The court emphasized that the SARFAESI Act does not provide for rescheduling of loans in case of debtor default, and that recovery proceedings can proceed as per the Act.

JUDGMENT :

S.MANIKUMAR, J.

Instant writ appeal is filed challenging the interim order dated 8.3.2021 in W.P.(C)No.6004/2021. Grievance of the appellant/writ petitioner herein is that by the impugned interim order, a learned single judge, while issuing notice on admission, in the writ petition, dismissed the stay application, for the reason that the appellant had availed a loan which is not repaid. The relief sought for is to consider Exhibit P4 application for rescheduling, pending before the respondents in connection with loan transaction on the background of physical ailment and stagnation taken place under the pandemic Covid-19 situation. According to the appellant, the learned single judge by the impugned order had given unlimited right to the respondents to take coercive action against the appellant. Hence this writ Appeal.

2. Order impugned in this writ appeal reads as under:

“Heard. Issue notice before admission to the respondents, returnable after two weeks.

Learned counsel for the petitioner has prayed for stay of the recovery proceedings. That prayer is rejected in the wake of the fact that the petitioner had availed loan and which is not repaid by him.”

3. Learned counsel for the appellant contended that the request before the learned Single Judge was for a direction to consider Exhibit P4 and till then recovery proceedings should be stayed. By issuing notice before admission and dismissing the stay sought for will practically give a right to the respondents to proceed with their coercive steps.

4. Though Mr.Biju Abraham, learned counsel for the appellant made submissions on the abovesaid grounds, we are not inclined to interfere with the same for the reason that the respondents have already initiated recovery proceedings. Perusal of the representation dated 1.3.2021, Ext.P4 shows that the appellant has availed loan for improving and developing business in the year 2007. Loan amount has to be repaid in 60 equal monthly instalments at the rate of Rs.50,000/-per month. Due to the illness of the appellant, he was compelled to close the business. Loan repayment was defaulted and the bank had initiated recovery proceedings under the provisions of SARFAESI Act 2002.

5. Section 13 of the SARFAESI Act, 2002 deals with 'enforcement of security interest', which reads as under:

Section 13 in The Securitisation And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act, 2002

13. Enforcement of security interest

(1) Notwithstanding anything contained in section 69 or section 69A of the Transfer of Property Act, 1882 (4 of 1882 ), any security interest created in favour of any secured creditor may be enforced, without the intervention of the Court or tribunal, by such creditor in accordance with the provisions of this Act.

(2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under sub-section (4).

Provided that

(i) the requirement of classification of secured debt as non-performing asset under this sub-section shall not apply to a borrower who has raised funds through issue of debt securities; and

(ii) in the event of default, the debenture trustee shall be entitled to enforce security interest in the same manner as provided under this section with such modifications as may be necessary and in accordance with the terms and conditions of security documents executed in favour of the debenture trustee.

(3) The notice referred to in sub-section (2) shall give details of the amount payable by the borrower and the secured assets intended to be enforc