[Cites 13, Cited by 0]
Kerala High Court
K.Elias vs Hero Fincorp Ltd on 9 February, 2026
Author: Anil K. Narendran
Bench: Anil K. Narendran
1
W.A.No.327 of 2026
2026:KER:11430
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE ANIL K. NARENDRAN
&
THE HONOURABLE MR. JUSTICE MURALEE KRISHNA S.
MONDAY, THE 9TH DAY OF FEBRUARY 2026 / 20TH MAGHA, 1947
WA NO. 327 OF 2026
AGAINST THE JUDGMENT DATED 27.01.2026 IN WP(C) NO.48356 OF
2025 OF THE HIGH COURT OF KERALA
APPELLANT/PETITIONER:
K. ELIAS
AGED 77 YEARS, S/O.VARGHESE
KATTAKKAYAM HOUSE, KADAYIRUPPU P.O KOLENCHERY,
ERNAKULAM, PIN - 682311
BY ADV SMT.ATHIRA A. MENON
RESPONDENTS/RESPONDENTS:
1 HERO FINCORP LTD
REGD. OFFICE AT 34, BASANT LOK, VASANT VIHAR NEW DELHI
REP. BY ITS CHAIRMAN, PIN - 110057
2 THE AUTHORISED OFFICER, HERO FINCORP LTD
NO.12, 3RD FLOOR, INCUBEX NESTEVERA, LONGFORD ROAD,
LONGFORD TOWN, SHANTHINAGAR, BANGLORE-KARNATAKA-, PIN
- 560025
3 NELLIMATTATHIL AGENCIES
REPRESENTED BY ITS PARTNER NELLIMATTATHIL DANIEL
JOSEPH IV/555 B ,THIRUVANIYOOR,M.C ROAD ERNAKULAM -,
PIN - 682308
4 AJO K ELIAS
KATTAKKAYAM HOUSE, KADAYIRUPPU P.O KOLENCHERY,
ERNAKULAM, PIN - 682311
5 NELLIMATTATHIL DANIEL JOSEPH
2
W.A.No.327 of 2026
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NELLIMATTATHIL HOUSE, AYURVEDA JUNCTION HILL PALACE
THIRUVANKULAM, ERNAKULAM, PIN - 682305
6 LEELA JOSEPH
NELLIMATTATHIL HOUSE, AYURVEDA JUNCTION HILL PALACE
THIRUVANKULAM, ERNAKULAM -, PIN - 682305
7 MARY ELIAS
KATTAKKAYAM HOUSE, KADAYIRUPPU P.O KOLENCHERY,
ERNAKULAM -, PIN - 682311
OTHER PRESENT:
SRI. P. PAULOCHAN ANTONY
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON
09.02.2026, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
3
W.A.No.327 of 2026
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JUDGMENT
Anil K. Narendran, J.
The appellant-petitioner filed W.P.(C)No.48356 of 2025,
invoking the extraordinary jurisdiction of this Court under Article
226 of the Constitution of India, seeking the following reliefs;
"i. To call for the records in connection with Exhibit P8
application, Exhibit P12 stay application and Exhibit P13
order and stay all further proceedings in Exhibit P13 order,
granting reasonable time to the petitioner to challenge the
same before the learned Debt Recovery Appellate Tribunal.
ii. To direct the learned Advocate Commissioner to grant
reasonable time to the petitioner to avail the appellate
legal remedy under Section 18 of the Securitisation and
Reconstruction of Financial Assets and Enforcement of
Securities Interest Act, 2002 and not to proceed further in
the matter of taking physical possession of the properties
of the petitioner, as per the proceedings in MC No.853 of
2025 on the files of the Additional Chief Judicial Magistrate
Court, Ernakulam."
2. The proceedings initiated against the appellant-
petitioner, under the provisions of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Securities
Interest Act, 2002 (SARFAESI Act) is in respect of a term loan for
Rs.4.60 Crores availed by him along with respondents 3 to 7,
from the 1st respondent Hero Fincorp Ltd., which is a non-
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banking financial company (NBFC), for a term of 180 months, for
the expansion of their business. A copy of the loan sanction
letter dated 12.10.2015 is marked as Ext.P1. On account of the
default committed by the petitioner and respondents 3 to 7 in
effecting repayment of the loan amount, the account was
classified as a non-performing asset (NPA) and proceedings were
initiated under the provisions of the SARFAESI Act, by issuing
Ext.P4 notice dated 29.04.2024 under Section 13(2) of the said
Act. Seeking assistance of the court to take physical possession
of the secured asset, the 1st respondent NBFC filed M.C.No.964
of 2024, under Section 14 of the SARFAESI Act before the
Additional Chief Judicial Magistrate, Ernakulam, and the
Advocate Commissioner appointed in that proceedings issued
Ext.P5 notice dated 01.01.2025.
3. The appellant-petitioner had earlier approached this
Court in W.P.(C)No.2057 of 2025 and the said writ petition was
disposed of by Ext.P6 judgment dated 17.01.2025, in view of the
judgment dated 17.01.2025 in W.P.(C)No.1945 of 2025, leaving
open all the questions agitated. By the judgment dated
17.01.2025, the learned Single Judge disposed of
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W.P.(C)No.1945 of 2025 filed by Nellimattathil Agencies and four
others, including the appellant-petitioner, by directing that if they
remit an amount of Rs.10 Lakhs on or before 31.01.2025 and
makes appropriate proposal for settlement of loan account, the
1st respondent Hero Fincorp Limited shall consider the same and
take appropriate decision. In the said judgment it was made
clear that if they remit Rs.10 Lakhs as directed above, coercive
proceedings shall stand deferred till the 1st respondent NBFC
takes a decision in the matter. Challenging Ext.P6 judgment
dated 17.01.2025 in W.P.(C)No.2057 of 2025, the appellant-
petitioner filed W.A.No.337 of 2025, which was disposed of by
Ext.P7 judgment dated 18.02.2025. Paragraphs 2 and 3 of that
judgment read thus;
"2. Against the action taken under Section 14 of the
Securitisation and Reconstruction of Financial Assets and
Enforcement of Securities Interest Act (SARFAESI Act), the
Appellant/Writ Petitioner approached this Court despite the
settled position of law that the Debts Recovery Tribunal is
the proper Forum.
3. The mandate of the Hon'ble Supreme Court in various
decisions regarding non-interference in writ jurisdiction
against actions initiated under the SARFAESI Act is clear.
The learned Single Judge has extended indulgence. No
further indulgence will be permissible. The appeal is
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accordingly disposed of."
4. On 27.01.2026, when W.P.(C)No.48356 of 2025 came
up for admission, the learned Single Judge disposed of the same
in the admission stage itself. Paragraphs 4 to 6 and also the last
paragraph of the judgment dated 27.01.2026 in W.P.(C)No.
48356 of 2025 read thus;
"4. Having regard to the facts and circumstances of the
case and the submissions made on either side, this Court
is of the view that the petitioner can be granted a limited
opportunity to comply with the conditions stipulated
hereinbelow.
5. Accordingly, the petitioner shall remit an amount of
₹25,00,000/- (Rupees Twenty-Five Lakhs only) on or
before 06.02.2026. Upon such remittance being made, the
Debts Recovery Appellate Tribunal shall take up Ext.P16
application seeking waiver of pre-deposit and pass
appropriate orders thereon within a period of two weeks
thereafter.
6. On deposit of the aforesaid amount of ₹25,00,000/-
within the time stipulated, all coercive proceedings against
the petitioner shall remain stayed for a period of three
weeks."
5. Feeling aggrieved by the judgment dated 27.01.2026
of the learned Single Judge in W.P.(C)No.48356 of 2025, the
appellant-petitioner is before this Court in this writ appeal,
invoking the provisions under Section 5(i) of the Kerala High
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Court Act, 1958.
6. Heard arguments of the learned counsel for the
appellant-petitioner and the learned counsel for respondents 1
and 2.
7. The learned counsel for the appellant-petitioner would
contend that the direction of the learned Single Judge whereby
the appellant-petitioner is required to deposit Rs.25 Lakhs as a
pre-deposit for considering Ext.P16 application for waiver of pre-
deposit filed in Ext.P15 appeal filed before the Debts Recovery
Appellate Tribunal, Chennai, which is an appeal filed under
Section 19 of the SARFAESI Act, against Ext.P13 order dated
11.12.2025 of the Debs Recovery Tribunal-I, Ernakulam in
I.A.No.4368 of 2025 in S.A.No.564 of 2025, is highly illegal, and
arbitrary and as such the same is liable to be interfered with in
this intra-court appeal.
8. On the other hand, the learned counsel for
respondents 1 and 2 would contend that the appellant-petitioner
is not legally entitled for waiver of statutory pre-deposit to be
made before the appellate Tribunal, as contended in this writ
appeal. The learned counsel would point out that the reliefs
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sought for in W.P.(C)No.48356 of 2025 are beyond the scope of
the writ jurisdiction under Article 226 of the Constitution of
India.
9. One of the reliefs sought for in W.P.(C)No.48356 of
2025, is an order directing the Advocate Commissioner
appointed by the Additional Chief Judicial Magistrate, Ernakulam,
to grant reasonable time to the appellant-petitioner to avail the
appellate remedy under Section 18 of the SARFAESI Act, and not
to proceed further in the matter of taking physical possession of
the secured assets, as per the proceedings in M.C.No.853 of
2025 on the file of the Additional Chief Judicial Magistrate Court,
Ernakulam. Another relief sought for is an order of stay of all
further proceedings in Ext.P13 order dated 11.12.2025 of the
Debts Recovery Tribunal-1, Ernakulam, in I.A.No.4368 of 2025 in
S.A.No.564 of 2025, granting reasonable time to the petitioner
to challenge the said order before the Debts Recovery Appellate
Tribunal.
10. Hero Fincorp Ltd. is a non-banking financial company
(NBFC). The legal issue as to whether a writ petition would lie
against a private financial institution like an NBFC is no more res
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integra in view of the law laid down by the Apex Court in
Phoenix ARC (P) Ltd. v. Vishwa Bharati Vidya Mandir
[(2022) 5 SCC 345].
11. In Phoenix ARC (P) Ltd. [(2022) 5 SCC 345] the
Apex Court was dealing with a case in which Phoenix ARC (P)
Ltd. (for brevity 'ARC'), which is a private financial institution,
proposed to take action under the SARFAESI Act to recover the
borrowed amount as a secured creditor. The Apex Court held
that ARC as such cannot be said to be performing public
functions which are normally expected to be performed by State
authorities. During the course of a commercial transaction and
under the contract, the bank/ARC lends money to the borrowers
and the said activity of the bank/ARC cannot be said to be as
performing a public function, which is normally expected to be
performed by the State authorities. If proceedings are initiated
under the SARFAESI Act and/or any proposed action is to be
taken, and the borrower is aggrieved by any of the actions of the
private bank/bank/ARC, he has to avail the remedy under the
SARFESI Act, and no writ petition would lie and/or is
maintainable and/or entertainable.
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12. In Sobha S. v. Muthoot Finance Limited [2025
(2) KHC 229], the Apex Court considered the question of
maintainability of writ petitions under Article 226 of the
Constitution of India against a private non-banking financial
company and also a private company carrying on banking
business as a Scheduled Bank. In the said decision, the Apex
Court was dealing with a case in which the question raised was
whether the Division Bench of the High Court was right in taking
the view that Muthoot Finance Ltd., a non-banking financial
institution registered under the Companies Act, 1956, is not a
'State' within the meaning of Article 12 of the Constitution of
India. Before the Apex Court, it was contended that, although
Muthoot Finance Ltd. may not be strictly falling within the ambit
of 'State', yet being a non-banking financial institution is
governed by the rules and regulations framed by the Reserve
Bank of India and if statutory rules and regulations framed by
Reserve Bank of India are breached by a non-banking financial
institution, then as a statutory authority such financial institution
is amenable to writ jurisdiction. The Apex Court found that the
position of law is otherwise. Applying the test, as per the
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decision in LIC of India v. Escorts Ltd. [AIR 1986 SC 1370],
the Apex Court held that Muthoot Finance Ltd., which is a non-
banking financial institution, cannot be called a public body. It
has no duty towards the public. Its duty is towards its account
holders, which may include borrowers having availed of the loan
facility. It has no power to take any action or pass any orders
affecting the rights of the members of the public. The binding
nature of its orders and actions is confined to its account holders
and borrowers and to its employees. Its functions are also not
akin to governmental functions. A body, public or private, should
not be categorised as 'amenable' or 'not amenable' to writ
jurisdiction. The most important and vital consideration should
be the 'function' test as regards the maintainability of a writ
application. If a public duty or public function is involved, any
body, public or private, concerned or connection with that duty
or function, and limited to that, would be subject to judicial
scrutiny under the extraordinary writ jurisdiction of Article 226 of
the Constitution of India. Although a non-banking finance
company like Muthoot Finance Ltd. is duty bound to follow and
abide by the guidelines provided by the Reserve Bank of India
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for smooth conduct of its affairs in carrying on its business, yet
those are of regulatory measures to keep a check and provide
guideline and not a participatory dominance or control over the
affairs of the company. Paragraph 9 of the decision, the Apex
Court held as follows;
'9. We may sum up thus;
(1) For issuing a writ against a legal entity, it would have
to be an instrumentality or agency of a State or should
have been entrusted with such functions as are
Governmental or closely associated therewith by being of
public importance or being fundamental to the life of the
people and hence Governmental.
(2) A writ petition under Article 226 of the Constitution of
India may be maintainable against (i) the State
Government; (ii) Authority; (iii) a statutory body; (iv) an
instrumentality or agency of the State; (v) a company
which is financed and owned by the State; (vi) a private
body run substantially on State funding; (vii) a private
body discharging public duty or positive obligation of public
nature; and (viii) a person or a body under liability to
discharge any function under any Statute, to compel it to
perform such a statutory function.
(3) Although a non-banking finance company like the
Muthoot Finance Ltd. with which we are concerned is duty
bound to follow and abide by the guidelines provided by
the Reserve Bank of India for smooth conduct of its affairs
in carrying on its business, yet those are of regulatory
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measures to keep a check and provide guideline and not a
participatory dominance or control over the affairs of the
company.
(4) A private company carrying on banking business as a
Scheduled bank cannot be termed as a company carrying
on any public function or public duty.
(5) Normally, mandamus is issued to a public body or
authority to compel it to perform some public duty cast
upon it by some statute or statutory rule. In exceptional
cases, a writ of mandamus or a writ in the nature of
mandamus may issue to a private body, but only where a
public duty is cast upon such private body by a statute or
statutory rule and only to compel such body to perform its
public duty.
(6) Merely because a Statute or a rule having the force of
a statute requires a company or some other body to do a
particular thing, it does not possess the attribute of a
statutory body.
(7) If a private body is discharging a public function and
the denial of any rights is in connection with the public
duty imposed on such body, the public law remedy can be
enforced. The duty cast on the public body may be either
statutory or otherwise and the source of such power is
immaterial but, nevertheless, there must be a public law
element in such action.
(8) According to Halsbury's Laws of England, 3rd Ed.
Vol.30, p.682, "a public authority is a body not necessarily
a county council, municipal corporation or other local
authority which has public statutory duties to perform, and
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which performs the duties and carries out its transactions
for the benefit of the public and not for private profit".
There cannot be any general definition of public authority
or public action. The facts of each case decide the point.'
(underline supplied)
13. During the course of a commercial transaction and
under the contract, Hero Fincorp Ltd., which is a non-banking
financial company (NBFC), lend money to the borrowers like the
appellant-petitioner. In view of the law laid down by the Apex
Court in Phoenix ARC (P) Ltd. [(2022) 5 SCC 345] and
Sobha S. [2025 (2) KHC 229], the said activity of the NBFC
cannot be said to be as performing a public function, which is
normally expected to be performed by the State authorities. If
proceedings are initiated by the said NBFC under the provisions
of the SARFAESI Act and the borrower or the guarantor or any
other person is affected by the action taken by the NBFC, he has
to avail the statutory remedy provided under Section 17 of the
SARFESI Act, and no writ petition would lie, maintainable or
entertainable under Article 226 of the Constitution of India.
14. The law laid down in the aforesaid decisions was
followed by this Court in M/s. Thiruvonam Industries v. Hero
Fincorp Ltd. [2025 (6) KLT 37], on the question of
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maintainability of a writ petition under Article 226 of the
Constitution of India against Hero Fincorp Ltd., which is a NBFC.
15. In Union Bank of India v. M/s. Suwique Traders
[2025 (4) KHC SN 30], a Division Bench of this Court in which
both of us are parties, held that the Debts Recovery Appellate
Tribunal cannot grant complete waiver of pre-deposit, which is
beyond the scope of the provisions contained in the second and
third provisos to Section 18(1) of the SARFAESI Act. In an
appeal filed under Section 18, which is accompanied by an
application for waiver of pre-deposit, the appellant has to deposit
with the appellate Tribunal 25% of the debt referred to in the
second proviso to Section 18(1). In the said decision, this Court
has stated in categorical terms that the appellate Tribunal cannot
entertain, i.e., give judicial consideration of an appeal filed under
Section 18 and the interlocutory application filed under the third
proviso to Section 18(1) for waiver of pre-deposit unless the
appellant has deposited with the appellate Tribunal 25% of the
debt referred to in the second proviso to Section 18(1). By way
of writ of mandamus under Article 226 of the Constitution of
India or in exercise of the supervisory jurisdiction under Article
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227 of the Constitution of India, the High Court cannot direct the
Debts Recovery Appellate Tribunal to act contrary to the
statutory mandate of Section 18(1) of the SARFAESI Act and the
law laid down in the decision referred to supra.
In such circumstances, we find absolutely no merits in the
contentions raised by the appellant-petitioner in this writ appeal.
The writ appeal fails and the same is accordingly dismissed.
Sd/-
ANIL K. NARENDRAN, JUDGE
Sd/-
MURALEE KRISHNA S., JUDGE
AV
