Noncompliance with loan restructuring terms justified the termination, and lack of prior intimation and vagueness of the termination order were not sufficient grounds for interference.

JUDGMENT

Avneesh Jhingan, J. - The Petitioner is a company incorporated under the Companies Act, 1956. The writ petition is filed through its authorised signatory for quashing an order dated 6th October, 2020 of the Respondent Bank (erstwhile Oriental Bank of Commerce now Punjab National Bank) whereby the re-structuring of its loan has been cancelled.

2. The Petitioner is a real estate developer. The Petitioner availed a term loan from the Bank for construction of a Residential Group Housing Project "Casa Romana" at Dharuhera. On 30th January, 2014, a Rs.100 crore term loan was sanctioned. Certain properties were offered as primary and collateral securities. Due to financial constraints in 2017, the project was downsized; resultantly the term loan was reduced from Rs.100 crores to Rs.80 crores. On 12th March, 2019, the Petitioner sought permission from the Bank for selling the collateral securities. There was a default in repayment of the loan and on 2nd April 2019, the account was declared as Non-Performing Asset ('NPA'). Thereafter, the Bank allowed the request of the Petitioner for sale of the collateral security, subject to deposit of Rs.18 crores.

3. On 15th April 2019, a notice under Section 13 (2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ('the Act') was issued by the Bank to the Petitioner. In terms of the said notice, the amount due as of that date was Rs.53,14,36,305/- plus future interest and other charges. On 26th May 2019, objections under Section 13 (3A) of the Act were filed to the notice and a request was made by the Petitioner for re-structuring of the loan. Thereafter reminders were sent for re-structuring. On 4th January 2020, the loan was re-structured by the Bank subject to the pre-condition that the Petitioner had to infuse Rs.1.20 crore. The repayment of Funded Interest Term Loan ('FITL') was to be made in five equated quarterly instalments. The first instalment was to be paid upto 31st March, 2020. There was a moratorium period upto 31st December, 2019 from the cut-off date (i.e. 31st October 2019).

4. The Petitioner failed to deposit the first instalment and made a request on 27th March, 2020 for providing a further moratorium. There was also a failure to deposit the second and third instalments. On 6th October 2020, the Bank terminated the re-structuring of the loan. On 16th October 2020, the Petitioner replied to the termination intimation. The Bank then served a legal notice-cum-demand notice dated 30th October 2020, seeking repayment of dues of Rs.63.25 crore (interest and penal charges upto 30th September, 2020) within 10 days. At this stage, the present petition was filed.

5. Mr. Puneet Bali, learned Senior counsel for the Petitioner contends that the termination of the re-structuring of the loan is bad for lack of prior intimation. The order of termination is vague and not reasoned. It is argued that the Bank has wrongly recorded in impugned order that the Petitioner had not infused Rs.1.20 crore into the project account when there was no such specific condition. He relies upon the certificate dated 16th January, 2020 issued by the Chartered Accountant ('CA') to show that Rs.1.20 crores were in fact contributed by promotees. It is further argued that the Bank had to sell the some of the properties mortgaged after No Objection Certificate ('NOC') from the Petitioner but it failed to do so. The grievance is that due to the COVID-19 situation, the moratorium as per the RBI Circular should have been extended. He states that if sufficient time is provided, the Petitioner was even now willing to infuse the aforementioned amount of Rs. 1.2 crores into the project account.

6. Mr. P.B.A. Srinivasan, learned counsel for the Bank, refuted the contentions raised by Mr. Bali. He contended that the Petitioner failed to comply with precondition of re-structuring i.e. infusing Rs.1.20 crore into the project account, there is no such reflection in