Point of law: When there is a matrix involving an admixture of Public Law elements and the Private Law elements, fraud as a ground, has its own limitations & parameters, as in the case at hand is.

ORDER :

First Petitioner, a registered Partnership Firm and the Second Petitioner being one of its Partners have presented this petition in the writ jurisdiction of this court for laying a challenge to the endorsement/notice dated 06.05.2023 issued by the 1st respondent-bank at Annexure-Q on the 2nd respondent’s letter dated 24.03.2023.

2. The impugned endorsement/notice reads as under :

“The Partners

M/s Legend Property

Sharvanthi Plaza, No.53 (old No.32)

16th main road, 4th T Block Jayanagar,

Bangalore.

Dear Sir/Madam

Sub: Complaint received from Mrs. Sivapriya W/o Sri M. Chandra shekar.

Kindly take cognizance of our mail dated 24/03/2023, wherein we had informed you regarding complaint received from Mrs. Sivapriya W/o Sri M. Chandrashekar, that she has been coercively and fraudulently removed form the partnership Firm (Legend Property) and has prayed before the Principle Judge, Family Court, Bangalore vide OS No-379/2022 to declare the affidavit dated 31.08.2021 releasing her share in M/s Legend Property as null and void. And has notified us vide her letter dated 24/03/2023 to not to disburse the loan.

In this regard legal opinion was sought by us from empanelled advocate and out law department, who have advised us to restrain from disbursement of loan further until a resolution is reached either amicably or through a court order.

Thus we request you to take necessary action to resolve the issue at earliest for smooth operation of the project and loan account.”

3. Learned counsel for the petitioner argues that the Firm was established vide registered Partnership Deed dated 24.07.2010; after the retirement of 2nd respondent from the Firm, it has been reconstituted on 31.07.2021; to the vacancy of retiring partner, her husband i.e., the 2nd petitioner herein has been inducted; a loan of Rs.40 crore was sanctioned by the bank by taking the subject property by way of security; about a sum of Rs.3 crore plus has been released as well; at this stage on the complaint of 2nd respondent, the bank has stopped release of further amount by virtue of endorsement; it refers to pendency of a declaration suit filed by the 2nd respondent in O.S.No.379/2022, wherein other partners are not the defendants; the respondent bank being a nationalized entity is an instrumentality of the State and therefore its impugned action being unjust & arbitrary, is liable to be set at naught and a direction be issued for releasing the sanctioned loan.

4. The respondent-bank has filed the Statement of Objections resisting the Writ Petition. Learned Panel Counsel appearing for the respondent-bank and learned Sr. Advocate representing the 2nd Respondent oppose the petition making submission in justification of the impugned endorsement/notice; they contend that: the 2nd petitioner has played fraud & fabrication on his spouse namely the 2nd respondent herein and thereby has obtained her retirement from the Firm; fraud vitiates anything & everything; in that connection the subject civil suit is pending; therefore the impugned action of the respondent bank cannot be faltered. Learned Panel counsel submits that the Writ Petition is not maintainable against his client, more particularly when the loan transaction is in the nature of a private contract; petitioners can avail the alternate remedy that is by approaching the Banking Ombudsman. So contending, they pray for the dismissal of Writ Petition.

5. Having heard the learned counsel for the parties and having perused the petition papers, this court is inclined to grant indulgence in the matter for the following reasons :

(a) The submission of learned Panel Counsel appearing for the respondent-bank as to availability of alternate remedy does not much impress the court. The fact matrix for adjudging this Writ Petition is substantiated from the pleadings of the parties and copies of the documents placed on record. In view of that, there is no reason for this court to deny remedy to the Petitioner-Firm. The second contention that, the d