3 M/s. M.S.K. Shelters, which is the 'Mortgagor' and
Canara Bank with its Head Office at Bengaluru having
Branch Office at Hong Kong which is the 'Mortgagee'. The
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property mortgaged is situated in Kuduvatti Village, Nandi
Hobli, Chikkaballapura District and the mortgage is
registered before the Office of Sub-Registrar,
Chikkaballapura. This mortgage by way of Deposit of Title
Deeds would fall within the definition of a Security
Agreement under Section 2(zb)1 of the SARFAESI Act. The
definition of 'Debt' under Section 2(ha)2 of the SARFAESI
Act refers back to definition under Section 2(g)3 of the
Recovery of Debts Due to Banks and Financial Institutions
Act, 1993. In terms of the said Act, 'Debt' includes liability
due from any person by a Bank or a Financial Institution.
1
2(zb) "security agreement" means an agreement, instrument or any other document or
arrangement under which security interest is created in favour of the secured creditor including
the creation of mortgage by deposit of title deeds with the secured creditor.
2
2(ha) "debt" shall have the meaning assigned to it in clause (g) of section 2 of the Recovery of
Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and includes--(i) unpaid
portion of the purchase price of any tangible asset given on hire or financial lease or conditional
sale or under any other contract; (ii) any right, title or interest on any intangible asset or licence
or assignment of such intangible asset, which secures the obligation to pay any unpaid portion of
the purchase price of such intangible asset or an obligation incurred or credit otherwise extended
to enable any borrower to acquire the intangible asset or obtain licence of such asset.
3
2(g) debt means any liability (inclusive of interest) which is claimed as due from any person by
a bank or a financial institution or by a consortium of banks or financial institutions during the
course of any business activity undertaken by the bank or the financial institution or the
consortium under any law for the time being in force, in cash or otherwise, whether secured or
unsecured, or assigned, or whether payable under a decree or order of any civil Court or any
arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable
on, the date of the application [and includes any liability towards debt securities which remains
unpaid in full or part after notice of ninety days served upon the borrower by the debenture
trustee or any other authority in whose favour security interest is created for the benefit of
holders of debt securities or.
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11. The Mortgage Deed created with respect to an
Indian asset by way of a registered document in favour of
Canara Bank by M/s. M.S.K. Shelters to secure the interest
of the petitioner would come within the applicability of
SARFAESI Act.
12. The action by the respondent Bank for
enforcement of security in terms of the Mortgage Deed for
default by the petitioner is by resort to Sale Notice and the
provisions of the SARFAESI Act and the Security Interest
(Enforcement) Rules, 2002.
13. The contention that the loan agreement which
stipulates the construction of the sanction letter must be
in accordance with laws of Hong Kong with exclusive
jurisdiction of Courts of Hong Kong Special Administrative
Region would exclude the jurisdiction of proceedings under
the SARFAESI Act in India, requires to be rejected.
14. Once the mortgage can be construed to be a
security and fulfils all requirements so as to make it
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enforceable under provisions of the SARFAESI Act, it can
be stated that recourse to provisions of SARFAESI Act
being a statutory remedy available to the Bank would be
permissible, notwithstanding any Clause in the loan
sanction letter. Such construction would be on the basis
of the principle that there cannot be contracting out of
statutory scheme designed to protect public policy.4 This
position was strengthened in Booz Allen and Hamilton
Inc. v. SBI Home Finance Limited & Ors.5 Para-35 of
the said decision is extracted hereinbelow:-
"35. The Arbitral Tribunals are private fora
chosen voluntarily by the parties to the dispute, to
adjudicate their disputes in place of courts and
tribunals which are public fora constituted under
the laws of the country. Every civil or commercial
dispute, either contractual or non-contractual,
which can be decided by a court, is in principle
capable of being adjudicated and resolved by
arbitration unless the jurisdiction of the Arbitral
Tribunals is excluded either expressly or by
necessary implication. Adjudication of certain
4
See, Waman Shriniwas v. Ratilal (1959) OnLine SCC 120 and Lachoo Mal v. Radhey Shyam
(1971) 1 SCC 619.
5
(2011) 5 SCC 532.
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categories of proceedings are reserved by the
legislature exclusively for public fora as a matter of
public policy. Certain other categories of cases,
though not expressly reserved for adjudication by
public fora (courts and tribunals), may by
necessary implication stand excluded from the
purview of private fora. Consequently, where the
cause/dispute is inarbitrable, the court where a suit
is pending, will refuse to refer the parties to
arbitration, under Section 8 of the Act, even if the
parties might have agreed upon arbitration as the
forum for settlement of such disputes.
48. The provisions of the Transfer of Property
Act read with Order 34 of the Code, relating to the
procedure prescribed for adjudication of the
mortgage suits, the rights of mortgagees and
mortgagors, the parties to a mortgage suit, and the
powers of a court adjudicating a mortgage suit,
make it clear that such suits are intended to be
decided by public fora (courts) and therefore,
impliedly barred from being referred to or decided
by private fora (Arbitral Tribunals). We may briefly
refer to some of the provisions which lead us to
such a conclusion.
51. If the three issues referred by the
appellant are the only disputes, it may be possible
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to refer them to arbitration. But a mortgage suit is
not only about determination of the existence of
the mortgage or determination of the amount due.
It is about enforcement of the mortgage with
reference to an immovable property and
adjudicating upon the rights and obligations of
several classes of persons (referred to in para 48.2
above), who have the right to participate in the
proceedings relating to the enforcement of the
mortgage, vis-Ã -vis the mortgagor and mortgagee.
Even if some of the issues or questions in a
mortgage suit (as pointed out by the appellant) are
arbitrable or could be decided by a private forum,
the issues in a mortgage suit cannot be divided."
15. This position of law was further reiterated in
Mardia Chemicals Ltd. & Others. v. Union of India &
Others.6 The Apex Court while upholding the
constitutional validity of the SARFAESI Act has observed as
follows:-
"66. On behalf of the petitioners one of the
contentions which has been forcefully raised is that
existing rights of private parties under a contract cannot
be interfered with, more particularly putting one party
in an advantageous position over the other. For
6
(2004) 4 SCC 311.
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example, in the present case, in a matter of private
contract between the borrower and the financing bank
or institution through impugned legislation rights of the
borrowers have been curtailed and enforcement of
secured assets has been provided for without
intervention of the court and above all depriving them
of the remedy available under the law by approaching
the civil court. Such a law, it is submitted, is not
envisaged in any civilized society governed by rule of
law. As discussed earlier as well, it may be observed
that though the transaction may have the character of a
private contract yet the question of great importance
behind such transactions as a whole having far-reaching
effect on the economy of the country cannot be
ignored, purely restricting it to individual transactions,
more particularly when financing is through banks and
financial institutions utilizing the money of the people in
general, namely, the depositors in the banks and public
money at the disposal of the financial institutions.....
67. It is well known that in different States rent
control legislations were enacted providing safeguards
to the sitting tenants as against the existing rights of
the landlords, which before coming into force of such
law were governed by contract between the private
parties. Therefore, it is clear that it has always been
held to be lawful, whenever it was necessary in the
public interest to legislate irrespective of the fact that it
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may affect some individuals enjoying certain rights. In
the present case we find that the unrealized dues of
banking companies and financial institutions utilizing
public money for advances were mounting and it was
considered imperative in view of recommendations of
Expert Committees to have such law which may provide
speedier remedy before any major fiscal setback occurs
and for improvement of general financial flow of money
necessary for the economy of the country that the
impugned Act was enacted. Undoubtedly, such a
legislation would be in the public interest and the
individual interest shall be subservient to it. Even if a
few borrowers are affected here and there, that would
not impinge upon the validity of the Act which otherwise
serves the larger interest.
69. On behalf of respondents time and again stress has
been given on the contention that in a contractual matter
between the two private parties they are supposed to act
in terms of the contract and no question of compliance
with the principles of natural justice arises nor the
question of judicial review of such actions needs to be
provided for. However, at the very outset, it may be
pointed that the contract between the parties as in
the present cases, is no more as private as sought to
be asserted on behalf of the respondents. If that
was so in that event parties would be at liberty to
seek redressal of their grievances on account of
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breach of contract or otherwise taking recourse to
the normal process of law as available, by
approaching the ordinary civil courts. But we find
that a contract which has been entered into
between the two private parties, in some respects
has been superseded by the statutory provisions or
it may be said that such contracts are now governed
by the statutory provisions relating to recovery of
debts and bar of jurisdiction of the civil court to
entertain any dispute in respect of such matters....."
(emphasis supplied)
Hence, it is settled legal position that provisions of statute
and statutory rights cannot exclude or contract away
provisions of an enactment conferring rights safeguarding
Public Financial Institutions.7
16. It needs to be noticed that the mortgage by
way of deposit of Title Deeds by itself would be construed
to be a standalone document. The Mortgage Deed which
is a registered document executed before the office of the
Sub-Registrar at Chikkaballapura relates to a property in
7
Statement of Objects and Reasons under the Enforcement of Security Interest and Recovery of
Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016.
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India and the consideration for creation of such security is
the extension of credit facility by Canara Bank through its
Branch. Default in payment of loan dues could result in
enforcement of the security under the SARFAESI Act.
17. Even if it is construed that the credit facility is
extended by Branch of Canara Bank at Hong Kong, still it
would be consideration enough for creation of a security in
favour of Canara Bank with its Head Office at Bengaluru.
If that were to be so, the Mortgage Deed could be
enforceable as a security under provisions of the
SARFAESI Act and contentions regarding lack of
jurisdiction by reliance on Clause in a contract cannot be
accepted in light of the discussion made above.
18. Insofar as recourse to parallel remedies are
concerned, viz., pre-existing proceedings in the form of
execution proceedings before the Civil Court in Execution
Case No.35/2022 instituted pursuant to Arbitral Award
passed by the High Court of the Hong Kong Special
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Administrative Region, Court of First Instance, Action No.
78 of 2021 vis-Ã -vis proceedings under the SARFAESI Act,
it must be noticed that the right to institute proceedings
under the SARFAESI Act is an additional remedy and not
'in derogation of' other laws as may be applicable in terms
of Section 37 of the Act.
19. As stated in Transcore v. The Union of India
and Another8, the Apex Court while determining the
validity of parallel proceedings under the DRT and
SARFAESI Act has held at para-64 as hereunder:-
"64. ... In the present case, as stated above,
the NPA Act is an additional remedy to the DRT Act.
Together they constitute one remedy and,
therefore, the doctrine of election does not apply.
Even according to Snell's Principles of Equity (31st
Edn., p.119), the doctrine of election of remedies is
applicable only when there are two or more co-
existent remedies available to the litigants at the
time of election which are repugnant and
inconsistent. In any event, there is no repugnancy
nor inconsistency between the two remedies,
8
(2008) 1 SCC 125.
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therefore, the doctrine of election has no
application."
As there is no inconsistency between the two remedies,
execution of the Arbitral award granted by the Court of
First Instance of Hong Kong before the Civil Court can
proceed simultaneously with SARFAESI proceedings.
20. Insofar as the contention that the contracts
entered into by way of Mortgage by Deposit of Title Deeds
being in violation of Foreign Exchange Management Act,
1999 [Hereinafter referred to as "FEMA"], it must be
noticed that both the petitioner and respondent No.3
having obtained benefits from the very loan transaction
and having offered security by way of mortgage, cannot
be permitted to approbate and reprobate.
21. Furthermore, in any event, Foreign Exchange
Management (Borrowing and Lending) in Foreign
Exchange Regulations 2000, Regulation No.49 states that
9
4.(1) An authorised dealer in India or his branch outside India may lend in foreign currency in
the circumstances and subject to the conditions mentioned below, namely: i) A branch outside
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Authorized dealer in India, or Branch outside India, may
lend in foreign currency loans in the normal course of
banking business outside India. If that were to be so, the
contention of the petitioner regarding violations of
provisions of FEMA do not stand.
22. Insofar as other contentions relating to
unreasonable indecisiveness in regards to the One Time
Settlement proposals, it is settled position that scope of
interference is minimal. As regards other procedural
violations, if any, in connection with measure under the
provisions of the SARFAESI Act are concerned, it is a
settled position that the petitioner is required to take
recourse through the substantive remedy of challenging
Section 13 measure under Section 17 of the SARFAESI
Act.
India of an authorised dealer being a bank incorporated or constituted in India, may extend
foreign currency loans in the normal course of its banking business outside India.
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23. Accordingly, the Writ Petition stands rejected in
light of the discussions as above. Insofar as the
substantive contentions relating to the actions under the
SARFAESI Act as regards to the impugned proceedings,
the petitioner is at liberty to approach DRT for appropriate
remedy under Section 17 of the SARFAESI Act.
24. Needless to state that the time spent in the
present proceedings may be taken note of appropriately, if
an objection regarding limitation is raised, in the event
petitioner were to approach the DRT.
25. All contentions are kept open, while it is clarified
that contentions, including and regarding jurisdiction
raised and other contentions as adverted to and decided
herein are not open for re-adjudication.
26. It is observed that the petitioner had insisted on
the recording of finding which according to them is a
jurisdictional issue and by virtue of which, the proceedings
before the DRT was one without jurisdiction and
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accordingly has been decided by this Court in the Writ
proceedings itself.
Sd/-
(S SUNIL DUTT YADAV)
JUDGE
VGR
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
[AMALOR INTERNATIONAL LIMITED VS. THE BRANCH HEAD
AND OTHERS]
22.07.2025
(VIDEO CONFERENCING / PHYSICAL HEARING)
CORAM: HON'BLE MR. JUSTICE S SUNIL DUTT YADAV
ORAL ORDER
After pronouncement of order today, learned counsel
for the petitioner files a memo and requests that time may
be granted to avail of the alternative remedy and some
protection may be granted to the petitioner in the
interregnum.
In light of the memo filed and submission made,
petitioner is granted three weeks’ time to take appropriate
steps to approach the Debts Recovery Tribunal. Until such
time, the respondent Bank not to take any precipitative
steps.
It is made clear that this protection is granted only in
light of relegation of petitioner to avail of the substantive
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remedy and must not be construed to be an order passed
considering the contentions on merits.
Needless to state that, upon lapse of such time, the
limited protection granted to the petitioner would cease to
operate.
This order is to be read in conjunction with the final
order dated 22.07.2025 pronounced today.
Sd/-
(S SUNIL DUTT YADAV)
JUDGE
VGR
List No.: 1 Sl No.: 161
