Discretionary powers of lending institutions not to be interfered with arbitrarily: Kerala High Court dismisses petition seeking restructuring of loan
CASE NAME: BINOY PAULOSE V. UNION OF INDIA CASE NO: WP(C) NO. 11939 OF 2023
DATE: 3.11.2023
CORAM: K. BABU, J
Introduction:
The Kerala High Court in its recent judgement clarified that it is unnecessary and uncalled for the courts to interfere with lending institution’s discretionary powers when they are lending to individuals or institutions alike. The courts only come in between when there is a violation of the discretionary powers alloted to lenders, not when they are merely put to use.
Facts of the case:
The petitioner in this case is the proprietor of Darshana Cinema Complex in Ernakulam, who availed a loan from the South India Bank for renovation of the theater. The petitioners defaulted in repayment of the loan availed,
Upon, default, the bank issued a noticed against the petitioner under Section 13[2] of SARFEASI act. The petitioner requested a restructuring of the loan, which was later denied by the bank as it was neither commercially viable nor in accordance with the MSME guidelines.
The court in this case came to the conclusion that the job of lending institutions is, undeniably, leaning. It would be overstepping by the courts if they began interfereing with the discretionary powers legislation provides to banks when lending. The petitioner’s appeal was quashed on the basis that it lacked merits.
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Written by: Radhika Shekhawat
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