Writ Appeal No. 856 of 2021, High Court of Kerala at Ernakulam

W.A.No.856 of 2021 1 ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR** **&** **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **MONDAY, THE 21[ST] DAY OF FEBRUARY 2022 / 2ND PHALGUNA, 1943** ## **WA NO. 856 OF 2021** **AGAINST THE JUDGMENT IN WP(C) 3023/2021 OF HIGH COURT OF KERALA APPELLANTS:** - **1 M/S.AKS COLD STORAGE LIMITED SF NO 43, 1G/2 AROOR JUNCTION, AROOR POST, ALAPUZHA DISTRICT, KERALA, PIN-688 534, REPRESENTED BY ITS MANAGING DIRECTOR** - **2 AKS SARAVANAN, 1A1, SARAVANAM ILLAM, MAHADEVAPURAM, METTUPALAYAM, TAMIL NADU-641 305 BY ADVS. MOHAN JACOB GEORGE P.V.PARVATHY (P-41) REENA THOMAS NIGI GEORGE** ## **RESPONDENTS:** |**1**|**INDIAN BANK**| |---|---| ||**143 OOTTY MAIN ROAD, METUPPALAYM-641 301, REPRESENTED BY**| ||**ITS CHIEF MANAGER**| |**2**|**RESERVE BANK OF INDIA,**| ||**BAKERY JUNCTION ROAD, NANDAVANAM, PALAYM,**| ||**THIRUVANANTHAPURAM, KERALA-695033, REPRESENTED BY ITS**| ||**REGIONAL DIRECTOR**| |**3**|**STATE LEVEL BANKER'S COMMITTEE,**| ||**KERALA, CANARA BANK, SLBC CELL, CIRCLE OFFICE, CANARA**| ||**BANK BUILDING, P.B.NO.159, M.G.ROAD, THIRUVANANTHAPURAM-**| ||**695 001, REPRESENTED BY ITS CONVENOR & GENERAL MANAGER**| W.A.No.856 of 2021 2 **4 CANARA BANK STRESSED MANAGEMENT BRANCH (FORMERLY SYNDICATE BANK), 15/38, SIC BUILDING, 1ST FLOOR, ANNA SALAI, CHENNAI-600 002, REPRESENTED BY ITS CHIEF MANAGER** **BY ADVS.** **SRI.S.EASWARAN, SC FOR INDIAN BANK R.S.KALKURA STANDING COUNSEL FOR R4** **THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 21.02.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.A.No.856 of 2021 3 ## **JUDGMENT** ## **SHAJI P.CHALY,J.** This appeal is preferred by the writ petitioners challenging the judgment of the learned Single Judge in W.P.(C) No.3023 of 2021 dated 23[rd] March, 2021, whereby the writ petition was dismissed, holding that there is no territorial jurisdiction for the writ court to entertain the writ petition since all the documents for financial facilities secured by the appellants from the 1[st] respondent bank are seen executed in its Mettupalayam Branch, State of Tamil Nadu, evident from Exhibit R1(a) to R1(i) documents/communications addressed by and between the parties ;as also the security documents are executed therein only. First appellant is a company incorporated under the Companies Act 1956 and registered with the Registrar of Companies Kerala, engaged in the business of sale in commodities like fruits, vegetables, pulses etc., and preservation of the same; 2nd appellant is its Managing Director . 2. Findings were rendered by the learned Single Judge leading to the dismissal of the writ petition for want of territorial jurisdiction, after an elaborate scrutiny of W.A.No.856 of 2021 4 the pleadings put forth by the rival parties and also taking into consideration the relevant judgements of the Apex Court in the matter of entertaining the writ petition under Article 226 of the Constitution of India vis-a-vis, the territorial jurisdiction. Accordingly, cause of action and right of action are distinguished, by following a judgment of the apex court that they are not synonymous or interchangeable; that right of action is a right to enforce a cause of action for remedial right affording redress for the infringement of a legal right belonging to some definite person; cause of action is the operative facts, which give rise to such right of action and cause of action should have arisen within the jurisdiction of the court either wholly or in part. It was also found that merely because the appellant company's head office is situated within the State of Kerala, that does not mean that the cause of action for the issue arose within the State of Kerala. It is thus challenging the legality and correctness of the Judgement the appeal is preferred. The subject issue actually relates to the grievance of the appellants against restructuring of the additional loan availed by the appellant company, as per Exhibit P18 decision of the 1st respondent bank dated 3.12.2019; though it is contended that the appellants are aggrieved by the illegal decision of the State Level Bankers Committee, Kerala, overlooking the circulars issued by the Reserve Bank of India in regard to the restructuring of loans due to natural calamities . W.A.No.856 of 2021 5 3. On a reading of the reliefs sought for by the appellants, it is significant to note that the appellants have not challenged Exhibit P18 restructuring done by the Mettupalayam Branch of the 1[st] respondent bank from where the loan was availed. But on the other hand, the appellants seek to declare that the 1[st] respondent bank has acted in violation of Exhibits P4 and P15 to P17 circulars issued by the Reserve Bank of India extending the relief measures in areas affected by natural calamities. According to the appellants, out of the four units, three units are functioning in Kerala and only one unit is operating from Mettupalayam. That apart it is submitted that merely because the Managing Director of the company has addressed communications from its office at Mettupalayam and merely because the security documents are executed at Mettupalayam, that would not take away the jurisdiction of this Court to entertain the writ petition since claims are raised by the appellants on the basis of natural calamities occurred in the State of Kerala during the year 2018; and therefore, the cause of action due to restructuring of the loan in fact took place in Kerala. It is also pointed out that restructuring of the loan was granted by the 1[st] respondent bank to carry on the activities of the appellant company in the State of Kerala and therefore the restructuring guidelines issued by the RBI, ameliorative in nature is the significant aspect to be taken into consideration while dealing with the issue of territorial jurisdiction. W.A.No.856 of 2021 6 4. Therefore, according to the appellants, since the appellant company is registered in Kerala with three units functioning in three districts in Kerala; that for the purpose of financing these units and its activities in Kerala, the appellants have availed loans from the 1[st] respondent bank; that in the year 2018 and 2019 devastating floods occurred in Kerala and damaged the unit of the appellants in Kerala, which were financed by the 1[st] respondent bank; that the State Level Bankers' Committee, Kerala - 3[rd] respondent, has issued circulars to restructure/reschedule the loans to those loanees, who were adversely affected by the floods ; that circulars were issued by the 3[rd] respondent directing rescheduling the loans for those, who are adversely affected by the floods and stipulating the manner and terms of restructuring in pursuance to the circulars issued by the Reserve Bank of India for providing financial assistance to those loanees affected by floods; due to floods in Kerala, appellants have sought for rescheduling the loans by the bank on the basis of the Reserve Bank of India circulars in that regard; that the 1[st] respondent granted restructuring of the loans to the appellants based on the circular of the State Level Bankers' Committee, Kerala in this regard; the restructuring of the financial facility is for the revival and financing of these units in Kerala; and that the right of action to challenge the terms of the circular and the restructuring arose to the appellants in Kerala, they are entitled to approach the High Court of Kerala, challenging the circular W.A.No.856 of 2021 7 issued by the State Level Bankers' Committee, and the terms of restructuring granted by the 1[st] respondent bank based on the circular of the State Level Bankers' Committee, Kerala. 5. It is further contended that the learned Single Judge has not properly appreciated the facts and position of law regarding the cause of action and right of action. That apart it is pointed out that the reliance made by the learned Single Judge is basically on the judgements in service jurisprudence, which may not apply to the facts and circumstances of the case on hand. That apart it is submitted that the learned Single Judge has distinguished the judgment of the Apex Court in **Nawal Kishore Sharma v. Union of India** [(2014) 9 SCC 329] on the basis of the interpretation given by the Full Bench of this Court; but fact remains the Apex Court has affirmed the judgment in **Nawal Kishore Sharma** (supra) in **Shanti Devi Alias Shanti Mishra v. Union of India and others** [(2020) 10 SCC 766]. That apart it is contended that since the circular issued by the State Level Bankers' Committee, Kerala, is the thrust of the challenge, and restructuring done by the 1[st] respondent bank is a consequential act to the circular issued by the State Level Bankers' Committee, Kerala, there was clear cause of action within the State of Kerala for the writ court to have entertained the writ petition. W.A.No.856 of 2021 8 6. On the other hand, the 1[st] respondent bank had filed a detailed counter affidavit before the writ court basically contending that the entire cause of action took place in Mettupalayam, and therefore, submitted that the learned Single Judge was right in holding that there is no territorial jurisdiction for entertaining the writ petition. It is further submitted that merely because the registered office of the 1[st] appellant is in Kerala, that by itself is not a ground to hold that the cause of action took place in the State of Kerala. It is further pointed out that the loan was sanctioned to the 1[st] appellant company by the Mettupalayam branch of the Indian Bank – the 1[st] respondent, and the security documents were furnished against the loan availed originally, which was extended at a later point of time to advance additional loan. That apart learned counsel appearing for the 1[st] respondent bank has invited our attention to various requests made by the 1[st] appellant company starting from Exhibit P3, wherein the realignment of credit facilities was addressed to the company in Mettupalayam; Exhibit P5 dated 27.3.2017, whereby fresh sanction of 15 Crores was addressed to the company in Mettupalayam; Exhibit P14 request letter dated 3.5.2019 for release of property at Tuticorin & Ooty made from Mettupalayam; Exhibit P18 decision dated 31.12.2019 accepting request for restructuring of credit facilities accepted in Mettupalayam; Exhibit P19 letter dated 11.2.2020, grievance raised by the appellants against Exhibit P18 restructuring credit facility addressed from Mettupalayam; Exhibit W.A.No.856 of 2021 9 P20 dated 23.3.2020 reply issued by the 1[st] respondent bank to the company at Mettupalayam; Exhibit P21 dated 15.4.2020, a representation again submitted by the company from Mettupalayam; Exhibit P22 communication dated 22.6.2020 of the Field General Manager's Office at Coimbatore addressed to the company at Mettupalayam stating that there is no merit in the grievances raised by the appellants; and finally Exhibit P23 dated 4.7.2020, a representation submitted by the 1[st] appellant company from Mettupalayam . It is relying upon the aforesaid aspects that the 1[st] respondent bank submits that there is no cause of action within the State of Kerala. That apart, it is submitted that Exhibit R1(a) and R1(b) agreements were executed at Mettupalayam. Apart from the same, it is contended that merely because damages occurred in Kerala, that would not give a cause of action in Kerala so far as the restructuring of the loan is concerned, and it is also pointed out that appellants have only a right of action based on the circular issued by the Reserve Bank of India and the attempt of the appellants is to mix up the right of action and cause of action while presenting the case. 7. Heard learned counsel for the appellants Sri.Mohan Jacob George, learned Standing Counsel for 1[st] respondent Sri S. Easwaran and perused the pleadings and materials on record. W.A.No.856 of 2021 10 8. The sole question to be considered in this case is whether there is any legal infirmity or other jurisdictional error in the judgment of the learned Single Judge, justifiable to be interfered with ? It is an admitted fact that the loan was availed from the Indian Bank, Mettupalayam Branch, State of Tamil Nadu. Even though appellants have a case that the loan against which the documents were mortgaged was completely paid off by the appellants and the security created over the consortium assets was extended by the 1[st] respondent bank unilaterally against the additional term loan of Rs.15 Crores, we are of the considered opinion that the additional loan was extended by the bank on the basis of the security offered, the appellants cannot turn around and attack those transactions collaterally in a proceeding against the restructuring of the loan as per Exhibit P18 dated 31.12.2019 issued from the Mettupalayam Branch, in the High Court of Kerala. 9. On a perusal of the documents produced by the appellants, it is clear that even the appellants have corresponded with the 1[st] respondent bank from its Mettupalayam branch. It may be true that, the three units of the appellants may be operated in Kerala, however, the loans were availed from the bank at Mettupalayam. The entire documents produced by the appellants, which are deliberated above, are all issued from the Mettupalayam and apparently, the Managing Director of the 1[st] appellant company is operating from its office at Mettupalayam. W.A.No.856 of 2021 11 10. Even though the case projected by the learned counsel for the appellants is that since the restructuring of the loan was done in accordance with the modalities prescribed by the State Level bankers' Committee, Kerala – the 3[rd] respondent, that would not by itself confer jurisdiction in regard to the restructuring done by the 1[st] respondent bank at Mettupalayam. It is true that the Appellants have raised a contention that the State Level bankers' Committee, Kerala, in the matter of restructuring the loan has violated the scheme proposed by the Reserve Bank of India as per Exhibit P4 & Exhibits P15 to P17; however, we are of the considered opinion that, by virtue of the circulars issued by the Reserve Bank of India, the appellants are conferred with a right for restructuring the loan in order to tide over the situation including the natural calamities. But that by itself would not create a cause of action within the State of Kerala. 11. Moreover, we are of the definite opinion that since the transactions were entered into by the appellants at Mettupalayam fully knowing that the jurisdiction for any litigation would be at Mettupalayam within the State of Tamil Nadu, if any circumstances occur due to failure on the part of the appellants to repay the loan amount, the bank has its remedy to take action against the appellants from Mettupalayam itself. Which thus means, in order to proceed against the appellants and their properties, the bank is at liberty to take action by issuing notice to the W.A.No.856 of 2021 12 appellants at their Mettupalayam office and it’s registered office in Kerala and proceed against the mortgaged properties from there itself. To put it otherwise even if any of the mortgaged properties are situated in the State of Kerala, that will not take away the right accrued to the 1[st] respondent bank to initiate action from its office at Mettupalayam. 12. Learned counsel for appellants Sri.Mohan Jacob George has taken us through the judgments of Apex Court in **Omprakash Srivastava v. Union of India & Another** [(2006) 6 SCC 207], **Shanti Devi Alias Shanti Mishra v. Union of India and others** [(2020) 10 SCC 766], **Rajiv Modi v. Sanjay Jain and others** [(2009) 13 SCC 241], **Navinchandra N. Majithia v. State of Maharashtra and others** [(2000) 7 SCC 640], **Nawal Kishore Sharma v. Union of India and others** [(2014) 9 SCC 329], **Alchemist Limited and others v. State Bank of Sikkim and others** [(2007) 11 SCC 335] and **Kusum Ingots & Alloys Ltd. v. Union of India and Another** [(2004) 6 SCC 254] to contend and canvas that merely because the loan transaction took place at Mettupalayam, that alone would suffice to decide the question of cause of action, since in the instant case the cause of action in respect of the decision taken by the State Level Bankers' Committee took place in Kerala. W.A.No.856 of 2021 13 13. That apart it is contended that the right of action to the appellants is generated in Kerala since restructuring was sought for by the appellants on the basis of devastating floods that took place in Kerala in the year 2018 and 2019. However, fact remains, the fundamental cause of action for the issue took place in Mettupalayam within the State of Tamil Nadu and merely because the appellants have three units in Kerala and the operation of which is suffered consequent to the floods, that will not give a cause of action to the appellants to raise issues against the bank within the State of Kerala. The said aspect in our view has generated only a right of action to the appellants to take advantage of the circulars issued by the Reserve Bank of India and seek benefit of the same against the bank by instituting suitable action within the territorial limits of the 1st respondent bank wherein the cause of action has arisen. 14. Even going by the judgments of the Apex Court referred to above, the subject matter of the cause of action has to be decided taking into account the factual circumstances involved in the respective cases. It is true, certain definite propositions are laid down by the Apex Court in the matter of territorial jurisdiction, however, the proposition of law laid down can only be considered, taking into account the specific fact situation in order to ascertain the cause of action and the consequential jurisdiction of the courts to entertain a litigation. It is also clear and W.A.No.856 of 2021 14 evident that restructuring was sought for by the appellants at Mettupalayam, and it was granted by the 1[st] respondent bank as per Exhibit P18 at Mettupalayam Therefore the sole question to be considered is whether the same is in terms of Exhibits P14 and P15 to P17 circulars issued by the Reserve Bank of India. Therefore, it can be seen that judicial review is sought for by the appellants to the order passed by the 1[st] respondent bank in the application submitted by the appellants for restructuring the loan, and the said decision was taken at Mettupalayam amenable to the territorial jurisdiction of the courts in the State of Tamil Nadu. Therefore, if at all the rights of the appellants are affected consequent to the decision taken by the 1[st] respondent bank, the appellants cannot challenge the legality and correctness of the order before the High Court of Kerala. 15. Appellants have not impugned Exhibit P18 order passed by the 1[st] respondent bank, but on the other hand, the reliefs are couched in such a manner as if to appear that the challenge is only on the decision taken by the State Level Bankers' Committee, Kerala in the matter of restructuring the loan on the basis of the circulars issued by the Reserve Bank of India. However fact remains, the cause of action to the appellants arose only when the first respondent passed orders on the application for restructuring. Though the appellants have contended that the security documents offered to the consortium was extended to the additional loans availed W.A.No.856 of 2021 15 by the appellants without the consent of the 4[th] respondent - Canara Bank, Stressed Management Branch, Chennai, the said issue is irrelevant to decide the territorial limits of the High Court of Kerala, since even according to the appellants, such an alleged action has taken place within the State of Tamil Nadu. In fact in **Nawal Kishore Sharma** (supra), the Apex Court has held that in order to maintain the writ petition in the High Court, the appellants have to establish the legal right claimed by them has been infringed by the respondents within the territorial limits of the court's jurisdiction. 16. So also as we have pointed out above, the judgments relied upon by the appellants have its own factual and legal characteristics for laying down the law by the Apex Court, and therefore, they may not strictly apply to the issues in the case on hand due to the peculiar facts and circumstances involved in the instant case . In the light of the deliberations above, on going through the judgment of the learned Single Judge, we are undoubtedly of the opinion that the learned Single Judge has considered the issue taking into account various judgments of the Apex Court and the applicability of the same to the fact situation involved in the instant case. 17. Having considered the factual and legal circumstances and a deep-seated analysis of the pleadings put forth by the rival parties, we are of the undoubted opinion that the learned Single Judge was right in holding that there is no territorial W.A.No.856 of 2021 16 jurisdiction for entertaining the writ petition. 18. Needless to say, the appellants have not established any case of jurisdictional error or other legal infirmities susceptible to be interfered with, in an intra court appeal filed under section 5 of the Kerala High Court Act, 1958. Needless to say appeal fails, accordingly it is dismissed. Sd/- **S.MANIKUMAR CHIEF JUSTICE** smv Sd/- **SHAJI P.CHALY JUDGE**