Dismissed

K.B. Nagendran v. The General Manager

Madras HC15 Feb 2018WP/3252/2018

Case brief

AI extract

What is this about?

The High Court dismissed a writ petition seeking a direction to the bank to grant a one-time settlement and reschedule three loan accounts. Relying on settled precedents, the Court held that it lacks jurisdiction to order banks to modify loan contracts or reschedule payments without a violation of law being established.

What did the court decide?

Petition dismissed; no costs awarded; connected miscellaneous petition closed.

K.B. Nagendran Vs The General Manager — Contract and Commercial Disputes | Madras HC (2018)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED: 15.02.2018

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CORAM:

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THE HONOURABLE MR.JUSTICE S.MANIKUMAR and

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THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN

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W.P.No.3252 of 2018
and
W.M.P.No.3985 of 2018
K.B.Nagendran .. Petitioner
versus
1.The General Manager
Circle Head
UCO Bank
Circle Office
No.328, Thambu Chetty Street
Chennai - 600 001
2.The Zonal Manager
UCO Bank
Vijaya Towers
1st Floor, Father Randy Street
R.S.Puram, Coimbatore - 641 002
3.The Senior Manager
UCO Bank
Ootacamund Branch
Charring Cross Commercial Road
Ootacamund - 643 001 .. Respondents

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Writ Petition filed under Article 226 of the Constitution of India, to issue a Writ of Mandamus, directing the 3rd respondent to consider for One Time Settlement for three accounts 1.Home Loan Account Number 09040603130127, 2.Car Loan Account No.09040603136842 and 3.Business loan account Number 09040501001067 and to apply Reserve Bank of India Guidelines and communicate the outstanding.

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For Petitioner : Mr.M.Madhuprakash

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https://hcservices.ecourts.gov.in/hcservices/

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ORDER

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(Order of the Court was made by S.MANIKUMAR, J.)

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Writ petition is filed seeking for a direction to the 3rd respondent to consider petitioner's request for One Time Settlement for three accounts 1.Home Loan Account Number 09040603130127, 2.Car Loan Account No.09040603136842 and 3.Business loan account Number 09040501001067 and to apply Reserve Bank of India Guidelines and communicate the outstanding.

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Short facts leading to the filing of the writ petition are that the petitioner, availed the following loans:

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S.No	Loan Type Account Number	Year	Amount
1	Home Loan 09040603130127	2006	Rs.15,00,00 0
2	Car Loan 09040603136842	2007	Rs.2,52,000
3	Business Loan 09040501001067	2006	Rs.9,75,000
Except name o	the Home loan, other two loans f the petitioner. Home loan has	have been av been availed	ailed in the in the name
of pet	itioner's wife.

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Material on record further discloses that the petitioner promptly paid the interest to the third respondent and since he suffered huge loss in his business in the year 2014, he was not able to pay the interest and consequently, the loan accounts have been declared as NPAs. He further submitted that the three loans were grouped together and his house was taken as security for all the three loans. Hence the petitioner has approached the Debts Recovery Tribunal, Coimbatore in October 2014 by filing S.A. No.34 of 2015 and the Tribunal granted stay for the proceedings along with a condition to pay 25% i.e. 12.5% in the first month and further 12.5% in the second month and for which the petitioner paid 26% i.e. around Rs.9,50,000/- out of which only Rs.1,00,000/- was paid one month later. Thereafter, during the pendency of the proceedings, the petitioner approached the respondent bank for a one time settlement.

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Material on record further discloses that the respondent bank issued a public notice dated 15.02.2017 under Section 13(2) of the SARFAESI Act, 2002. From the materials on record, it culd be deduced that the petitioner did not reply to the notice, but has sent a representation to the Bank on 20.03.2017. Material on record further discloses that thereafter, on 21.03.2017, the petitioner paid a sum of Rs.5,00,000/- towards housing loan and a further sum of Rs.1,00,000/- on 08.05.2017 to cash credit account. In view of the above, the petitioner has made a request to the respondent bank for rescheduling of loan amount.

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Though the learned counsel for the petitioner submitted that more than half of the loan amount has already been paid and that the petitioner is only seeking a direction to the respondent bank for rescheduling with regard to payment of the balance amount, we are not inclined to accept the said contention in the light of a Hon'ble Division Bench judgment of this Court in M/s.Digivision Electronics Ltd., Retistered Office at No.A5 & 6, Industrial Estate, Guindy, Chennai - 32 Vs. Indian Bank, rep. by its Deputy General Manager, Head Office, 31, Rajaji Salai, Chennai-1 and another, reported in 2005 (3) LW 269, wherein at paragraph No.42, the Court held as follows:

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"42. Some of the learned counsel submitted that the Court should direct one time settlement or fixing of installment or rescheduling the loan. In Tamilnadu Industrial Investment Corporation Vs. Millenium Business Solutions Private Limited, 2004 (5) CTC 689, it has been held that this Court cannot pass any such order in writ jurisdiction, since directing one time settlement or granting installments is really rescheduling the loan, which can only be done by the bank or financial institution which granted the loan. This Court under Article 226 of the Constitution cannot reschedule a loan. A writ is issued when there is violation of law or error of law apparent on the face of the record, and not for rescheduling loans. The Court must exercise restraint in such matters, and not depart from well settled legal principles".

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At paragraph No.46, in M/s.Digivision Electronics Ltd., Retistered Office at No.A5 & 6, Industrial Estate, Guindy, Chennai - 32 Vs. Indian Bank, rep. by its Deputy General Manager, Head Office, 31, Rajaji Salai, Chennai-1 and another, reported in 2005 (3) LW 269, the Hon'ble Division Bench further held as follows:

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"46. Writ is a discretionary remedy, and hence this Court under Article 226 is not bound to interfere even if there is a technical violation of law, vide R.Nanjappan Vs. The District Collector, Coimbatore, 2005 WLR 47, Chandra Singh Vs. State of Rajasthan, JT 2003 (6) SC 20. The Managing Director, Tamil Nadu State Transport Corporation (Madurai Division-IV) Ltd., Dindigul Vs. P.Ellappan, 2005 (1) MLJ 639, Ramniklal N.Bhutta and Another Vs. State of Maharashtra, 1997 (1) SCC 134, etc."

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Earlier, after considering a catena of decisions on the legal right of a person to seek for a writ of mandamus, a Hon'ble Division Bench of this Court in Tamilnadu Industrial Investment Corporation Vs. Millenium Business Solutions Private Limited, reported in 2004 (5) CTC 689, at Paragraph Nos.7,8,16

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https://hcservices.ecourts.gov.in/hcservices/

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and 18, held as follows:

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"7.In our considered opinion it is not proper for the Court to interfere in such matters relating to recovery of loans. Such matters are contractual in nature and writ jurisdiction is not the proper remedy for this. A writ lies when there is an error of law apparent on the face of the record, or there is violation of law. No writ lies merely for directing one time settlement or for directing rescheduling of the loan or for fixing instalments in connection with the loan. It is only the bank or the financial institution which granted the loan which can re-schedule it or fix one time settlement or grant instalments. The Court has no right under Article 226 of the Constitution to direct grant of one time settlement or for re-scheduling of the loan, or to fix instalments.

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No doubt Article 226 on its plain language states that a writ can be used by the High Court for enforcing a fundamental right or for 'any other purpose'. However, by judician interpretation the words 'any other purpose' have been interpreted to mean the enforcement of any legal right or performance of any legal duty, vide Calcutta Gas Co. v. State of West Bengal, AIR 1963 SC 1044. In the present case, the writ petitioner has really prayed for a Mandamus to the Corporation to grant it a one time settlement, but no violation of any law has been pointed out. In our opinion, no such mandamus can be issued in this case, and hence the writ petition should not have been entertained. A mandamus is issued only when the petitioner can show that he has a legal right to the performance of a public duty by the party against whom the mandamus is sought.

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A loan is granted in terms of the contract, and grant of one time settlement or rescheduling of the loan amount is really a modification of the contract, which can only be done by mutual consent of the parties, vide Section 62 of the Contract Act, 1872. The Court cannot alter the terms of the contract.

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Before parting with the case we would like to mention that recovery of tens of thousands of crore rupees of loans of banks and financial institutions has been held up by Court orders under Article 226 proceedings which were really unwarranted. However, much sympathy a Court may have for a party, a writ Court must exercise its jurisdiction on well settled principles, and not a mere sympathy or compassion. No

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doubt, there be hardship to a party, but unless violation of law is shown the Court cannot interfere. Holding up recoveries of loans by unwarranted Court orders is causing incalculable harm to our economy, since unless the loan is recovered a fresh loan cannot be granted to needy persons. The Courts must keep these considerations in mind."

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Therefore, as per the decisions of this Court in Tamilnadu Industrial Investment Corporation Vs. Millenium Business Solutions Private Limited, reported in 2004 (5) CTC 689 and M/s.Digivision Electonics Ltd., Retistered Office at No.A5 & 6, Industrial Estate, Guindy, Chennai - 32 Vs. Indian Bank, rep. by its Deputy General Manager, Head Office, 31, Rajaji Salai, Chennai-1 and another, reported in 2005 (3) LW 269, Court cannot compel the bank for rescheduling or one time settlement. Decisions stated supra are proximate to the principles of law to be followed in the matter of rescheduling and settlement of dues. It is well settled that a decision on the point of law raised, argued and decided is binding on the Co-ordinate Bench.

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In the light of the above discussion and decisions, the writ petition is dismissed. No costs. Consequently, the connected miscellaneous petition is closed. Sd/Assistant Registrar(J) //True Copy// Sub Assistant Registrar asr TO 1.The General Manager Circle Head UCO Bank Circle Office No.328, Thambu Chetty Street Chennai - 600 001 2.The Zonal Manager UCO Bank Vijaya Towers 1st Floor, Father Randy Street R.S.Puram, Coimbatore - 641 002

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3.The Senior Manager UCO Bank Ootacamund Branch Charring Cross Commercial Road Ootacamund - 643 001

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W.P.No.3252 of 2018

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CNR(CO) RRK(20/03/2018)

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