Petitioner sought a writ direction to the bank to issue NOC for his closed car loan account. The bank opposed, citing the loan agreement's set-off and lien clause permitting withholding of NOC until closure of another loan where he was guarantor, and relied on a prior judgment. The writ petition was dismissed.
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IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No.1874 of 2024
Umakanta Biswal …. Petitioner(s)
Mr. Amit Prasad Bose, Mr. D. Sahoo, P.K. Nayak, Adv.
-versus-
The Indusland Bank Ltd., …. Opposite Parties Maharashtra & Anr.
Mr. Rama Chandra Panigrahi, Adv.
for O.Ps.1 & 2
CORAM:
DR. JUSTICE S.K. PANIGRAHI
Order No.
ORDER 24.09.2024
1 . This matter is taken up through hybrid arrangement.
2 . In filing this Writ Petition, the Petitioner has sought for a direction from this Court to the Opposite Parties for issuing N.O.C in respect of the Loan Account No.OCB02731C in his favour.
3. Learned counsel for the Petitioner submits that despite clearance of the loan outstanding dues availed for purchasing the Car having Registration No.OD-02-AJ-2272, the Opposite Parties are not issuing necessary N.O.C. in favour of the Petitioner.
4. Learned counsel for the Opposite Parties, at this juncture,
submits that since the Petitioner is a guarantor in another Signature Not Verified Digitally Signed vehicle loan pertaining to the vehicle having registration Signed by: AYASKANTA JENA Designation: Personal Assistant Reason: AuthenticationLocation: High Court of Orissa N o.O D-05-AJ-8509, the N.O.C. relating to the above noted Date: 27-Sep-2024 20:19:26 Loan Account cannot be issued in favour of the Petitioner
Page 1 of 3
until closure of the another loan relating to the vehicle bearing Registration No.OD-05-AJ-8509.
5. He also draws the attention of this Court to the agreement made between both the parties at the time of availing the loan. The relevant portion of the said agreement is extracted herein
below:-
“20.00 SET-OFF AND LIEN
20.1 Notwithstanding anything contained in this Agreement, the Lender shall have a lien over all the assets of the Borrower(s)/Co-borrower(s) in the Lender’s control and a right of set off against any monies due to the Lender from the Borrower/Co-borrower(s) and to combine all accounts of the Borrower(s)/Co-borrower(s) for recovery of the Lender’s dues hereunder.
The Borrower(s)/Co-borrower(s) understand, accept and agree that the Lender is also further entitled to withhold No Objection Certificate (NOC) or No Dues Certificate (NDC) or Loan Clearance Letter for those contracts which are closed, until recovery of overdue amounts in all other contracts in which the Borrower(s)/Coborrower(s) are one of the Party(ies).
20.02. It is hereby agreed and understood by the Borrower(s)/Co-borrower(s) that, in the event the Borrower(s)/Co-borrower(s) defaults in payment of the installments/charges/fees, without prejudice to the right of termination, the Lender shall have the right to set-off all monies, securities, deposits, other assets and properties of the Borrower(s)/Co-borrower(s) that is held by the Lender as secured asset, against the amount in respect of which the default has been committed under this Agreement or any other Agreement. For this purpose the Lender can combine all accounts held in the name of the Borrower, Co Borrower and/or Guarantor.”
6. Learned counsel for the Opposite Parties also draws the attention of this Court to the judgment of this Court passed in the case of Alekha Sahoo Vrs. Puri Urban Co-operative Bank
Signature Not Verified
Digitally Signed Signed by: AYASKANTA JENA Designation: Personal Assistant Reason: Authentication Location: High Court of Orissa Date: 27-Sep-2024 20:19:26
Page 2 of 3
Ltd. & Ors.1 . The relevant portion of the said judgment is extracted herein below:-
Unless therefore a customer has expressly agreed that his properties can be retained as security for the outstanding balance in the account of some other customer, a Bank cannot exercise lien over the properties of such customer under Section 171 of the Contract Act. In the guarantee agreement executed by the petitioner for the cash credit account of M/s. Bimala Bhandar, a copy of which has been annexed to the counter-affidavit as Annexure-R/2, there is no such provision that the Bank can retain the properties of the petitioner as security for the outstanding balance in the loan account of M/s. Bimala Bhandar. In fact, the Bank has also not relied on any such provision in the guarantee agreement and instead has relied on the bye-laws of the Bank and the general lien of the Bank as provided in Section 171 of the Contract Act. As we have seen, the Bank has no such right under the byelaws or Section 171 of the Contract Act to retain the gold ornaments of the petitioner as security for the outstanding balance in the loan account of M/s. Bimala Bhandar.”
7. He, accordingly, prays for dismissal of this Writ Petition.
8. Considering the submissions made on behalf of both the parties and looking to the loan agreement and the judgment cited hereinabove, this Court is not inclined to entertain the prayer made in this Writ Petition.
9. This Writ Petition is, accordingly, dismissed.
Signature Not Verified
Digitally Signed
Signed by: AYASKANTA JENA Designation: Personal Assistant Reason: Authentication Ayaskanta Location: High Court of Orissa Date: 27-Sep-2024 20:19:26
(Dr. S.K. Panigrahi) Judge
1 AIR 2004 Orissa 142
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1 issue framed by the court
Whether the bank can be directed to issue an NOC on a closed car loan where the petitioner stands guarantor for another outstanding vehicle loan covered by the agreement's set-off and lien clause.
Colour shows how this judgement treated each authority
Alekha Sahoo Vrs. Puri Urban Co-operative Bank Ltd. & Ors.Relied on¶6
AIR 2004 Orissa 142 · Who else cites this
Umakanta Biswal
The Indusland Bank Ltd., Maharashtra
Anr.
S.K. Panigrahi
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
