Court dismisses petition challenging loan validity, upholds Bank's right to recover under SARFAESI Act

The Court dismissed the writ petition challenging the validity of loan documents and seeking regularisation of the loan account exceeding the sanctioned limit. The Court held that the petitioner, a seafood business company, was not entitled to relief as all accounts had become non-operational NPAs. Despite an interim order for payment compliance, the Bank proceeded with possession of secured assets due to substantial outstanding amounts. The Court declined interference in contractual obligations, allowing the Bank to proceed under the SARFAESI Act for recovery without hindrance.

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Issues:
Challenging validity of Exts.P8, P12, and P13, seeking regularisation of loan account exceeding sanctioned limit, SARFAESI Act proceedings, compliance with interim order for payments, rejection of revival proposal, interference in contractual obligations.

Analysis:
The writ petition challenges the validity of Exts.P8, P12, and P13 while seeking the regularisation of the loan account exceeding the sanctioned limit. The petitioner, a seafood business company, had taken various financial facilities from the respondent Bank, all of which turned into Non Performing Assets (NPAs), making the petitioner a defaulter. The Bank initiated steps under the SARFAESI Act for recovery, leading to the filing of this petition seeking relief.

In response, the Bank stated that the petitioner is not entitled to the relief sought as all accounts have become non-operational NPAs. The Bank proceeded with possession of secured assets and property sale, highlighting the substantial outstanding amount exceeding crores. The Bank argued that the unit is not viable for regularisation, despite granting opportunities for repayment with no action taken by the petitioner.

The petitioner relied on an interim order directing payments to regularise the term loan account. However, the Bank rejected the revival proposal and demanded full dues, leading to the current dispute. The Court acknowledged the limited scope of interference in SARFAESI Act proceedings, citing the settled law by the Apex Court. Despite the interim order for regularisation upon payment compliance, the Court noted the substantial outstanding amount and lack of valid proposal for settlement.

The Court declined interference in contractual obligations and rights, especially after the account turned NPA, unless special circumstances exist. The Court found no grounds for interference, considering the substantial outstanding liability. Consequently, the writ petition was dismissed, maintaining the Bank's right to proceed under the SARFAESI Act without hindrance.

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