Point of Law:
If a premium is charged on the outstanding loan being prepaid, the same is justified as Corporation, which borrows funds from the financial institutions at the prevailing rate of interest, would suffer loss, if an account is prepaid/foreclosed when the interest rates are falling.

JUDGMENT :

1. RULE. Learned Advocate Mr. Kuntal Parikh waives service of notice of Rule on behalf of the respondent No.1 – Punjab National Bank, learned Advocate Mr. Pranav G. Desai waives service of notice of Rule on behalf of the respondent No.2 – Andhra Bank, learned Advocate Mr. Bhaskar Sharma waives service of notice of Rule on behalf of the respondent No.3 – Dena Bank and learned Advocate Mr. Kaushal D. Nakrani waives service of notice of Rule on behalf of the respondent No.4 – Indian Bank.

2. This petition under Article 226 of the Constitution of India is filed seeking direction to the respondent No.1 seeking direction to the respondent No.1 to release the collateral security of the petitioner created by deposit of title deeds without demanding prepayment charges/foreclosure charges and to issue 'No Objection Certificate' in favour of AXIS Bank and HDFC Bank who had taken over the credit facilities. Consequentially, relief is prayed for setting aside the communication dated 07.11.2019, 20.11.2019 and 19.10.2019 demanding prepayment charges/foreclosure charges.

3. It is the case of the petitioner that the petitioner had availed credit facilities in the form of funding of projects jointly by the Consortium of the respondents No.1, 2, 3 and 4 – Bank, the respondent No.1 being the lead Bank.

4. It is submitted that the total funds sanctioned by the Consortium was of Rs.135 Crores which was in the forum of term loan, cash credit facilities and non-fund based facilities. It is the case of the petitioner that after sanctioning of the facilities by the Consortium in the year 2017, the collateral security was offered to secure such facilities. It is the case of the petitioner that from the beginning, the petitioner had brought to the notice of the consortium, the excessive rate of interest as compared to the rate of interest which was offered in the Sector and therefore, requested the respondents to take a decision with regard to applying of such higher rate of interest, higher process fees and bringing it to the level which is applicable in the market. This point was raised by the petitioner in the very first meeting of the Consortium. It was also requested that considering the higher amount of loan, a period of 8 years be fixed as against 5 years. On both the issues, the respondent Banks assured the petitioner that appropriate decision would be taken by the higher authorities. In expectation, the petitioner had also addressed a communication. It is submitted that as per the terms of the Bank, the collateral security coverage to the extent of 52% of the credit facility was to be submitted before the disbursement of the funds and hence, the petitioner had created a charge on its various immovable properties worth Rs.72.76 Crores. It is submitted that the petitioner had also given an additional security in the form of LIC Policies worth Rs.8.82 Crores only with an object to receive competitive rate of interest. The charge was created by a communication dated 26.05.2017 by which the Policies worth Rs.8.82 Crores were charged. The details of the policy are as under :-

5. It is submitted that out of the sanctioned funds, the disbursement of Rs.105.08 Crores took place and against which the value of the property given towards the collateral security was then valued at Rs.72.76 Crore