Kerala High Court
Hyder C.A vs The Authorised Officer, Indian Bank on 7 August, 2025
Author: Anil K. Narendran
Bench: Anil K. Narendran
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WA No.1579 of 2025 2025:KER:58683
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE ANIL K. NARENDRAN
&
THE HONOURABLE MR. JUSTICE MURALEE KRISHNA S.
THURSDAY, THE 7TH DAY OF AUGUST 2025 / 16TH SRAVANA, 1947
WA NO. 1579 OF 2025
AGAINST THE JUDGMENT DATED 28.05.2025 IN W.P.(C)
NO.46617 OF 2024 OF HIGH COURT OF KERALA
APPELLANTS/ PETITIONERS IN WP:
1 HYDER C.A,AGED 54 YEARS
S/O LATE ABDUL KHADER, BUILDING NO. VIII/152,
THARBIYATH ROAD, NEAR THARBIATH SCHOOL,
MUVATTUPUZHA, ERNAKULAM, PIN - 686671
2 SHABEENA HYDER,AGED 48 YEARS
W/O HYDER C.A, BUILDING NO. VIII/152, THARBIYATH ROAD,
NEAR THARBIATH SCHOOL,
MUVATTUPUZHA, ERNAKULAM, PIN - 686671
[THE ADDRESS PORTION OF THE APPELLANTS IS SUO MOTU
CORRECTED AS PER ORDER DATED 7.8.2025 IN WA NO.1579 OF
2025]
BY ADVS.
SRI.K.N.MUHAMMED THANVEER
SRI.MILLU DANDAPANI
SHRI.DANIC ANTONY
RESPONDENTS/RESPONDENTS IN WP:
1 THE AUTHORISED OFFICER, INDIAN BANK
ZONAL OFFICE, RAM MEENA BUILDING, SA ROAD,
2
WA No.1579 of 2025 2025:KER:58683
ERNAKULAM, PIN - 682016
2 THE CHIEF MANAGER (R&L)
INDIAN BANK ZONAL OFFICE,
RAM MEENA BUILDING, SA ROAD,
ERNAKULAM, PIN - 682016
3 THE BRANCH MANAGER
INDIAN BANK KALAMASSERY BRANCH, A.K.K.M TOWERS,
CUSAT JUNCTION, SOUTH KALAMASSERY, KALAMASSERY,
ERNAKULAM, KERALA, PIN - 682022
4 M/S NOOH EXPORTS
39/6503, A BLOCK, THARAKANDAM ESTATE KURISHUPALLY ROAD,
PERUMANOOR, ERNAKULAM. REPRESENTED BY ITS MANAGING
PARTNER C.M NOORUDIN, PIN - 682015
5 C.M NOORUDIN
AGED 62 YEARS
S/O. MOHAMMED KUNJU, MANAGING PARTNER,
M/S NOOH EXPORTS, THARAKANDAM ESTATE,
KURISHUPALLY ROAD, PERUMANOOR SO,
ERNAKULAM., PIN - 682015
SRI.JITHESH MENON, SC, INDIAN BANK
THIS WRIT APPEAL WAS FINALLY HEARD ON 29.07.2025, THE
COURT ON 7.8.2025 PASSED THE FOLLOWING:
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WA No.1579 of 2025 2025:KER:58683
"CR"
JUDGMENT
Muralee Krishna, J.
The petitioners in W.P.(C)No.46617 of 2024 filed this writ appeal under Section 5(i) of the Kerala High Court Act, 1958, challenging the judgment dated 28.05.2025 passed by the learned Single Judge in that writ petition.
2. According to the appellants, who are husband and wife, they are facing unjust and unfortunate eviction from their residential property due to arbitrary actions initiated by the respondent bank under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, 'SARFAESI Act'). It is pleaded in the writ petition that the 1st appellant, as a partner of the 4th respondent Partnership business, namely, M/s. Nooh Exports Private Ltd. and the 2nd appellant, as guarantor, mortgaged their joint residential property in Sy. No. 899/19 having an extent of 4.25 Ares situated in Velloorkunnam Village, Muvattupuzha Taluk, Ernakulam District, along with a residential building with Door No.8/152 (Old No.5/89A) having 246.36 Sq.meters, in the year 2013, as a part 4 WA No.1579 of 2025 2025:KER:58683 of helping the 4th respondent firm to raise funds for its business operations. On 01.02.2013, an amount of Rs.40 lakhs was sanctioned by the 3rd respondent vide, Overdraft Facility Loan Account, and thereafter, on account of Covid-19 pandemic, i.e., on 22.01.2021, an additional GECLS facility was given for an amount of Rs.10.92 lakhs also to the 4 th respondent. The 3rd respondent on 29.04.2021 declared the aforesaid loan accounts of the 4th respondent firm as a Non-Performing Asset (for short 'NPA') and started to initiate recovery measures under the SARFAESI Act. The 5th respondent, who is a relative of the appellants and the Managing Partner of the 4 th respondent Partnership business, assured the appellants that the loan liability would be cleared in a short span of time. However, by Ext.P1 letter dated 19.12.2024, the bank informed the appellants that they will be taking possession of the mortgaged property on 01.01.2025 at 10.00 a.m. Thereafter, the appellants approached the 1 st respondent with a proposal for full and final One Time Settlement scheme (for short 'OTS') stating that they are ready to settle the loan liability of the partnership firm. The appellants submitted Ext.P2 request dated 23.12.2024 for OTS before the bank. By 5 WA No.1579 of 2025 2025:KER:58683 Ext.P3 letter dated 26.12.2024, the respondent bank permitted the appellants to clear the entire loan liability for an amount of Rs.75 lakhs, provided an amount of Rs.50 lakhs to be paid on or before 27.12.2024 and the balance amount of Rs.25 lakhs on or before 30.12.2024. It is further stated by the 1 st respondent that the mortgaged documents shall be released to the appellants only after the closure of NPA account of M/s. Nooh Exports and Imports Private Ltd. in which the 1st appellant is also one among the Directors. Contending that the conduct of the bank in issuing the Ext.P3 letter directing the appellants to clear the proposed OTS amount within a short span of time was unjust, arbitrary, and illegal, and also contending that the condition that only after the NPA account of M/s. Nooh Exports and Imports Private Ltd. is closed the mortgaged document will be released to the appellants as improper, they approached this Court by filing W.P.(C)No.46617 of 2024, seeking the following reliefs;
"(i) Issue a writ of mandamus or any other writ, order or direction directing the respondents 1 to 3 to give sufficient breathing time to the petitioners to pay the proposed OTS amount covered by Ext.P3, either in lumpsum or in monthly installments.6
WA No.1579 of 2025 2025:KER:58683
(ii) Issue a writ of mandamus or any other appropriate writ, order or direction directing the respondent 1 to 3 not to proceed further with Ext.P1 notice of taking physical possession.
(iii) Issue a writ of mandamus or any other appropriate writ, order or direction directing the respondents 1 to 3 to handover the original title deeds of the mortgaged property immediately to the petitioners upon settling the proposed OTS amount covered by Ext.P3 and consequent closure of loan liability of M/s. Nooh Exports.
(iv) To declare that the respondents 1 to 3 has no authority whatsoever to hold back the mortgage deeds of a property once the loan liability is cleared by the borrower pertaining to the mortgaged property."
3. After hearing both sides and on appreciation of materials on record, the learned Single Judge disposed of the writ petition granting the appellants an option to file a request before the bank to return the documents by substituting the security or such other appropriate measures by treating the borrower, who cleared the dues, in a just and reasonable manner. Paragraphs 5 and 6 of that judgment are extracted hereunder;
"5. It is trite that the contract between the borrower and the bank cannot be rewritten, much less by giving a direction in a writ petition under Article 226 of the Constitution of India. If the petitioners did not agree to any of the conditions 7 WA No.1579 of 2025 2025:KER:58683 imposed by the bank, it was open to the petitioners to approach the bank for variation of the said condition, or not to settle the loan account through the OTS mode as offered by the bank. It is also to be noted that the petitioners are admittedly guarantors to the loan of the 4th respondent, and as such, it is for the bank to decide on the question of change/substitution of the security offered.
6. However, taking note of the fact that the petitioners have already cleared the liability of M/s. Nooh Exports, the bank will consider the request for return of the documents by substituting the security or by such other appropriate measures, by treating the borrower, who cleared the dues, in a just and reasonable manner. A decision in this regard shall be taken by the bank within a month from the date of receipt of a copy of the judgment."
4. Heard the learned counsel for the appellants and the learned Standing Counsel for the respondents 1 to 3. Considering the nature of the appeal, issuance of notice to respondents 4 and 5 is dispensed with.
5. The learned counsel for the appellants would submit that from Ext.P8 order dated 24.03.2025 issued by the bank, it is evident that the appellants closed the account of M/s.Nooh Exports and Imports Private Ltd., the liability of which was guaranteed by the appellants by executing a mortgage deed of 8 WA No.1579 of 2025 2025:KER:58683 their property in question. The condition to retain the mortgaged document till the debt of M/s. Nooh Exports and Imports Private Ltd. is cleared, is unjust, and a general lien provided under Section 171 of the Indian Contract Act cannot be extended to that liability. Therefore, the impugned judgment of the learned Single Judge is liable to be interfered with. The learned counsel relied on the judgments of the High Court of Madras (Madurai Bench) dated 09.08.2017 in W.P.(MD)No.12613/2016 in the matter of M. Shanthi v. Bank of Baroda, Namakkal Branch [2017 SCC Online Mad 37703] and that of the Bombay High Court in Sunil Ratnakar Gutte v. Union Bank of India [AIR 2022 Bom 195] in support of his arguments.
6. On the other hand, the learned Standing Counsel for the respondent bank would submit that this Court, by exercising jurisdiction under Article 226 of the Constitution of India, cannot vary the terms of the Ext.P3 OTS agreement entered into between the bank and the guarantor. Moreover, by Ext.P6, the appellants agreed that the mortgaged document shall not be released till the closure of the NPA account of M/s.Nooh Exports and Imports Private Ltd. The said fact was suppressed by the appellants while 9 WA No.1579 of 2025 2025:KER:58683 filing the writ petition. The learned Standing Counsel for the respondent Bank relied on the judgment of this Court in Idukki District Police Co-operative Society Ltd.No.1-490 v. Rasheed A.K. [2025 (4) KHC 44] in support of his arguments. In reply, the learned counsel for the appellants would submit that the condition in Ext.P3 OTS agreement to retain the mortgaged document till the closure of the NPA account of another company is against public policy and hence not sustainable.
7. The appellants stood as guarantors for the loan of the 4th respondent firm M/s. Nooh Exports and Imports Private Ltd. and executed a mortgage deed in respect of the property mentioned in the writ petition. Subsequently, when the loan was converted into an NPA, the appellants approached the bank with Ext.P2 request for OTS of the loan account. By Ext.P3 communication dated 26.12.2024, the proposal for OTS was made by the bank, and it was accepted by the appellants as evident from Ext.P6 copy of the letter dated 03.03.2025 issued by the 2nd respondent, wherein the signatures of the appellants are also seen entered. One of the conditions in Exts.P3 and P6 is that the mortgaged document by the appellants shall not be released till 10 WA No.1579 of 2025 2025:KER:58683 the closure of the NPA of M/s.Nooh Exports and Imports Private Ltd. Admittedly, the 1st appellant is one of the Directors of M/s.Nooh Exports and Imports Private Ltd. Now, the appellants say that the condition in Ext.P3 to retain their document, after clearing the loan of the 4th respondent, is against public policy. They claim that the general lien of the bank under Section 171 of the Indian Contract Act will not extend to retain the document of the property of the appellants in respect of a loan to which they did not stand as guarantors.
8. In Sunil Ratnakar Gutte [AIR 2022 Bom 195], the Bombay High Court held that the bank is not justified in retaining the document offered as security towards the loan amount after repayment of the entire loan by the borrower, stating the reason that another loan of a company in which the borrower is a Director, and the bank has right under Section 171 of the Contract Act.
9. In M. Shanthi [2017 SCC Online Mad 37703] the High Court of Madras (Madurai Bench) held that the bank cannot exercise right of lien to secure any other liabilities of the mortgagor by retaining the documents of the mortgagor or guarantor, which are deposited with an intention to secure a 11 WA No.1579 of 2025 2025:KER:58683 particular loan transaction.
10. However, while going through the facts of Sunil Ratnakar Gutte [AIR 2022 Bom 195] it is pertinent to note that in that case the loan availed by the borrower was on personal capacity, and there was no consent to retain the document as security of another loan, as done in the instant case. In M. Shanthi [2017 SCC Online Mad 37703] also the bank proceeded to retain the title deed of the borrower when he offered to clear the loan, by relying on Section 171 of the Contract Act. In that case also there was no consent to retain the document as security of another loan. But in the instant case, the 1 st appellant was one of the Directors of the company, and the appellants agreed to retain the documents as security for the loan of the company, as evident from Exts.P3 and P6 documents. Therefore, the judgments of the High Court of Madras (Madurai Bench) and that of the Bombay High Court referred to supra are not applicable to the facts of the instant case.
11. In Idukki District Police Co-operative Society Ltd.No.1-490 [2025 (4) KHC 44], the short question involved was whether the writ court can issue a writ of mandamus 12 WA No.1579 of 2025 2025:KER:58683 compelling the bank/financial institution to extend the benefit of the OTS scheme to the borrowers. In that judgment, a Division Bench of this Court held thus;
"13. The ratio decidendi culled out from the aforesaid decision would clearly indicate that the borrowers availing the benefit of OTS Scheme is bound by the terms and conditions of the Scheme. If the borrower had committed breach of the terms and conditions of the OTS Scheme, the writ court cannot issue a writ of mandamus to the bank/financial institutions to extend the benefit of OTS Scheme. The relationship between the banker and the customer is based on the contract. If the Writ Court interferes in the contractual relationship between the banker and the customer, it would result in rewriting of the contract, which is impermissible by a writ court."
(Underline supplied)
12. In the instant case, the bank did not rely on Section 171 of the Contract Act, to claim the right to retain the document of the appellants. The claim of the bank is based on the condition imposed while sanctioning the OTS facility, which is a special scheme granted at the discretion of the bank, on the basis of a contract between the parties.
13. The appellants accepted the terms of the OTS as evident from Exts.P3 and P6 documents. If the appellants are not 13 WA No.1579 of 2025 2025:KER:58683 agreeable with the terms of OTS, they could have very well withdrawn from the same. Accepting the conditions of Ext.P3 and Ext.P6 OTS, the appellants cleared the loan of the 4 th respondent, as evident from Ext.P8 document. It is thereafter, they filed the writ petition challenging the condition incorporated while extending the benefit of OTS to them, which, according to us, is not legally sustainable.
Having considered the pleadings and materials on record and the submissions made at the Bar, we find no reason to interfere with the impugned judgment of the learned Single Judge.
In the result, this writ appeal stands dismissed.
Sd/-
ANIL K.NARENDRAN, JUDGE Sd/-
MURALEE KRISHNA S., JUDGE MSA