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2010 Supreme(Online)(KER) 22067
HIGH COURT OF KERALA
P.R.RAMACHANDRA MENON, J
ABIDE C.H – Appellant
Versus
NORTH MALABAR GRAMIN BANK – Respondent
WP(C)/7266/2010
ADV. MR. S.MOHAMMED AL RAFI, R1 ADV. MR. DEVAN RAMACHANDRAN, MR. K.M.ANEESH, MR. SANTHOSH KUMAR.K.
A bonafide purchaser must settle liabilities to the bank under the SARFAESI Act to secure their interest in the property after a loan default.
Headnote:
SARFAESI - Property - SARFAESI Act 2002 Section 13 - The court discussed the enforcement of security interests under the SARFAESI Act, affirming the bank's right to proceed against the borrowers while also allowing the bonafide purchaser to clear the outstanding amount in installments.
Fact of the Case:
The petitioner, a bonafide purchaser, challenged actions taken by the Bank under the SARFAESI Act to recover dues from the original borrowers, claiming ignorance of the security interest.
Finding of the Court:
The court acknowledged the Bank's legal right under the SARFAESI Act to act against the borrowers. It permitted the petitioner to pay the liability in installments to save the property, subject to conditions.
Issues: Whether the petitioner, as a bonafide purchaser, can contest the Bank's recovery actions under the SARFAESI Act as a total stranger to the Bank.
Ratio Decidendi: The court held that the SARFAESI Act's provisions allow a bank to pursue recovery against the borrower despite potential disputes about the property ownership that may involve a bonafide purchaser.
Final Decision: The petitioner permitted to clear liability in installments; recovery proceedings against property kept in abeyance.
JUDGMENT
The petitioner is before this Court being aggrieved of the steps taken by the respondent Bank under the SARFAESI Act, seeking to realize the amount stated as due from the borrowers of a loan availed from the Bank, from whom the petitioner had purchased the property, without knowing the security interest created over the said property. The learned counsel for the petitioner submits that, the third and fourth respondents herein had secured a loan from the second respondent Bank, creating security interest over the property and the petitioner was a bonafide purchaser.
2. The learned counsel for the Bank, with reference to the contents of the statement, submits that the Writ Petition is not maintainable, as the petitioner is a total stranger as far as the Bank is concerned and the action being pursued by the Bank is only against the 3rd and 4th respondents/borrowers and the property over which security interest was created, which hence is perfectly in tune with the relevant provisions of the law. It is also stated that, by virtue of the relevant provisions of the Act, the rights and liberties of the Bank stands concluded and secured, notwithstanding anything contained in any other provisions of law.
3. The learned counsel for the petitioner submits that, the only grievance now pressed before this Court is that, the petitioner might be permitted to clear the liability to the Bank in a phased manner. Despite the service of notice to the 3rd and 4th respondents, nobody has entered appearance on their behalf.
4. Taking note of the submissions made by the learned counsel for the petitioner and that total outstanding liability will be nearly Rs. 10 lakhs, the petitioner is directed to clear the entire liability, if he wants to save the property in question, by way of 6 equal monthly installments; the first of which shall be effected on or before the 20th of June, 2010 to be followed by the similar installments to be effected on before the 20th of the succeeding months. Subject to this, the recovery proceedings, stated as being pursued against the petitioner, shall be kept in abeyance. It is also made clear that, if any default is committed by the petitioner in satisfying the installments as above, the Bank will be free to proceed with further steps for realization the entire amount in a lump sum, from the stage where it stands now. The rights and liberties between the petitioner and respondents 3 and 4 are left open.
P. R. RAMACHANDRA MENON, JUDGE kmd
