Banks are not mandated to disclose benchmarks or consider OTS proposals, and courts cannot compel alteration of existing financial agreements under Article 226.

JUDGMENT :

( Per : Rajnish R. Vyas )

The petitioner is a Director and Shareholder of respondent No. 5/ N. Kumar Housing and Infrastructures/ mortgager. Respondent Nos.1 and 2 had extended term loan facility to Respondent No. 4 /principal borrower for the advancement of business 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 (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 respondent bank was taken exception to by the borrower/mortgagor by preferring appeal under Section 17 of the SARFAESI Act.

6. A Company Petition No. 3631/2018 was also filed by respondent Nos. 1 and 2, against respondent borrower and guarantor under Section 7 of the Insolvency and Bankruptcy Code, 2016 (For short, “Code of 2016”) before NCLT, Mumbai.

7. According to the petitioner respondent bank is acting like a private money lender and is trying to recover the dues without following policy laid down by respondent No. 3 Reserve Bank of India. By taking the said argument further it is contended by the petitioner that on several occasions, proposal for One Time Settlement (“OTS”) was submitted but same was rejected on the ground that proposal submitted by the petitioner fails to meet the benchmark.According to the petitioner, what is the benchmark is still not disclosed by the respondent no. 1 & 2.

8. It is in this background, the petitioner has made various prayers including direction to Reserve Bank of India to appoint an independent senior officer to undertake the scrutiny/audit of the accounts originally maintained by respondent No. 2 bank and transfered to respondent No.1 bank. Prayers are also made that declaration be given that action of interim resolution professional is also illegal. A prayer for direction to the Tribunal to take up and decide securitisation appeal preferred by respondent No. 4 expeditiously is also made.

9. Though various prayers are made, controversy involved in the present petition settles down to the issue as to whether borrower/guarantor can ask mandate from the court to compel the creditors/bank to disclose benchmark and settle the matter ignoring OTS proposal submitted? The question is also whether Court can give direction to disclose benchmark, which according to the petitioner has not been disclosed and changed from time to time by way of vague replies.

10. In pursuance with notice, respondent bank has appeared and has contended that the loan agreement entered into amongst creditor, principal bo