The moratorium runs from sanction, not from the day the money actually arrives
A borrower who told the bank in 2011 that it did not want the rest of its loan later said the loan was never fully disbursed. The Calcutta High Court finds nothing perverse in the Tribunal’s refusal to accept that.
On 24 September 2026 Justice Dinesh Kumar Sharma dismissed a civil revision against an order of the Debt Recovery Appellate Tribunal, in a dispute that began with a loan sanctioned more than fifteen years earlier.
The loan
The borrower applied to IDBI Bank for a term loan and a cash credit facility. On the mortgage of property at Belghoria in Kolkata, the bank sanctioned a term loan of Rs 70,00,000 and a cash credit limit of Rs 1,40,00,000.
The borrower’s case was that the full term loan was never disbursed, and that the difficulties which followed flowed from that failure. The bank issued a notice under Section 13(2) of the SARFAESI Act in August 2012. A representation under Section 13(3A) followed, and then a securitisation application before the Debt Recovery Tribunal registered in 2014, in which the borrower sought to have the Section 13(2) notice quashed.
That route led eventually to the Appellate Tribunal, whose order of October 2023 the borrower challenged here.
A Section 13(2) notice is the opening move in enforcement without a court: it demands repayment within sixty days and, if unmet, entitles the secured creditor to take possession of the mortgaged property. Quashing it is therefore the borrower's whole defence to losing the security.
What the record showed
The Court went to the terms and the correspondence, and what it found there answered the complaint.
Under the terms and conditions, the term loan was to be disbursed in instalments on the basis of requests made by the borrower. Disbursement was demand-driven, not automatic.
After December 2009, by a communication of 21 January 2011, the borrower expressed its intention not to avail any balance sanctioned amount. Having declined the remainder, it could not later complain that the remainder was not paid.
The request for renewal was made after the agreed period had expired. The borrower had enjoyed the cash credit limit. And — the point the Court puts most directly — it is not the borrower’s case that further term loan was not disbursed despite a request having been made.
That last sentence is the hinge. A complaint that money did not arrive is only a complaint if it was asked for.
Read together the findings describe a borrower who took the cash credit, declined the balance of the term loan, sought renewal out of time, and then attributed its default to a shortfall it had itself refused to take.
Sanction, not disbursement
The point of general application concerns when the moratorium begins.
A moratorium on a term loan is the initial period during which the borrower pays no principal, giving a project time to start generating revenue. The borrower’s interest is in having it run from the day the money actually reaches it; the bank’s is in having it run from sanction.
The material on record, the Court held, indicates that the moratorium is to take effect from the sanction and not from the disbursement. Where drawdown is staggered and dependent on the borrower’s own requests, that is the only workable rule — otherwise a borrower could extend its own moratorium indefinitely by delaying its requests.
The Court added that the guidelines of the Reserve Bank of India are to be followed scrupulously, having statutory force. That is not an aside: in disputes of this kind the RBI’s circulars often supply the standard against which the bank’s conduct is measured, and treating them as binding cuts both ways.
The observation about RBI guidelines matters beyond this dispute. Where a circular governs how a facility is to be classified, restructured or enforced, neither the bank nor the borrower is free to treat it as advisory.
The standard of review
The Court was not sitting in appeal on the facts. Its conclusion is framed accordingly: the Appellate Tribunal had taken into account the entire material on record, and there is no manifest illegality or perversity in its order.
That is the whole scope of a revision against a DRAT order. The question is not whether the High Court would have reached the same view, but whether the Tribunal considered the record and reached a conclusion open to it.
For borrowers the practical reading is about the paper trail. A complaint that a facility was under-disbursed has to be built from contemporaneous requests that went unanswered. A letter declining the balance, sitting on the bank's file, will end the argument years later.
The petition was dismissed,
The petition was dismissed, with a direction that all parties act on the basis of the server copy of the judgment downloaded from the Court’s official website.