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2009 DIGILAW 861 (CAL)

Snow View Properties Ltd. v. Punjab and Sind Bank

2009-12-01

DIPANKAR DATTA

body2009
Judgment :- (1.) The petitioners are engaged in the business of developing properties. The second petitioner is a Director of the first petitioner (hereafter the company) incorporated under the Companies Act, 1956. (2.) On or about 31.8.1993, the company had acquired an immovable property at 42/C, Ballygunge Circular Road Kolkata 700019 (hereafter the said property) by and/or under a registered deed of lease from one Bengal Bihar Construction Private Limited (in liquidation). On 28.2.1997, the company created mortgage in favour of the respondent (hereafter the Bank) over and in respect of the said property by depositing the lease deed in original in lieu of grant of a credit facility viz. "Inland Letter of Credit" in terms of an arrangement entered into by and between them on 26.2.1997. (3.) Apart from the above mortgage, the Bank had obtained hypothecation of raw materials, goods and stocks under a deed of hypothecation dated 28.2.1997 from the petitioners. (4.) Alleging default on the part of the company to repay its debts/dues, the Bank had initiated legal proceedings against the company as well as its guarantors before the Calcutta Debts Recovery Tribunal No. 1 by filing an application under section 19 of The Recovery of Debts due to Banks and Financial Institutions Act, 1993. It was registered as OA No.135 of 2001. During pendency of the said proceedings, the company and the Bank entered into negotiation for settlement of the debts owed by the former. Ultimately, it was mutually agreed by and between the parties that the company would be required to pay a sum of Rs. 54 lakh towards full and final settlement of the claim of the Bank within 31.3.2006 and upon payment of such amount, all the securities held by the Bank would stand released. (5.) A communication to this effect was made by the Advocate for the Bank vide letter dated 25.3.2006, addressed to one of the Directors of the company. The letter reads as follows: "Under instructions from my client Punjab and Sind Bank, Asset Recovery Branch of 14/15, Old Court House Street, Kolkata-7000 001 I write to you as follows :That the settlement proposal initiated for your Account for which O.A. No.135 of 2001 is pending before the Debts Recovery Tribunal-I, Kolkata has been sanctioned by the Head Office on the following terms: 1. That you will suffer a decree for the entire amount of suit with pendenti lite and future interest till realisation along with costs as prayed in the plaint. 2. The above decree shall be deemed to have been satisfied, if you pay a sum of Rs. 54 Lacs latest by 30.3.2006. 3. In case of the default in the above payment, full amount of decree as per (i) above, shall become immediately payable. 4. If you pay the settlement amount before obtaining the consent decree, the factum of settlement be got recorded in the Court towards satisfaction of Banks claim in the suit. 5. Concession will be credited in the account only after full and final adjustment of the account. 6. Securities held will be released only after the full and final adjustment of the account. 7. Cases filed/pending against the Bank if any, are to be withdrawn by you to the entire satisfaction of the Bank. Please act strictly in terms of the aforesaid sanction to avail the same". (6.) According to the petitioners, the securities would include the original lease deed of the said property, the original guarantee documents executed by Sri Jagadish Prasad Podder and Sri Sushil Kumar Podder (individual guarantors) and three public limited companies (the corporate guarantors) and the deed of hypothecation of the raw materials, goods and stocks. (7.) Upon receipt of the aforesaid-letter, the company acted according to the terms and conditions mentioned therein and under cover of letter dated 29.3.2006 forwarded a pay order of even date for the settled sum of Rs. 54 lakh to the Bank towards full and final settlement of its dues and pro-tanto in respect of the aforesaid credit facility account. (8.) It is not in dispute that after receipt of the aforesaid sum of Rs. 54 lakh, the Bank filed an application and affidavit before the Tribunal on 16.5.2006 praying for dismissal/ withdrawal of OA No. 135/2001. The application was taken up for consideration by the Tribunal on 17.8.2006. Advocate for the Bank pressed the prayer for withdrawal of the proceedings and ultimately by order dated 17.8.2006, the Tribunal recorded as follows: "Learned counsel Mr. Provjyot Singh is present for the applicant Bank and Mr. S.S. Lanthra, Senior Manager of the applicant Bank is also present. Learned counsel Mr. D. Mukherjee alongwith learned counsel Mr. Saket Chowdhury is present for defdt. No.4. Provjyot Singh is present for the applicant Bank and Mr. S.S. Lanthra, Senior Manager of the applicant Bank is also present. Learned counsel Mr. D. Mukherjee alongwith learned counsel Mr. Saket Chowdhury is present for defdt. No.4. The matter is fixed today for hearing. Learned counsel for the Bank presses the petition dated 16.5.06 alongwith affidavit filed on that date for hearing. On the basis of the petition of the applicant Bank verified by Mr. S.S. Luthra, Senior Manager and the affidavit of Mr. Ruthra the learned counsel Mr. Singh submitted that in a out of Court settlement the applicant Bank has received Rs. 54 lakhs from the defdts. In view of such compromise the applicant Bank does not want to proceed further with the O.A. He submitted to dismiss the O.A. as withdrawn. Learned counsel appearing for the defdt No.4 has no objection. Considering the submission of the learned counsel the instant O.A. is dismissed as withdrawn and the petitioner alongwith affidavit is disposed of accordingly. Copy of this order be given to the parties." (9.) In spite of withdrawal of the proceedings before the Tribunal, the Bank had not released the securities. The company by several letters issued between 4.4.2006 and 7.2.2007 sought for release thereof but all attempts proved abortive: The Bank had issued three letters dated 11.4.2006, 11.6.2006 and 30.8.2006, whereby the company, inter alia, was requested to "adjust the other group accounts, personal overdraft account at other branches of the Bank and decreed a/c of M/s. Dheklapara Tea Company Ltd. B/o ARB, Calcutta at the earliest possible". (10.) The petitioners repudiated the claim of the Bank. In particular, it was claimed that they are in no way concerned or connected with the said M/s. Dheklapara Tea Company Ltd. (hereafter Dheklapara) and as such they cannot be made liable for the alleged dues of such company. Apart from the said credit facility account, the company further claimed that it was not enjoying any other credit facility and, therefore, having regard to full and final adjustment of the account in question the securities ought to be released. The Bank persisted in its demand resulting in refusal to release the same. (11.) Feeling aggrieved by such refusal of the Bank, the petitioners presented this petition before this Court on 4.4.2007 praying for, inter alia. The Bank persisted in its demand resulting in refusal to release the same. (11.) Feeling aggrieved by such refusal of the Bank, the petitioners presented this petition before this Court on 4.4.2007 praying for, inter alia. Mandamus on the Bank to withdraw, cancel, rescind and/or revoke the letters dated 11.4.2006, 11.6.2006 and 30.6,2006 and for a further Mandamus to release the securities referred to above. (12.) Mr. Sen, learned counsel for the petitioners, while referring to the relevant pleadings and the documents on record contended that the Bank has acted unreasonably and in an arbitrary manner and thus violated the guarantee enshrined in Article 14 of the Constitution. He urged the Writ Court to undo the wrong and the unnecessary harassment to which the petitioners have been subjected as a consequence of the Banks impugned refusal to release the securities. He relied on several decisions, to be referred hereafter, to buttress his contention that even in respect a dispute of the present nature, the Writ Court would be well within its jurisdiction to grant relief, as claimed unfettered by its self-imposed limitations. (13.) The writ petition has been opposed by Mr. Mitra, learned counsel appearing for the Bank. (14.) First, he contended that the Bank is not an instrumentality or agency of the State and hence is not an other authority within the meaning of Article 12 of the Constitution. Therefore, no writ petition is maintainable against it. In support of his submission, he relied on the decision in Sukhdev Singh v. Bhagatram, (1975) 1 SCCC 421. (15.) Secondly, he contended that since the petitioners seek to impeach contractual obligations the Writ Court is not the proper forum. The Bank, according to him, is carrying on business of commercial banking as any other nationalised and/or private bank and the impugned dealings have arisen out of and are incidents of usual lending activities against securities received by the Bank. No public law element is involved in such dealings and the Writ Court ought not to interfere in a dispute between parties in respect of mutual rights and obligations flowing from a contract. Such rights and obligations are private rights capable of being enforced by instituting a civil suit and hence the petitioners are not entitled to any relief in the writ jurisdiction. Such rights and obligations are private rights capable of being enforced by instituting a civil suit and hence the petitioners are not entitled to any relief in the writ jurisdiction. (16.) He relied on several decisions of the Apex Court in support of his aforesaid objection, viz.: (i) Lekhraj Sathramdas Lalvani v. N.M. Shah, Deputy Custodian cum Managing Officer, Bombay and Ors., AIR 1966 SC 334 ; (ii) Kulchhinder Singh and Ors. v. Hardayal Singh Brar and Ors., AIR 1976 SC 2216 ; (ill) M/s. RadhakrishnaAgarwal and Ors. v. State of Bihar and Ors., AIR 1977 SC 1496 : (iv) The Divisional Forest Officer v. Bishwanath Tea Co. Ltd., AIR 1981 SC 1368 ; (v) Bareilly Development Authority and Anr. v. Ajai Pal Singh and Ors., (1989) 2 SCC 116 ; (vi) State of U.P. and Ors. v. Bridge and Roof Company (India) Ltd., (1996) 6 SCC 22 ; (vii) Kerala State Electricity Board and Anr. v. Kurien E. Kalathil and Ors., (2006)6 SCC 293 ; (viii) State of Bihar v. Kalika Huer alias Kalika Singh and Ors., (2003) 5 SCC 448 ; (ix) National Highways Authority of India v. Ganga Enterprises and Anr., (2003) 7 SCC 410 ; and (x) Bareilly Development Authority v. Vrinda Gujarati and Ors., (2004) 4 SCC 606 . (17.) He further contended that Article 14 of the Constitution of India is not attracted in the instant proceedings. The present dispute does not involve questions of infringement or violation of any statutory provisions or statutory rights and that it would be an untenable and far fetched allegation that the Bank failed to perform a statutory obligation under the Transfer of Property Act, 1882 or the Contract Act, 1872. He submitted that the Bank had withheld release of the securities only to safeguard the public monies by way of outstanding amount of Rs. 20,37,646.27 against the loan granted to Dheklapara which is under the same group and managed and controlled by the Poddar Group. (18.) It was further contended that promissory estoppel would not apply against the Bank in the facts and circumstances of the instant proceedings as its action is for protection and to retrieve public monies as aforesaid. The decisions in M/s. Motilal Padampat Sugar Mills Co. (18.) It was further contended that promissory estoppel would not apply against the Bank in the facts and circumstances of the instant proceedings as its action is for protection and to retrieve public monies as aforesaid. The decisions in M/s. Motilal Padampat Sugar Mills Co. Ltd. v. The State of Uttar Pradesh and Ors., AIR 1979 SC 621 , Commissioner of Incone Tax v. B.N. Bhattacharya AIR 1979 SC 1725 , and Shrijee Sales Corporation and Anr. v. Union of India, (1997) 3 SCC 398 , were cited for the proposition that equity shall prevail over estoppel and that inequity shall not prevail over equity. (19.) It was next submitted by Mr. Mitra that Shri Prabhjot Singh, Advocate eviated from the authority given by the Bank. His letter was not in conformity with the terms which the Bank had stipulated in its letter dated 25.3.2006 addressed to him. The decision in Chunilal Mandal v. Hira Lal Mandal XXXII CWN 44, was cited for the proposition that a consent decree passed on concurrence by counsel in excess of authority may be reversed by the Court on finding that the history of limited authority granted by the client was true. Such misrepresentation by the advocate, he submitted, is also covered by section 238 of the Contract Act. (20.) That apart, it was argued that in view of the terms of settlement set out in the Banks actual letter dated 25.03.2006 to the said Advocate, it was clear that there was no accord or satisfaction and consequently the Bank resiled from the purported commitment in the Advocates letter to Shri Sushil Kumar Poddar. (21.) On facts, it was contended that the same persons viz. Vikram Poddar, Jagdish Prasad Poddar and Sushil Kumar Poddar are managing and in control of both the companies i.e. the company and Dheklapara and dealt with the Bank for loans obtained for both. The company, of which the Poddars are the alter ego, it was further contended, has not come before the Court with clean hands. Vikram Poddar, Jagdish Prasad Poddar and Sushil Kumar Poddar are managing and in control of both the companies i.e. the company and Dheklapara and dealt with the Bank for loans obtained for both. The company, of which the Poddars are the alter ego, it was further contended, has not come before the Court with clean hands. It has suppressed transaction the Bank had with Dheklapara at the instance of Vikram Poddar, Sushil Kumar Poddar and Jagdish Prasad Poddar who introduced Dheklapara while managing and controlling Dheklapara and sold the controlling interest (96% shareholding) behind the back of the Bank without its knowledge or consent, which still holds the title deeds of the lease of the garden as security by equitable mortgage in addition to guarantee by Vikram Poddar, Director and Sushil Kumar Poddar (while Jagadish Prasad Poddar was Managing Director) vide letter of Terai Tea Co. Ltd. dated 27-3.1999. The Bank, he submitted, has acted in public interest to protect and retrieve public monies and is thus endeavouring to realize the public monies by way of outstandings of loan to Dheklapara, a company within the management and control of the same group (the Poddars), since it has now no property/assets to recover the loan outstanding from Dheklapara. Such an action of the Bank is in public interest for realising public monies and the company has not suffered any detriment in having paid some amount to the Bank on account of outstanding, which is lesser than the amount due and payable. Since public equity prevails over private equity, unless some overwhelming circumstances are shown which have not been shown, he appealed to the Court not to interfere in the present case. (22.) It was, finally urged that the company and Dheklapara form a group managed along with defacto control by the Poddars. The definition of group in section 2(ef) of the Monopolies and Restrictive Trade Practices Act, 1969, and as referred to in section 108G of the Companies Act, were referred to together with the decision in Hinduithan Motors Ltd. v. The Monopolies Commission, AIR 1973 Cal 450 , for establishing that the banking accounts of the companies i.e. the company and Dheklapara were signed and executed by Vikram Poddar and Sushil Kumar Poddar, both of whom were guarantors for the loans guaranteed to the two companies. It is, therefore, crystal clear that Dheklapara was not an unknown company, as alleged, but was also under the control of the Poddars. Thus material facts have been suppressed disentitling the petitioners to relief. (23.) He, accordingly, prayed for dismissal of the writ petition. (24.) The contention that the Bank is not an authority within the meaning of Article 12 of the Constitution has been urged to be rejected. Apart from other decisions of the Apex Court where public sector banks have been held to be State within the meaning of Article 12 of the Constitution (see Hyderabad Commercials v. Indian Bank, AIR 1991 SC 247 , where the respondent bank was held to be an instrumentality of the State), the Bank itself has been held to be so in the decision of the Apex Court in Punjab and Sind Bank v. Mohinder Pal Singh, (2005) 12 SCC 747. In view thereof, reliance placed on Sukhdev Singh (supra) is misplaced. The objection being clearly untenable is overrule. (25.) Next, this Court would deal with the objection that for enforcing the terms and conditions of a contract, the Writ Court is not the appropriate forum and the parties must be relegated to a suit. Though the decisions cited by Mr. Mitra support the contention that a writ petition is not an appropriate remedy for impeaching contractual obligations, there are other decisions of the Apex Court wherein a shift in stance is discernible. (26.) However, before I take note of the said decisions, I consider it prudent to consider the decision in Central Group and Ors. v. Calcutta Metropolitan Development Authority and Ors., 1982 (2) CHN 90 . This decision, rendered by Honble T.K. Basu, J. (as His Lordship then was), was heavily relied on by Mr. Sen while persuading me to hold the writ petition to be maintainable. (27.) It appears from a perusal thereof that Radhakrishna Agarwal (supra), BishwanathTea Co. Ltd, (supra) and Motilal Padampat Sugar Mills (supra) along with a host of other decisions were considered. Sen while persuading me to hold the writ petition to be maintainable. (27.) It appears from a perusal thereof that Radhakrishna Agarwal (supra), BishwanathTea Co. Ltd, (supra) and Motilal Padampat Sugar Mills (supra) along with a host of other decisions were considered. His Lordship held that the Apex Court in Radhakrishna Agarwal (supra) repelled the challenge in respect of violation of Article 14 of the Constitution because of lack of proper pleadings and materials and that it had no occasion to pronounce its decision on the question of arbitrariness in State action pertaining to contractual obligations being a permissble ground on which a writ petition may be founded since such a ground was never raised. It was ultimateh held as follows: "46. The submissions of the petitioners on this aspect of the case which I accept may be summarized as follows :- 1. If a petitioner seeks to enforce a purely contractual term, the Court normally does not entertain as application for such purpose under Article 226 of the Constitution of India. But when one of the contracting parties is the State, and a challenge is thrown by the petitioner alleging that the action is arbitrary, an attack to such an action under Article 14 of the Constitution of India is fully available. 3. The development of administrative law and activist dimension of Article 14 of the Constitution of India, as laid down in the International Airport Authoritys case has brought out a distinction between a purely private right and a right of an individual as a member of the public vis a vis the State. If there is an arbitrary revocation of contract by the State, the contractor has two rights available to him, namely, the Constitutional right as also the right under the contract. These two rights are available when there is a concluded contract, only the constitutional right is available. 4. It is not correct to say that the relief prayed for in the Writ application amounts to the relief of specific performance. In such a case the Court is not really concerned with the mode or manner of performance. The only question that arises is whether action complained of amounts to an arbitrary action on the part of the State or not. If it is found to be arbitrary, then it should be struck down. In such a case the Court is not really concerned with the mode or manner of performance. The only question that arises is whether action complained of amounts to an arbitrary action on the part of the State or not. If it is found to be arbitrary, then it should be struck down. The Court is not really concerned with the future performance of the contract. That will take its own course in accordance with law." (28.) I am in respectful agreement with the views expressed by this Court in Central Group (supra). Radhakrishna Agarwal (supra) is not an authority for negating a writ petitioners challenge to breach of contractual obligations by the State based on arbitrariness and unreasonableness offending Article 14 of the Constitution, and particularly when no disputed question of fact is involved. (29.) Even otherwise, Radhakrishna Agarwal (supra) does not in absolute terms rule that in a case where a contract has been executed by the parties one of which is a State, a plea of violation of Article 14 by the State in respect of its contractual obligations cannot be raised. In paragraph 10, it was ruled as follows: "10. ***But, after the State or its agents have entered into the field of ordinary contract, the relations are no longer governed by the constitutional provisions but by the legally valid contract which determines rights and obligations of the parties inter se. No question arises of violation of Article 14 or of any other constitutional provision when the State or its agents, purporting to act within this field, perform any act. In this sphere, they can only claim rights conferred upon them by contract and are bound by the terms of the contract only unless some statute steps in and confers some special statutory power or obligation on the State in the contractual field which is apart from contract." (30.) In Kumari Shrtiekha Vidyarthi v. State of Uttar Pradesh and Ors., AIR 1991 SC 537 , it has been held that it would be alien to our constitutional scheme to accept the argument of exclusion of Article 14 in contractual matters. It was further held that impact of every State action on public interest is alone a factor sufficient to import at least a minimum requirement of public law obligations to the extent challenge is made on the ground of violation of Article 14 by alleging that the impugned act is arbitrary, unfair or unreasonable. The fact that the dispute also falls within the domain of contractual obligations would not relieve the State of its obligation to comply with the basic requirements of Article 14. An additional contractual obligation cannot divest the claims of the guarantee under Article 14 of non-arbitrariness at the hands of the State in any of its action. (31.) It has been held in ABL International Ltd. v. Export Credit Guarantee Corporation of India Limited, (2004) 3 SCC 553 , that in an appropriate case, a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable. Yet again, in Indian Bank v. Godhara Nagrik Coop. Credit Society Ltd., (2008) 12 SCC 541 , it was observed: "16. It is one thing to say that the public sector banks having regard to the provisions of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 should discharge their functions keeping in mind the larger public interest but ordinarily in the matter of enforcement of contract, they are to be governed by the terms thereof, which would not be amenable to writ jurisdiction of the High Court unless the actions of the banks are found to be wholly arbitrary and unreasonable." Quite recently, in Karnataka State Forest Industries Corporation v. Indian Rocks, (2009) 1 SCC 150 , it has been held that: "Although ordinarily a Superior Court in exercise of its writ jurisdiction would not enforce the terms of a contract qua contract, it is trite that when an action of the State is arbitrary or discriminatory and, thus, violative of Article 14 of the Constitution of India, a writ petition would be maintainable." (32.) Even a dispute arising out of a non-statutory contract between parties, one of which is a State, could be urged before a Writ Court for adjudication based on arbitrary State action has been recognised by a Division Bench of this Court in its decision in The Director of Supply and Disposals and Anr. v. M/s. Vijay Shree Ltd. and Ors., AIR 2006 Cal 46 . (33.) Four of the decisions relied on by Mr. Mitra [Radhakrishna Agarwal (supra), Ajai Pal Singh (supra), Bishwanath Tea Co. (supra) and Kurien E. Kalathil (supra)] were considered in Enkon Private Limited and Anr. v. Bijoli Studio Private Limited and Ors., 2008 (1) CHN 122 . The Division Bench of this Court while repelling the challenge that the writ petition was not maintainable (since it purported to enforce the terms of a non-statutory contract) held that representation of an existing fact must be distinguished from a representation that something will be done in future. The Court proceeded to observe as follows: "The former may, if it amounts to a representation as to some fact alleged at the time to be actually in existence, raise an estoppel, if another person alters his position relying upon that representation. A representation that something will be done in future may also involve an existing intention to act in future in the manner represented. If the representation is acted upon by another person it may, unless the statute governing the person making the representation provides otherwise, results in an agreement enforceable at law; if the statute requires that the agreement shall be in a certain form, no contract may result from our acting on such representation but the law is not powerless to raise in appropriate cases an equity against him to compel performance of the obligation arising out of his representation." (34.) Another Division Bench of this Court in Central Bank of India and Ors. v. Gour Nitya Industries Ltd. and Ors., AIR 2008 Cal 207 , while dealing with a dispute similar to the one on hand upon consideration of the decision of the Apex Court in Ganga Enterprises (supra) relied on by Mr. Mitra, overruled the contention raised on behalf of the appellant bank and the decision of the learned single Judge in Gour Nitya Tea and Industries Ltd. and Anr. v. Central Bank of India and Ors., AIR 2008 Cal 193 , was upheld. Mitra, overruled the contention raised on behalf of the appellant bank and the decision of the learned single Judge in Gour Nitya Tea and Industries Ltd. and Anr. v. Central Bank of India and Ors., AIR 2008 Cal 193 , was upheld. (35.) In the conspectus of the ratio decidendi of the decisions referred to above as well as other decisions on the point (which have not been cited by either party), my understanding of the legal position is that ordinarily an application under Article 226 of the Constitution is not maintainable for enforcement of a contractual right against the State being a party to the contract. A writ remedy may be unavailable to enforce a contract qua contract. A Court of Writ may be loath to exercise discretion in contractual disputes where interference would not be in furtherance of public interest. It is settled law that discretionary powers are exercised not merely on the making out of a legal point but only when overwhelming public interest requires interference. Even if the action is challenged on the ground of arbitrariness and discrimination and the Court considers that disputed questions of fact have surfaced which cannot be effectively resolved on the basis of affidavit evidence, it may in its wisdom refuse to exercise discretion. It is only in appropriate cases that the extra-ordinary jurisdiction ought to be exercised. What would be an appropriate case necessarily has to be decided on the basis of the facts presented and it would not be prudent to even attempt to lay down any guidelines in this behalf. (36.) However, without fear of contradiction, it may be held that a Writ Court in exercise of its discretion may entertain a writ petition if it is established by a party to the contract that while no disputed questions of fact are involved, not only a private right flowing from the contract has been breached by the State, being the other party, but such breach either amounts to offending statutory provisions or may validly be termed to be acts which are wholly arbitrary and unreasonable, forbidden by Article 14 of the Constitution. In such exceptional cases, it would be futile to contend that in respect of contractual dispute the writ jurisdiction of the High Court cannot be invoked. In such exceptional cases, it would be futile to contend that in respect of contractual dispute the writ jurisdiction of the High Court cannot be invoked. (37.) Keeping in mind the aforesaid principles, it would be my endeavour to determine whether apart from breach of the settlement arrived at between the company and the Bank resulting in withdrawal of proceedings before the Tribunal, the company in law can enforce any right conferred by statute and/ or the Bank is statutorily obliged in the light of the settlement in question to honour the commitment made by it. Section 63 of the Contract Act provides as follows: "63. Promise may dispense with or remit performance of promise.-Every promise may dispense with or remit, wholly or in part, the performance of the promise made to him, or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit." Illustration (b) thereof says: "(b) A owes B 5,000 rupees. A pays to B, and B accepts in satisfaction of the whole debt, 2,000 rupees paid at the time and place at which the 5,000 rupees were payable. The whole debt is discharged." (38.) Section 63 of the Contract Act embodies the principle of discharge of contract by accord and satisfaction. The Apex Court in National Insurance Co. v. Boghara Polyfab (P) Ltd. (2009) 1 SCC 267 , explained the principle of discharge of contract by accord and satisfaction. In paragraph 27 of the decision, it held as follows. "27. While discharge of contract by performance refers to fulfilment of the contract by performance of all the obligations in terms of the original contract, discharge by "accord and satisfaction" refers to the contract being discharged by reason of performance of certain substituted obligations. The agreement by which the original obligation is discharged is the accord, and the discharge of the substituted obligation is the satisfaction. A contract can be discharged by the same process which created it, that is, by mutual agreement. A contract may be discharged by the parties to the original contract either by entering into a new contract in substitution of the original contract; or by acceptance of performance of modified. A contract can be discharged by the same process which created it, that is, by mutual agreement. A contract may be discharged by the parties to the original contract either by entering into a new contract in substitution of the original contract; or by acceptance of performance of modified. obligations in lieu of the obligations stipulated in the contract." (emphasis supplied in original*) (39.) In paragraph 28 of the same decision, the Apex Court approved the decision of the Privy Council in Payana Reena Saminathan v. Pana Lana Palaniappa, 41 Indian Appeals 1941, wherein it was held as under: "... The receipt given by the appellants and accepted by the respondent, and acted on by both parties proves conclusively that all the parties agreed to a settlement of all their existing disputes by the arrangement formulated in the receipt. It is a clear example of what used to be well known as common law pleading as accord and satisfaction by a substituted agreement. No matter what were the respective rights of the parties inter se they are abandoned in consideration of the acceptance by all for a new agreement. The consequence is that when such an accord and satisfaction takes place the prior rights of the parties are extinguished. They have in fact been exchangedfor the new rights; and the new agreement becomes a new departure, and the rights of all the parties are fully represented by it" (emphasis supplied in original*) (40.) The decision in Kapur Chand Godha and Ors. v. Mir Nawab Himayatalikhan Azamjah, AIR 1963 SC 250 , may also be referred to in this connection. In that case, the Apex Court held on a construction of section 63 and illustration (c) thereof that the appellants having accepted payment in full satisfaction of their claim were not entitled to sue the respondent for the balance. (41.) The present case appears to be covered by section 63, illustration (b) supra. The Bank having accepted payment of Rs. 54 lakh in full satisfaction of its claim, the company had discharged its liability by accord and satisfaction. (42.) Now the question is whether the Bank is entitled to retain the securities and not release the same in favour of the company for the purpose of recovering sums which might have been due to it under some other contract from the other company i.e. Dheklapara, having common Directors. (42.) Now the question is whether the Bank is entitled to retain the securities and not release the same in favour of the company for the purpose of recovering sums which might have been due to it under some other contract from the other company i.e. Dheklapara, having common Directors. (43.) Section 60 of the Transfer of Property confers right to redeem and the party aggrieved may enforce this right. It provides as follows : "60. Right of mortgagor to redeem.-At any time after the principal money has become due, the mortgagor has a right, on payment or tender, at a proper time and place, of the mortgage-money, to require the mortgagee (a) to deliver to the mortgagor the mortgage-deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee, (b) where the mortgagee is in possession of the mortgaged property, to deliver possession thereof to the mortgagor, and (c) at the cost of the mortgagor either to re-transfer the mortgaged property to him or to such third person as he may direct, or to execute and (where the mortgage has been effected by a registered instrument) to have registered an acknowledgment in writing that any right in derogation of his interest transferred to the mortgagee has been extinguished: Provided that the right conferred by this section has not been extinguished by act of the parties or by decree of a Court. The right conferred by this section is called a right to redeem and a suit to enforce it is called a suit for redemption. Nothing in this section shall be deemed to render invalid any provision to the effect that, if the time fixed for payment of the principal money has been allowed to pass or no such time has been fixed, the mortgagee shall be entitled to reasonable notice before payment or tender of such money. Nothing in this section shall be deemed to render invalid any provision to the effect that, if the time fixed for payment of the principal money has been allowed to pass or no such time has been fixed, the mortgagee shall be entitled to reasonable notice before payment or tender of such money. Redemption of portion of mortgaged property.-Nothing in this section shall entitle a person interested in a share only of the mortgaged property to redeem his Own share only, on payment of a proportionate part of the amount remaining due on the mortgage, except only where a mortgagee, or, if there are more mortgagees than one, all such mortgagees, has or have acquired, in whole or in part, the share of a mortgagor." (44.) While considering this provision, the Apex Court in Prtihi Nath Singh v. Suraj Ahir and Ors., AIR 1963 SC 1041 , had the occasion to observe as follows: "4:***When the mortgage money is paid by the mortgagor to the mortgagee, there does not remain any debt due from the mortgagor to the mortgagee, and therefore the mortgage can no longer continue after the mortgage money has been paid. The transfer of interest represented by the mortgage was for a certain purpose, and that was to secure payment of money advanced by way of loan. A security cannot exist after the loan had been paid up. If any interest in the property continues to vest in the mortgagee subsequent to the payment of the mortgage money to him, it would be an interest different from that of a mortgagees interest. The mortgage as a transfer of an interest in immovable properly for the purpose of securing payment of money advanced by way of loan must come to an end on the payment of the mortgage money. 7. It is to be noted that these provisions do not state when a mortgage ceases to be a mortgage. They simply describe the right of a mortgagor to redeem. Now, what is this right and, in what circumstances does it arise? The right arises on the principal money, payment of which is secured by the mortgage deed, becoming due. 7. It is to be noted that these provisions do not state when a mortgage ceases to be a mortgage. They simply describe the right of a mortgagor to redeem. Now, what is this right and, in what circumstances does it arise? The right arises on the principal money, payment of which is secured by the mortgage deed, becoming due. The right entitles the mortgagor, on his paying or tendering to the mortgagee the mortgage money to ask him (i) to deliver to him the mortgage deed and other documents relating to the mortgaged property; (ii) to deliver possession to the mortgagor, if the mortgagee is in possession; and (iii) to re-transfer the mortgaged property in accordance with the desire of the mortgagor. If the mortgagee receives the money and does not perform any of the three acts required of him to be done, the question arises whether this non-compliance with the demands will make the mortgage continue. The provisions of the section do not say so and there appears no good reason why the mortgage should continue. If the mortgagee is not to perform these acts the mortgagor is not to pay the amount. If, however, the mortgage money has been received by the mortgagee and thereafter he refuses to perform the acts, he is bound to do, the mortgagor can enforce his right to get back the mortgage document, the possession of the mortgaged property and the reconveyance of that property through Court. A new right to get his demands enforced through the Court thus arises as a result of the provisions of section 60 of the Act." (45.) Though in that case the Court was dealing with the case of the mortgagor having paid the mortgagee the money due whereupon the mortgagee refused to perform acts which he is bound to do under section 60 of the Transfer of Property Act, there is no reason as to why the right of redemption may not be enforced in a case of discharge of contract by accord and satisfaction. The right conferred by section 60 being a statutory as well as a legal right, the company in exercise of its right of ownership has a right to get back the mortgage deed and/or other documents once the loan is liquidated and the Bank has a corresponding statutory obligation to return such documents relating to the mortgaged property and the hypothecated goods. A right recognised by a statute dehors the private right arising from the contract can be said to have accrued in favour of the company to have the same enforced through Court and there is no good reason to see why a Writ Court may not be approached challenging such arbitrary, unfair and unreasonable act of the Bank in not returning the securities in such a case, particularly when the issue is capable of being resolved on affidavit evidence. (46.) The only other point necessary for consideration in such case would be whether the Bank is justified in its action of withholding the securities. Section 171 of the Contract Act confers on the Bank the power to exercise general lien. However, in the present case, it is not the Banks case that it invoked such power. In the absence thereof and no other provision of law having been brought to my notice which authorises the Bank in realising public monies in the manner it seeks to do, its impugned action can hardly be countenanced. (47.) The contention that since the Bank has no properties/assets to recover the loan outstanding from Dheklapara is no ground either for not delivering the mortgage deed and other documents upon receipt of Rs. 54 lakh from the petitioner. (48.) The Bank ought to have been vigilant before issuance of the letter dated 25.3.2006 referred to above. The endeavour of the Bank to shift the blame on the Advocate who appeared on its behalf before the Tribunal cannot be appreciated. The settlement proposal had been sanctioned by the Head Office of the Bank. The Advocate conveyed the same to the company. The Bank has not pleaded ignorance of the terms of the letter dated 25.3.2006 issued by the Advocate. In the event there was any act of misdemeanor on the part of the Advocate for the Bank, there is no reason as to why Rs. The Advocate conveyed the same to the company. The Bank has not pleaded ignorance of the terms of the letter dated 25.3.2006 issued by the Advocate. In the event there was any act of misdemeanor on the part of the Advocate for the Bank, there is no reason as to why Rs. 54 lakh was accepted from the petitioners in the first place and thereafter application was filed on 16.5.2006 together with an affidavit before the Tribunal praying for dismissal/withdrawal of O.A. 135 of 2001. The application and the affidavit were considered by the Tribunal three months after filing thereof. The Bank could have well returned the amount of Rs. 54 lakh to the company and pressed for withdrawal of such application if it had reason to believe that it would stand to lose in the bargain. It is noteworthy that alongwith the Advocate, a Senior Manager of the Bank was present before the Tribunal on 17.8.2006 when, based on the compromise, the original application was dismissed as withdrawn. The Bank, therefore, is absolutely unjustified in putting the blame on the shoulders of the Advocate engaged by it. (49.) The decision in Chunilal Mandal (supra) does not assist the Bank. Even if the Advocate had exceeded his authority, the remedy of the Bank lay in seeking reversal of the order of the Tribunal by initiating appropriate proceedings in accordance with law, and not in withholding the securities. (50.) The other objection to the effect that some of the Directors of the company are also the Directors of Dheklapara functioning as a group and, therefore, to protect public monies the impugned refusal has been necessitated does not also impress me at all. The grievance which the petitioners have voiced in the petition cannot be said to have any direct relation with the outstandings of Dheklapara. Each company has a separate legal existence apart from its shareholders. The company offered securities for the purpose of enjoying credit facility. The Bank proposed to settle the account on payment of Rs. 54 lakh, and promised to release the securities "after the full and final adjustment of the account". Once payment was received, liability devolved on the Bank to return the securities. The company offered securities for the purpose of enjoying credit facility. The Bank proposed to settle the account on payment of Rs. 54 lakh, and promised to release the securities "after the full and final adjustment of the account". Once payment was received, liability devolved on the Bank to return the securities. If at all the tea estate has been transferred behind the back of the Bank, it is free to pursue its remedy before the appropriate forum but that cannot be considered to be a valid ground for justifying its impugned action. Endeavour of the Bank to realise the outstandings of loan sanctioned in favour of Dheklapara in the manner impugned cannot but be termed arbitrary and without lawful authority. I am reminded of a talisman of the father of the nation that says even a small wrong can never justify a greater good. (51.) On consideration of the legal position that certain statutory provisions could be said to have stepped in conferring special statutory obligations on the Bank in the contractual field which is apart from the contract between the parties, I am unable to hold that the dispute in question falls within the realm of private law and that no public law element is assotiated with it. It is declared that the Bank is liable to return the securities to the company for due discharge of its debts upon acceptance of the entire consideration in terms of the offer letter dated 25.3.2006. (52.) There shall be orders in terms of prayers (a) and (b) of the petition, to be complied with by the Bank as early as possible, but not later than a month from date. (53.) The writ petition stands allowed. However, parties shall bear their own costs. Urgent photostat certified copy of this judgment, if applied for, be furnished to the parties as early as possible. Writ petition allowed.