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2023 Supreme(Online)(KER) 1356
HIGH COURT OF KERALA
N.NAGARESH, J
K. JOHN @ ASHOK – Appellant
Versus
JOHN JOSEPH – Respondent
RSA 451/2023
PADMALAYAN.P.P, SRI.DEVAPRASANTH P.J, SMT.SMINI JOSE
A debtor facing coercive proceedings may secure relief and time to repay if defaults are due to circumstances beyond their control, provided sufficient security is offered.
Headnote:
Loan - Coercive Proceedings - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Sections discussed regarding the enforcement of security interests and the timelines for repayment.
Fact of the Case:
The petitioner was coerced by the Bank into repayment of a Term Loan due to default caused by an accident and subsequent surgery, despite initial timely payments. The Bank initiated coercive measures for recovery under the applicable Act.
Finding of the Court:
The court noted the petitioner's prior timely payments and the unforeseen circumstances causing subsequent defaults, concluding that a limited, reasonable time to repay was warranted to avoid undue hardship.
Issues: Whether the petitioner should be granted time to repay overdue loan amounts before coercive measures are continued by the Bank.
Ratio Decidendi: The court emphasized balancing the rights of the creditor to enforce repayment with the need to provide the debtor a fair opportunity to rectify defaults caused by extenuating circumstances.
Final Decision: The writ petition is disposed of allowing the petitioner 10 months to repay overdue amounts, with conditions regarding future compliance.
J U D G M E N T
Dated this the 15th day of December, 2023 The petitioner has approached this Court aggrieved by the coercive proceedings for recovery of financial advance made by the Peoples Urban 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 .
2. The Bank paid ₹10 lakhs to the petitioner as Term Loan in the year 2022. 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 an accident met by him and he was subjected to an operation. 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 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 2022. 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 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 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 is ₹9,58,859/- and the overdue amount as on 14.12.2023 is ₹1,26,519/-.
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 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 overdue amount of ₹1,26,519/- in 10 equal and consecutive monthly instalments along with accruing interest and other Bank charges, if any. The first instalment shall be made on or before
15.01.2024.
(ii) If the petitioner commits default in making payments as directed above, the respondent will be at liberty to continue with coercive proceedings against the petitioner in accordance with law.
(iii) The petitioner shall also pay current EMIs along with the aforesaid paymen
