South Indian Bank Ltd. v. Medicina Unani Hospital Pvt. Ltd. & Ors.

## **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 17[TH] DAY OF MARCH 2022 / 26TH PHALGUNA, 1943** **WA NO. 362 OF 2022** **AGAINST THE JUDGMENT IN WP(C) 22686/2021 OF HIGH COURT OF KERALA** **APPELLANTS:** - **1 THE SOUTH INDIAN BANK LTD. T.B. ROAD, MISSION QUARTERS, THRISSUR, PIN - 680 001, REPRESENTED BY ITS SENIOR MANAGER, DRT CELL.** - **2 THE SOUTH INDIAN BANK LTD DOOR NO. 733/2, FIRST FLOOR, D AND D ARCADE BUILDING, CHITTUR ROAD, MANAPPULLIKAVU, KUNNATHURMEDU P.O, PALAKKAD, PIN-678 013 , REPRESENTED BY ITS SENIOR MANAGER, DRT CELL.** - **3 THE SOUTH INDIAN BANK LTD WARD NO. XVII, KOPPANS OUTLET MALL, GROUND FLOOR, MAIN ROAD, SHORANUR, PALAKKAD DISTRICT, PIN 679 121., REPRESENTED BY ITS SENIOR MANAGER, DRT CELL. BY ADVS.** - **SUNIL SHANKER VIDYA GANGADHARAN** ## **RESPONDENTS:** - **1 MEDICINA UNANI HOSPITAL PVT. LTD., XII/339, CHEPPANGATHODY HOUSE, KARUMBULLY, MARUTHUR P.O, PATTAMBI, PALAKKAD DISTRICT-PIN-679 306, REPRESENTED BY ITS MANAGING DIRECTOR DR. ADDUL VAHAB, AGED 39 YEARS, S/O. MUHAMMED MUSLIAR, RESIDING AT CHEPPANGATHODY HOUSE, KARUMBULLY, MARUTHUR P.O, PATTAMBI, PALAKKAD DISTRICT, PIN 679 306.** - **2 DR.ABDUL VAHAB AGED 39 YEARS** - **S/O. MUHAMMED MUSLIAR, RESIDING AT CHEPPANGATHODY HOUSE, KARUMBULLY, MARUTHUR P.O, PATTAMBI, PALAKKAD DISTRICT, PIN 679 306.** 2 W.A.No.362 of 2022 **3 ASHRAF C. AGED 46 YEARS** **S/O. MUHAMMED MUSLIAR, RESIDING AT CHEPPANGATHODY HOUSE, KARUMBULLY, MARUTHUR P.O, PATTAMBI, PALAKKAD DISTRICT, PIN 679 306** **BY ADV P.T.DINESH** **THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 17.03.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.A.No.362 of 2022 3 ## **JUDGMENT** ## **S.MANIKUMAR,CJ.** ## Before the writ court, petitioner has sought for the following reliefs: (i) Declare that non Rescheduling/reconstructing repayment or non converting the accumulated interest into a fresh loan with a deferred payment schedule or non sanctioning additional loan with repayment holiday by the respondents as directed by the Reserve Bank of India in Exhibit P15 to Exhibit P18 circulars in the light of the outbreak of Covid-19 pandemic as highly illegal, arbitrary and unjust and against the directions given by the Reserve Bank of India. (ii) Declare that Exhibit P13 Notice issued under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and Ext.P14 possession Notice issued under Section 13 (4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 read with Rule 8 of the Security Interest (Enforcement) Rules, 2002 are vitiated for non compliance of due procedure contemplated under S.13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and hence illegal, arbitrary and unenforceable. (iii) To call for the records leading to Exhibit-P13 Notice issued under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and Ext-P14 possession notice W.A.No.362 of 2022 4 issued under Section 13 (4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 read with Rule 8 of the Security Interest (Enforcement) Rules, 2002 and quash the same by the issuance of a writ of certiorari or any other appropriate writ, order or direction as this Hon'ble Court may deem fit to grant. (iv) To issue a writ of mandamus or any other appropriate writ, order or direction commanding the respondents to Reschedule/reconstruct the repayment or convert the accumulated interest into a fresh loan with a deferred payment schedule starting from April, 2022 or to sanction additional loan with repayment holiday for one year. ## Or In the alternative, to issue a writ of mandamus or any other appropriate writ, order or direction commanding the respondents to provide the petitioners to pay the defaulted amount in installments which this Hon'ble Court may deem fit to grant starting from April, 2022 and to regularize the loan and permit the petitioners to pay EMIs as per the original terms of the loan account starting from April, 2022. 2. There was a repayment of overdue amount of Rs.79,12,000/- along with bank charges from the petitioner. During the course of hearing of the writ petition, bank has willing to show indulgence and willing to accept the payment of overdue amount in limited installments and regularize the account. W.A.No.362 of 2022 5 3. Placing on record the above submission, writ court, vide judgment in W.P.(C) No.22686/2021 dated 11.1.2022 ordered thus: 5. Having regard to the circumstances of the case and the situation now prevailing, apart from the submissions made as recorded above, I am of the view that the petitioners can be granted an opportunity to repay the overdue amount in ‘16’ instalments and thereafter, if the amount so directed is repaid within the time as directed above, to have the loan account regularised. 6. Accordingly, there will be a direction to the respondent bank to accept repayment of the entire overdue amount of Rs.79,12,000/- along with bank charges from the petitioners and regularise the loan account of the petitioners on the following conditions: - (i) The overdue amount of Rs.79,12,000/- shall be repaid in ‘16’ equated monthly instalments. (ii) The first instalment shall be paid on or before 15/02/2022. (iii) Petitioners shall continue to pay the regular EMI’s along with the instalments directed above. (iv) In the event of default of any one instalment, the respondent bank shall be entitled to proceed in accordance with law. - (v) In order to enable the petitioners to repay the entire amounts, all coercive proceedings shall be kept in abeyance. (vi) Notwithstanding the above, if the petitioners clear the entire W.A.No.362 of 2022 6 overdue amount as directed above, they shall be at liberty to approach the Bank seeking a restructuring of the loan and if the said proposal is feasible to the Bank the same shall be considered in accordance with law. The writ petition is disposed of as above. ## 4. Being aggrieved, instant writ appeal is filed on the following grounds: “B. It is submitted that the learned single Judge ought to have held that the Respondent, even if to be permitted to make payment in installments, ought to have been directed to clear the overdue by the end of March, 2022, i.e., the end of the financial year 2021-22. C. Learned Single Judge ought to have held that the continuance of the credit facilities as non performing asset will cause severe prejudice to the Appellant Bank. It is submitted that the accounts having been classified as a non performing asset, the Appellant Bank will have to set aside funds for provisioning as per the RBI guidelines. D. The Learned Single Judge ought to have held that recovery of amounts is in public interest. The Hon'ble Supreme Court in Authorized Officer, State Bank of Travancore and Ors. vs. Mathew K.C. (30.01.2018 SC) VS. MANU/SC/0054/2018. “ Loans by financial institutions are granted from public money generated at the tax payers expense. Such loan does not become the property of the person taking the loan, but retains its character of public money given in a fiduciary capacity as entrustment by the W.A.No.362 of 2022 7 public. Timely repayment also ensures liquidity to facilitate loan to another in need, by circulation of the money and cannot be permitted to be blocked by frivolous litigation by those who can afford the luxury of the same." E. It is submitted that the Learned Single Judge ought to have appreciated that providing more than 16 months time to clear the overdue amount seriously prejudices the rights of the Appellant/secured creditor. The Hon'ble Supreme Court in Phoenix ARC Private Limited Vs. Vishwa Bharati Vidya Mandir and Ors. , judgment dated 12.1.2022 in Civil Appeal Nos. 257 -259 of 2022- had reiterated that discretion vested in the Hon'ble High Court ought to be exercised extremely carefully and with circumspection, since the staying of recovery measures would have serious adverse impact on the financial health of the secured creditor/assignor. It is submitted that the Appellant Bank had a net loss of Rs.91.62 Crores in second quarter of Financial year 2021-2022, and net loss of Rs. 50.31 Crores in the third quarter of Financial year 20212022. 5. Though Mr.Sunil Shankar - learned Standing Counsel for the bank, advanced arguments on the grounds stated supra and sought for reduction in installments, we are not inclined to interfere with the impugned judgment, for the reason that accepting the judgment made in W.P.(C) No.22686/2021, bank had sent email communications dated 9[th] February, 2022 and 3[rd] March, 2022 respectively, to the respondent, to remit the total over due amount in 16 installments along with regular EMIs. W.A.No.362 of 2022 8 For brevity, letters dated 9[th] February, 2022 and 3[rd] March, 2022 are reproduced hereunder: **==> picture [492 x 459] intentionally omitted <==** W.A.No.362 of 2022 9 **==> picture [454 x 532] intentionally omitted <==** W.A.No.362 of 2022 10 6. On a reading of the above, it could be deduced that bank itself has stated that as per the orders of the Hon'ble High Court, respondent should remit the total overdue amounts in the loan account in 16 installments along with regular EMIs. The bank has also demanded vide letter dated 3[rd] March, 2022, the subsequent installments to be paid on or before 15.3.2022, as directed by this Court. Thus, the bank, in all respects, has accepted the direction of this Court and directed the respondent to make the installments before the due date without default. Having regard to the above, we are not inclined to interfere with the impugned judgment. Therefore, the instant writ appeal is dismissed. Sd/- ## **S.MANIKUMAR CHIEF JUSTICE** smv Sd/- **SHAJI P.CHALY JUDGE**