The Kerala High Court directed to clear off liability against the coercive proceedings for recovery of financial advance.
The petitioners have approached the Court aggrieved by the coercive proceedings for recovery of financial advance made by the DCB Bank to the petitioners, invoking the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
The Bank paid ₹58 lakhs to the petitioners as Business Loan in the year 2019. The petitioners state that though the petitioners made remittances promptly during the initial repayment period of the financial advance, they could not pay the repayment instalments promptly later due to flood and Covid-19 pandemic. The repayment of loan fell into arrears later. It happened due to reasons beyond the control of the petitioners.
Though the petitioners requested the Bank to permit the petitioners to repay the overdue amounts in easy monthly instalments, the Bank authorities were not yielding. The authorities, instead, started coercive proceedings, invoking the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Security Interest (Enforcement) Rules, 2002 and issued notices.
The petitioners stated that they are still in a position to clear the overdue amounts towards the loan, if sufficient time is given to clear the dues in easy monthly instalments. If the respondents are permitted to continue with the coercive proceedings and auction the secured assets provided by the petitioners, they will be put to untold hardship and loss.
The specific case of the petitioners is that the petitioners have been making the repayment and maintaining the loan account initially. The default in repayment of the account occurred lately due to reasons beyond the control of the petitioners. The petitioners have provided substantial security which will safeguard the interest of the Bank.
A Single Bench of Justice N Nagaresh directed that “The petitioners shall remit an amount of ₹1 lakh on or before 12.04.2024. The petitioners shall remit the balance overdue amount in subsequent consecutive seven equal monthly instalments thereafter, along with accruing interest and other Bank charges, if any. If the petitioners remit ₹1 lakh as directed above, sale shall stand deferred. If the petitioners commit default in making payments as directed above, the respondents will be at liberty to continue with coercive proceedings against the petitioners in accordance with law.”
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