Point of Law: Agreement by mistake of fact - As the parties were under a mutual mistake with respect to their respective rights, the agreement is liable to be set aside as having been proceeded upon a common mistake.

JUDGMENT :

N. NAGARESH, J.

1. The petitioner, who is running a proprietary business in construction, hardware and paint materials, has filed this writ petition seeking to command respondents 1 to 3 to immediately release loan papers, security title deeds and other documents obtained towards the loan covered by Ext.P3 settlement. Incidental reliefs are also sought for.

2. The petitioner states that the 2nd respondent-Manager, Syndicate Bank, Sasthamangalam Branch provided a term loan facility of Rs. 90 lakhs to the petitioner on 30.10.2006. SARFAESI proceedings were initiated by the Bank against the petitioner. The petitioner filed WP (C) No. 28398/2011 when Section 14 was invoked. This Court granted 10 EMIs to discharge the liability of about Rs. 100 lakhs. Though the petitioner made substantial remittances, on making a default, the Bank recalled the One Time Settlement facility on 18.03.2017.

3. The Bank then filed O.A. No. 440/2017 in the DRT, Ernakulam for realisation of dues. The petitioner would submit that during the interregnum, he had brought down the outstanding to Rs. 25 lakhs even as per the bank statement. But, the Bank brought up the amount to Rs. 55 lakhs soon. By 18.03.2017, when OTS offer was withdrawn by the Bank, the petitioner had remitted more than Rs. 100 lakhs.

4. The Bank again permitted the petitioner to settle the liability for a total amount of Rs. 35,50,000/- as per Ext.P3 dated 15.01.2020. Towards this settlement, the petitioner paid Rs. 5,50,000/- on 15.01.2020 itself as is evident from Ext.P4. Thereafter, Rs. 18 lakhs was paid on 11.03.2020 and Rs. 7.5 lakhs on 20.03.2020. Another Rs. 4,50,000/- was transferred to the Bank on 20.03.2020.

5. Thus, the entire OTS amount of Rs. 35,50,000/- was paid. Now, the Bank is not returning to the petitioner the title documents in respect of the property offered by the petitioner on a specious plea that in view of RBI directions, the Bank cannot accept the OTS agreed upon. The respondents are therefore compellable by appropriate orders of this Court to return the title documents to the petitioner.

6. Respondents 1 to 3 filed counter affidavit and opposed the writ petition. Respondents 1 to 3 stated that the account of the petitioner became NPA on 31.12.2008. In WP (C) No. 30040/2009, this Court permitted the petitioner to clear the outstanding amount in five equal monthly instalments. The petitioner failed to pay. The petitioner then filed WP (C) No. 28398/2011. This Court granted time to the petitioner to pay the balance amounts due, in 10 equal monthly instalments. The petitioner still failed to clear the loan.

7. Respondents 1 to 3 denied the statement of the petitioner that Rs. 28,86,562/- was paid on 30.03.2015. According to the respondents, the entry shown in their statement of accounts is a mistake. The petitioner paid only Rs. 65,00,000/- by 27.12.2014. Thus, as against Rs. 100 lakhs, the petitioner paid only Rs. 65 lakhs within the time limit prescribed for OTS. The OTS therefore stood terminated.

8. Thereafter, the petitioner submitted Ext.R1(d) offer dated 14.01.2020 to settle the account for Rs. 35,50,000/-. The offer was addressed to the Regional Manager. At that time, the loan outstanding was Rs. 1,06,22,805.19. Market value of the secured property would come to Rs. 2,19,84,000/-. Therefore, the Regional Manager could not have settled the account of the petitioner under OTS for Rs. 35,50,000/-. It could have been settled only by the next higher authority, as per RBI stipulations. Ext.P3 settlement is without any authority, contended respondents 1 to 3.

9. The counsel appearing for the additional 4th respondent, who is the mother of the petitioner, argued that the Bank being ‘State’ cannot take a defence that the One Time Settlement as per Ext.P3 is a mistake. The principles of promissory estoppel would come into play, against the Bank.

10. Heard the learned counsel for the petitioner, the learned Standing Counsel appearing for the Bank and the learned Senior