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2026 Supreme(Online)(Ker) 32060
IN THE HIGH COURT OF KERALA AT ERNAKULAM
Gopinath P., J
Hamsa Malladi Kizhakkambedath – Appellant
Versus
Koyyode Service Co-Operative Bank – Respondent
WP(C) NO. 11859 OF 2026
For the Appellants/Petitioners: Abdul Raoof Pallipath, E.Mohammed Shafi, Prajit Ratnakaran, Anju Dony
For the Respondents: K.C.Santhoshkumar, K.K.Chandralekha
The High Court may grant a conditional installment repayment scheme to a defaulting borrower to forestall the confirmation of a recovery auction sale, provided the borrower deposits a substantial upfront amount and adheres to a strict payment schedule.
Headnote:The present case involves the recovery of loan amounts initiated by a cooperative bank against the petitioners who had defaulted on two loan accounts. The court noted that the mortgaged property had been auctioned by the bank but the sale remained unconfirmed. The court observed that equity demands an opportunity for the borrowers to settle their liabilities given a concrete repayment plan. The central issue is whether the court should grant an installment-based repayment scheme to the defaulters to prevent the confirmation of the auction sale. The court reasoned that in exercise of its jurisdiction, it could facilitate a settlement by allowing the petitioners to pay a substantial upfront amount followed by equated monthly installments, thereby preserving the possibility of canceling the auction. The court permitted the petitioners to repay the outstanding liability in specified installments with the condition that failure to comply would entitle the bank to proceed with the sale confirmation.
| Table of Content |
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| 1. court intervention in recovery proceedings for loan default. (Para 1 , 2) |
| 2. granting structured repayment plans to prevent auction sale confirmation. (Para 4 , 5) |
JUDGMENT
The 1st petitioner availed two separate loans (Loan Account No.MTG-1014 and Loan Account No.MTG-1026) from the 1st respondent Bank. The 2nd petitioner, who is the wife of the 1st petitioner, stood as a guarantor for both the loans. On default being committed, proceedings have been initiated against the petitioners for recovery of the amounts due from them, prompting the petitioners to approach this Court by filing the above writ petition.
2. During the course of hearing, petitioners have confined the relief to an opportunity for repaying the outstanding amount in instalments.
3. The learned counsel appearing for the
1st respondent bank submits that the petitioners have not complied with the condition imposed in the interim order dated 26-03-2026. It is submitted that the mortgaged properties have already been auctioned and were purchased by the bank. It is submitted that since the sale has not been confirmed, if the petitioners pay a substantial amount towards the loan liability immediately and the balance amount in some limited instalments, the sale can be cancelled. It is submitted that the outstanding amount in respect of the first loan (Loan Account No.MTG-1014) is Rs.25,51,878/- and the outstanding amount in respect of the second loan (Loan Account No.MTG-1026) is Rs.21,65,757/-.
4. Having regard to the circumstances of the case and the submissions made as recorded above, I am of the view that the petitioners can be granted an opportunity to repay the outstanding amount in instalments on a condition that they will pay a sum of Rs.5,00,000/- on or before 30-06-2026 and balance outstanding amount along with any accrued interest, costs and charges in 10 instalments.
5. Accordingly, there will be a direction to the respondent bank to accept repayment of the entire outstanding amount of Rs.47,17,635/- along with any accrued interest, costs and bank charges from the petitioners in the following manner:
i. The petitioners shall pay an amount of Rs.5,00,000/- (Rupees Five Lakh only) on or before 30-06-2026. The balance outstanding amount (Rs.42,17,635/-) shall be repaid in 10 equated monthly instalments, along with any accrued interest, costs and charges. The first instalment shall be paid on or before
31-07-2026;
ii. The subsequent instalments shall be paid on or before the last working day of every succeeding months;
iii.In the event of default of any one instalment, the respondent bank shall be entitled to proceed in accordance with the law;
iv.In order to enable the petitioners to repay the entire amounts, all coercive proceedings shall be kept in abeyance.
If the petitioners pay the entire amount, as directed above, the sale shall be cancelled. However, if the petitioners fail to pay any instalment in the manner permitted above, it will be open to the respondent bank to continue with the proceedings, including for getting the sale confirmed in its name.
The writ petition is disposed of as above.
