National Pharma vs. Authorised Officer, City Union Bank
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The petitioners, National Pharma and its directors, approached the High Court of Kerala challenging proceedings initiated against them under the SARFAESI Act by the respondent bank, City Union Bank. These proceedings were to recover amounts due under credit facilities availed by the petitioners. The outstanding liability as of April 7, 2025, was Rs. 2,48,40,905/-. The petitioners had previously complied with an interim order dated April 1, 2025, by paying Rs. 10 lakh. They intended to approach the bank with a proposal for renewal of the loan facility.
Held
The Court disposed of the writ petition by directing that if the petitioners submit a proposal to the respondent bank for renewal of the loan facility, the competent authority of the bank shall consider it and take a decision without undue delay. The petitioners were directed to submit this proposal immediately, within ten days of receiving a certified copy of the judgment. Crucially, the Court ordered that further proceedings under the SARFAESI Act would remain suspended until a decision was taken on the renewal proposal. The Court explicitly stated that it had not expressed any opinion regarding the merits of the petitioners' claim for renewal.
Key Issues
1. Whether the Court should direct the respondent bank to consider the petitioners' proposal for renewal of loan facilities, given the ongoing SARFAESI proceedings. Petitioner's Argument: The petitioners argued that they had complied with the interim order by paying Rs. 10 lakh and intended to submit a suitable proposal to the bank for renewal. They sought a direction for the bank to consider this proposal. Respondent Bank's Argument: The respondent bank submitted that the outstanding liability was substantial and the loan accounts could not be regularized. They stated that if the petitioners wished to renew the facility, they must approach the bank with a suitable application, which would be considered on merits, provided the loan accounts were serviced as required by the bank.
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Cause title — parties, addresses and appearances
JUDGMENT
Petitioners have approached this Court, challenging the proceedings initiated against the petitioners under the provisions of the SARFAESI Act to recover amounts due under credit faculties availed by the petitioners from the respondent bank.
Learned counsel appearing for the respondent bank submits that, the outstanding liability, as on 07.04.2025 is Rs.2,48,40,905/- in respect of the cash credit facility and the emergency credit granted to the petitioner on account of the Covid-19 pandemic. It is submitted that, the loan accounts cannot be regularized and if at all the petitioners have a proposal for renewal of the facility, it is for the petitioners to approach the bank with a suitable application for the same. It is submitted that, if the petitioners approach the bank with an application for renewal of the facility, the same can be considered by the competent Authority on merits provided the petitioners service the loan accounts in the manner required by the bank.
Learned counsel appearing for the petitioners submits that the petitioners have complied with the condition in the interim order dated 01.04.2025 and paid a sum of Rs.10 lakh within the time specified. It is submitted that, the petitioners will approach
2025:KER:30462 WP(C) NO. 12904 OF 2025 4 the bank with a suitable proposal and the same may be directed to be considered by the respondent bank.
Having heard the learned counsel appearing for the petitioners and the learned counsel appearing for the respondent bank, the writ petition will stand disposed of, directing that if the petitioners submit a proposal before the respondent bank for renewal of the loan facility, the same shall be considered by the competent Authority of the respondent bank and a decision shall be taken in the matter without undue delay. The petitioners shall submit the proposal immediately and at any rate, within a period of ten days from the date of receipt of a certified copy of this judgment. If the petitioners submit the proposal within the time as directed above, further proceedings under the SARFAESI Act shall remain suspended till a decision is taken on the proposal by the competent Authority. I make it clear that I have not expressed any opinion regarding the claim for renewal raised by the petitioners.
Writ petition is disposed of as above. GOPINATH P. JUDGE ajt
2025:KER:30462 WP(C) NO. 12904 OF 2025 5
Appendix — schedule of exhibits
Reproduced from the public record of the Kerala High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.