- (1.) The petitioners have prayed for the quashing of the order dated 11.12.2013 passed by the Assistant General Manager, State Bank of India rejecting the petitioners' application for restructuring the Cash Credit Limit. The petitioners have also prayed for a writ of mandamus commanding the State Bank of India to restructure the Cash Credit Limit and grant concessionary rate of interest, as per the guidelines issued by the Reserve Bank of India and circulars issued by the State Bank of India from time to time.
(2.) The facts leading to the writ petition is, that the petitioners' Company is a Private Limited Company incorporated under the Indian Companies Act and is engaged in the business of distribution of Mico Bosch automobile parts, Reliance Handset and recharge vouchers. It transpires that the Bank sanctioned a Cash Credit Limit to the tune of Rs. 156.00 lacs in August, 2006 for the purpose of meeting the working capital requirements of the company under the "Trader Easy Loan Scheme" floated by the Bank. It is alleged that on account of recession in the automobile and telecommunication industry, the Cash Credit Limit granted by the respondent Bank could not be paid on time and it became irregular in the year 2009. The petitioners made a proposal dated 20.12.2009 for repayment of the Cash Credit Limit in a phased manner. It transpires that the respondent-Bank considered the proposal and issued an order dated 26.04.2010 renewing the Cash Credit Limit by reducing the limit from Rs. 156.00 lacs to Rs.100.00 lacs subject to certain terms and conditions, namely, that the petitioner was required to give an equitable mortgage of a portion of the house and that the release of the title deeds would only be done upon deposit of Rs.56.00 lacs towards the reduction of the Cash Credit Limit. The respondent-Bank also granted permission for letting out the mortgaged premises and assignment of rentals only on deposit of an amount of Rs. 56.00 lacs after taking previous permission from the Bank. The respondents further directed that during the currency of the Bank's credit facilities, the petitioners would not deal with another Bank without taking prior permission from the respondent-Bank and that the petitioners would confine all its banking business with the respondent Bank. The sanction was also subject to a first charge on the profits of the Company towards repayment of the loan and interest accrued thereon. Instead of complying with the terms and conditions mentioned in the sanction letter, the petitioners by means of letter dated 05.05.2010 requested the respondent-Bank to permit them to pay Rs. 56.00 lacs in two years.
(3.) It transpires that since the petitioners committed various defaults, the respondent-Bank declared the petitioners' Account as "NPA" on 30.06.2010. The position remained the same for the next two years and it is alleged that in spite of the declaration of petitioners' account as "NPA", the petitioners paid Rs. 1.13 crores to the respondent-Bank between the period from 16.08.2010 to 22.03.2012. The petitioners approached the respondent-Bank again on 26.12.2012 for a loan under "assigned rent". The respondent-Bank by a letter dated 26.02.2013 accepted the proposal of the petitioners indicating that they have no objection to the closure of the Cash Credit Limit with them so long as the entire disbursement given by the subsequent Banks was remitted and credited in the Account of the petitioners operating with the respondent-Bank. It transpires that even this proposal was not accepted and the petitioners filed a fresh proposal for renewal of the existing Cash Credit Limit and for an additional loan of Rs. 35.00 lacs under the "Rent Plus Scheme". The petitioners submitted a representation dated 14.10.2013 for renewal of the Cash Credit Limit and conversion of the interest overdues payable in 36 months at 5% per annum under Debt Restructuring Mechanism. The petitioners contended that their demand is in the light of the circular of the State Bank of India dated 26.04.2012 and RBI guidelines dated 01.07.2011 framed by the Reserve Bank of India. It further transpires that while all these proposals were being sent by the petitioners, the respondent-Bank issued a notice in September, 2013 demanding Rs. 1.07 crores under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The petitioners, accordingly, filed Writ Petition No. 68288 of 2013, which was disposed of by an order dated 20.11.2013 directing the petitioners to file a fresh application for restructuring of the loan, which would be decided by the Bank. Accordingly, the petitioners filed a fresh application on 27.11.2013 praying that their Cash Credit Limit be restructured, as per RBI guidelines and as per the circulars of the State Bank of India. The request of the petitioners for restructuring of the loan was rejected by an order dated 11.12.2013 on the ground that the proposal was not within the purview of the RBI guidelines or the circulars of the State Bank of India. The respondents found that the petitioners' company was not declared a sick unit and was generating income regularly and that the petitioners' entire business proceeds was being routed through HDFC Bank or South Indian Bank Ltd. in violation of the sanction granted earlier by the respondent-Bank. The respondent-Bank further found that the petitioners were getting a rent of Rs. 1.42 lacs and were going to rent out another portion of the premises without taking permission from the respondent-Bank and that major alterations were taken on the property in which equitable mortgage was created in favour of the respondent-Bank. The respondent-Bank found that the compromise proposal, which was accepted in 2010 was not complied with by the petitioners and the overdues were not paid by the petitioners wilfully and, accordingly, the respondent-Bank did not find it fit to consider the petitioners' application for restructuring of the Cash Credit Limit.;