Bank Cannot Use SARFAESI Act After Civil Court Dismisses Recovery Suit: Kerala High Court

The Kerala High Court has ruled that a bank can not continue against a borrower under the SARFAESI Act if a civil courtroom has brushed off the bank's restoration healthy. This ruling came from Justice Eswaran S. At the same time as addressing a writ petition filed via a borrower from Kottayam.

Case Background:

The petitioner claimed that in spite of repaying the complete loan, the bank persisted to pursue restoration underneath the SARFAESI Act. She highlighted that in November 2023, the Commercial Court in Kottayam had dismissed the bank's healthy for healing, figuring out that no quantity became due to the bank.

Court's Observations:

The court stated that once a civil court docket adjudicates and dismisses a healing in shape, establishing that no debt is due, the bank can't pursue measures beneath the SARFAESI Act. This is due to the fact there's no legally recoverable debt remaining.

Bank's Argument:

The bank argued that it can provoke parallel restoration complaints through both the civil court docket and under the SARFAESI Act. The bank maintained that the dismissal of the civil in shape have to not save you it from taking measures below the SARFAESI Act.

Court's Response:

The court observed the bank's stance irrational and opposite to felony statutes. It emphasized that the financial institution's refusal to appreciate the civil court docket's judgment changed into unacceptable. However, the court additionally cited that the financial institution ought to resume action beneath Section 13(2) of the SARFAESI Act if it efficaciously appeals and overturns the civil courtroom's judgment.

In summary, the Kerala High Court ruled that a bank can't use the SARFAESI Act for loan recovery after a civil courtroom has dismissed its healing healthy, until the financial institution wins an enchantment reversing that selection.