Sri N Ravindranath Kamath vs. Sri Subramanyeshwara Co-Operative

Facts

The petitioner, a senior advocate and a loan defaulter of the respondent cooperative bank, filed writ petitions challenging the coercive loan recovery proceedings initiated under the SARFAESI Act, 2002. The petitioner argued that he was not granted relief due to the Covid-19 pandemic and did not receive a fair deal from the bank. He also requested a three-month period to clear the entire loan amount by taking over the loan. The bank, through its senior counsel, argued that the petitioner borrowed Rs. 1.50 Crore in February 2017, which was declared NPA on July 2, 2017. The petitioner had acknowledged the debt and sought extensions, which were rejected. The bank also highlighted that conditions for interim relief granted by the court were repeatedly unfulfilled, and a cheque issued by the petitioner had bounced.

Held

The Court dismissed the writ petitions, finding them devoid of merit. The Court noted that the petitioner, a senior advocate, was a chronic loan defaulter and had repeatedly failed to comply with court orders and assurances. The petitioner's arguments regarding Covid-19 relief and unfair treatment were not substantiated. The Court found that the petitioner's attempts to delay the recovery process were evident from his repeated requests for extensions, the dishonor of his cheque, and the unfulfilled conditions for interim relief. The Court emphasized that loan laws do not provide preferential treatment to borrowers, regardless of their profession, when they become chronic defaulters. The Court stated that showing further indulgence would lead to public criticism of courts favoring unscrupulous borrowers from the legal fraternity. The respondent bank was permitted to proceed with the coercive recovery process without further delay. The Court did not expressly leave any issue undecided.

Key Issues

1. Whether the coercive loan recovery proceedings initiated by the respondent bank under the SARFAESI Act, 2002, are valid, considering the petitioner's contentions regarding lack of fair treatment and non-consideration of Covid-19 pandemic relief? (Question of law and fact, concerning the procedure established by law). 2. Whether the petitioner is entitled to further extension of time to clear the outstanding loan amount, given his repeated defaults and unfulfilled assurances? (Question of law and fact, concerning equitable relief). Petitioner's arguments: The petitioner contended that he was not given the reprieve admissible due to the Covid-19 pandemic and that he did not receive a fair deal from the lender bank. He further argued that if granted a period of three months, he could clear the entire loan amount by taking over the loan. He also cited the involvement of GST implications and the need for due diligence by the potential loan-taking society. Revenue/State's arguments: The respondent bank argued that the petitioner is a chronic loan defaulter and has repeatedly failed to comply with court orders and assurances. They highlighted the petitioner's default within five months of availing the loan, his acknowledgment of debt, and the rejection of his requests for extension. The bank also pointed out that a cheque issued by the petitioner bounced, and the petitioner's subsequent explanations for delay, including the involvement of GST and due diligence, were tactics to delay recovery.