IN THE HIGH COURT AT CALCUTTA

(Constitutional Writ Jurisdiction)

APPELLATE SIDE

Present:

The Hon’ble Justice Krishna Rao

WPA No. 15702 of 2025

Khatu Shyam Trading Co.

Versus

The Union of India & Ors.

Mr. Atarup Banerjee

Mr. Arindam Sen Mr. Saurav Basu

Mr. Sumik Biswas

Ms. Payel Maji

Mr. Rajdeep Pramanik

.....For the petitioner.

Ms. Suchismita Ghosh

.....For the respondent nos. 5 & 6.

Mr. R.N. Pyne

Mr. Arijeet D. Mullick

Mr. Subhasis Pyne

.....For the respondent no. 7.

Hearing Concluded On : 08.12.2025 Judgment on : 07.01.2026 Krishna Rao, J

1. The petitioner has filed the present writ application praying for a direction upon the respondent no.7 to refund an amount of Rs. 7,82,282.02/- to the petitioner as was taken by the respondent no.7 illegally as a foreclosure charge of Term Loan and Overdraft Credit Loan of the petitioner.

2. The petitioner has availed Term Loan with a sanctioned amount of Rs.

2,38,00,000/- and Over Draft Credit Loan with a sanctioned amount of Rs.5,00,00,000/- out of which only Rs.4,00,00,000/- has been released and remaining amount of Rs.1,00,00,000/- has not been released without assigning any reasons. On 29th January, 2025, the petitioner has submitted a request to the bank for foreclosure of the Term Loan account followed by several reminders. The Bank by an e-mail directed the petitioner to deposit an amount of Rs. 7,82,282.02 being the charges for foreclosure of the Term Loan account of the petitioner.

3. The petitioner has also submitted a request for foreclosure of the Over Draft Facilities. On receipt of the request of the petitioner, the bank has demanded an amount of Rs. 17,70,000/- being 3% foreclosure charges of the original sanctioned amount of Rs. 5,00,00,000/-.

4. Mr. Atarup Banerjee, Learned Advocate representing the petitioner submits that the petitioner is a proprietorship firm registered under the Micro, Small and Medium Enterprises (MSME) having registration No. UDYAM-WB-14-0010673 and as per the circular issued by the Reserve Bank of India dated 7th May, 2014, the petitioner is not liable to pay any foreclosure charges to the bank but the bank has illegally charged an amount of Rs. 7,82,282.02 and Rs. 17,70,000/- for foreclosure of the Term Loan and Over Draft Credit Loan. The petitioner has made complaint to the Reserve Bank of India Ombudsman but no decision was taken by the Reserve Bank of India Ombudsman.

5. Mr. Banerjee relied upon the judgment in the case of Devendra Surana Vs. Bank of Baroda & Ors., dated 12th December, 2018 and submits that the Coordinate Bench of this Court held that the Reserve Bank of India, when it is advising the banks, by its circular dated 7th May, 2014, not to charge any foreclosure charges/ prepayment penalties on all floating rate term loans sanctioned to individual borrowers, with immediate effect, it is not distinguishing between an individual borrower, who has obtained the term loan for business exploitation or otherwise.

6. Mr. Banerjee submits that the case of the petitioner is covered under the circular dated 7th May, 2014, issued by the Reserve Bank of India but the respondent bank has illegally taken the foreclosure charges from the petitioner.

7. Mr. R.N. Pyne, Learned Advocate representing the respondent no. 7 submits that the petitioner is Medium Enterprises but the circular is applicable only for the Small Enterprises.

8. Mr. Pyne relied upon the Reserve Bank of India (Pre-payment Charges on Loans) Directions, 2025 and submits that by the said directions, all the previous circulars have been repealed and the petitioner cannot claim any benefits of circular dated 7th May, 2014.

9. Ms. Suchismita Ghosh, Learned Advocate representing the respondent nos. 5 and 6 submits that on receipt of the complaint of the petitioner, the Bank Ombudsman has called for report from the bank and on receipt of report from the bank, the petitioner has submitted reply and after considering the same, the Reserve Bank of India Ombudsman passed an order on 23rd April, 2025, holding that the p