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2017 Supreme(Online)(KER) 25134
HIGH COURT OF KERALA
K VINOD CHANDRAN, J
SHAJAN T U – Appellant
Versus
THE AUTHORISED OFFICER – Respondent
WRIT PETITION (CIVIL) 5504/2017
The court established that debtors may seek temporary relief from recovery under the SARFAESI Act if they demonstrate a commitment to a structured repayment plan.
Headnote:
SARFAESI - Housing Loan - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Sections discussed include provisions for loan recovery and debtor rights. The interpretation of the Act emphasizes conditions under which recovery proceedings may be initiated or held in abeyance, affecting the court's decision to permit specific repayment terms.
Fact of the Case:
The petitioner took a housing loan from the respondent Bank and defaulted on payments for twenty-two months, prompting the Bank to initiate recovery proceedings under the SARFAESI Act.
Finding of the Court:
The court assessed the petitioner’s financial situation and allowed a repayment plan contingent upon the petitioner making timely payments, thus balancing the interests of both parties while adhering to statutory provisions.
Issues: Key issues included whether the petitioner should be granted relief from recovery proceedings due to alleged financial hardship and whether the proposed payment plan was reasonable.
Ratio Decidendi: The court held that it could provide leniency in enforcement of recovery proceedings based on the petitioner's commitment to regular payments, as well as the conditions outlined in the SARFAESI Act regarding default.
Final Decision: The writ petition is disposed of with conditions requiring payment schedules to avoid recovery proceedings.
J U D G M E N T
The petitioners availed a housing loan from the respondent Bank. On default being committed the respondent initiated proceedings under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ('SARFAESI'
for short) against the property of the petitioner.
2. The learned Standing Counsel for the respondent Bank submits that there was no payment for twenty two months and the petitioner is a chronic defaulter. Only on the undertaking of the petitioner that there shall be a payment of Rs.50,000/- in three weeks, the petitioner is granted instalments for regularisation.
W.P.(C) No. 5504/2017
3. Considering the facts of the case and the alleged impecunious circumstances of the petitioner, this writ petition is disposed of on the following terms.
(i) The total defaulted arrears is said to be Rs.3,24,000/- as on date.
(ii) If the petitioner pays an amount of Rs.50,000/-
within three weeks, the respondent shall grant twelve monthly instalments for the payment of the balance arrears, starting from 10.04.2017, which shall be paid along with the regular EMIs, on the due dates.
(iii) Recovery proceedings shall be kept in abeyance on condition that the remittances as per this order are made without any default.
W.P.(C) No. 5504/2017 (iv) On the petitioner making two defaults in repaying either the instalments or the regular EMIs, the Bank shall resume the proceedings before the Chief Judicial Magistrate. The Chief Judicial Magistrate shall keep the CMP pending for the installment period or till default is committed as brought to the notice of the Chief Judicial Magistrate by the Bank.
(v) The respondent shall issue a statement of the future interest accrued on the defaulted arrears every three months and the same shall be paid along with the next month's instalment, as granted by this Court, and after satisfaction of the arrears, as the 13th instalment.
(vi) On the petitioner satisfying the entire arrears, the recovery proceedings shall be unenforceable and the petitioner allowed regularisation by permitting EMI remittance as per the original agreement.
W.P.(C) No. 5504/2017 The Writ Petition is disposed of as above, making it clear that the respondent will be free to proceed with the recovery if the above conditions are not complied with.
