IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE ANTONY DOMINIC THURSDAY, THE 10TH APRIL 2008 / 21ST CHAITHRA 1930 WP(C).No. 8015 of 2008(D) ------------------------- PETITIONER: ------------ S.KHALEEL, ALIF MANZIL, KURUMPELIL, AGASTHYACODE, ANCHAL, KOLLAM. BY ADV. SRI.S.SANTHOSH KUMAR RESPONDENTS: ------------- 1. THE REPCO HOME FINANCE LTD. REGISTERED OFFICE, RED FORT TOWERS, NO.33, NORTH USMAN ROAD, T.NAGAR, CHENNAI - 600 017, REP. BY ITS MANAGING DIRECTOR. 2. THE MANAGER, REPCO HOME FINANCE LTD., PUNALUR BRANCH, JEEVAN JYOTHI NEW LIC BUILDING, PUNALUR - 691 305. 3. THE AUTHORISED OFFICER, REPCO HOME FINANCE LTD., CHENNAI - 600 035. BY ADV. SRI.MANOJ RAMASWAMY THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 10/04/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C)8015/2008 1 ANTONY DOMINIC, J. ====================================== WRIT PETITION NO.8015 OF 2008 ====================================== Dated this the 10th day of April 2008 JUDGMENT The petitioner had availed of two loans from the respondents. It is stated that one loan was of Rs.4.5 lakhs and the other loan was of Rs.5 lakhs. It is stated that default was committed by him and proceedings were initiated under the Securitisation and Reconstruction of Financial Assets and Enfocement of Security Interest Act, 2002 ( hereinafter referred to as `the Act'). Going by the statement of accounts, the principal amount in default is indicated as Rs.20,888/= towards the first loan of Rs.4.5 lakhs and Rs.59,808/- towards the second loan of Rs.5 lakhs. By Ext.P3 the Bank has informed that the possession of the property will be taken over. At this stage this writ petition is filed by challenging that order. 2. The respondents have filed a statement wherein it is stated that the account was classified as N.P.A. as early as on 24.1.2007. It is stated that at present Rs.4,34,553/= is due W.P.(C)8015/2008 2 towards the first loan and Rs.6,54,741/= towards the second loan of Rs.5 lakhs. It is stated that they have complied with all procedural formalities that have been prescribed under the `Act'. 3. Petitioner submits that he is willing to pay the defaulted amount and regularising the account. But, however, since the account was already classified as N.P.A., the respondents have expressed their unwillingness to do so. From the facts as available, it is evident that at the time when proceedings under the `Act' was initiated, the amount due was Rs.20,888/- towards the first loan of Rs.4.5 lakhs and Rs.59,808/- towards the second loan of Rs.5 lakhs. In this context, the issue that arises for consideration is whether, when the amount is due only as indicated above, the respondents could have initiated the proceedings at all. Section 31 of the `Act' to the extent it is relevant, provides that the provisions of the Act shall not apply to a case in which the amount due is less than 20% of the principal amount and interest thereon. The amount due from the petitioner as on 21.1.2008 is as indicated above, which is much less than the 20% specified under Section 31 of the Act. W.P.(C)8015/2008 3 4. In my view, in such a situation, the respondents could not have initiated the proceedings. It may be true that the account was classified as non performing asset as early as on 24.1.2007. But, however, in terms of the prudential norms issued by the Reserve Bank of India regulating the classification of accounts as N.P.A., credit has to be given to subsequent payments and the financial institutions are required to upgrade the accounts on that basis. Therefore for the reason that the account has been classified as NPA earlier, subsequent payments made by the borrower cannot be ignored. For the aforesaid reasons, I am satisfied that the proceedings initiated against the petitioner cannot be sustained. Accordingly, I quash Ext.P3 and direct that the petitioner shall remit the entire amount in default towards the aforesaid two loans before 30.4.2008 and on such payment the respondents shall accept the same and revive the loan agreement and permit the petitioner to continue payment in their favour. The writ petition is disposed of as above. ANTONY DOMINIC, JUDGE W.P.(C)8015/2008 4 css/