High Court of KeralaSingle Judge2019-03-12Petition disposed with directions; writ petitio...

Varghese Joseph @ Sabu & Janny Varghese v. State Bank of India and Authorized Officer, State Bank of India, Alappuzha

Case / Petition Number:WP(C).No. 5922 of 2019

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: Devan Ramachandran
Judgment Date: 2019-03-12
Court Decision / Holding: The writ petition is ordered accordingly. The Bank is directed to issue a letter to the prospective purchaser within 10 days, indicating willingness to release title documents on payment of the balance in the EPC account, along with charges and interest, within a specified period. Upon such payment, the EPC account shall be closed; the petitioners shall pay Rs. 16,30,451 by 28.03.2019 for the remaining two accounts, which will then stand regularised, subject to payment of regular EMIs thereafter. The petitioners shall execute security documents by 31.03.2019. If any default occurs, the benefit of this judgment is vacated and the Bank may continue with SARFAESI proceedings from the date of this order.
Final Disposition: Petition disposed with directions; writ petition allowed in terms of the directions issued, with peremptory compliance required and consequences for non-compliance clearly stated.

Parties to the Case

Appellants / Petitioners

VARGHESE JOSEPH @ SABU
JANNY VARGHESE

Respondents

STATE OF BANK OF INDIA
THE AUTHORIZED OFFICER, STATE BANK OF INDIA

Legal Representation & Advocates

Counsels for Petitioners

• Sri. Mathew KuriaKose

Counsels for Respondents

• Sri. K.K. Chandran Pillai (Sr.)
• Smt. Ambily S., SC, SBI

Case Synopsis & Summary

This writ petition challenges Ext.P1 notice issued under Section 13(2) of the SARFAESI Act by the respondent Bank. The court takes note of settled law, citing Union Bank of India v. Satyawati Tondon (2010) 8 SCC 110 and Authorised Officer, SBT v. Mathew, ILR 2018 (1) Ker. 479, to emphasize that the High Court’s powers in SARFAESI challenges are constrained where efficacious statutory remedies exist. The petitioners seek a limited indulgence to settle one loan account in full via a prospective purchaser and to regularise the remaining two accounts. The bank, identifying three accounts—Export Packing Credit, Cash Credit, and Term Loan—proposes a structured settlement: issue a letter to the purchaser accepting full dues for the EPC account to close it, while the petitioners pay the balance of Rs. 16,30,451 for the other two accounts, by 28.03.2019, so those accounts can be regularised. The petitioners also undertake to execute security documents by 31.03.2019 and to maintain regular EMIs thereafter. The court directs the bank to issue the requisite letter within 10 days, conditioned on timely payment; upon compliance, the EPC account will be closed and the other two accounts regularised. A default will nullify the benefits and permit recovery by SARFAESI proceedings. The petition is thus disposed with peremptory directions.

Provisions of Law Cited

Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SARFAESI Act)

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioners seek a narrow relief: to permit settlement by paying off one loan account in full via a prospective purchaser and to regularise the other two accounts. They point to three loan accounts, with the largest currently under a sale arrangement; the purchaser has agreed to pay the amounts due for closure of that account and the petitioners request a Bank letter to this effect, enabling the transfer of liability. They urge that efficacious statutory remedies exist and the court should allow this targeted settlement rather than escalate to further SARFAESI action. The goal is to close the EPC loan and regularise the Cash Credit and Term Loan facilities, subject to timely payment and execution of security documents.

Contentions of Respondents

The respondents affirm the existence of three accounts, with the Export Packing Credit account showing a total outstanding of Rs. 1,07,71,188 as on 11.03.2019. They propose to issue a letter to the prospective purchaser confirming willingness to accept the full due in that account, along with charges and interest, provided the petitioners pay the EPC balance and an additional Rs.16,30,451 for the other two accounts by 28.03.2019. If complied with, those two accounts would be regularised; the petitioners would execute necessary security documents by 31.03.2019 and continue to service future EMIs. They argue this is a controlled, lawful settlement mechanism under SARFAESI and seek to safeguard the bank’s interests while ensuring a structured exit for the borrowers.

Cited Precedents (2)

Case Name	Citation	Treatment	Explanation
Union Bank of India v. Satyawati Tondon	2010 (8) SCC 110	Positive	Cited as part of the settled law that restricts High Court jurisdiction in SARFAESI challenges owing to the availability of efficacious statutory remedies; followed by the present judgment.
Authorised Officer, SBT v. Mathew	ILR 2018 (1) Ker. 479	Positive	Cited and followed as reinforcing the principle of limited jurisdiction and the preference for statutory remedies in SARFAESI matters.

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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 12TH DAY OF MARCH 2019 / 21ST PHALGUNA, 1940** ## **WP(C).No. 5922 of 2019** ## **PETITIONER/S:** |**1**|**VARGHESE JOSEPH @ SABU, AGED 58 YEARS**| |---|---| ||**S/O. M.V. JOSEPH, MALAYAMPURAM HOUSE,**| ||**POOMTHOPPE, AVALOOKUNNU P.O.,**| ||**ALAPPUZHA DISTRICT, 688 006.**| |**2**|**JANNY VARGHESE, AGED 52 YEARS**| ||**W/O. VARGHESE, JOSEPH,**| ||**MALAYAMPURAM HOUSE,**| ||**POOMTHOPPE, AVALOOKUNNU P.O.,**| ||**ALAPPUZHA DISTRICT, 688 006.**| ||**BY ADV. SRI.MATHEW KURIAKOSE**| ## **RESPONDENT/S:** |**1**|**STATE OF BANK OF INDIA**| |---|---| ||**ALAPPUZHA MAIN BRANCH,**| ||**BEACH ROAD, ALAPPUZHA 688 012,**| ||**REPRESENTED BY BRANCH MANAGER.**| |**2**|**THE AUTHORISED OFFICER,**| ||**STATE BANK OF INDIA,**| ||**ALAPPUZHA MAIN BRANCH,**| ||**BEACH ROAD, ALAPPUZHA 688 012.**| ||**BY ADVS.**| ||**SRI.K.K.CHANDRAN PILLAI (SR.)**| ||**SMT.AMBILY S., SC, SBI**| **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 12.03.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** WPC 5922/19 2 ## **JUDGMENT** The petitioners impugn Ext.P1 notice issued by the respondent-Bank under the provisions of Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act ('the SARFAESI Act' for brevity). However, it is now well settled, going by the judgment of the Hon'ble Supreme Court in **Union Bank of India v. Satyawati Tondon** ((2010) 8 SCC 110) and followed recently in **Authorised Officer, SBT v. Mathew** (ILR 2018 (1) Ker. 479), that the jurisdiction of this Court in entertaining this challenge is severely restricted, on account of the availability of efficacious alternative statutory remedies to the petitioners. 2. When I disclosed my mind as afore at the Bar, Sri. Mathew Kuriakose, the learned counsel for the petitioners, submits that his clients are only seeking a limited indulgence of this WPC 5922/19 3 Court for being allowed to pay off the liability in one of their loan accounts thus closing it, and to regularise the others. He says that, as is clear from Ext.P1, there are three loan accounts and that, with respect to the largest one, his clients have already entered into an agreement for sale with a prospective purchaser, who has consented to pay the amounts required for the closure of the said account, so that the other two accounts can be regularised. He submits that his clients require a letter from the respondent-Bank that they are willing to allow another Bank to take over the liability and, therefore, prays that the respondent-Bank be directed to do so. 3. Sri. K.K. Chandran Pillai, the learned Senior Cousel, assisted by Smt. S. Ambily, the learned Standing Counsel for the respondentBank, submits that as is evident from Ext.P1, there are three accounts; one of which is an WPC 5922/19 4 Export Packing Credit account and the other two being Cash Credit and Term Loan facilities. He says that the total outstanding in the Export Packing Credit account, as on 11.03.2019, is **Rs.1,07,71,188/-** and that the Bank is ready to issue a letter as requested by the petitioners, addressed to the Bank of the prospective purchaser that they are willing to accept the full amounts due in the afore account along with all applicable charges and interest, within a specified period of time and that if the petitioners are able to do so, the said account can be closed and the other two accounts, namely the Cash Credit and Term Loan facilities, can be regularised, provided the petitioners pay an additional amount of **Rs.16,30,451/-** , which is the balance outstanding therein, as on 12.03.2019, on or before **28.03.2019** . 4. Sri. Mathew Kuriakose, the learned counsel for the petitioners, submits that his WPC 5922/19 5 clients accept these suggestions and prays that this writ petition be ordered on such terms. 5. In the afore circumstances, taking specific note of the submissions of Sri. K.K. Chandran Pillai, the learned Senior Counsel for the respondent-Bank, I direct the Bank to issue a letter, addressed to the Bank of the prospective purchaser, that they are willing to release the title documents of items 1 and 2 properties mentioned in Ext.P1, provided the petitioners pay the balance outstanding in the Export Packing Credit account afore mentioned, along with all applicable charges and interest is paid, within a time to be specified; which shall not be less than 10 days from the date of the letter, so as to close the said account. 6. Once such payment is made into the Export Packing Credit account and the same is closed, the petitioners will pay Rs.16,30,451/-, which is stated to be the overdue amount in the WPC 5922/19 6 other two accounts as on 12.03.2019, along with all applicable charges and interest, on or before 28.03.2019; in which event, these two accounts will stand regularised. 7. Needless to say, the petitioners will also pay the regular EMIs in the accounts to be regularised, without fail in future, in addition to the above. 8. Since the Cash Credit and Term Loan accounts are thus directed to be regularised, it goes without saying that the petitioners will also execute all necessary security documents, as instructed by the Bank, before 31.03.2019, so as to enable them to service those accounts in terms of the original loan sanction thereafter. 9. Thus, if the petitioners comply with the directions afore, the final consequence will be that the Export Packing Credit account will be closed and the other two accounts will stand regularised. If there is any default in making WPC 5922/19 7 the payment as directed above, the benefit granted under this judgment would stand vacated and the Bank will be at liberty to recover the entire liability from the petitioners by continuing with the proceedings from the stage it is on this date. It is further clarified that the directions in this judgment are peremptory in nature and that the petitioners will have to comply with the same meticulously. I caution the petitioners that no further requests for extension or modification of this judgment, save in exceptional circumstances, will be permitted and that if the petitioners fail to comply with the directions herein, they will lose the benefit of this judgment and they will also be foreclosed from challenging the measures/proceedings taken by the Bank under the SARFAESI Act and impugned in this writ petition before any other alternative Forum or Court. WPC 5922/19 8 The writ petition is ordered accordingly. **Sd/-** RR **DEVAN RAMACHANDRAN JUDGE** WPC 5922/19 9 ## APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE NOTICE DATED 22.10.2018 ISSUED UNDER SECTION 13 (2) OF THE SARGAESI ACT. EXHIBIT P2 TRUE COPY OF THE COMMUNICATION DATED 1.11.2018 ISSUED TO THE 1ST RESPONDENT BANK. EXHIBIT P3 TRUE COPY OF THE STATEMENT OF ACCOUNT DATED 25.2.2019 OF THE CASH CREDIT CC STOCKS ACCOUNT NO. 00000030849260631 WITH THE 1ST RESPONDENT BANK. EXHIBIT P4 TRUE COPY OF THE STATEMENT OF ACCOUNT DATED 25.2.2019 OF THE CC PRE SHIPMENT EPC SSI ACCOUNT NO. 00000030998997414 WITH THE 1ST RESPONDENT BANK.