Can Banks Continue SARFAESI Proceedings With Respect To Loan Accounts Declared As NPA Prior To Lockdown? Kerala HC Seeks Response From Centre,State [Read Order]

The Kerala High Court has sought response from the Central Government about the banks' plea seeking permission to continue SARFAESI proceedings with respect to loan accounts which were declared as NPA prior to the declaration of lockdown

The Full bench comprising the Chief Justice S. Manikumar, Justices CT Ravikumar and Shaji P. Chaly was considering an application filed by State Bank of India and Canara Bank who sought a clarification whether they can continue with SARFAESI proceedings which were already initiated. 

In an earlier order, the bench had observed that in view of Covid 19 pandemic situation, the litigants may not be free to approach the Courts/Tribunals for vindicating their grievances against any coercive/recovery action, taken by the institutions.

When these applications came up for further consideration on Monday, the Court noticed that the Supreme Court is in seisin of a related issue regarding initiation of action of recovery on accounts which have been closed as NPA prior to lock down.  The court therefore said that the request of the banks can be considered after the Supreme Court passes orders in the matters pending before it. court also directed the centre to file response on subsequent events in the Supreme Court and also to submit as to whether guidelines have been issued as per the order of Supreme Court on 20th March.

The bench also extended the interim orders passed by it earlier. The case is posted on 23rd September.

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