IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN THURSDAY, THE 22ND SEPTEMBER 2011 / 31ST BHADRA 1933 WA.No. 1355 of 2011() --------------------- AGAINST THE JUDGEMENT/ORDER IN WPC.7872/2011 DATED 21/06/2011 .................... APPELLANT(S): / PETITIONER -------------- SAROJINI,W/O.LATE VISWANATHAN, AGED 65 YEARS,KARTHULLIPARAMBIL HOUSE, SOUTH JANATHA ROAD,ERNAKULAM BY ADV. SRI.P.P.MOHAMED NOUFAL SMT.BINITHA JAMES RESPONDENT(S): / RESPONDENTS --------------- 1. THE PUNJAB NATIONAL BANK, ASSETS MANAGEMENT RECOVERY BRANCH, 40/1461,MARKET ROAD,ERNAKULAM-682 011, REPRESENTED BY ITS AUTHORIZED OFFICER & CHIEF MANAGER. 2. THE SENIOR MANAGER, PUNJAB NATIONAL BANK, VYTTILA BRANCH,VYTTILA COCHIN-19. 3. R.RAJALAKSHMI,AGED ABOUT 47 YEARS, PROPRIETOR,M/S.LADIES QUEEN HOSTEL,KSFE ROAD, OPP.KALOOR BUS STAND,COCHIN-17. BY STANDING COUNSEL, MR. C.AJITH KUMAR THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 22/09/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & P.S.GOPINATHAN, JJ. .................................................................... W.A.No.1355 of 2011 .................................................................... Dated this the 22nd day of September, 2011. J U D G M E N T Ramachandran Nair, J. Learned Standing Counsel took notice at admission stage for respondents 1 & 2. Notice to 3rd respondent is not required. 2. This Writ Appeal is filed against the judgment of the learned Single Judge upholding SARFAESI proceedings initiated against the appellant as surety for the loan availed by the 3rd respondent, who defaulted payment. Learned counsel for respondents 1 & 2 submitted that the appellant failed to comply with interim orders of this Court directing payment of Rs.1 lakh within the time granted by this Court. While the prayer of the appellant is for easy installments to settle the arrears, which is to save her house from sale, the Bank's case is that on account of chronic default recovery is permissible. 3. After hearing both sides, what we notice is that the W.A.No.1355/2011 2 Bank has given loan to a person whose credentials are doubtful as she is not even traceable. The security accepted is house of the appellant, which is located in 3 cents of land. Obviously the Bank misjudged the viability of the business and the capacity of the borrower to repay the loan. Even though legally it is permissible to proceed for sale of the surety's property, we feel the Bank should not drive the appellant to street if loan is repaid in reasonable installments within the loan period. The appellant's counsel submitted before us that community members have offered to help the appellant to settle the arrears in installments. The loan was said to be given in 2006 for a period of 7 years. On behalf of the appellant, learned counsel submitted that if installment at the rate of Rs.25,000/- per month is paid, the same will cover the entire loan amount with interest by July, 2013 up to which is the loan period granted by the Bank to the 3rd respondent. Specific undertaking is given by the learned counsel on behalf of the appellant that repayment will be made without any W.A.No.1355/2011 3 default @ Rs.25,000/- per month. We do not think this arrangement in any way affects the interest of the Bank. Consequently, recording the undertaking of the appellant, we allow the Writ Appeal by vacating the judgment of the learned Single Judge and by directing the Bank to withhold all proceedings of recovery on condition that the appellant will pay installments at the rate of Rs.25,000/- per month, first of which will be paid on or before 30/10/2011 and balance on or before 30th of every succeeding month without default. If payments are made as above, the Bank will adjust the same towards the loan at agreed rate of interest without charging any default or penal interest until the arrears are cleared as above, and thereafter title deed will be released to the appellant. However, if there is default in making payment of two consecutive installments, that too only after paying 4 installments without default, the installment facility granted by us will stand vacated and the Bank will proceed to sell appellant's property in public auction, and in that event W.A.No.1355/2011 4 there will be direction to the appellant to vacate the building and give possession to the Bank without any requirement for the Bank to proceed for any coercive step for taking over the possession. Besides the above, the Bank is free to charge default interest if any default is committed in making payment of any of the installments. This Writ Appeal is allowed as above. (C.N.RAMACHANDRAN NAIR, JUDGE) (P.S.GOPINATHAN, JUDGE) jg