Structured repayment plan under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

Headnote:
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Coercive Proceedings - Financial Advance
Fact of the Case:

The petitioner received a business loan from the bank but defaulted on repayments due to the Covid-19 pandemic. The bank initiated coercive proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
Finding of the Court:

The court directed the petitioner to remit the outstanding amount in consecutive monthly instalments, with the first instalment due on a specified date. The court also allowed the bank to continue coercive proceedings in case of a single default in payments.
Issues: Default in loan repayment, Coercive proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
Ratio Decidendi: The court considered the petitioner's reasons for default and provided a structured repayment plan while allowing the bank to proceed with coercive measures in case of further default.
Final Decision: The writ petition was disposed of with directions for the petitioner to remit the outstanding amount in monthly instalments, with provisions for the bank to continue coercive proceedings in case of default.

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE N.NAGARESH WEDNESDAY, THE 21ST DAY OF FEBRUARY 2024 / 2ND PHALGUNA, 1945 WP(C) NO. 6760 OF 2024 PETITIONER:

HARIDAS C. N AGED 58 YEARS S/O NARAYANAN , CHOONDAL HOUSE, VETTUKAD DESOM, COONDAL VILLAGE, KUNNAMKULAM TALUK, THRISSUR DT, PIN – 680014 BY ADVS.

M.R.REENA P.S.SUJETH RESPONDENT:

THE KERALA STATE CO-OPERATIVE BANK LTD KUNNAMKULAM BR, THRISSUR DISTRICT REP BY ITS AUTHORIZED OFFICER, SAHAKARANA SAPTHATHI MANDIRAM KOVILAKATHUMPADAM THRISSUR, PIN – 680022 SRI.P.C. SASIDHARAN, STANDING COUNSEL THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON

21.02.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

JUDGMENT Dated this the 21st day of February, 2024 The petitioner has approached this Court aggrieved by the coercive proceedings for recovery of financial advance made by the Kerala State Co-operative Bank Limited to the petitioner, invoking the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

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2. The Bank paid 5 lakhs to the petitioner as Simple Loan in the year 2014. The petitioner states that though the petitioner made remittances promptly during the initial repayment period of the financial advance, he could not pay the repayment instalments promptly later due to financial stringency. The repayment of loan fell into arrears later. It happened due to reasons beyond the control of the petitioner.

3. Though the petitioner requested the Bank to permit the petitioner to repay the overdue amounts in easy monthly instalments, the Bank authorities were not yielding. The authorities, instead, started coercive proceedings, invoking the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Security Interest (Enforcement) Rules, 2002 and issued Ext.P1 notice.

4. The petitioner states that he is still in a position to clear the overdue amounts towards the loan, if sufficient time is given to clear the dues in easy monthly instalments. If the respondent is permitted to continue with the coercive proceedings and auction the secured assets provided by the petitioner, he will be put to untold hardship and loss.

5. Standing Counsel entered appearance on behalf of the Bank and denied all the statements made by the petitioner. On behalf of the respondent, it is submitted that the loan was given to the petitioner in the year 2014. The petitioner committed default in repaying the loan.

6. The Bank repeatedly reminded the petitioner and required him to clear the dues. The petitioner deliberately omitted to do so. In the circumstances, the Bank had no other go than to proceed against the petitioner invoking the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The impugned Ext.P1 was issued in these circumstances. The petitioner has not advanced any legal reasons to thwart the coercive proceedings initiated by the Bank.

7. The Standing Counsel, however, submitted that if the petitioner is ready and willing to make a substantial payment soon and remit the balance overdue amount immediately thereafter, a short breathing time can be granted to the petitioner to clear the dues. The Standing Counsel submitted that the outstanding amount due to the Bank from ₹

the petitioner as on 21.02.2024 is 7,16,229/- and the ₹

overdue amount as on 21.02.2024 is 4,15,421/-.

8. I have heard the counsel for the petitioner and the Standing Counsel representing the Bank.

9. The specific case of the petitioner is that the petitioner has been making the repayment and maintaining the loan account initially. The default in repayment of the loan occurred lately due to reasons beyond the control of the petitioner. The petitioner has provided substantial security which will safeguard the interest of the Bank.

10. In the facts and circumstances of the case, I am inclined to dispose of the writ pet

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