HALEEMA IBRAHIM Vs. KERALA FINANCIAL CORPORATION

JUDGEMENT

(1.) In these connected writ petitions, three are filed by the defaulter and two are filed by the purchaser of the defaulter's property in the auction conducted by the Kerala Financial Corporation in recovery proceedings.

(2.) We have heard counsel appearing for both sides and the Standing Counsel appearing for the Kerala Financial Corporation.

(3.) The loan availed of for business purpose was around Rs.18 lakhs in the year 1992. However, shortly thereafter, the borrower committed default which led to initiation of recovery proceedings. At first, the KFC exercised their authority under S.29 of the State Financial Corporations Act, 1951 (for short 'SFC Act') and took over possession of the industrial unit. Even though the borrower was granted the OTS benefit, she could not make the payment under the OTS Scheme. However, when the property was notified for sale, the borrower filed writ petition before this Court in which this Court granted stay against confirmation of sale for a short period. The said stay expired on 21/03/2005. The purchaser of property had deposited only Rs.50,000/-. Even though the stay expired on 21/03/2005, the KFC issued a conditional order of confirmation of sale to the purchaser on 20/03/2006 which is produced as Ext. P2 in WP (C) No. 2526 of 2009. One of the conditions for confirmation of sale was payment of balance sales price of Rs.38.50 lakhs within 15 days from the date of receipt of the said letter issued by the KFC. Admittedly, the purchaser did not make the payment, but challenged the conditions imposed in the letter issued by the KFC. Since the auction purchaser did not comply with the terms imposed by the KFC including payment of balance consideration, the KFC again offered OTS benefit to the defaulter. The defaulter accordingly remitted Rs.26 lakhs in instalments. Even though the defaulter accepted the OTS Scheme and made substantial payments, there was still delay in payment of interest portion for the payment of which she again applied for time. It is seen from Ext. P12 produced in WP (C) No. 29472 of 2008 that the KFC allowed the defaulter to finally settle the liability on payment of a further amount of Rs.6 lakhs towards the interest by 30/08/2008. In fact, when the defaulter filed the said writ petition, this Court granted interim order granting time to pay Rs.6 lakhs in terms of the demand made by the KFC by 31/10/2008. According to the defaulter / petitioner, the entire liability is settled under the OTS Scheme by 31/10/2008 and the only violation of the condition imposed by the KFC is two months delay in payment of Rs.6 lakhs.