Case Note & Summary
This writ petition was filed by Canara Bank under Articles 226 and 227 of the Constitution, seeking directions against the Warehousing Development and Regulatory Authority (respondent no.1) and the proprietor of M/s. Shree Kollur Mookambika Warehouse (respondent no.2). The Bank had sanctioned 54 credit facilities to 53 borrowers/farmers against the security of electronic negotiable warehouse receipts (e-NWRs) issued under the Warehousing (Development and Regulation) Act, 2007 (WDRA Act). The underlying goods — areca nuts/betel nuts — were stored in the warehouse of respondent no.2, which was registered under the Act. The borrowers created pledges of the e-NWRs in favour of the Bank. The loan accounts turned irregular, and 30 accounts were classified as non-performing assets (NPA) as on 11.02.2025, while 23 were marked as special mention accounts (SMA), following RBI guidelines. To enforce its security, the Bank invoked the pledge and sought to verify, segregate, and auction the pledged goods. However, respondent no.2 failed to cooperate: the goods were allegedly mixed up, and the warehouseman showed the same goods to represent multiple borrowers' stocks. Despite repeated requests and a court order in another writ petition (W.P. No. 100064 of 2025) directing a borrower's guarantor to assist in segregation, no progress was made. The Bank then complained to respondent no.1 authority but alleged inaction and apprehended collusion between the two respondents. Hence, the Bank approached the High Court for directions to permit verification, to compel the authority to take control of the warehouse and goods, to preserve the pledged stocks, to segregate them e-NWR wise, and to facilitate auction. Learned counsel for the Bank argued that the WDRA Act was designed to instil confidence in bankers and creditors through negotiable warehouse receipts, and that warehousemen discharge public duties. He referred to the definitions of 'warehouseman', 'warehousing business', 'negotiable warehouse receipt', and 'non-negotiable warehouse receipt' under Section 2 of the Act, and highlighted the registration requirement under Section 4. He emphasized the liabilities of a warehouseman under Section 6 for loss or damage to goods, the duties under Section 7, and the obligation to maintain records under Section 8. He submitted that respondent no.2, as a registered warehouseman holding the goods as a trustee for the bank, had breached these duties. He also pointed to Section 24, which establishes the Warehousing Development and Regulatory Authority with powers to regulate, and argued that the authority failed to enforce compliance. The petition was heard and reserved on 21.08.2025, and the order was pronounced on 17.09.2025. The full text of the operative directions is not included in the available excerpt.
Issue of Consideration
Case Details
2020 LawText (KAR) (09) 58
Writ Petition No. 101644 of 2025 (GM-RES)
Suresh S. Gundi, Shashank Manish, Siddappa S. Sajjan, Mrutyunjaya Tata Bangi
Canara Bank, Masur Branch
1. The Warehousing Development and Regulatory Authority, 2. Smt. Bhagyamma W/o. Nagaraj Chalageri, Proprietor of M/s. Shree Kollur Mookambika Warehouse
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Nature of Litigation
The writ petition seeks directions to the Warehousing Development and Regulatory Authority and the warehouseman for verification, segregation, preservation, and auction of pledged goods underlying electronic negotiable warehouse receipts.
Remedy Sought
The petitioner bank sought directions to: (1) allow the bank to verify pledged goods; (2) direct respondent no.1 to take control of warehouse and goods; (3) preserve quality and quantity of pledged stocks; (4) segregate goods e-NWR wise; (5) facilitate auction.
Filing Reason
Loan accounts became irregular; 30 accounts classified as NPA and 23 as SMA. The warehouseman allegedly failed to cooperate, mixed up goods, and did not allow identification. Complaints to the authority yielded no effective action, leading to apprehension of misappropriation.
Previous Decisions
In W.P. No. 100064 of 2025 filed by a borrower, this Court on 07.01.2025 directed the borrower's guarantor to cooperate with the bank in segregating goods, but the warehouseman did not comply.
Submissions/Arguments
The WDRA Act was enacted to provide security to fiduciaries and creditors, enabling trading in negotiable warehouse receipts; warehousemen discharge a public duty.
The bank sanctioned 54 credit facilities against pledges of e-NWRs issued under the WDRA Act; the warehouseman is registered under Section 4.
Under Sections 6, 7 and 8, a warehouseman has liabilities and duties including care of goods, record-keeping, and accounts; the warehouseman mixed up goods and refused inspection.
Despite court orders and requests, the warehouseman did not segregate or allow verification, raising concerns of collusion with the authority.
Section 24 establishes the Authority with powers and functions to regulate warehouses; the Authority failed to take effective steps despite being approached with documentation.
Judgment Excerpts
The Petitioner Bank claims that it has sanctioned a total of 54 credit facilities by way of loans to 53 borrowers/farmers on the security of pledges of Electronic Negotiable Warehouse Receipts (E-NWRs).
The loan accounts having become irregular and the borrowers having failed to regularise/close the loan accounts, the Bank was constrained to classify the accounts of 30 such borrowers as Non-Performing Assets (NPAs) as on 11.02.2025.
The warehouseman instead of segregating the goods had mixed up several of the goods, and whenever inquiries were made, showed the same goods as belonging to each of the borrowers.
Apprehending misappropriation of the underlying goods of the NWRs and collusion between Respondent No. 1 and Respondent No. 2, the Petitioner is before this Court seeking the aforesaid reliefs.
By relying on sub-section (t), he submits that 'warehousing business' means the business of maintaining warehouses in the storage of goods and issuing negotiable warehouse receipts.
Procedural History
The petitioner bank filed the present writ petition seeking directions. Earlier, in W.P. No. 100064 of 2025 filed by a borrower, this Court on 07.01.2025 directed the borrower's guarantor to cooperate with the bank for segregation. Bank officials visited the warehouse on 12.01.2025 and 15.01.2025 but found non-compliance. The bank corresponded with respondent no.1 authority (Annexure-K series) without effective action. The petition was heard and reserved on 21.08.2025, and the order was pronounced on 17.09.2025.
Acts & Sections
- Warehousing (Development and Regulation) Act, 2007: 2(v), 2(t), 2(n), 2(m), 2(h), 2(i), 4, 6, 7, 8, 24
- Warehousing Development and Regulation (Registration of Warehouses) Rules, 2017:
