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2010 Supreme(Online)(KER) 1826
HIGH COURT OF KERALA
P.R.RAMACHANDRA MENON, J
R.SWAYAM PRABHA – Appellant
Versus
THE FEDERAL BANK LIMITED AND ANOTHER – Respondent
WP(C)/5477/2010
MR. M.V.THAMBAN, MR. R.REJI, MR. B.BIPIN, MR. MOHAN JACOB GEORGE, MS. P.V.PARVATHI, MS. REENA THOMAS, MR. L.RAM MOHAN
The SARFAESI Act applies to loans superior to Rs. 1 lakh, and the court endorsed the borrower’s opportunity to regularize defaulted payments.
Headnote:
SARFAESI - Housing Loan - SARFAESI Act - Section 31(h) - Court clarified that the SARFAESI Act applies to loans above Rs. 1 lakh and upheld the bank's right to regularize the loan upon payment.
Fact of the Case:
The petitioner secured a housing loan of Rs. 75,000 but defaulted on payments. The Bank sought recovery through the SARFAESI Act despite an earlier decree in a civil suit.
Finding of the Court:
The court found that the SARFAESI Act was applicable based on the conclusive decision in Transcore Vs. Union of India, ensuring the bank's actions were lawful and that the petitioner could remedy default by timely payment.
Issues: Whether the provisions of the SARFAESI Act apply to loans below Rs. 1 lakh and if coercive steps can be initiated by the bank in this case.
Ratio Decidendi: The SARFAESI Act can be invoked for loans over Rs. 1 lakh, and the court supports the option for the borrower to settle overdue payments for account regularization.
Final Decision: The Writ Petition is disposed of with directions for payment to regularize the loan.
JUDGMENT
The petitioner had availed a housing loan of Rs. 75,000/- from the respondent Bank in the year 1998, creating equitable mortgage over the property in question. But, the repayment could not be effected on time, under which circumstance, the Bank proceeded with steps for getting the due amount cleared by approaching Sub Court, Mavelikkara by filing O.S.154 of 2002, wherein Ext.P2 decree was passed on 18.8.2004. Instead of proceeding with the matter to get the decree executed as provided under the relevant provisions of law, the respondent Bank has resorted to coercive steps under the SARFAESI Act , which is the grievance under challenge.
2. As discernible from the pleadings raised in the Writ Petition, the specific case of the petitioner is that the SARFAESI Act came into existence only in the year 2002 and hence the provisions of the said Act are not applicable in respect of the prior cause of action projected by the petitioner. It is also contended that, the proceedings are also hit by the stipulation under Section 31 (h) of the Act, as the amount in question does not exceed Rs. '1 lakh', obviously for the reason that the loan availed by the petitioner was only for Rs. 75,000/-
3. The learned counsel appearing for the respondent Bank submits that the idea and understanding of the petitioner as to the rights and liberties of the Bank are quite wrong and misconceived and contrary to the law declared by the Apex Court by virtue of the authorittive pronouncement in Transcore Vs. Union of India and another (AIR 2007 SC 712)
4. The learned counsel for the petitioner submits in the said circumstance, that the petitioner does not intend to press any of the contentions raised in the Writ Petition, nor does he intend to avail the statutory remedy by approaching the DRT. The only relief pressed before this Court is to permit the petitioner to clear the entire 'overdue' amount, giving some reasonable time and to have the loan account regularized.
5. The learned counsel appearing for the Bank submits that, on payment of a sum of Rs.50,000/-, the loan account of the petitioner will be regularised and since the tenure of the account is over, balance liability shall be arrived at only after rescheduling the loan.
6. In the above circumstances, the petitioner is directed to deposit a sum of Rs. 50,000/- forthwith at any rate on or before 15th of July,2010; on which event the loan account of the petitioner will stand regularized. On clearing the 'overdue' amount as above, the Bank will reschedule the loan account and inform the petitioner with regard to the remaining liability and the monthly installments to be satisfied, so as to wipe off entire liability under the loan transaction. This shall be done within a further period of two weeks from the date of clearing the 'overdue' amount as above. The liability of the petitioner to satisfy the balance amount will be on the basis of the orders to be passed by the Bank restructuring the loan. It is made clear that. further repayments as above shall be made by the petitioner without fail and if any default is committed in satisfying the installments, the Bank will be at liberty to proceed with further steps in accordance with law, for realization of the entire amount in lump sum.
The Writ Petition is disposed of.
P. R. RAMACHANDRA MENON, JUDGE kmd
