Kerala High Court
Mano E B vs Union Of India on 31 May, 2024
Author: N.Nagaresh
Bench: N.Nagaresh
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE N.NAGARESH
FRIDAY, THE 31ST DAY OF MAY 2024 / 10TH JYAISHTA, 1946
WP(C) NO. 5248 OF 2023
PETITIONERS:
1 MANO E.B.,
AGED 71 YEARS,
S/O EDWARD. T, PROPRIETOR,
WESTON WATCH COMPANY,
TC 83/2923, SREE GANESH TOWER,
MG ROAD, PAZHAVANGADI,
THIRUVANANTHAPURAM -695023,
RESIDING AT WESTON, MUTTACAUD P O,
VEGANOOR,
THIRUVANANTHAPURAM, PIN - 695523
2 SARASWATHY R.,
AGED 69 YEARS,
W/O MANO E B, RESIDING AT WESTON,
MUTTACAUD P.O., VEGANOOR,
THIRUVANANTHAPURAM, PIN - 695523
3 REFI M.S.,
AGED 40 YEARS,
S/O MANO E B, RESIDING AT WESTON,
MUTTACAUD P.O., VEGANOOR,
THIRUVANANTHAPURAM, PIN - 695523
BY ADV. SRI.MANO E.B.(Party-In-Person)
RESPONDENTS:
1 UNION OF INDIA,
REPRESENTED BY: THE SECRETARY,
MINISTRY OF MICRO,
SMALL AND MEDIUM ENTERPRISES UDYOG BHAVAN,
NEW DELHI, PIN - 110011
2 THE SECRETARY,
DEPARTMENT OF FINANCIAL SERVICES,
MINISTRY OF FINANCE, 3RD FLOOR,
JEEVAN DEEP BUILDING,
SANSAD MARG,
NEW DELHI, PIN - 110001
W.P.(C) No.5248/2023
:2:
3 STATE OF KERALA,
REPRESENTED BY: THE PRINCIPAL SECRETARY,
INDUSTRY DEPARTMENT, SECRETARIAT,
THIRUVANANTHAPURAM, PIN - 695001
4 THE RESERVE BANK OF INDIA,
REPRESENTED BY THE REGIONAL DIRECTOR,
RESERVE BANK OF INDIA POST BAG NO.6507,
BAKERY JUNCTION,
THIRUVANANTHAPURAM,
KERALA, PIN - 695033
5 THE SOUTH INDIAN BANK,
REPRESENTED BY MANAGING DIRECTOR,
SIB HOUSE, TB ROAD, MISSION QUARTERS,
THRISSUR, PIN - 680001
6 THE AUTHORISED OFFICER,
SOUTH INDIAN BANK LTD,
SARFAESI ACT, REGIONAL OFFICE,
TC/31/151, YWCA BUILING,
3RD FLOOR, MG ROAD,
SPENCER JUNCTION STATUE,
THIRUVANANTHAPURAM, PIN - 695001
7 THE BRANCH MANAGER,
SOUTH INDIAN BANK LIMITED,
CHALA BRANCH, SHIVAKAMI BUILDINGS,
POWER HOUSE ROAD, FORT P.O.,
THIRUVANANTHAPURAM, PIN - 695023
BY ADVS.
SRI.SUNIL SHANKER
SMT.VIDYA GANGADHARAN(K/000424/2020)
SMT.SANDHRA.S(K/001610/2021)
SRI.ACHUTH KRISHNAN, CGC
SRI.SREEJITH V.S., GOVERNMENT PLEADER
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 31.05.2024, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
W.P.(C) No.5248/2023
:3:
N. NAGARESH, J.
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W.P.(C) No.5248 of 2023
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Dated this the 31st day of May, 2024
JUDGMENT
~~~~~~~~~
The 1st petitioner is the sole Proprietor of
M/s.Weston Watch Company which is a registered MSME.
Respondents 2 and 3 are the wife and son of the 1 st petitioner
and guarantors to the loan availed by the 1 st petitioner. The
5th respondent-Bank extended ₹45 lakhs as loan to the 1 st
petitioner. According to the petitioner, though ₹45 lakhs was
sanctioned under ECLGS, only an amount of ₹21.16 lakhs
was released to the petitioner and the remaining ₹23.84 lakhs
was recovered towards loan repayment. This was in gross
violation of ECLG Scheme and policy of the Union
Government.
2. When the Bank refused to restructure the loan
account of the petitioner in tune with Exts.P7 to P12 Schemes
with 100% guarantee from the Government of India, the 1 st
petitioner filed W.P.(C) No.951/2023. This Court disposed of
the said writ petition directing the competent authority of the
Bank to consider and pass orders on Ext.P11 representation.
The Bank, however, rejected the petitioner's representation
without adverting to or complying with the policies of the
Government / RBI guidelines.
3. The petitioners state that the 1st petitioner
submitted a proposal dated 14.07.2022 to the Bank making
an offer of ₹80 lakhs towards One Time Settlement.
However, the OTS proposal was rejected by the Bank. The
Bank, however, required the petitioner to submit a revised
proposal.
4. The petitioners state that Exts.P7 to P12 Schemes
mandate that once the loan is restructured, the principal
amount shall be paid only after seven years by servicing the
interest portion when demanded.
5. The petitioners pointed out that the secured asset
for the loan is the sole residential building in which the 1 st
petitioner is residing with his family. Coercive action taken by
the Bank without extending any benefit of revival schemes
notified by the Government of India is illegal and
unsustainable. The petitioners therefore seek to direct the 5 th
respondent to restructure the existing loan in the light of
Exts.P7 to P12. The petitioners also seek to direct the 5 th
respondent to put on hold all coercive steps initiated against
the petitioners.
6. The 6th respondent filed a counter affidavit on
behalf of respondents 5 to 7. On behalf of respondents 5 to 7,
the 6th respondent submitted that the respondent-Bank
initiated securitisation measures when the petitioners failed to
maintain the loan account. Possession notice was served on
the petitioners and was published in newspapers. The
petitioners initially accepted an OTS which is evident from
Ext.R6(b). But, subsequently, the petitioners represented that
the accounts are to be restructured. There was complete lack
of bona fide on the part of the petitioners.
7. I have heard the learned counsel for the
petitioners, the learned Central Government Counsel
representing respondent 1 and 2, the learned Government
Pleader representing the 3 rd respondent and the learned
Standing Counsel appearing for respondents 5 to 7.
8. There is no dispute that the 5 th respondent-Bank
has advanced finance to the 1 st petitioner. The loan was not
repaid promptly. The 5th respondent therefore initiated
recovery proceedings under the Securitisation and
Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002. The grievance of the petitioners is
that the respondents have not extended the benefit of Exts.P7
to P12 Schemes of the Government of India.
9. It is evident from the counter affidavit filed by
respondents 5 to 7 that the account operation was not
satisfactory and the accounts have become NPA on several
times. The CCOL accounts were restructured under the
Kerala Flood Restructuring Scheme in November, 2018. The
1st petitioner was granted two fresh working capital term
loans. The benefit of moratorium was also extended to the 1 st
petitioner till 31.07.2019. The petitioner could not service the
loan obligations even after the moratorium period.
10. The respondents would also submit that a Funded
Interest Term Loan (FITL) was allowed to the 1 st petitioner and
that too with 12-month moratorium on principal and interest
repayment. The 1st petitioner was also extended with ECLGS
loan of ₹38.84 lakhs in June, 2020. All the afore facts would
indicate that respondents 5 to 7 have extended benefit of
various Government Schemes to the 1st petitioner.
11. The further argument of the petitioners is that
multiple proceedings are taken against the 1 st petitioner. The
provisions of the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act,
2002 are intended to enforce the security interest of the
financial institutions. Going by the Scheme of the Act, 2002,
the financial institutions are entitled to invoke the provisions of
the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 along with any
other mode of recovery of loan. It is not correct to argue that
the Bank has a right to initiate SARFAESI proceedings only
when all other legal measures to recover the loan are
exhausted.
12. The attempt of the petitioners is to force
respondents 5 to 7 to stop securitisation proceedings initiated
by the Bank alleging violation of the provisions of Government
Schemes. Going through the pleadings in the writ petition, I
am satisfied that the 5th respondent-Bank has extended the
benefit of various Government Schemes to the petitioners.
Assuming that there is failure on the part of the Bank to do so,
that cannot be a reason for the petitioners to question the
proceedings initiated by the Bank under the SARFAESI Act.
In view of the afore facts, I find no merit in the
contentions of the petitioners as contained in the writ petition.
The writ petition is therefore dismissed.
Sd/-
N. NAGARESH, JUDGE
aks/29.05.2024
APPENDIX OF WP(C) 5248/2023
PETITIONERS' EXHIBITS:
Exhibit P.1 TRUE COPY OF PRESS RELEASE DATED 20-
05-2020 ISSUED BY PRESS INFORMATION
BUREAU, GOVERNMENT OF INDIA
Exhibit P.2 TRUE COPY OF ECLGS GUIDELINES DATED
06-10-2022 DOWNLOADED FROM WEBSITE OF
NATIONAL CREDIT GUARANTEE TRUSTEE
COMPANY LIMITED (NCGTCL), MINISTRY OF
FINANCE, GOVERNMENT OF INDIA
Exhibit P.3 TRUE COPY OF FAQS ON EMERGENCY CREDIT
LINE GUARANTEE SCHEME UPLOADED ON
WEBSITE OF NATIONAL CREDIT GUARANTEE
TRUSTEE COMPANY LIMITED, MINISTRY OF
FINANCE, GOVERNMENT OF INDIA
Exhibit P.4 TRUE COPY OF JUDGMENT DATED 18-01-2023
IN WP (C) NO.951 OF 2023 OF HON'BLE
HIGH COURT OF KERALA
Exhibit P.5 TRUE COPY OF REPRESENTATION DATED 19-
12-2022 SUBMITTED BY 1ST PETITIONER
BEFORE RESPONDENT BANK
Exhibit P.6 TRUE COPY OF LETTER DATED 07-02-2023
ISSUED BY 6TH RESPONDENT
Exhibit P.7 TRUE COPIES OF RELEVANT PAGES OF
CIRCULAR DATED 01-10-2021 ISSUED BY
4TH RESPONDENT
Exhibit P.8 TRUE COPIES OF CIRCULAR DATED 23-05-
2020 ISSUED BY NATIONAL CREDIT
GUARANTEE TRUSTEE COMPANY, GOVERNMENT
OF INDIA
Exhibit P.9 TRUE COPY CREDIT GUARANTEE SCHEME FOR
SUBORDINATE DEBT (CGSSD) PUBLISHED BY
BANK OF MAHARASHTRA
Exhibit P.10 TRUE COPY OF FRR FOR MSMES NOTIFIED BY
1ST RESPONDENT
Exhibit P.11 TRUE COPY OF CIRCULAR DATED 17-03-2016
ISSUED BY 4TH RESPONDENT
Exhibit P.12 TRUE COPY OF CIRCULAR DATED 05-05-2021
ISSUED BY 4TH RESPONDENT.
Exhibit P.13 TRUE COPY OF LETTER DATED 29-07-2022
ISSUED BY 6TH RESPONDENT
Exhibit P.14 TRUE COPY OF LETTER DATED 01-09-2022
ISSUED BY 6TH RESPONDENT
Exhibit P.15 TRUE COPY OF LETTER DATED 31-10-2022
ISSUED BY 6TH RESPONDENT
Exhibit P.16 TRUE COPY OF THE LETTER DATED 04-08-
2023 ISSUED BY THE BRANCH HEAD, CHALAI
BRANCH OF THE RESPONDENT BANK
Exhibit P.17 TRUE COPY OF THE NOTICE DATED 08-09-
2023 ISSUED BY THE ADVOCATE
COMMISSIONER
Exhibit P.18 TRUE COPY OF THE REPRESENTATION DATED
29-09-2023 SUBMITTED BEFORE THE
AUTHORISED OFFICER OF THE RESPONDENT
BANK.
Exhibit P.19 TRUE COPY OF THE NOTICE DATED 20-11-
2023 ISSUED BY THE ADVOCATE
COMMISSIONER.
RESPONDENTS' EXHIBITS:
Exhibit R6(a) TRUE COPY OF THE LETTER OF THE
RESPONDENT BANK DATED 03.04.2021
Exhibit R6(b) TRUE COPY OF THE LETTER OF THE 6TH
RESPONDENT BANK DATED 31.10.2022
Exhibit R6(c) TRUE COPY OF THE LETTER DATED
16.10.2023 ISSUED BY THE 7TH
RESPONDENT.
