HC dismisses review plea in SARFAESI case

Srinagar, July 17: In a significant development, the High Court of Jammu & Kashmir and Ladakh on Tuesday dismissed a review petition filed by M/s Ghulam Hassan Shah seeking to recall its earlier judgment upholding SARFAESI proceedings initiated by a bank against mortgaged property. Pertinently, Ghulam Hassan Shah is a borrower of J&K Bank.
In his plea, the petitioner had argued that the mortgaged land was agricultural and therefore could not be attached or sold under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002.
After examining the records and earlier findings, the Division Bench comprising Justice Sanjeev Kumar and Justice Sanjay Parihar held that the petitioner, having availed the loan by mortgaging the land, could not later challenge enforcement on that ground.
Moreover, the court also observed that accepting such a plea would amount to permitting a borrower to mislead the lending institution, and it even hinted that such conduct could attract penal consequences. The court termed the review petition as “grossly misconceived” and dismissed it with costs of Rs 50,000 to be deposited within two weeks.
Commenting upon the judgement, observers point out that the order can be interpreted as a timely reminder for borrowers to approach their lenders proactively for resolution of stressed accounts rather than entering into protracted and uncertain litigation that too on flimsy grounds. “Provisions under the SARFAESI Act empower banks to enforce security of its interests efficiently, and repeated legal challenges often add to the financial strain of the borrower without changing the outcome”, opined a keen observer of financial and legal matters.