The main legal point established in the judgment is the importance of consulting with the relevant party before making observations or recommendations based on a complaint, and the court's authority to direct the respondent - Bank to consider a one-time settlement proposal.

T.S. SIVAGNANAM, J.

Heard Mr. R. Singaravelan, learned senior counsel, appearing for Mr. D. Selvanayagam, learned counsel on record for the petitioner and Mr. M. Senthil Kumar, learned counsel appearing for the respondents 1 and 2 and carefully perused the materials placed on record.

2. None appeared on behalf of the respondents 3 and 4.

3. In this writ petition, the petitioner seeks for issuance of a writ of mandamus to direct the respondent - Bank to release the documents in the light of the letter, dated 21.04.2016, issued by the third respondent addressed to the fourth respondent.

4. The admitted fact is that the petitioner borrowed loan from the respondent - Bank and as on date, they are a defaulter. The petitioner's case rests upon the letter, dated 21.04.2016, issued by the third respondent / Micro Small & Medium Enterprises Institute to the fourth respondent / Deputy General Manager (SME), Indian Overseas Bank. In the said letter, there is a reference to the complaint given by the petitioner to the third respondent - Organization against the respondent - Bank.

5. On perusal, we find that before making a positive observation / recommendation to the said letter, based on the complaint given by the petitioner, the respondent - Bank has not been consulted with nor they have been put on notice by the third respondent - MSMEI.

6. Be that as it may, the third respondent requested the respondent - Bank to look into the matter for necessary redressal to the borrower amicably and for return of their due security documents and to treat their loan under CGTMSE norms.

7. The petitioner's case is that in spite of such communication having been sent by the third respondent to the fourth respondent, the respondent - Bank have not considered the petitioner's request and on the other hand, they have initiated recovery proceedings and the matter is pending before the Debts Recovery Tribunal at Coimbatore, in S.A.No.14 of 2016 at the instance of the petitioner.

8. The learned counsel appearing for the respondents 1 and 2 submitted that the letter, dated 21.04.2016, has been sent by the third respondent without consulting the respondent - Bank and in sofar as the collateral security is concerned, once loan has been secured by offering property as collateral security, CGTMSE coverage would automatically get cancelled and in the instant case, the amount has been refunded to the petitioner on their request. It is further submitted that had the third respondent issued notice to the respondent - Bank, they would have brought to the notice of the third respondent these facts and such a communication, dated 21.04.2016, would not have been issued.

9. However, the larger issue, which is to be considered is whether the loan availed by the petitioner could be liquidated. The petitioner has, in unequivocal terms, offered to the respondent - Bank that he is agreeable for the disposal of the machineries available in the factory. Taking note of the said submission, on 24.02.2016, an interim direction was issued to the respondent - Bank and despite the same, they have not complied with the interim direction. Further, it is submitted that the loan availed by the petitioner is covered under the Scheme and therefore, there is no justification to retain the mortgaged property.

10. Considering the fact that the matter is pending before the Debts Recovery Tribunal and the petitioner has also effected payment of Rs.16,50,000/- pursuant to the order passed by the Debts Recovery Tribunal, we are of the view that the petitioner should take earnest step to liquidate the dues by approaching the respondent - Bank. According to the respondent - Bank, as on date, the amount recoverable from the petitioner is Rs.58,26,390/-. This is after giving credit to all the payments effected by the petitioner including the payment as per the interim direction issued by the Debts Recovery Tribunal.

11. Considering the fact that the petitioner is a Small Enterprises, which was initially