Kerala High Court

Hyder C.A vs The Authorised Officer, Indian Bank on 7 August, 2025

Author: Anil K. Narendran

Bench: Anil K. Narendran

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WA No.1579 of 2025                             2025:KER:58683
            IN THE HIGH COURT OF KERALA AT ERNAKULAM

                              PRESENT

         THE HONOURABLE MR. JUSTICE ANIL K. NARENDRAN

                                   &

         THE HONOURABLE MR. JUSTICE MURALEE KRISHNA S.

 THURSDAY, THE 7TH DAY OF AUGUST 2025 / 16TH SRAVANA, 1947

                        WA NO. 1579 OF 2025

        AGAINST   THE   JUDGMENT   DATED   28.05.2025   IN   W.P.(C)

NO.46617 OF 2024 OF HIGH COURT OF KERALA

APPELLANTS/ PETITIONERS IN WP:

    1       HYDER C.A,AGED 54 YEARS
            S/O LATE ABDUL KHADER, BUILDING NO. VIII/152,
            THARBIYATH ROAD, NEAR THARBIATH SCHOOL,
            MUVATTUPUZHA, ERNAKULAM, PIN - 686671

    2       SHABEENA HYDER,AGED 48 YEARS
            W/O HYDER C.A, BUILDING NO. VIII/152, THARBIYATH ROAD,
            NEAR THARBIATH SCHOOL,
            MUVATTUPUZHA, ERNAKULAM, PIN - 686671
            [THE ADDRESS PORTION OF THE APPELLANTS IS SUO MOTU
            CORRECTED AS PER ORDER DATED 7.8.2025 IN WA NO.1579 OF
            2025]


            BY ADVS.
            SRI.K.N.MUHAMMED THANVEER
            SRI.MILLU DANDAPANI
            SHRI.DANIC ANTONY


RESPONDENTS/RESPONDENTS IN WP:

    1       THE AUTHORISED OFFICER, INDIAN BANK
            ZONAL OFFICE, RAM MEENA BUILDING, SA ROAD,
                                2
WA No.1579 of 2025                              2025:KER:58683
             ERNAKULAM, PIN - 682016

    2      THE CHIEF MANAGER (R&L)
           INDIAN BANK ZONAL OFFICE,
           RAM MEENA BUILDING, SA ROAD,
           ERNAKULAM, PIN - 682016

    3      THE BRANCH MANAGER
           INDIAN BANK KALAMASSERY BRANCH, A.K.K.M TOWERS,
           CUSAT JUNCTION, SOUTH KALAMASSERY, KALAMASSERY,
           ERNAKULAM, KERALA, PIN - 682022

    4      M/S NOOH EXPORTS
           39/6503, A BLOCK, THARAKANDAM ESTATE KURISHUPALLY ROAD,
           PERUMANOOR, ERNAKULAM. REPRESENTED BY ITS MANAGING
           PARTNER C.M NOORUDIN, PIN - 682015

    5      C.M NOORUDIN
           AGED 62 YEARS
           S/O. MOHAMMED KUNJU, MANAGING PARTNER,
           M/S NOOH EXPORTS, THARAKANDAM ESTATE,
           KURISHUPALLY ROAD, PERUMANOOR SO,
           ERNAKULAM., PIN - 682015

           SRI.JITHESH MENON, SC, INDIAN BANK

     THIS WRIT APPEAL WAS FINALLY HEARD ON 29.07.2025, THE
COURT ON 7.8.2025 PASSED THE FOLLOWING:
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WA No.1579 of 2025                                   2025:KER:58683

                                                                 "CR"
                            JUDGMENT

Muralee Krishna, J.

The petitioners in W.P.(C)No.46617 of 2024 filed this writ

appeal under Section 5(i) of the Kerala High Court Act, 1958,

challenging the judgment dated 28.05.2025 passed by the learned

Single Judge in that writ petition.

2. According to the appellants, who are husband and wife,

they are facing unjust and unfortunate eviction from their

residential property due to arbitrary actions initiated by the

respondent bank under the provisions of the Securitisation and

Reconstruction of Financial Assets and Enforcement of Security Interest

Act, 2002 (for short, 'SARFAESI Act'). It is pleaded in the writ

petition that the 1st appellant, as a partner of the 4th respondent

Partnership business, namely, M/s. Nooh Exports Private Ltd. and

the 2nd appellant, as guarantor, mortgaged their joint residential

property in Sy. No. 899/19 having an extent of 4.25 Ares situated

in Velloorkunnam Village, Muvattupuzha Taluk, Ernakulam

District, along with a residential building with Door No.8/152 (Old

No.5/89A) having 246.36 Sq.meters, in the year 2013, as a part

WA No.1579 of 2025 2025:KER:58683 of helping the 4th respondent firm to raise funds for its business

operations. On 01.02.2013, an amount of Rs.40 lakhs was

sanctioned by the 3rd respondent vide, Overdraft Facility Loan

Account, and thereafter, on account of Covid-19 pandemic, i.e.,

on 22.01.2021, an additional GECLS facility was given for an

amount of Rs.10.92 lakhs also to the 4 th respondent. The 3rd

respondent on 29.04.2021 declared the aforesaid loan accounts of

the 4th respondent firm as a Non-Performing Asset (for short

'NPA') and started to initiate recovery measures under the

SARFAESI Act. The 5th respondent, who is a relative of the

appellants and the Managing Partner of the 4 th respondent

Partnership business, assured the appellants that the loan liability

would be cleared in a short span of time. However, by Ext.P1 letter

dated 19.12.2024, the bank informed the appellants that they will

be taking possession of the mortgaged property on 01.01.2025 at

10.00 a.m. Thereafter, the appellants approached the 1 st

respondent with a proposal for full and final One Time Settlement

scheme (for short 'OTS') stating that they are ready to settle the

loan liability of the partnership firm. The appellants submitted

Ext.P2 request dated 23.12.2024 for OTS before the bank. By

WA No.1579 of 2025 2025:KER:58683 Ext.P3 letter dated 26.12.2024, the respondent bank permitted

the appellants to clear the entire loan liability for an amount of

Rs.75 lakhs, provided an amount of Rs.50 lakhs to be paid on or

before 27.12.2024 and the balance amount of Rs.25 lakhs on or

before 30.12.2024. It is further stated by the 1 st respondent that

the mortgaged documents shall be released to the appellants only

after the closure of NPA account of M/s. Nooh Exports and Imports

Private Ltd. in which the 1st appellant is also one among the

Directors. Contending that the conduct of the bank in issuing the

Ext.P3 letter directing the appellants to clear the proposed OTS

amount within a short span of time was unjust, arbitrary, and

illegal, and also contending that the condition that only after the

NPA account of M/s. Nooh Exports and Imports Private Ltd. is

closed the mortgaged document will be released to the appellants

as improper, they approached this Court by filing

W.P.(C)No.46617 of 2024, seeking the following reliefs;

"(i) Issue a writ of mandamus or any other writ, order or direction directing the respondents 1 to 3 to give sufficient breathing time to the petitioners to pay the proposed OTS amount covered by Ext.P3, either in lumpsum or in monthly installments.

WA No.1579 of 2025 2025:KER:58683

(ii) Issue a writ of mandamus or any other appropriate writ, order or direction directing the respondent 1 to 3 not to proceed further with Ext.P1 notice of taking physical possession.

(iii) Issue a writ of mandamus or any other appropriate writ, order or direction directing the respondents 1 to 3 to handover the original title deeds of the mortgaged property immediately to the petitioners upon settling the proposed OTS amount covered by Ext.P3 and consequent closure of loan liability of M/s. Nooh Exports.

(iv) To declare that the respondents 1 to 3 has no authority whatsoever to hold back the mortgage deeds of a property once the loan liability is cleared by the borrower pertaining to the mortgaged property."

3. After hearing both sides and on appreciation of

materials on record, the learned Single Judge disposed of the writ

petition granting the appellants an option to file a request before

the bank to return the documents by substituting the security or

such other appropriate measures by treating the borrower, who

cleared the dues, in a just and reasonable manner. Paragraphs 5

and 6 of that judgment are extracted hereunder;

"5. It is trite that the contract between the borrower and the bank cannot be rewritten, much less by giving a direction in a writ petition under Article 226 of the Constitution of India. If the petitioners did not agree to any of the conditions

WA No.1579 of 2025 2025:KER:58683 imposed by the bank, it was open to the petitioners to approach the bank for variation of the said condition, or not to settle the loan account through the OTS mode as offered by the bank. It is also to be noted that the petitioners are admittedly guarantors to the loan of the 4th respondent, and as such, it is for the bank to decide on the question of change/substitution of the security offered.

6. However, taking note of the fact that the petitioners have already cleared the liability of M/s. Nooh Exports, the bank will consider the request for return of the documents by substituting the security or by such other appropriate measures, by treating the borrower, who cleared the dues, in a just and reasonable manner. A decision in this regard shall be taken by the bank within a month from the date of receipt of a copy of the judgment."

4. Heard the learned counsel for the appellants and the

learned Standing Counsel for the respondents 1 to 3. Considering

the nature of the appeal, issuance of notice to respondents 4 and

5 is dispensed with.

5. The learned counsel for the appellants would submit

that from Ext.P8 order dated 24.03.2025 issued by the bank, it is

evident that the appellants closed the account of M/s.Nooh

Exports and Imports Private Ltd., the liability of which was

guaranteed by the appellants by executing a mortgage deed of

WA No.1579 of 2025 2025:KER:58683 their property in question. The condition to retain the mortgaged

document till the debt of M/s. Nooh Exports and Imports Private

Ltd. is cleared, is unjust, and a general lien provided under Section

171 of the Indian Contract Act cannot be extended to that liability.

Therefore, the impugned judgment of the learned Single Judge is

liable to be interfered with. The learned counsel relied on the

judgments of the High Court of Madras (Madurai Bench) dated

09.08.2017 in W.P.(MD)No.12613/2016 in the matter of M.

Shanthi v. Bank of Baroda, Namakkal Branch [2017 SCC

Online Mad 37703] and that of the Bombay High Court in Sunil

Ratnakar Gutte v. Union Bank of India [AIR 2022 Bom 195]

in support of his arguments.

6. On the other hand, the learned Standing Counsel for

the respondent bank would submit that this Court, by exercising

jurisdiction under Article 226 of the Constitution of India, cannot

vary the terms of the Ext.P3 OTS agreement entered into between

the bank and the guarantor. Moreover, by Ext.P6, the appellants

agreed that the mortgaged document shall not be released till the

closure of the NPA account of M/s.Nooh Exports and Imports

Private Ltd. The said fact was suppressed by the appellants while

WA No.1579 of 2025 2025:KER:58683 filing the writ petition. The learned Standing Counsel for the

respondent Bank relied on the judgment of this Court in Idukki

District Police Co-operative Society Ltd.No.1-490 v.

Rasheed A.K. [2025 (4) KHC 44] in support of his arguments.

In reply, the learned counsel for the appellants would submit that

the condition in Ext.P3 OTS agreement to retain the mortgaged

document till the closure of the NPA account of another company

is against public policy and hence not sustainable.

7. The appellants stood as guarantors for the loan of the

4th respondent firm M/s. Nooh Exports and Imports Private Ltd.

and executed a mortgage deed in respect of the property

mentioned in the writ petition. Subsequently, when the loan was

converted into an NPA, the appellants approached the bank with

Ext.P2 request for OTS of the loan account. By Ext.P3

communication dated 26.12.2024, the proposal for OTS was made

by the bank, and it was accepted by the appellants as evident from

Ext.P6 copy of the letter dated 03.03.2025 issued by the 2nd

respondent, wherein the signatures of the appellants are also seen

entered. One of the conditions in Exts.P3 and P6 is that the

mortgaged document by the appellants shall not be released till

WA No.1579 of 2025 2025:KER:58683 the closure of the NPA of M/s.Nooh Exports and Imports Private

Ltd. Admittedly, the 1st appellant is one of the Directors of

M/s.Nooh Exports and Imports Private Ltd. Now, the appellants

say that the condition in Ext.P3 to retain their document, after

clearing the loan of the 4th respondent, is against public policy.

They claim that the general lien of the bank under Section 171 of

the Indian Contract Act will not extend to retain the document of

the property of the appellants in respect of a loan to which they

did not stand as guarantors.

8. In Sunil Ratnakar Gutte [AIR 2022 Bom 195], the

Bombay High Court held that the bank is not justified in retaining

the document offered as security towards the loan amount after

repayment of the entire loan by the borrower, stating the reason

that another loan of a company in which the borrower is a Director,

and the bank has right under Section 171 of the Contract Act.

9. In M. Shanthi [2017 SCC Online Mad 37703] the

High Court of Madras (Madurai Bench) held that the bank cannot

exercise right of lien to secure any other liabilities of the

mortgagor by retaining the documents of the mortgagor or

guarantor, which are deposited with an intention to secure a

WA No.1579 of 2025 2025:KER:58683 particular loan transaction.

10. However, while going through the facts of Sunil

Ratnakar Gutte [AIR 2022 Bom 195] it is pertinent to note

that in that case the loan availed by the borrower was on personal

capacity, and there was no consent to retain the document as

security of another loan, as done in the instant case. In M.

Shanthi [2017 SCC Online Mad 37703] also the bank

proceeded to retain the title deed of the borrower when he offered

to clear the loan, by relying on Section 171 of the Contract Act. In

that case also there was no consent to retain the document as

security of another loan. But in the instant case, the 1 st appellant

was one of the Directors of the company, and the appellants

agreed to retain the documents as security for the loan of the

company, as evident from Exts.P3 and P6 documents. Therefore,

the judgments of the High Court of Madras (Madurai Bench) and

that of the Bombay High Court referred to supra are not applicable

to the facts of the instant case.

11. In Idukki District Police Co-operative Society

Ltd.No.1-490 [2025 (4) KHC 44], the short question involved

was whether the writ court can issue a writ of mandamus

WA No.1579 of 2025 2025:KER:58683 compelling the bank/financial institution to extend the benefit of

the OTS scheme to the borrowers. In that judgment, a Division

Bench of this Court held thus;

"13. The ratio decidendi culled out from the aforesaid decision would clearly indicate that the borrowers availing the benefit of OTS Scheme is bound by the terms and conditions of the Scheme. If the borrower had committed breach of the terms and conditions of the OTS Scheme, the writ court cannot issue a writ of mandamus to the bank/financial institutions to extend the benefit of OTS Scheme. The relationship between the banker and the customer is based on the contract. If the Writ Court interferes in the contractual relationship between the banker and the customer, it would result in rewriting of the contract, which is impermissible by a writ court."

(Underline supplied)

12. In the instant case, the bank did not rely on Section

171 of the Contract Act, to claim the right to retain the document

of the appellants. The claim of the bank is based on the condition

imposed while sanctioning the OTS facility, which is a special

scheme granted at the discretion of the bank, on the basis of a

contract between the parties.

13. The appellants accepted the terms of the OTS as

evident from Exts.P3 and P6 documents. If the appellants are not

WA No.1579 of 2025 2025:KER:58683 agreeable with the terms of OTS, they could have very well

withdrawn from the same. Accepting the conditions of Ext.P3 and

Ext.P6 OTS, the appellants cleared the loan of the 4 th respondent,

as evident from Ext.P8 document. It is thereafter, they filed the

writ petition challenging the condition incorporated while

extending the benefit of OTS to them, which, according to us, is

not legally sustainable.

Having considered the pleadings and materials on record and

the submissions made at the Bar, we find no reason to interfere

with the impugned judgment of the learned Single Judge.

In the result, this writ appeal stands dismissed.

Sd/-

ANIL K.NARENDRAN, JUDGE

Sd/-

MURALEE KRISHNA S., JUDGE MSA