SARFASI Act: High Court of Kerala Grants Relief to Borrower, Orders Repayment in Installments Amidst COVID-19 Hardships

In a significant judgment, the High Court of Kerala, presided over by Justice N. Nagares, granted relief to a borrower facing coercive recovery proceedings for loans availed from Kerala Bank. The petitioner, Anil Kumar G., had approached the court aggrieved by the bank's recovery actions under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

Justice Nagares, in his observation, empathized with the borrower's situation, acknowledging that "the default in repayment occurred lately due to reasons beyond the control of the petitioner" [Para 9]. The court recognized the impact of the COVID-19 pandemic on the petitioner's financial ability to repay the loans.

Anil Kumar had availed various loans from Kerala Bank between 2011 and 2022. He faced difficulties in repaying due to the pandemic and sought to arrange the repayment of overdue amounts in monthly installments. However, the bank initiated coercive proceedings, leading him to seek judicial intervention.

The court, while considering the facts and circumstances of the case, disposed of the writ petition with specific directions. The petitioner was ordered to "remit the overdue amount ₹2,60,125/- in the Housing Loan account and the outstanding amount of ₹17,58,289/- in the Overdraft account in 10 equal and consecutive monthly instalments" [Para 11(i)], starting from February 19, 2024. The court also directed that the current EMIs in the Housing Loan account should be paid along with the aforesaid payments [Para 11(iii)]. It was emphasized that if the petitioner defaulted in making these payments, the respondents would be free to continue with coercive proceedings [Para 11(ii)].

This decision reflects the judiciary's recognition of the financial hardships faced by individuals due to the COVID-19 pandemic and its willingness to provide reasonable accommodations in loan repayments. The case underscores the importance of a balanced approach in financial disputes, especially in unprecedented times like a pandemic.

Date of Decision: 17th January 2024

ANIL KUMAR.G VS THE KERALA BANK