Ashok Harry Pothen Vs Authorised Officer (Kerala High Court)
Kerala High Court addressed a petition filed by Ashok Harry Pothen, who sought to halt SARFAESI proceedings initiated by a bank to recover a loan. Pothen had mortgaged his property as security and entered into a joint development agreement with M/s. Heera Constructions Pvt. Ltd. Subsequently, M/s. Heera Constructions underwent insolvency proceedings, and a resolution plan was approved. Pothen argued that since his joint venture was part of the resolution plan, the bank could not proceed under the SARFAESI Act, citing a Supreme Court judgment that freezes claims included in approved resolution plans. However, the High Court rejected this argument, stating that the bank was not a party to the resolution plan and was therefore not bound by it. The court emphasized that the Supreme Court’s ruling applied only to claims against the corporate debtor in the resolution plan, not to third parties like Pothen. The court concluded that the bank’s right to proceed against the mortgaged property was unaffected by M/s. Heera Constructions’ resolution plan.
The High Court’s decision clarified that financial institutions, not involved in a company’s insolvency resolution process, retain their rights to recover loans secured by mortgaged assets. The court highlighted that resolution plans bind parties involved in the insolvency proceedings but do not extend to unrelated entities. The petitioner’s reliance on the Supreme Court’s judgment was deemed misplaced, as the judgment’s scope was limited to claims within the resolution framework. The court also addressed the petitioner’s request for additional time to deposit amounts as a condition for a stay in a pending securitization appeal. The court granted an extension, provided the petitioner deposited specified amounts within stipulated deadlines. This decision reinforces the principle that SARFAESI proceedings can continue independently of separate insolvency resolutions, ensuring that secured creditors can pursue their legitimate claims.
