Kerala High Court
Menkol Industries Private ... vs State Of Kerala on 25 January, 2022
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE N.NAGARESH
TUESDAY, THE 25TH DAY OF JANUARY 2022 / 5TH MAGHA, 1943
WP(C) NO. 22019 OF 2021
PETITIONERS:
MENKOL INDUSTRIES PRIVATE LIMITED
EARLIER KNOWN AS M/S BAUTECH GLOBAL INDUSTRIES
PVT LTD, PLOT NO.134, KINFRA INDUSTRIAL PARK,
KANJIKODE WEST, PALAKKAD-678621.
REPRESENTED BY ITS MANAGING DIRECTOR,
MRS.DEEPA MADANAKUMAR.
BY ADVS.
SANTHOSH MATHEW
ARUN THOMAS
JENNIS STEPHEN
KARTHIKA MARIA
ANIL SEBASTIAN PULICKEL
JAISY ELZA JOE
LEAH RACHEL NINAN
MATHEW NEVIN THOMAS
RESPONDENTS:
1 STATE OF KERALA
REPRESENTED BY THE SECRETARY TO THE GOVERNMENT,
DEPARTMENT OF FINANCE, GOVERNMENT SECRETARIAT,
STATUE, TRIVANDRUM-695001.
2 KERALA FINANCIL CORPORATION
REPRESENTED BY ITS MANAGING DIRECTOR,
VELLAYAMBALAM, THIRUVANANTHAPURAM-695033.
3 BRANCH MANAGER
PALAKKAD, KERALA FINANCIAL CORPORATION,
BRANCH OFFICE, 1ST FLOOR, CENTURY COMPLEX,
MATHAKOVIL STREET, SULTANPET, PLAKKAD-678001.
BY ADVS.
SHRI.M.R.VENUGOPAL, SC, KFC
DHANYA P.ASHOKAN
S. MUHAMMAD ALIKHAN
SRI.APPU P S, GOVT. PLEADER
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 25.01.2022, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
W.P.(C) No.22019/2021
:2:
N. NAGARESH, J.
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W.P.(C) No.22019 of 2021
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Dated this the 25th day of January, 2022
JUDGMENT
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The petitioner, a Private Limited Company, seeks
to direct the 2nd respondent-Kerala Financial Corporation, to
refund the amount wrongly charged by it as pre-closure
charges and to declare that pre-closure charges as per
Clause 18 of Ext.P2 will not apply in situations such as
instant case wherein closure occurred due to the actions of
the 2nd respondent.
2. The petitioner states that the 2 nd respondent
sanctioned a loan of ₹6,32,00,000/- as term loan and
₹1,00,00,000/- as working capital revolving fund loan on
02.04.2019, on the petitioner providing adequate security.
Substantial portion of the sanctioned advances was availed
W.P.(C) No.22019/2021
by the petitioner. Later, the 2 nd respondent revalued the
secured assets of the petitioner unilaterally and demanded
additional security. The petitioner was not in a position to
provide additional security. Therefore, at the instance of the
petitioner, the Federal Bank Limited took over the loans from
the 2nd respondent. The petitioner was forced to pay
pre-closure charges of ₹13,41,046/- including GST.
3. The petitioner argued that the pre-closure of
loan/advances by the 2nd respondent was warranted and
forced by the 2nd respondent itself and hence no pre-closure
charges can be imposed on the petitioner. The pre-closure
charges are not only arbitrarily imposed but they are
excessive also. The Apex Court in Ssangyong Engineering
and Construction Company Ltd. v. National Highways
Authority of India [(2019) 15 SCC 131] and in a number of
other judgments has held that a unilateral addition or
alteration of a term of contract can never be foisted upon an
unwilling party. Hence, the 2nd respondent is compellable to
refund the pre-closure charges extracted from the petitioner.
W.P.(C) No.22019/2021
4. The 2nd respondent contested the case. The 2 nd
respondent contended that paragraph V(6) of the loan
agreement has given a right to the 2 nd respondent to demand
additional security, if the market value of the securities
provided depreciates. The Corporation has only invoked the
said paragraph V(6) of the agreement. The 2 nd respondent
did not ask the petitioner to get the loan/advances taken over
by any Bank and the loan take over was voluntarily effected
by the petitioner. Pre-closure premium was fixed as per
Clause No.34.2 of the Credit Policy of the Corporation.
5. I have heard the counsel for the petitioner, the
Government Pleader for the 1st respondent and the Standing
Counsel for respondents 2 and 3.
6. The dispute between the petitioner and the 2 nd
respondent agitated in this writ petition, arises out of a
commercial transaction. Though the 2nd respondent is an
instrumentality of the State, the dispute revolves around the
power of the 2nd respondent to levy pre-closure charges from
the petitioner in respect of a loan account. The decision
W.P.(C) No.22019/2021
thereon would depend on interpretation of the agreement
clauses. A factual adjudication would also be necessary as
the 2nd respondent has a case that there was depreciation of
value of securities provided by the petitioner.
In the circumstances, this Court is of the view that
this is not a fit case to adjudicate in exercise of the powers
under writ jurisdiction. The writ petition is hence dismissed.
The petitioner may, however, resort to other legal remedies
available for redressal of grievances, if the petitioner is so
advised.
Sd/-
N. NAGARESH, JUDGE
aks/24.01.2022
W.P.(C) No.22019/2021
APPENDIX OF WP(C) 22019/2021
PETITIONER'S EXHIBITS
Exhibit P1 TRUE COPY OF THE TRIPARTITE AGREEMENT
DATED 14.06.2018 PETITIONER ENTERED
INTO THE PETITIONER WITH KIDC AND
KINFRA INTEGRATED INDUSTRIAL AND
TEXTILE PARK, PALAKKAD.
Exhibit P2 TRUE COPY OF THE SANCTION LETTER
ISSUED BY THE 2ND RESPONDENT DATED
02.04.2019 TO THE PETITIONER.
Exhibit P3 TRUE COPY OF THE DEED OF HYPOTHECATION
EXECUTED BETWEEN THE PETITIONER AND
THE 2ND RESPONDENT DATED 22.05.2019.
Exhibit P4 TRUE COPY OF THE COMMON LETTER DATED
14.12.2020 ISSUED BY THE 2ND
RESPONDENT TO THE PETITIONER.
Exhibit P5 TRUE COPY OF THE EMAIL COMMUNICATION
SENT TO THE 3RD RESPONDENT BY THE
FEDERAL BANK LTD.
Exhibit P6 TRUE COPY OF THE REPRESENTATION DATED
30.03.2021 SUBMITTED BEFORE THE 3RD
RESPONDENT BY THE PETITIONER.
Exhibit P7 TRUE COPY OF THE LETTER DATED
09.07.2021 ISSUED BY THE 3RD
RESPONDENT TO THE PETITIONER.
Exhibit P8 TRUE COPY OF THE LETTER ISSUED BY THE
2ND RESPONDENT DATED 30.07.2021 TO THE
PETITIONER.
Exhibit P9 TRUE COPY OF THE REPRESENTATION DATED
14.09.2021 SUBMITTED BEFORE THE 2ND
RESPONDENT BY THE PETITIONER.
