Rajesh H. Shukla, J.

The present petition is filed by the petitioners under Article 226 of the Constitution of India for the prayers inter alia that appropriate writ, order or direction may be issued to the respondent - bank to release the charge over the movable and immovable property as stated in the prayer clause and also direct to issue No Due Certificate to the petitioners.

2. The facts of the case briefly summarized are as follows:

2.1 That, the petitioner no.1 is a Private Limited Company incorporated under the provision of the Companies Act, 1956. The petitioner no.2 is a guarantor for the loan granted to the petitioner no.1Company. The respondent - bank had sanctioned cash credit facility for maximum limit of Rs. 700 lacs and term loan facility with maximum limit of Rs. 450 lakhs in favour of the petitioner, however as the petitioner no.1 was not satisfied with the facility and service, it decided to shift loan with Kotak Mahindra Bank, who agreed to provide loan facility with more attractive terms. Therefore on the basis of the sanction letter dated 02.05.2016, the confirmation of the respondent - bank was to be obtained for handing over the property papers upon full and final settlement of outstanding of CC account and the term loan of the petitioner with the respondent - bank. The respondent - bank is said to have declined to issue no due certificate, which led to present petition.

3. Heard learned advocate, Shri Aditya Gupta for the petitioner and learned advocate, Shri S.S. Panesar for the respondent - bank.

4. Learned advocate, Shri Gupta referred to the papers at length and submitted that Kotak Mahindra Bank was to pay up entire outstanding loan amount of the respondent - bank. He submitted that outstanding amount of the respondent bank was to be paid by the Kotal Mahindra Bank pursuant to the understanding between the petitioners and Kotak Mahindra Bank. He referred to the fact that Kotal Mahindra Bank had paid the outstanding amount by RTGC to the respondent - bank on 27.05.2016. However, learned advocate, Shri Gupta submitted that the respondent - bank refused to release the mortgage and clear the charge with ROC and also refused to provide no due certificate. Learned advocate, Shri Gupta has also referred to the communication from the Kotal Mahindra Bank and submitted that as stated in the conditions, for shifting loan facility, no due certificate was required to be obtained from the respondent - bank. Learned advocate, Shri Gupta referred to the communication from the respondent - bank dated 17.08.2016 at Annexure-G and submitted that the bank has replied to the advocate of the petitioner and the respondent - bank has clearly stated that the reason for shifting account of Dena Bank to Kotal Mahindra Bank is not stated, however, the respondent - bank has refused to release the papers and to give no due certificate.

5. Learned advocate, Shri Gupta, therefore, submitted that the respondent - bank which is a "State" within the meaning of Article 12 of the Constitution of India could not have refused once the outstanding dues are agreed to be paid by the Kotal Mahindra Bank. He has also referred to the judgment of the Hon'ble Apex Court in case of Zonal Manager, Central Bank of India Vs. Devi Ispat Limited and Others., (2010) 11 SCC 186 and strenuously submitted that in similar circumstances in case of Zonal Manager, Central Bank of India Vs. Devi Ispat Limited and Others. (2010) 11 SCC 186, the Hon'ble Apex court has issued direction that despite clearance of the outstanding dues of the borrower, if the bank has failed to issue no due certificate or the return of the documents, it would be arbitrary and illegal. He has referred to the observations made by the Hon'ble Apex Court. Learned advocate, Shri Gupta has also referred to other judgments including the judgment of the Hon'ble Kalkatta High Court in a Writ Petition No.411/2007. He has also referred to the judgment of the High Court (Coram : R