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2008 Supreme(Online)(KER) 774
HIGH COURT OF KERALA
ANTONY DOMINIC, J
V.S.MADHU – Appellant
Versus
THE AUTHORIZED OFFICER, UCO BANK – Respondent
WP(C)/2557/2008
SRI.G.BALAMURALEEDHARAN (PARAVUR), SRI.MATHEWS V.JACOB (PARAVUR), SRI.N.T.NANDAKUMAR (PARAVUR), SRI. GEORGE K. VARGHESE, SC
The court established the balance between creditors' rights and debtors' circumstances under the Securitisation Act, allowing deferment of proceedings upon partial payment.
Headnote:
Securitisation - Proceedings - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Sections 13(2) - The court granted an opportunity to petitioners to pay due amounts, interpreting the provisions to balance the rights of the bank and the hardships of the borrowers.
Fact of the Case:
Petitioners challenged proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act initiated due to loan defaults, requesting an opportunity to pay due amounts after the bank took symbolic possession.
Finding of the Court:
The court recognized the petitioners’ chronic default but decided to allow them an opportunity to pay off their dues to prevent distress sale, subject to specific payment terms.
Issues: Whether the petitioners should be given another opportunity to pay their dues after the bank initiated possession proceedings under the Act.
Ratio Decidendi: The court held that while the bank was within its rights to act against the defaulters, fairness necessitated giving the petitioners a chance to remit part of their dues.
Final Decision: The writ petition was disposed of, allowing the petitioners to pay their dues in installments to avoid further action by the bank.
J U D G M E N T
The challenge in this writ petition is against proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 initiated against the petitioners. Petitioners submit that they have availed of a loan in January, 2004. Following the defaults that were committed, the Bank initiated proceedings and notice issued under Section 13 (2) was not even responded. Finally the Bank issued Ext.P2 possession notice and counsel submits that symbolic possession has also been taken over. It is thereafter that petitioners submitted Ext.P3 representation requesting for permitting them to pay the dues within six months from 1/3/08. As it did not evoke any response from the Bank, this writ petition has been filed.
WPC 2557/08 :2 :
2. Counsel for the Bank submits that petitioner is a chronic defaulter and that despite the opportunities given, the petitioners did not clear the arrears. On this ground, it is submitted that the petitioners do not deserve any sympathy. True, Bank cannot be faulted for the action that it has taken and the symbolic possession of the property that it has taken over.
3. However, having regard to the fact that the only request made by the counsel for the petitioners is for an instalment facility to discharge the liability, I am inclined to think that yet another opportunity should be given to the petitioners for safeguarding the property from a distress sale.
In view of the above, I dispose of this writ petition directing that within two weeks from today, petitioners shall remit 1/4th of the amount that is due to the Bank. Subject to such payment, further proceedings initiated against the petitioners shall be deferred. Thereafter the balance will be permitted to be paid by the petitioners in three equal monthly instalments, first of which will be payable on the 15th of February, 2008 and the subsequent WPC 2557/08 :3 :
instalments payable on 15th of every succeeding month. It is clarified that in case the petitioners commit default in paying any one of the instalments, Bank will be free to continue the action it has taken, without further notice to the petitioners.
ANTONY DOMINIC, JUDGE.
Rp
