Point of Law: Loans by financial institutions are granted from public money generated at the tax payers' expense. Such loan does not become the property of the person taking the loan, but retains its character of public money given in a fiduciary capacity as entrustment by the public. Timely repayment also ensures liquidity to facilitate loan to another in need, by circulation of the money and cannot be permitted to be blocked by frivolous litigation by those who can afford the luxury of the same.

JUDGMENT :

1. By this petition, inter alia, under Article 226 of the Constitution of India, the petitioner has prayed the following main reliefs:

“a) Issue a Writ of Mandamus or any other Writ, Order or Direction in the nature of Mandamus as this Hon’ble Court may deem fit in the facts and circumstances of the case and direct the Respondent to consider and pass order on the One Time Settlement proposals put forward by the Petitioner in accordance with the norms and procedure laid down in this regard in a time bound manner.

b) Issue a Writ of Mandamus or any other Writ, Order or Direction in the nature of Mandamus as this Hon’ble Court may deem fit in the facts and circumstances of the case and direct the Respondent Bank act in compliance with the mandate of Circulars dated 04.05.2009 and 17.03.2016 and Rule 9 of the Securitization Interest (Enforcement) Rules 2002 in a time bound and transparent manner;”

2. Facts, being discernible from the petition, are as under.

2.1 The petitioner is a private limited company incorporated as per the Companies Act, 1956 having its registered office Bhavnagar. It is a Micro Small Medium Enterprise (hereinafter referred to as ‘MSME’) engaged in the production / manufacture of specialised silica in its factory. At the time of formation of the petitioner, one M/s. Madhu Silica Private Limited was the undisputed leader in silica manufacture and trade in India and abroad. However, with the entry of the petitioner, M/s. Madhu Silica Private Limited's standing in the silica market was threatened. The petitioner was approached by Tata Chemicals Limited to develop / produce specialised silica for ultimate sale of its customers. The Tata Chemicals Limited entered into a business transfer agreement for purchase of the petitioner's business with a plan to scale it up through infusion of Rs.292 crore in the business of specialised silica.

2.2 On 2.6.2014, the petitioner availed of a fully secured term loan of Rs.14.5 crore from the respondent Bank for which, the petitioner gave its assets as collateral securities towards the said term loan sanctioned by the respondent Bank wherein the repayment period was 84 months, i.e. 7 years. The petitioner, between April 2014 and September 2017, was making regular payment of its EMI towards the term loan. By 29.9.2017, the petitioner had paid to the respondent Bank an aggregate sum of Rs.5,71,69,465/- (Rs.488 lakh towards interest and Rs.83 lakh towards principal). In August 2017, Tata Chemicals Limited terminated the business transfer agreement with the petitioner. Soon after termination, the petitioner wrote letters dated 18.8.2017 and 18.9.2017 to the respondent Bank as regards the challenges of dealing with the sudden and unexpected situation.

2.3 The petitioner, vide its detailed note dated 25.10.2017, outlined various aspects including the aspect of last ditch attempts to discharge respondent Bank liabilities. The petitioner, vide the said letter, requested the respondent Bank to release the collateral security immediately in its favour to help to extinguish the bank's dues at the earliest on the ground that early action will help the petitioner to identify buyers at optimum prices, prevent distress sale and to prevent erosion of value that may otherwise happen in delayed action for sale of collateral. It has also been stated that one-time settlement (hereinafter referred to as ‘OTS') be sanctioned.

2.4 According to petitioner, the respondent Bank did not respond to the said communication and on 26.10.2017, it declared the account of the petitioner as non-performing assets (hereinafter referred to as 'NPA') even though the sums due to the respondent Bank were being paid on regular basis till September 2017. Owing to lack of response, it kept querying the respondent Bank as to why the communication dated 25.10.2017 was not responded. The respondent Bank reverte