Public sector banks must adhere to principles of fairness and non-arbitrariness in their dealings, as established under Article 14 of the Constitution.

ORDER :

(Mohammed Shaffiq, J.)

The present writ petition is filed challenging the impugned order in R.A.No.102 of 2019 dated 19.12.2019 of the Debt Recovery Appellate Tribunal (DRAT), on the premise that it suffers from manifest arbitrariness inasmuch as it affirms the action of the 1^st respondent financial institution in resiling/reneging its offer/promise. 

2. The 1^st petitioner proposed to establish an Hospital at Erode with a view to provide better medical care in Rural area. The project cost was estimated at Rs. 20 Crores. The first respondent came forward to fund the petitioner hospital under the “Rural Infrastructure Development Scheme” envisaged by the first respondent. In terms of the said Scheme the 1^st respondent was to fund projects including hospitals for development of rural infrastructure, with a condition that the project/establishment would provide for certain concessions, one of them being that such hospital would provide 20% of the beds free of cost to rural public. The first respondent granted a loan of Rs.827.95 lakhs for construction of 100 bedded multi- speciality hospital at Kasipalayam, Erode. The petitioner executed necessary documents including mortgage deed as security for the loan advanced by the 1^st respondent. While, petitioners 2 to 4 (1^st petitioner is the Managing Director; 2^nd petitioner is a Doctor and wife of the 1^st petitioner, petitioners 3 and 4 are the Directors of the 1^st petitioner), executed personal guarantee in favour of the 1^st respondent.

3. The petitioner due to a variety of reasons inter alia including financial bottlenecks, non availability of adequate finance at the right time, policy measures introduced by the government which according to the petitioner had a negative impact, rendered the project itself unviable. As a consequence, there were defaults made by the petitioner in servicing/ repayment of the loans obtained, which is not in dispute.

4. In view of the above default, the first respondent took measures to recover the loan amount. The first respondent filed an Original Application in O.A. No.276 of 2003, renumbered as (O.A.No.156 of 2013) on the file of Debts Recovery Tribunal, Chennai, seeking to recover a sum of Rs. 11,42,30,870/- together with interest @16.5% per annum with quarterly rests. The first respondent herein invoked provisions of SARFAESI Act, which was challenged by the petitioner in S.A.No.167 of 2013. The Tribunal was pleased to grant a stay on condition that the petitioner deposits a portion of the claim amount. Accordingly, the petitioner paid a sum of Rs.8.27 crores to the 1^st respondent on 6 dates commencing from 4.5.2006 and ending on 1.7.2013. The petitioner filed a Counter Claim in the above said OA to which the 1^st respondent had filed its reply. However, in view of the promise stated to have been made by the 1^st respondent herein to consider the OTS proposal, and with a view to settle the matter, the petitioner withdrew the Counter Claim.

5. The Debts Recovery Tribunal vide order dated 05.10.2018 found that the respondent bank is entitled for a recovery certificate as against petitioners 1 to 5 for a sum of Rs.11,42,30,870/- together with interest @ 9% (simple), till the date of realization. Pursuant to the final order, a Debt Recovery Certificate in DRC No.129/2018 dated 27.11.2018 was issued determining the amount payable at Rs.17,11,47,281.05.

6. The petitioner vide Email dated 11.11.2018, expressed their intent to discharge the certified amount by making RTGS and requested the respondent bank to send the account details necessary for making RTGS. The respondent bank vide its communication dated 20.11.2018, stated that in view of the petitioners' intention to discharge the outstanding due amount as per the DRT final order, the competent authority of the respondent bank had accorded “in principle approval”, for acceptance of the final order dated 05.10.2018, provided the petitioner clears the entire dues within 7 days from the date of receipt of t