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2018 Supreme(Online)(KER) 38327
HIGH COURT OF KERALA
P. B. Suresh Kumar, J
ARAVINDAKSHAN.V. – Appellant
Versus
KOZHIKODE DISTRICT CO-OPERATIVE BANK LTD – Respondent
WP(C)/8275/2018
SRI.S.K.SAJU, SRI.P.C.SASIDHARAN, SC, KOZHIKODE DISTRICT CO-OPERATIVE BANK
Courts can grant debtors relief by allowing instalment repayments if they demonstrate genuine inability to pay.
Headnote:
Loan - Proceedings under Securitisation Act - [Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, Sections Referenced] - Court directed repayment in instalments while considering the petitioner's inability to pay due to uncontrollable circumstances, balancing creditor rights with borrower's situation.
Fact of the Case:
Petitioner obtained a term loan from a bank but defaulted on repayments. The bank initiated proceedings under a specific financial act for recovery. The petitioner claimed non-payment was due to uncontrollable circumstances.
Finding of the Court:
The court acknowledged the petitioner's situation and allowed repayment of overdue amounts in six monthly instalments, while also mandating continued regular payments. The court balanced the rights of the bank with the petitioner's circumstances.
Issues: The main issue was whether the bank could proceed with recovery actions given the petitioner's claims of inability to pay due to circumstances beyond his control.
Ratio Decidendi: The decision hinged on the principle that while creditors have rights to recover dues, courts can intervene to allow reasonable repayment terms where debtors show genuine inability to discharge their liabilities.
Final Decision: Petitioner to repay overdue loan in instalments to defer coercive actions from the bank.
JUDGMENT
Petitioner availed a term loan from the Kozhikode District Co-operative Bank Limited (the bank). He has not remitted the instalments of the loan as agreed. Consequently, proceedings have been initiated by the bank under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the Act) for realisation of the outstanding in the loan account. The petitioner is aggrieved by the said proceedings.
2. Heard the learned counsel for the petitioner as also the learned counsel for the bank.
3. When the matter was taken up, the learned counsel for the petitioner pointed out that non-payment of the instalments of the loan by the petitioner was due to reasons beyond his control and not wilful and that if a reasonable time is granted, the W.P.(C.) No. 8275/2018 2 petitioner is prepared to liquidate the overdue in the loan account, so that he can repay the outstanding in the loan account in instalments.
4. Having regard to the facts and circumstances of the case as also the orders passed by this Court in similar writ petitions, this writ petition is disposed of as follows :
(i) The petitioner shall pay the overdue in the loan account with the interest due, in six equal monthly instalments, of which the first instalment shall be paid within one month from today. The petitioner shall also pay, in addition, the regular instalments of the loan on the due dates.
(ii) If the petitioner remits the overdue in the loan account as directed above, the bank shall regularise the loan account so as to enable the petitioner to liquidate the remaining liability in accordance with the terms of the loan.
(iii) Needless to say that if the petitioner liquidates the overdue as directed above, coercive action against the petitioner shall be deferred. It is, however, made clear that if the petitioner commits default in remitting any one of the instalments as directed, the proceedings initiated against the petitioner under the Act can be W.P.(C.) No. 8275/2018 3 continued.
