🏛️ Right to Be Heard: Kerala High Court's Stern Stand Against Arbitrary Loan Recovery


Salim P.M., a borrower, approached the Kerala High Court alleging that the State Bank of India took action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) without giving him a chance to be heard.

He claimed:

  • He was not served a proper notice.

  • The Bank did not give him an opportunity to respond before initiating possession proceedings of his secured assets.

  • His representations were not considered at all. 

Key Observations:

  • Natural Justice is a core principle, even under SARFAESI.

  • Section 13(3A) of the Act mandates the consideration and disposal of borrower’s representation before further action.

  • The bank cannot bypass the borrower’s right to be heard.

The Court ordered that the bank reconsider Salim's representation and take further steps only after a reasoned decision.

This judgment is a reminder to all banks and financial institutions:

✅ Borrowers must be given an opportunity to respond.
✅ Section 13(3A) is not a formality—it's a right.
✅ Arbitrary or mechanical recovery actions may be struck down in court.

  • Always respond in writing to SARFAESI notices.

  • If your objections are ignored, you can approach the DRT or High Court.

  • Fair hearing is your constitutional right even against a powerful bank.

⚠️ Banks, Beware!

Even under SARFAESI, procedural safeguards must be followed. Any recovery action that ignores borrower representation is liable to be invalidated by courts.

The Salim P.M. case reaffirms that borrowers aren’t voiceless, and courts will step in to uphold fairness. Financial institutions must ensure transparency, accountability, and adherence to natural justice, or face judicial rebuke.

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