Court upheld the relevance of timelines in loan recovery processes under SARFAESI, allowing for temporary relief in securitisation actions based on the borrower's undertaking.

J U D G M E N T

Petitioner had availed of a short term loan from the 1st respondent Bank mortgaging 15.63 ares of land in R.S.No.20, 20/1 and 20/2 of Vazhappally East Village, the title deed of which is Ext.P1. It is stated that he has constructed a commercial complex availing of the said loan. Default was committed and apparently the Bank has proceeded against the property in terms of the provisions contained in the SARFAESI Act. At that stage, petitioner approached the Canara Bank, Temple Road Branch, Kottayam and according to the petitioner, the Bank has agreed to take over the liability and has valued the property, the report of which is Ext.P5. While the matter stands at that stage, 1st respondent Bank is proceeding with Securitisation proceedings and therefore the petitioner has approached this Court seeking a direction to the 1st respondent Bank not to take any coercive steps in order to enable the Canara Bank to take over the liability.

2. In this writ petition, petitioner has also filed an affidavit dated 28th of September, 2011, the relevant portion of which WPC No. 25473/11 :2 :

reads as under:-

“Subsequent to the filing of the writ petition on 24.9.11 the petitioner remitted an amount of Rs.15 lakhs through ING Vysya Bank in the loan amount. The petitioner undertakes that he is ready and willing to close the loan transaction within 60 days from today either by way of transfer of the loan transaction to another Bank or by remitting the entire amount. The petitioner undertakes before this Hon'ble Court that he will surrender the mortgaged properties with the Bank after the expiry of the said 60 days and will not raise any objection in respect of non publication of public notice through paper advertisement etc.

Hence I hereby undertakes that I will not raise any objection or contention in respect of the non publication of Notice through paper advertisement and will surrender the property without any objection on expiry of 60 days if the loan transaction is not closed either by way of transfer the loan from the respondents bank to another Bank or by remitting the amount.”

3. On behalf of the 1st respondent, Sri. Saji P.Joseph submitted that in pursuance to the Securitisation proceedings, the Bank has already taken possession of the property on 24/9/11 and that the Bank is proceeding to issue notice in terms of Rule 8 of the Securitisation Rules.

4. In the circumstances, in order to avert further proceedings, petitioner only seeks 15 days time in order to discharge the entire liability due to the 1st respondent and submits that, in the meanwhile, Bank may be directed to keep in abeyance further proceedings so that the Canara Bank will take over the liability and accept the property in question as security.

WPC No. 25473/11 :3 :

5. Having considered the submissions and also in the light of the undertaking in the affidavit dated 28th of September, 2011, I am inclined to think that the 15 days time sought for by the petitioner could be granted.

6. Therefore, I dispose of this writ petition with the following directions:-

(1) That the 1st respondent Bank which has taken possession of the building shall retain possession as of now.

(2) If the petitioner discharges the entire liability due to the Bank within 15 days from today, the possession of the building will be returned to the petitioner.

(3) In so far as the proceedings under the SARFAESI Act and the Rules are concerned, status quo as on date will be maintained for 15 days from today.

(4) In so far as the issuance of notice under Rule 8 is concerned, that also will be kept in abeyance and the Bank will be free to proceed with the matter after 15 days in view of the undertaking given by the petitioner in the affidavit filed by him.

ANTONY DOMINIC, JUDGE Rp