Dismissed

Aboobacker Siddik Chappan v. Kerala State Co-Operative Bank Ltd. (Kerala Bank)

Kerala HC4 Oct 2021WA/1265/2021

Case brief

AI extract

What is this about?

The High Court of Kerala dismissed an appeal against a writ court order that granted a bank account holder time to repay a disputed loan in instalments. The court held that writs of mandamus do not lie to enforce purely contractual obligations or to control the bank's exercise of discretion in allowing instalment payments.

What did the court decide?

Writ Appeal dismissed; impugned judgment upholding the grant of instalment facility to the appellant remains intact.

Aboobacker Siddik Chappan Vs Kerala State Co-Operative… — Banking and Recovery | Kerala HC (2021)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR

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THE HONOURABLE MR. JUSTICE SHAJI P.CHALY

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MONDAY, THE 4^TH DAY OF OCTOBER 2021 / 12TH ASWINA, 1943

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WA NO. 1265 OF 2021

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AGAINST THE JUDGMENT IN WP(C) 10285/2021 DATED 24.8.2021 OF HIGH

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COURT OF KERALA, ERNAKULAM

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APPELLANT/S:

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ABOOBACKER SIDDIK CHAPPAN, AGED 45 YEARS, S/O UMMER HAJI, BAITH AL FATHAH, PATTAYAM SCHOOL ROAD, KAMBIL, KOLACHERRY P.O., KANNUR DISTRICT, PIN-670601

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BY ADVS. P.U.SHAILAJAN V.SREEJITH (K/1398/2000) NIDHEESH T.P

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RESPONDENT/S:

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KERALA STATE CO-OPERATIVE BANK LTD (KERALA BANK), (FORMER KANNUR DISTRICT CO-OPERATIVE BANK LTD), REGIONAL OFFICE, KANNUR - 670001, REPRESENTED BY ITS GENERAL MANAGER

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THE AUTHORISED OFFICER (UNDER SARFAESI ACT), KERALA STATE CO-OPERATIVE BANK LTD (KERALA BANK), (FORMER KANNUR DISTRICT CO-OPERATIVE BANK LTD), REGIONAL OFFICE, KANNUR – 670001

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BY SRI.M. SASINDRAN

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THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 04.10.2021,

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THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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JUDGMENT

S.MANIKUMAR, CJ.

Being aggrieved by the judgment in W.P.(C).No.10285/2021 dated 24.08.2021, instant writ appeal is filed on the grounds inter alia that the appellant availed Rs.70 lakhs as loan on 05.06.2018 and the term is 120 months. At present the overdue amount is Rs.39,92,101/-. The regular EMI to be paid is Rs.96,425/- per month.

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As per the judgment in Writ Petition, the amount to be paid by the appellant is @ Rs.4,47,000/- per month. The appellant has remitted an amount of Rs.2.5 lakhs on 13.09.2021. The appellant is doing the business of laterate stones. At present there is no business and not in a position to pay Rs.4,47,000/- per month. So 25 installments may be granted for the payment of defaulted amount. So that an amount of Rs.1,59,684/- has to be paid towards the defaulted amount. Along with EMI, the total amount to be paid in a month will be about Rs.2.5 lakhs. If the appellant is not permitted to remit the amount @ 2.5 lakhs per month towards the EMI and installments of defaulted amount, irreparable injuries and hardships will be caused to the appellant.

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It was contented before the writ court that the appellant availed a

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loan of Rs.70 lakhs from the Puthiyatheru Branch of the Kannur District Cooperative Bank on 5.5.2016 and the immovable property owned by the wife of the appellant was offered as security. Loan was availed for the business purpose of the appellant. As per Ext.P1, the Authorised Officer directed to pay an amount of Rs.71,58,420/-. Due to the loss of business, immediately after taking loan and subsequently, due to Covid-19 pandemic, the business went to heavy loss and therefore the appellant could not raise the fund and pay the loan installments.

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In the writ petition, learned Standing Counsel for the Bank submitted that the overdue amount as on 30.4.2021 is Rs.39,92,101/-.

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Considering the grievance of the petitioner, writ court, at paragraph No.4 of the impugned judgment, ordered thus:-

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“4. Considering the facts and circumstances of the instant case and as the respondent is willing to grant facility of installment to the petitioner for clearing the overdue amount of loan, the petition is ordered as under:-

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The petitioner is directed to pay the entire overdue amount with interest and other charges in ten equated successive monthly installemnts commencing from 13.09.2021. In addition, the petitioner should also pay the EMIs regularly. If the petitioner complies with these directions, respondents shall keep the coercive action,

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initiated against the petitioner under the SARFAESI Act, in abeyance. In case of a single default, the respondents are at liberty to continue the action under the SARFAESI Act initiated against the petitioner. No further extension of time for compliance of this direction shall be granted to the petitioner.”

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Though, Mr.P.U.Shailajan, learned Counsel for the appellant sought for reversal of the impugned judgment, on the grounds stated supra, we are not inclined to do so, as repayment of loan amount is purely contractual. When a writ of mandamus can be issued, let us consider few decisions.

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(i) In State of Kerala v. A. Lakshmi Kutty reported in (1986) 4 SCC 632, the Hon'ble Supreme Court held that, a Writ of Mandamus is not a writ of course or a writ of right but is, as a rule, discretionary. There must be a judicially enforceable right for the enforcement of which a mandamus will lie. The legal right to enforce the performance of a duty must be in the applicant himself. In general, therefore, the Court will only enforce the performance of statutory duties by public bodies on application of a person who can show that he has himself a legal right to insist on such performance. The existence of a right is the foundation of the jurisdiction of a Court to issue a writ of Mandamus.

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“(ii) In Comptroller and Auditor General of India v. K.S.Jegannathan , reported in AIR 1987 SC 537 -

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(1986) 2 SCC 679, a Three-Judge Bench of the Hon'ble Apex Court referred to Halsbury's Laws of England 4^th Edition, Vol. I, Paragraph 89, about the efficacy of mandamus:

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"89.Nature of Mandamus.-- .... is to remedy defects of justice; and accordingly it will issue, to the end that justice may be done, in all cases where there is a specific legal right and no specific legal remedy, for enforcing that right; and it may issue in cases where, although there is an alternative legal remedy, yet that mode of redress is less convenient, beneficial and effectual."

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(iii) In Raisa Begum v. State of U.P. , reported in 1995 All.L.J. 534, the Allahabad High Court has held that certain conditions have to be satisfied before a writ of mandamus is issued. The petitioner for a writ of mandamus must show that he has a legal right to compel the respondent to do or abstain from doing something. There must be in the petitioner a right to compel the performance of some duty cast on the respondents. The duty sought to be enforced must have three qualities. It must be a duty of public nature created by the provisions of the Constitution or of a statute or some rule of common law.

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(iv) Writ of mandamus cannot be issued merely because, a person is praying for. One must establish the right first and then he must seek for the prayer to enforce the said right. If there is failure of duty by the authorities or inaction, one can approach the Court for a mandamus.

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The said position is well settled in a series of decisions.

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(a) In State of U.P. and Ors. v. Harish Chandra and Ors., reported in (1996) 9 SCC 309, at paragraph 10, the Hon'ble Apex Court held as follows:

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“10. ...Under the Constitution a mandamus can be issued by the court when the applicant establishes that he has a legal right to the performance of legal duty by the party against whom the mandamus is sought and the said right was subsisting on the date of the petition....”

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(b) In Union of India v. S.B. Vohra reported in (2004) 2 SCC 150, the Hon'ble Apex Court considered the said issue and held that,- 'for issuing a writ of mandamus in favour of a person, the person claiming, must establish his legal right in himself. Then only a writ of mandamus could be issued against a person, who has a legal duty to perform, but has failed and/or neglected to do so.”

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(c) In Oriental Bank of Commerce v. Sunder Lal Jain reported in (2008) 2 SCC 280, at paragraphs 11 and 12, the Hon'ble Apex Court held as follows:-

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“11. The principles on which a writ of mandamus can be issued have been stated as under in The Law of Extraordinary Legal Remedies by F.G. Ferris and F.G. Ferris, Jr.:

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“Note 187.- Mandamus, at common law, is a highly prerogative writ, usually issuing out of the highest court of general jurisdiction, in the name of the sovereignty, directed to any natural person, corporation or inferior court within the jurisdiction, requiring them to do some particular thing therein specified, and which appertains to

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their office or duty. Generally speaking, it may be said that mandamus is a summary writ, issuing from the proper court, commanding the official or board to which it is addressed to perform some specific legal duty to which the party applying for the writ is entitled of legal right to have performed.

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Note 192.- Mandamus is, subject to the exercise of a sound judicial discretion, the appropriate remedy to enforce a plain, positive, specific and ministerial duty presently existing and imposed by law upon officers and others who refuse or neglect to perform such duty, when there is no other adequate and specific legal remedy and without which there would be a failure of justice. The chief function of the writ is to compel the performance of public duties prescribed by statute, and to keep subordinate and inferior bodies and tribunals exercising public functions within their jurisdictions. It is not necessary, however, that the duty be imposed by statute; mandamus lies as well for the enforcement of a common law duty.

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Note 196.- Mandamus is not a writ of right. Its issuance unquestionably lies in the sound judicial discretion of the court, subject always to the well-settled principles which have been established by the courts. An action in mandamus is not governed by the principles of ordinary litigation where the matters alleged on one side and not denied on the other are taken as true, and judgment pronounced thereon as of course. While mandamus is classed as a legal remedy, its issuance is largely controlled by equitable principles. Before granting

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the writ the court may, and should, look to the larger public interest which may be concerned-an interest which private litigants are apt to overlook when striving for private ends. The court should act in view of all the existing facts, and with due regard to the consequences which will result. It is in every case a discretion dependent upon all the surrounding facts and circumstances.

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Note 206.--......The correct rule is that mandamus will not lie where the duty is clearly discretionary and the party upon whom the duty rests has exercised his discretion reasonably and within his jurisdiction, that is, upon facts sufficient to support his action.”

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12. These very principles have been adopted in our country. In Bihar Eastern Gangetic Fishermen Cooperative Society Ltd. v. Sipahi Singh and others , AIR 1977 SC 2149, after referring to the earlier decisions in Lekhraj Satramdas Lalvani v. Deputy Custodian-cum-Managing Officer, AIR 1966 SC 334; Dr. Rai Shivendra Bahadur v. The Governing Body of the Nalanda College, AIR 1962 SC 1210 and Dr. Umakant Saran v. State of Bihar, AIR 1973 SC 964, this Court observed as follows in paragraph 15 of the reports :

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"15. .......... There is abundant authority in favour of the proposition that a writ of mandamus can be granted only in a case where there is a statutory duty imposed upon the officer concerned and there is a failure on the part of the officer to discharge the statutory obligation. The chief function of a writ is to compel performance of public duties prescribed by

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statute and to keep subordinate Tribunals and officers exercising public functions within the limit of their jurisdiction. It follows, therefore, that in order that mandamus may issue to compel the authorities to do something, it must be shown that there is a statute which imposes a legal duty and the aggrieved party has a legal right under the statute to enforce its performance. .... In the instant case, it has not been shown by respondent No. 1 that there is any statute or rule having the force of law which casts a duty on respondents 2 to 4 which they failed to perform. All that is sought to be enforced is an obligation flowing from a contract which, as already indicated, is also not binding and enforceable. Accordingly, we are clearly of the opinion that respondent No. 1 was not entitled to apply for grant of a writ of mandamus under Article 226 of the Constitution and the High Court was not competent to issue the same."

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(v) When a Writ of Mandamus can be issued, has been summarised in Corpus Juris Secundum, as follows:

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“Mandamus may issue to compel the person or official in whom a discretionary duty is lodged to proceed to exercise such discretion, but unless there is peremptory statutory direction that the duty shall be performed mandamus will not lie to control or review the exercise of the discretion of any board, tribunal or officer, when the act complained of is either judicial or quasi-judicial unless it clearly appears that there has been an abuse of discretion on the part of such Court, board, tribunal or

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officer, and in accordance with this rule mandamus may not be invoked to compel the matter of discretion to be exercised in any particular way. This principle applies with full force and effect, however, clearly it may be made to appear what the decision ought to be, or even though its conclusion be disputable or, however, erroneous the conclusion reached may be, and although there may be no other method of review or correction provided by law. The discretion must be exercised according to the established rule where the action complained has been arbitrary or capricious, or based on personal, selfish or fraudulent motives, or on false information, or on total lack of authority to act, or where it amounts to an evasion of positive duty, or there has been a refusal to consider pertinent evidence, hear the parties where so required, or to entertain any proper question concerning the exercise of the discretion, or where the exercise of the discretion is in a manner entirely futile and known by the officer to be so and there are other methods which it adopted, would be effective." (emphasis supplied)

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In the light of the above decisions, and on the facts and circumstances of the case, we are of the view that there is no statutory right for the appellant to seek for the reliefs prayed for in the appeal and consequential duty on the bank. No mandamus can be issued directing the 1^st respondent bank to permit payment of the outstanding amount in 25 installments.

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