In this writ petition for pre-closure charges and return of mortgage documents against a bank deemed private, the High Court held the petition non-maintainable. The dispute over a commercial loan amount and charges does not involve violation of public duty, the bank is not 'State', and alternative remedies exist.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE V.G.ARUN
MONDAY, THE 25TH DAY OF JULY 2022 / 3RD SRAVANA, 1944 WP(C) NO. 3428 OF 2022
PETITIONER/S:
K. BALAKRISHNAN AGED 76 YEARS S/O. KUTTAPPU, RESIDING AT NIRMAL, MAKKADA P.O, KAKKODI, KOZHIKODE 673 611 MANAGING PARTNER NALINAM ARCADE BY ADVS. PUSHPARAJAN KODOTH K.JAYESH MOHANKUMAR P.SHAMSUDDEEN VANDANA MENON VIMAL VIJAY
RESPONDENT/S:
1 SOUTH INDIAN BANK REPRESENTED BY ITS SENIOR MANAGER, KOZHIKODE MAVOOR BRANCH, KOZHIKODE MAVOOR ROAD, 5/3410 GALLERIA TRADE CENTRE, NEAR MARKUS COMPLES, MAVOOR ROAD, KOZHIKODE, KERALA 673 004 2 AXIS BANK LIMITED REPRESENTED BY ITS BRANCH MANAGER, RA, 2ND FLOOR, GLOBAL TOWER, NEAR V ZONE MALL, PARAYANCHERY, MAVOOR ROAD, CALICUT 673 016 BY ADVS. KEVIN VARGHESE JACOB MADHU RADHAKRISHNAN SUNIL SHANKER
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
18.07.2022, THE COURT ON 25.07.2022, DELIVERED THE FOLLOWING:
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JUDGMENT
Dated this the 25th day of July, 2022
The petitioner, along with two others, has
formed a registered partnership firm under the name and style M/s.Nalinam Arcade. The
partnership is into the business of construction and leasing out of commercial buildings. For the purpose of augmenting funds, the partnership applied for a loan of Rs.8 Crores from the first respondent and was sanctioned an amount of Rs.10.1618 Crores. The excess amount sanctioned being for collection of interest during the moratorium. The loan agreement provides for release of the amounts at different stages of the construction. Towards security for the loan, title deed of immovable property, in which the building is being constructed, was deposited. Construction of the commercial complex was commenced in the year 2018 and an amount of
Rs.4,45,00,000/- disbursed from the loan account
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at different stages. While so, the Government of
India introduced the Emergency Credit Line Guarantee Scheme (ECLGS). Thereupon, an additional amount of Rs.69,25,000/- was sanctioned at special interest rate. Thus, a total amount of Rs.5,14,25,000/- was received from the two accounts. Later, difference of opinion arose between the bank and the borrower due to the first respondent’s reluctance to disburse the balance loan amount and the higher rate of interest, when compared with other banks. Therefore, the petitioner decided to switch over to the second respondent Bank and, for that purpose, requested the first respondent to provide details of the balance outstanding in the accounts of M/s.Nalinam Arcade. Accordingly, the first respondent issued Ext.P1 letter informing
that, as on 27.12.2021, an amount of Rs.4,32,19,944.65 was outstanding in the first loan account and Rs.56,37,383.67, in the second
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loan account (ECLGS). Accordingly, the second respondent paid the amounts shown in Ext.P1 and
took over the loan. Thereupon, the petitioner issued Ext.P8 letter, intimating the first respondent that, as the loans were taken over, the title deeds of the documents mortgaged with the first respondent may be returned immediately. Thereupon, the first respondent issued Ext.P9, informing that the actual amount payable for closing the two loans was Rs.4,49,76,441.20 and Rs.53,95,857.67 as on 13.01.2022, the additional amount being foreclosure charges and penal interest. According to the petitioner, an excess amount of Rs.18,57,177.11 is available with the first respondent and the claim for pre-closure charges and penal interest is unconscionable and illegal. The first respondent having refused to
return the additional amount, Ext.P10
communication was issued, requesting to refund the excess amount and return the title deeds. To
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this, the first respondent sent Ext.P11 reply, reiterating its stand in Ext.P9 communication. Aggrieved, this writ petition is filed seeking the following reliefs;
“i) issue a writ of certiorari or any
other appropriate writ, order or direction, quashing Exhibits P9 & P11;
ii) issue a writ of mandamus or any other appropriate writ, order or direction, directing the 1st respondent to release the documents pertaining to R.S.No.265/5 of Karekkunnam Desom, Kasaba Village, Kozhikode Taluk – 673 003 and R.S.No.5-6-167/1-C, 5-6-174/3C of
Katchery Villae, Kozhikode Taluk – 673 006 deposited with the 1st respondent for availing the loans at the earliest.
iii) Issue a writ of mandamus or any other appropriate writ, order or direction, directing the 1st respondent not to claim any amounts as stated in Ext.P9 and P11 from the petitioner; iv) Issue a writ of mandamus or any other appropriate writ, order or direction, directing the 1st respondent to reimburse the excess amounts received pursuant to the take over of the two loans by the 2nd respondent to the current account No.0347073000000572 maintained by the
W.P.(C) No.3428 of 2022
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petitioner in the 1st respondent Bank.”
statement questioning the maintainability of the
writ petition and refuting the factual contentions.
consideration, Adv.Sunil Shankar, learned
Standing counsel for the first respondent Bank, raised the question of maintainability of the
writ petitions. Hence, maintainability is considered as the preliminary issue.
can exercise the discretionary jurisdiction for setting right the illegality.
the second respondent Bank contended that,
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insofar as the first respondent is dealing in public money, it is bound by the guidelines laid down by the Reserve Bank of India. The first respondent having violated the guidelines, its action is bound to be corrected in exercise of the extraordinary jurisdiction.
first respondent Bank is a private limited
company and is not a ‘State’ amenable to writ jurisdiction. To bolster the contention reliance is placed on the decision in Federal Bank v Sagar
Thomas [(2003) 10 SCC 733] and Y. Sleebachan v State of Kerala [2020 (4) KLT OnLine 1024] . It is
further contended that the dispute being with respect to enforcement of the terms of the loan agreement, the writ petition is liable to be dismissed in limine. The legal position is no longer res integra , in view of the decision in
Unimoni Financial Services Ltd v IDBI Bank Ltd and others [2020 SCC OnLine Ker 7347] .
W.P.(C) No.3428 of 2022
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Arcade, of which the petitioner claims to be a partner, is liable to pay pre-closure charges to the first respondent. According to the first respondent, the loan agreement contains specific clauses providing for payment of foreclosure charges. On the other hand, the petitioner would contend that such a clause was not specifically pointed out while sanctioning the loan and the petitioner had signed on the dotted lines in the agreement without reading the contents. In my opinion, dispute regarding the actual amount payable and the question whether the agreement actually provides for pre-closure charges, cannot be resolved in a proceeding under Article 226. Indisputably, the petitioner is not seeking to
W.P.(C) No.3428 of 2022
enforce any public duty and the first respondent does not fall within the definition of ‘State’ under Article 226 of the constitution of India. Moreover, the petitioner has an effective alternative remedy under the Reserve BankIntegrated Ombudsman Scheme, 2021. For the
aforementioned reasons, the challenge against maintainability is upheld.
In the result, the writ petition is
dismissed.
Sd/-
V.G.ARUN JUDGE
Scl/
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APPENDIX OF WP(C) 3428/2022
| PETITIO | NER EXHI | BITS | |||
|---|---|---|---|---|---|
| Exhibit | P1 | TRUE 2021 FAVO |
COPY ISSUE UR OF |
OF D B THE |
THE LETTER DATED 28-12- Y THE 1ST RESPONDENT IN PETITIONER |
| Exhibit | P2 | TRUE IN F 2ND |
COPY AVOUR RESPON |
OF OF DEN |
THE DEMAND DRAFTS ISSUED THE 1ST RESPONDENT BY THE T DATED 10-01-2022 |
| Exhibit | P3 | TRUE IN F 2ND |
COPY AVOUR RESPON |
OF OF DEN |
THE DEMAND DRAFTS ISSUED THE 1ST RESPONDENT BY THE T DATED 10-01-2022 |
| Exhibit | P4 | TRUE 2022 |
COPY | OF | THE LETTER DATED 12-01- |
| Exhibit | P5 | TRUE 2022 |
COPY | OF | THE LETTER DATED 12-01- |
| Exhibit | P6 | TRUE ISSU |
COPY ED BY |
OF THE |
THE ACCOUNT STATEMENTS 1ST RESPONDENT BANK |
| Exhibit | P7 | TRUE ISSU |
COPY ED BY |
OF THE |
THE ACCOUNT STATEMENTS 1ST RESPONDENT BANK |
| Exhibit | P8 | TRUE 2022 THE |
COPY ISSUE PETITI |
OF D B ONE |
THE LETTER DATED 11-01- Y THE 1ST RESPONDENT TO R |
| Exhibit | P9 | TRUE 2022 1ST |
COPY ISSUE RESPON |
OF D B DEN |
THE EMAIL DATED 20-01- Y THE PETITIONER TO THE T |
| Exhibit | P10 | TRUE 2022 |
COPY | OF | THE EMAIL DATED 21-01- |
| Exhibit | P12 | TRUE RESP 11.8 |
COPY ONDENT .2021 |
OF TO |
THE EMAIL SENT BY THE 1ST THE PETITIONER ON |
3 issues framed by the court
Whether a dispute regarding the amount payable and pre-closure charges under a private loan agreement falls within the jurisdiction of the High Court under Article 226.
Whether a private bank falls within the definition of 'State' under Article 226 of the Constitution of India.
Whether the petitioner has an effective alternative remedy under the Reserve Bank Integrated Ombudsman Scheme, 2021.
Colour shows how this judgement treated each authority
Federal Bank v Sagar ThomasReferred¶58
Federal Bank v Sagar Thomas [(2003) 10 SCC 733] · Who else cites this
Y. Sleebachan v State of KeralaReferred¶58
Y. Sleebachan v State of Kerala [2020 (4) KLT OnLine 1024]
Unimoni Financial Services Ltd v IDBI Bank LtdReferred¶60
Unimoni Financial Services Ltd v IDBI Bank Ltd and others [2020 SCC OnLine Ker 7347] · Who else cites this
K. Balakrishnan & Others
South Indian Bank
Axis Bank Limited
V.G.Arun
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
