IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM FRIDAY, THE 18TH FEBRUARY 2011 / 29TH MAGHA 1932 WP(C).No. 1826 of 2011(C) ------------------------- PETITIONER(S): --------------- 1. KUNHAMMED HAJEE, S/O.KUNJABDULLA HAJEE VARAPRATH HOUSE, PO, PERODE, KOZHIKODE. 2. SHKEELA K.V,W/O.KUNHAMMED HAJEE RESIDING AT DO..DO.. BY ADV. SRI.K.PRAVEEN KUMAR RESPONDENT(S): --------------- 1. ANDHRA BANK, THALASSERY BRANCH, REP BY ITS BRANCH MANAGER 670 101. 2. THE AUTHORISED OFFICER AND CHIEF MANAGER,ANDHRA BANK,KOZHIKODE 673 001. ADV. SRI.LAL GEORGE – SC FOR R1,2 THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 18/02/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.K.ABDUL REHIM, J --------------------------------------- W.P(C) No.1826 of 2011-C ---------------------------------------- Dated this the 18th day of February, 2011. J U D G M E N T Proceedings initiated against the petitioners under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) is the subject matter of challenge in this writ petition. The petitioners availed a housing loan to the tune of Rs.7.50 lakhs by mortgaging certain immovable properties, during the year 2004. The repayment period was stipulated for 144 months, which will expire only in the year 2016. Consequent to default committed in repayment of monthly instalments, the Bank initiated proceedings under the SARFAESI Act and the Chief Judicial Magistrate Court was approached invoking Section 14(1). Ext.P3 is the order issued by that Court appointing an Advocate Commissioner to take over possession of the property. 2. Contention of the petitioners is that the coercive steps are now being pursued without acceding to their W.P(C) No.1826 of 2011-C 2 request for permitting regularisation of the loan account by making an offer for payment of the amounts in default. 3. In the counter affidavit filed by the 1st respondent, it is mentioned that, apart from the housing loan the petitioners have also availed another loan for purchase of a Car, to the tune of Rs.5 lakhs, in the year 2004. It is stated that since payments were defaulted in both the loan accounts, the accounts were classified as 'NPA' and the SARFAESI proceedings were initiated. It is also alleged that the petitioners had clandestinely sold the vehicle in question to third parties, eventhough hypothication was noticed in the registration certificate. It is further stated that the petitioners have not responded to any of the notices issued under Section 13(2) and 13(4). Learned standing counsel appearing for the respondent Bank strongly opposed the prayer for permitting regularisation, contending that the loan accounts are in chronic default and the petitioners have clandestinely dispossessed the vehicle in order to defeat the interest of the respondent Bank. He W.P(C) No.1826 of 2011-C 3 specifically points out that this Court may not be justified in interdicting with the proceedings initiated under the SARFAESI Act, since the petitioners have not chosen to avail the statutory remedy provided. 4. Learned counsel appearing for the petitioners submitted that the property which is now being proceeded against was not mortgaged for securing the vehicle loan and that the impugned proceedings was initiated only with respect to the housing loan. The allegation regarding disposal of the vehicle is also strongly refuted. With respect to the alternative remedy available, submission of learned counsel for the petitioners is that, the petitioners are undertaking to relinquish all challenges against the proceedings initiated and also relinquishing rights if any available to invoke the statutory remedy. On the other hand a limited prayer is made to permit regularisation of the housing loan by offering payment of the amounts in default within a short time. 5. From the contentions as stated above, it is evident W.P(C) No.1826 of 2011-C 4 that there exists a dispute as to whether the property in question was mortgaged for securing the vehicle loan also. However, I am of the view that the respondent Bank is justified in denying regularisation since the vehicle loan availed by the petitioners from the very same Bank is in default and the same also remains classified as 'NPA'. Confronted with the above situation, learned counsel for the petitioners submitted that the petitioners are ready and willing to close the vehicle loan account by paying the entire amounts outstanding, within a short period, in a phased manner. 6. Eventhough the respondent Bank is not favouring in permitting regularisation of the housing loan account, I take note of the fact that the respondents are at an obligation to re-classify the loan as a 'performing asset', in view of the guidelines prescribed by the Reserve Bank of India, which is having statutory force, once the amounts in default is cleared payment. At the same time I notice that the petitioners are liable for payment of the entire amounts W.P(C) No.1826 of 2011-C 5 due under the vehicle loan account. 7. Since the petitioners are relinquishing all challenges and since the period of repayment is not over, I am of the view that eventhough interference on merits is not warranted, indulgence can be shown in permitting the petitioners to regularise the housing loan account, provided the petitioners remit the entire outstanding balance in the vehicle loan account. 8. Under the above circumstances, the writ petition is disposed of directing the respondents to keep in abeyance all further steps for dispossession and sale of the property in question, subject to condition of the petitioners remitting the entire amounts outstanding along with interest if any due in the vehicle loan account (car loan) in 5 (five) equal monthly instalments, falling due on or before 15.3.2011 and on or before the 15th day of succeeding months. 9. The petitioners will also make payment of the overdue amounts in the housing loan (defaulted monthly instalments along with interest and expenses if any due) in W.P(C) No.1826 of 2011-C 6 3 (three) equal monthly instalments, falling due on or before 28.2.2011 and on before the last day of two succeeding months along with payment of regular monthly instalments due for the respective months. The respondent Bank shall furnish a statement of account showing details of the amounts due, if the petitioners make an approach within the time stipulated as above. 10. If payment of the defaulted amounts is regularised in the housing loan account, the respondents shall permit the petitioners to pay the future monthly instalments in the said account, in accordance with the original schedule of repayment. 11. If payment of any of the amounts as stipulated above in either of the accounts is defaulted, the respondents will be at liberty to proceed with further steps on the basis of Ext.P3 order issued by the Chief Judicial Magistrate Court. It is also made clear that on the event of default in payment of any one of the future monthly instalments in the housing loan account, the respondents will be free to W.P(C) No.1826 of 2011-C 7 proceed with further steps. It is further made clear that the above relief is granted subject to condition that the petitioners are precluded from raising any subsequent challenge against such proceedings. C.K.ABDUL REHIM JUDGE ab