Raghav Buildcon Private Limited vs Union Of India & Ors
2016 Latest Caselaw 4379 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                          Date of decision: 7th July, 2016.

+      W.P.(C) 385/2016 & CM No.1576/2016 (for interim directions)

       RAGHAV BUILDCON PRIVATE LIMITED            ..... Petitioner
                   Through: Mr. Arvind Nigam, Sr. Adv. with Mr.
                            Hrishikesh Baruah & Mr. Pranav Jain,
                            Advs.

                                  Versus

       UNION OF INDIA & ORS                             ..... Respondents

                    Through:         Mr. Akshay Makhija, CGSC for R-1.
                                     Mr. H.S. Parihar & Mr. K.S. Parihar,
                                     Advs. for R-2.
                                     Mr. Sanjay Bajaj & Mr. Ajay Bahl,
                                     Advs. for R-3.

                                   AND

+              W.P.(C) 437/2016 & CM No.1746/2016 (for stay)

       MASCOT BUILDCON PRIVATE LIMITED            ..... Petitioner
                   Through: Mr. Arvind Nigam, Sr. Adv. with Mr.
                            Hrishikesh Baruah & Mr. Pranav Jain,
                            Advs.

                                  Versus

       UNION OF INDIA & ORS                            ..... Respondents
                    Through:         Mr. Akshay Makhija, CGSC for R-1.
                                     Mr. H.S. Parihar & Mr. K.S. Parihar,
                                     Advs. for R-2.
                                     Mr. Sanjay Bajaj & Mr. Ajay Bahl,
                                     Advs. for R-3.



 CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1. W.P.(C) No.385/2016 (i) seeks mandamus to the respondent No.3

Punjab and Sind Bank to refund / revert the illegal, unreasonable and

arbitrary debits made in the Term Loan Account bearing

No.03881200055026 of the petitioner with the respondent No.3 Bank and to

credit the same to Current Account bearing No.0388110043358 maintained

by the petitioner with the Nehru Palace, New Delhi branch of the respondent

No.3 Bank; (ii) seeks mandamus to the respondent No.3 Bank to close the

term loan account aforesaid of the petitioner and to release all the securities

mortgaged therein and as detailed in the petition; (iii) seeks a mandamus to

the respondent No.1 Union of India (UOI) for conducting an enquiry in the

matter and to pass appropriate direction / remedial measures in terms of

Section 8 of the Banking Companies (Acquisition and Transfer of

Undertakings) Act, 1980 (Banking Acquisition Act); and, (iv) seeks

mandamus to the respondent No.2 Reserve Bank of India (RBI) for

conducting enquiry and thereafter to pass appropriate directions in terms of

the Banking Regulation Act, 1949, particularly Section 47A thereof against

the respondent No.3 Bank for violating the various Circulars issued by the

respondent No.2 RBI from time to time.

2. W.P.(C) No.385/2016 came up first before this Court on 15 th January,

2016, when on the statement of the counsel for the petitioner that the said

petition had in fact been filed alongwith another petition which had not got

listed till then, the same was adjourned to 19th January, 2016.

3. W.P.(C) No.437/2016 (i) seeks a mandamus to the respondent No.3

Bank to remove / rectify the illegal, unreasonable and arbitrary debits made

in the accounts and the illegal, unreasonable and arbitrary demands detailed

in paragraph 9(LXX) of the said petition and the statement of account dated

15th December, 2015 Annexure P-4 to the petition in the Over Draft (OD)

Limit account maintained by the petitioner with the respondent No.3 Bank;

(ii) seeks a mandamus to the respondent No.1 UOI to conduct an enquiry and

pass appropriate directions in terms of Section 8 of the Banking Acquisition

Act; and, (iii) seeks a mandamus to the respondent No.2 RBI for conducting

enquiry and passing directions against the respondent No.3 Bank in terms of

provisions of the Banking Regulation Act for violation of the Circulars of the

respondent No.2 RBI.

4. W.P.(C) No.437/2016 came up first before this Court on 18 th January,

2016, when the same was also posted to 19th January, 2016.

5. Being prima facie of the opinion that the writ petitions were not

maintainable in view of the alternative remedy available under the civil laws

for the reliefs claimed, the senior counsel for both the petitioners (the two

petitioners were stated to be sister concerns) and the counsels for the

respondents appearing on advance notice were heard in extenso on the said

aspect on 19th January, 2016 and order reserved.

6. It is the case of the petitioner in W.P.(C) No.385/2016:

(i) that the petitioner, engaged in the business of development of

real estate projects, to finance part of its activities had in June, 2008

availed of a term loan of Rs.20 crores from the respondent No.3 Bank;

the sanction letter dated 20th June, 2008 contained all the terms and

conditions which were to govern the contractual relationship between

the petitioner and the respondent No.3 Bank;

(ii) that it was specifically provided that the rate of interest would

be 15.20% per annum on monthly basis and the upfront fee would be

as per the Bank Guidelines;

(iii) that there was no mention of any provision for obtaining

external credit rating;

(iv) that the petitioner and its Directors were also made to sign a

number of documents but copies whereof not given to the petitioner

inspite of demand;

(v) that the petitioner provided securities including of immovable

property and corporate guarantee of petitioner in W.P.(C)

No.437/2016 for re-payment of the said term loan;

(vi) that upfront fee @ 2% to the tune of Rs.44,94,400/- was debited

on 16th July, 2008;

(vii) that as per the sanction letter, the total interest to be charged

was Basic Prime Lending Rate (BPLR) + 0.5% + 0.70%;

(viii) that on certain occasions in the financial year 2008-2009, "the

respondent No.3 Bank besides charging extra processing / upfront fee

also charged interest at a rate higher than that stipulated in the sanction

letter";

(ix) that from the financial year 2008-2009, the petitioner made

several requests to the respondent No.3 Bank to rectify the amount of

interest charged;

(x) that the representations dated 16th January, 2010 and 23rd

March, 2010 for refund of excess interest amounting to Rs.14,08,714/-

charged in the account were made;

(xi) that vide sanction letter dated 9th March, 2010, additional term

loan of Rs.5 crores was sanctioned;

(xii) that another amount of Rs.11,03,000/- was erroneously debited

from the account of the petitioner on 23rd March, 2010 as processing

fee, without there being any provision therefor in the sanction letter;

(xiii) that another representation dated 30th March, 2012 was made to

the respondent No.3 Bank to reduce the rate of interest to 13% as had

been assured;

(xiv) that vide letter dated 31st March, 2012, the respondent No.3

Bank sanctioned the review of the aforesaid two term loans and the

remaining balance at that time in the first term loan was Rs.15.78

crores and the second term loan was Rs.3.84 crores;

(xv) that in the sanction letter dated 31st March, 2012 supra for the

first time a provision was made for obtaining an external credit rating

and for imposing penalty;

(xvi) that the petitioner approached the external credit rating agency

CRISIL and whose rating was provided to the respondent No.3 Bank;

(xvii) that after the sanction letter dated 31st March, 2012, further

sums of Rs.11,00,350/- and Rs.11,23,000/- were debited from the

account of the petitioner as upfront fee / processing fee on 7th May,

2012 and 26th May, 2012, without any rationale therefor and without

informing the petitioner;

(xviii) that the aforesaid amount could not have been debited in terms

of the Fair Practice Code (FPC) issued by the respondent No.2 RBI;

(xix) that the respondent No.3 Bank vide letter dated 7 th June, 2013

proposed to debit penal interest of Rs.25,29,798/- from the account of

the petitioner for want of external agency rating; the petitioner

immediately drew attention to the report submitted of CRISIL;

however the respondent No.3 Bank nevertheless charged penal interest

to the account of the petitioner;

(xx) that the respondent No.3 Bank in contravention of sanction

letters and banking practices created a charge on the properties of the

petitioner which was much higher than the value of the loan availed,

again in violation of bank‟s FPC;

(xxi) that the term loans were again reviewed on 28th September,

2013 and in pursuance whereto a further sum of Rs.5,46,912/- was

debited from the account of the petitioner on 29th January, 2014, even

though there was no provision thereof;

(xxii) that in this manner, a total excess amount of Rs.85.75 lakhs had

been erroneously debited from the account of the petitioner and

representation dated 3rd March, 2014 was made in respect thereof;

(xxiii) that the respondent No.3 Bank as a counter-blast claimed that

there were irregularities of Rs.1.378 crores in the first term loan and of

Rs.34.14 lakhs in the second term loan account;

(xxiv) that the respondent No.3 Bank inspite of repeated reminders of

the petitioner refused to reconcile the account;

(xxv) that the petitioner submitted a detailed working of the actual

interest chargeable in its account and on scrutiny whereof the

respondent No.3 Bank admitted that it had overcharged interest in the

account of the sister concern of the petitioner to the tune of

Rs.72,41,999/-;

(xxvi) that vide letter dated 11th March, 2015, the petitioner

confirmed the balance of Rs.23,20,012.50 paise on as 31 st December,

2014; this confirmation was made subject to the pending reversal of

the excess amounts deducted;

(xxvii) that upon the failure of the respondent No.3 Bank to reconcile

the account, the petitioner and its sister concern approached the

Banking Ombudsman;

(xxviii) that the respondent No.3 Bank as a counter-blast started

issuing letters raising unauthorised, illegal, arbitrary and unreasonable

debit entries from the sister concern of the petitioner;

(xxix) that the Banking Ombudsman in the meeting held on 23 rd July,

2015 directed both the parties to sit together and reconcile the claims;

(xxx) that in terms thereof, the petitioner did a joint reconciliation on

the point of interest charges on 24th July, 2015 and 27th July, 2015 and

found excess interest to the tune of Rs.48,59,897/- and informed the

respondent No.3 Bank of the same vide its letter dated 27th July, 2015;

(xxxi) that on 23rd September, 2015, the Banking Ombudsman

directed both the parties to prepare a document reflecting agreed areas

and disagreed areas; though the respondent No.3 Bank admitted total

excess of Rs.43,49,745.79 paise was charged as interest but did not

agree to reverse the excess processing fee charged and the additional

interest charged on account of alleged non-submission of external

credit rating;

(xxxii) that after execution of the joint statement, issues were

examined by Banking Ombudsman and order reserved; though no

order was received but the Banking Ombudsman vide letter dated 8th

December, 2015 informed the petitioner that no deficiency in service

rendered by the respondent No.3 Bank had been found and the case

was closed;

(xxxiii) that from June, 2008, the respondent No.3 Bank has charged

excess interest in the sum of Rs.76,35,608/- to the account of the

petitioner;

(xxxiv) that the respondent No.3 Bank by way of letter dated 27th

August, 2015 accepted that Rs.43,49,745.79 paise was excess interest

charged;

(xxxv) that according to the petitioner, the petitioner is entitled to

refund of the entire excess amount charged i.e. Rs.48,59,897/- along

with compound interest as well as damages;

(xxxvi) that there is no policy of the respondent No.3 Bank to impose

the said debit entries which are imposed as per the whims and fancies

of the officials of the respondent No.3 Bank;

(xxxvii) that the debit of Rs.5,84,244/- on account of non-submission

of external credit entries is also bad;

(xxxviii) that the respondent No.3 Bank on 9 th November, 2015

credited the Current Account of the petitioner with Rs.53,65,302.99

paise without any intimation or particulars;

(xxxix) that even after the aforesaid credit, an amount of

Rs.51,45,017.48 paise remains payable to the petitioner and which the

petitioner is entitled to recover from the respondent No.3 Bank.

7. It is the case of the petitioner in W.P.(C) No.437/2016:

(a) that a OD limit of Rs.19 crores was sanctioned by the

respondent No.3 Bank in its favour on 28th February, 2008;

(b) that the petitioner had furnished securities for re-payment

thereof;

(c) that though there was no mention in the sanction letter of

payment of upfront fee / processing fee but a sum of Rs.6,40,500/-

was debited thereto on 31st March, 2008;

(d) that the said OD limit was renewed after 12 months and

whereupon a sum of Rs.6,28,710/- was deducted from the account of

the petitioner towards upfront fee / processing fee;

(e) that the aforesaid deductions were contrary to the FPC of the

respondent No.3 Bank;

(f) that in the financial year 2008-2009, the respondent No.3 Bank

entered incorrect entries in the computer system resulting in a higher

rate of interest being charged to the petitioner;

(g) that the requests of the petitioner from the financial year 2008-

2009 for rectification of the amount of the interest charged did not

bear any fruit;

(h) that a Chartered Accountant engaged by the petitioner though at

the instance of the respondent No.3 Bank found a sum of

Rs.31,90,565/- to have been charged extra but no action was taken

thereon;

(i) that the OD limit was on 2nd February, 2010 enhanced from

Rs.19 crores to 25 crores and again processing fee of Rs.13,78,750/-

was charged without any basis;

(j) that OD limit was renewed every 12 months, further amounts of

Rs.14,04,500/- and 42,93,750/- were illegally debited to the account of

the petitioner;

(k) that the representations of the petitioner also did not bear any

fruit.

(Need to record any further details of the grievances of the

petitioner in this judgment is not felt and suffice it is to state that

according to the petitioner wrongful debits of Rs.97,41,584/- and

Rs.66,98,630.14 paise have been made).

8. The purport of giving all the particulars qua W.P.(C) No.385/2016 and

some of the particulars qua W.P.(C) No.437/2016 is to show the flavour of

the grievances of the petitioners against the respondent No.3 Bank and it was

in view thereof that I was prima facie of the opinion that the question,

whether the debits by the respondent No.3 Bank in the account of the

petitioners are wrongful or not i.e. in violation of the contract between the

petitioners and the respondent No.3 Bank and / or in violation of any binding

Circulars of the respondent No.2 RBI could not conveniently be resolved in

jurisdiction under Article 226 of the Constitution of India and the remedy if

any of the petitioners was to either avail of the civil remedies in this regard

or in the event of the respondent No.3 Bank initiating any proceedings for

recovery thereof from the petitioners, contest the said claim including on the

grounds as raised in these petitions. It was also felt that the claim in the

petitions is a money claim and / or a claim for declaration that the monies

which according to the respondent No.3 Bank are due from the petitioners

are in fact not due. It was yet further felt that if this Court were to start

entertaining petitions as the present one, the pendency of the present

petitions may come in the way of the respondent No.3 Bank initiating

proceedings under the Recovery of Debts Due to Banks and Financial

Institutions Act, 1993 (DRT Act) and the Securitisation and Reconstruction

of Financial Assets and Enforcement of Security Interest Act, 2002

(SARFAESI Act) for realisation of its dues, thereby frustrating the spirit and

provisions of the said two legislations. It was yet further felt that unless such

petitions are nipped in the bud, even the pendency thereof was fatal to the

larger public interest in maintaining healthy banks, as the petitions of the

present nature are designed to be obstacles in early recovery by the banks of

their dues and for which purpose the legislations aforesaid are devised. It

was yet further felt that to start entertaining disputes as the present one where

money claims made by a bank against its customers are disputed on the

ground of being contrary to the contract of the bank with its customers and /

or the law would amount to converting the extraordinary jurisdiction vested

in this Court under Article 226 into ordinary civil jurisdiction and would

come in the way of this Court in exercise of its extraordinary jurisdiction

expeditiously dealing with the deserving matters.

9. The senior counsel for the petitioners argued with reference to the

paper book of W.P.(C) No.385/2016 and drew attention to:

(i) letter dated 27th August, 2015 of the respondent No3 Bank to

the petitioner at page 206 of the paper book to contend that the

respondent No.3 Bank therein on recalculation found excess interest to

have been charged and which was rectified;

(ii) letter dated 20th May, 2015 of the office of the Banking

Ombudsman closing the case of the petitioner;

(iii) para 19 of ABL International Ltd. Vs. Export Credit

Guarantee Corporation of India Ltd. (2004) 3 SCC 553 laying down

that merely because one of the parties to the litigation raises a dispute

in regard to the facts of the case does not require the Court

entertaining a petition under Article 226 of the Constitution of India to

relegate the parties to a suit and that in an appropriate case, the writ

Court has the jurisdiction to entertain a writ petition involving

disputed questions of fact and there is no absolute bar for entertaining

a writ petition, even if the same arises out of contractual obligation

and / or involves some disputed questions of fact;

       (iv)    argued:

               (a)     that the respondent No.3 Bank is claiming interest even

               on the wrongfully charged amount;

               (b)     that the respondent No.3 Bank is charging process fee

               without there being any provision therefor;

               (c)     that these issues can be decided in writ jurisdiction;

               (d)     that       the   Supreme   Court   in   Joshi   Technologies

International Inc. Vs. Union of India (2015) 7 SCC 728 also in

para 69 held that there is no absolute bar to the maintainability

of the writ petition in contractual matters or where there are

disputed questions of fact or even when monetary claim is

raised, though went on to hold that discretion lies with the High

Court which under certain circumstances, can refuse to exercise

and would normally not be exercised;

(e) drew attention to State of Kerala Vs. M.K. Jose (2015) 9

SCC 433 reiterating ABL International Ltd supra and further

holding that if from the materials that come on record it is

clearly evincible, the writ Court may exercise the power of

judicial review and argued that it is so in the present case;

(f) drew attention to the judgment dated 28th October, 2013

of this Court in W.P.(C) No.1161/2010 titled Fortuna

Foundation and Engineers AMD Consultants Pvt. Ltd. Vs.

RBI laying down that RBI cannot ignore the interests of the

borrowers and if satisfied that a particular Non-Banking

Financial Company is charging interest at unreasonable rates or

levying charges which are not called for, would be entitled to

issue appropriate directions to the financial institution to modify

the rate of interest or charges and to refrain from levying the

same;

(g) drew attention to Sardar Associates Vs. Punjab & Sind

Bank (2009) 8 SCC 257 laying down that since a public sector

bank is bound by the guidelines issued by the RBI, the Debt

Recovery Tribunal (DRT) and Debt Recovery Appellate

Tribunal (DRAT) are entitled to enforce the same;

(h) referred to my judgment in DLF Limited Vs. Punjab

National Bank (2011) 180 DLT 435 where the demand of the

petitioner in that case for pre-payment charges was quashed.

10. Per contra, the counsel for the respondent No.3 Bank argued:

(I) that the petitioners are averring errors in the entries in the

account since the year 2008;

(II) that in whichever objections of the petitioners merit was found,

the entries were reversed;

(III) that vide letter dated 4th August, 2015 of the respondent No.3

Bank to the petitioner at page 173 of the paper book in W.P.(C)

No.385/2016 the position was explained to the petitioner;

(IV) drew attention to page 76 of the paper book being a part of the

letter dated 9th March, 2010 of sanction and which provides for

charging of upfront fee / processing fee in terms of the Circular dated

28th July, 2009;

(V) that the charging of interest is in terms of the letter of sanction.

The counsel for the respondent No.3 Bank also handed over the letter

dated 20th October, 2015 of the Banking Ombudsman advising the

respondent No.3 Bank to refund the excess interest amount and stated that

the respondent No.3 Bank has complied therewith. Extract of the sanction

letter providing for the undertaking to be furnished by the petitioners that

penal interest @ 2% above the normal rate would be recovered for the period

of default was also handed over and it was contended that interest which is

disputed by the petitioners is thus in terms of the contract.

11. The senior counsel for the petitioners in rejoinder:

(A) contended that the Banking Ombudsman had failed to furnish a

detailed order;

(B) drew attention to the statement of account dated 15th December,

2015 Annexure P-30 to the writ petition showing reversal of entries of

excess interest in the amount of Rs.4,62,329.85;

(C) drew attention to the letter dated 12th November, 2010 at page

264 of the paper book of the RBI to all the banks advising them to

disclose "all in cost inclusive of all such charges involved in

processing / sanction of loan application in a transparent manner to

enable the customer to compare the rates / charges with other sources

of finance and to ensure that such charges / fees are non-

discriminatory" and contended that the respondent No.3 Bank is not

doing so;

(D) argued that the respondent No.3 Bank is holding security in

excess of the amount due and refusing to release the same.

12. I am afraid, none of my aforesaid doubts about the maintainability of

the writ petition stand addressed by any of the contentions of the senior

counsel for the petitioners. What the petitioners are wanting this court to do

in exercise of jurisdiction under Article 226 of the Constitution is to

scrutinise the statement of account of the petitioners since the year 2008 and

to adjudicate whether the disputed entries therein are in accordance with law

and contract or not and if finds the same to be not so, to pass consequential

directions. In such an exercise, the question of limitation is also likely to

arise as unlawful debits and entries are claimed since the year 2008. Though

the jurisdiction to do such an exercise, as the petitioners are wanting this

Court to do, was traditionally and inherently of the Civil Court but with the

enactment of the DRT Act and the SARFAESI Act, now stands vested in the

Debt Recovery Tribunal to the extent provided therein. Once a specialised

forum has been created and before which the petitioner would have full

liberty to take all the pleas as are raised herein, I fail to see, as to why this

Court should entertain such a petition. To do so, would tantamount usurping

to itself the jurisdiction vested by law in DRT. The DRTs which are under

the supervisory jurisdiction of this Court, even if approached by the

respondent No.3 Bank during the pendency of these petitions, are likely to

hesitate in proceeding to adjudicate when the same question is pending

adjudication before this Court. Even otherwise, there is no reason to open up

the fora of Article 226 in a matter which is within the jurisdiction of a

specialised forum. The principle as enunciated in T.P. Vishnu Kumar Vs.

Canara Bank, P.N. Road, Tiruppur (2013) 10 SCC 652 and United Bank of

India Vs. Satyawati Tondon (2010) 8 SCC 110 that a writ remedy cannot be

used to prevent a fora as DRT from exercising jurisdiction is applicable to

the petition of the present nature as well.

13. Supreme Court, in Joshi Technologies International Inc. supra, after

reiterating that there is no bar to entertain writ remedy in contractual matters

or when a money claim is made or when disputed questions of fact arise,

went on to hold that normally the High Court should not entertain such a

petition if there is no public law character to the issue or if serious disputed

questions of fact of complex nature requiring oral evidence arise or if

alternative fora are available. So is the position here. There is no public law

character to the dispute raised in these petitions i.e. whether the money

claimed by the respondent No.3 Bank from the petitioners is due from the

petitioners or not. In fact, even qua the Civil Court, I have held in Radnik

Exports Vs. Standard Chartered Bank MANU/DE/1461/2014 that a suit for

declaration that the monies claimed by the defendant are not due would not

lie, as such defence can be adjudicated before the DRT in a proceeding for

recovery of those monies. The principle of Section 34 of Specific Relief Act,

1963 that mere declaration without consequential relief is not maintainable is

also attracted. Supreme Court, in Muni Lal Vs. Oriental Fire & General

Insurance Co. Ltd. (1996) 1 SCC 90 held mere declaration that monies are

due, without claiming recovery thereof, cannot be claimed. If it were to be

held that after returning a finding as sought by petitioners, direction is to be

issued for payment of said amount by respondent no.3 Bank to petitioners,

then this becomes a writ petition for recovery of money and which also, as

per Joshi Technologies International Inc. supra is not maintainable.

14. The adjudication of all these questions would also involve

examination and cross-examination of witnesses, to gauge whether either of

the parties have by their conduct acquiesced in the stand of the other. It has

also been seen whether the petitioner, by keeping quiet, now till January,

2016 with respect to its grievances of the year 2008 onwards, is entitled to

any relief with respect thereto.

15. On the aspect of maintainability of writ petition, reference may also be

made to Dr. Yashwant Singh Vs. Indian Bank (2015) 220 DLT 667 (DB).

16. I therefore do not find the petitions to be maintainable and dismiss the

same.

No costs.

RAJIV SAHAI ENDLAW, J.

JULY 07, 2016 „bs‟..