Karnataka High Court
Muthoot Finance Ltd vs Dr.S. Shobha on 24 July, 2024
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NC: 2024:KHC:29091-DB
WA No. 418 of 2024
C/W WA No. 490 of 2024
WA No. 491 of 2024
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 24TH DAY OF JULY, 2024
PRESENT
THE HON'BLE MR N. V. ANJARIA, CHIEF JUSTICE
AND
THE HON'BLE MR JUSTICE K V ARAVIND
WRIT APPEAL NO. 418 OF 2024 (GM-RES)
C/W
WRIT APPEAL NO. 490 OF 2024 (GM-RES)
WRIT APPEAL NO. 491 OF 2024 (GM-RES)
IN WRIT APPEAL NO. 418 OF 2024 (GM-RES)
BETWEEN:
MUTHOOT FINANCE LTD
NO.651/69, 11TH MAIN, JAYANAGAR
4TH BLOCK, BENGALURU - 560 011.
A COMPANY INCORPORATED UNDER
THE COMPANIES ACT 1956
REP. BY ITS AUTHORIZED OFFICER
Digitally signed
by
SRI AJUMON P GEORGE
SREEDHARAN
BANGALORE
SUSHMA
LAKSHMI
...APPELLANT
Location: HIGH (BY MR. ANISH JOSE ANTONY, ADVOCATE)
COURT OF
KARNATAKA
AND:
DR. S SHOBHA
AGED ABOUT 63 YEARS
W/O LATE DR. S. JANARDHANA MURTHY
NO. 5, 17TH MAIN, MUNESWARA BLOCK
SRINAGAR, BENGALURU - 560 026.
...RESPONDENT
(BY DR. S SHOBHA, RESPONDENT-IN-PERSON)
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NC: 2024:KHC:29091-DB
WA No. 418 of 2024
C/W WA No. 490 of 2024
WA No. 491 of 2024
THIS WRIT APPEAL FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO SET ASIDE THE JUDGMENT
DATED 28.02.2024 PASSED BY THE LEARNED SINGLE JUDGE
OF THIS HON'BLE COURT IN WRIT PETITION No.832/2022
(GM-RES) AND DISMISS THE WRIT PETITION AND GRANT
SUCH OTHER AND FURTHER RELIEFS.
IN WRIT APPEAL NO. 490 OF 2024 (GM-RES)
BETWEEN:
MUTHOOT FINANCE LTD
NO.651/69, 11TH MAIN, JAYANAGAR
4TH BLOCK, BENGALURU - 560 011.
A COMPANY INCORPORATED UNDER
THE COMPANIES ACT 1956
REP. BY ITS AUTHORIZED OFFICER
SRI AJUMON P GEORGE
...APPELLANT
(BY MR. ANISH JOSE ANTONY, ADVOCATE)
AND:
DR. S SHOBHA
AGED ABOUT 63 YEARS
W/O LATE DR. S. JANARDHANA MURTHY
NO. 5, 17TH MAIN, MUNESWARA BLOCK
SRINAGAR, BENGALURU - 560 026.
...RESPONDENT
(BY DR. S SHOBHA, RESPONDENT-IN-PERSON)
THIS WRIT APPEAL FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO SET ASIDE THE JUDGMENT
DATED 28.02.2024 PASSED BY THE LEARNED SINGLE JUDGE
OF THIS HON'BLE COURT IN WRIT PETITION No.898/2022
(GM-RES) AND DISMISS THE WRIT PETITION AND GRANT
SUCH OTHER AND FURTHER RELIEFS.
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NC: 2024:KHC:29091-DB
WA No. 418 of 2024
C/W WA No. 490 of 2024
WA No. 491 of 2024
IN WRIT APPEAL NO. 491 OF 2024 (GM-RES)
BETWEEN:
MUTHOOT FINANCE LTD
NO.651/69, 11TH MAIN, JAYANAGAR
4TH BLOCK, BENGALURU - 560 011.
A COMPANY INCORPORATED UNDER
THE COMPANIES ACT 1956
REP. BY ITS AUTHORIZED OFFICER
SRI AJUMON P GEORGE
...APPELLANT
(BY MR. ANISH JOSE ANTONY, ADVOCATE)
AND:
DR. S SHOBHA
AGED ABOUT 63 YEARS
W/O LATE DR. S. JANARDHANA MURTHY
NO. 5, 17TH MAIN, MUNESWARA BLOCK
SRINAGAR, BENGALURU - 560 026.
...RESPONDENT
(BY DR. S. SHOBHA, RESPONDENT-IN-PERSON)
THIS WRIT APPEAL FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO SET ASIDE THE JUDGMENT
DATED 28.02.2024 PASSED BY THE LEARNED SINGLE JUDGE
OF THIS HON'BLE COURT IN WRIT PETITION No.894/2022
(GM-RES) AND DISMISS THE WRIT PETITION AND GRANT
SUCH OTHER AND FURTHER RELIEFS.
THESE APPEALS, COMING ON FOR ORDERS, THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR N. V. ANJARIA, CHIEF JUSTICE
AND
HON'BLE MR JUSTICE K V ARAVIND
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NC: 2024:KHC:29091-DB
WA No. 418 of 2024
C/W WA No. 490 of 2024
WA No. 491 of 2024
ORAL JUDGMENT
(PER: HON'BLE THE CHIEF JUSTICE MR. JUSTICE N. V. ANJARIA) Heard learned Advocate Mr. Anish Jose Antony for the appellant and learned party-in-person as respondent Smt. Dr. S. Shobha, at length.
2. The present writ appeals, at the instance of the appellant- Company arise out of common judgment and order dated 28.02.2024 passed in three writ petitions.
3. Learned Single Judge granted relief to the petitioner in terms of direction issued in the order. What was prayed in the petitions by the petitioner as respondent - party-in-person herein was to direct and require the respondent - Company to waive the penalty interest and compound interest demanded by the respondent - Muthoot Finance Limited and to reduce the interest rate from 26.87 percent as demanded to 1.17 percent for the gold loan of Rs.4,65,000/-, Rs.15,00,100/- and Rs.4,15,000/- from 20.03.2021 to till date agreed as on the date, that is, 07.10.2020. All three petitions contained similar prayers.
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NC: 2024:KHC:29091-DB WA No. 418 of 2024 C/W WA No. 490 of 2024 WA No. 491 of 2024 3.1 The grievance of the petitioner - party-in-person was in respect of notices received by the petitioner from the respondent- appellant herein Muthoot Finance Limited seeking to recover the unpaid loan amount.
3.2 It appears that the petitioner had availed three gold loans from the appellant-Company, while the one loan was for Rs.15,00,100/-, the other two loans were for Rs.4,65,000/- and Rs.4,15,000/- in respect of which the amounts of Rs.19,52,775/-, Rs.6,00,032/- and Rs.4,18,081/- respectively were due. As the petitioner defaulted in repayment, the Company issued notices to auction the gold. This gave cause of action to the petitioner to file the petitions against the Company.
3.3 It appears that interim orders were passed in the petitions. In the meantime, the auction was held by the Company. It took place and the amount of Rs.24,39,085/- was realized by the sale of gold which was pledged. The said amount came to be deposited with the Registry and is lying with the Registry.
4. Finally, the writ petitions for the reasons recorded by the learned Single Judge culminated into the following operative order, -6- NC: 2024:KHC:29091-DB WA No. 418 of 2024 C/W WA No. 490 of 2024 WA No. 491 of 2024 "(ii) The Registry of this Court shall release the deposit made before this Court in favour of the petitioner within two weeks from the date of receipt of a copy of the order, if not earlier. The receipt of the amount by the petitioner shall be without prejudice to her claim for higher amount of gold articles and it is open to the petitioner to agitate the said claim before the appropriate fora in an appropriate proceeding.
(iii) The financier shall return the gold or the value of the gold pledged by the petitioner in all these cases, bearing in mind the observations made in the course of the order."
5. While the Court examined the appeals and considered the controversy raised in the petitions, a conspicuous aspect surfaced that the petitions were filed against the Company named Muthoot Finance Limited. Admittedly, the respondent - Company is a Company registered under the Companies Act, 1956. It does not answer the definition of "State" within meaning of Article 12 of the Constitution. Nor the transaction of loan by pledging gold between the petitioner and the respondent could be said to be involving any public function or could be said to be in the public realm. Also the Company is not discharging any function which has the trapping of -7- NC: 2024:KHC:29091-DB WA No. 418 of 2024 C/W WA No. 490 of 2024 WA No. 491 of 2024 sovereign function. Respondent - Company is a Private Company registered under the law. It is not a "State". 5.1 Once the above position is clear, the writ petitions would not lie against the respondent - Company. Learned Single Judge could not have, therefore, entertained the petitions on that ground alone.
5.2 Noticeably, learned Single Judge was aware of the said aspect that the respondent - Company did not have the status of the "State" under Article 12 of the Constitution. What was reasoned by the learned Single Judge to entertain the petitions notwithstanding the aforesaid aspect was that, since the financier had acted contrary to some interim order, the petitions merited entertainment. The Court does not endorse to the said view and to make the petitions maintainable on the said ground. 5.3 The following was observed by learned Single Judge, "Since on this fact the financier has acted contrary to the interim order, the petition merited entertainment notwithstanding the fact that the respondent is a private financier and would not completely answer its status as being a State under Article 12 of the Constitution of India who performs public functions and loan is granted under the statutory requirement, as enunciated by Reserve Bank of India. -8-
NC: 2024:KHC:29091-DB WA No. 418 of 2024 C/W WA No. 490 of 2024 WA No. 491 of 2024 On all these factors, the petitions are entertained. The amount of Rs.24,39,085/- is in deposit before this Court."
5.4 Thus, it is clear that though the learned Single Judge was well aware that the respondent - Company did not fall within the purview of the 'state' or its instrumentality under Article 12 of the Constitution, he proceeded to entertain the petitions and passed the order. The party-in-person submitted that it was a COVID-19 time when she approached the High Court by way of petitions, therefore, they ought to have been entertained. The Court is not impressed with the submission.
5.5 The remedy for the petitioner may be to institute the civil suit and to seek appropriate relief. It was further pointed out by learned advocate for the appellant that the loan agreement between the Company and the petitioner contains an arbitration clause. The loan agreement figures on record (page No.88 onwards) which is found to be containing arbitration clause. Paragraph No.6 (page No.100) of the loan agreement is the arbitration clause.
6. In the aforesaid view, when the petitions itself could not have been maintained, learned Single Judge could not have granted -9- NC: 2024:KHC:29091-DB WA No. 418 of 2024 C/W WA No. 490 of 2024 WA No. 491 of 2024 relief by entertaining the petitions, this Court inclined to allow the appeals. The order of learned Single Judge in respect of each petition impugned in the appeals is accordingly set aside. 6.1 Following order shall govern,
(i) It would be open for the respondent - original petitioner to have recourse to civil remedy before the appropriate Court in relation to the claim and grievance which she agitated by filing the writ petitions.
(ii) The appellant-Company is not precluded from taking any recourse in law, if it is of the view that it has any claim against the respondent - party-in-person.
(iii) It is also open to either side to invoke arbitration clause and engage in the process of arbitration to resolve the disputes.
(iv) The amount of Rs.24,39,085/-, which has been realized from sale of the gold pursuant to the auction conducted by the appellant-Company, shall remain deposited with the Registry of this Court.
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NC: 2024:KHC:29091-DB WA No. 418 of 2024 C/W WA No. 490 of 2024 WA No. 491 of 2024
(v) The Registry shall invest the said amount in a Fixed Deposit in a Nationalized Bank initially for a period of one year and renewable.
(vi) Such Fixed Deposit shall continue to renew for a maximum period of three years.
(vii) The amount of interest which may accrue on such deposit shall be receivable by the respondent-petitioner.
(viii) However, the petitioner shall not be entitled to raise any loan on the Fixed Deposit.
(ix) The Fixed Deposit kept shall remain in custody of the Registry of this Court.
(x) It would be open for either party to take recourse of civil remedy or before the arbitration within a period of three months from today.
7. All the three appeals are accordingly allowed and disposed of.
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NC: 2024:KHC:29091-DB WA No. 418 of 2024 C/W WA No. 490 of 2024 WA No. 491 of 2024 In view of disposal of the appeals, the interlocutory applications would not survive and they stand accordingly disposed of.
Sd/-
(N. V. ANJARIA) CHIEF JUSTICE Sd/-
(K V ARAVIND) JUDGE Bss List No.: 1 Sl No.: 17