Don’t move court to buy time, loan defaulters told

Litigants, especially those defaulting on the loan obtained from secure creditors (read banks) and approaching the High Court instead of the Debt Recovery Appellate Tribunal (DRAT) to delay the takeover of the mortgaged property, have been dealt with accordingly by the Madras High Court, imposing high costs. 

The first bench comprising Chief Justice Sanjib Banerjee and Justice Senthilkumar Ramamoorthy, in a case of this kind, imposed a cost of Rs 20,000 and after the petitioner’s counsel pleaded reduction of the same, increased it to Rs 30,000. 

Petitioner DCA Ashok Kumar had obtained credit facilities from Vijaya Bank, Chennai, and failed to make repayments as agreed upon. Hence, on the account turning a non-performing asset (NPA), the bank took steps as per the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 and the relevant property in Porur was sold in 2012. 

But since then, the petitioner has been successfully resisting handing over possession. The bank requested the District Collector for appropriate assistance under Section 14 of the said Act and the Tahsildar was directed to take appropriate steps. 

At this stage, the petitioner approached the court and obtained an interim order that continued for a couple of months before it was expressly vacated on December 4, 2020. 

However, when the plea came up for hearing with the petitioner seeking reinstatement of stay, the Chief Justice took strong exception to the fact that the petitioner had been indulging in litigation without even challenging the measures taken by the bank under the SARFAESI Act. 

Pointing out that the petitioner had no right to question the steps taken by the bank, the Chief Justice said: “The petitioner has used the pendency of the present proceedings to resist making over possession of the relevant property. It appears that the purchaser of the property may have already lost hope since matters that enter courts tend to never come out.” 

“It is precisely such perception that the petitioner has attempted to exploit. There was no basis to the petition and there can be no basis to the petitioner clinging on to the property despite it being sold pursuant to steps taken by the secured creditor against which no protest has been made by the petitioner,” the Chief justice held. 

He also observed that this petition has run its course and the petitioner has exploited the situation to the hilt much to the prejudice and chagrin of the secured creditor and the purchaser of the property. 

The bench, while closing the plea after imposing costs, directed the bank and the purchaser of the property to seek the assistance of the Kundrathur Tahsildar and the Superintendent of Police to transfer possession to the purchaser within four weeks.