2017 (2) TMI 655 - HC - Indian Laws

Regularization of loan account - All the accounts became NPA and therefore the petitioner became a defaulter - permitting the petitioner to remit the amount which exceeded the sanctioned limit of the credit facilities - Held that - The amount outstanding is substantial and there is no valid proposal agreed upon by the parties to settle the liability. Even according to the petitioner there is no proposal to discharge the liability within a short time frame. Therefore there is no reason why the Bank should be asked to desist from taking any further action under the SARFAESI Act. If interference is made by this Court in this matter it would definitely hinder the right of the Bank to proceed further. In the interim order dated 9.4.2015 this Court had further observed that if the petitioner commits default in respect of the payments it will be open for the respondent Bank to bring up the matter for further orders. It is submitted that after paying the amount as directed in the interim order dated 9.4.2015 no steps had been taken by the petitioner to regularise the term loan account by approaching the Bank. This fact has been disputed by the learned counsel for the petitioner who submits that after paying the aforesaid amount the petitioner had approached the Bank for regularising the account. Be that as it may we do not think that this is an instance where this Court should interfere and interfere with the contractual obligations/rights of the parties. Once the account had become NPA unless there are special circumstances involved in the matter it may not be possible for this Court to interfere in such contractual obligations and direct regularisation. We do not think that the petitioner has ventilated any grievance which requires interference by this Court especially in an instance where huge liability is outstanding.

Summary

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.