Kerala High Court Dismisses Writ Petition Against Bank's SARFAESI Action in Loan Default Case

Case Overview

In a recent ruling, the Kerala High Court at Ernakulam dismissed a writ petition filed by Hashim, a 51-year-old resident of Alappuzha, challenging recovery proceedings initiated by the Federal Bank Ltd. under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act. The case, WP(C) No. 42331 of 2025, was heard and decided on December 11, 2025, by Honourable Mr. Justice Basant Balaji.

Hashim had availed an overdraft/cash credit facility of Rs. 94,00,000/- and a term loan of Rs. 2,37,000/- from the Federal Bank's Alappuzha Convent Square branch on June 30, 2023. As security, he mortgaged property measuring 3.20 ares in Punnapra village, Alappuzha, including all improvements thereon. Following defaults in repayment, the bank invoked SARFAESI provisions, leading to a notice for physical possession of the secured asset on October 25, 2025, and a subsequent sale notice scheduled for December 9, 2025.

The petitioner sought permission to settle the overdue amounts through installments, highlighting his intent to avoid the loss of the property.

Arguments Presented

Hashim's counsel, George Sebastian and Antony Thomas, urged the court to intervene and grant relief by allowing installment payments, arguing that this would prevent irreversible harm from the auction of the mortgaged property.

Opposing the plea, the bank's counsel, Sunil Shanker and Vidya Gangadharan, strongly contested the request. They pointed out that the petitioner had already obtained a similar interim order on November 13, 2025, but failed to comply with it. This non-compliance, they argued, precluded any further indulgence from the court, emphasizing the bank's right to proceed under SARFAESI for efficient debt recovery.

Legal Precedents and Principles Applied

The court relied on the Supreme Court's decision in South Indian Bank Ltd. v. Naveen Mathew Philip [(2023) 17 SCC 311], which clarifies that writ jurisdiction under Article 226 of the Constitution is not the appropriate forum for challenging SARFAESI proceedings. Instead, aggrieved borrowers must seek remedies through the specialized Debt Recovery Tribunal (DRT), which is equipped to handle such financial disputes efficiently.

Justice Balant Balaji distinguished the writ remedy from statutory alternatives, noting that entertaining the petition would undermine the legislative intent behind the SARFAESI Act and DRT framework. The ruling underscores that constitutional courts should exercise restraint in matters of commercial disputes, deferring to statutory bodies unless fundamental rights are grossly violated.

Key excerpt from the judgment: "Taking note of the decision of the Hon’ble Apex Court in South Indian Bank Ltd v. Naveen Mathew Philip [(2023) 17 SCC 311], the remedy available to the petitioners is to approach the DRT against the proceedings initiated by the bank. Hence, I am not inclined to entertain this writ petition and it stands dismissed."

Court's Decision and Implications

The High Court dismissed the writ petition, directing Hashim to pursue his grievance before the DRT. No interim relief was granted, allowing the bank's SARFAESI proceedings, including the proposed sale, to continue unabated.

This decision reinforces the procedural hierarchy in debt recovery cases, emphasizing compliance with statutory timelines and prior court orders. For borrowers facing similar defaults, it signals the importance of approaching the DRT promptly rather than invoking writ jurisdiction, potentially streamlining bank recoveries while protecting access to specialized forums. Legal experts suggest this could reduce the burden on high courts in routine banking disputes, promoting faster resolutions in India's financial sector.

The ruling, delivered on December 11, 2025, highlights the balance between lender rights and borrower protections under SARFAESI, with broader implications for ongoing loan enforcement across Kerala and beyond.