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2014 Supreme(Online)(KER) 25121
HIGH COURT OF KERALA
P.R.RAMACHANDRA MENON, J
MR ANIL RAVEENDRAN – Appellant
Versus
THE AUTHORIZED OFFICER, FEDERAL BANK – Respondent
WRIT PETITION (CIVIL) 21994/2014
The court established the right of borrowers to seek repayment options under financial distress while recognizing the legal avenues available to lenders for recovery.
Headnote:
Loan - Business Loan - SARFAESI Act Section List - The case concerns the challenge against recovery proceedings initiated under the SARFAESI Act due to the defaults in loan repayments, with the court allowing repayment in instalments contingent on prompt payment compliance.
Fact of the Case:
The petitioner, running a business, borrowed Rs.30,00,000 from the respondent Bank but defaulted on repayments due to market conditions. The Bank initiated recovery under the SARFAESI Act, prompting the writ petition.
Issues: Whether the petitioner could challenge the Bank's recovery actions under the SARFAESI Act and seek to repay the loan in installments.
Ratio Decidendi: The court affirmed that while the Bank acted within its rights under the SARFAESI Act, the borrower could be permitted to repay the loan in installments, conditional on timely payments.
Final Decision: The writ petition was disposed of allowing repayments in installments.
JUDGMENT
The petitioner is running an establishment in the name and style 'M/s. A&S Steels', doing wholesale and retail business. In connection with the business, the petitioner availed an amount of Rs.30,00,000/- (Rupees Thirty lakhs only) from the respondent Bank on 16.02.2013, creating security interest over the property in question. Because of some unforeseen circumstances and adverse market conditions, the repayment could not be effected on time, which made the Bank to proceed with further steps under the ' SARFAESI Act ', this in turn is under challenge in this writ petition.
2. When the matter came up for consideration before this Court on 22.08.2014, coercive proceedings were intercepted, subject to satisfaction of a sum of Rupees One lakh within two weeks.
3. The learned counsel for the petitioner submits that, since the market was lying closed for 'Onam', no transaction could take place and that steps are being taken on war footing to satisfy the condition, which will be effected forthwith.
4. With regard to the prayer for regularisation of the loan account, the learned counsel for the respondent Bank submits that, no proper business is being conducted by the petitioner and that there are no proper returns as well. It is also stated that, it is a business loan and that, the account has already been declared as 'N.P.A.', adding that the proceedings pursued by the Bank are perfectly within the four walls of law and hence not assailable under any circumstances.
5. The learned counsel for the petitioner submits that, the petitioner does not intend to dispute the liability and the prayer is only to enable the petitioner to clear the entire amounts of the loan transaction by way of instalments.
6. After hearing both the sides, the petitioner is set at liberty to clear the entire loan amount by way of 'ten' equal monthly instalments, the first of it shall be effected on or before the 30th of this month, followed by similar installments, to be effected on or before the 30th of the succeeding months. Subject to this, the recovery proceedings shall be kept in abeyance. It is made clear that, if any single default is committed with regard to the satisfaction of the above instalments, it will be open for the respondent Bank to proceed with further steps for realization of the entire amount in lump, by pursuing such steps from the stage where it stands now.
The writ petition is disposed of.
P.R. RAMACHANDRA MENON, JUDGE sp
