Back
2025 Supreme(Online)(Ker) 38248
IN THE HIGH COURT OF KERALA AT ERNAKULAM
N. NAGARESH, J
NIMIL K.K – Appellant
Versus
THE AUTHORIZED OFFICER, HDFC BANK – Respondent
WP(C) NO. 16429 OF 2025
For the Appellants/Petitioners: SRI.RAMEEZ NOOH, SHRI.DANIC ANTONY, SMT.FATHIMA K., SMT.SHAFNA SINU, SHRI.AMIN ALI ASHRAF
For the Respondents: SRI. M. PREMCHAND
The court affirmed that once a loan is settled, a borrower is entitled to a No Due Certificate without undue conditions, emphasizing fairness in creditor-borrower relationships.
Headnote:(A) SARFAESI Act - Issuance of No Due Certificate - Petitioner availed a loan for a vehicle, defaulted, and reached a One Time Settlement (OTS) which was paid in full. Despite compliance, the bank denies issuing the certificate based on unrelated loan demands. The court directed issuance due to the settled status of the account. (Paras 2-7)
(B) Rights of Borrowers - A borrower who has settled dues is entitled to receive a No Due Certificate without further conditions unrelated to the loan in question. The court emphasized fairness in procedures related to loan settlements. (Paras 2 and 7)
Facts of the case:
The petitioner had availed a vehicle loan and faced procedural challenges from the bank regarding the issuance of a No Due Certificate despite having fulfilled the settlement terms.
Findings of Court:
The petitioner cleared all liabilities concerning the vehicle's loan; thus, the bank's refusal to issue the certificate was unwarranted.
Issues: The primary issue revolved around the bank's refusal to issue the No Due Certificate despite full settlement of the loan.
Ratio Decidendi: The court concluded that a No Due Certificate must be issued once the borrower has fulfilled their obligations, reaffirming the rights of borrowers under the SARFAESI Act.
Result: The writ petition was disposed of directing the 1st respondent to issue the No Due Certificate.
| Table of Content |
|---|
| 1. loan settlement acknowledgment (Para 2 , 6) |
| 2. issuance of no due certificate (Para 3 , 7) |
| 3. bank's legal obligations (Para 5) |
J U D G M E N T
Dated this the 26th day of June, 2025 The petitioner is aggrieved by the arbitrary and unlawful action of the 1st respondent-Bank, which has resulted in denial of No Due Certificate (NDC) despite full and final settlement of a Vehicle Loan.
2. The petitioner had availed a loan under Credit Account No.57500000602262 for the purchase of a Bharat Benz 1014R BSIV-7, hypothecated to the respondents. Due to financial difficulties, the petitioner defaulted, but expressed willingness to clear the dues. However, the respondents initiated proceedings under the SARFAESI Act without granting a fair opportunity to settle the dues. Following negotiations, a One Time Settlement (OTS) was reached for ₹12,00,000/-, which the petitioner paid in full on 24th and 25th March, 2025. The 2nd respondent acknowledged the payment and assured via e-mail dated 24.03.2025 that a No Due Certificate would be issued within seven days.
3. Despite this, the respondents failed to issue the certificate and have now made an arbitrary demand that an unrelated loan account be cleared as a condition for issuing the No Due Certificate.
4. Counsel entered appearance on behalf of the
1st respondent and submitted that the loan account of the petitioner has been transferred to the 2nd respondent-Reliance Asset Reconstruction Company. Therefore, without clearing the loan advanced to the 2nd respondent, No Due Certificate cannot be issued to the petitioner.
5. I have heard the learned Counsel for the petitioner and the learned Counsel representing the respondents.
6. It is not in dispute that the loan liability of the petitioner has been transferred by the 1st respondent to the 2nd respondent. Ext.P2 would indicate that there was a One Time Settlement offer whereunder the petitioner was required to pay ₹12 lakhs for settlement of the loan account. Ext.P4 would indicate that the petitioner has remitted requisite amounts to the account number mentioned in Ext.P2. It is also discernible from Ext.P5 that the 2nd respondent has acknowledged that they have received ₹12 lakhs from the petitioner towards the One Time Settlement. It is evident that the petitioner has cleared all loan liabilities in respect of vehicle No.KL-07CS-3833 towards the 2nd respondent.
7. In view of the afore facts, the 1st respondent will not be justified in desisting from issuing No Due Certificate in favour of the petitioner, as the loan account stands settled.
The writ petition is, therefore, disposed of directing the
1st respondent to issue No Due Certificate to the petitioner in respect of his vehicle No. KL-07CS-3833. No Due Certificate shall be issued within a period of two weeks.
