Thankachan. M. Paul v. State Bank of India

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** # **THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR** **&** **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **FRIDAY, THE 11TH DAY OF SEPTEMBER 2020 / 20TH BHADRA, 1942** **WA.No.1197 OF 2020** **AGAINST THE JUDGMENT IN WP(C) 12989/2020(W) OF HIGH COURT OF KERALA DATED 12.8.2020** ## **APPELLANT/PETITIONER:** **THANKACHAN. M. PAUL, AGED 55 YEARS, S/O M.M. PAULOSE, SHOBA SADANAM, VAZHODE, KARUKONE P.O., ANCHAL, KOLLAM DISTRICT** ## **BY ADV. SRI.M.S.RADHAKRISHNAN NAIR** ## **RESPONDENT/RESPONDENT:** **STATE BANK OF INDIA, ETTUMANOOR BRANCH, KOTTAYAM, REPRESENTED BY AUTHORIZED OFFICER/ CHIEF MANAGER (MAINTENANCE) RACPC, KOTTAYAM – 686 001.** ## **SMT. DEEPA NARAYANAN, SC FOR RESPONDENT** **THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 11.09.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** _**W.A.1197/2020**_ 2 ## JUDGMENT Dated this the 11[th] day of September, 2020 ## S. Manikumar, CJ. Being aggrieved by the judgment made in W.P(C).No.12989 of 2020 dated 12.8.2020, instant appeal is filed. Material on record discloses that appellant's daughter-in-law availed a loan of Rs.44,89,895/- from the respondent bank for purchasing a car and appellant is the guarantor for the said loan. Since there was some dues in remitting the instalments, the respondent bank initiated steps for taking possession of the car and auctioned same. It is submitted that in the meantime appellant remitted the entire outstanding dues on 6.3.2020 evident from Ext.P4. So bank did not take any action. After remitting the outstanding amount, appellant could not remit the instalments due to Covid-19 pandemic. Appellant's daughter-in-law is also a victim of Covid-19 and she was in a hospital at Kuwait and she is not getting any salary for remitting the instalments. In the meantime RBI issued certain Regulatory Package for payment of loan amount. Firstly moratorium was declared upto 31.5.2020 and subsequently, moratorium was extended upto 31.8.2020. Appellant is also entitled to the benefit of the moratorium declared by RBI. Appellant/petitioner has only prayed in _**W.A.1197/2020**_ 3 the Writ Petition that the benefits of moratorium declared by RBI may be extended to petitioner also and to direct the respondent bank to defer from taking any action in the matter till the moratorium is in force. 2. The reliefs sought for in the writ petition are as follows: - “i) Issue a writ of mandamus or any other appropriate writ order or direction directing the respondents not to seize the car and sell it in auction till the moratorium declared by RBI is over. - ii) To declare that the petitioner is entitled to the benefit granted by RBI as per Exts. P5 and P6. - iii) Issue a writ of mandamus or any other appropriate writ order or direction directing the respondents to grant time till moratorium is over, to pay the instalments due in respect of the car loan taken by the petitioner's daughter- in-law in which petitioner is the guarantor.” 3. Before the writ court, a statement has been filed by the respondent Bank, which states that: - “2. The above writ petition is filed seeking benefits of the regulatory package and moratorium issued by the RBI to instigate the burden of debt for the loan amount availed by debtors in the wake of the Covid-19 pandemic. The respondent denies the entire averments in the writ petition except to the extent those that are admitted as hereunder. 3. It is submitted that an amount of Rs 44.98 lakhs was availed as vehicle loan for purchase of BMW Car by Mrs. Sherine Kurian for which the petitioner stood as a guarantor in the year 2018. 4. It is submitted that the borrower being a defaulter from the very beginning, on 03.05.2019, was issued with 13(2) notice. It is further submitted that since the account was not regularized _**W.A.1197/2020**_ 4 even after 13(2) notice, further proceedings as per the SARFAESI Act were initiated and on 09.10.2019, the Hon'ble Chief Judicial Magistrate, Kollam was pleased to appoint an Advocate Commissioner for initiating further proceedings as under the Act. 5. It is submitted that Mrs. Sherine Kurian and her husband had availed a housing loan of Rs.75 lac from the Punaloor Branch of S.B.I. The above loan also is classified as NPA and after issuing 13(2) notice symbolic possession of the secured asset was taken on 08.01.2019. Suppressing the mortgage, the borrowers sold the secured asset to one Smt. Lekha without the knowledge of the Bank and the Bank is contemplating to file a criminal case for the offence of cheating and breach of trust. 5. It is submitted that as per the guidelines issued by the RBI in the wake of the Covid-19 pandemic, the regulatory package was applicable only to standard account borrowers whose accounts were Standard as on 01.03.2020. It is submitted that the petitioner herein was not a Standard account borrower as on that date and his account was already classified as NPA on the said date. 6. It is submitted that as on 01.07.2020 the overdue amount in the said account is Rs 673875/- and the closure balance is Rs 3569205/-. It is submitted that the regulatory benefit under Exts. P5 & P6 are not available to be extended to the petitioner and therefore the Writ petition is liable to be dismissed.” ## 4. A reply affidavit has been filed by the petitioner, to the statement filed by the respondent bank and the same reads thus: “2) It is submitted that in Ext.P5 and P6, the word used is "in respect of all term loans" and there is no clarification made _**W.A.1197/2020**_ 5 stating that same is only to standard account borrowers whose accounts were standard as on 1.3.2020. The Regulatory package mentioned in the statement is not produced by the respondent. It is also submitted that petitioner on behalf of his daughter-in-law cleared all the overdue amount as per Ext.P4 on 6.3.2020. 3) It is submitted that the statement that the borrowers suppressing the mortgage sold the property in not fully correct. The real facts is that since the loan amount received by the borrowers is not sufficient to complete the construction of the house, they obtained a loan from a private financier. But the financier fraudulently created a sale deed stating that the same is only an agreement. Immediately on releasing the facts the borrowers filed suit as O.S. No. 186/2016 before the Munsiff's court, Punalur to set aside the sale deed and the same is pending. It is submitted that even after existing the document, the borrowers allowed to continue the construction of the house. Even now the borrowers and their family is residing in the house and paying the taxes. It is submitted that the original document is with Bank and mutation is not effected so far and property is in the name of borrower and her husband. Hence it is submitted that the so call sale deed is a sham document and same is not taken effect so far. 4) It is also submitted that petitioner obtained a statement of loan amount in respect of the car loan. As per the statement that the total amount due is Rs.32,91,993/- and overdue amount is Rs.3,17,650/- as on 30.6.2020 instead of Rs.35,69,205/- and Rs.6,73,875/-. 5) It is further submitted that the borrower Mrs. Sherin Kurian Varghese is attacked with the Covid-19 and she is in Home Isolation. She is not receiving any salary. After recovery from her _**W.A.1197/2020**_ 6 illness, she is prepared to clear the overdue amount in instalments. Hence it is humbly prayed that W.P.(C) may be allowed. ## 5. In the additional statement filed by the respondent bank, it is further stated that: “2. It is submitted that based on Exts.P5 & P6 regulatory package of RBI the respondent has formulated Broad guidelines and Standard Operating Procedure (SOP) for handling the EMI deferment and refunding of term loan installments for the period of 01.03.2020 to 31.05.2020 and later to 31.08.2020. As per Clause 4 of the SOP (Annexure-R1), the regulatory package is applicable only to standard account borrowers whose accounts were standard as on 01.03.2020. The petitioner whose account is classified as NPA prior to 03.05.2019 (as can be seen from Ext. P2) is not eligible for the benefits of the regulatory package. 3. With respect to the contentions in paragraph 3 of the reply statement of the petitioner, it is submitted that it is without the knowledge or consent of the respondent Bank that the secured asset has been sold by the petitioner thereby paving the way to offence of cheating and breach of trust. 4. It is submitted that as on 01.07.2020 the overdue amount in the said account is Rs.6,73,875/- and the closure balance is Rs.35,69,205/-. It is further submitted that the difference in the overdue amount and the closure balance as mentioned in paragraph 4 of the reply statement is because of the noninclusion of the uncollected interest after the account became NPA in the account statement collected by the petitioner. The _**W.A.1197/2020**_ 7 petitioner though paid an amount of Rs 5.05 lakh on 06.03.2020, due to non-payment of further installments the account again became NPA in May 2020. It is therefore submitted that the petitioner is not eligible for the regulatory benefit under Exts. P5 & P6 and the Writ petition is therefore liable to be dismissed.” ## 6. Considering the rival submissions and going through the material on record, writ court held that : “4. On a consideration of the facts and circumstances of the case and the submissions made across the bar, and taking note of the submission of the learned Senior counsel for the respondent bank as also the plea of financial hardship raised by the petitioner, I dispose the writ petition with the following directions:- (i) If the petitioner pays the entire balance outstanding in the car loan account, of Rs.35,69,205/- together with accrued interest from 30.06.2020, in 12 equal and successive monthly installments commencing from 14.09.2020, then further proceedings for recovery as against the petitioner shall be kept in abeyance. (ii) It is made clear that, if the petitioner commits a default in respect of any of the installments, he will lose the benefit of this judgment and the respondent bank will be free to continue the recovery proceedings against him from the stage at which they presently stand. (iii) It is further made clear that inasmuch as it is in exceptional cases that this Court would grant the reliefs aforementioned, no further petition for modification/extension of time will be entertained.” _**W.A.1197/2020**_ 8 7. Aggrieved by the Judgment in the writ petition No.12989 of 2020 dated 12.8.2020, this Writ Appeal is filed inter alia on the following grounds: A) It is submitted that the learned Single Judge ought to have found that the appellant is entitled for the benefits declared by RBI as per Exts.P5 and P6. B) It is submitted that the appellant cleared the entire overdue amount on 6.3.2020 evident from Ext.P4. The only thing is that there is a delay of 6 days in remitting the amount and it is also to be noted that Ext.P5 is dated 27.3.2020 and before that the appellant cleared entire overdue amount prior to issue of Ext.P5. C) It is also submitted that as the appellant cleared the entire overdue amount, the account may not be classified as NPA and default in paying the installment due to Covid-19 does not disentitle him from claiming the benefit of the moratorium declared by RBI. D) It is further submitted that the loanee is also a victim of Covid19 and she is admitted in a hospital in Kuwait and she is not getting any salary. Now she is recovered from it and after completing the procedure, she will get her salary. For that, some time is required. E) It is submitted that the overdue amount and the closure amount stated by the respondent is not correct as evident from Annexure-A. It is also submitted that the appellant is prepared to clear the entire overdue amount, if some time is granted. It is _**W.A.1197/2020**_ 9 further submitted that Annexure-A is not received at the time of filing the W.P.(C) and same is not produced along with WP(C). 8. Repeatedly, the Hon'ble Supreme Court has held that writ petitions as against proceedings initiated under the SARFAESI Act, 2002 should not be entertained. Reference can be made to a few decisions of the Hon'ble Supreme Court on that aspect. In Authorised Officer, State Bank of Travancore and Another v. Mathew K.C. reported in (2018) 3 SCC 85 , at paragraphs 15 to 18, the Hon'ble Supreme Court held as under: “15. It is the solemn duty of the Court to apply the correct law without waiting for an objection to be raised by a party, especially when the law stands well settled. Any departure, if permissible, has to be for reasons discussed, of the case falling under a defined exception, duly discussed after noticing the relevant law. In financial matters grant of ex-parte interim orders can have a deleterious effect and it is not sufficient to say that the aggrieved has the remedy to move for vacating the interim order. 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 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. The caution required, as expressed in United Bank of India v. Satyawati Tondon and others [AIR 2010 SC 3413], has also not been kept in mind before passing the _**W.A.1197/2020**_ 10 ## impugned interim order:- “46. It must be remembered that stay of an action initiated by the State and/or its agencies/instrumentalities for recovery of taxes, cess, fees, etc. seriously impedes execution of projects of public importance and disables them from discharging their constitutional and legal obligations towards the citizens. In cases relating to recovery of the dues of banks, financial institutions and secured creditors, stay granted by the High Court would have serious adverse impact on the financial health of such bodies/institutions, which (sic will) ultimately prove detrimental to the economy of the nation. Therefore, the High Court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters. Of course, if the petitioner is able to show that its case falls within any of the exceptions carved out in Baburam Prakash Chandra Maheshwari v. Antarim Zila Parishad , [1969 AIR 556, 1969 SCR (1) 518], Whirlpool Corpn. v. Registrar of Trade Marks [(1998) 8 SCC 1], and Harbanslal Sahnia v. Indian Oil Corpn. Ltd. [AIR 2003 SC 2120] and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order.” (emphasis supplied) 16. The writ petition ought not to have been entertained and the interim order granted for the mere asking without assigning special reasons, and that too without even granting opportunity to the Appellant to contest the maintainability of the writ petition and failure to notice the subsequent developments in the interregnum. The opinion of the Division Bench that the counter affidavit having subsequently been filed, stay/modification could be sought of the interim order cannot be considered sufficient justification to have declined interference. 17. We cannot help but disapprove the approach of the High Court for reasons already noticed in Dwarikesh Sugar Industries Ltd. v. Prem Heavy Engineering Works (P) Ltd. and _**W.A.1197/2020**_ 11 ## Another , [(1997) 6 SCC 450], observing :- “32. When a position, in law, is well settled as a result of judicial pronouncement of this Court, it would amount to judicial impropriety to say the least, for the subordinate courts including the High Courts to ignore the settled decisions and then to pass a judicial order which is clearly contrary to the settled legal position. Such judicial adventurism cannot be permitted and we strongly deprecate the tendency of the subordinate courts in not applying the settled principles and in passing whimsical orders which necessarily has the effect of granting wrongful and unwarranted relief to one of the parties. It is time that this tendency stops.” 18. The impugned orders are therefore contrary to the law laid down by this Court under Art.141 of the Constitution and unsustainable. They are therefore set aside and the appeal is allowed.” 9. In Civil Appeal Nos.10243-10250 of 2018 [ICICI Bank Ltd. v. Umakanta Mohapatra and Others] , by order dated 5.10.2018, the Honourable Apex Court reaffirmed the legal position that High Court has no jurisdiction to entertain writ petitions under Article 226 of the Constitution of India, relating to matters coming under the purview of SARFAESI Act, 2002, where a statutory remedy is available by filing an application under Section 17 of the said Act. 10. In K.C.Mathew's case, Hon'ble Apex Court stated that writ petition challenging proceedings initiated against SARFAESI Act, 2002 is not maintainable, in the light of the alternate remedy provided under the statute. Following the decision in K.C.Mathew's case, we are not _**W.A.1197/2020**_ 12 inclined to interfere with the judgment in W.P(C). No.12989 of 2020 dated 12.8.2020. Appeal fails and it is dismissed. 11. Mr. M.S. Radhakriahnan Nair, learned counsel for the appellant submitted that the guidelines issued in the matter of granting moratorium may be directed to be followed by the respondent Bank. Needless to make any observation on the same. If the bank is bound by any guidelines for moratorium, the same be considered in accordance with law. Sd/S. Manikumar, Chief Justice Sd/Shaji P. Chaly, Judge sou. _**W.A.1197/2020**_ 13 ## **APPENDIX** ## **PETITIONER'S EXHIBITS** **ANNEXURE-A - A COPY OF BANK STATEMENT ISSUED BY THE STATE BANK OF INDIA, ETTUMANOOR BRANCH DATED 15.7.2020**