Back
2010 Supreme(Online)(KER) 22579
HIGH COURT OF KERALA
P.R.RAMACHANDRA MENON, J
NAJUMA SALI AND ANOTHER – Appellant
Versus
VIJAYA BANK LIMITED – Respondent
WP(C)/23448/2010
MR. K.C.CHARLES MR. M.POLY MATHAI MR. P.CHELLAPPAN MR. HARI MENON.MR. VIMAL K.CHARLES MS. A.T.RENJU
Banks have the authority to declare accounts as NPA and modify loan interest based on compliance with agreements and RBI guidelines, and borrowers retain the right to challenge these modifications legally.
Headnote:
NPA - Bank Loans - SARFAESI Act - The judgment discusses provisions under the SARFAESI Act regarding Non-Performing Assets, along with general RBI guidelines on interest rates, establishing the bank's right to declare accounts as NPA due to non-compliance with EMI payments and subsequent legal obligations.
Fact of the Case:
The petitioner took three loans in 2005, with disputes arising over interest rates after a corruption case involving bank officers. Despite paying EMIs regularly, the bank declared the account as NPA due to an alleged increase in interest and unpaid dues.
Finding of the Court:
The court found that the petitioner had the opportunity to avoid the NPA status by paying overdue amounts and directed a deposit of Rs. 17 lakhs to remove the NPA designation, while refraining from determining disputes regarding interest rates for the present.
Issues: The main issue was whether the bank acted legitimately in declaring the account as NPA and altering interest rates, amidst claims from the petitioner about harassment and unjust practices.
Ratio Decidendi: The court emphasized the importance of the petitioner fulfilling outstanding obligations to mitigate the NPA status, allowing a payment to restore account status while leaving open the legal questions surrounding interest rates for future resolution.
Final Decision: The writ petition was disposed of with a directive to deposit the required amount to amend the NPA status.
JUDGMENT
The petitioner is stated as aggrieved of the declaration of the account as 'NPA' and the steps being pursued by the respondent Bank, under the SARFAESI Act .
2. The petitioner had availed 'three' different loans from the respondent Bank way back in the year 2005. The first one was of 'housing loan' to the tune of Rs. 90 lakhs and the second and third were 'term loans' for a sum of Rs. 9.5 lakhs and Rs. 40 lakhs respectively, sanctioned and disbursed after creating security interest over the property in question. It is contended that, the petitioner was very much regular in effecting the EMIs without default. The case projected by the petitioner is that, the rate of interest in respect of the first loan, as borne by the documents produced as Exts. P1 to P5, was only @ 9 %, while in respect of the 2nd and 3rd loans, it was originally stipulated @ 14.25 %, which was supposed to be converted as 'V-rent Scheme', on generating rent form the concerned tenants, on which event, the rate of interest was agreed to be reduced to @ 9%.
3. The learned counsel for the petitioner submits that, there was absolutely no dispute till the year, 2002 and thereafter arose some difference of opinion with the concerned officer, in connection with a 'corruption case' registered by the CBI officials against the officers of the respondent Bank, in which the second petitioner is an eye witness. It was pursuant to this, that the officers of the respondent Bank, chose to harass the petitioner and the rate of interest originally agreed in respect of the first loan was unilaterally enhanced to be charged @ 14.25% and in respect of the other two term loans, even after generating funds by way of rent, they were not converted to 'V-Rent Scheme' as agreed so as to bring down the rate of interest from 14.25% to 9 %. The learned counsel submits that, because of the recalcitrant attitude pursued by the Bank, the petitioner was constrained to file two civil suits before the concerned Civil Court, wherein interim order of injunction was passed, which is still subsisting, whereby the respondent Bank has been prevented from raising interest above the rate of 9% in respect of the 'housing loan'.
4. The respondent has filed a detailed counter affidavit explaining the sequence of events and also producing copies of the relevant documents as Annexure R1 (a) to R1 (h). With reference to the contents of the counter affidavit, the learned counsel for the respondents submits that, there is no basis for the averments and allegations in the Writ Petition and that the rate of interest is being charged in confirmity with the relevant guidelines issued by the 'RBI' from time to time and the respondent is bound to follow the said guidelines. It is also pointed out that, after effecting the construction utilizing the amount availed under 'housing loan', the petitioner used the same for 'commercial purpose' and this being the position, going by mandate given under RBI, the rate of interest is liable to be converted to commercial rate. As such, the EMIs to be remitted by the petitioner have gone up to Rs.1,40,080/- from Rs. 81,000/-. In spite of communicating the position, the petitioner has never chose to satisfy the enhanced EMIs, under which circumstances, the Bank was constrained to proceed with further steps under the relevant provisions of the SARFAESI Act , after declaring the account as NPA. The factual position as to the 'overdue' amount under the 'three' different loans are discernible from Exts.R1 (e) to R1 (h). The relevant stipulations issued by the RBI from time to time are not liable to be challenged under any circumstance, submits the learned counsel for the respondent Bank.
5. The learned counsel for the petitioner submits that, in view of the averments in paragraph 17 of the counter affidavit that the petitioner is still at liberty to take remedial measures to avoid consequences of remaining the account as 'NPA', the petitioner has thought it fit to satisfy the
