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2009 Supreme(Online)(KER) 35988
HIGH COURT OF KERALA
C.K. ABDUL REHIM, J
J.JOHN – Appellant
Versus
STATE BANK OF INDIA – Respondent
WP(C)/30024/2009
SRI.NISHIN GEORGE VIJAYABABU, SRI.K.K.CHANDRAN PILLAI
The decision highlights the balance between enforcing loan recovery and accommodating borrowers' repayment capabilities.
Headnote:
Securitisation - SARFAESI Act - Section 13(4) - The court allowed petitioners to repay their loan in installments post-default, emphasizing the bank's flexibility in collection while warning of strict consequences for non-compliance.
Fact of the Case:
Petitioners challenged proceedings under the SARFAESI Act initiated by the State Bank of India due to loan repayment defaults, seeking permission for installment payments.
Finding of the Court:
The court acknowledged the bank's stance on defaults but ruled that petitioners could repay the debt in five monthly installments, halting further coercive actions on timely payments.
Issues: Whether the petitioners can be permitted to repay outstanding loans in installments under the SARFAESI Act despite previous defaults.
Ratio Decidendi: The court established that allowing installment payments respects the principles of debtor relief while circumventing impending enforcement actions under the SARFAESI Act.
Final Decision: Petitioners allowed to repay loans in 5 installments with conditions on future compliance.
J U D G M E N T
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1. In all these cases challenge is against proceedings initiated under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) by the common respondent, the State Bank of India. Pursuant to default committed in repayment of the loan accounts the respondent proceeded with steps under the SARFAESI Act and notices under Section 13(4) has now been published, which is Ext.P2 in WP(C).30024/09 and 30047/09 and Ext.P1 in WP(C). 29838/09 and 29844/09. According to the petitioners they have approached the Bank seeking indulgence for permitting payment of the balance outstanding within a reasonable time in installments. Since the Bank has not acceded to such requests these writ petitions are filed.
2. Heard standing counsel appearing for the respondent, who on the basis of instructions submitted that, there is serious default in all the loan accounts and no earnest efforts has been taken from the side of the petitioners to pay off the liability. However, the respondent is not standing in the way of permitting the petitioners in paying off the entire liability within a reasonable time.
W.P.(C).30024,30047,29838 & 29844/09 2
3. Having considered facts and circumstances of the cases I am of the opinion that the writ petitions can be disposed of permitting all the petitioners herein to pay off the entire liability due to the Bank along with future interest due thereon, in 5 (five) equal monthly installments starting from 30.11.09 and on or before the last day of the 4 succeeding months. If the installments as directed above is paid promptly, the respondent Bank shall keep in abeyance further coercive steps initiated pursuant to the notices issued under Section 13(4).
4. It is further directed that on payment of the 1st installment, the Bank shall issue a balance statement to the petitioners after crediting all payments and after considering possible waiver of interest/default interest and expenses.
5. It is made clear that on the event of default in payment of any of the installments as stipulated above the respondent Bank will be free to proceed with further steps pursuant to the notices already issued and on such event the petitioner 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.
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