Once a demand notice under SARFAESI Act is issued by the Bank, the amount mentioned in the Demand Notice is required to be paid in full.
Here the question that would arise is:
Is there a remedy for the borrower to file a Writ Petition seeking direction on the Bank to desist from initiating further action under SARFAESI if borrower pays the overdue interest and principal amount?
As per RBI Circular on Prudential Norms: RBI/2011-12/66 DBOD.No.BP.BC.12 /21.04.048/2011-12 July 1, 2011 in terms of paragraph 4.2.5
“Upgradation of loan accounts classified as NPAs: If arrears of interest and principal are paid by the borrower in the case of loan accounts classified as NPAs, the account should no longer be treated as non-performing and may be classified as ‘standard’ accounts”.
The Honourable Supreme Court has opined that: [at paragraph 40]
"If in terms of the guidelines issued by the Reserve Bank of India a right is created in a borrower, we see no reason as to why a writ of mandamus could not be issued........."
Citation(s): 2010 AIR 218 : 2009 (11 ) SCR 803 : 2009 (8 ) SCC 257
The judgment of the Honorable Supreme Court is attached.