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2023 Supreme(Online)(KER) 2713
HIGH COURT OF KERALA
N. NAGARESH, J
VALLY KEZHIYATTU – Appellant
Versus
THE MANJERI CO-OPERATIVE URBAN BANK LTD – Respondent
WP(C) 34997/2023
P.C.MUHAMMED NOUSHIQ, K.VIDYASAGAR
Courts can grant repayment relief in loan defaults when borrowers face genuine hardships, balancing creditor rights with debtor needs.
Headnote:
Coercion - Loan Recovery - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 13 - The court acknowledged the petitioner's hardships and allowed repayment in installments while balancing the bank's rights under the Securitisation Act.
Fact of the Case:
The petitioner, who received a loan from the bank, defaulted on repayments due to unforeseen circumstances. The bank initiated coercive actions for recovery, prompting the petitioner to seek relief from the court.
Issues: Whether the petitioner can be granted relief from the coercive recovery proceedings initiated by the bank under the Securitisation Act due to her repayment difficulties.
Ratio Decidendi: A balancing act was applied, weighing the bank’s right to recover dues under the Securitisation Act against the petitioner’s circumstances that necessitated a repayment plan.
Final Decision: The writ petition is disposed of with a repayment plan for the petitioner.
JUDGMENT
Dated this the 6th day of December, 2023 The petitioner has approached this Court aggrieved by the coercive proceedings for recovery of financial advance made by the Manjeri Co-operative Urban Bank to the petitioner, invoking the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 .
2. The Bank paid ₹2 lakhs to the petitioner as Mortgage Loan in the year 2015. The petitioner states that though the petitioner made remittances promptly during the initial repayment period of the financial advance, she could not pay the repayment installments promptly later due to loss in business, Flood related issues and Covid-19 pandemic. The repayment of loan fell into arrears. 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 installments, 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 she 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 installments. If the respondent is permitted to continue with the coercive proceedings and auction the secured assets provided by the petitioner, she 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 2015. The petitioner committed default in repaying the loan.
6. The Bank repeatedly reminded the petitioner and required her 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 notice 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 total outstanding 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
06.12.2023 is ₹3,86,329/-.
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 of 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 petition giving a short and reasonable time to the petitioner to clear off the liability.
11. The writ petition is therefore disposed of with the following directions:
(i) The petitioner shall remit the outstanding amount of ₹3,86,329/- in 12 consecutive and equal monthly installments along with accruing interest and other Bank charges, if any. First of such installments shall be paid on or before
08.01.2024.
(ii) If the petitioner commits single default in making payments as directed above, the respondent will be at liberty to continue with the coercive proceedings against the petitioner in accordance with law.
(iii) If the petitioner makes payments as directed above, coercive proceedings, if any, against the pet
