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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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,
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"(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
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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.
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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
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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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(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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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
