In the present instance, the petitioners were directors of a company by name Parul Polymers Private Limited that used respondent bank loan and credit facilities. The petitioners provided both a guarantee for loan repayment and collateral in the form of their real estate.
Due to missed payments, the bank loan was classified as a non-performing asset. The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 first issued a notice pursuant to section 13(2), and then issued a possession notice pursuant to section 13(4).
In the instant case titled Suman Chadha v. Central Bank of India. The issue raised for clarification before the Supreme Court was:
Whether the undertaking was pursued with bona fide intent?
With regard to this issue, following an investigation, the Apex Court noted the petitioners' series of actions, including it issuing post-dated cheques that were dated after the timeframe they had agreed to pay; (ii) allowing those cheques to be dishonoured; (iii) failing to appear before the Court on the first date of hearing with a reason that was later discovered to be false; (iv) developing an explanation about their own debtors going into default; and (v) obtaining an extension of time in getting exposed through the SFIO report. As a result, the High Court's holding order is correct.
Because the immovable properties that the petitioners sought to rescue by contacting the DRT and the High Court have already been sold. Since 2015, petitioners have made many attempts in futility to save mortgaged properties. As a result, the SLP was dismissed, affirming the High Court's determination that the petitioners had engaged in contempt of court, but reducing the punishment from three months to the time the petitioners had already spent in jail.
The Court categorically stated that,
“There is no dispute on facts that the mortgaged properties have now been sold and with extraordinary efforts, the Bank has also taken possession. The petitioners have also spent 11 days in custody out of the total period of imprisonment of three months imposed by the High Court. In such circumstances, we think that it is sufficient punishment for the petitioners".