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2010 (6) Supreme 46
SUPREME COURT OF INDIA
P. Sathasivam and Anil R. Dave, JJ.
Zonal Manager, Central Bank of India — Appellant(s)
versus
M/s Devi Ispat Ltd. & Ors. — Respondent(s)
Civil Appeal No. 6077 of 2010
(Arising out of S.L.P. (C) No. 11505 of 2010)
Decided on : 30-7-2010
(b) Constitution of India – Article 226 – Having liquidated all dues the respondent-Company was entitled to return of all title deeds and a NOC from the appellant-Bank – High Court rightly issued writ of mandamus. (Para 8)
(c) Constitution of India – Article 226 – Disputes relating to interpretation of terms and conditions of a contract could not be examined/challenged or agitated in a petition filed under Article 226 – However 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. (Para 11)
(1996) 6 SCC 22; (2000) 6 SCC 293 – Distinguished
(d) Constitution of India – Article 226 – The date of the filing of the writ petition is the relevant date to test the direction of the High Court vis-à-vis the facts obtaining on that date. (Para 12)
(1955) 2 SCR 1066 – Relied upon
(e) Constitution of India – Article 226 – Maintainability – Except where arbitration is specifically provided for and there is an alternate remedy available, if the instrumentality of the State acts contrary to the public good, public interest, unfairly, unjustly, unreasonably discriminatory and violative of Art. 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. (Paras 13 to 15)
(2004) 3 SCC 553; (2009) 1 SCC 150 – Relied upon
Facts of the case:
1.Since the very inception of the respondent-Company, it has been banking with the appellant-Bank and availing various credit facilities like.
2.On 16.10.2006, the respondent-Company wrote a letter to the appellant-Bank requesting it to review and enhance its credit facilities. On 15.12.2006, the appellant-Bank enhanced credit facilities of the Company’s account.
3. On 25.02.2009, the appellant-Bank received an Internal Audit Report in respect of crores of rupees siphoned away to the account of the respondent-Company. Therefore, on 14.03.2009, the appellant-Bank filed two complaints complaining of the fraud.
4) On 02.04.2009, Special Audit Team of the appellant-Bank submitted its report on the fraud committed by the respondent-Company which revealed the transfer of a huge amount of funds from the account of M/s Rajco Steel Enterprises and M/s Kali International Pvt. Ltd. to the account of the respondent-Company.
5)On 06.05.2009, the respondent-Company requested the appellant-Bank to handover the original title deeds of its factory premises and all the collateral securities held by it as against the Company as well as from Mr. Nirmal Kumar Mandhani, Director of the Company to the State Bank of India, to whom they had transferred their account. On 09.05.2009, the State Bank of India issued a Banker’s cheque of Rs. 15 crores to the respondent-Company which the appellant-Bank had encashed and appropriated in lieu of the outstanding balances lying against the respondent-Company.
6)By various letters, the respondent-Company requested the appellant-Bank to return the Security documents and issuance of ‘No Objection Certificate’ and ‘No Due Certificate’ (in short ‘NDC’).
7)On 29.05.2009, the respondent-Company filed a writ petition before the High Court at Calcutta. By order dated 24.08.2009, the learned single Judge of the High court allowed the writ petition and directed the appellant-Bank to release the security documents.
8)The High Court dismissed the appeal filed by the appellant-Bank.
Finding of the Court:
High Court was fully justified in issuing a writ of mandamus for return of its title deeds.
Result : Appeal dismissed.
Key Points: - The Bank contends writ petition under Article 226 is not maintainable to enforce contractual rights or return title deeds; whether writ jurisdiction can compel return of security documents in a contractual debt recovery context (!) (!) (!) - Whether disputes relating to interpretation of contract terms can be decided in writ proceedings, and under what circumstances a writ can issue for contractual matters involving a State instrumentality; including maintainability criteria and when alternative remedies apply (!) (!) (!) (!) (!) (!) - Whether in the given factual matrix, where settlement of dues occurred via an arrangement with another nationalized bank and there is "nil" due, the High Court’s writ of mandamus directing return of title deeds is justified, and the appellate court’s scope to review such writ under Article 226 (!) (!) (!) (!) (!) (!) (!)
JUDGMENT
P. Sathasivam, J. —
1)Leave granted.
2)This appeal arising out of SLP (C) No. 11505 of 2010 is directed against the final judgment and order dated 05.04.2010 passed by the High Court at Calcutta in G.A. No. 2441 of 2009 whereby the High Court dismissed the appeal filed by the appellant-Bank herein against the order of the learned single Judge dated 24.08.2009 in W.P. No. 485 of 2009 directing the appellant-Bank to return forthwith the title deeds deposited by M/s Devi Ispat Ltd., the Respondent-Company herein.
3)Brief facts :
a) Respondent No.1 is a Company incorporated under the name and style of M/s Devi Ispat Ltd. The Respondent-Company carries on the business of manufacturing and trading in ingots and various other types of steel and for the said purpose requires financial support from the financial institutions like the appellant- Bank. Since the very inception of the respondent- Company, it has been banking with the appellant-Bank and availing various credit facilities like Term Loan, Working Capital Demand Loan, Cash Credit and Letter of Credit facility. On 16.10.2006, the respondent-Company wrote a letter to the appellant-Bank requesting it to review and enhance its credit facilities. On 15.12.2006, the appellant-Bank intimated the respondent-Company of its decision of review and enhanced credit facilities of the Company’s account whereby the Company was to enjoy two Term Loans being Term Loan I for Rs. 360 lacs being Account No. 1103590030, Term Loan II for Rs. 215 lacs being Account No. 1103590041, Cash Credit for Rs.300 lacs being Account No. 1103589988, Working Capital Demand Loan for Rs.1200 lacs being Account No. 3001640109 and a Letter of Credit in favour of the West Bengal State Electricity Board for Rs.56 lacs.
b) Due to various irregularities in the account of the respondent-Company, the appellant-Bank by various letters between 15.09.2008 to 24.04.2009, advised the respondent-Company to shift its loan account to some other Bank. On 12.01.2009, the appellant-Bank sent the Credit Information Report of the respondent-Company to its new Banker, namely, the State Bank of India. On 25.02.2009, the appellant-Bank received an Internal Audit Report in respect of the fraud perpetrated in the accounts of M/s Rajco Steel Enterprises and M/s Kali International Pvt. Ltd., whereby crores of rupees were siphoned away to the account of the respondent-Company. Therefore, on 14.03.2009, the appellant-Bank filed two complaints with the Superintendent of Police, Central Bureau of Investigation, Kolkata complaining of the fraud and requesting the CBI, Kolkata to investigate into the matter.
c) On 02.04.2009, Special Audit Team of the appellant- Bank submitted its report on the fraud committed by the respondent-Company which revealed the transfer of a huge amount of funds from the account of M/s Rajco Steel Enterprises and M/s Kali International Pvt. Ltd. to the account of the respondent-Company. On 06.05.2009, the respondent-Company requested the appellant-Bank to handover the original title deeds of its factory premises and all the collateral securities held by it as against the Company as well as from Mr. Nirmal Kumar Mandhani, Director of the Company (respondent No.2 herein) to the State Bank of India, Chowringhee Branch, Kolkata to whom they had transferred their account. On 09.05.2009, the State Bank of India issued a Banker’s cheque of Rs. 15 crores to the respondent-Company which the appellant-Bank had encashed and appropriated in lieu of the outstanding balances lying against the respondent- Company. By various letters, the respondent-Company requested the appellant-Bank to return the Security documents and issuance of ‘No Objection Certificate’ (in short ‘NOC’) and ‘No Due Certificate’ (in short ‘NDC’). On 29.05.2009, the respondent-Company filed W.P. No. 485 of 2009 before the High Court at Calcutta. By order dated 24.08.2009, the learned single Judge of the High court allowed the writ petition and directed the appe
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