Disputed questions of fact in loan agreements cannot be resolved in writ jurisdiction; such matters require civil adjudication based on evidence rather than legal interpretations alone.

Headnote:(A) Constitution of India, 1950 - Article 226 - Banking Ombudsman Scheme, 2006 - Dispute over loan agreement - Appellants secured joint housing loan of Rs.51,50,000/- from Respondent Bank with a fixed interest for the first year and subsequently floating rates. The Bank unilaterally extended the repayment period from 180 months to 274 months. Appellants challenged actions alleging unilateral changes and failure to conform to Fair Practices Code for Lenders - Held, disputes involve interpretation of contractual terms, rendering them unsuitable for resolution under writ jurisdiction. (Paras 12-19)

(B) Jurisdiction - Writ Jurisdiction - Scope of high court's authority to adjudicate upon disputed questions of fact in writ petitions is limited, primarily focusing on legality rather than adjudicating factual disputes. Such matters should be resolved through civil proceedings. (Paras 15-19)

Facts of the case:
The Appellants were granted a housing loan that they claim was subject to excessive interest charges and extended repayment terms without their consent. They approached the Banking Ombudsman, whose decisions they sought to challenge.

Findings of Court:
The court concluded that the disputes are purely factual and require civil litigation for resolution, maintaining the interpretation of the Loan Agreement falls outside the ambit of writ jurisdiction under Article 226.

Issues: Whether the changes made unilaterally by the bank regarding interest rates and loan tenure breach the agreement; can such disputes be resolved in writ jurisdiction?

Ratio Decidendi: The court emphasized that issues involving disputed factual interpretations of loan agreements are not suitable for writ proceedings, referencing established legal principles on the matter.

Result: Appeal dismissed.

Table of Content
1. loan agreement details and terms. (Para 1 , 2 , 3)
2. disputes and communications regarding loan repayment. (Para 4 , 5 , 6 , 7 , 8 , 9 , 10)
3. arguments based on rbi guidelines and banking practices. (Para 11 , 12)
4. court's analysis on the nature of disputes. (Para 13 , 14 , 15)
5. legal principles governing writ jurisdiction in factual disputes. (Para 16 , 17 , 18)
6. final decision on appeal dismissal. (Para 19)

JUDGMENT

Satish Chandra Sharma, C.J.

1. The present LPA is arising out of an Order dated 06.07.2022 of a learned Single Judge of this Court, in W.P.(C.) No. 6913/2021 ("Impugned Order").

2. The undisputed facts of the present case reveal that the Appellants before this Court had applied for a joint housing loan and were accordingly sanctioned Rs.51,50,000/- from the State Bank of India, RAPC Branch, New Delhi.

3. The Appellants and the Respondent Bank entered into the Loan Agreement on 20.06.2009 and the same stipulated a fixed rate of interest at 8% for the first year and, thereafter, a floating rate of interest. The tenure of the loan was for 15 years (180 months), and the Appellants were required to furnish regular EMIs to repay the loan. Clause 5 of the Loan Agreement had provided that the Respondent Bank had a right to reduce or increase the EMI, or extend the repayment period, or both, consequent upon revision in the interest rate. Clause 4 (v) of the Loan Agreement had also granted liberty to the Respondent Bank to alter the rate of interest at its sole discretion in the event of major volatility in interest rates during the subsistence of the Loan Agreement. Clause 4(i)(b) further stated that the change of interest rate would be informed to the Appellants vide a notice and it was stated that the Appellant would be deemed to have notice of the change in interest rate if the same is published on the notice board of the Respondent Bank's branch office/newspaper publication is effectuated/a publication on the Respondent Bank's website is effectuated/entries of the interest rate charged in the passbook/ statement of accounts furnished to the Appellants.

4. The Appellants have submitted before this Court that they regularly paid EMIs to the Respondent Bank from June 2009, without any default and at times the EMIs were also reduced. However, the Appellants were never informed about any increase in the rate of interest. It was submitted that the Appellants were under the impression that the interest rate has never been increased as at no point of time, the EMI's were increased. The Appellants have given details of the payment made by them from time to time and have further stated that they had approached the Respondent bank in December 2020 to foreclose the loan account. It was submitted that at such point in time whence they sought to foreclose the Loan Account, upon making an inquiry regarding the outstanding amount due to the Respondent Bank, they were informed that there is an outstanding principal amount of Rs.33 Lakhs due to be paid to foreclose the loan account.

5. It was submitted that the dispute started sometime in December 2020, when the Appellants learnt that the outstanding principal loan amount is still Rs. 33 Lakhs, even though the 15-year loan term was about to conclude in 2024. It was submitted that the Appellants believe that there are some serious irregularities and manipulations with respect to its Loan Account. Further, upon perusing the amortization schedule, which was furnished upon the demand of the Appellants, they learnt that the tenure of the Loan was increased from 180 months to 274 months and the Respondent Bank, unilaterally, without obtaining any consent of the Appellants, increased the repayment schedule. The loan amount due to the Respondent Bank had also increased. On a loan of Rs. 51.5 lakhs, the Respondent Bank's calculation showed that a sum of Rs. 1.34 crores were still due. It was further submitted that the interest payment on a loan of Rs. 51.5 lakh