Research › Search › Judgment

Karnataka High Court · body

2003 DIGILAW 429 (KAR)

HITTCO DRILLS LTD. v. STATE BANK OF MYSORE

2003-06-05

body2003
( 1 ) WRIT petitioner is a borrower from the respondent-bank who had agreed to provide certain cash credit facilities in favour of the petitioner to the extent agreed to between the parties. It is the case of the petitioner that such terms and conditions are evidenced by an agreement, a copy of which is produced as Annexure -B to this writ petition. The bank had also, by a subsequent communication dated 5. 1. 1999 indicated that the cash credit facilities sanctioned in favour of the petitioner is as detailed in its communication, copy of which is produced and marked as Annexure-C to the write petition. ( 2 ) SRI D. S. Joshi, learned Counsel for the petitioner submits that pursuant to such agreements, the transactions between the petitioner and the bank was quite normal, that the petitioner did avail of the facilities and had provided security by way of hypothecation of the stocks, raw material as well as goods that were being processed at the factory situated at No. 78, III Phase Peenya Industrial Area, Bangalore and similar goods stored elsewhere in the factory. It is the submission of Mr. Joshi that all of a sudden, the respondent-bank issued communication dated 2. 5. 2001 (copy marked at Annexure`d') indicating that as per the advice of the Head Office, the facilities were being withdrawn and alternative arrangements may be made by the petitioner to have such facilities from any other source and they can also make arrangements for repayment of the outstanding amount at the earliest. This was followed by another communication dated 23. 5. 2001 (copy at Annexure -E) informing that the advance facility was recalled and the amount outstanding should be paid within sixty days from the date of receipt of such communication. ( 3 ) IT is aggrieved by these two communications from the bank and stopping the cash credit facilities to the detriment of the petitioner, the petitioner has approached this Court seeking for quashing of these two communications and for a further direction by way of mandamus to the respondent-bank to continue the facilities to enable the petitioner to operate the cash credit accounts and for other incidental reliefs. ( 4 ) SRI Joshi, learned Counsel for the petitioner submits that the action on the part of the respondents in withdrawing the facilities is contrary to the terms of the agreement, that it has been done suddenly without proper notice and without assigning any reason, that the action is arbitrary, that it is violative of the right of the petitioner under Articles 19 and 21 of the Constitution of India and that therefore the impugned communications are to be quashed and consequential writ and mandamus to be issued in favour of the petitioner. ( 5 ) LEARNED Counsel for the petitioner has relied upon a decision of the Madras High Court reported in AIR 2002 NOC 25 (Madras)=2001 AIHC 4008 (INDIAN OVERSEAS BANK V BISMILLA TRADING CO) in support of his submission. ( 6 ) STATEMENT of objections has been filed on behalf of the respondent-Bank. It is inter alia pleaded that the Bank had come across information which indicated that certain documents which had been presented to the bank by the petitioner were not trustworthy, that there was some tampering in respect of those documents and at rate, in a commercial transaction it was not prudent on the part of the bank to advance amounts on the basis of such documents and as such the Head Quarters of the Bank took a decision to recall the loan and it was accordingly informed to the petitioner also. It is also stated that the petitioner had marginally exceeded the limit is respect of cash credit hypothecation amount, that there were violations of some of the conditions subject to which the facility had been extended and the action on the part of the bank is proper and justified and to safeguard the commercial interest of the bank. It is also submitted in the statement of objections that the subject matter of the dispute cannot be agitated for relief in a petition under Article 226 of the Constitution as the matter is governed by contract between the parties and involved disputed facts necessitating the parties to lead evidence and as such it is only a civil forum which would be an appropriate forum if the petitioners were keen on seeking any relief. Respondents have sought for dismissal of the writ petition. ( 7 ) THE petitioner is a limited Company. Respondents have sought for dismissal of the writ petition. ( 7 ) THE petitioner is a limited Company. The borrowings by the petitioner from the respondent which is essentially a commercial banking organization is for business purpose of the petitioner. As to whom all the respondents wish to advance amounts and on what grounds, is a matter which is essentially within the business acumen of the bank. The relationship between the petitioner and respondent is one of a `customer' and `banker' and `borrower and creditor' of the bank. The terms of advance etc. , is governed by the agreement between the parties. The nature of the transaction between the bank and the customer is one involving trust and confidence between the parties. Such matters are not matters involving any fundamental rights or other rights of the petitioner. In fact, the petitioner being a company, no rights either under Article 19 or Article 21 of the Constitution of India can be claimed, as has been sought to be submitted by the learned Counsel for the petitioner. No action on the part of the respondent has resulted in violation of these rights. ( 8 ) THERE is no legal right either in so far as the petitioner is concerned nor the learned Counsel for the petitioner was able to demonstrate violation of any statutory provisions. The communication under Annexure `d' and `e' are essentially part of communication between a banker and its customer and as a part of business transaction. It is essentially a decision of a commercial bank in the context of the nature of relationship that it wishes to have with its customer and as to whom it wishes to have as its customer. The decision is neither a decision in the course of any administrative functioning of a public authority nor one in the nature of a quasi judicial function. Communications and letters of this nature cannot be made subject matter for issue of a writ of certiorari. The question of this Court issuing a write for quashing such communications does not arise at all. ( 9 ) IN so far as the prayer for mandamus is concerned, it is only consequential. There is not right, fundamental or statutory, in favour of the petitioner which it can seek to enforce in this write petition. The question of this Court issuing a write for quashing such communications does not arise at all. ( 9 ) IN so far as the prayer for mandamus is concerned, it is only consequential. There is not right, fundamental or statutory, in favour of the petitioner which it can seek to enforce in this write petition. The question of issuing a writ of mandamus in a matter of this nature does not arise at all. The write petition is obviously a misadventure. ( 10 ) THIS Court had not issued any interim orders in this matter for either restraining the respondent from taking any action as against the petitioner or has issued any direction to act in a particular manner. Sri Puttige R. Ramesh, learned Counsel for the first respondent bank submits that the respondents, with due respect to the notice that had been issued by this Court in this writ petition, may not have taken any action, but subject to verification submits that proceedings might have been initiated as against the petitioner for recovery of the amount before the Debts Recovery Tribunal having jurisdiction. ( 11 ) IT should be a matter of concern for the first respondent Bank in matters of this nature where they are advancing monies collected from public at large who are the depositors, that they should be prudent in realizing the outstanding without giving room for any negligence or inaction. In the absence of timely action for recovery of the amounts, debts may get time barred for realization or recovery of the amount and respondents will be preempted from recovering the amount. It is necessary that the business of the bank is transacted with due diligence and responsibility as otherwise, the danger of public money being lost to the detriment of the depositors cannot be ruled out. ( 12 ) WHILE it is left open to the petitioner to avail of any remedy or relief that the petitioner is entitled to in law before the appropriate forum, this writ petition is dismissed as without any merits levying costs in a sum of Rs. 5,000/ -. --- *** --- .