K. Balakrishnan v. South Indian Bank & Axis Bank (W.P.(C) No. 3428 of 2022, High Court of Kerala at Ernakulam)

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE V.G.ARUN** **MONDAY, THE 25[TH] 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:** W.P.(C) No.3428 of 2022 -2- ## **JUDGMENT** Dated this the 25[th] 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 ## W.P.(C) No.3428 of 2022 -3- 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 ## W.P.(C) No.3428 of 2022 -4- 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 W.P.(C) No.3428 of 2022 -5- 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 1[st] 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 1[st] respondent for availing the loans at the earliest. iii) Issue a writ of mandamus or any other appropriate writ, order or direction, directing the 1[st] 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 1[st] respondent to reimburse the excess amounts received pursuant to the take over of the two loans by the 2[nd] respondent to the current account No.0347073000000572 maintained by the W.P.(C) No.3428 of 2022 -6- petitioner in the 1[st] respondent Bank.” 2. The first respondent Bank has filed a statement questioning the maintainability of the writ petition and refuting the factual contentions. 3. When the writ petition was taken up for 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. 4. Adv.Jayesh Mohankumar, learned Counsel for the petitioner contended that the claim for pre-closure charges and refusal to return the title deeds being patently illegal, this Court can exercise the discretionary jurisdiction for setting right the illegality. 5. Adv.Madhu Radhakrishnan appearing for the second respondent Bank contended that, ## W.P.(C) No.3428 of 2022 -7- 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. 6. Adv.Sunil Shankar submitted that the 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 -8- 7. Having heard the learned Counsel for the parties, I find substantial merit in the challenge against maintainability of the writ petition. Going by the contentions in the writ petition, the dispute is whether M/s.Nalinam 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 -9- 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/ -10- ## W.P.(C) No.3428 of 2022 ## **APPENDIX OF WP(C) 3428/2022** |PETITIONER EXHIBITS|PETITIONER EXHIBITS| |---|---| |Exhibit P1|TRUE COPY OF THE LETTER DATED 28-12-| ||2021 ISSUED BY THE 1ST RESPONDENT IN| ||FAVOUR OF THE PETITIONER| |Exhibit P2|TRUE COPY OF THE DEMAND DRAFTS ISSUED| ||IN FAVOUR OF THE 1ST RESPONDENT BY THE| ||2ND RESPONDENT DATED 10-01-2022| |Exhibit P3|TRUE COPY OF THE DEMAND DRAFTS ISSUED| ||IN FAVOUR OF THE 1ST RESPONDENT BY THE| ||2ND RESPONDENT DATED 10-01-2022| |Exhibit P4|TRUE COPY OF THE LETTER DATED 12-01-| ||2022| |Exhibit P5|TRUE COPY OF THE LETTER DATED 12-01-| ||2022| |Exhibit P6|TRUE COPY OF THE ACCOUNT STATEMENTS| ||ISSUED BY THE 1ST RESPONDENT BANK| |Exhibit P7|TRUE COPY OF THE ACCOUNT STATEMENTS| ||ISSUED BY THE 1ST RESPONDENT BANK| |Exhibit P8|TRUE COPY OF THE LETTER DATED 11-01-| ||2022 ISSUED BY THE 1ST RESPONDENT TO| ||THE PETITIONER| |Exhibit P9|TRUE COPY OF THE EMAIL DATED 20-01-| ||2022 ISSUED BY THE PETITIONER TO THE| ||1ST RESPONDENT| |Exhibit P10|TRUE COPY OF THE EMAIL DATED 21-01-| ||2022| |Exhibit P12|TRUE COPY OF THE EMAIL SENT BY THE 1ST| ||RESPONDENT TO THE PETITIONER ON| ||11.8.2021|