Allowed

M/S Kanaka Durga Rice Mill v. Bank of Baroda

Andhra Pradesh HC6 Jul 2022WP/2978/2022

Case brief

AI extract

What is this about?

Petitioner challenged the bank's refusal to allow her to operate an account after she received a letter of confirmation for completed work and subsequent bank guarantee release. The court held the refusal was arbitrary as the guarantee was expired and its release did not harm respondent interests or impede the investigation.

What did the court decide?

Petition allowed; Respondent Bank directed to permit the petitioner to operate her bank account bearing No.755302200000080.

M/S Kanaka Durga Rice Mill Vs Bank of Baroda — Banking and Recovery | Andhra Pradesh HC (2022)

¶1

THE HON’BLE SRI JUSTICE R.RAGHUNANDAN RAO WRIT PETITION No.2978 of 2022

¶2

ORDER:

¶3

The petitioner had participated in the procurement of Paddy for the Kharif Marketing Season KMS-2020-2021, for the purpose of delivering Custom Mill Rice to the 2^nd respondent. As per the terms of the scheme, the petitioner had given a bank guarantee for Rs.1 crore, to the 2^nd respondent, by obtaining it from the 1^st respondent on 17.12.2020. This bank guarantee was valid upto 18.09.2020. Subsequently, the petitioner completed the supply of custom mill rice by 08.09.2021 and submitted an application to the 3^rd respondent, for issuance of a letter of confirmation that the work entrusted to the petitioner had been completed and for release of bank guarantee.

¶4

The petitioner contends that for the purpose of obtaining bank guarantee, a sum of Rs.25 lakhs had been deposited with the 1^st respondent, as security, apart from furnishing property worth about Rs.2 crores as security. As the amount deposited with the 1^st respondent and the properties given for the bank guarantee would be released only upon release of the bank guarantee and handing over the original to the 1^st respondent, the husband of the petitioner had been following up with the 3^rd respondent for completing the formalities. However, the 3^rd respondent for one reason or the other had initially postponed the release of the bank

¶5

¶6

guarantee. It is the case of the petitioner that this was on account of the petitioner not complying with the illegal demands made by the 3^rd respondent on the petitioner. However, the 3^rd respondent finally gave a release order dated 20.10.2021 which was produced by the husband of the petitioner, before the 1^st respondent who released the bank guarantee and also the deposit of Rs.25 lakhs. Subsequently, the petitioner transferred Rs.15 lakhs to her daughter and withdrew the remaining amount.

¶7

At that stage, the petitioner came to know that the 3^rd respondent had given a complaint dated 31.10.2021 against her and her husband with the allegation that the letter of the 3^rd respondent dated 20.10.2021 had been forged by them. On the basis of this complaint, Crime No.361 of 2021 was registered in Governorpet Police Station and the matter was under investigation. On account of the said investigation, the 1^st respondent is said to have frozen the account of the rice mill of the petitioner and that of the daughter of the petitioner on the ground that the amount of Rs.25 lakhs, released by the 1^st respondent, had been transferred through these accounts. Subsequently, the 1^st respondent permitted the operation of the account of the daughter of the petitioner on deposit of Rs.5 lakhs which was done. However, the 1^st respondent was not permitting the petitioner to operate the rice mill bank account until a no objection is obtained from the 3^rd respondent. Aggrieved by the said condition and the refusal of the 1^st

¶8

¶9

respondent from allowing the petitioner to operate her bank account bearing No.755302200000080, the petitioner has approached this Court, by way of the present writ petition.

¶10

The respondents 2 and 3 have filed a counter affidavit in which the contention of the petitioner that the letter dated 20.10.2021 was not forged, has been specifically denied. However, there is no denial of the averment of the petitioner that the work entrusted to the petitioner had been completed by her. The respondents have also not stated anywhere that release of the bank guarantee, even under the alleged forged letter of 20.10.2021 had in any manner affected the respondents 2 or 3. Further, t is not disputed that the bank guarantee had expired and the said bank guarantee cannot be invoked.

¶11

A conspectus of the above facts would show that there is at best a case of forgery against the petitioner and her husband. There is no averment or allegation that the release of the bank guarantee or the subsequent release of the security given for issuance of such a bank guarantee is in any manner detrimental to the interests of respondents 1 to 3. The investigation into the complaint given by the 3^rd respondent is in no way impacted by the release of the bank guarantee or the release of the securities given for issuance of such a bank guarantee. It is not the case of respondents 2 and 3 that the bank guarantee continues to subsist and closure of such a bank guarantee affects the interests of the respondents 2 and

¶12

¶13

Further, there is no claim by the respondents 2 and 3 for any short fall on the part of the petitioner, in completing the work given to her. The release of the bank guarantee or the securities given under the bank guarantee or for that matter, the operation of the bank account of the rice mill of the petitioner, does not in any manner impact the investigation that is to be carried out by the investigating officer in the complaint filed by the 3^rd respondent.

¶14

In the circumstances, the refusal of the 1^st respondent to permit the petitioner to operate her bank account is clearly arbitrary and would have to be set aside.

¶15

Accordingly, this writ petition is allowed directing the 1^st respondent to permit the petitioner to operate her bank account bearing No.755302200000080. This order shall not preclude any steps taken by the investigating officer in the course of investigation. There shall be no order as to costs.

¶16

Miscellaneous petitions, pending if any, shall stand closed.

¶17

___________________________________ JUSTICE R.RAGHUNANDAN RAO

¶18

Date : 06.07.2022 RJS

¶19

¶20

THE HON’BLE SRI JUSTICE R.RAGHUNANDAN RAO

¶21

WRIT PETITION No.2978 of 2022

¶22

Date : 06.07.2022

¶23

RJS

¶24

M/S Kanaka Durga Rice Mill v. Bank of Baroda

Case brief

What is this about?

What did the court decide?

M/S Kanaka Durga Rice Mill v. Bank of Baroda

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Parties & counsel

Coram

Case details

Similar cases

Gopireddy Subbamma Vs the Life Insurance Corporation of India

U. Ramanjaneyulu Vs The State of Andhra Pradesh

Singara Mohan Babu, Vs The State of Andhra Pradesh

M/s Koumudhi Realtors Vs The State of Andhra Pradesh

Yellaboina Mallaiah Vs the State of Andhra Pradesh

Chennareddy Narasaiah Vs the State of Andhra Pradesh