Cholamandalam Investment & Finance ... vs Navayug India Facility Management ...

W.A.NO.226 OF 2026 2026:KER:8227 1

IN THE HIGH COURT OF KERALA AT ERNAKULAM

PRESENT

THE HONOURABLE MR. JUSTICE ANIL K. NARENDRAN

&

THE HONOURABLE MR. JUSTICE MURALEE KRISHNA S.

THURSDAY, THE 29TH DAY OF JANUARY 2026 / 9TH MAGHA, 1947

W.A.NO.226 OF 2026

ARISING FROM THE JUDGMENT DATED 15.01.2026 IN WP(C) NO.44529 OF

2025 OF THE HIGH COURT OF KERALA

APPELLANTS/RESPONDENTS:

1 CHOLAMANDALAM INVESTMENT & FINANCE COMPANY LTD., REPRESENTED BY ITS AUTHORIZED OFFICER,2ND FLOOR, VJ TOWERS, VYTILA, ERNAKULAM, PIN - 682019

2 THE AUTHORIZED OFFICER, CHOLAMANDALAM INVESTMENT & FINANACE COMPANY LTD., 2ND FLOOR, VJ TOWERS, VYTILA, ERNAKULAM, PIN - 682019

BY ADV SMT.K.PARVATHY

RESPONDENTS/RESPONDENTS:

1 NAVAYUG INDIA FACILITY MANAGEMENT PRIVATE LIMITED, REPRESENTED BY ITS MANAGING DIRECTOR, RAGHUVIBHAKAR, AGED 62 YEARS, S/O. LATE. SHRI. R. VIBHAKARAN PILLAI, 10/368A, LAKSHMI SADANAM, THURUTHIKKARA, MULANTHURUTHY, ERNAKULAM, KERALA, PIN - 682314

2 LAKSHMI SUPER MART, LAKSHMI SADANAM CHOTTANIKKARA P.O., INCHIMALA CHINGAM NAGAR KANAYANNUR, ERNAKULAM, REPRESENTED BY ITS PROPRIETOR, RAGHUVIBHAKAR, AGED 62 YEARS, S/O. LATE. SHRI. R. VIBHAKARAN PILLAI,10/368A, LAKSHMI SADANAM, THURUTHIKKARA, MULANTHURUTHY, ERNAKULAM, KERALA, PIN - 682314

OTHER PRESENT: W.A.NO.226 OF 2026 2026:KER:8227 2

SRI. RINNY STEPHEN CHAMAPARAMBIL

THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 29.01.2026, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.A.NO.226 OF 2026 2026:KER:8227 3

"C.R" JUDGMENT

Anil K. Narendran, J.

The respondents in W.P.(C)No.44529 of 2025 have filed this

writ appeal, invoking the provisions under Section 5(i) of the

Kerala High Court Act, 1958, challenging the judgment dated

15.01.2026 of the learned Single Judge in that writ petition, which

was one filed by the respondents herein-petitioners, invoking the

writ jurisdiction of this Court under Article 226 of the Constitution

of India, seeking a writ of mandamus commanding the

respondents, namely, Cholamandalam Investment and Finance

Company Ltd., which is a Non-Banking Financial Company (NBFC),

and its Authorised Officer to regularise the loan availed by the 1 st

petitioner against Property Account No.HE1OCI00000036216 and

the business loan availed by the 2nd petitioner with Loan Account

No.BLTLCOCH000005027799, from the Cochin Branch of the said

NBFC, and to permit the petitioners to pay the overdue amount in

the said loan accounts, in installments, as may be granted by this

Court; and a writ of mandamus commanding the respondents not

to proceed against the mortgaged property under the provisions

of the Securitisation and Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002 (SARFAESI Act).

W.A.NO.226 OF 2026 2026:KER:8227 4

2. Ext.P1 notice dated 06.08.2025 issued by the 2nd

respondent Authorised Officer of the 1st respondent NBFC is in

respect of the loan availed by the 1st petitioner company against

Property Account No.HE1OCI00000036216, for an amount of

Rs.1,69,00,000/-, in which the overdue as on 31.07.2025 was

Rs.4,75,488/- excluding late payment charges and other charges.

In Ext.P2 notice dated 22.05.2024, which is in respect of the

business loan availed by the 2nd petitioner with Loan Account

No.BLTLCOCH000005027799, for an amount of Rs.20,00,000/-,

the overdue as on 22.05.2024 was Rs.51,882/-. The accounts

were classified as a non-performing asset (NPA) on 06.08.2025

and the 2nd respondent Authorised Officer issued Ext.P3 notice

dated 07.10.2025, under Section 13(2) of the SARFAESI Act, in

respect of the loan availed by the 1 st petitioner company against

Property Account No.HE1OCI00000036216. In the writ petition, it

is stated that, due to severe financial hardship, the petitioner

could not remit the monthly installments in time.

3. On 11.12.2025, when W.P.(C)No.44529 of 2025 came

up for admission, the learned Single Judge granted an interim

order, which reads thus;

"The learned Standing Counsel appearing for the respondent-Bank seeks time to file a statement showing W.A.NO.226 OF 2026 2026:KER:8227 5

the amount due and the amount already remitted in respect of the loan. For deciding the maintainability of the writ petition, to consider the prayers seeking installment facility and regarding the willingness of the Bank to regularize the account, and since the Bank is proposing to take physical possession of the property, the coercive steps against the petitioners shall be deferred for a period of eight weeks on condition that the petitioners remit an amount of Rs.1,00,000/- (Rupees One lakh only) within a period of one month from today. It is made clear that if the payment is not made, the respondents will be at liberty to proceed in accordance with law."

4. On 17.12.2025, the 2nd respondent in W.P.(C)No.44529

of 2025, i.e., the Authorised Officer of the 1st respondent NBFC

filed a counter affidavit, opposing the reliefs sought for in that writ

petition, producing therewith Ext.R2(a) statement of account of

the loan availed by the 1st petitioner company against Property

Account No.HE1OCI00000036216. Along with that counter

affidavit, the respondents have also filed I.A.No.1 of 2025 seeking

an order to vacate the aforesaid interim order dated 11.12.2025.

In the affidavit filed in support of I.A.No.1 of 2025, which is one

sworn to by the Authorised Officer of the NBFC, the legal and

factual contentions raised in the counter affidavit are reiterated.

Paragraphs 3 to 6 of the affidavit dated 17.12.2025 filed in support

of I.A.No.1 of 2025 read thus;

W.A.NO.226 OF 2026 2026:KER:8227 6

"3. At the very outset, it is submitted that the writ petition is not maintainable since this respondent is a Non-Banking Financial Company (NBFC) and is not an authority of the 'State' under Article 12 of the Constitution of India. Therefore, this respondent is not amenable to the writ jurisdiction of this Hon'ble Court. The Hon'ble Supreme Court, in Phoenix ARC Pvt. Ltd. v. Vishwa Bharati Vidya Mandir [(2022) 5 SCC 345], has categorically held that a writ petition against a private financial institution is not maintainable in matters arising out of securitization proceedings. Hence, the writ petition is liable to be dismissed on this ground alone.

4. Vide interim order dated 11.12.2025, this Hon'ble Court deferred the SARFAESI proceedings initiated by this respondent, on the condition that the petitioner deposits Rs.1,00,000/- within one month, and directed this respondent to file a statement showing the amount due and the amounts already remitted by the petitioner. In compliance, it is submitted that the SARFAESI proceedings initiated by this respondent is only with respect to Loan against property availed by the petitioner. The details of the said loan account are as follows;

a. The loan account No. is HE01OC100000036216. b. Amount of loan availed: - Rs.1,69,00,000/- c. The tenure is 158 months (13 years and 2 months); d. The monthly EMI is Rs.2,17,025.

e. As on 15.12.2025, the total outstanding in the loan account is Rs.1,69,41,249/- and the total overdue is Rs.14,38,867/-.

5. During the period of loan, the petitioners have thus defaulted 6 EMIS, amounting to Rs.13,01,175/- (Rupees W.A.NO.226 OF 2026 2026:KER:8227 7

Thirteen Lakh One Thousand One Hundred and Seventy Five), with respect to the above loan account No. HE01OC100000036216.

6. The loan account No.HE01OC100000036216 is classified as a Non-Performing Asset (NPA) on 03.10.2025. Since the petitioner has failed to pay 6 EMIS with respect to loan account No.HE01OC100000036216 and continues to remain in default, and as the total loan overdue amount including charges is Rs.14,38,867/-, this respondent was constrained to proceed under the SARFAESI Act. This respondent is not willing to extend any installment facility or restructuring since the petitioner has been in continuous default from 05.06.2023, and has not exhibited any bona fide intention to clear the overdue amounts or regularise the monthly instalments." (underline supplied)

5. On 15.01.2026, when W.P.(C)No.44529 of 2025 came

up for consideration, the learned Single Judge disposed of the

same, by the judgment dated 15.01.2026, permitting the

petitioner to remit the overdue amount of Rs.15,90,225/-,

together with any accrued interest, cost and allied charges, in 8

equal monthly installments commencing from 15.02.2026 and the

subsequent installments payable on or before 15th day of every

succeeding months, along with regular monthly installments. In

the judgment it was made clear that, in the event of default of any

one installment, the 1st respondent NBFC shall be entitled to

proceed with the coercive steps, in accordance with law.

W.A.NO.226 OF 2026 2026:KER:8227 8

Paragraphs 2 to 4 of the judgment dated 15.01.2026 read thus;

"2. On 11.12.2025, an interim order was passed by this Court deferring the coercive steps against the petitioner on condition that the petitioner remits an amount of Rs.1,00,000/- within one month. It is submitted that the said interim order has been complied with.

3. The learned Standing Counsel for the Bank, on instructions, submits that the overdue amount as on date is Rs.15,90,225/- and the Bank has no objection in regularizing the loan accounts.

4. Having heard the learned counsel on both sides, and taking note of the fact that the Bank is proposing to take physical possession of the property and since the Bank has no objection in regularizing the loan accounts, I deem it appropriate to dispose of this writ petition with the following directions:

a) The petitioner shall remit the overdue amount of Rs.15,90,225/- (Rupees Fifteen Lakhs Ninety Thousand Two Hundred and Twenty Five only) together with any accrued interest, cost and allied charges, in eight equated monthly installments, starting from 15.02.2026 and the subsequent installments shall be paid on or before 15th of every succeeding months.

b) The petitioner shall continue to pay the regular EMIs/installments along with the installments as directed above.

c) In the event of default of any one installment, the respondent Bank shall be entitled to proceed in accordance with law.

d) All coercive proceedings shall be kept in abeyance to enable the petitioner to repay the entire amount as W.A.NO.226 OF 2026 2026:KER:8227 9

directed above."

6. Challenging the judgment dated 15.01.2026 of the

learned Single Judge in W.P.(C)No.44529 of 2025, the appellants-

respondents are before this Court in this writ appeal.

7. Heard arguments of the learned counsel for the

appellants-respondents and also the learned counsel for the

respondents-petitioners.

8. The learned counsel for the appellants-respondents

would contend that the judgment dated 15.01.2026 is contrary to

the settled law laid down by the Apex Court in Phoenix ARC Pvt.

Ltd. v. Vishwa Bharati Vidya Mandir [(2022) 5 SCC 345] on

the maintainability of a writ petition against a private financial

institution/NBFC and also the law laid down by the Apex Court as

well as this Court on the maintainability of a writ petition in view

of an efficacious alternative remedy provided under Section 17 of

the SARFAESI Act. The learned counsel for the appellants would

point out that the averments in paragraph 8 of the statement of

facts in the memorandum of writ appeal, wherein it is stated that

in the counter affidavit filed in W.P.(C)No.44529 of 2025 and also

in the affidavit filed in support of I.A.No.1 of 2025 seeking an order

to vacate the interim order dated 11.12.2025, the appellants-

respondents have explicitly stated that they are not willing to W.A.NO.226 OF 2026 2026:KER:8227 10

extend any installment facility or restructuring, since the

respondents-petitioners have been in continuous default, and they

have not exhibited any bona fide intention to clear the overdue

amount or regularise the monthly installments. However, in the

judgment dated 15.01.2026 the learned Single Judge observed

that the appellants-respondents have no objection in regularising

the loan account. The learned counsel would point out that, as

evident from Ext.R2(a) statement of accounts for the period from

31.01.2023 to 15.12.2025, there is continuous default from

05.06.2023, in respect of the loan availed by the 1st petitioner

company against Property Account No.HE1OCI00000036216. The

learned counsel would also point out the specific contention raised

in Ground F of the memorandum of writ appeal that "the counsel

for the appellants has not conceded for the grant of 8 installments

for payment of the balance outstanding from the respondents-

petitioners".

9. On the other hand, the learned counsel for the

respondents-petitioners would submit that by the judgment dated

15.01.2026 in W.P.(C)No.44529 of 2025, the learned Single Judge

has only granted a breathing time to the petitioners to clear the

overdue amount, so as to enable the 1st respondent NBFC to W.A.NO.226 OF 2026 2026:KER:8227 11

regularise the loan account. Such a discretion exercised by the

learned Single Judge, while disposing of the writ petition, cannot

be interfered with in an intra-court appeal filed under Section 5(i)

of the Kerala High Court Act.

10. Cholamandalam Investment and Finance Company Ltd.,

the 1st appellant-1st respondent is a non-banking financial

company (NBFC). In the counter affidavit dated 17.12.2025 filed

in W.P.(C)No.44529 of 2025 and also in the affidavit filed in

support of I.A.No.1 of 2025 seeking an order to vacate the interim

order dated 11.12.2025, the appellants-respondents have stated

that they are not willing to extend any installment facility or

restructuring since the respondents-petitioners have been in

continuance default from 05.06.2023 and they have not exhibited

any bona fide intention to clear the overdue amount or regularise

the monthly installments. The persistent default committed by the

1st petitioner company in the payment of monthly installments in

respect of the loan availed by the 1st petitioner company against

Property Account No.HE1OCI00000036216 is evident from

Ext.R2(a) statement of account produced along with the counter

affidavit dated 17.12.2025 filed in the writ petition.

11. In Phoenix ARC (P) Ltd. v. Vishwa Bharati Vidya W.A.NO.226 OF 2026 2026:KER:8227 12

Mandir [(2022) 5 SCC 345] the Apex Court was dealing with a

case in which Phoenix ARC (P) Ltd. (for brevity 'ARC'), which is a

private financial institution, proposed to take action under the

SARFAESI Act to recover the borrowed amount as a secured

creditor. The Apex Court held that ARC as such cannot be said to

be performing public functions which are normally expected to be

performed by State authorities. During the course of a commercial

transaction and under the contract, the bank/ARC lends money to

the borrowers and the said activity of the bank/ARC cannot be said

to be as performing a public function, which is normally expected

to be performed by the State authorities. If proceedings are

initiated under the SARFAESI Act and/or any proposed action is to

be taken, and the borrower is aggrieved by any of the actions of

the private bank/bank/ARC, he has to avail the remedy under the

SARFESI Act, and no writ petition would lie and/or is maintainable

and/or entertainable.

12. In Sobha S. v. Muthoot Finance Limited [2025 (2)

KHC 229], the Apex Court considered the question of

maintainability of writ petitions under Article 226 of the

Constitution of India against a private non-banking financial

company and also a private company carrying on banking W.A.NO.226 OF 2026 2026:KER:8227 13

business as a Scheduled Bank. In the said decision, the Apex Court

was dealing with a case in which the question raised was whether

the Division Bench of the High Court was right in taking the view

that Muthoot Finance Ltd., a non-banking financial institution

registered under the Companies Act, 1956, is not a 'State' within

the meaning of Article 12 of the Constitution of India. Before the

Apex Court, it was contended that, although Muthoot Finance Ltd.

may not be strictly falling within the ambit of 'State', yet being a

non-banking financial institution is governed by the rules and

regulations framed by the Reserve Bank of India and if statutory

rules and regulations framed by Reserve Bank of India are

breached by a non-banking financial institution, then as a

statutory authority such financial institution is amenable to writ

jurisdiction. The Apex Court found that the position of law is

otherwise. Applying the test, as per the decision in LIC of India

v. Escorts Ltd. [AIR 1986 SC 1370], the Apex Court held that

Muthoot Finance Ltd., which is a non-banking financial institution,

cannot be called a public body. It has no duty towards the public.

Its duty is towards its account holders, which may include

borrowers having availed of the loan facility. It has no power to

take any action or pass any orders affecting the rights of the W.A.NO.226 OF 2026 2026:KER:8227 14

members of the public. The binding nature of its orders and

actions is confined to its account holders and borrowers and to its

employees. Its functions are also not akin to governmental

functions. A body, public or private, should not be categorised as

'amenable' or 'not amenable' to writ jurisdiction. The most

important and vital consideration should be the 'function' test as

regards the maintainability of a writ application. If a public duty

or public function is involved, any body, public or private,

concerned or connection with that duty or function, and limited to

that, would be subject to judicial scrutiny under the extraordinary

writ jurisdiction of Article 226 of the Constitution of India.

Although a non-banking finance company like Muthoot Finance Ltd.

is duty bound to follow and abide by the guidelines provided by

the Reserve Bank of India for smooth conduct of its affairs in

carrying on its business, yet those are of regulatory measures to

keep a check and provide guideline and not a participatory

dominance or control over the affairs of the company. Paragraph

9 of the decision, the Apex Court held as follows;

'9. We may sum up thus;

(1) For issuing a writ against a legal entity, it would have to be an instrumentality or agency of a State or should have been entrusted with such functions as are Governmental or closely associated therewith by being of public importance W.A.NO.226 OF 2026 2026:KER:8227 15

or being fundamental to the life of the people and hence Governmental.

(2) A writ petition under Article 226 of the Constitution of India may be maintainable against (i) the State Government; (ii) Authority; (iii) a statutory body; (iv) an instrumentality or agency of the State; (v) a company which is financed and owned by the State; (vi) a private body run substantially on State funding; (vii) a private body discharging public duty or positive obligation of public nature; and (viii) a person or a body under liability to discharge any function under any Statute, to compel it to perform such a statutory function.

(3) Although a non-banking finance company like the Muthoot Finance Ltd. with which we are concerned is duty bound to follow and abide by the guidelines provided by the Reserve Bank of India for smooth conduct of its affairs in carrying on its business, yet those are of regulatory measures to keep a check and provide guideline and not a participatory dominance or control over the affairs of the company.

(4) A private company carrying on banking business as a Scheduled bank cannot be termed as a company carrying on any public function or public duty.

(5) Normally, mandamus is issued to a public body or authority to compel it to perform some public duty cast upon it by some statute or statutory rule. In exceptional cases, a writ of mandamus or a writ in the nature of mandamus may issue to a private body, but only where a public duty is cast upon such private body by a statute or statutory rule and only to compel such body to perform its public duty. (6) Merely because a Statute or a rule having the force of a W.A.NO.226 OF 2026 2026:KER:8227 16

statute requires a company or some other body to do a particular thing, it does not possess the attribute of a statutory body.

(7) If a private body is discharging a public function and the denial of any rights is in connection with the public duty imposed on such body, the public law remedy can be enforced. The duty cast on the public body may be either statutory or otherwise and the source of such power is immaterial but, nevertheless, there must be a public law element in such action.

(8) According to Halsbury's Laws of England, 3rd Ed. Vol.30, p.682, "a public authority is a body not necessarily a county council, municipal corporation or other local authority which has public statutory duties to perform, and which performs the duties and carries out its transactions for the benefit of the public and not for private profit". There cannot be any general definition of public authority or public action. The facts of each case decide the point.' (underline supplied)

13. During the course of a commercial transaction and

under the contract, Cholamandalam Investment and Finance

Company Ltd., which is a non-banking financial company (NBFC),

lend money to the borrowers like the respondents-petitioners. In

view of the law laid down by the Apex Court in Phoenix ARC (P)

Ltd. [(2022) 5 SCC 345] and Sobha S. [2025 (2) KHC 229],

the said activity of the NBFC cannot be said to be as performing a

public function, which is normally expected to be performed by the

State authorities. If proceedings are initiated by the said NBFC W.A.NO.226 OF 2026 2026:KER:8227 17

under the provisions of the SARFAESI Act and the borrower or the

guarantor or any other person is affected by the action taken by

the NBFC, he has to avail the statutory remedy provided under

Section 17 of the SARFESI Act, and no writ petition would lie,

maintainable or entertainable under Article 226 of the Constitution

of India.

14. When the continuance of credit facilities as NPA will

cause severe prejudice to bank/NBFC, as provisioning requires

banks/NBFCs to set aside capital based on asset quality as per the

guidelines issued by the Reserve Bank of India, no mandamus can

be issued directing a bank/NBFC to accept the overdue amount in

monthly installments, in respect of a loan account which has been

classified as NPA, followed by the issuance of notice under Section

13 of the SARFAESI Act, disregarding the specific stand taken by

the said bank/NBFC against regularisation of the said loan account

by accepting the overdue amount in monthly installments.

Therefore, the learned Single Judge committed a grave error in

disposing of W.P.(C)No.44529 of 2025, by the judgment dated

15.01.2026, by permitting the petitioners to remit the overdue

amount together with any accrued interest, cost and allied charges,

in 8 equal monthly installments commencing from 15.02.2026, W.A.NO.226 OF 2026 2026:KER:8227 18

thereby virtually directing the 1st respondent NBFC (1st appellant

herein) to regularise the loan account, despite the specific stand

taken in the counter affidavit filed in W.P.(C)No.44529 of 2025 that

the 1st respondent NBFC is not willing to extend any installment

facility or restructuring since there is continuous default from

15.06.2023 in respect of the loan account in question. By such a

direction, the learned Single Judge has interfered with the

proceedings initiated by the 1st respondent NBFC under the

provisions of the SARFAESI Act through the 2nd respondent

Authorised Officer. Such a direction issued by the learned Single

Judge, without taking into consideration the specific stand taken

by the 1st respondent NBFC and its Authorised Officer in the

counter affidavit filed in W.P.(C)No.44529 of 2025, against

regularisation of the loan account by accepting the overdue

amount in installments, and also the question of maintainability of

the writ petition raised therein, placing reliance on the law laid

down by the Apex Court in Phoenix ARC (P) Ltd. [(2022) 5

SCC 345], cannot be sustained in law.

In the result, this writ appeal is allowed by setting aside the

judgment dated 15.01.2026 of the learned Single Judge in

W.P.(C)No.44529 of 2025 and the said writ petition stands W.A.NO.226 OF 2026 2026:KER:8227 19

dismissed; however, without prejudice to the right of the

respondents-petitioners to invoke the statutory remedy provided

under Section 17 of the SARFAESI Act, at the appropriate stage,

against the measures taken by the secured creditor under the

provisions of the said Act.

Sd/-

ANIL K. NARENDRAN, JUDGE

Sd/-

MURALEE KRISHNA S., JUDGE

MIN