High Court of KeralaSingle Judge2021-01-05Writ petition disposed of by interim/partial re...

Kannan T v. State Bank of India & Others

Case / Petition Number:WP(C).No.164 OF 2021(U)

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: Devan Ramachandran
Judgment Date: 2021-01-05
Court Decision / Holding: Writ petition disposed of. Bank to defer sale of the secured assets under Ext.P1 until 05/02/2021; petitioner to pay Rs.3 crores by 05/02/2021 to liquidate liability across three accounts. If paid, bank will cease further proceedings and return title documents; if default, bank may continue proceedings from Ext.P1. The bank may publish a fresh sale notification if needed, and the petitioner may bear the publication costs.
Final Disposition: Writ petition disposed of by interim/partial relief granting deferment of sale and settlement offer terms to be honored by the petitioner.

Parties to the Case

Appellants / Petitioners

Kannan T, aged 48 years, s/o Late Thankappan, Sayabi, Town Limit, Kadappakkara, Kollam-691008

Respondents

The Assistant General Manager, State Bank of India, Vikas Bhavan P O, Thiruvananthapuram-695033
The Deputy General Manager, State Bank of India, Vikas Bhavan P O, Thiruvananthapuram-695033
The Chief Manager, State Bank of India, Vikas Bhavan P O, Thiruvananthapuram-695033
The Branch Manager, State Bank of India, Commercial Branch, Chamakkada P O, Kollam-691001

Legal Representation & Advocates

Counsels for Petitioners

• Sri. I. Dinesh Menon

Counsels for Respondents

• Sri Jawahar Jose - SC

Case Synopsis & Summary

The petitioner, Kannan T, has availed large loan facilities from the respondent State Bank of India and has approached this Court challenging Ext.P1 sale notice for a secured asset, asserting that he has been classified as a “willful defaulter” incorrectly, leading to penalties and hindering liquidation of his liability. He seeks to set aside Ext.P1 and to settle the loan liabilities under the One Time Settlement (OTS) scheme as indicated in Ext.P3. The respondents contend that the petitioner is not entitled to Ext.P3 since he did not make the first instalment, the OTS window has expired, and more than Rs.23.23 crores are due across three accounts; they offer a fresh settlement at Rs.3 crores if paid within a month, which would liquidate the liabilities. The court acknowledges the SARFAESI Act regime but notes the Bank’s offer as a pragmatic alternative to preserve value and prevent irreparable loss. The bench questions whether the petitioner would accept the Rs.3 crore settlement; the petitioner agrees. Without delving into merits, the court orders deferral of sale under Ext.P1 to 05 February 2021, directing payment of Rs.3 crores by that date to liquidate all three accounts. If paid, the bank will halt proceedings and return title documents; if not, the sale may proceed from the Ext.P1 stage, with publication costs potentially borne by the petitioner.

Provisions of Law Cited

Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SARFAESI Act), 2002

Legal Doctrines & Maxims

Jurisdiction under SARFAESI Act is severely restricted and proscribed, as held by the Supreme Court in Union Bank of India v. Satyawati Tondon and reinforced in Mathew K.C. (2018).

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner contends Ext.P1 sale notice should be set aside and the loan liability liquidated under the One Time Settlement Scheme (Ext.P3). He asserts misclassification as a ‘willful defaulter’ causing excessive penalties and obstacles to settlement.

Contentions of Respondents

The bank maintains the petitioner is not eligible for Ext.P3 due to non-payment of the first instalment and the expiry of the OTS; it offers Rs.3 crores as a fresh settlement for full liquidation within one month.

Cited Precedents (2)

Case Name	Citation	Treatment	Explanation
Union Bank of India v. Satyawati Tondon	2010 (8) SCC 110	Positive	Cited to support the proposition that the jurisdiction of courts under SARFAESI Act is restricted/proscribed.
Authorised Officer, State Bank of Travancore and Another v. Mathew K.C.	2018 (1) KLT 784	Positive	Affirmative declarations of the Supreme Court on restricted SARFAESI jurisdiction, cited to reinforce the same principle.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN** **TUESDAY, THE 05TH DAY OF JANUARY 2021 / 15TH POUSHA, 1942** ## **WP(C).No.164 OF 2021(U)** ## **PETITIONER:** **KANNAN T AGED 48 YEARS S/O LATE THANKAPPAN, SAYABI, TOWN LIMIT, KADAPPAKKARA, KOLLAM-691008.** **BY ADV. SRI.I.DINESH MENON** ## **RESPONDENTS:** |**1**|**THE ASSISTANT GENERAL MANAGER**| |---|---| ||**STATE BANK OF INDIA,**| ||**VIKAS BHAVAN P O, THIRUVANANTHAPURAM-695033.**| |**2**|**THE DEPUTY GENERAL MANAGER**| ||**STATE BANK OF INDIA,**| ||**VIKAS BHAVAN P O, THIRUVANANTHAPURAM-695033.**| |**3**|**THE CHIEF MANAGER**| ||**STATE BANK OF INDIA,**| ||**VIKAS BHAVAN P O, THIRUVANANTHAPURAM-695033.**| |**4**|**THE BRANCH MANAGER**| ||**STATE BANK OF INDIA,**| ||**COMMERCIAL BRANCH,**| ||**CHAMAKKADA P O, KOLLAM-691001.**| **SRI. JAWAHAR JOSE - SC** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 05.01.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C).No.164 OF 2021 2** ## **JUDGMENT** The petitioner concedes that he has availed of certain large loan facilities from the respondent – State Bank of India (hereinafter referred to as 'the Bank' for short) and has approached this Court impugning Ext.P1 notice of sale issued by the said Bank for sale of secured asset. 2. According to the petitioner, he has been always willing and ready to pay off the loan liability, but that on account of the fact that he has been classified incorrectly and illegally as a “willful defaulter”, he has been mulcted with larger penalties and detriment, thus incapacitating him from liquidating the liability. The petitioner, therefore, prays that Ext.P1 be set aside and the Bank be directed to allow him to settle the loan liability under the One Time Settlement Scheme, as is discernible from Ext.P3. **WP(C).No.164 OF 2021 3** 3. In response to the submissions of Shri.I.Dinesh Menon, learned counsel for the petitioner as afore, Shri.Jawahar Jose, learned counsel for the respondents, submitted that the petitioner is not entitled to seek settlement of the loan liability under Ext.P3 because he did not even pay the first instalment under it until now. He submitted that the term of the said One Time Settlement is now over; but added that the petitioner has been offered another settlement at Rs.3 Crores and that if he pays this amount within a period of one month, the loan liabilities will stand fully liquidated. He added that this is the best offer that the Bank can offer to the petitioner, because, as per the accounts, more than Rs.23.23 Crores is due from him, in three loan accounts and that Ext.P1 has been issued for recovery of the same. 4. Shri.Jawahar Jose, therefore, prayed that either the petitioner be directed to pay Rs.3 Crores within a period of one month from ## **WP(C).No.164 OF 2021 4** today in full and final settlement of all the three loan accounts; or that this Court dismiss this writ petition, finding it be not maintainable. 5. It is indubitable, going by the affirmative declarations of the Hon'ble Supreme Court in _**Union Bank of India v. Satyawati Tondon** [2010 (8) SCC 110]_ and in ## _**Authorised Officer, State Bank of Travancore and**_ _**Another v. Mathew K.C.** [2018 (1) KLT 784],_ that the jurisdiction of this Court in dealing with matters arising under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act ('the SARFAESI Act' for brevity) is severely restricted and even proscribed. 6. However, since the Bank now offers that the petitioner can be allowed to liquidate the loan liability by payment of Rs.3 Crores within a period of one month from today, I asked Shri.I.Dinesh Menon - learned counsel for the petitioner, whether his client is interested in ## **WP(C).No.164 OF 2021 5** accepting this suggestion. 7. Shri.I.Dinesh Menon, in response, submitted that since his client has no other option, he will agree to the offer now made by the Bank and thus prayed that this Court order this writ petition on such terms. In the afore circumstances, without entering into the merits of any of the dialectical contentions of the parties, I order this writ petition and direct the Bank to defer the sale of the properties, as notified through Ext.P1, until 05/02/2021; with a concomitant direction to the petitioner to pay an amount of Rs.3 Crores - which is stated to be the One Time Settlement figure - so as to liquidate the liability in all the three loan accounts, on or before 05/02/2021. It goes without saying that if the petitioner pays the amounts as afore directed and within the time granted, then the Bank will cease all further proceedings pursuant to ## **WP(C).No.164 OF 2021 6** Ext.P1 and return the title documents of the secured assets to the petitioner or to the mortgagor, as the case may be; but if on the contrary, the petitioner defaults in payment as ordered above, the Bank will be at liberty to continue further proceedings from the stage at which it is available today based on Ext.P1 for sale of the secured assets without having to seek any further orders from this Court. At this time, Shri.Jawahar Jose brought to my notice a practical difficulty that may be faced by the Bank when the sale is deferred, namely, that a fresh sale notification will have to be published, should the petitioner default payment in terms of this judgment. This certainly is an issue that the Bank will have to face and I, therefore, asked Shri.I.Disnesh Menon, learned counsel for the petitioner, whether his client will suffer the cost of the said publication also, if it becomes so warranted. ## **WP(C).No.164 OF 2021 7** Shri.I.Dinesh Menon, in answer submitted that his client will take full responsibility for this and that if he is unable to make payment as per this judgment, the Bank may left liberty to charge the amount for the next publication also to his account. He also submitted that his client will not insist on a fresh publication in such event and that the Bank may be left liberty to take a decision on this appropriately. This is recorded. **Sd/-** ## **DEVAN RAMACHANDRAN** **JUDGE** **MC/5.1.2021** **WP(C).No.164 OF 2021 8** ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE SALE NOTICE DATED 15.12.2020. EXHIBIT P2 TRUE COPY OF THE FIR DATED 2.8.2018. EXHIBIT P3 TRUE COPY OF THE ONE TIME SETTLEMENT SCHEME DATED 19.10.2020. EXHIBIT P4 TRUE COPY OF THE ORDER IN WPC NO.9400/2020 DATED 3.8.2020. EXHIBIT P5 TRUE COPY OF THE REQUEST FOR FRESH PROPOSAL DATED 31.12.2020. EXHIBIT P6 TRUE COPY OF THE REQUEST FOR EXTENSION OF TIME DATED 31.12.2020. RESPONDENT'S/S EXHIBITS:** ## **NIL** **MC** **(TRUE COPY) PA TO JUDGE**