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IN THE HIGH COURT OF ORISSA AT CUTTACK
Jaswant Singh, M.S. Sahoo, JJ.
Rajesh Kumar Behera – Appellant
Versus
State Bank of India, Sambalpur Branch, Sambalpur & Ors. – Respondents
Writ Petition (C) No. 4275 of 2016
Decided On : 03-02-2023
SARFAESI Act - Defaulting Borrower - The court dismissed the writ petition as infructuous after the bank took actual possession of the secured asset due to non-payment of installments and the loan account being classified as NPA under Section 13(2) of the SARFAESI Act, 2002.
Fact of the Case:
The petitioner defaulted on a housing loan, leading to the loan account being classified as NPA. The bank issued a demand notice and assumed symbolic possession of the mortgaged house. The petitioner filed a writ petition challenging the notice for peaceful actual possession.
Finding of the Court:
The court found the writ petition to be infructuous as the bank had already taken actual possession of the secured asset and the loan account was liquidated.
Issues: Default on housing loan, classification as NPA, issuance of demand notice, symbolic possession, challenge through writ petition, acceptance of OTS proposal, application for official assistance for possession, and dismissal of the writ petition.
Ratio Decidendi: The court's decision was influenced by the bank's actions in taking actual possession of the secured asset and the liquidation of the loan account, rendering the writ petition infructuous.
Final Decision: The writ petition was dismissed as infructuous due to the bank already taking actual possession of the secured asset and the liquidation of the loan account.
JUDGMENT
1. The petitioner is a defaulting borrower in a Housing Loan availed for a sum of Rs.6 lakhs on 08.10.2005 from State Bank of India, Sambalpur Branch, Sambalpur. Due to non-payment of due installments, the loan account was classified as NPA and a demand notice dated 28.01.2010 under Section 13(2) of the SARFAESI Act, 2002 (for short 'the Act, 2002') was issued recalling the outstanding amount of Rs.7,22,561/- due as on 10.01.2010 together with future interest, expenses etc. The symbolic possession of the mortgaged residential house was assumed on 01.06.2010 by issuance of a notice under Section 13 (4) of the Act, 2002. A notice on 13.11.2014 was served upon the petitioner seeking a request for handing over peaceful actual possession of the secured asset, which was challenged before this Court by filing W.P.(C) No.22665 of 2014. Interim order dated 21.11.2014 in the said writ petition was passed directing the Bank not to take any coercive action subject to the petitioner depositing a sum of Rs.1 lakh within four weeks. Subsequently the writ petition was disposed of vide order dated 04.12.2015 as not maintainable, however with the permission to the petitioner to approach the Bank for an amicable settlement under any prevailing OTS Scheme.
2. It transpires the OTS proposal was not accepted by the Bank leading the Bank to file an application under Section 14 of the Act, 2002 before the District Magistrate, Sambalpur for directing providing of official assistance for delivery of the actual possession. Pursuant to the order passed by the District Magistrate, a notice dated 25.02.2016 (Annexure-4) was issued to the petitioner for taking over of the actual possession of the secured asset on 11.03.2016.
It is the aforesaid notice (Annexure-4) which is the subject matter of the present writ petition.
3. At the time of hearing, learned counsel for the Bank submits that the actual possession was already taken on the said date as there was no interim order passed by this Court. He further states that the loan account of the petitioner stands liquidated.
Learned counsel for the petitioner states that he has no instructions.
4. In view of the above, the writ petition is dismissed as infructuous.
The bank's right to take actual possession of the secured asset under the SARFAESI Act, 2002 upon default by the borrower.
The availability of alternative remedies under the SARFAESI Act, 2002 and the maintainability of parallel proceedings in challenging recovery processes.
Compliance with court orders and instructions is crucial in legal proceedings, and failure to do so can result in dismissal of petitions.
The court's decision was influenced by the provisions of the SARFAESI Act, 2002, specifically Section 13(4), which allowed for the upgrade of the loan account to a standard account upon the deposit o....
The court's decision was based on the petitioner's request to withdraw the writ petition and pursue available remedies before the finance company.
The judgment centers on the enforcement of loan agreements and the application of the SARFAESI Act in case of defaults, emphasizing the validity of One-Time Settlement proposals.
Court allowed repayment of overdue housing loan amounts in installments, establishing conditions to prevent coercive bank action.
The appropriate remedy for loan recovery disputes lies in approaching the DRT, not through writ petitions.
Court determines structured repayment for overdue loan under SARFAESI Act to avoid possession by the lender.
The court established that the petitioner must adhere to a structured payment plan to address loan default under the SARFAESI Act, averting asset possession.
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