A bank cannot demand additional payments after accepting a settlement amount, emphasizing fairness in contractual obligations.

ORDER :

D.Bharatha Chakravarthy, J

This Writ Petition is filed to direct the respondents to consider the petitioner's representations dated 10.04.2024 and 23.04.2024, close the loan account after accepting the payment made by the petitioner and return the documents mortgaged with the Bank, and pass any further or other orders.

2. The brief factual matrix in which the Writ Petition arises is that the petitioner's husband mortgaged a property and secured a loan of Rs.4,60,000/-. However, it appears that he has not repaid the loan, and the account was classified as a Non-Performing Asset long ago, in 2005. In 2023, when the respondent Bank took up the recovery by issuing a notice to come for pre-litigation settlement through Lok Adalat. Upon receiving the notice, the petitioner approached the Bank. The Bank demanded a total sum of Rs.16,30,000/-, which the petitioner also paid. Subsequently, when the petitioner sought the release of documents and NOC, the Bank communicated that the previously quoted amount, accepted by the Bank, was based on a miscalculation. In addition to the Rs.16,30,000/- paid by the petitioner, she must pay an additional Rs.32,64,518/-. Only upon receiving this amount the Bank will grant the NOC and release the documents. Aggrieved by this, the petitioner has filed the present Writ Petition.

3. Mr. C . K. Chandrasekkar, the learned counsel for the petitioner, submits that the petitioner is a 72-year-old widow, whose husband had only mortgaged the property. The outstanding balance was conveyed through the notice. She approached the bank, and upon being informed by the bank of the amount, as full and final settlement, she paid it. Once this agreement was honoured by the parties, the bank cannot now go back and claim an additional sum of Rs. 32,64,518/-

4. Per contra, M s. Revathi Manivannan, the learned counsel representing the respondents – Bank would argue that the Bank merged with another institution, resulting in a transition from one software system to another. During this migration, specific interest calculations were omitted, and the total outstanding amount was not accurately reflected in the system. Without recognising this issue and mistakenly considering the incorrect amount due, an offer was made and subsequently accepted. Due to the error in the system, the Bank should not be held accountable for receiving the same amount. This constitutes a bona fide mistake, and no valid contract exists. The entire issue is within the realm of contract law. This Court, under Article 226 of the Constitution of India , cannot intervene in this matter. Given that the Bank asserts there was a bona fide mistake and no consensus ad idem, particularly since the amount was misrepresented in the system, this Court should refrain from intervening. If the petitioner desires, she can approach the Civil Court, or if she seeks a complete and final settlement from the Bank, the Bank will also provide terms.

5. I have considered the rival submissions from both sides and examined the material records of the case.

6. At the outset, this considers whether the issue has to be dealt with by this Court in exercise of jurisdiction under Article 226 of the Constitution of India or to relegate the parties to Civil Suit. In this regard, the following facts are considered:

(a) The petitioner is a 72-year-old woman who has lost her husband;

(b) Her husband mortgaged the house in 2004 to obtain a loan of Rs. 4,60,000/-;

(c) The account was classified as NPA from the year 2005 (17.05.2005), and the Bank took no action for recovery until 2023. Of course, the primary responsibility lies with the borrower to approach the Bank and repay the loan;

(d) The demand was made for the first time by utilising the Alternative Dispute Resolution method of Lok Adalat, through the issuance of a pre- litigation settlement notice, seeking the outstanding principal amount of Rs. 4,60,000/-, along with interest totalling Rs. 10,28,686.03/-.

(e) It can be observed that even