Petitioners challenged a bank notice demanding repayment. The single judge held that while RBI guidelines apply, parties cannot invalidate their own contractual terms by voluntarily waiving benefits derived from such guidelines. The writ petition was dismissed.
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR. JUSTICE A.V.RAMAKRISHNA PILLAI
WEDNESDAY, THE 18TH DAY OF FEBRUARY 2015/29TH MAGHA, 1936
WP(C).NO. 22391 OF 2013 (Y)
PETITIONER(S):
1. SASIDHARAN C.S., CHANDRA VIHAR, THOTTAVARAM, ATTINGAL, PIN- 695 101.
2. BEENA.C., CHANDRA VIHAR, THOTTAVARAM, ATTINGAL, PIN- 695 101.
BY ADVS.SRI.R.MANOJ, SMT.SINDHU MANOJ, SMT.P.P.BLESSY MOL.
RESPONDENT(S):
1. UNION OF INDIA, REPRESENTED BY THE SECRETARY, MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS (BANKING DIVISION), NEW DELHI-110 001 .
2. RESERVE BANK OF INDIA, REPRESENTED BY ITS JURISDICTIONAL OFFICER, BAKERY JUNCTION, THIRUVANANTHAPURAM-695 001.
3. THE INDIAN OVERSEAS BANK, REPRESENTED BY ITS REGIONAL MANAGER, REGIONAL OFFICE, THIRUVANANTHAPURAM-695 001.
4. THE BRANCH MANAGER, INDIAN OVERSEAS BANK, REGIONAL OFFICE, THIRUVANANTHAPURAM-695 001.
R1 BY ADV. SRI.N. NAGARESH, ASST. S.G. OF INDIA. R3 & R4 BY ADV. SRI.LEO GEORGE, SC.
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 18-02-2015, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
rs.
WP(C).NO. 22391 OF 2013 (Y)
APPENDIX
PETITIONER'S EXHIBITS:-
EXHIBIT P1 COPY OF THE MODEL LOAN SCHEME WHICH HAS BEEN APPROVED BY THE RESERVE BANK OF INDIA.
EXHIBIT P2 COPY OF THE LAWYER'S NOTICE ISSUED TO THE PETITIONERS.
RESPONDENT'S EXHIBITS:- NIL.
//TRUE COPY//
P.S. TO JUDGE
rs.
A.V.RAMAKRISHNA PILLAI, J
WPC No.22391 of 2013
Dated this the 18th day of February, 2015
JUDGMENT
Ext.P2 notice, by which the petitioners were called upon to repay the amount of `1,15,317/- by the respondent bank, is under challenge.
95,000/- on 25.10.2003 from the 4<sup>th</sup> respondent bank and as a collateral security, the property of the petitioners was offered. The petitioners stood as sureties for the loan amount. As per Ext.P1 guidelines, loans below 4 lakhs has to be disbursed to the students on his own application. The said position of law is affirmed in the decision of this Court in Vasanthakumari v State Bank of Travancore (2012 (1) KLT 755). It was pointed out by the learned standing counsel for the respondents that the aforesaid decision has been reversed by the Division Bench in State Bank of Travancore v VasanthaKumari (2013(1) KLT 649) wherein it was observed that
WPC No.22391/2013 2
though the directions of the RBI has binding force on banking companies in general or banking company in particular, it cannot invalidate terms of contract where the party voluntarily agrees to waive the benefit accrued to him by virtue of the directions or guidelines.
The learned counsel for the respondent bank submitted that it was on the basis of the agreement signed by the petitioners that the security was taken. As the legal position is now covered against the petitioners
as per the decision of the Division Bench pointed out above, the writ petition is dismissed.
Sd/-A.V.RAMAKRISHNA PILLAI JUDGE
css/ true copy
P.S.TO JUDGE
2 issues framed by the court
Whether acquisition of security by the bank as per agreement binds the petitioner sureties even if RBI guidelines suggest otherwise.
Whether petitioners who voluntarily waived the benefit of RBI guidelines can successfully challenge the notice for security recovery.
Colour shows how this judgement treated each authority
Vasanthakumari v State Bank of TravancoreReferred¶32
Vasanthakumari v State Bank of Travancore (2012 (1) KLT 755)
State Bank of Travancore v Vasantha KumariExplained¶32
State Bank of Travancore v Vasantha Kumari (2013(1) KLT 649)
Sasidharan C.S. and Beena.C.
Union of India
Reserve Bank of India
The Indian Overseas Bank
The Branch Manager, Indian Overseas Bank
A.V. Ramakrishna Pillai
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court