Location: ORISSA HIGH COURT, CUTTACK

Date: 04-Dec-2025 18:50:39

IN THE HIGH COURT OF ORISSA AT CUTTACK

W.P.(C) No.23022 of 2025

(In the matter of a petition under Articles 226 and 227 of the

Constitution of India, 1950).

Maa Tarini Poultries Pvt. Ltd., …. Petitioner (s)

Ganjam -versus-

Indian Bank, Main Branch, Berhampur …. Opposite Party(s)

& Ors.

Advocates appeared in the case through Hybrid Mode:

For Petitioner (s) : Mr. Meru Sagar Samantaray, Adv.

Mr. Debasish Samal, Adv.

-versus-

For Opp. Party(s) : Mr. Tuna Sahu, Adv. (for Indian Bank),

Mr. R.Roy, Adv. (for RBI).

CORAM:

DR. JUSTICE SANJEEB K PANIGRAHI

DATES OF HEARING:- 19.11.2025 DATE OF JUDGMENT:- 29.11.2025

Dr. Sanjeeb K Panigrahi, J.

1. When discretion hardens into exaction, it ceases to be banking and

becomes expropriation. The levy of pre-payment or foreclosure charges on floating-rate credit facilities, prohibited as it is by the RBI’s binding directives, exemplifies such an impermissible transformation. A bank cannot convert a borrower’s right to mobility into a chargeable

Location: ORISSA HIGH COURT, CUTTACK

Date: 04-Dec-2025 18:50:39 commodity. Any such attempt, as in the present case, stands condemned by statute, policy, and public interest alike. The instant case narrates the ordeal of the petitioner while dealing with the pre-

payment’s charges.

2. The Petitioner has invoked the writ jurisdiction of this Court, assailing the arbitrary and unsustainable demand raised by the Respondent– Bank towards foreclosure charges in respect of Item Loan Account No. 7166340164 and Cash Credit Account No. 7303572317, both availed by the Petitioner in its capacity as an MSME unit. The Petitioner contends that the impugned demand is devoid of contractual authority and contrary to the regulatory framework governing MSME lending, thereby warranting the Court’s intervention. It is the specific case of the Petitioner that the levy of foreclosure charges is dehors the terms of the loan agreement, inconsistent with the directions issued by the Reserve Bank of India, and constitutes an instance of manifest arbitrariness. The Petitioner asserts that, having fully discharged all outstanding dues, no lawful basis exists for the Respondent–Bank to insist on foreclosure charges or to retain the Petitioner’s secured documents. In these circumstances, the Petitioner prays for issuance of an appropriate writ, order, or direction directing the Respondent–Bank to forthwith release the original title deeds, property documents, and all collateral securities deposited by the Petitioner at the time of sanction of the aforesaid loan, the Petitioner’s loan liabilities having admittedly been liquidated in full.

Location: ORISSA HIGH COURT, CUTTACK

Date: 04-Dec-2025 18:50:39 I. FACTUAL MATRIX OF THE CASE

3. The brief facts of the case are as follows:

(i) The Petitioner is an MSME, Maa Tarini Poultries Pvt. Ltd., bearing Registration No. UDYAM-OD-11-0003310, had, with the objective of establishing an agro-based industrial unit, submitted an application before the Indian Bank, Main Branch, Berhampur, seeking sanction of a term loan of ₹1.80 Crores under the MSME Scheme.

(ii)Pursuant to the said application, the Respondent–Bank sanctioned a loan of ₹1.80 Crores in February 2022 under the applicable MSME lending guidelines, subject to creation of a valid mortgage over the Petitioner’s immovable property and furnishing of other collateral securities. Upon completion of the requisite documentation and security formalities, the sanctioned amount was duly disbursed in favour of the Petitioner.

(iii) In terms of the loan agreement, the Petitioner regularly serviced the loan by making timely payments towards both principal and interest. However, following the sanction of the loan, the Petitioner encountered persistent harassment at the hands of Opposite Party No.1/bank. It is specifically alleged that the Bank compelled the Petitioner to procure an SBI Life Personal Insurance policy valued at ₹1.53 lakh per annum. When the Managing Directo