IMPORTANT POINT
A bank must return securities upon loan repayment, and failure to do so constitutes deficiency in service under the Ombudsman Scheme, despite the bank's claims of lien.

JUDGMENT :

Hiranmay Bhattacharyya, J.

1. This intra Court appeal is at the instance of Axis Bank Limited and is directed against a judgment and order dated 6th February, 2024 passed by learned Single Judge in WPA 23561 of 2023.

2. By the impugned judgment and order, the writ petition was allowed and the appellant bank was directed to issue requisite no dues certificate to the writ petitioner no. 1/respondent no. 1 herein and return all securities given by the 1st respondent for the loans and credit facilities taken by the 1st respondent within a specified time limit.

3. Facts giving rise to the writ petition and this appeal, in a nut shell, are as follows.

The 1st respondent herein is a multi system operator of cable television and is a subsidiary of SITI Networks Limited (for short “SITI”). The 1st respondent entered into a Term Loan Agreement dated March 30, 2019 with the appellant bank. The credit facilities availed by the 1st respondent was secured by the deposit of title deeds in respect of an immovable property situated at Sector V, Electronic Complex, Bidhannagar, Saltlake. SITI, being the owner of 2,59,11,689 shares of the respondent no. 1 company agreed to pledge such shares to secure the facilities to be granted to the 1st respondent. The 1st respondent claims to have complied with the terms of sanction of credit facilities and the final repayment of term loan facilities was made on November 7, 2022. The respondent no. 1 claims to have issued several emails requesting the appellant bank to issue no dues certificate and release all securities in respect of the credit facilities. Despite the receipt of the said emails the appellant bank failed and neglected to issue no dues certificate and release the securities. Finding no other alternative the respondent no. 1 lodged a complaint dated November 30, 2023 before the Ombudsman, Reserve Bank of India being the 4th respondent herein. The 4th respondent herein, by an email dated July 14, 2023, rejected the complaint filed by the 1st respondent herein.

4. The 1st respondent approached the Writ Court praying for setting aside the email dated July 14, 2023 and for issuance of a writ in the nature of mandamus commanding the appellant bank to return all the original security documents including the original title deeds and original pledge agreement and the original share certificates as specifically mentioned in the Schedule thereto.

5. By the impugned judgment and order, the learned Single Judge allowed the writ petition thereby setting aside the order of the Ombudsman and quashing the refusal of the appellant bank and directed the appellant bank to issue the requisite No Dues Certificate to the 1st respondent and return all securities given by the 1st respondent for the loans and credit facilities taken by the 1st respondent within the specified time.

6. Being aggrieved, the Bank, who was the 3rd respondent in the writ petition has approached this Court with this intra Court appeal.

7. Mr. Banerjee, learned Senior Advocate for the appellant contended that the appellant bank had sanctioned credit facilities amounting to Rs. 243.04 crores to the 1st respondent herein pursuant to a term loan agreement which was executed between the appellant bank and the 1st respondent herein on March 30, 2019 for two term loan facilities, one for Rs. 48.04 crores and the other for Rs. 175 crores. As security for term loan of Rs. 175 crores, SITI pledged shares representing 29.99% of total shares of the 1st respondent herein in favour of the appellant bank. The sanctioned credit facilities were further secured by the 1st respondent by creating a mortgage on a lease hold land and building situated at Sector V, Bidhannagar, Saltlake. Mr. Banerjee further contended that the appellant bank had also granted various facilities to SITI from time to time and on account of default in repayment by SITI to appellant bank, the account of SITI was declared to be a “Non Performing Asset” (for short “NPA”) by the appell