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2022 Supreme(Online)(KER) 22495
HIGH COURT OF KERALA
V. G. Arun, J
APC ALUMINUM PVT LTD – Appellant
Versus
UNION OF INDIA – Respondent
WP(C)/20381/2022
SAIBY JOSE KIDANGOOR, BENNY ANTONY, PAREL PRAMITHA AUGUSTINE, IRINE MATHEW, ADITHYA KIRAN V.E, ANJALI NAIR, NAAIL FATHIMA ABDULLA, MANU S., SUNIL SHANKER, MADHU RADHAKRISHNAN, VIDYA GANGADHARAN
The court reinforced that writ jurisdiction should not intervene in matters where statutory appellate remedies exist, adhering to the principles of judicial efficiency and respect for institutional processes.
Headnote:
Banking - Writ Jurisdiction - Ombudsman Scheme - 2021 - The court addressed the issue of maintainability of the writ petition challenging the Ombudsman's decisions and reaffirmed the need to exhaust appellate remedies under the framework of the Reserve Bank of India's guidelines.
Fact of the Case:
The petitioner company sought to transfer its cash credit facility from one bank to another and challenged the first bank's demand for pre-closure charges, which was deemed excessive. The petitioner had previously approached the Banking Ombudsman, leading to an award that the bank later contested.
Finding of the Court:
The court upheld the maintainability issue raised and dismissed the writ petition, indicating that issues regarding the Ombudsman’s award and the bank’s compliance could be raised through proper appellate channels.
Issues: The primary issue was whether the writ petition challenging the Banking Ombudsman's award was maintainable given that the petitioner had alternative appellate remedies under the Ombudsman Scheme.
Ratio Decidendi: The court concluded that as the petitioner had access to appellate remedies, it was inappropriate for the court to interfere at that stage, thus emphasizing the efficiency of existing mechanisms for dispute resolution.
Final Decision: Writ petition dismissed, maintaining judicial decorum and respect for prescribed appellate procedures.
JUDGMENT
Dated this the 25th day of July, 2022 The petitioner Company had availed a cash credit facility from the 6th respondent Bank by offering immovable properties as collateral security. The loan was sanctioned under Ext.P1 loan sanction/renewal letter dated 18.02.2020. As the interest rate and other charges of the 6th respondent was found to be higher than other banks, the petitioner sent Ext.P2, requesting to rework interest and other charges. The 6th respondent refused to accede to the petitioner's request. Hence, petitioner approached the 7th respondent Bank for taking over the cash credit facility. The 7th respondent expressed willingness to take over the cash credit facility. Thereupon, petitioner issued Ext.P3 letter to the 6th respondent on 06.02.2021, stating that the entire amount outstanding in its account is being cleared through the 7th respondent. The amount outstanding to the 6th respondent was paid by the 7th respondent Bank and thereafter, the petitioner demanded the 6th respondent to transfer the collateral securities in favour of the 7th respondent. To the petitioner’s dismay, the 6th respondent demanded Rs.45 lakhs towards preclosure charges and processing fees. As the demand was contrary to the conditions in the loan sanction letter and Circulars of the RBI, petitioner approached the 5th respondent Banking Ombudsman with Ext.P7 complaint. Simultaneously, the petitioner preferred W.P.(C) No.12205 of 2021 before this Court challenging the untenable stand taken by the respondent bank. On being informed that the petitioner had approached this Court, 5th respondent closed Ext.P7 complaint. Thereafter, the writ petition was disposed of vide Ext.P9 judgment, directing the Ombudsman to reopen the complaint and take a decision on merits after hearing the parties. Accordingly, the 5th respondent heard the parties, considered the documents and passed Ext.P10 award. The bank’s argument that the complainant company had not produced documents prior to the validity of the sanction order and continued to operate the renewed limits after expiry, was not accepted. As the issue was pending before the Managing Director of the Bank, the Ombudsman directed the competent authority in the bank to take a decision on petitioner’s representation, after considering the facts and circumstances of the issue. The levy of penal interest was held to be wrong and the interest already levied was directed to be refunded. It was also observed that the bank may release either whole or part of the title deeds on a proportionate basis, depending on the dues realisable. After the award, the representation filed by the petitioner, with regard to the pre-closure charges, was rejected by the 6th respondent under Ext.P11 and P11(a). Faced with such a situation, the petitioner went back to the Ombudsman, complaining about the bank’s refusal to abide by the terms of Ext.P10 award. The second complaint was rejected by the Ombudsman under Ext.P14 finding it to be not maintainable under Clause 16(1)(a) r/w Clause 10(2)(b)(i) of the Reserve Bank-Integrated Ombudsman Scheme, 2021. In the meanwhile, the petitioner preferred an appeal under Clause 17 before the 4th respondent. This writ petition is filed challenging Ext.P10 order and to declare Ext.P11 order passed by the 6th respondent to be bad in law and against the guidelines issued by the Reserve Bank of India on Fair Practices Code for Lenders.
2. When the writ petition was taken up for consideration, Adv.Sunil Shankar, learned Standing counsel for the first respondent Bank, insisted to hear the question of maintainability first. Accordingly, maintainability is considered as the preliminary issue.
3. Adv.Saiby Jose, learned Counsel appearing for the petitioner, contended that the Ombudsman had committed an illegality in relegating the petitioner to the Managing Director of the 6th respondent, after being convinced that the demand for preclosure charges is illegal. The patent illegality committed by th
