Case BriefsHigh Courts

Kerala High Court: P.V. Asha, J. allowed the writ petition questioning status of IDBI Bank as “State” under Article 12 of the Constitution and further stated that the acts of public sector undertakings arising out of contractual transactions between the parties will not fall under the term “public duty” to attract the Court’s jurisdiction.

Brief facts of the case are such that the petitioner challenged the demand of Rs 11,00,000 as a processing fee of a credit facility and retaining of original property documents as security against such facility as arbitrary and illegal, hence, being violative of his fundamental rights. The petitioner, while relying on R.D.Shetty v. International Airport Authority, (1979) 3 SCC 489, contended that as per the order passed by the RBI, IDBI would be treated as a private bank only for regulatory purposes and it would continue to be a public sector bank for all other purposes. It was further argued that IDBI is controlled by the Central Government and it is always under the watch of Central Vigilance Commission.

Counsel for the respondent challenged the maintainability of Petition stating that respondent bank does not perform any public or statutory or sovereign function and it does not enjoy any monopoly in the banking. It was argued that its function is confined to commercial activities and the Central Government does not have any deep or pervasive control over its functioning.

The court dismissed the petition, holding that providing of credit facility or loan on the strength of title deeds given against security cannot be said to be done in discharge of any public function. Hence, even when the bank is a public sector bank, demand for a processing fee or withholding of title deeds towards security cannot be said to be one involving any element of public duty. Therefore, IDBI is not amenable to writ jurisdiction. [Unimoni Financial Services Ltd. v. IDBI Bank Ltd., 2020 SCC OnLine Ker 7347, decided on 16-12-2020]

Case BriefsHigh Courts

Kerala High Court: A.M. Badar J., allowing the present petition, quashes the attachment made by the State authorities to recover tax dues.

Background

Counsel appearing for the petitioner argued that for repayment of loan availed by its borrower, the property comprised in Mannanchery village was mortgaged by the borrower. As the loan account became irregular, by following due process of law, it was declared as Non-Performing Asset and demand notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the SARFAESI Act’) came to be issued on 02-07-2015. Standing Counsel further submitted that as the borrower failed to settle the loan amount by repayment, physical possession of the mortgaged property was taken by the petitioner bank on 30-11-2019. It is to be further noted that, on 22-02-2019, the respondents had attached the said property alleging to have the ‘First Charge’ over the secured assets for recovery of sales tax dues. This act of the State, as per the Standing Counsel, is grossly illegal, arbitrary and misconstrued. Prayer sought by the petitioner, therefore, seeks to quash the aforementioned attachment made by the respondent authorities and further set aside the related communication letters.

Decision

Allowing the present petition, the Court relied on Travancore Devaswom Board v. Local Fund Audit, 2020 (3) KLT 296 and State Bank of India v. State of Kerala, 2019 (4) KLT 521, both of which, make it clear that, Section 26E of the SARFAESI Act and Section 31B of the RDB Act create a ‘First Charge’ by way of a priority to the Banks/Financial Institutions to recover and satisfy their debts, notwithstanding any statutory ‘First Charge’ in favour of the Revenue.

[Bank of Baroda v. State of Kerala, 2020 SCC OnLine Ker 7152, decided on 15-12-2020]


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Case BriefsSupreme Court

Supreme Court: In a breather to customers in the case relating to waiver of interest on loan during the moratorium period, the 3-judge bench of Ashok Bhushan*, R. Subhash Reddy and MR Shah, JJ has directed that all steps to implement the decision dated 23.10.2020 of the Government of India, Ministry of Finance be taken so that benefit to the eight categories contemplated in the affidavit can be extended.

The affidavit dated 23.10.2020, states that

“ (…) the decision taken by the Central Government for granting various reliefs for the COVID-19 pandemic for benefit of waiver of interest upto Rs.2 Crores in eight categories has been approved by the Union Cabinet in its meeting dated 21.10.2020 and Ministry of Finance has issued directions dated 23.10.2020 on the subject, which has been brought on record alongwith the affidavit.”

The eight categories are:

(i) MSME loans

(ii) Education loans

(iii) Housing loans

(iv) Consumer durable loans

(v) Credit card dues

(vi) Automobile loans

(vii) Personal loans to professionals

(viii) Consumption loans up

Solicitor General Tushar Mehta submitted before the Court that the Central Government is fully conscious of the difficulties faced by the various sectors and the stakeholders of various sectors and the Finance Ministry, after the outbreak of COVID-19, has taken several measures of reliefs dealing with the potential problems faced by several sectors and in several spheres of all financial worlds.

It was further highlighted that in pursuance of circular dated 23.10.2020,

“… the State Bank of India has informed that as on 13.11.2020, as per provisional, unaudited information received so far from various lending institutions, such lending institutions have released ex-gratia amount of an aggregate exceeding Rs.4,300 Crores in over 13.12 Crore accounts of borrowers covered under the Scheme.”

The Court will continue to hear the matter on 02.12.2020.

[Gajendra Sharma v. Union of India, 2020 SCC OnLine SC 963, decided on 27.11.2020]


*Justice Ashok Bhushan has penned this judgment

For petitioner: Senior Advocate Rajiv Dutta

For RBI: Solicitor General Tushar Mehta, Senior Advocate V. Giri and Advocate Ramesh Babu M.R.

Case BriefsHigh Courts

Jharkhand High Court: Rajesh Shankar, J. dismissed the petition on grounds of non-maintainability.

The facts of the case are such that the petitioner took a loan to the tune of Rs 4, 25,000 from the respondent bank namely Allahabad Bank. Due to default in payment of money, a notice was issued under Section 13(2) of the Securitization and Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 [“SARFAESI Act”] to pay the outstanding amount of Rs 7, 89, 420 within 60 days from the date of the notice, failing which, the respondent-Bank will exercise the power conferred under Section 13(4) of the SARFAESI Act. There has been another notice dated 28-11-2019 issued for possession of her property by the Respondent Bank and cautioned the public in general to not deal with the property under Rule 8(1) of the Security Interest (Enforcement) Rules, 2002 (“Rules, 2002”) by the respondent 2. Aggrieved by the same, instant petition in the nature of certiorari has been filed to quash both the notices.

Counsel for the petitioner Rajiv Nandan Prasad submitted that the petitioner is a disabled lady and also the owner of the property in question in one of the impugned notice, she took a loan and has already paid Rs 8, 00,000 inclusive of the interest but later a huge amount was spent on her treatment at Vellore and as such, she was not able to pay EMI of the said home loan due to which her loan account became irregular and was subsequently declared as N.P.A.

Counsel for the respondent P.A.S. Pati raised an objection on grounds of maintainability as an alternative remedy under Section 17 of the SARFAESI Act is available.

 ISSUE 1: Availability of Alternative Remedy

  The Court relied on the judgment titled United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110 which held:

“The expression “any person” used in Section 17(1) is of wide import. It takes within its fold, not only the borrower but also the guarantor or any other person who may be affected by the action taken under Section 13(4) or Section 14. Both, the Tribunal and the Appellate Tribunal are empowered to pass interim orders under Sections 17 and 18 and are required to decide the matters within a fixed time schedule. It is thus evident that the remedies available to an aggrieved person under the SARFAESI Act are both expeditious and effective.”

 The Court also relied on the judgment titled Standard Chartered Bank v. Noble Kumar, (2013) 9 SCC 620 which held:

“The “appeal” under Section 17 is available to the borrower against any measure taken under Section 13(4).”

“We are of the opinion that by whatever manner the secured creditor obtains possession either through the process contemplated under Section 14 or without resorting to such a process obtaining of the possession of a secured asset is always a measure against which a remedy under Section 17 is available.”

 ISSUE 2: Invoking Writ Jurisdiction in Matters relating to Realization of Loans

The Court relied on the judgment titled Authorized Officer, State Bank of Travancore v. Mathew K.C. (2018) 3 SCC 85 which held :

“Loans by financial institutions are granted from public money generated at the tax payers expense. Such loan does not become the property of the person taking the loan, but retains its character of public money given in a fiduciary capacity as entrustment by the public. Timely repayment also ensures liquidity to facilitate loan to another in need, by circulation of the money and cannot be permitted to be blocked by frivolous litigation by those who can afford the luxury of the same.”

Taking into account the provisions of the SARFAESI Act and judicial pronouncements, the Court held the petition to be non-maintainable directing liberty to the petitioner to take recourse before the appropriate forum.

In view of the above, petition stands dismissed. [Uma Pandey v. Allahabad Bank, 2020 SCC OnLine Jhar 819, decided on 18-06-2020]


Arunima Bose, Editorial Assistant has put this story together

Case BriefsHigh Courts

Bombay High Court: A Division Bench of V.M. Deshpande and Anil S. Kilor, JJ., held that if the prosecution fails prima facie to show that that accused had an intention to aid or instigate or abet deceased to commit suicide caused cannot be compelled to face trial for the offence punishable under Section 306 of the Penal Code, 1860.

The instant application was filed for quashing the FIR registered for offence punishable under Section 306 of Penal Code, 1860 along with a prayer to stay the investigation in the said matter.

The complainant had a Loan Account with the Bank of Maharashtra wherein the applicant was discharging his duties as Branch Manager, Bank of Maharashtra.

In the present matter, complainant’s real brother is the deceased who committed suicide in 2015 by hanging himself.

Complainant lodged his report against the present applicant a day after his brother committed suicide.

Though the applicant was granted pre-arrest bail, he filed for the present proceedings to quash the FIR.

Section 306 of the Penal Code, 1860

“If any person commits suicide, whoever abets the commission of such suicide, shall be punished with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine.”

Section 107 of Penal Code, 1860: 

As per the First clause, “if a person instigates any person to do a particular thing, it can be said that he has abetted”.

High Court referred to the decision of Dilip v. State of Maharashtra, (2004) 11 SCC 401.

Ratio: It is incumbent upon the prosecution to at least show prima facie case that accused had an intention to aid or instigate or abet deceased to commit suicide. In the absence of availability of such material, the accused cannot be compelled to face trial for the offence punishable under Section 306 of the Penal Code.

In the present matter, it has been noted that the deceased was not having any loan outstanding in his name. According to the prosecution, the deceased went to the Bank of Maharashtra for a loan.

If previous loan amount is outstanding and if the applicant, who is Branch Manager of the said Bank, is refusing to grant any further loan, can be said as act of a vigilant and prudent banker and if he is not granting any further loan, it cannot be termed that by such act he instigated and/or abetted the person to commit suicide.

Hence, in view of the above, Court terminated the proceedings against the applicant. [Santoshkumar v. State of Maharashtra,  2020 SCC OnLine Bom 914, decided on 09-09-2020]

Case BriefsForeign Courts

Supreme Court of the United Kingdom: A Full Bench of Lady Hale (President), Lord Reed (Deputy President), Lord Lloyd Jones, Lord Sales, and Lord Thomas, dismissed the appeal filed by a bank.

In the present case, the respondent company, “Singularis”, is registered in the Cayman Islands, which was set up to manage the personal assets of Mr Maan Al Sanea. He was the company’s sole shareholder and also one of the directors. The other 6 directors did not have any influence over the company’s management. A loan financing for the purchase of shares was provided to Singularis in 2007, by the appellant investment bank i.e., Diawa. This loan was also the security for the repayment of the loan. In the year 2009, after the shares were sold and the loans were repaid, a surplus amount of money (US$204m) was held by the bank for the account of the respondent company. As per the instruction given by Al Sanea, Daiwa paid out the surplus funds to third parties. The payments were misappropriation of Singularis’ fund and as a result of that Singularis was unable to meet the demands of the creditors. Singularis consequently entered into liquidation. On 18.09.2009, the Cayman Islands made a winding-up order and a joint liquidator were appointed for the same.

Respondent company herein (Singularis) held a certain sum of money as a deposit with the appellant bank (Daiwa). In 2009, the bank Daiwa was instructed by an authorised signatory of Singularis (Mr. Al Sanea) to make payments out of Singularis’ account. The Bank approved and completed the transfers notwithstanding many obvious and glaring signs that Mr. Al Sanea was perpetrating a fraud on the company. In 2014, Singularis issued a claim against the bank for USD 204 million (the total amount transferred in 2009). There were two bases for the claim: (i) dishonest assistance in Al Sanea’s breach of fiduciary duty in misapplying Singularis’ funds; and (ii) breach of the Quincecare duty of care owed by the Bank to Singularis by giving effect to the payment instructions.

The Quincecare duty arises when bankers are asked to make payments in circumstances where there are reasonable grounds to suspect possible fraud. In such a situation, banks owe a duty of care to their customers to refrain from making payments. When “on inquiry” in this way, banks have a positive duty to investigate the potential fraud, they have to be satisfied, by enquiring as far a reasonable banker could be expected to do so, that the payment is not fraudulent before they can be “off inquiry” and go on to comply with their contractual obligations and make the payment.

The claim allowed by the High court was the breach of the Quincecare duty of care. Since Daiwa’s appeal against the finding of liability on the negligence was dismissed, it appealed to the Supreme Court.

The main issue which arose in this matter was, whether the appellant bank was in the breach of its duty towards their customers by transferring the money regardless of circumstances which were suspicious. Also, whether the customer’s claim against the bank was precluded by the fact that the fraudulent acts of the director should be attributed to the customer so as to bar the claim of the customer against the bank.

According to the findings of the case, the judge held that there was a clear breach of Quincecare duty of care by the appellant bank towards the respondent company. The possible defences raised by Daiwa were: illegality, causation, countervailing claim in deceit and attribution. The Court opined that whether or not Mr. Al Sanea’s fraud was attributed to the company, the said defences would fail in any circumstance. It was held that Daiwa was liable to Singularis for its breach of Quincecare duty. It was the appellant bank’s duty to realise something suspicious was going on and a reasonable inquiry should have been done for the same. Due to Daiwa’s negligence, the company (and through the company, its creditors) had to suffer and be victims of fraudulent incidents.

Thus, the claims of Daiwa were dismissed and the judgment of the trial court was upheld. [Singularis Holdings Ltd. v. Daiwa Capital Markets Europe Ltd., [2019] 3 WLR 997, decided on 30-10-2019]

Case BriefsHigh Courts

Delhi High Court: Mukta Gupta, J. allowed a petition filed against the order of the trial Judge whereby the petitioner’s complaint filed for the commission of offence under Section 138 (dishonour of cheque) of the Negotiable Instruments Act, 1881, was dismissed for non-prosecution.

The petitioner had advanced a loan to the respondent who defaulted in repaying the same. The cheque given by the respondent for the discharge of the said liability was also dishonoured. After fulfilling the codal formalities, the petitioner filed a complaint under Section 138.

The petitioner along with his counsel was present when the Metropolitan Magistrate issued summons against the respondent. Thereafter, on the next date, counsel for the petitioner was present but Metropolitan Magistrate was not available on account of training, Thereafter, counsel for the petitioner was present and bailable warrants were issued against the respondent. When notice was required to be framed, the case was transferred to another Metropolitan Magistrate. On the subsequent date, none appeared before the Metropolitan Magistrate as the advocates were on strike. On the date of the impugned order, the complaint was dismissed on account of non-appearance on behalf of the petitioner.

The High Court was of the view that the petition ought to be allowed. It was considered that neither the complainant nor his counsel could appear due to strike as mentioned above and that the clerk of the counsel wrongly noted the next date, and therefore the complainant or his counsel could not again appear on the date of the impugned order. In such circumstances of the case, the Court thought it fit to restore petitioner’s complaint on the file of the Metropolitan Magistrate. The petition was accordingly allowed. [Rajeev Kumar v. Gagan Makhija, 2019 SCC OnLine Del 9708, decided on 07-08-2019]

Case BriefsHigh Courts

Delhi High Court: Sanjeev Sachdeva, J., dismissed a petition assailing the Appellate Court’s order whereby it had set aside the judgment of conviction passed against the accused (respondent) by the trial court for an offence under Section 138 of the Negotiable Instruments Act, 1881 (dishonour of cheque).

The complainant (petitioner) alleged that he gave a friendly loan of Rs 4.90 lakhs to the accused and in discharge of such liability, the accused issued a cheque. However, when the cheque was presented to the bank for encashment, it was returned unpaid with the endorsement “insufficient funds”. Subsequently, a complaint under Section 138 was filed and the matter went to trial. The trial court convicted the accused but on appeal, the Appellate Court acquitted him. Aggrieved thereby, the complainant filed the present petition.

The accused was represented by H.G.R. Khattar, Advocate. His defence was that the complainant was employed in the shop of one Subhash Aggarwal. He alleged that the subject cheque was issued in blank to Subhash Aggarwal and the same had been misused. Further, the complainant and his wife earned a monthly income of Rs 15,000 each and they could not have extended a loan of Rs 4.90 lakhs to him.

The High Court was of the view that no error could be found with the Appellate Court’s order. It was observed, “it is very surprising that a person who earns only Rs 15,000 per month would make an arrangement of Rs 4,90,000/- and give the same as a friendly loan. No date of extending the loan or rate of interest at which such loan was extended, has been mentioned. Neither there is any document executed nor the date when the loan was and of its repayment is mentioned.” In the Court’s opinion, the defence raised by the accused was probable and rightly rebutted the statutory presumption. In such view of the matter, the petition was dismissed and the impugned order was upheld. [Sanjay Verma v. Gopal Halwai, 2019 SCC OnLine Del 7572, decided on 15-03-2019]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): Justice V.K. Jain (Presiding Member) set aside the order of District Forum and State Commission and set aside their orders holding a national bank liable for returning educational certificates of the complainant.

Respondent herein had taken a loan from the petitioner bank under Pradhan Mantri Rozgar Yojana (PMRY) Scheme in 1984. He stated that he had deposited his educational certificates with the bank on the assurance that after repayment of the loan, the said documents would be returned to him. After repayment of the loan, respondent approached the bank for return of his original documents; but the same were not returned to him. Being aggrieved, he approached District Forum by way of a consumer complaint. District Forum allowed the complaint, and the bank’s appeal against the said order was dismissed. Thus, the bank approached filed the instant revision petition.

The Commission noted that no documentary proof of the alleged deposit had been filed by the respondent. Petitioner, being a nationalized bank and respondent being an educated person, it was difficult to accept that he deposited such important documents with the bank, without even taking an acknowledgment from it. Moreover, no evidence had been led by the respondent to prove that the submission of such documents was necessary under rules of the bank or PMRY Scheme.

In the absence of any evidence, it was opined that the view taken by the fora was perverse, and therefore the impugned orders could not be sustained.[Allahabad Bank v. Subhash Kumar Mittal, 2019 SCC OnLine NCDRC 25, Order dated 01-03-2019]

Case BriefsHigh Courts

Karnataka High Court: The Single Judge Bench of S. Sujatha, J. dismissed a petition challenging the decision of  Returning Officer of Kadaragundi Milk Producers Co-operative Society whereby petitioner’s nomination for contesting elections to Board of Directors of the said society, was rejected.

The ground for Returning Officer’s decision was that petitioner was in default of loan taken from the bank. Aggrieved thereby, petitioner filed the instant petition submitting that he was required to pay the loan taken from bank by March 2019 but he had already paid the said loan by January, 2019. Hence, rejection on the said ground was unsustainable. He further contended that his nomination paper had been scrutinized and accepted by the respondent Returning Officer in his presence, but was rejected behind his back later on without providing him an opportunity of hearing.

The Court observed that rejection of petitioner’s nomination behind his back was a disputed question of fact which could not be determined in writ jurisdiction. Relying on the judgment in Umesh Shivappa Ambi v. Angadi Shekara Basappa, (1998) 4 SCC 529 it was opined that the Court will not ordinarily interfere in matters where an equally efficacious remedy is available under the Karnataka Cooperative Societies Act, 1959.

In view of the above, the petition was dismissed granting liberty to the petitioner to resort to appropriate proceedings in accordance with law.[Jayaram K.P. v. State of Karnataka, 2019 SCC OnLine Kar 91, Order dated 01-02-2019]

Case BriefsHigh Courts

Delhi High Court: R.K. Gauba, J. allowed a petition filed against the order of Sessions Court whereby proceedings in a case filed under Section 138 of Negotiable Instruments Act, 1881 were stayed.

Petitioner had filed a case against respondents alleging commission of an offence under Section 138. It was alleged that he had advanced a loan to the respondents, for the repayment of which, the respondents had issued a cheque in his favour drawn on Axis Bank Ltd. However, on presenting the cheque, it was returned unpaid with remarks “payment stopped by drawer.” After a preliminary enquiry, Metropolitan Magistrate issued summons to respondents. Thereafter the respondents reached the Sessions Court which granted a stay on summons order till final decision in another case arising out of an FIR filed by respondents against the petitioner. Aggrieved thereby, petitioner filed the present petition under Section 482 CrPC.

The High Court noted that in the FIR filed, respondents alleged that the cheque in question was stolen and misappropriated by the petitioner. It was also noted that revisional court stayed the proceedings under Section 138 on the ground that the same would unnecessarily prejudice the trial in the case arising out of the FIR. The High Court held this to be totally unjust and unfair. It was stated “Though questions would arise in the criminal case under Section 138 NI Act as to whether cheque in question had come in the hands of the petitioner legitimately or not, the contentions of the respondents are a matter of defence which will have to be raised by them, the burden of proof of the requisite facts in such regard being placed on them. There is no reason why the case arising out of above-mentioned FIR should have primacy or priority over the case of the petitioner against the opposite party.” The petition was thus allowed and the impugned stay order was allowed. [Mukesh Aggarwal v. State (NCT of Delhi), 2019 SCC OnLine Del 6843, decided on 28-01-2019]

Case BriefsHigh Courts

Madras High Court: The Bench of M. Nimal Kumar, J. refused to quash proceedings pending on the file of Judicial Magistrate (III), Coimbatore.

The complainant filed a case against the petitioner for an offence punishable under Section 138 NI Act, 1881 (dishonour of cheque). Petitioner took a hand loan of Rs 6 lakhs from the complainant. The amount was agreed to be repaid within 6 months along with an interest at 18% per annum for which petitioner issued a cheque. However, petitioner defaulted in paying either the amount or the interest. Consequently, complainant presented the cheque on the bank but it was dishonoured. Hence, he instituted the case.

M. Prabhakaran, counsel for the petitioner submitted that the subject cheque was issued for collateral security for the loan secured by Sri Venkateswara Educational and Charitable Trust. It was contended that the case which was preferred against the petitioner in his individual capacity was not maintainable.

However, the High Court held the said contention to be not acceptable for the reason that the cheque was issued in the name of the petitioner for the loan availed. Further, the petitioner neither repaid the money nor replied to the statutory notice sent by the complainant. It was also held that the claim of “security cheque” was a matter of fact which had to be decided only in the trial. Resultantly, the present petition was dismissed.[K. Velu v. P. Damodharan, 2019 SCC OnLine Mad 315, dated 07-01-2019]

Case BriefsHigh Courts

Kerala High Court: A Single Judge Bench comprising of Devan Ramachandran, J. was seized of a civil writ petition filed by a defaulter challenging proceedings initiated by the respondent bank against him under Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act).

The Court took note of the financial constraints and burden pleaded by the petitioner and in the interest of saving time, disposed of the petition granting petitioner an opportunity to repay the loan in installments.

At the outset, the Court opined that it was jurisdictionally proscribed from considering the legality impugned proceedings in view of binding judicial pronouncements of the Apex Court in United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110. Therefore, it refused to consider any of the contentions raised by the petitioner on merits. However, counsels for the petitioner Sri Saiju S. and Smt Rubeena Hilal prayed that notwithstanding jurisdictional limitations, the petitioner may be granted leniency to enable him to pay off respondent’s loan in installments.

It was noted that banks are only interested in recovering and not in pursuing pending litigations for recovery; and on respondent bank’s submission to that effect, petitioner was granted an opportunity to pay the entire outstanding amount to respondent in installments.

The Court clarified that in case of any default by the petitioner, a benefit granted to him under its judgment would stand vacated and the bank would be at liberty to recover entire amount from him by continuing proceedings under SARFAESI Act from the stage as it was on the date of this judgment.[Wills I v. Kerala State Co-operative Bank Ltd., 2018 SCC OnLine Ker 5227, decided on 10-12-2018]

 

 

 

Case BriefsHigh Courts

Delhi High Court: A Single Judge Bench comprising of Anu Malhotra, J. dismissed a petition filed against the order of the trial court whereby plaintiff’s application under Order VI Rule 17 CPC was rejected.

The petitioner had instituted a suit for recovery of Rs 25 lakhs along with pendente lite and future interest against the respondent. In the plaint, it was categorically submitted by the petitioner that that the loan disbursed to the defendant was a friendly loan. In the application filed under the rule mentioned above, the petitioner submitted that ‘the previous counsel had inadvertently made the title of the suit wrongly as the loan was advanced through the company therefore the suit was to be in the name of the company’. The trial court, vide the order impugned rejected the application of the petitioner. Aggrieved thus, the instant petition was filed. It was submitted by the petitioner that it was only a typographical error and the amendment sought would not in any manner change the nature of the suit.

The High Court perused the record, considered the submissions, and was of the view that the petition could not be allowed. According to the Court, it was rightly observed by the trial court that through the application under Order VI Rule 17, the petitioner herein sought to convert the suit filed by a private individual into a suit filed by a private limited company and thus the prayer could not be allowed. The High Court found no infirmity in the order impugned. Resultantly, the Court dismissed the petition and disallowed the accompanying applications. [Varun Pahwa v. Renu Chaudhary, 2018 SCC OnLine Del 10730, dated 20-08-2018]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Resolution Commission (NCDRC): The appellant applied to the respondent bank for a loan of Rs 9,00,000, but only a loan of Rs. 5,25,000 was sanctioned. The appellant produced as evidence a letter signed by the Respondent-Branch Manager wherein the respondent expressed inability to sanction a loan of Rs. 9,00,000 at the moment due to unavailability of subsidy. The respondent assured to sanction a sum of Rs.5,00,00 and the balance amount after the subsidy amount was received.

The respondent produced the letter of arrangement, entered into4 days after the assurance received by the appellant, which clearly showed that the sanctioned amount was only Rs. 5,25,000, of which Rs. 1,94, 750 was as premium loan, Rs. 3,04,000 as working capital and Rs. 26,250 to be arranged by the appellant himself. This breakdown was according to the application cum receipt issued by the Khadi and Village Industries Commission which stated the cost of the project as Rs. 5,25,000.

The District Forum and State Commission both rejected the appellant’s stand, hence he approached NCDRC. The NCDRC was of the view that a mere assurance by the bank manager that a greater sum shall be sanctioned cannot be treated as a binding condition on the actual sanction of the loan. Since the letter of arrangement, which was issued on 30.06.2009, 4 days after the letter produced by the appellant, mentions the sanctioned amount as Rs. 5,25,000, the same has to be treated as final.

The counsel for the appellant drew the NCDRC’s attention to a nomination letter dated 31.03.2009 which stated the loan amount to be Rs. 9,50,000 and was duly attested by the respondent. However, more documentary evidence from July 2009, which admitted the actual amount to be Rs. 5,25,000 by the appellant himself was produced and hence the NCDRC held that a bank has to sanction loan by way of issuing a proper sanction letter and only the amount mentioned in the sanction letter can be said to be a loan amount sanctioned by the bank.

Having found no reason for interference with the decision of the lower authorities, the revision petition was dismissed. [Nisar Ahmed v. Branch Manager, State Bank of India, Revision Petition No. 2562/2017, decided on 24.05.2018]