The court highlighted limited intervention in SARFAESI Act matters, emphasizing borrowers' eligibility for One-Time Settlement is governed by strict criteria; judicial interference is reserved for exceptional circumstances.

JUDGMENT

Muralee Krishna S., J.

Respondents 1 and 2 in W.P.(C)No.27100 of 2025 filed this writ appeal under Section 5 (i) of the Kerala High Court Act , 1958, challenging the judgment dated 25.07.2025 passed by the learned Single Judge in that writ petition.

2. The respondent, who is the proprietor of a poultry farm, availed altogether five loans from South Indian Bank Ltd., Thrissur Main Branch, for the purpose of his poultry farm and also for other businesses conducted by his family members. Though a portion of the loans were repaid, according to the respondent, as on the date of filing of the writ petition, an amount of Rs.5.66 Crores was the total liability outstanding in those five loan accounts. Since the repayment was defaulted, the Bank converted the loans into a Non Performing Asset (‘NPA’ in short) and initiated proceedings under the Provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘ SARFAESI Act ’ for short). Thereafter, Ext.P1 Possession Notice dated 06.08.2024 and Ext.P2 notice under Section 13(8) of the SARFAESI Act dated 27.08.2024 were issued by the 1^st appellant to the respondent. On receipt of Exts.P1 and P2, the respondent and his family members offered One-Time Settlement (‘OTS’ in short) of the loans, by Exts.P3 and P4 letters dated 28.03.2025 and 11.07.2025, respectively. In Ext.P4, the respondent offered to close the entire liability by paying a sum of Rs.3 Crores as OTS, of which 10% can be paid immediately. Meanwhile, the respondent received Ext.P5 notice dated 08.11.2024 from an Advocate Commissioner appointed by the Chief Judicial Magistrate Court, Thrissur, in Crl.M.P.No.10656 of 2024. On receipt of Ext.P5 notice, the respondent again submitted Ext.P6 representation dated 18.07.2025 to the appellants, reiterating the offer for OTS. Thereafter, the respondent approached this Court with the writ petition filed under Article 226 of the Constitution of India seeking the following reliefs:

“i. Issue writ in the nature of the Mandamus commanding respondents 1 and 2 to consider Ext P3, P4 and P6 representation and permit the petitioner and his family members to settle the amount due to the 2^nd respondent as a One-time settlement as requested in Ext P3, P4 and P7.

ii. In the alternative issue writ in the nature of mandamus commanding respondents to regularise the loans by paying the interest portion of the amount and make the said loans operational within such time as may be fixed by this Hon’ble Court.

iii. issue writ in the nature of mandamus commanding respondents to permit the petitioner to pay off the amount due to the 1^st respondent as mentioned in Ext P7 within 6 months.”

3. On 25.07.2025, the learned Single Judge disposed of the writ petition by the impugned judgment. Paragraphs 2 to 4 and the last paragraph of that judgment read thus:

“2. The learned counsel for the petitioner would submit that the petitioner may be permitted to clear the liability in instalments.

3. It was submitted on behalf of the respondent Bank that the petitioner committed default in repayment of the loan and the outstanding amount as on 25.07.2025 is Rs.5,11,52,686/- (Rupees five crores eleven lakhs fifty two thousand six hundred and eighty six only). It was further submitted that though proceedings for recovery have been initiated, as a matter of indulgence, the respondent Bank is willing to accept repayment of the outstanding amount in limited instalments. This is recorded.

4. In view of the above, I am of the view