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2017 Supreme(Online)(KER) 47720
HIGH COURT OF KERALA
A. K. Jayasankaran Nambiar, J
SHRI BABU GEORGE – Appellant
Versus
THE AUTHORISED OFFICER & CHIEF MANAGER – Respondent
WRIT PETITION (CIVIL) 23466/2017
The court established that financial hardship may warrant flexibility in debt repayment terms under the SARFAESI Act.
Headnote:
SARFAESI - Recovery - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Sections 13(2) - Guidance on recovery proceedings and installment payment arrangements for debtors in default.
Fact of the Case:
The petitioners defaulted on four loans from the respondent bank, leading to recovery actions under the SARFAESI Act. They sought to contest these actions, requesting the opportunity to pay the outstanding amount in installments due to financial hardship.
Finding of the Court:
The court recognized the petitioners' financial difficulties and allowed them to repay their total outstanding debts in 12 monthly installments, placing a hold on further recovery actions as long as the installments were adhered to.
Issues: Whether the petitioners should be allowed to repay their loan in installments instead of facing immediate recovery under the SARFAESI Act.
Ratio Decidendi: The court held that under the SARFAESI Act, debtors facing genuine financial hardship may be granted leeway to repay their debts through structured installment plans, protecting their interests while respecting creditor rights.
Final Decision: Petitioners may repay outstanding loans in 12 installments, with recovery proceedings stayed pending compliance.
JUDGMENT
The petitioners, who had availed four loans from the respondent bank, defaulted in repayment of the same. Consequently, the respondent bank initiated proceedings under the Securitisation and Reconstructions of Financial Assets and Enforcement of Security Interest Act, 2002, hereinafter referred to as the 'SARFAESI Act', to recover the loan amounts. Ext.P1 is the sale notice issued to the petitioners under Section13(2) of the SARFAESI Act. In the writ petition, the petitioners impugn the steps initiated by the respondent bank for recovery of the loan amounts.
2.I have heard the learned counsel appearing on behalf of the petitioners as also the learned Standing Counsel appearing on behalf of the respondents.
3.On a consideration of the facts and circumstances of the case and the submissions made across the bar, I note that the sole prayer of the petitioners is to permit them to remit the balance amounts outstanding to the bank in easy installments. Taking into account the plea of financial hardship raised by the petitioners, I dispose the writ petition with the following directions:-
(i) The total outstanding amount, in respect of the loans availed by the petitioners, as on today, is stated to be Rs.28,12,438/-. Accordingly, if the petitioners pay the aforesaid amount of Rs.28,12,438/- together with accrued interest, in 12 equal and successive monthly installments commencing from 31.07.2017, then the recovery steps initiated against them by the respondent bank shall be kept in abeyance.
(ii) It is made clear that if the petitioners commit a default in respect of any of the installments, they will lose the benefit of this judgment and the respondent bank will be free to continue the recovery proceedings against them from the stage at which they presently stand.
(iii)The respondent bank shall furnish the petitioners with an up-to-date statement, of the dues position together with interest, within 10 days from today so as to enable the petitioners to discharge their liability in accordance with the directions in this judgment.
