The duty of the customer to act honestly towards the bank and the limited scope of judicial review over banking decisions.

JUDGMENT

1. Petitioner a heavy borrower, is knocking at the doors of Writ Court for assailing the Letters dtd. 5/2/2021 (Annexure-F) and 7/4/2021 (Annexure-J) whereby all credit facilities extended to him have been recalled. He also lays a challenge to the consequent SARFAESI Notice at Annexure-L; all these are issued by the 3rd Respondent- lender Bank inter alia on the ground of defaults committed by the petitioner eventually resulting into its "debt being classified as non performing asset". The net effect of all these impugned instruments are that the petitioner has to discharge in full all his outstanding liabilities aggregating to Rs.358,39,49,064.00 (Rupees Three Hundred and Fifty Eight Crore Thirty Nine Lakh Forty Nine Thousand & Sixty Four) only, computed as on 16/7/2021 with interest as agreed, accruing thereon.

2. After service of notice, the Union of India is represented by the Asst. Solicitor General; the 2nd respondent RBI has chosen to remain unrepresented; the

3. rd respondent - lender Bank is represented by its private counsel who has filed the Statement of Objections dtd. 27/5/2022 opposing the petition. Learned Senior Advocate appearing for the lender Bank, makes submission in justification of the impugned proceedings and the cumulative reasons on which they have been structured. He also seeks dismissal of the Writ Petition on the ground that petitioner has perpetrated sharp practices unbecoming of a scrupulous borrower and a culpable litigant. 3. BRIEF FACTS OF THE CASE:

(a) Petitioner, a Private Limited Company is incorporated under the provisions of Companies Act, 1956, with the sole purpose of developing sa hotel namely, 'The Ritz-Carlton-Bangalore', for providing accommodation and worldly services. The Hotel was sought to be established on a property which petitioner had obtained by a registered lease deed dtd. 11/1/2007 with ARCHDIOCEASE of Bangalore. On the assurances and representations of the petitioner, the third respondent - Bank sanctioned the credit facilities which would include a Term Loan of Rs.291, 00, 00, 000.00, granted in March, 2016. The leasehold rights were furnished by way of security for the repayment coupled with certain personal guarantees and hypothecations.

(b) The Loan Agreement was entered into on 31/3/2016 and the petitioner had executed a Deed of Undertaking on the same date. Petitioner had specifically declared that it has a clear and marketable title and, transferable interest over the Hotel Ritz-Carlton which was free from any prior charge, lien, encumbrance or litigations. However, the said lease was terminated way back in the year 2014 itself and the dispute was in the arbitration proceedings, a retired judge of this Court being the sole arbitrator. The lender - Bank states that it was not given any inkling of the same. Petitioner was also granted an additional Temporary Overdraft facility of Rs.100,00,00,000.00 during the Covid-19 Pandemic pursuant its Letter dtd. 25/11/2020, the lender-Bank being kept in complete darkness as to the arbitral proceedings.

(c) The lesser vide Letter dtd. 8/1/2021 informed the lender-Bank about the arbitral award passed on 7/11/2020 upholding the termination of lease and rejecting petitioner's Counter claim for a sum of about Rs.600.00 Crores. A challenge to the same before the Commercial Court in COM.AP No. 4/2021, having been rejected the matter is now pending in appeal before a Division Bench of this Court. Petitioner having remained in default, its debt came to be classified as NPA. By the impugned Letters, the entire credit facilities have been recalled on the ground of fraud, misrepresentation and default. A Demand Notice u/s 13(2) of the SARFAESI Act, 2002 has also been issued. Aggrieved by all this, petitioner is before this Court.

(d) The respondent - Bank has filed the Statement of Objections resisting the writ petition contending that: the third respondent is not an instrumentality of the State under Article 12 of the Constitution