ICICI Bank Ltd. v. Nassaruddin Abdul Majeed

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR** ## **&** **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **THURSDAY, THE 06TH DAY OF FEBRUARY 2020 / 17TH MAGHA, 1947** **WA.No.218 OF 2020** **AGAINST THE ORDER IN IA 1/2020 IN WP(C) 17959/2019(T) OF HIGH COURT OF KERALA DATED 8.1.2020** ## **APPELLANTS/RESPONDENTS:** **1 THE ICICI BANK LTD., 2ND FLOOR, PUSHPAMANGALAM ESTATES, NH-47, EDAPPALLY BRANCH, PIN-682 024, REPRESENTED BY ITS CHIEF MANAGER. 2 THE AUTHORISED OFFICER, ICICI BANK LIMITED, 2ND FLOOR, PUSHPAMANGALAM ESTATES, NH 47, EDAPPALLY BRANCH, PIN-682 024.** **BY ADVS. SRI.LAL K.JOSEPH SRI.A.A.ZIYAD RAHMAN SRI.SURESH SUKUMAR SRI.V.S.SHIRAZ BAVA SHRI.CHACKO MATHEWS K.** ## **RESPONDENT/PETITIONER:** **NASSARUDDIN ABDUL MAJEED, PALLIKUNNEL HOUSE, X/199, NETTOR P.O., NEAR CONCORD MOTORS, ERNAKULAM-682 304.** ## **SRI.V.S.CHANDRASEKHARAN** **THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 06.02.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **W.A.No.218 of 2020** **2** ## **“C.R.”** ## **JUDGMENT** Dated this the 6[th ] day of February, 2020 ## **S.Manikumar, C.J.** Challenge in this writ appeal is to the order made in I.A.No.1 of 2020 in W.P.(C)No.17959 of 2019 dated 8.1.2020, by which, the learned single Judge has granted two months' time to pay off the liability, in terms of the judgment rendered earlier in W.P.(C)No.17959 of 2019. 2. Short facts leading to the appeal are that: 1[st] respondent is availed certain loans from ICICI Bank, appellants herein. When there is default, the Bank has issued Ext.P2 notice demanding a sum of Rs.5,29,037/-, which reads thus: “ICICI Bank ## WITHOUT – PREJUDICE June 25, 2019 Mr.Nassaruddin Abdul Majeed Pallikunnel House, X/199 Nettoor P.O. Near Concord Motors, Ernakulam Ernakulam -682 304. Madam / Dear Sir, Sub: Pending dues in your Home Loan Agreement No.LBCOC00002914979 We wish to state that you had approached the Bank for availing a Home loan. Pursuant to our consideration of your application, a Home loan was disbursed/sanctioned to you and an agreement was thereafter **W.A.No.218 of 2020** **3** executed with you for availing the said loan facility to the tune of Rs.35,62,500/- on the terms and condition more particularly stated therein. While applying for the said loan facility, you had inter alia agreed to abide by the terms and conditions governing the above said agreement and/or agreed to make repayment of such loan amount availed by you, by paying necessary equated monthly installments on its due dates, which is the essence of the said agreement. Further, as per the terms and conditions of the said agreement, the property detailed as HOUSE is mortgaged to the bank as security towards repayment of the loan/credit facility by way of first, exclusive and paramount charge created in favor of the Bank. The said security is enforceable by the Bank on the events of any default as contemplated by the said agreement. We regret to state that, consequent to the series of defaults committed by you in paying the loan installments, compensation on the delayed/arrears of the installments as called upon vide our several notices and reminder on previous dates. In this connection, we would like to draw the attention on a Central Act “Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as SARFAESI) that has been passed and enforced across the country. This Act has conferred statutory power on the Banks and Financial Institutions to take possession of the Assets as mentioned hereinafter. Under this Act after service of a DEMAND NOTICE by the Bank, if the borrower does not discharge his liabilities in full within the stipulated time period from the date of notice, the Bank shall be entitled to exercise all the rights to take possession of the asset including the right to transfer by way of lease, assignment or sale and realize payment. Bank is also empowered to ATTACH AND SEAL the financed asset before enforcing the right to **W.A.No.218 of 2020** **4** sale or transfer. Further to the Sale of the attached asset, Bank also has a right to initiate separate legal proceedings to recover the balance dues, in case the value of the asset is insufficient to cover the dues payable to the Bank. This remedy is in addition and independent of all the other remedies available to the lending Bank under any other law. For your reference and convenience, we are providing herewith the details of your outstanding dues as on June 24, 2019 and would request to clear the same at the earliest to avoid any further inconvenience. |inconvenience.|| |---|---| |PARTICULARS|AMOUNT ()| |EMI Dues|450718.00| |Overdue Charges|78319.00| ||--------------| |Total Amount Due|529037.00| ||=======| We value your relationship with ICICI Bank and therefore would urge to take serious note of this notice and regularize your loan account within 7 days from the receipt of this notice failing which we shall be constrained to proceed without any further notice to you to exercise our legal remedies available to us. In case your require any clarification, you are requested to contact the undersigned immediately. We would be glad to provide you with all the clarifications required to dispel any further confusion in this regard. Kindly note that any action initiated under the provision of SARFAESI Act shall be without prejudice to other rights and remedies available to ICICI Bank Ltd including rights available against the guarantors, if any. Yours faithfully, For ICICI Bank Ltd.” **W.A.No.218 of 2020** **5** ## 3. Subsequently, the Bank has issued Ext.P3 notice instructing the 1[st] respondent to clear the dues, or else, the amount will be declared as NPA, which reads thus: Dear Sir/Madam, Sub: Non Performance Asset Classification (NPA) of Loan/credit facilities Ref: Your Loan/Credit Facility Account as per Annexure-I We write to you in reference to your Loan/Credit Facility Account(s) as per Annexure-I, wherein despite of our various reminders, you have failed and neglected to pay the dues and regularize your loan account(s). There are installment is/are due towards you Loan/Credit Facility account(s) as on date. Further, we understand that you also have obtained other Loan/Facilities from our bank as listed in Annexure-I and in some of your accounts with us you are regular in repayment of dues. In regard to this, we would like to draw your attention that as per the RBI guidelines relating to prudential norms on Non Performance Asset (NPA) classification and provisioning that has been issued to all banks which mandates to classify all Loan/Facilities availed by Borrower in case of non-payment of dues in anyone of the Loan/Facilities. Following are the implications in case of non-payment of Interest and/or installment of principal remain overdue for a period of more than 90 days: 1. Your Loan Account shall be classified as Non-Performing Asset (NPA). 2. NPA classification shall be borrower-wise and not Loan Account- **W.A.No.218 of 2020** **6** wise. Thus, all your loan account with us shall be classified as NPA. 3. On non-payment of dues, Bank shall have right to recover total loan amount due amongst all loan that has been advanced to you. 4. In case if you fail and neglect to pay then Bank shall be at liberty to proceed legally against you for the recovery of total outstanding dues. 5. Further, we would like to draw your attention towards Central Act called “Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred as SARFAESI)”. This Act has conferred statutory power on the Banks and Financial Institutions to take possession of the assets furnished as security for credit facilities availed. Bank is also empowered to ATTACH AND SEAL the financed asset before enforcing the right to sale or transfer. Further to the Sale of the attached asset, Bank also has a right to initiate separate legal proceedings to recover the balance dues, in case the value of the asset is insufficient to cover the dues payable to the Bank. This remedy is in addition and independent of all the other remedies available to the lending Bank under any other law. In case, if you fail to make payment of the dues then it will be construed as the event of default on your part and Bank can initiate action under SARFAESI Act wherein Bank can take possession of all your assets that are either mortgaged or hypothecated by you as security against the respective loan facilities availed by you and can dispose it off for recovery of your entire outstanding dues amongst all loan accounts. Thus, in order to avoid your all loan accounts becoming a Non Performing Asset (NPA), you are required to clear the installment outstanding immediately, and make timely repayment of your future dues regularly on every due date. **W.A.No.218 of 2020** **7** In the event of non-clearance of the dues before (date), your account will be declared as Non-Performing Asset (NPA) and shall subject to aforementioned implications. In light of above you are requested to contact one of the officers, namely MANU THOMAS, contact no.9567435054 for a mutual discussion to regularize your loan account.” ## 4. Writ petitioner/respondent herein has sent a reply (Ext.P4) to the Bank, which is extracted hereunder: “Dear Sir, Sub: Pending dues in Home Loan A/c.LBCOC00002914979 – Your Notice dated June 25, 2009 This has reference to your Notice cited here above and I wish to state as follows: 1. I have availed the house loan by mortgaging my house property at Nettoor in Re. Sy.No.240/03 and 204/04 admeasuring 10.53 are and 0.975 which is approximately valued at Rs.10 Crores at present. 2. Due to severe financial constraints and business set back after the demonetization I could not repay regularly the EMI's after November 2016, but I have been making prompt payments before that and intermittent repayment after that. I have even made an installment payment in May 2019, which clearly indicates my bonafide interest in repaying the loan. 3. In spite of my repeated personal request to grant more time to make a one-time settlement of the loan, your officers or agents are making regular visits to my house and threatening my family members, when I am away from home. Those intimidating actions by your officials/agents are unwarranted, unethical and unlawful. You may refrain from such unlawful action, else I will be constrained to **W.A.No.218 of 2020** **8** actions against that. 4. However in response to your above mentioned notice I wish to seek 6 months time for one time settlement of the above loan. I am negotiating to sell of another property of mine admeasuring 17 Ares at Cherthala Taluk, solely for the purpose of settling your loan. Hence it is humbly requested that your bank may kindly grant me 6 months time for one time settlement of the above loan and further request you to keep in abeyance all further legal proceedings till such time. Looking forward to your favorable response in this regard. Thanking you, Yours faithfully, Sd/Nassaruddin Abdul Majeed.” 5. In the above background, W.P.(C)No.17959 of 2019 has been filed for a mandamus directing the Bank to grant six months' time to pay the entire outstanding home loan. Direction has also been sought for against the Bank to keep in abeyance all further proceedings for recovery for a period of six months. 6. Before the writ court, appellant Bank has accepted that time be granted for payment. Taking note of the above submission, writ court, ordered thus: “Resultantly, these writ petitions are ordered with a consequential direction to the respondent - ICICI Bank not to take any action against the petitioner under the SARFAESI Act for a period of six months from the date of receipt of a copy of this judgment and await payment by the petitioner of the entire **W.A.No.218 of 2020** **9** amount, including interest, penal interest and such other applicable charges. Needless to say, if the petitioner does not pay the entire outstanding, along with applicable charges and interest and close the loan accounts within the time granted herein, the ICICI Bank will be at liberty to take further action under the SARFAESI Act from the stage at which it is available today without any further orders from this Court. I make it clear that the directions in this judgment are peremptory in nature and that the petitioner will have to comply with the same meticulously. I caution the petitioner that no further requests for extension or modification of this judgment, save in exceptional circumstances, will be permitted and that if the petitioner fails to comply with the directions herein, he will lose the benefit of this judgment.” 7. As the accrued amount as per the judgment has not been paid within time, setting out reasons for extension, I.A.No.1 of 2020 has been filed by the writ petitioner/respondent. 8. The Bank has opposed the said application by filing a counter affidavit. Reliance has also been placed on the decisions of the Hon'ble Supreme Court in **Union Bank of India v. Satyawati Tondon** reported in **2010 (8) SCC 110** and **Authorised Officer, State Bank of Travancore and Another v. Mathew K.C.** reported in **2018 (1) KLT 784** wherein it was held that in cases relating to recovery of the dues of banks, financial institutions and secured creditors, stay granted **W.A.No.218 of 2020** **10** by the High Court would have serious adverse impact on the financial health of such bodies/institutions, which will ultimately prove detrimental to the economy of the nation. 9. Though the writ court, has taken note of the judgments stated supra that prayer for extension of time cannot be granted unless the Bank concedes to any such benefit being granted and observed that the writ petitioner cannot be heard to now seek another six months time to pay off the entire liability, having regard to the submission of the learned counsel for the writ petitioner that his client was desperately attempting to sell his property so as to pay off the dues and liquidate the liability notwithstanding the opposition of Bank, writ court has thought it fit to grant the writ petitioner/respondent another two months' time to pay off the liability and that is how time has been extended. 10. Being aggrieved, ICICI Bank has filed the instant appeal, raising the following grounds: “A. The Learned single judge ought to have appreciated the fact that Exhibit P2 was only a demand notice issued to the respondent customer to dear the arrears required to regularise the loan account. Hence the interference and stay of the recovery proceedings was upon a premature relief sought in the writ, and hence illegal. B. It is respectfully submitted that, as per Annexure A2, judgment the Learned Single Judge was pleased to direct the appellant to keep the proceedings initiated by the appellant in abeyance for a period of six months and it was further observed that **W.A.No.218 of 2020** **11** “ **.....** **I make it clear directions in this judgment are peremptory in nature and the petitioner will have to comply with the same meticulously. I caution the petitioner that no further requests for extensions or modification of this judgment, save in exceptional circumstances, will be permitted and that if the petitioner fails to comply with the directions herein, he will lose the benefit of this judgment** ”. A reading of the aforesaid order for granting further extensions would reveal that, there should be exceptional circumstances for granting the same. However, the recitals in I.A. 1/2020 do not reveal any exceptional circumstances and the pleadings as to sale of the property in the writ petition is reiterated as the circumstances and the same paved way for the extension of time. Thus, the indulgence in I.A 1/2020 by extending further period till 15/3/2020 is highly illegal and arbitrary even though objections were raised by the appellant as in Annexure A1. C. It is submitted that the reason highlighted for seeking extension was that negotiations are being done to sell the property situated in Cherthala and the same is not substantiated by any documents. The same reasons were already pleaded in the writ petition. Hence the interim order is not illegal and erroneous. D. It is submitted that the property sought to be sold pleaded in I.A 1/2020 is, is mortgaged with Federal Bank Ltd. Thus, the proposed sale of the property was a concocted story to drag the recovery proceedings of the appellant bank. Hence the impugned order is liable to set aside. E. It is respectfully submitted that the respondent has not paid any amount whatsoever and was enjoying the benefit of the judgment for the last six months. Further the Bank was curtailed from initiating any steps for the last six months due to the assurance of the **W.A.No.218 of 2020** **12** petitioner in view of the judgment. Now the respondent had approached the Learned Single Judge for extension of time without pointing out any exceptional circumstances in a casual manner to curtail the right of the Bank. F. It is respectfully submitted that the Learned Single Judge ought to have appreciated the fact that the appellant is a Company incorporated under the Companies Act 1956 which is not an institution directly under the control of the Government nor is it an instrumentality of the State. Thus, no writ petition against the appellant is not maintainable. G. The respondents were also having a statutory remedy of appeal as contemplated under section 17 of the Act against any of the steps taken by the appellant. In the decision reported in **2011 (2) SCC 782** , the Hon'ble Supreme Court was pleased to uphold the dismissal of writ petition for not Invoking the statutory remedy of appeal. Further, in the decision of the Honourable Supreme Court pronounced on 26.07.2010 in **United Bank of India Vs Satyawathi Tandon and another** , reported in **2010 (8) SCC 110** it was categorically held that the High Courts shall not interfere in the proceedings under SARFEASI Act, by invoking powers under Article 226 of the Constitution of India by making the following observation " **It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection.** ” **W.A.No.218 of 2020** **13** H. The Honourable Apex Court had held that interference by the High Court in cases relating to recovery of the dues of Banks, financial institutions and secured creditors would have serious adverse impact on the financial health of such bodies / institutions, which will ultimately prove detrimental to the economy of the nation and it was decided that the writ petition challenging the proceedings under the SARFAESI Act is not maintainable. The principles were laid down in the judgment reported in 2010 (8) SCC 110 and 2018 (1) KLT 784. I. The Learned Single Judge ought to have considered the fact that the account was declared a nonperforming asset and thereafter judgment was passed granting 6 months' time to the respondent to dose the account. Now by the impugned order further time has been granted till 15/3/2020 without any exceptional circumstances being made out. Due to the impugned order the respondent has not made any effective payment for the last 11 months. J. The learned single judge ought to have appreciated the fact that the appellants were only pursuing the legal remedies available to them for realising the amounts legally due to them from the respondents. The respondents have not raised any dispute as to the quantum of the amount demanded by the appellant. Hence the order curtaining the legal remedies is unwarranted and liable to be set aside.” 11. Mr.K.Jayakumar, learned counsel for the appellants made submissions on the grounds stated supra and further contended that during the pendency of the writ petition when the respondent wanted six months' time to pay off the entire outstanding home loan, it was fairly conceded by the Bank for the request made and that is why the court **W.A.No.218 of 2020** **14** was inclined to grant six months' time. The last payment was made on 5.12.2018. Since then the writ petitioner/respondent has not paid a pie towards discharge of the loan amount. The writ petitioner has prayed for six months' time before the writ court. Bank did not concede for the prayer in I.A.No.1 of 2020. On the other hand, Bank had opposed the extension petition by filing a detailed counter affidavit. Placing reliance on the decisions stated supra, learned counsel for the Bank submitted that as the assurance made by the writ petitioner/respondent has not been honoured, writ court ought not have extended time. 12. Learned counsel for the Bank also invited the attention of this court to the ultimate paragraph of the judgment rendered in W.P. (C)No.17959 of 2019 dated 2.7.2019 wherein the writ court has made it clear that writ petitioner/respondent will have to comply with the undertaking or payment of the entire outstanding amount within six months and that the writ court also cautioned the respondent that no further extension of time will be granted except in exceptional circumstances. According to the learned counsel for the appellant Bank, in the case on hand, there is no exceptional circumstance. For the above, he seeks reversal of the order made in I.A.No.1 of 2020 in W.P. (C)No.17959 of 2019 dated 8.1.2020. 13. Per contra, learned counsel for the writ petitioner/respondent submitted that Bank has been threatening to initiate proceedings and **W.A.No.218 of 2020** **15** hence he was constrained to approach this court. Learned counsel further submitted that the Bank has not furnished the details for the payments already made. Financial constraints and economical instability in general, were taken as reasons for not complying with the judgment made in W.P.(C)No.17959 of 2019 dated 2.7.2019. According to him, respondent is not a wilful or habitual defaulter. 14. Heard learned counsel for the parties and perused the materials available on record. 15. Cause for approaching this Court by filing the writ petition is stated supra. The Bank has not declared the amount as NPA. Only a demand notice has been issued. Time and again, Hon'ble Supreme Court has held that High Courts should not entertain writ petitions in matters of recovery of loan amounts. When the writ petitioner/respondent has sought for a mandamus, directing the Bank to allow six months' time to pay off the entire outstanding home loan, Bank conceded to the prayer and accordingly, by judgment in W.P.(C)No.17959 of 2019 dated 2.7.2019, writ court has granted six months' time. As pointed out by the learned counsel for the Bank, writ court has made it clear that writ petitioner/respondent has to comply with the assurance made and that no further request for modification of the judgment will be permitted save in exceptional circumstances and that if writ petitioner/respondent fails to comply with the directions in the judgment, he will lose the **W.A.No.218 of 2020** **16** benefit of judgment. 16. Notwithstanding the assurance by the respondent, which resulted in the above directions, writ petitioner has not paid any amount. As per the submission of the learned counsel for the Bank, the last payment was made on 5.12.2018. When respondent has filed I.A.No.1 of 2020 for extension of time, Bank has opposed the same by filing a detailed counter affidavit. Writ court, having taken note of the decision of the Hon'ble Supreme Court in **Union Bank of India v. Satyawati Tondon** and **Authorised Officer, State Bank of Travancore and Another v. Mathew K.C.** stated supra and even after observing that Bank has not conceded to any such benefit being granted, has granted two months' time to the writ petitioner to pay off the liability. A writ cannot be issued directing one party or the other to alter the terms of the contract without consent. Admittedly in the case on hand, Bank has opposed the extension of time. Writ court is also aware of the fact that the writ petition should not be entertained and that is why the judgments in **Union Bank of India v. Satyawati Tondon** and **Authorised Officer, State Bank of Travancore and Another v. Mathew K.C.** stated supra have been quoted even in the opening paragraphs of the order in I.A.No.1 of 2020 in W.P.(C)No.17959 of 2019 dated 8.1.2020. In the light of the decisions of the Hon'ble Supreme Court, we are of the view that the order made in I.A.No.1 of 2020 has to be set aside **17** ## **W.A.No.218 of 2020** and accordingly set aside. Writ appeal is allowed. Pending interlocutory applications, if any, shall stand closed. Sd/- **S.Manikumar, Chief Justice** Sd/- **Shaji P.Chaly Judge** ## **vpv** /TRUE COPY/ P.A. TO JUDGE