Dismissed

P.S.Sarvanath v. Kerala Financial Corporation

Kerala HC18 Aug 2014WP(C)/13261/2014

Case brief

AI extract

What is this about?

Petitioners challenged recovery proceedings against a business loan. The court found they failed to comply with a prior order directing settlement of arrears for regularization. Holding that quantitative disputes are not amenable to writ jurisdiction, the court dismissed the plea for full regularization but permitted payment of initial arrears in installments to suspend recovery.

What did the court decide?

Petitioners permitted to make deposit of Rs.75,00,000 in three equal monthly installments upon which recovery proceedings shall be kept in abeyance.

P.S.Sarvanath Vs Kerala Financial Corporation — Civil Procedure and Limitation | Kerala HC (2014)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN

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MONDAY, THE 18TH DAY OF AUGUST 2014/27TH SRAVANA, 1936

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WP(C).No. 13261 of 2014 (G)

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PETITIONER(S):

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1. P.S.SARVANATH, S/O.SADANANDAN, AGED 42, PARVATHY VILLA, MANAGING PARTNER, M/S ORCHID PROPERTIES & RESORTS, F-4TH FLOOR, APPLE TOWER, NH BYPASS, EDAPPALLY, ERNAKULAM - 682 024.

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2. ANUPAMA SARVANATH, W/O.P.S.SARVANATH, AGED 38, PARVATHY VILLA, THURAVOOR P.O., ANGAMALY, ERNAKULAM - 683 586.

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3. LEKSHMI BAI M., W/O.K.N.SUDHEENDRAN, AGED 68, KOCHUVEEDU, NO.3, AREEKARA P.O., CHENGANNUR, ALAPPUZHA - 689 505.

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BY ADVS.DR.V.N.SANKARJEE SRI.S.SIDHARDHAN SRI.V.N.MADHUSUDANAN

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RESPONDENTS:

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1. THE KERALA FINANCIAL CORPORATION, BRANCH OFFICE, KALOOR, KOCHI - 682 017, REPRESENTED BY ITS CHIEF MANAGER.

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2. THE DEPUTY TAHSILDAR (R.R.), KERALA FINANCIAL CORPORATION, KALOOR, KOCHI - 682 017.

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3. THE DEPUTY TAHSILDAR (R.R.), KERALA FINANCIAL CORPORATION, ALAPPUZHA - 688 001.

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R1 BY SMT.MOLLY JACOB, SC SRI.T.V.GEORGE, SC R2 & R3 BY GOVERNMENT PLEADER SRI.P.V.LONACHAN

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 18-08-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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MBR

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WP(C).No. 13261 of 2014 (G)

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APPENDIX

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PETITIONER(S)' EXHIBITS :

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EXHIBIT P1:TRUE COPY OF THE RECEIPT DATED 06.08.2011 ISSUED BY THE 1ST RESPONDENT.

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EXHIBIT P1(A): TRUE COPY OF THE RECEIPT DATED 01.09.2011 ISSUED BY THE 1ST RESPONDENT.

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EXHIBIT P1(B): TRUE COPY OF THE RECEIPT DATED 07.10.2011 ISSUED BY THE 1ST RESPONDENT.

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EXHIBIT P1(C): TRUE COPY OF THE RECEIPT DATED 05.11.2011 ISSUED BY THE 1ST RESPONDENT.

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EXHIBIT P1(D): TRUE COPY OF THE RECEIPT DATED 06.12.2011 ISSUED BY THE 1ST RESPONDENT.

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EXHIBIT P1(E): TRUE COPY OF THE RECEIPT DATED 07.01.2012 ISSUED BY THE 1ST RESPONDENT.

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EXHIBIT P1(F): TRUE COPY OF THE RECEIPT DATED 08.02.2012 ISSUED BY THE 1ST RESPONDENT.

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EXHIBIT P1(G): TRUE COPY OF THE RECEIPT DATED 18.05.2012 ISSUED BY THE 1ST RESPONDENT.

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EXHIBIT P1(H): TRUE COPY OF THE RECEIPT DATED 04.07.2012 ISSUED BY THE 1ST RESPONDENT.

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EXHIBIT P1(I): TRUE COPY OF THE RECEIPT DATED 04.09.2012 ISSUED BY THE 1ST RESPONDENT.

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EXHIBIT P1(J): TRUE COPY OF THE RECEIPT DATED 26.09.2012 ISSUED BY THE 1ST RESPONDENT.

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EXHIBIT P1(K: TRUE COPY OF THE RECEIPT DATED 03.01.2013 ISSUED BY THE 1ST RESPONDENT.

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EXHIBIT P1(L): TRUE COPY OF THE RECEIPT DATED 21.01.2013 ISSUED BY THE 1ST RESPONDENT.

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EXHIBIT P1(M): TRUE COPY OF THE RECEIPT DATED 25.03.2013 ISSUED BY THE 1ST RESPONDENT.

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EXHIBIT P1(N): TRUE COPY OF THE RECEIPT DATED 03.07.2013 ISSUED BY THE 1ST RESPONDENT.

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EXHIBIT P1(O): TRUE COPY OF THE RECEIPT DATED 05.11.2013 ISSUED BY THE 1ST RESPONDENT.

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--2--

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--2--

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WP(C).No. 13261 of 2014 (G)

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EXHIBIT P1(P): TRUE COPY OF THE RECEIPT DATED 24.12.2013 ISSUED BY THE 1ST RESPONDENT.

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EXHIBIT P2: TRUE COPY OF THE DISCHARGE SUMMARY ISSUED FROM THE HOSPITAL.

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EXHIBIT P3: TRUE COPY OF THE NOTICE DATED 02.05.2014 ISSUED BY THE 2ND RESPONDENT UNDER SECTION 34 OF RR ACT.

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EXHIBIT P3(A): TRUE COPY OF THE NOTICE DATED 02.05.2014 ISSUED BY THE 2ND RESPONDENT UNDER SECTION 7 OF RR ACT.

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EXHIBIT P4: TRUE COPY OF THE NOTICE DATED 15.05.2014 ISSUED BY THE 3RD RESPONDENT UNDER SECTION 34 OF RR ACT.

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EXHIBIT P4(A): TRUE COPY OF THE NOTICE DATED 02.05.2014 ISSUED BY THE 3RD RESPONDENT UNDER SECTION 7 OF RR ACT.

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EXHIBIT P5: TRUE COPY OF THE JUDGMENT DATED 19.02.2013 IN W.P.(C)NO.4086/2013.

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RESPONDENT(S)' EXHIBITS:

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EXHIBIT R2(A) : TRUE COPY OF THE STATEMENT OF ACCOUNTS RELATING TO PETITIONER'S ACCOUNT FOR THE PERIOD 1.7.2012 - 30/6/2014 MAINTAINED IN THE RESPONDENT CORPORATION.

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EXHIBIT R2(B) : TRUE COPY OF LETTER DTD. 11.10.2013 ISSUED TO THE PETITIONER FROM THE RESPONDENT CORPORATION.

/TRUE COPY/

P.A. TO JUDGE

MBR/

K.VINOD CHANDRAN, J

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- - - - W.P.(C).No. 13261 of 2014

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- - - - Dated 18^th August, 2014

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JUDGMENT

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The petitioners are aggrieved with the recovery proceedings initiated against their properties which were admittedly mortgaged to the respondent Corporation. The petitioners were disbursed with Rs.1,62,00,000/- as on 22.06.2012 which principal amount they were obliged to repay in equated monthly instalments on every succeeding

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month starting with an initial remittance of Rs.3.9 Lakhs and continued with remittance of Rs.3.7 Lakhs, and was also further liable to pay the interest levied as per the agreement.

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The equated monthly instalments for repayment of the principal amount was fixed as above for fifty four months, on the petitioners having been sanctioned Rs.2 Crores for the construction of a resort project. The petitioners however,

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WP(C).13261/14

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having not utilized the amounts disbursed, for the purpose of which the loan was availed, the respondent Corporation stopped disbursement after disbursing Rs.1,62,00,000/-. Default having been committed in repayments, recovery proceedings have now been initiated, which is assailed by the petitioners in the above writ petition.

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The learned counsel for the petitioners assert that the loan was not availed for the

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purpose of a Resort project. However, there is no specific averment as to what is the purpose for which the loan was availed except, raising a contention, that it was a term loan for business purposes. Nothing is stated as to what was the business carried on or why such huge amounts were advanced to the petitioners.

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In any event, the default having occurred in re-payment, recovery proceedings were initiated

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WP(C).13261/14

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by the respondent Corporation. It is also submitted by the learned counsel appearing for the respondent Corporation that there was clear mis-utilization of funds upon which the disbursement of the loan was stopped and recovery proceedings initiated. In any event, when recovery proceedings were initiated, petitioners were before this Court with W.P.(C).4086/2013 which was disposed of by Ext.P5.

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At the time of disposal of W.P.(C). 4086/2013, the respondent Corporation had brought to the notice of this Court that, there was clear mis-utilization of funds and hence, the loan was recalled and proceedings initiated for recovery. In the context of the respondent Corporation having submitted before Court that the respondent Corporation is willing to regularize the loan on the arrears being settled, petitioners undertook to pay the defaulted dues that were remaining

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WP(C).13261/14

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outstanding on 31.03.2013. It was also directed that if payment is made as above, the respondent will consider the request of the petitioners for regularization of the loan and orders thereon will be passed, at any rate, within four weeks thereafter.

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Considerable dispute is raised with respect to the satisfaction of the condition as denoted in Ext.P5. The petitioners assert, an amount of Rs.18,00,000/- has been paid. The learned counsel for the respondent would, on a reference to Ext.P5 statement of accounts, produced along with the additional counter affidavit, contend that more than Rs.37,00,000/- was due as on 31.03.2013.

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The learned counsel for the petitioners would raise a contention that, in fact, the dues as on 31.03.2013 were far lesser. However, this Court under Article 226 of the Constitution of

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WP(C).13261/14

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India is not called upon to compute the amounts nor look into the accounts to find out whether the credits have been adjusted in accordance with the agreement and interest levied in accordance with such agreement. Such disputes would have to be raised by the petitioners before the proper forum and not invoking the extraordinary remedy under Article 226 of the Constitution of India.

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The fact remains, that the petitioners failed to comply with Ext.P5 judgment of this Court. If the petitioners' submission of satisfaction is accepted; it is not clear as to why the petitioners did not initiate any proceedings, to compel the Bank to regularize the loan account. Ext.P5 was passed on 19.02.2013 and after more than 1½ years, petitioners have chosen to file a fresh writ petition challenging the recovery proceedings; merely contending that the conditions in Ext.P5 were complied, without having

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taken resort to any procedure to compel the respondent Corporation to comply with Ext.P5.

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In the above stated circumstances, it can

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only be deemed that the petitioners have not complied with the condition imposed in Ext.P5. In that context, the petitioners cannot, also, be granted, any regularization since the benefit of the same, conceded by the respondent Corporation before this Court at the earlier instance, has not been availed of by the petitioners.

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The learned counsel for the respondent

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Corporation contends that the amounts due as on 01.07.2014; the principal, interest as also the penal interest, is evidenced from Ext.R2(a). It is also contended that the petitioners had approached the Honourable Finance Minister under whose instruction, re-structuring of the loan was granted as is evidenced in Ext.R2(b). The

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WP(C).13261/14

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petitioners have not complied with the same also. It is also to be noticed that the petitioners failed to disclose the same in the writ petition and have approached this Court claiming settlement in instalments.

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Taking all the above circumstances into consideration, this Court is not persuaded to extent equity to the petitioners invoking the extraordinary remedy under Article 226 of the Constitution of India. It is also to be noticed that the statement of accounts produced by the respondent Corporation at Ext.R2(a) indicates the total credit in the account to be Rs.1,24,02,352/-. The computation of the principal amount as per the original agreement and the instalment granted therein, would indicate the petitioners' obligation to pay an amount of Rs.96,40,000/- in the preceding months; being 26 in number. Needless to say, interest as applied to

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the account as per the original agreement also would have to be satisfied by the petitioners, and in the event of default; the penal interest too. In such circumstances, this Court is not convinced that any further opportunity for regularization can be granted to the petitioners. The opportunity granted by Ext.P5 as also by Ext.R2(b) was not availed of by the petitioners, thus dis-entitling the petitioners to any further equitable consideration.

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However, considering the fervent plea made by the learned counsel for the petitioners, and also considering the huge amounts due in the loan account as also taking into account the anxiety of the Corporation in effecting recovery, the petitioners shall be permitted to make the payment in instalments, as directed herein.

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Looking at Ext.R2(a), the total arrears

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due as on 01.07.2014 was Rs.70,44,612/- with respect to the principal amount alone. Hence, the petitioners shall make a deposit of Rs.75,00,000/in three equal monthly instalments; on 18.09.2014, 18.10.2014 and 18.11.2014 in which event, the recovery proceedings shall be kept in abeyance.

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If the petitioners commit even one

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default, the respondent Corporation shall be

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entitled to revive the recovery proceedings and proceed against the petitioners' properties. On payment of the instalment as above, the recovery proceedings shall be kept in abeyance and the petitioners shall be granted ten monthly instalments to satisfy the entire balance amounts as per the statement issued by the respondent Corporation showing the arrears as on 30.11.2014. The said statement shall be issued immediately after the 3^rd instalment of the defaulted arrears is made.

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WP(C).13261/14

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If the petitioners make the initial

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deposit, the respondent Corporation shall keep the recovery proceedings in abeyance. On further deposits being made as indicated above, the recovery proceedings shall be revived only on two

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consecutive defaults being committed.

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The writ petition is disposed of, leaving the parties to suffer their costs.

Sd/-

K.VINOD CHANDRAN

Judge

Mrcs

//True Copy//

P.S.Sarvanath v. Kerala Financial Corporation

Case brief

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P.S.Sarvanath v. Kerala Financial Corporation

Case brief

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