Point of Law: Debt Recovery and Monetary Laws - Bank - Loan - Mortgaged properties - Where public money is involved, a Writ Court has to assume a realistic role of a trustee in ensuring that public money is not lost in conundrums of constitutional contentions; Courts have to have a pragmatic approach when matters touching economics are brought before them for adjudication.

JUDGMENT :

The appeal in W.A. No.100103/2021 is by the auction purchaser of the mortgaged properties that secured the repayment of the loans in question; the companion appeal in W.A.No.100109/2021 is by the surety; both these Intra Court appeals seek to lay a challenge to the Judgment & Order dated 06.04.2021 rendered by a learned Single Judge of this Court in borrower’s W.P. No.100312/2021 (GMRES) whereby he has been handed relief; in re. the breach of OTS terms: the respondent Canara Bank’s letter dated 27.01.2021 whereby the OTS offer was withdrawn having been quashed, a direction has been issued to give effect (to accept) to the OTS offer dated 22.01.2021 wherein a sum of Rs.15.20 crore was offered.

2. The contesting respondent borrower having entered caveat/appearance through it’s counsel resists the appeals making submission in justification of the impugned order and the reasons on which it has been constructed; it is pertinent to mention here itself that during the course of hearing, the principal borrower, surety & the auction purchaser were given an option to revive their offers; both the appellants have come up with much higher offers; the appellant surety came forward with an offer of Rs.23 Crore and the auction purchaser revised his offer from Rs.15,00,52,000/to Rs.25,20,99,999/; the principal borrower did not avail the opportunity; these aspects have been discussed by us, infra.

3. BRIEF FACTS OF THE CASE:

(a) Under the Term Loan Agreement and Hypothecation Agreement both dated 29.01.2009, the writ petitioner had availed a loan of Rs.53.60 Crore &a cash credit facility upto Rs.3 Crore from the respondent Canara Bank; the appellant Shri K.Ramappa was the surety; the loans having bulged to above Rs.100 crore now owing to run of time and not been repaid despite demand, the coercive actions for recovery were resorted to by the bank.

(b) The writ petitioner (hereafter ‘borrower’) vide letter dated 22.04.2017 had offered to pay Rs.5 crore by way of One Time Settlement; that was turned down by the bank by letter dated 15.11.2018; later he revised the OTS offer to Rs.11 crore vide letter dated 30.01.2019; this was accompanied by Banker’s Cheques in all for Rs.20 lakh; the mortgaged properties were sought to be put to eauction vide notice dated 21.06.2019 u/s 14(2) of SARFEASI Act, 2002 read with Rule 8(6) of Security Interest (Enforcement) Rules 2002; fearing this, the borrower remitted Rs.4 crore on 22.07.2019 and requested the bank to defer the eauction that was scheduled held on 24.07.2019.

(c) After seeing the reluctance of the bank, the borrower further revised his OTS offer to Rs.15 crore & 20 lakh; this having impressed the bank, it issued a letter dated 30.11.2019 accepting the said offer on the condition that the earlier paid amount of Rs.4.2 crore being adjusted, the remainder i.e., Rs.11 crore should be paid on or before 15.03.2020. In the meanwhile, the Deputy Commissioner, Ballari District had issued section 14(2) notice dated 17.12.2019; the bank vide letter dated 24.07.2019 requested the Deputy Commissioner to withdraw the coercive notice in view of the OTS.

(d) The borrower vide letter dated 17.01.2020 had requested the bank to accord consent for assigning the outstanding debt (Rs.107,000,000/) to the Asset Reconstruction and Securitization Company; other back up actions were also being worked out, is the version of the borrower before us; to this, the bank did agree of course subject to the rider of making the entire OTS payment on or before 15.03.2020;

(e) The above condition of requiring the payment of making entire OTS amount within the agreed time, having not been adhered to, the bank withdrew the OTS facility vide letter dated 27.01.2021; this was challenged by the borrower in the subject writ petition in the first week of February2021; obviously the appellants were not parties; the learned Single Judge by the interim order dated 24.03.2021 had restrained confirmation of then contemplated auction; thereafter