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Petitioner granted 12 months relaxation in liquidating the loan account considering Covid-19 pandemic: The High court of Kerela

After analyzing the impact of covid-19 pandemic on the day to day activities and the financial risks posed by it, it would be appropriate to provide the non-performing assets with some relaxation to liquidate the liability in their prevalent loan accounts. The aforementioned was the act of courtesy shown by the Kerela High court while adjudicating the case of Sunny Kizhukkarakatt v. Manager, Canara Bank [WP(C) NO. 11169 OF 2021] which was decided by a single judge bench comprising Justice P.B. Suresh Kumar on 22nd June 2021.

The facts of the case are as follows. Petitioner had availed an overdraft facility from the respondent bank. The account had been classified as a non-performing asset on 29.02.2020 and the outstanding amount as on 07.06.2021 was Rs.18,82,115.72.in a notice issued by the respondent bank, it had permitted the petitioner to liquidate the liability in the loan account by paying Rs.18,31,931/-. It is however mentioned in the notice that if the petitioner does not remit the amount within seven days, coercive action will be taken against him for realisation of the loan outstanding.

The contention presented by the counsel for petitioner stated that he is not in a position to comply with  the demand in the light of the Covid-19 pandemic and its consequences on the activity undertaken by him making use of the credit facility extended by the bank. The petitioner, therefore, sought permission to pay the amount demanded in 20 equal monthly instalments. On the contrary, in the statement filed by the respondent, it was submitted that having regard to the pandemic situation, the bank is prepared to extend 10 equal monthly instalments to the petitioner to liquidate the liability.

After a perusal of the facts and arguments presented, the court was of the opinion that “Having regard to the Covid-19 pandemic and its impact on the activities undertaken by the petitioner I deem it appropriate to dispose of the writ petition permitting the petitioner to pay the amount mentioned in 12 equal monthly instalments commencing from 1.7.2021 with interest at the rate of 9% from the date of Ext.P1. Ordered accordingly. If the petitioner remits the amount as directed, the entire liability will stand liquidated. It is, however, made clear that if the petitioner commits default in payment of any of the two consecutive instalments, the bank will be at liberty to realise the amount in lumpsum.”

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