A borrower remains liable for interest on an outstanding loan facility until the debt is fully discharged, and cannot claim a waiver of interest on the ground of external criminal proceedings if they failed to timely liquidate the liability as demanded by the creditor.

J U D G M E N T

The petitioners are husband and wife. The 2^nd respondent is the sister of the 1^st petitioner. The petitioners had pledged certain gold ornaments with the 1^st respondent Bank and availed themselves of certain credit facilities.

2. The petitioners contend that the 1^st respondent Bank issued Ext.P1 notice dated 29.10.2021, proposing to auction the pledged gold ornaments if the liability was not discharged within 15 days from the date of receipt of the notice. The petitioners further state that, upon receipt of Ext.P1, they sought to issue a lawyer's notice, as evidenced by Ext.P2, pointing out that the action proposed by the 1^st respondent Bank was unjustified. 3. In reply, the Bank issued Ext.P3 reply notice, making reference to certain police complaints filed by the 2^nd respondent herein, as well as the pendency of certain criminal cases at the Beppur Police Station. At the same time, in Ext.P3, the 1^st respondent Bank specifically pointed out that both the petitioners and the 2^nd respondent had committed wilful default in repayment of the loan accounts and that the petitioners were liable to liquidate the outstanding dues together with future interest in order to avert the proposed auction proceedings.

4. The petitioners have approached this Court contending that, notwithstanding the above circumstances, Exts.P4 and P5 auction notices were issued by the 1^st respondent Bank, addressed to the 1^st petitioner as well as the 2^nd respondent.

5. Heard Sri.Sergi Joseph Thomas, the learned counsel for the petitioners, Sri.Pauly V. Mathew, the learned Standing Counsel for the 1^st respondent and Sri.P.V. Anoop, the learned counsel for the 2^nd respondent herein.

6. The short issue arising for consideration in this writ petition is whether the petitioners are entitled to the return of the gold ornaments without any liability to pay interest from the date of Ext.P1, as contended by Sri. Sergi Joseph Thomas, learned counsel for the petitioners.

7. The petitioners submit that they were ready and willing to discharge the outstanding liability in the loan account as early as the year 2021 itself. According to them, it was only on account of the insistence of the 1st respondent Bank, on account of the pendency of the criminal cases referred to above, that the gold ornaments could not be released to them and consequently, they were prevented from redeeming the pledged gold ornaments. Therefore, according to them, at least from the date of Ext.P1, no interest could be charged on the outstanding loan amount.

8. At the same time, this Court notices that Ext.P1 has informed the 1^st petitioner as under:

“Now there is due and payable by you to the bank under the credit/loan facility a sum of Rs.6,17,529.00/- (Rupees Six Lakh Seventeen Thousand Five Hundred Twenty Nine only) inclusive of interest upto 28/10/2021.

We hereby finally call upon you to pay to the bank the said sum of Rs.6,17,529.00/- with interest at 10% compounded quarterly/half yearly from 28/10/2021 till payment. As you have failed to repay the liability in the above loan we hereby again request you to clear the liability/close the loan within 15 days from the date of receipt of hereof, failing which the Bank will be constrained to sell the gold ornaments pledged by you with the Bank by following due procedure and appropriate the sale proceeds to your loan account by conducting auction on the date and place as mentioned hereunder.”

9. A reading of Ext.P1 makes it clear that the Bank had specifically informed the 1^st petitioner that the proposed auction proceedings were being initiated solely on account of the fai