Banking - Bank cannot be called in to pump more money in the project of borrower, when the borrower is being termed as Willful Defaulter.

Recently, the Hon'ble Punjab and Haryana High Court in M/s Arjun Mall Retail Holding Pvt. Ltd., Vs UCO Bank and others held that a Bank cannot be called in to pump more money in the project of borrower, when the borrower is being termed as Willful Defaulter. It is the commercial decision taken by the Bank safeguarding its interest. In this case, the Bank partly disbursed loan amount to the Petitioner, however, on alleged breach of terms and conditions of loan agreement, bank refused to disburse the remaining loan amount. Hence, instant writ petition. In this context, the Hon'ble High Court gave this decision. The Relevant portion of the judgement is extracted herein under; 

"In the present case, the Bank has alleged violation of the terms and conditions of the loan. The petitioner is being termed as a willful defaulter. Once the petitioner is being threatened to be treated as a willful defaulter, the Bank cannot be called in to pump more money in the project of the petitioner when the petitioner is a defaulter. It is a commercial decision taken by the Bank for safeguarding its interest. Therefore, mere fact that the Bank has sanctioned loan of Rs.6.50 crores, there is no obligation that irrespective of the violation of the conditions of loan and the defaults committed by the borrower, the balance loan must be released."