Bank might have done it as per the loan agreement. You may study, the detailed terms of loan agreement.
You should appear in court and produce all receipts/proofs.
Kindly submit a detailed representation in writing, under acknowledgment, to Nodal Officer of the bank with a copy to MD, and RBI, followed by email, and ask them to withdraw the case in writing with a copy to you.
You can obtain the contact details from bank's website and RBI web site.
You can mention that you are contemplating to seek a legal advice and you may sue the bank and may approach the institutions of print and electronic media, NGO's, social and legal forum, at their cost and consequences.