The Kerala High Court recently stayed a possession notice issued by Repatriates Cooperative Finance and Development Bank Limited (REPCO) under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) Act, 2002 (Brijith M Raj v. Union of India & Ors.)
Single judge Justice Bechu Kurian Thomas stayed the possession notice issued by REPCO for a period of six months.
The order was passed in the light of a recent judgment of the Madras High Court which had held that REPCO is not a 'bank' or a 'secured creditor' eligible to invoke the provisions of the SARFAESI Act.
The court ordered that it is seen from the judgment of the Madras High Court that the respondents have been found to be not a Bank or a financial institution coming within the purview of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. In the said circumstances, there will be an interim stay as prayed for, for a period of six monthsThe order was passed on a plea by a borrower which stated that the petitioner failed to repay his dues to REPCO, in view of which REPCO had issued notices for repayment and later for taking possession of his secured assets under Section 13 of the SARFAESI Act.
The petitioner had approached the High Court in December 2020 and was allowed to pay off his dues in ten equal monthly installments. However, due to a severe financial crisis, compounded by the effect of the pandemic on his business, the petitioner failed to do the same.
However, in March 2021, the Madras High Court ruled in SP Ganesh v. The Authorised Officer, REPCO that REPCO is not a "bank" or a "secured creditor" that is eligible to invoke the provisions of the SARFAESI Act.
Consequently, the Madras High Court had quashed the notices issued by REPCO under the SARFAESI Act.
In view of this judgment, the petitioner filed a securitization application before the Debts Recovery Tribunal (DRT)-2, Ernakulam to set aside the notices and to permanently restrain REPCO from proceeding further under the said notices.
But, at around the same time, the Kerala High Court, in Kerela Fashion Jewellery v. Union of India, passed an order restraining the Presiding officer, DRT Bangalore from functioning as Presiding officer in an additional charge of DRT-2 Ernakulam.
Since the post of Presiding Officer of DRT-2 continued to be vacant and as the petitioner apprehended that there might be a significant delay in a new appointment to the post, he approached the High Court to quash the notices issued to him.
Taking a cue from the judgment of Madras High Court, the Kerala High Court saw it fit to issue an interim order staying the notices for six months.
Advocates Raghul Sudheesh, Lakshmi J, Glaxon KJ, and Amal Jees Alex appeared for the petitioner.