Stl Global Ltd. vs Oriental Bank Of Commerce & Ors
2014 Latest Caselaw 6641 Del

             *IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                    Date of decision: 10th December, 2014

+                                  LPA No.763/2014

       STL GLOBAL LTD.                                    ..... Appellant
                    Through:             Mr. T.K. Ganju, Sr. Adv. with Mr.
                                         Manish Kumar, Adv.

                                      Versus

    ORIENTAL BANK OF COMMERCE & ORS. ..... Respondents

Through: Mr. S.S. Lingwal, Adv. for R-2.

CORAM:-

HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

RAJIV SAHAI ENDLAW, J

1. This intra-court appeal impugns the order dated 29th September, 2014

of the learned Single Judge of this Court of dismissal of W.P.(C)

No.7354/2013 preferred by the appellant. We heard the senior counsel for

the appellant at length on admission and reserved judgment.

2. The writ petition from which this appeal arises was filed to:

(i) Direct the respondents No.1 and 2 Oriental Bank of Commerce

and United Bank of India to give to the appellant at the cost of

the appellant the certified copy of the complete file in respect of

the loan granted by the said Banks to the respondent No.3 RPS

Infrastructure Ltd.

(ii) Direct the respondents No.1&2 Banks to ensure the full

compliance of the terms and conditions of the sanction of the

loan.

(iii) Appoint any Government / Bank approved valuer and / or any

Local Commission to visit the land admeasuring 23504 sq. yds.

belonging to the appellant and adjoining land ad-measuring

13219 sq. yds. belonging to M/s Reckon Industries Ltd. (not a

party to the writ petition or to the appeal) situated at 12/6,

Milestone, Mathura Road, Faridabad with respect where to the

appellant and the said M/s Reckon Industries Ltd. had entered

into a Collaboration Agreement dated 22nd May, 2007 for the

respondent No.3 to raise construction thereon of a commercial

complex named as "RPS Oxy Park" and to report of the extent

and valuation of the construction carried out thereon.

(iv) To direct the respondents No.1&2 Banks to secure payment of

excess amount of the loan released to the respondent No.3 in

violation of the terms and conditions of the sanction of the loan,

by taking additional security from the respondent No.3.

(v) to save the land, rights and interest aforesaid of the appellant.

3. It is inter alia the case of the appellant / writ petitioner that:

(a) It had entered into the Collaboration Agreement aforesaid with

the respondent No.3.

(b) As per the terms of the said Collaboration Agreement, the

respondent No.3 was permitted to raise loan of upto Rs.100

crores on security of the land and to utilize the said loan for the

sole purpose of construction on the said land of a commercial

complex (project).

(c) On the basis of the aforesaid, the respondents No.1&2 Banks

sanctioned a loan of Rs.100 crores for the purpose of

construction by the respondent no.3 on the said land and the

appellant deposited the original title deeds in their favour with

respect to the said land in favour of the respondents No.1&2

Banks to secure the said loan.

(d) One of the terms of the sanction of the loan is that the Banks

will disburse the amount required from time to time only when

the respondent No.3 had already invested in the ratio of

100:176 on the project.

(e) Thus the respondents No. 1 and 2 Banks were required to

ensure the worth of the construction carried out on the land

before disbursement of the loan.

(f) The respondent No.3 used the loan for its other projects /

purposes and the Banks disbursed loan much in excess of the

amount spent by the respondent No.3 on the construction.

4. It appears that the learned Single Judge initially entertained the writ

petition; however upon the Banks filing an affidavit to the effect that the

amount of the loan disbursed was in terms of the sanction and not in excess,

the learned Single Judge dismissed the writ petition observing that the

statement of the Banks could not be readily doubted as it is expected that

they would have evaluated the construction at site before making such a

statement and that hence disputed questions of fact arise which could not be

entertained in a writ petition.

5. We have at the outset only enquired from the senior counsel for the

petitioner whether not the appellant, in the garb of this appeal and the writ

petition from which this appeal arises, was seeking either to enforce the

Collaboration Agreement with the respondent No.3 or whether not these

proceedings are intended to arm twist the respondent No.3.

6. The senior counsel for the appellant of course vehemently protested

and contended; i) that the construction on site is only 15% of the total

planned construction; ii) that the banks ought to have disbursed the entire

loan of Rs.100 crores only after satisfying themselves that the respondent

No.3 itself had already invested Rs.176 crores in the project and which the

respondent No.3 has not invested; and, iii) that the officials of the Banks are

in connivance with the respondent No.3.

7. The argument is purported to be matched by producing photographs

of the site showing little construction and by contending that more than 80%

of the construction planned is still left. It is further argued that the learned

Single Judge erred in holding that disputed questions of fact arise. It is

contended that there was / is no disputed question of fact inasmuch as loan

already disbursed by the Banks is a matter of record, the construction carried

out can be easily evaluated and if the same is not found to be in the ratio of

100:176, the appellant / writ petitioner would be entitled to the relief. It is

yet further contended that the respondents No. 1 and 2 Banks have been lax

in safeguarding their interest by disbursing loan without satisfying

themselves of the amounts spent by the respondent No.3 till then in the

project, feeling secure because of holding equitable mortgage of the land of

the appellant is worth much more than Rs.100 crores. Reliance in this

regard is placed on Gunwant Kaur Vs. Municipal Committee, Bhatinda

(1969) 3 SCC 769 where it was observed that what facts are in dispute and

what are admitted could only be determined after an affidavit in reply was

filed - instead the writ petition was dismissed in limine observing that

disputed questions of facts arise. It is further argued that there is no absolute

bar to entertain a petition under Article 226 of the Constitution of India even

where disputed questions of fact are involved and it is only on a finding that

the said disputed questions of fact cannot be appropriately tried in a writ

petition, would the High Court be entitled to dismiss the writ petition on the

said ground.

8. We have further enquired from the senior counsel for the petitioner

whether not, the appellants by claiming the reliefs aforesaid are seeking to

renege from their agreement, of standing as guarantor to the loan sanctioned

and disbursed by the respondents No.1&2 Banks to the respondent No.3 and

as to how the writ petition would lie. It was pointed out that the case of the

appellants at best could be that the Banks having themselves violated the

terms and conditions of sanction on which loan was granted and in

consideration of which terms and conditions the appellant had agreed to

guarantee the said loan, the appellant as guarantor stood discharged. It was

yet further enquired as to how the question whether the respondent Banks

were entitled to recovery of the loan amount from the appellant as guarantor

or were required to seek their remedy against the respondent No.3 only

could be adjudicated in the writ petition.

9. The senior counsel for the appellant continued to highlight the

predicament in which the appellant had been placed i.e. on the one hand

construction on its land being held up and on the other hand it also having

become liable to the respondents No.1&2 Banks, all due to the respondent

No.3.

10. Though, if what is argued is correct, we have our sympathies with the

appellant but the writ petition, if otherwise is not maintainable, would still

not become maintainable on sympathetic grounds.

11. In our opinion, the learned Single Judge was correct in not entertaining

writ petition. Any decision in the writ petition, even if we believe the

agreements between the parties to be clearly stipulating what has been

contended before us, would necessarily entail adjudication of the correctness

of the action of the respondents No.1&2 Banks of disbursing the loan

amount i.e. whether the Banks took the precautions which they were required

to take before disbursing the loan amount and if not to what effect. It would

also require valuation of the work of construction carried out, in accordance

with the parameters prescribed therefor in the contracts. We fail to see as to

how the same does not raise disputed questions of facts. Undoubtedly the

counter affidavits have not been called as yet. However, in every case we do

not have to await the counter affidavits to gauge whether disputed questions

of facts arise. If we were to do that in a pedantic manner, the same would

add considerable unnecessary load to the docket of this Court, to the

prejudice of deserving cases. There has been a sea change in this regard

since the era in which Gunwant Kaur (supra) was pronounced. Here, the

battle lines have already been drawn between the appellant and respondent

No.3; else there was no need for the appellant to approach this Court.

12. Though the Supreme Court in ABL International Ltd. Vs. Export

Credit Guarantee Corporation of India Limited (2005) 10 SCC 495 has

held that merely because some disputed questions of facts arise for

consideration, same cannot be a ground to refuse to entertain a writ petition

in all cases as a matter of rule and that in appropriate cases a writ petition

against a State or an instrumentality of State arising out of contractual

obligation is maintainable but we find the adjudication of disputed question

of facts as arising in the present facts to be entailing issuance of a

commission for local enquiry / measurement / valuation and examination and

cross-examination of witnesses and all of which in our view is not feasible

under Article 226 and is best left to be done in a fact finding fora. Also, the

said disputes are not only contractual in nature but are not with the

respondents No.1 & 2 Banks, even if to be called an instrumentality of State,

only but are in the nature of tripartite disputes between appellant,

respondents No.1&2 Banks and the respondent No.3. The same also, in our

opinion are not to be entertained in writ jurisdiction.

13. The Supreme court, again in Godavari Sugar Mills Ltd. Vs. State of

Maharashtra (2011) 2 SCC 439, on a conspectus of case law on the subject,

held that normally a petition under Article 226 of the Constitution of India

will not be entertained to enforce a civil liability arising out of a breach of a

contract and that the aggrieved party will have to agitate the question in a

Civil Court. Similarly, in Kerala State Electricity Board Vs Kurien E.

Kalathil (2000) 6 SCC 293, it was held that interpretation and

implementation of a clause in a contract cannot be the subject matter of a

writ petition, being in realm of private law and that the fact that one of the

parties to the agreement is a statutory or a public body will not of itself

affect the principle to be applied. It was held that every act of a statutory

body need not necessarily invoke exercise of a statutory power. It was

further held in Godavari Sugar Mills Ltd that only where the lis has a public

law character or involves a question arising out of public law functions on

the part of the State or its authorities, is the access to justice by way of

public law remedy allowed.

14. There is no public law character or element in the dispute of the

petitioner with respondents No. 1 and 2 Banks. The actions of the

respondents No. 1 and 2 Banks with which the appellant is aggrieved are not

public functions. The dispute between the appellant and the respondents

No.1&2 Banks if any and the dispute certainly between the appellant and the

respondent No.3, are purely civil in character. It is not as if the respondents

No.1&2 Banks are alleged to have acted in contravention of any guideline of

the Reserve Bank of India with which they are bound. The disbursement /

sanction of loan by the respondent Banks to the respondent No.3 and of

which loan the appellant stood as guarantor was purely a private

arrangement, not in discharge of a public duties / functions of the

respondents No.1&2 Banks. The disputes arising therefrom thus cannot be

adjudicated upon in a writ petition. As aforesaid, if at all the appellant is

aggrieved from the disbursement by the respondents No.1&2 Banks of the

loan amount to the respondent No.3 in excess of that provided under the

terms of sanction and on the basis whereof the appellants stood guarantor,

the only remedy of the appellant is to notify the respondents No.1&2 Banks

that on its doing so, the appellant stands discharged from its liability as a

guarantor.

15. We also fail to see as to what action the respondents No.1&2 Banks

also can now take against the respondent No.3, even if they were to be of the

opinion that the respondent No.3 has wrongly got disbursed loan amount in

excess of its entitlement. As aforesaid, the entire loan amount is stated to

have been already disbursed. The appellant wants us to issue a direction to

the respondents No.1&2 Banks to seek security for the excess amount

withdrawn by the respondent No.3 from the respondents No.1&2 Banks.

We fail to see as to how in this jurisdiction such a direction also can be

issued. The only remedy of the respondents No.1&2 Banks, even if what the

appellants says is to be true, would be to recall the loan.

16. We are therefore of the view that the writ petition as well as this

appeal is totally misconceived. Accordingly, the appeal is dismissed.

However since the appellant claims to be already in the predicament

aforesaid for reasons not attributable to it, we are refraining from burdening

the appellant with costs of these proceedings.

RAJIV SAHAI ENDLAW, J

CHIEF JUSTICE th DECEMBER 10 , 2014 „gsr‟