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2009 Supreme(Online)(KER) 40441
HIGH COURT OF KERALA
C.K. ABDUL REHIM, J
K.K.RAKHEE CHANDRAN – Appellant
Versus
STATE BANK OF TRAVANCORE & OTHERS – Respondent
WP(C)/31706/2009
MR.C.P.CHANDRASEKHARAN (CALICUT), MR.M.SHAJU PURUSHOTHAMAN, MR.SATHISH NINAN
The court established that it would not interfere with ongoing SARFAESI proceedings at the notice stage when alternate remedies exist.
Headnote:
SARFAESI - Securitization - Section 13(2) - The court upheld that it cannot interfere with proceedings at the notice stage under the SARFAESI Act due to available alternate remedies, allowing a two-month abeyance for debt settlement.
Fact of the Case:
The petitioner, a guarantor, challenged proceedings under the SARFAESI Act initiated by banks, claiming that no coercive steps should be taken against him, despite the third party borrower defaulting on the loan.
Finding of the Court:
The court noted the proceedings were at the notice stage, restricting its intervention and highlighting the availability of an appeal. It allowed a two-month period for the parties to settle their dues.
Issues: Whether the court could interfere with SARFAESI proceedings at the notice stage and the rights of the guarantor against coercive measures.
Ratio Decidendi: The court emphasized the importance of exhausting alternate remedies before intervening in SARFAESI proceedings, allowing a temporary stay to facilitate settlement.
Final Decision: The writ petition is disposed of, directing the respondents to keep coercive steps in abeyance for two months.
J U D G M E N T
1. Challenge in this writ petition is against proceedings initiated by respondents 1 & 2 under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). Since the proceedings is only at the stage of notice under Section 13 (2) of the Act, this court could not interfere with the matter at present, especially in view of the alternate remedy of appeal available under the statute against further steps.
2. Contention of the petitioner is that he is only a guarantor who had offered immovable property as security to facilitate the 3rd respondent to avail the loan from the 2nd respondent Bank. Complaint of the petitioner is that the Bank is not taking any coercive steps against the
3rd respondent-borrower, who had committed default.
3. However, the 3rd respondent who entered appearance through counsel submitted that he is ready and willing to make payment of the entire outstanding within a period of two months. On the basis of the above submission learned counsel for the petitioner requested for a limited relief of directing the respondents to keep in abeyance further coercive steps under the SARFAESI Act for a period of two months, within such time the petitioner as well as the
3rd respondent will clear the entire dues.
4. Eventhough the respondent Bank is not favouring in granting such relief, considering the facts and circumstances of the case, I am of the opinion that some indulgence can be shown in the matter in permitting the petitioner and the 3rd respondent to pay off the entire liability within two months.
5. Accordingly the writ petition is disposed of directing the respondents 1 & 2 to keep in abeyance further coercive steps under the SARFAESI Act for a period of two months from today, in order to facilitate the petitioner and the 3rd respondent to pay the entire liability.
6. It is made clear that on the event of default in payment of the liability within the period stipulated above, the respondents will be free to proceed with further steps under the SARFAESI Act and on such event the petitioner as well as the 3rd respondent will be precluded from raising any subsequent challenge against such proceedings either before this court or before any other forum.
C.K. ABDUL REHIM JUDGE
