IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) MONDAY, THE FIFTH DAY OF DECEMBER TWO THOUSAND AND ELEVEN PRESENT THE HON'BLE SRI JUSTICE VILAS V. AFZULPURKAR WRIT PETITION No.21651 of 2011 BETWEEN M/s. Golconda Engineering Enterprises Ltd., Secunderabad. ... PETITIONER AND The State Bank of Hyderabad, Hyderabad and two others. ...RESPONDENTS Counsel for the Petitioner: MR. D. MADHAVA RAO Counsel for the Respondents: MR. KRISHNAM RAJU The Court made the following order: ORDER: Heard Mr. B. Madhava Rao, learned counsel for the petitioner and Mr. Krishnam Raju, learned counsel appearing for the respondent – bank. 2. The facts, in brief, are that the petitioner – company is a manufacturer of Jelly ﬁlled telephone cables and related products and mostly has dealings with BSNL and other companies engaged with the cable industry. Petitioner – company obtained ﬁnancial assistance from the respondents, however, on account of the default committed by the petitioner, the third respondent recalled the facilities and ﬁled recovery proceedings before the Debts Recovery Tribunal, Hyderabad. Later the third respondent assigned the entire debt of the petitioner in favour of the Asset Reconstruction Company of India Limited viz. M/s. ARCIL under an agreement dated 07.11.2006 and thereby, the said ARCIL stepped into the shoes of the respondents. ARCIL in turn appointed APITCO Ltd. (formerly known as A.P. Industrial Technical Consultancy Organization Limited) as their constituted attorney, which in turn negotiated with the petitioner and settled the entire loan amount under a negotiated settlement. Petitioner states that it has honoured the said settlement by paying and discharging all the liabilities and entire amount on all counts in the said loan account has been paid. In view of the said compliance APTICO has given certificate dated 03.03.2010, which states as follows: “This is to inform that, M/s. Golkonda Engineering Enterprises Limited, having its oﬃce at 1-7-241/11/D, S.D. Road, Secunderabad, Andhra Pradesh, India has settled their total outstanding in the matter of M/s. Golkonda Engineering Enterprises Limited originally belonging to State Bank of Hyderabad later transferred to M/s. ARCIL by an Assignment Agreement dated November 07, 2006. Now, M/s. Golkonda Engineering Enterprises Limited is not having any dues towards the State Bank of Hyderabad or M/s. ARCIL.” 3. In view of the said no-dues certiﬁcate, the petitioner alleges that all the original documents given as security by the petitioner to the respondent – bank and which were ﬁled before the DRT, Hyderabad in the recovery proceedings were returned to the petitioner by APITCO and it has also singed Form-17 under the Companies Act, which is required for cancelling/releasing the charge registered against the petitioner with the Registrar of Companies, Hyderabad. It is also stated that while obtaining the said ﬁnancial assistance to the extent of margin money for the bank guarantee, petitioner was required to contribute the margin money in the shape of ﬁxed deposits obtained from the third respondent – bank. Various FDR’s showing the date of maturity and the value thereof, as extracted in para 4 of the affidavit, are extracted hereunder: ________________________________________________________ Name of the Purchaser. Date of Maturity For Rupees FDR No. M/s. Golconda Engineering 31/03/2004 14,39,860/- Enterprises LTD (0435137) --Do-- (157783) 26/10/2005 16,570/- --Do-- (0435124) 24/02/2003 86,000/- --Do-- (157608) 23/06/2005 2,67,811/- --Do-- (157607) 23/06/2005 3,32,571/- --Do-- (157606) --do-- 1,01,205/- --Do-- (157604) --do-- 71,935/- --Do-- (0793395) --do-- 99,124/- --Do-- (0435147) --do-- 3,13,130/- --Do-- (0435136) --do-- 2,13,123/- --Do-- (370861) 19/03/2009 1,06,598/- --Do-- (0435148) 23/06/2005 1,79,363/- --Do-- (0435192) --do-- 40,460/- The aforesaid FDR’s representing the margin money has also matured subsequently and the third respondent – bank has also issued TDS certiﬁcates showing deduction of tax thereon under certificate dated 15.04.2011. The validity of original bank guarantee, with which the said FDR’s were concerned, has expired long back and the petitioner has already received the original bank guarantee but the request of the petitioner for release of the ﬁxed deposit receipts placed with the respondent – bank at the time of availing the bank guarantee have not been released in spite of number of requests by the petitioner. Hence, petitioner approached this Court by ﬁling the present writ petition challenging the action of the respondents as arbitrary and unauthorized in withholding the FDR’s in spite of liquidation of entire liability of the petitioner. 4. The respondents ﬁled a counter aﬃdavit, inter alia, accepting the primary contentions of the petitioner, as referred to above, but curious stand is taken that notwithstanding the liquidation of liability as certiﬁed by APITCO Ltd., the respondent – bank cannot take congnizance thereof on the ground that the said ﬁxed deposit receipts were not transferred to M/s. ARCIL while transferring the petitioner’s loan account and on that ground the bank justiﬁes availment of general lien under Section 171 of the Indian Contract Act. A contention also has been raised that the writ petition is not an appropriate remedy, as disputed questions of fact are involved and that the petitioner must approach a competent civil Court for the aforesaid purpose. 5. Petitioner has also ﬁeld a reply aﬃdavit refuting the said claim of the respondent - bank by asserting that the entire loan account of the petitioner was transferred to M/s. ARCIL and in view of the the no-dues certiﬁcate issued by APITCO Ltd., the constituent attorney M/s. ARCIL, no further liability of the petitioner remains. Learned counsel for the petitioner place reliance upon schedule – I appended to the assignment deed executed between the respondent – bank and M/s. ARCIL to substantiate that all ﬁnancial documents, relating to various ﬁnancial assistance by the bank, which includes bank guarantees, were subject matter of the said assignment. 6. On consideration of the contentions of the parties, as above, I am unable to appreciate the stand of the respondents, as they do not deny that the entire loan account of the petitioner was assigned to M/s. ARCIL, referred to above and the petitioner has entered into a negotiated settlement and cleared off the entire liability. The no-dues certiﬁcate given on behalf of M/s. ARCIL as well as the return of all the documents of the petitioner given towards security and produced before the DRT, Hyderabad, back to the petitioner conclusively establish that all the ﬁnancial transactions between the petitioner and the respondents have been fully satisﬁed and there remains no relationship of debtor and creditor between the petitioner and the respondents. The speciﬁc allegation of the petitioner that the original bank guarantees for which FDR’s, referred to above, were given by the petitioner towards margin money has also expired long back and the original bank guarantee is returned to the petitioner, is also not contraverted. In view of that, therefore, the withholding of the ﬁxed deposit receipts by the respondent – bank, instead of returning the same with interest accrued to the petitioner, is clearly unsupported by any entitlement of the respondents either contractually or otherwise. For attracting Section 171 of the Contract Act, the petitioner must be indebted to the respondents, which is non-existent in this case. 7. Realizing the aforesaid, the learned counsel for the respondents also raised an alternative contention of maintainability of the writ petition, but I am not able to see any disputed questions of fact arising in the present case, as the respondents are bound to return to the petitioner/borrower all the original title deeds and all documents connected with the ﬁnancial assistance, when once the petitioner clears all the outstanding. The respondent, a public sector bank, discharging public functions and having status of a ‘State’ under Article 12 of the Constitution of India, cannot drive the petitioner to a long drawn litigation before a civil Court when the facts of the case, admittedly, show that there is no disputed question of fact involved and the documents of the respondents themselves show that there is no relationship of debtor and creditor between the parties. I am fortiﬁed in the said view by a decision of the Supreme Court in CENTRAL BANK OF INDIA v. DEVI ISPAT LIMITED [1] . The following paragraphs whereof would be appropriate to be extracted hereunder: 20. In the case on hand, the respondent- Company has demonstrated that based on the advise of the appellant-Bank, they shifted their accounts to another Nationalized Bank and through an arrangement with the State Bank of India, a cheque of Rs. 15 crores was deposited by their Bank and in token of the same, by statement of accounts dated 14.05.2009 the appellant- Bank clearly mentioned that there is no due or nil balance from the respondent-Company (Emphasis supplied). In such circumstances, when the relief sought for does not relate to interpretation of any terms of contract, the Bank being a Nationalized Bank, a Writ Court can issue appropriate direction in certain circumstances as mentioned above. In such a factual matrix, the reliance placed on these two decisions is not helpful to the appellant-Bank. … … 28. It is clear that, (a) in the contract if there is a clause for arbitration, normally, writ court should not invoke its jurisdiction; (b) the existence of eﬀective alternative remedy provided in the contract itself is a good ground to decline to exercise its extraordinary jurisdiction under Article 226; and (c) if the instrumentality of the State acts contrary to the public good, public interest, unfairly, unjustly, unreasonably discriminatory and violative of Article 14 of the Constitution of India in its contractual or statutory obligation, writ petition would be maintainable. However, a legal right must exist and corresponding legal duty on the part of the State and if any action on the part of the State is wholly unfair or arbitrary, writ courts can exercise their power. In the light of the legal position, writ petition is maintainable even in contractual matters, in the circumstances mentioned in the earlier paragraphs. 29. In the case on hand, it is not in dispute that the appellant- Bank, being a public sector Bank, discharging public functions is "State" under Article 12. In view of the settlement of the dues on the date of ﬁling of the writ petition by arrangement made through another Nationalized Bank, namely, State Bank of India and the statement of accounts furnished by the appellant-Bank subsequent to the same i.e. on 14.05.2009 is 0.00 (nil) outstanding, we hold that the High Court was fully justiﬁed in issuing a writ of mandamus for return of its title deeds. In view of the above, therefore, the writ petition deserves to be allowed and is accordingly allowed. However, in the circumstances, there shall be no order as to costs. _____________________ VILAS V. AFZULPURKAR, J December 5, 2011 DSK [1] (2010) 11 SCC 186