T R Lalu & Anr. vs State Of Kerala & Ors.

The petitioners had availed credit facilities from the 6^th respondent bank. On default being committed, the bank initiated proceedings under Section 69 of the Kerala Co-operative Societies Act, 1969, and obtained an Award determining the liability of the petitioners. On the Award being put to execution before the Munsiff’s Court, Perumbavoor, the mortgaged property was brought to sale. According to the petitioners, their mortgaged property is included in the ‘Navakiranam Scheme’ of the Forest Department for voluntary relocation and compensation benefits and that following the directions issued by this Court in WP(C) No.43525 of 2024, the application filed by the petitioners is being considered by the competent authority for the award of compensation under the aforesaid scheme.

When this matter came up for consideration on 19.06.2026, this Court passed the following order:-

The petitioners has thereafter filed an affidavit dated 13.07.2026 stating that the amount receivable from the Forest Department is Rs.30,00,000/- and the amount is to be received in two installments of Rs.15,00,000/- each. The petitioners also produced a certificate from the respondent bank stating that the amount of compensation can be paid to the petitioners, after deducting an amount of Rs.9,93,936/-, which was due to the bank as on 08.06.2026. The petitioners have now filed IA No.1 of 2026 stating that they may be permitted to settle the liability under the One Time Settlement Scheme now in force (Aswas 2026). It is submitted that, going by the provisions of Circular No.19 of 2026, the benefits of circular No.82 of 2013 is also to be extended to the petitioners. It is submitted that the petitioners are entitled to the benefits of Circular No.82 of 2013 which provides that in respect of loans which are less than Rs.5,00,000/-, the amount of interest cannot exceed the amount of principal. It is submitted that if the benefits of circular No.82 of 2013 and circular No.19 of 2026 introducing the ‘Aswas Scheme’ are extended to the petitioners, the petitioners will be in a position to clear the liability in the manner permitted by the bank. It is submitted that the amounts can be remitted immediately if all the benefits under the Scheme are extended to the petitioners.

The learned counsel appearing for the respondent bank submits that the petitioners may not be entitled to the benefits of the circular which provides that in respect of loans less than Rs.5,00,000/-, the amount of interest will not exceed the amount of principal. It is submitted that, in terms of the provisions contained in circular No.19 of 2026, the bank has to take into consideration, the current financial position of the borrower, repayment capacity etc. before taking a decision on the benefits to be extended in terms of the One Time Settlement Scheme. It is submitted that the Bank has no objection to consider the case of the petitioner strictly in terms of the provisions contained in circular 19 of 2026. It is pointed out that the One Time Settlement Scheme is to expire on 30.09.2026. It is stated that under the Scheme, the amounts will have to be remitted by 5.00 PM on 30.09.2026.

Having heard the learned counsel appearing for the petitioners, the learned Government Pleader and the learned counsel appearing for the respondent Bank, I am of the opinion that this writ petition can be disposed of directing that the claim of the petitioners for the benefit of One Time Settlement Scheme now in force (Aswas 2026) shall be considered by the respondent bank, strictly in terms of circular No.19 of 2026. Since the scheme is yet to expire on 30.09.2026, it is directed that, if the petitioners make a suitable application, the matter shall be considered by the competent authority tomorrow itself.

Having heard the learned counsel appearing for the petitioners, the learned Government Pleader and the learned counsel appearing for the respondent Bank, this writ petition will stand disposed with the following directions:-