Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Online)(Kar) 24658

KARNATAKA HIGH COURT
B M SHYAM PRASAD, J
MRS.VANITHA R W/O MR. RUDRA PAPALAH AGED ABOUT 4 YEARS D.NO. VL-904, PURVA VENEZIA APARTMENTS, SANDEEP UNNIKRISHNAN ROAD, NEAR GRVK, YELHANKA NEW TOWN, YELHANKA, BENGALURU 500064 – Appellant
Versus
THE CENTRAL BANK OF INDIA IISC BRANCH – Respondent
WRIT PETITION NO. 7973 OF 2025 (GM-RES)

Advocates:
For the Appellants/Petitioners: SRI. CHITHRALEKHA H R.
For the Respondents: SRI. Y P GOKUL.

Court may defer enforcement actions on loans to allow borrowers time to rectify defaults.

Headnote:This case revolves around the enforcement of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, where the petitioners seek to quash possession notices for a defaulted loan. The Court analyzed the interim orders previously granted and the petitioners' failure to meet the financial obligations set by earlier orders. The Court determined that the respondents should defer action until 15.10.2025, allowing the petitioners a final opportunity to settle the loan, failing which they must pursue alternative remedies. The petition stands disposed of in the afore terms.

Table of Content
1. petitioners in default for loan repayment. (Para 1 , 2)
2. respondents provided several restructuring opportunities. (Para 3)
3. deferral of actions granted for loan settlement. (Para 4)

ORAL ORDER

The petitioners have availed a Term Loan from the respondent and are admittedly in default. The respondent has initiated proceedings under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [for short, the SARFAESI Act] with the issuance of the initial Notice dated 05.11.2024 under Section 13 [2] and the subsequent notice for possession under Section 13 [4] of the SARFAESI Act.

2. This Court, on 18.03.2025, has granted interim order, and by the subsequent order dated 24.04.2025, this Court has extended the interim order subject to deposit of 25% of the amount in demand within a certain time line. In terms of this interim order, the petitioners had to deposit Rs. 21,00,000/- but the petitioners have only deposited a sum of Rs. 6,00,000/-. Therefore, this Court recorded that the interim order stands vacated. The present application is for reinstatement of this order.

3. It is undisputed that the petitioners have presently deposited a sum of Rs. 27,00,000/- and are in arrears in excess of Rs. 66,00,000/-. The learned counsel for the petitioners submits that this Court could consider disposing of the petition deferring precipitative action for some reasonable time as the petitioners propose to close the loan. The learned counsel for the respondent submits that the respondent is not able to recover its dues though the petitioners have been given the benefit of restructuring on six different occasions.

4. On merits, the petitioners' case hinges on a request for One Time Settlement [OTS]. In the circumstances, this Court is of the view that the respondent must defer taking precipitative action for a period up to 15.10.2025, which would enable the petitioners, if bona fide, to write off the loan and if the petitioners fail, the respondent must be at liberty to take action, in which event. The petitioners must, instead of invoking this Court's jurisdiction under Article 226 of the Constitution, avail alternative remedy under Section 17 of the SARFAESI Act.

The petition stands disposed of in the afore terms.

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