The court affirmed that a bank is entitled to recover its contracted interest rates unless there is a clear legal basis to modify them, emphasizing the importance of contractual obligations in debt recovery.

JUDGMENT

Talwant Singh, J. The Petitioner Bank has filed this writ petition for issuing appropriate writ/direction/order for setting aside order dated 21st April, 2015 passed by Debt Recovery Appellate Tribunal (DRAT), New Delhi in appeal No.154/2015 and order dated 16th February, 2015 passed in MA No.72/2014 by DRT-I and to allow the Petitioner Bank to recover the Original Application (OA) amount of Rs.62,78,446/- along with contractual rate of interest.

2. In brief, the case of the Petitioner is that it is a public sector bank and that Respondent No.1 is the borrowing Company which had availed various credit facilities from the Petitioner Bank since 1986. Respondent Nos.2 to 4 are stated to be Directors of Respondent No.1 Company who stood guarantors along with late Shri M.S. Goel who had since expired and Respondent Nos.2 and 3 are stated to be his surviving legal heirs. The loan facilities granted to Respondent No.1 were renewed and enhanced from time to time.

3. However, Respondent No.1 Company stopped its operations from January, 1998 due to the orders passed by Delhi Pollution Control Committee.After complying with the requirements, it restarted its operation and requested the Petitioner Bank for rehabilitation of the unit and to sanction fresh limits. Accordingly, the Petitioner Bank sanctioned the limits as per sanction letter dated 4th January, 2001 and in pursuance thereto the Respondents had executed relevant loan, security and guarantee documents dated 4th January, 2001. Equitable mortgage was also created on industrial property No. B-II/31, Mohan Cooperative Industrial Area, New Delhi in favour of the Petitioner Bank after obtaining permission from DDA.

4. Respondent No.1 Company availed the rehabilitation credit facilities but failed to deposit the due instalments in the loan accounts and again stopped its operations from August, 2001. The Petitioner Bank called upon Respondents to clear the outstanding liabilities but with no positive result. Hence, the loan accounts of the Respondent No.1 Company were classified as NPA accounts on 31st December, 2001. On the said date, the outstanding amount due and recoverable against the Respondents was Rs.78,97,110/-.

5. An amount of Rs.34,92,970/- was received as insurance claim by the Petitioner Bank on 14th January, 2002 which was set off against the outstanding amount. A demand notice under Section 13 (2) of SARFAESI Act dated 25th June, 2003 was served upon the Respondents calling upon them to pay outstanding amount of Rs.44,76,219/- together with interest from 1st January, 2002 within 60 days. No amount was paid so an OA bearing No.90/2003 praying for recovery of Rs.62,78,446/- along with pendentelite and future interest at the rate of 14% per annum with monthly rests along with penal interest at the rate of 2% per annum was filed by the Petitioner Bank before DRT-I, New Delhi. During the pendency of the OA, the Petitioner Bank initiated further action under Section 13 (4) of the SARFAESI Act.

6. Feeling aggrieved, Respondent No.1 Company along with its tenant M/s Excel Car Company preferred two separate Securitisation Applications under Section 17 of SARFAESI Act before DRT-I. Both these applications were dismissed on 14th July, 2009 and appeals were filed before DRAT which disposed of both the appeals vide common order dated 5th March, 2014 directing DRT-I to decide the OA of the Petitioner Bank within three months.

7. The OA No.90/2003 filed by the Petitioner Bank was disposed of on 15th May, 2014 wherein DRT-I had held that Petitioner Bank would be entitled to charge interest from the date of NPA, i.e. 31st December, 2001 on reducing balance till realization. DRT-I did not even state what was the amount to be recovered and what was the amount on which interest was awarded.

8. It is stated that feeling aggrieved, the Petitioner Bank filed an appeal bearing No.246/2014 before DRAT, New Delhi which came up for hearing on 4th July, 2014 but DRAT without