AI Drafter 
TaxTMI 
TaxTMI 
2025 (11) TMI 12
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....ness of contractor (Development and Construction of Club House cum Resort Project). 2. A request of principal borrower was considered by the respondent Nos. 1 and 2 and accordingly term loan of Rs. 62 crores was granted on 8.3.2011. The sanction of the term loan was at the floating interest and cost of project was initially Rs. 93.70 crores. The tenure of repayment was 110 months. Respondent No. 5 had also executed deed of guarantee and mortgaged documents to secure the loan, so also, letter confirming deposit of title deed. 3. As the principal borrower defaulted in repayment of loan due, same resulted into classification of credit facility as non performing asset on 31.3.2017. 4. Consequently recourse to Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, "SARFAESI Act") was taken by res. no. 1 and 2, since notice was not complied. Further measures under Section 13(4) of the SARFAESI Act were taken recourse to. 5. Respondent Nos. 1 and 2 filed Original Application before the Debts Recovery Tribunal, Nagpur for recovery of dues principal borrower and guarantors. The said action of the resp....
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....er the provisions of SARFAESI Act but also taking recourse to Section 7 of the Code of 2016, powers conferred by the Constitution under Article 226 may not be invoked. 12. The bank has further contended that though initial loan was disbursed in the year 2011, much time lapsed and due to pendency of petition and interim order passed by this Court, respondent bank is not in a position to go ahead with recovery proceedings. 13. According to the respondent bank, though by way of interim order, the petitioner has deposited the amount, same is not enough to satisfy the outstanding amount. 14. A detailed affidavit is filed by the interim resolution professional contending that since it was appointed as per order dated 24.2.2023, passed by National Company Law Tribunal, Mumbai Bench, Court - IV vide Company Petition (IB) NO. 1093/MB/IV/2020, it is under statutory obligation to follow the procedure prescribed under the Code of 2016. According to the IRP, since the petitioner has shown willingness to settle the account by offering a certain amount, a recourse can be taken to the provisions of the Code of 2016. 15. In the aforesaid background, we have heard learned counsels at len....
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....tract with full understanding, they cannot subsequently change their stand and deviate from obligation to repay the amount. 21. The contention of learned counsel for petitioner that he was legitimately expecting that respondent bank would act as per the guidelines framed by the Reserve Bank of India, may at first glance, seems to be attractive, but it ignores the fact that the doctrine of legitimate expectation is rooted in fairness. The fairness would obviously mean repayment of outstanding amount within the period agreed. 22. At this stage, it is necessary to discuss various judgments cited by the parties. Learned counsel for the petitioner, in order to put forward his contention has relied upon the judgment in case of Power Grid Corporation of India Vs. Jyoti Structures Limited, reported in 2017 SCC OnLine Del 12189. In the aforesaid judgment, Hon'ble Apex Court has observed as under: "10. In the light of above purpose or object behind the moratorium, Section 14 of the Code would not apply to the proceedings which are in the benefit of the corporate debtor, like the one before this court in as much as these proceedings are not a "debt recovery action" and its conc....
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....s these proceedings are not debt recovery action. There cannot be any about the aforesaid proposition but fact remains that here the principal question is regarding non payment of the dues and further non consideration of proposal of OTS. A judgment, in case of Indian Overseas Bank Vs. RCM Infrastructures Limited and Another, reported in 2022 Vol.8 SCC 516 is also relied upon. In the aforesaid judgment, the Hon'ble Apex Court has observed as under: "35. In view of the provisions of Section 14(1)(c) of the IBC, which have overriding effect over any other law, any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under the SARFAESI Act is prohibited. We are of the view that the appellant Bank could not have continued the proceedings under the SARFAESI Act once the CIRP was initiated and the moratorium was ordered." The proposition of law laid down by the Hon'ble Apex Court cannot even be doubted but the facts in the instant case travels on different path. The default in repayment was made by the petitoner is not even disputed for the loan which was granted in the year 2011. Thus....
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....4 thereof would only be in relation to some minor matters which does not touch the broad aspects of the policy decision and in particular the one governing the non-discriminatory treatment. In a case of this nature, we are satisfied that the respondent-Bank is guilty of violation of the equality clause contained in the Reserve Bank of India guidelines as also Article 14 of the Constitution of India. In that case, there was a specific policy regarding OTS scheme which was adopted in view of guidelines of Reserve Bank of India. In the instant case, no such guidelines has been produced on record. 26. He has also relied upon judgment of Madhya Pradesh High Court in case of Mohanlal Patidar Vs. Bank of Maharashtra, Jabalpur reported in 2022(2) MPLJ 276, more particularly, paragraphs 29 and 30, which reads thus: Legitimate Expectation : "29. The impugned action of the Bank can be tested on the doctrine of legitimate expectation. The concept of legitimate expectation is of European origin. It is one of the fundamental Principles of European Community Law. (See: Durbeck v. Hauptzollant Frankfurt an Main Flughafen, (1981) ECR 1095, at 1120; Mulder v. Minister Van Lan....
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....(i) Whether benefit under the OTS Scheme can be prayed as a matter of right?; 6.2(ii) Whether the High Court in exercise of powers under Article 226 of the Constitution of India can issue a writ of mandamus directing the Bank to positively consider the grant of benefit under the OTS Scheme and that too de hors the eligibility criteria mentioned under the OTS Scheme? 9. In the present case, despite the fact that it was specifically pointed out before the High Court by way of counter affidavit that (i) the recovery proceedings under SARFAESI Act are pending; (ii) the borrower and her husband have availed two credit facilities and both the loan accounts are maintained regularly and the money is being deposited on regular basis; (iii) the Settlement Advisory Committee concluded that the borrower is enjoying a good financial status and the secured assets are sufficient in case if any recovery is to be made and by auctioning the mortgaged property the bank can recover the entire loan amount, the High Court failed to consider the aforesaid aspects in their true perspective and has issued a writ of mandamus as if the grant of benefit under the OTS Scheme can be claimed as....
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....ution/bank shall take a prudent decision whether to grant the benefit or not under the OTS Scheme, having regard to the public interest involved and having regard to the factors which are narrated hereinabove. Thus, it is crystal clear that issuing writ of mandamus under Article 226 of Constitution, would not in the interest of justice by directing the bank to consider the benefit of OTS to the borrower - guarantor. 28. He also relied upon the judgment in a case of State Bank of India Vs. Arvind Electronics Pvt Ltd, reported in 2023(1) SCC 540. The Hon'ble Apex Court in the said Judgment in paragraph 22 has observed as under: "22. Even otherwise as rightly submitted on behalf of the Bank directing the Bank to reschedule the payment under OTS would tantamount to modification of the contract which can be done by mutual consent under Section 62 of the Indian Contract Act. By the impugned judgment and order rescheduling the payment under the OTS Scheme and granting extension of time would tantamount to rewriting the contract which is not permissible while exercising the powers under Article 226 of the Constitution of India." Thus, we cannot direct the bank....