Executed loan agreements require adherence to contractual terms even if cancellation is requested prior to full execution.

JUDGMENT

1.

The Petitioner is a private limited company, which got sanction of a loan of Rs.25 Crores from the Respondent/Bank. The Petitioner has filed this Writ Petition challenging Ext.P5 Communication dated 02.09.2025, refusing to cancel the loan in reply to Ext.P4 Request dated 23.08.2025 for cancellation of the loan and Ext.P6 Communication demanding a total amount of Rs.26,62,500/- which consists of upfront fee of Rs.15,62,500/-, project appraisal fee of Rs.5,00,000/-, Escrow charges of Rs.5,00,000/- and documentation fee of Rs.1,00,000/- and GST.

2. The loan was sanctioned to the Petitioner as per Ext.P2/R1(d)

Sanction Letter dated 12.05.2025. According to the Petitioner, the Petitioner paid Rs.5,00,000/- towards processing charges with Rs.90,000/- towards GST. The Petitioner did not execute the Loan Agreement. Before execution of the Loan Agreement, the Petitioner had sought cancellation of the loan as per Ext.P4 on 23.08.2025, and hence the Bank cannot demand the amounts stated in Ext.P6.

3. The Respondent Nos.1 and 2 filed Counter Affidavit opposing the prayers in the Writ Petition as well as challenging the maintainability of the Writ Petition on the grounds that the issue arises from contractual obligations between the parties and the Petitioner has suppressed the execution of the Loan Agreement and connected documents and the deposit of the title deeds to create equitable mortgage. The Respondents produced all the loan documents executed by the Petitioner and the guarantors along with the Counter Affidavit.

4. The Petitioner has not filed any Reply Affidavit controverting the averments in the Counter Affidavit filed by the Respondents.

5. I heard the learned Counsel for the Petitioner, Sri. Millu Dandapani, and the learned Counsel for the Respondents, Sri.Mohan Jacob George.

6.

The contention of the learned Counsel for the Petitioner is that the Loan Agreement and other connected documents produced by the Bank are executed only for the purpose of processing the loan. The documents were deposited only for verification. Several blank spaces are not filled up before signing the document. It would be clear that the Loan Agreement is incomplete. The Loan Agreement is not signed by the Bank. The Petitioners were not given copies of these documents, and hence, the Petitioner was not aware of these documents. The Petitioner was under the impression that the said documents were only for the purpose of processing the loan, and hence, it is stated in the Writ Petition that the Loan Agreement was not executed. The learned Counsel specifically pointed out Ext.R1(w) Key Fact Statement produced by the Respondent/Bank in which it is stated that the amount collected as processing charges may not be refunded if the borrower fails to avail the loan. The contention of the Counsel is that in case the borrower does not avail the loan, the right of the Respondent/Bank is limited to the processing charges, which is already paid by the Petitioner. The learned Counsel further contended that the Respondent/Bank has not expended any amount towards the upfront fee or escrow charges towards processing of the loan, and at any rate, the Respondent/Bank can claim only the project appraisal fee of Rs.5,00,000/- and the documentation fee of Rs.1,00,000/- from the Petitioner.

7.

On the other hand, the learned Counsel for the Respondent/Bank contended that the Writ Petition is liable to be dismissed at the threshold, since the Petitioner has deliberately suppressed the material facts before this Court. The various documents produced along with the Counter affid