Where borrowers admit loan liability in arbitration proceedings under Co-operative Societies Act, no issues need framing nor evidence recording; appellate remand solely on procedural grounds without factual denial is liable to be set aside.

JUDGMENT :

ROMESH VERMA, J.

1. The present writ petition arises out of the order dated 12.07.2019, passed by the Additional Registrar (Administration) Co-operative Societies H.P., whereby, Appeal Nos. 329, 330 and 331 of 2016 have been disposed off by setting-aside the award passed by the Arbitrator (Bank) and case was sent back to him for fresh disposal of the dispute under Section 72 of the H.P. Co-operative Societies Act, 1968. It was ordered that Arbitrator shall decide the case within a period of four months from the date of the appearance of the parties.

2. The facts which arise in the case are that the present petitioner advanced working capital (CC) limit of Rs. 10.00 lakhs to M/S Bhagra Resorts Pvt. Ltd. through its Managing Director Smt. Prabha Bhagra on 16.02.2004. Further, on 28.06.2005, the private respondents availed term loan of Rs. 3.00 crores vide sanction letter dated 28.06.2005 for completion/ renovation of the Hotel/Motel under the scheme of the Bank. The said term loan of Rs.3.00 crores was sanctioned in favour of M/S Bhagra Resorts Pvt. Ltd., (respondent No.5). The present petitioner sanctioned the term loan of Rs. 3.00 crores on 28.06.2005 at the rate of 10.90% interest for a period of seven years including moratorium period of one year. The petitioner has placed on record the copy of the sanction of capital (CC) limit of Rs. 10.00 Lakhs as Annexure P-1 and sanction of term loan of Rs. 3.00 crores in favour of respondent No.5, as Annexure P-2.

3. It has been stipulated in the sanction letter, Annexure P-2 that the borrower shall repay the term loan within a maximum period of seven years including moratorium period of one year. It has further been stipulated in the sanction letter that during the moratorium period, the borrower shall repay the interest accrued on monthly basis with the stipulation that the loan shall be repaid in seventy two equated monthly installments (EMI) of Rs. 5.7 lakhs consisting of principal and interest. It has also been incorporated in the sanction letter that the borrower shall pay interest @ 10.90 % per annum on term loan. The interest shall be compounded on monthly rests, however, the rate of interest and periodicity of compounding of interest shall be subject to change from time to time without notice. The sanction letter stipulates that the Bank shall charge the penal interest @ 2% per annum over the normal interest.

4. The private respondents failed to repay the said loan amount, as a result of which, the loans/advances of the private respondents became non-performing assets in terms of the Reserve Bank of India Guidelines w.e.f. 30.09. 2006. Under such circumstances, the present petitioner issued notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘SARFAESI Act’) to respondent No.5 for the payment of outstanding amount of Rs. 3,90,76,986.00/- crores.

5. Pursuant to the issuance of the notice, the District Magistrate, Shimla vide its order dated 14.01.2010 passed an order and the possession of the premises was taken on 03.05.2010, however, it is stated that private responden