The main legal point established in the judgment is that a writ petition against a private company carrying on banking business as a scheduled bank is not maintainable, and mandamus cannot be issued against a scheduled private limited bank.

S. MANIKUMAR, J.

1. Challenge in this writ petition, is to the notice, dated 20.10.2014, issued under Section 13(2) of the SARFAESI Act, 2002, by issuance of a writ of Certiorarified Mandamus, to quash the same and consequently, sought for a direction to the Federal Bank, to disburse the petitioners, the balance loan amount of Rs.30,56,100/-, as per the Term Loan Agreement, dated 30.01.2014.

2. As the principal borrower, the 1st petitioner has availed the term loan of Rs.50,00,000/- on 30.01.2014, from Federal Bank Ltd., for the purpose of repair and renovation of building. Petitioners 2 and 3, being son and wife, are the co-borrowers. Property has been mortgaged. First installment fell due on 30.05.2014 and that the petitioners were supposed to pay the monthly installment of Rs.1,00,074.03. After satisfaction of the work carried on, as per the quotations submitted by the 1st petitioner, the Bank had initially released a sum of Rs.11,51,900/-, on 08.02.2014 and also released a sum of Rs.6,92,000/- on 07.02.2014, for the purpose of purchasing the building materials and altogether, disbursed a total sum of Rs.19,43,900/-.

3. The petitioners have further contended that the said amount was utilised for renovation of building and purchase of building materials. The petitioner has requested to disburse the remaining loan amount of Rs.30,56,100/-. However, the Bank has refused to disburse the same, in time and therefore, the entire renovation and construction works, could not be continued.

4. The petitioners have further contended that had the Federal Bank complied with the terms and conditions, they would have remitted the first installment, which fell due on 30.05.2014 and continued to make future installments promptly. Having failed to disburse the balance amount of Rs.30,56,100/-, even before the due date of payment of the first installment, ie., on 30.05.2014, the Bank has issued a letter, dated 04.04.2014, stating that payment would not be made. In the said letter, the reason assigned by the Bank was that there was a monetary rival claim, between the 1st petitioner and one Mr. Loganathan, towards starting of guest house, which is subject matter of mortgage and in this regard, the Bank seemed to have received a legal notice from the said Mr. Loganathan, calling upon the petitioner to first settle the issue between themselves, and for that reason, the Bank had failed to fulfil the obligations.

5. It is the further case of the petitioners that the above litigation, between the 1st petitioner and Mr. Loganathan, was pending before the civil Court and it has nothing to do with the Bank, to disbuse the remaining loan amount. In the above said circumstances, payments could not be made. The respondents-Bank has issued a notice, dated 20.10.2014, under Section 13(2) of SARFAESI Act, 2002, demanding the petitioners to pay a sum of Rs.21,23,386/-, as on 30.09.2014, with costs and other charges along with further interest thereon, at the rate of 13.95% per annum, with monthly rests and penal interest, at the rate of 2% per annum, from 30.09.2014, till the date of payment and costs/other charges, within 60 days from the date of receipt of the said notice, failing which, the bank would take recourse, under Section 14 of the SARFAESI Act, 2002. On the above facts and circumstances, the petitioners have filed the instant writ petition, for the relief, as stated supra.

6. Supporting the prayer sought for, Dr. R.Gouri, learned counsel for the petitioners submitted that the Bank has failed to discharge their obligations, by making payment of remaining loan amount of Rs.30,56,100/- and due to such breach, the petitioners could not pay the monthly installments. She further submitted that the reason assigned by the Bank is untenable and the dispute between the petitioner and Mr. Loganathan, is in no way connected to the loan borrowed.

7. Placing reliance on the decision of this Court reported in 2010 (5) CTC 337 [Signal Apparels Pvt. Ltd., v. Canara