Precious Infraprojects Pvt.Ltd vs The Banking Ombudsman
2024 Latest Caselaw 23013 Ker

Kerala High Court

Precious Infraprojects Pvt.Ltd vs The Banking Ombudsman on 1 August, 2024

             IN THE HIGH COURT OF KERALA AT ERNAKULAM
                                PRESENT
               THE HONOURABLE MR. JUSTICE P.M.MANOJ
 THURSDAY, THE 1ST DAY OF AUGUST 2024 / 10TH SRAVANA, 1946
                     WP(C) NO. 33709 OF 2014
PETITIONER:

            PRECIOUS INFRAPROJECTS PVT.LTD.
            AGED 40 YEARS
            10/815/16, ST.LOUIS COMMERCIAL COMPLEX,
            CHURCHCIRCLE, THRISSUR, PINCODE - 680001.
            REPRESENTEDBY ITS MANAGING DIRECTOR, LEO LOUIS.
            BY ADV SRI.RAJIT


RESPONDENTS:

    1       THE BANKING OMBUDSMAN
            O/O.THE BANKING OMBUDSMAN (KERALA, UNION
            TERRITORYOF LAKSHADWEEP AND MAHI), RESERVE BANK OF
            INDIA,BAKERY JUNCTION, TRIVANDRUM - 695 033.
    2       BANK OF INDIA
            ERNAKULAM MID-CORPORATE BRANCH, MANAVALAN
            BUILDING,SUBHASH CHANDRA BOSE ROAD, VYTTILA,
            COCHIN -682 019, REPRESENTED BY GENERAL MANAGER.
            BY ADV SRI.ABRAHAM P.GEORGE, SC, BANK OF INDIA


     THIS     WRIT   PETITION    (CIVIL)      HAVING    BEEN   FINALLY
HEARD   ON     01.08.2024,      THE   COURT    ON      THE   SAME   DAY
DELIVERED THE FOLLOWING:
                                              2
W.P.(C) No.33709 of 2014




                                      JUDGMENT

Dated this the 01st day of August, 2024

The petitioner has availed a loan of Rs.10 crores for the completion

of a construction project. As per Ext.P2, there are terms of agreement

with respect to the loan. Accordingly, the rate of interest was fixed at the

rate of 16.5% per annum. The term for repayment of loan was decided as

102 equal monthly instalments at the rate of 0.18 Crores. The repayment

commences from October 2013 onwards. This was on the basis of

moratorium agreed by the bank for a period of six months after the

completion of project in March 2013. It is stated, there was no condition

that the bank will levy any charge for pre-closure of loan. According to the

petitioner, the bank assured that rate of interest would be lowered on

progress of the project and the petitioner insisted for an option of pre-

closure without levying any charge, in case the bank refuses to lower the

interest rate as agreed. As per Ext.P2 agreement, it is stated that the

petitioner is not liable to pay the pre-closure charges in the event the

petitioner finds the bank is going back on agreed understanding of

lowering the rate of interest.

2. After the sanctioning of loan of Rs.10 crores, the petitioner

proceeded with the project and they were able to find tenants, who are

willing to pay monthly rent for Rs.30 lakhs for the building. Therefore, the

petitioner requested to change the credit facility to rent discounting

scheme for an amount of Rs.15 crores and also requested to lower the rate

of interest as agreed in between the petitioner and the respondent bank

while availing the loan. It is also pointed out by the petitioner that they

already obtained offers from other banks for taking over the loan at the

interest rate of 11.25%. In contrary to the terms agreed as per Ext.P2, the

2nd respondent refused to lower the interest rate and demanded an amount

of Rs.42,50,000/- towards the prepayment charges, which was calculated

at the rate of 0.50% of the entire loan amount. The same has been

communicated as per Ext.P4.

3. Since the 2nd respondent bank stepped away from the agreed

terms, finding no other way, petitioner has shifted the loan account from

the 2nd respondent bank to other banks, wherein the petitioner offered

better rate of interest at 11.25%. Thereafter, the petitioner informed the

2nd respondent bank that they are not liable and willing to pay the pre-

closure charge of Rs.42,50,000/-. This was refuted by the bank and

informed that the closure of the loan and the release of the documents,

which are mortgaged to the bank can be done only when the petitioner is

remitting the amount as claimed in Ext.P4. It is also stated that any

further action would be taken only after getting sanction from the higher

authorities for waiver of the pre-closure charges. Accordingly, the petitioner

deposited the entire amount of Rs.11,50,41,547/- as demanded in Ext.P4.

This is only with an intention to avail the documents mortgaged by the

petitioner before the 2nd respondent, at the time of availing the term loan.

4. However, contrary to the understanding, an amount of

Rs.42,50,000/-, which is charged as pre-closure charges and which was

kept in suspense account, has been utilised by the bank without giving any

intimation to the petitioner on 13.11.2013. Under such circumstances, the

petitioner has preferred Ext.P5 representation and it is rejected as per

Ext.P6. Being aggrieved by that, the petitioner has preferred Ext.P7 before

the 1st respondent Ombudsman.

5. On receipt of Ext.P7, the 1st respondent issued notice to the 2nd

respondent only to answer the allegation raised in Ext.P7. Accordingly, the

2nd respondent has offered their explanation. However, without evaluating

the circumstances and the facts involved in this case, the 1 st respondent

has closed the complaint by pointing out that as per Clause 13(1)(a) of the

Banking Ombudsman Scheme, 2006, the 1 st respondent is unable to

intervene in the matter.

6. In response, the 2nd respondent bank has preferred a counter

affidavit, wherein it is reiterated that the loan was availed by the petitioner

for an amount of Rs.10 crores, with a repayment tenure of 102 monthly

instalments. The repayment of instalments at the rate of 0.18 crores,

which starts from October, 2013. The interest rate is fixed at 16.25% per

annum. It is also stated that the petitioner is well aware of the pre-closure

charges at the rate of 0.50% per annum on Rs.10 crores for the remaining

102 months on simple interest basis, which would amounts to

Rs.42,50,000/-. The petitioner took the decision to pre-close the loan while

the bank was in the process of reviewing the account of the petitioner with

better terms as requested by them.

7. I have heard Sri.Rajit, the learned counsel appearing for the

petitioner, Sri.Abraham P.George, the Standing Counsel appearing for the

2nd respondent.

8. On evaluating the contentions raised in the writ petition it appears

that Ext.P2 agreement does not provide any specific right with respect to

the pre-closure of the charges. In fact, the column pertains to pre-closure

was left blank. It is also discernible from pleadings that while availing the

loan itself, there was an agreed terms with respect to pre-closure of the

loan, if the bank is not ready and willing to grant a reduced rate of interest.

The repayment was not started as the bank has fixed a moratorium for a

period of six months after the completion of the project. The period of

repayment starts from October 2010. Even by that time, there is no

positive response from the 2nd respondent bank with respect to reduced

rate of interest. At that point of time, the petitioner obtained many offers

from other banks with reduced interest rate and this was intimated to the

2nd respondent bank.

9. However, there was no positive response from the 2 nd respondent-

bank. In order to avoid payment of interest, the petitioner accepted the

offers extended by the other bank and repaid the entire amount demanded

in Ext.P2 on 12.10.2013. At that point of time, the pre-closure charges,

which amounts at the rate of 0.50% per annum on Rs.10 crores, which

comes to Rs.42,50,000/- was kept in a suspense account. Later, without

notice to the petitioner, the amount was credited by the bank and utilised

towards the pre-closure charges. This is the circumstances in which the

petitioner preferred Ext.P7 complaint before the Ombudsman. On receipt

of Ext.P7 the Ombudsman sought explanation from the 2 nd respondent

Bank. On receipt of the reply from the part of the 2 nd respondent bank,

without assessing and ascertaining the dispute between the petitioner and

the bank, the Ombudsman has decided the matter through a cryptic order,

which is stated to be on the ground of Clause 13 (a) of the Banking

Ombudsman Scheme, 2006.

10. Clause 13(1)(a) of the Banking Ombudsman Scheme, 2006 reads

thus:

13. Rejection of the complaint.

(1) The Banking Ombudsman may reject a complaint at any

stage if it appears to him that the complaint made is;

(b) frivolous, vexatious, malafide or

(b) without any sufficient cause; or

xxxxx xxxxx xxxxxx

11. On a perusal of Ext.P9, it does not appear the Banking

Ombudsman has evaluated the complaint as frivolous, vexatious or

malafide and does not offer any specific reason for rejection except saying

that they are unable to proceed with the complaint in the light of clause

13(1)(a) of the scheme, 2006. Even then there was no opportunity of

hearing was offered to the petitioner. That itself shows that there is non

application of mind as well as violation of principles of natural justice. The

1st respondent, being an entity which is vested with the powers to decide

the dispute with the bank and its customer, without proper application of

mind and considering the real facts involved, has closed the complaint by

pointing out some frivolous reason. Hence, I am of the considered opinion

that Ext.P9 cannot stand the test of law.

12. Accordingly, Ext.P9 stands set aside. The 1 st respondent is

directed to reconsider the issue in the light of Ext.P2 agreement and

following the Banking Ombudsman Scheme, 2006, within a period of three

months from the date of receipt of a certified copy of this judgment.

Needless to say, while reconsidering the matter as directed above, an

opportunity shall be afforded to both sides.

The writ petition is disposed of as above.

sd/-

P.M.MANOJ JUDGE das

APPENDIX OF WP(C) 33709/2014

PETITIONER EXHIBITS EXT.P-1: A TRUE COPY OF THE SANCTION LETTER BEARING NO.EMCB/VVS/12-13/25 DTD 4.7.2012 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER EXT.P-2: A TRUE COPY OF THE HYPOTHECATION CUM LOAN AGREEMENT EXECUTED BETWEEN THE PETITIONER AND THE 2ND RESPONDENT EXT.P-3: A TRUE COPY OF LETTER DTD 21.9.2013 SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT EXT.P-4: A TRUE COPY OF THE EMAIL SENT BY THE 2ND RESPONDENT TO THE PETITIONER EXT.P-5: A TRUE COPY OF THE LETTER DTD 29.1.2014 SEND BY THE PETITIONER TO THE 2ND RESPONDENT EXT.P-6: A TRUE COPY OF THE LETTER BEARING NO.ERNMCV/VVS/2014-15/33 DTD 6.2.2014 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER EXT.P-7: A TRUE COPY OF THE COMPLAINT FILED BY THE PETITIONER BEFORE THE IST RESPONDENT EXT.P-8: A TRUE COPY OF THE REPLY FILED BY THE 2ND RESPONDENT BEFORE THE IST RESPONDENT EXT.P-9: A TRUE COPY OF THE LETTER BEARING NO.OBO(T)1212/CTS/000104/2014-15 DTD 27.8.2014