South Indian Bank Ltd. & Ors. Vs Naveen Mathew Philip & Anr. ETC. (Supreme Court of India)
The Supreme Court considered appeals arising from orders of the Kerala High Court, where borrowers had invoked the High Court’s writ jurisdiction under Article 226 of the Constitution to challenge recovery measures initiated under the SARFAESI Act, 2002 and to seek enforcement of unilateral one-time settlement proposals. The borrowers had obtained two loans, which were classified as Non-Performing Assets (NPAs) on 27 May 2021. Following notices issued under Section 13(2) of the SARFAESI Act, the borrowers sought twelve months’ time to repay the loans. Before the statutory period expired, they approached the High Court, which directed the lender to consider their proposal. Although the lender permitted payment in five instalments, the borrowers failed to avail the benefit, leading to notices under Section 13(4). The borrowers then filed further writ petitions challenging those notices and seeking directions to accept their settlement proposals.
The Supreme Court noted that although the Debt Recovery Tribunal (DRT) was not functional when the writ petitions were filed, it became operational from March 2022. It referred to its earlier interim order permitting High Courts to entertain such matters only as a stop-gap arrangement until DRTs became functional, after which pending matters were to be relegated to the Tribunals. Despite this, the High Court decided the matters on merits and granted repayment relief in instalments.
