C.M. Jahish and C.M. Vasantha vs The Regional Manager, The Senior Manager, Union Bank of India and The Authorised Officer

C.K. Abdul Rehim, J.—The 1st petitioner availed loan to the tune of Rs. 10 lakhs from the 2nd respondent Bank for business purpose. 2nd petitioner, mother of the 1st petitioner, is guarantor to the loan transaction. Immovable property belonging to the 2nd petitioner was mortgaged to secure the loan. On default in repayment of the loan amount, bank approached the Debts Recovery Tribunal and a recovery certificate was issued for a sum of Rs. 15,09,516/- along with interest. It is submitted that, thereafter the petitioners have approached the 2nd respondent Bank for settlement of the account and sought for waiver of interest. It is evident from Ext.P2 letter issued by the 2nd respondent Bank that in response to the request of the petitioners, the Bank had expressed its readiness for a `compromise settlement'' subject to its norms. It is submitted that pursuant to Ext.P2, various negotiations were conducted with the bank for `compromise settlement'' of the entire arrears. It is further submitted that in order to prove bona fides, the petitioners have effected payment of an amount of Rs. 8.25 lakhs after Ext.P2 letter. However, the `compromise settlement'' could not be materialised and the Bank is now proceeding with sale of the property, under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short `the SARFAESI Act''). It is further submitted that the 1st petitioner had arranged a N.R.O deposit to the tune of Rs. 7.75 lakhs from one of his friends and the said amount was deposited in a separate account. Hence the petitioners are seeking directions to the Bank to settle the account after permitting waiver of interest to the possible extent.

Today when the matter was taken up, it is submitted by the learned Counsel for the petitioners that, the amount of Rs. 7.75 lakhs, which was deposited by the third party, has already been transferred to the loan account on 24.09.09 and credited against the arrears. The Standing Counsel for the respondent Bank endorses the said submission. Learned Counsel appearing for the petitioners submitted that they are ready and willing to pay off the entire balance provided waiver of interest and `compromise settlement'' is considered by the Bank. Learned Standing Counsel submitted that since the loan account was in default for quite a long time and since the Tribunal had already issued recovery certificate, the petitioners should be compelled to settle the arrears immediately, if they want to get rid of the coercive steps initiated. It is also submitted that the balance outstanding as on today is Rs. 8,90,152/-.

Having considered the rival contentions and facts and circumstances of the case, I am of the opinion that eventhough interference on merits to resolve the dispute regarding the correctness of balance outstanding as well as feasibility of the `compromise settlement'' may not be neither warranted nor desirable in this Writ Petition, some indulgence can be shown for permitting the petitioner to pay off the entire liability within a reasonable time in instalments.

Accordingly, this Writ Petition is disposed of directing the petitioners to make payment of an amount of Rs. 2,00,000/- (Rupees Two lakhs only) on or before 31.10.2009. The respondents are directed to keep in abeyance all further steps till 31.10.09. On payment of the said amount, the respondent-bank will consider `compromise settlement'' by allowing waiver of interest to the permissible extent, after affording opportunity of hearing to the petitioner, and shall intimate the net balance payable by the petitioners. It is submitted by the learned Standing Counsel that considering the entire facts and circumstances of the case, the matter will be dealt with in a manner favourable to the petitioners to the possible extent. On intimation of the balance outstanding through such statement, the petitioners shall continue to pay the said amount in five equal monthly installments starting from 30.11.2009 and on or before the last date of the succeeding months.

It is made clear that on default in payment of the initial amount or any of the installments, the Bank will be free to proceed with further steps pursuant to the proceedings initiated under the SARFAESI Act. It is also made clear that the benefit granted under this judgment is subject to the condition that the petitioners are precluded from raising any subsequent challenge against the proceedings before this Court or before any other forum.