IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON TUESDAY, THE 20TH JULY 2010 / 29TH ASHADHA 1932 WP(C).No. 24771 of 2009(N) --------------------------------------- (OA.NO.143/2004 OF DEBT RECOVERY TRIBUNAL, ERNAKULAM) .................... PETITIONER: ------------------- SHYLA JOSE, W/O. JOSE JOSEPH, RESIDING AT 15/275, MOOLANKUZHI, COCHIN- 682 002. BY SRI.GEORGE THOMAS (MEVADA), SENIOR ADVOCATE. RESPONDENTS: ------------------------ 1. CANARA BANK, OVER SEAS BRANCH, KARUNA BUILDINGS, M.G.ROAD, KOCHI, REP.BY ITS CHIEF MANAGER. 2. CANARA BANK, ARM BRANCH, RUKIYA BAGH, RAVIPURAM, ERNAKULAM, REP.BY CHIEF MANAGER. 3. M/S SAI SANTHOSHI FOOD, SANTHOSHI MANSION, KARUVELIPADY,COCHIN-5, REP.BY ITS MG.PARTNER BINDU M GANESH. R1 & R2 BY ADV. SRI.PAULY MATHEW MURICKEN, S.C. R3 BY ADVS. SRI.S.ANANTHAKRISHNAN, SRI.N.K.SUBRAMANIAN. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 20/07/2010,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C). NO.24771/2009-N: APPENDIX PETITIONERS' EXHIBITS: EXT.P.1: COPY OF THE LETTER SENT BY THE BANK INFORMING OF SETTLEMENT DTD. 18/11/08. EXT.P.2: COPY OF THE LETTER DTD. 15/01/2009 SENT BY SMT. PARVATHY SREENIVASAN. EXT.P.3: COPY OF THE JUDGMENT DTD. 09/02/09. EXT.P.4: COPY OF THE LETTER DTD. 27/02/2009. EXT.P.5: COPY OF THE ISSUED BY THE R.2. LETTER DTD. 09/04/09. EXT.P.6: COPY OF THE LETTER DTD. 16/06/2009. RESPONDENTS' EXHIBITS: EXT.R2.A: COPY OF THE JUDGMENT DTD. 22/01/2009 PASSED BY THIS HON'BLE COURT IN W.P.(C).NO.2347/2009. EXT.R2.B: COPY OF THE PROCEEDINGS DTD. 14/09/2007 ISSUED TO THE PETITIONER BY THE R.2. EXT.R2.C: COPY OF THE LETTER DTD. 11/07/2009 ADDRESSED TO THE PETITIONER BY THE R.2. EXT.R2.D: COPY OF THE VALUATION REPORT DTD. 12/12/2008 PERTAINING TO THE PROPERTY OF THE PETITIONER. //TRUE COPY// P.A. TO JUDGE. Prv. P.R.RAMACHANDRA MENON, J --------------------------- W.P(C) No.24771 of 2009-N ---------------------------- Dated this the 20th day of July, 2010. J U D G M E N T The petitioner is constrained to approach this Court because of the adverse consequences stated as resulted from satisfaction of the direction given by the Division Bench of this Court vide Ext.P3 judgment, whereby a sum of Rs.30 lakhs was remitted, so as to have Ext.P2 representation preferred for extending the benefit of One Time Settlement, (which was sanctioned earlier) to be revived and extended, enabling the petitioner to save the property, which was given in mortgage, in connection with the loan availed by the third respondent. 2. The sequence of events as described in the Writ Petition shows that, the third respondent had approached the Bank for availing a loan, which was sanctioned on the strength of the property in Survey No.982/1A in Thiruvaniyur Village in Ernakulam District owned by the petitioner and given by way of mortgage, along with two other items belonging to one Parvathy Sreenivasan and another item belonging to one Meera Stanley, who are the W.P(C) No.24771 of 2009-N 2 guarantors to the loan transaction. The petitioner in the instant case, is not a guarantor but only a mortgagor. 3. At the time of availing the loan by the third respondent, the business was going on very smoothly. Because of sudden downfall in the business and some unforeseen circumstances, repayment could not be effected by the third respondent, which made the respondent Bank to proceed with coercive steps for realization of the property. In the meanwhile, the third respondent approached the Bank for settling the liability under One Time Settlement, simultaneously assuring that the liabilities in respect of the other transactions also will be cleared by the third respondent. The request made by the third respondent was considered and sanctioned as per Ext.R2(b) dated 14.9.2007 fixing the OTS liability as Rs.40 lakhs and making it clear that the acceptance was strictly provisional and subject to ratification by the higher authorities. The manner of payment was prescribed therein, also stating that, release of the securities mortgaged/hypothecated to the loan account and withdrawal of the legal proceedings will be considered on receipt of the entire OTS amount of all the companies. It was further made clear that the Bank reserved the right for withdrawal of the OTS W.P(C) No.24771 of 2009-N 3 sanctioned, at any point of time and that the concession extended would stand automatically withdrawn, if any of the terms/conditions specified therein was not satisfied or if any default was committed in effecting the payment as mentioned therein. 4. Mr. George Thomas Mevada, the learned Senior counsel for the petitioner submits that, inspite of extending the benefit of One Time Settlement, the third respondent did not honour the commitment. Since the petitioner was only a mortgagor, who had not executed any document providing guarantee to the loan transaction, she, along with one Parvathy Sreenivasan, (who is stated as a guarantor) approached the Bank by filing a representation, stating that they were ready and willing to satisfy the balance amount under the OTS, which according to the petitioner was only a sum of Rs.26.5 lakhs as on 31.12.2008 ie. after giving credit to the payments already effected by the third respondent. Since the suggestion made by the petitioner and Parvathy Sreenivasan was not accepted by the respondent Bank, they approached this Court by filing W.P(C)No.2347 of 2009, which culminated in Ext.R2(a) judgment passed on 22.1.2009, whereby interference was declined, however observing that, it was without prejudice to the rights and W.P(C) No.24771 of 2009-N 4 liberties of the petitioner or the third respondent/borrower to work out their remedies with the Bank, in accordance with law. The factum of sanction to have the matter settled under the One Time settlement for a total sum of Rs.40 lakhs and the subsequent turn of events including extension of period under the One Time Settlement and the non-satisfaction of the liability by the borrower were taken note of in Ext.R2(a) judgment. 5. Met with the circumstances, the petitioners in the above Writ Petition filed W.A.No.300 of 2009 and after hearing both the sides, it was observed by the Division Bench that the total liability was nearly Rs.1.61 crores but the matter was agreed to be settled on 14.09.2007 for a total sum of Rs.40 lakhs and if such offer was still there, the balance amount payable was only Rs.14.1 lakhs as on 31.1.2008 with further liability to pay interest thereafter. The learned Senior Counsel submits that, the observation made in Ext.P3 judgment classifying both the appellants therein as guarantors is only a mistake and admittedly, the petitioner is only a mortgagor. By virtue of Ext.P3 verdict, it was observed by the Division Bench that, the first respondent Bank being a pubic sector undertaking, has to take generous view on the facts and circumstances of the case and W.P(C) No.24771 of 2009-N 5 accordingly, it was observed that if the appellants paid a sum of Rs.30 lakhs on or before 28.2.2009, Ext.P6 representation (Ext.P2 herein) should be considered by the Bank and a decision should be taken, alerting the Bank that a 'practical approach' should be taken by the Bank, simultaneously adding that till a final decision was taken, no further coercive action was to be pursued against them. 6. Pursuant to Ext.P3 judgment, the appellants therein satisfied a total sum of Rs.30 lakhs as ordered by the Division Bench, particulars of which are given in Ext.P4 letter dated 27.2.2009 submitted by them before the Bank and sought for further action to have the matter settled as proposed. After considering the representation the Bank issued Ext.P5 reply dated 9.4.2009, whereby the representation was rejected stating that the OTS benefit extended earlier already stood cancelled and that a revised OTS was permitted, whereby the liability to be satisfied by the borrower was shown as Rs.115 lakhs. The petitioner preferred Ext.P6 dated 16.6.2009, pointing out the facts and events; which however did not turn to be fruitful. This made the petitioner to approach this Court by fling the present Writ Petition, challenging Ext.P5 simultaneously seeking for other appropriate reliefs. W.P(C) No.24771 of 2009-N 6 7. The respondent Bank has filed a counter affidavit rebutting the averments and allegations raised in the Writ Petition and producing copies of the relevant documents sought to be relied on. Referring to Ext.R2(a) judgment passed by the learned Single Bench of this Court in the W.P(C) No.2347 of 2009, the learned counsel submits that, the observation made by the learned Judge that, the matter could not be interfered with, has not been set aside by the Division Bench while passing Ext.P3 judgment in the Writ Appeal. Pointing out the various conditions stipulated in ExtR2(b), the learned counsel also submits that, there is absolutely no rationale in demanding to release the security, on payment of the balance sum to top up the figure of Rs.40 lakhs in full and final satisfaction of the loan account, more so since, the position was already brought to the notice of this Court when the matter finalized by the learned Single Judge and also when Ext.P3 judgment was passed by the Division Bench. The learned counsel further submits that, though the petitioner in this Writ Petition is only a mortgagor and not a guarantor, the other person by name Parvathy Sreenivasan, who had approached this Court earlier, leading to Ext.R2(a) judgment is a guarantor and since the amount has been W.P(C) No.24771 of 2009-N 7 paid by the petitioner as well as the said person jointly, as discernible from Ext.P4 forwarding letter, the amount so satisfied by them is not liable to be refunded in any circumstances and that the Bank has entitled to have it appropriated against the loan account. 8. After hearing both the sides and on going through the materials on record, this Court finds that there is considerable force in the submissions made from the part of the learned counsel that the Bank can’t be compelled by issuing any writ of mandamus directing to settle the matter accepting the balance amount of Rs.26.5 lakhs with interest or otherwise in respect of the period after 31.12.2008. More so, when the said facility/sanction is stated as already withdrawn and the revised OTS has been sanctioned pointing out the figure as Rs.115 lakhs. That apart, the terms and conditions under which a total figure of OTS was stipulated as Rs.40 lakhs, are very much discernible from Ext.R2(b) dated 14.9.2007, whereby the right of withdrawal of OTS facility on infringement of any of the conditions as specified therein, is also reserved. 9. However, on considering the subsequent turn of events, it is also brought to light that the matter was pursued further by the petitioner and the other person by name Parvathy Sreenivasan by W.P(C) No.24771 of 2009-N 8 filing Writ Appeal against Ext.R2(a) leading to Ext.P3 judgment, wherein the Division Bench observed the extent of liability, the amount agreed to be settled by way of OTS and the balance amount required to top up the figure. It was after making specific observations that the respondent Bank, being a public sector undertaking, would take a generous view on the facts and circumstances of the case and that a practical approach should be made by the Bank, that the matter was directed to be re-considered, on condition that the appellants paid a sum of Rs.30 lakhs as specified. It was pursuant to the above direction, that the sum of Rs.30 lakhs was remitted by the appellants therein as clarified in Ext.P4 giving the particulars of payment. It is also relevant to note that the proposal made by the appellants therein, as borne by Ext.P2 representation, was by expressing their willingness to deposit the balance to top up the total sum of Rs.40 lakhs by effecting such deposit in a “ no-lien account” till the matter was finalized. 10. However, pursuant to the specific direction given by the Division Bench of this Court vide Ext.P3 judgment, inspite of effecting the deposit in such a 'no-lien account', the petitioner and the other person concerned, were made to effect the deposit against W.P(C) No.24771 of 2009-N 9 the loan account; which in turn has been appropriated by the Bank without any hesitation and thereafter rejected the representation, stating that the proposal to have the loan account settled for Rs.40 lakhs was not acceptable to the Bank. Whether the Bank has honoured the direction given by the Division Bench of this Court vide Ext.P3 judgment, in the true spirit and prospective, is a different question and this Court does not intend to express any opinion in this regard. But the fact remains that the purpose of the judgment has been defeated, as the request made by the petitioner and the other party concerned was only to have the balance amount of Rs.26.5 lakhs offered to be remitted by them retained in a 'no-lien account' as proposed by them in Ext.P2 representation. Instead of having such a course, over and above the said amount of Rs.26.5 lakhs, a further/additional sum of Rs.3.5 lakhs (making a total of Rs.30 lakhs) was caused to be paid against the loan account, only by the intervention made by this Court as per Ext.P3 judgment. By virtue of Ext.P3 judgment passed by this Court, the petitioner has been made to part with the money, which has been appropriated by the Bank quite conveniently, without any sense of reciprocal understanding, while causally rejecting the representation vide W.P(C) No.24771 of 2009-N 10 Ext.P5. 11. Considering the course pursued by the Bank, it cannot but be observed by this Court that, substantial injury has been caused to the petitioner on implementing the direction given by this Court vide Ext.P3, by effecting the sum of Rs.30 lakhs. Since the petitioner herein is admittedly not a guarantor, there is no liability for the petitioner to have satisfied the said amount, but for letting her property offered as security to be proceeded against. Since the payment has caused to be effected as ordered by this Court vide Ext.P3, in spite of the specific offer and stipulation made by the petitioner and the other person concerned vide Ext.P2 representation to have it retained in a 'no-lien account' till the matter was considered and finalised by the Court, this Court has necessarily to see that nobody sustained any injury at the hands of this Court. The maximum 'Actus Curiae Nemineum Gravabit (Act of Court shall prejudice no man) is attracted to the case in hand. 12. In the above circumstances, it is declared that the petitioner and the other person by name Parvathy Sreenivasan, who was jointly effecting the payment as borne by Ext.P4, pursuant to Ext.P3 judgment passed by this Court, are entitled to get back the W.P(C) No.24771 of 2009-N 11 amount of Rs.30 lakhs deposited by them, notwithstanding the fact that the aforesaid Parvathy Sreenivasan was a guarantor to the loan transaction and is not a party to the present Writ Petition. The said amount shall be repaid by the Bank to the above persons either jointly or on producing a power of attorney by either of them, enabling the power holder to receive the said amount for and on behalf of the other as well. This shall be effected forthwith, at any rate within two weeks from the date of receipt of a copy of this judgment, failing which, it will attract interest at the prime lending rate of the Bank, besides other costs and consequences. The Writ Petition is allowed to the above extent. No cost. Sd/- P.R.RAMACHANDRA MENON JUDGE //True Copy// P.A to Judge ab W.P(C) No.24771 of 2009-N 12