IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM TUESDAY, THE 21ST DECEMBER 2010 / 30TH AGRAHAYANA 1932 WP(C).No. 33405 of 2010(A) --------------------------------------- PETITIONER(S): ---------------------- T.K.ALIKUTTY, S/O. MOHAMMED HAJI, AGED 49 YEARS, THONIKADAVATH HOUSE, ATHAVANADU P.O., MALAPPURAM DISTRICT. BY ADV. SRI.JACOB SEBASTIAN RESPONDENT(S): ------------------------- STATE BANK OF TRAVANCORE, VATANCHERY BRANCH, REPRESENTED BY ITS CHIEF MANAGER (ADV.), REGION-III, ZONAL OFFICE, MALAPPURAM, PIN-676 552. R1 BY ADV. SRI.T.SETHUMADHAVAN SRI.PUSHPARAJAN KODOTH SRI.K.JAYESH MOHANKUMAR THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 21/12/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: sts C.K.ABDUL REHIM, J. ------------------------------------------- W.P.(C).No.33405 of 2010 ------------------------------------------- Dated this the 21st day of December, 2010 J U D G M E N T ---------------------- The petitioner had availed a term loan to the tune of Rs.8.98 lakhs, from the respondent Bank, for purchase of a Toyota Innova Car. The loan in question was availed in the year 2006 with repayment period extending upto the year 2015. Consequent to default committed in repayment, the bank had taken over possession of the vehicle, invoking the provisions under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). According to the petitioner, eventhough the bank was approached with an offer to make payment of the defaulted amounts and to regularise the account, they are not prepared to release the vehicle. Hence the petitioner seeks interference of this court to direct release of the vehicle on the petitioner remitting payment of the amounts in default. 2. In a statement filed on behalf of the respondent it is mentioned that, pursuant to default committed by the petitioner the loan account was classified as 'NPA' as on 31.3.2010. Subsequently the vehicle was taken into possession by virtue of W.P.(C).33405/10-A -2- order issued by the Chief Judicial Magistrate Court in exercise of powers under Section 14(1) of the SARFAESI Act. The possession of the vehicle was taken over on 8.10.2010. It is also mentioned that payment of instalments effected through cheque was dishonoured and the Bank had already initiated criminal proceedings against the petitioner, for offences punishable under Section 138 of the Negotiable Instruments Act. It is also mentioned that the total amount outstanding is Rs.9,31,211/-, as on August 2010. 3. Considering the fact that the petitioner has not challenged any of the steps initiated under the SARFAESI Act by approaching the statutory authorities, I am not inclined to interfere with the proceedings. However, learned counsel for the petitioner submits that eventhough the arrears in default is around Rs.2,50,000/-, the petitioner is ready and willing to make payment of a sum of Rs.5,00,000/-, in order to get release of the vehicle. He further submits that the entire balance amount due under the loan account will be paid off within a period of 5 months thereafter. On the basis of the above offer the petitioner seeks direction from this court to give custody of the vehicle to the petitioner for putting the vehicle for his personal use, subject to condition of the legal possession being retained by the respondent Bank. W.P.(C).33405/10-A -3- 4. Counsel appearing for the respondent bank submitted that, apart from the hypothecation endorsement made in the Registration Certificate, there is no other collateral security with respect to the loan transaction. The Bank is not favouring in giving custody of the vehicle to the petitioner under such circumstances. Per contra, learned counsel for the petitioner submits that, the vehicle in question is a 2006 Model Toyota Innova Car, which will fetch only a market price of Rs.5 lakhs. He further submits that the petitioner is even prepared to deposit original of the Registration Certificate with the bank to ensure that the vehicle will not be transferred in any manner. It is further stated that at the time of sanctioning the loan the bank insisted only for a personal guarantee of the petitioner and his wife, apart from hypothecation of the vehicle. Therefore there is no justification in resisting the release of the vehicle, is the contention. 5. Having considered the facts and circumstances, I notice that the loan in question was originally sanctioned without any collateral security. I find force in the arguments of the petitioner that the vehicle in question may fetch only a market price of Rs.5 lakhs. Under such circumstances I am of the view that the Bank can be directed to give custody of the vehicle to the petitioner subject to condition of the petitioner depositing W.P.(C).33405/10-A -4- original of the Registration Certificate and also subject to condition of the petitioner paying the entire balance within a period of 5 months. 6. Accordingly, the writ petition is disposed of directing the respondent to give custody of the vehicle bearing No:KL- 10/Y-4401 to the petitioner, subject to condition of his remitting a sum of Rs.5,00,000/- (Rupees five lakhs only), on or before 31.1.2011, and on further condition of the petitioner depositing original of the Registration Certificate with the respondent Bank. 7. It is further directed that the petitioner shall remit the entire balance outstanding in 5 (five) equal monthly instalments falling due on or before 28.2.2011 and on or before the last day of the succeeding months thereafter. 8. It is made clear that the petitioner shall not part with ownership or possession of the vehicle till the entire amount is cleared payment and he shall not cause anything which will diminish value of the vehicle in question. It is further made clear that the custody of the vehicle will be given to the petitioner without prejudices to the rights of the respondent Bank to have legal possession of the vehicle and on the event of default in payment of any one of the instalments as stated above, the respondents will be free to recover possession of the vehicle without recourse to any proceedings under law and if necessary W.P.(C).33405/10-A -5- with the help of police authorities having jurisdiction on the local area. 9. It is made clear that the above directions contained in this judgment will not stand in the way of the petitioner approaching the respondent bank seeking 'One Time Settlement' of the balance amount and in the respondent bank considering such request favourably. C.K.ABDUL REHIM, JUDGE. okb