Borrower Is A Borrower, Whether Practising Lawyer Or Sitting Judge: Karnataka HC Upholds Coercive Action Against 'Chronic Defaulter' Sr. Advocate Ravindranath Kamath
The Karnataka High Court dismissed a writ petition filed by a designated Senior Advocate N. Ravindranath Kamath assailing the coercive loan recovery proceedings against him instituted under the provisions of the SARFAESI Act, 2002 alleging unfair treatment, holding that granting additional leniency would set a negative precedent and could be perceived as favoring unscrupulous borrowers.
The Court accepted the argument of the Bank that the petitioner Senior Advocate is a "chronic defaulter and that he cannot be trusted". The Court accepted the argument of the Bank that "the credentials of petitioner as reflected from the record of these proceedings, demonstrate his untrustworthiness".
The Bench of Justice Krishna S Dixit observed:
“A borrower is a borrower, whether he is a practising lawyer or a sitting Judge. Loan laws do not provide for favourable treatment to them differential qua other borrowers, when they become chronic defaulters. An argument to the contrary offends equality/parity in matters of loan recovery and therefore, cannot be countenanced. Showing any more indulgence in favour of the Petitioner would give scope for public criticism that courts are favouring the unscrupulous borrowers only because they happen to be in the legal fraternity.”
The petitioner, a designated Senior Advocate and a chronic loan defaulter of a Cooperative Bank (Respondent 1), contested coercive loan recovery actions initiated under the SARFAESI Act, citing improper legal procedures.
Senior Advocate Diwakar K. appeared for the Petitioner and Senior Advocate Lakshmy Iyengar appeared for the Respondent.
The petitioner's argument included claims of unfair treatment due to the Covid-19 pandemic and proposed clearing the entire loan within three months through methods like 'taking over'. In response, the Cooperative Bank's Advocate submitted a Statement of Objections, strongly justifying the loan recovery proceedings. The bank's lawyer referred to letters in which the petitioner admitted the debt and requested more time to rectify the loan account, but these requests were denied. The lawyer highlighted the petitioner's repeated failure to meet court-set conditions for relief and emphasized a bounced check as evidence of disrespect for court orders.
The Court reviewed the case and declined to provide any further leniency to the petitioner.
The Court stated that Cooperative Banks, including the respondent bank, have faced issues due to reckless lending and failure to recover debts. The Court noted the seriousness of the problem of overdue loans in cooperative banks, affecting their lending capacity and that remedial actions have been suggested by committees in the past.
The Court said that the petitioner's loan availed and outstanding amount were not disputed. Despite repeated notices, the petitioner repaid only a partial sum, leaving a substantial unpaid balance. This unpaid loan became a non-performing asset (NPA) in 2017. Coercive actions for loan recovery are justified under the provisions of the SARFAESI Act.
The Court further remarked that the petitioner made promises to repay but consistently failed to do so. The petitioner had taken legal action against other debtors but failed to uphold their own commitments. Various orders of the court, threatening dismissal of the case if payments weren't made, were ignored by the petitioner.
It was noted by the Court that the petitioner claimed financial difficulties and proposed selling properties for loan repayment, but no concrete steps were taken. Despite court warnings and orders, the petitioner continued to default.
“Gone are those days now and still he has not prima facie demonstrated the endeavors made for disposing off the said properties. A lender cannot lend his ears for cock & bull stories of the borrower, endlessly. A writ court cannot grant indulgence to an unscrupulous litigant who does not keep up his words given repeatedly. A borrower is a borrower, whether he is a practising lawyer or a sitting Judge”, the Court remarked.
The Court was of the view that the petitioner's actions and non-compliance with court orders have shown a lack of trustworthiness. The Court concluded that further indulgence to the petitioner, especially considering their profession as a lawyer, would not be appropriate.
“Sr. Advocate appearing for the respondent-bank is justified in contending that the credentials of petitioner as reflected from the record of these proceedings, demonstrate his untrustworthiness.”
The Court found the petitioner's case lacking merit and dismissed the writ petition, allowing the respondent bank to proceed with the coercive recovery process according to the law.
Cause Title: N. Ravindranath Kamath v. Sri Subramanyeshwara Co-Operative
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