Writ Petition is not maintainable even there is breach of contract between the parties.
In the Matter of United Bank of India, a “corresponding new bank”, constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and the provisions of the said Act lays down a pervasive control of the Central Government and the Reserve Bank of India (in short WPA 1998 OF 2020 RBI) in its functioning, I am inclined to borrow the language of the Hon’ble Supreme Court of India in Sagar Thomas (supra) though the same in respect of a private company carrying on banking business. The control of the Central Government and RBI over United Bank of India (now having been merged with Punjab National Bank) may bring it within the ambit of Article 12 of the Constitution of India but a contract entered into by such bank with its constituent while carrying on business or commercial activity of banking as in the instant case is a pure and simple contract without any statutory flavour. The RBI guidelines in the instant case operates in the interest of banking system or in the interest of monetary stability or sound economic growth having due regard to the interest of the depositors and does not incorporate any statutory flavour to the contract in hand. This brings such a contract like that in hand to the third category of cases specified in Radhakrishna Agarwal (supra). The breach alleged in such case like that in hand are that of contractual provisions pure and simple and no writ lies or order can be issued under Article 226 of the Constitution of India to compel the authorities to remedy such breach of contract. In the instant case, the writ petitioner is seeking release of the properties mortgaged to secure the loan on the ground of repayment of a substantial portion thereof. The prayer for release on being made to the bank has been rejected in 2016 which is under challenge in the writ petition filed in 2020 after about four years relying on a valuation WPA 1998 OF 2020 report of 2018. The breach complained of according to me falls in the third category of case as spelt out in Radhakrishna Agarwal (supra) and no writ lies or order can be made under Article 226 of the Constitution compelling the respondent bank to remedy the breach of contract pure and simple.
f) In a subsequent judgement of the Hon’ble Supreme Court reported in (2006) 10 SCC 236 (Noble Resources Ltd vs. State of Orissa & Anr.) Radhkrishna Agarwal (supra) and ABL International (supra) (cited by the petitioner) were considered. In Noble Resources Ltd. (supra) the Hon’ble Supreme Court after considering various authorities has brought a distinction between non-statutory contract and a statutory contract. A further distinction is also made between performance of statutory duty or dealing of a public matter by a State and its commercial activities. The Hon’ble Supreme Court then went on to hold that contractual matters are, thus, ordinarily beyond the realm of judicial review. The application of judicial review in such cases, are, however, very limited. Judicial review according to the said judgement is permissible when mala fide or ulterior motive is attributed. The Court has to bear in mind while considering the scope of judicial review so far it relates to the exercise of contractual powers by Government bodies that the principle of judicial review is to prevent arbitrariness or favouritism. The Court has to see whether interference is needed for larger public interest or that power has WPA 1998 OF 2020 been exercised for any collateral proposition. The Supreme Court has also held in Noble Resources (Supra) that existence of disputed question of fact or availability of an alternative remedy by itself would not decline the High Court in exercising its jurisdiction under Article 226 of the Constitution of India.
g) In another judgement reported in (2015) 9 SCC 433 State of Kerala and others vs. M.K. Jose, the Hon’ble Supreme Court has considered several authorities including ABL International Ltd. (Supra) and Noble Resources Ltd. (Supra) to find out in which type of case judicial review relating to contracts entered by the Government are called for.
h) In M.K. Jose (Supra) while approving the views taken in ABL International (supra), wherein legal principles as to maintainability of writ petition was considered, the Hon’ble Supreme Court quoted with approval the following See SCC Page 443 paragraph 17:
17. In ABL Internatinal Ltd. v. Export Credit Guarantee Corpn. Of India Ltd., a two-Judge Bench after referring to various judgments as well as the pronouncement in Gunwant Kaur and Century Spg. and Mfg. Co. Ltd. v. Ulhasnagar Municipal Council, has held thus: (ABL International case, SCC pp. 568-69 & 572, paras 19 & 27) ” 19. Therefor, it is clear from the above enunciation of law that merely because one of the parties to the litigation raises a dispute in regard to the facts of the case, the court entertaining such petition under Article 226 of the Constitution is not always bound to relegate the parties to a suit. In the above case of Gunwant Kaur this Court even went to the extent of holding that in a writ petition, if the facts require, even oral evidence can be taken. This clearly shows that in an appropriate case, the writ court has the jurisdiction to entertain a writ petition involving disputed questions of fact and there is no absolute bar for entertaining a writ petition even if the same arises out of a contractual obligation and/or involves some disputed questions of fact.
27. From the above discussion of ours, the following legal principles emerge as to the maintainability of a writ petition:
(a) 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.
(b) Merely because some disputed questions of fact arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule.
(c) A writ petition involving a consequential relief of monetary claim is also maintainable.”
While laying down the principle, the Court sounded a word of caution as under: (ABL International case, SCC p. 572, para 28) “28. However, while entertaining an objection as to the maintainability of a writ petition under Article 226 of the Constitution of India, the court should bear in mind the fact that the power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provisions of the Constitution. The High Court having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. The Court has imposed upon itself certain restrictions in the exercise of this power. (See Whirlpool Corpn. v. Registrar of Trade Marks.) And this plenary right of the High Court to issue a prerogative writ will not normally be exercised by the Court to the exclusion of other available remedies unless such action of the State or its instrumentality is arbitrary and unreasonable so as to violate the constitutional mandate of Article 14 or for other valid and legitimate reasons, for which the Court thinks it necessary to exercise the said jurisdiction.”
i) The Hon’ble Supreme Court in M.K. Jose (Supra) has further held See SCC Page 444 paragraph 18:
“18. It is appropriate to state here that in the said case, the Court granted the relief as the facts were absolutely clear from the documentary evidence brought which pertain to interpretation of certain clauses of contract of insurance. In that context, the Court opined: (ABL International Ltd. case, SCC p.
578, para 51) “51. … The terms of the insurance contract which were agreed between the parties were after the terms of the contract between the exporter and the importer were executed which included the addendum, therefore, without hesitation we must proceed on the basis that the first respondent issued the insurance policy knowing very well that there was more than one mode of payment of consideration and it had insured failure of all the modes of payment of consideration. From the correspondence as well as from the terms of the policy, it is noticed that existence of only two conditions has been made as a condition precedent for making the first respondent Corporation liable to pay for the insured risk, that is: (i) there should be a default on the part of the Kazak Corporation to pay for the goods received; and (ii) there should be a failure on the part of the Kazakhstan Government to fulfil their guarantee.” And it eventually held: (SCC pp. 578-79, para 51) “51. … We have come to the conclusion that the amended Clause 6 of the agreement between the exporter and the importer on the face of it does not give room for a second or another construction than the one already accepted by us. We have also noted that reliance placed on sub-clause (d) of the proviso to the insurance contract by the Appellate Bench is also misplaced which is clear from the language of the said clause WPA 1998 OF 2020 itself. Therefore, in our opinion, it does not require any external aid, much less any oral evidence to interpret the above clause. Merely because the first respondent wants to dispute this fact, in our opinion, it does not become a disputed fact. If such objection as to disputed questions or interpretations is raised in a writ petition, in our opinion, the courts can very well go into the same and decide that objection if facts permit the same as in this case.”
j) The Hon’ble Supreme Court in M.K. Jose (Supra) quoted with approval the following findings in Noble Resources Ltd. (supra) See SCC page 445 paragraph 19.
19. In this regard, a reference to Noble Resources Ltd. vs. State of Orissa would be seemly. The two-Judge Bench referred to ABL International Dwarkadas Marfatia & Sons v. Port of Bombay, Mahabir Auto Stores v. Indian Oil Corpn. and Jamshed Hormusji Wadia v. Port of Mumbai and opined thus: (Noble Resources case, SCC p. 246 para 29) “29. Although the scope of judicial review or the development of law in this field has been noticed hereinbefore particularly in the light of the decision of this Court in ABL International Ltd. each case, however, must be decided on its own facts. Public interest as noticed hereinbefore, may be one of the factors to exercise the power of judicial review. In a case where a public law element is involved, judicial review may be permissible. (See Binny Ltd. v. V. Sadasivan and G.B. Mahajan v. Jalgaon Municipal Council.)”
Thereafter, the Court in Noble Resources case, proceeded to analyse the facts and came to hold that certain serious disputed questions of facts have arisen for determination and such disputes ordinarily could not have been entertained by the High Court in exercise of its power of judicial review and ultimately the appeal was dismissed.”
k) Applying the ratio as laid down in the several Supreme Court judgements, referred to hereinabove, to the case in hand, I find that the sanction letter dated 5th September, 2005 issued by the respondent bank and accepted by the petitioners amounts to a non- statutory contract. It also falls within the third category of cases referred to in M/s Radhakrishna Agarwal (supra). The mortgage being a consolidated one along with valuation relied upon gives rise to disputed questions of fact and is not dependent on the interpretation of the clauses of contract alone. Any documentary evidence that may be brought through affidavits will also not improve the situation to enable the writ court to decide the issues raised. The judgement in ABL International (supra) therefor lays no assistance to the petitioner in the facts of the instant case. In that view of the matter, following the ratio laid down in M/s Radhakrishna Agarwal (supra) no writ of order can be issued under Article 226 of the WPA 1998 OF 2020 Constitution of India in such cases to compel “the authority to remedy a breach of contract pure and simple” is an accepted proposition. The writ petition, therefor, is not maintainable.
l) The contract between the respondent-bank and the petitioner clearly and unambiguously reveals that the petitioner after voluntarily accepting the conditions imposed by the respondent-bank have entered into the realm of concluded contract, pure and simple. The petitioner can only claim the right conferred upon it by the said contract and bound by the terms of the contract unless some statute steps in and confers some special statutory obligations on the part of the bank in the contractual field. The contract between the petitioner and the respondent-bank so far as the issue of release of mortgage upon repayment of a portion of the aggregate loan does not include any statutory terms and/or conditions. The petitioner’s remedy, if any lies for redemption of mortgage and not by filing writ petition seeking release of mortgage properties under the contract.
m) I have also considered the subject ‘contract’ from another angle. In the light of the ratio laid down in ABL International (Supra) assuming without admitting that the valuation of the mortgaged properties done by the Bank in 2018 relied upon by the petitioner to be a disputed question of fact and that a Civil proceeding is the alternative remedy available to the petitioner to redress his grievances does not create an impediment in exercising the writ jurisdiction, then also my answer will be the same as the contract in question is non-statutory WPA 1998 OF 2020 in nature wherein remedy for a breach of contract pure and simple has been sought for. There is no public interest element involved in the matter, no case to attract the provisions of Article 14 of the Constitution of India has also been made out. There is no mala fide or ulterior motive attributed to the bank which can compel interference under judicial review. The rejection to release the mortgaged properties does not involve any favouritism for which interference is required to prevent arbitrariness in the instant case. The bank has only said that unless the entire loan is repaid, the mortgage cannot be released. This does not mean that the bank has acted mala fide or with an ulterior motive. It has only conveyed its view on an appreciation of the contract between itself and the petitioner. Merely because the respondent bank acts in compliance with the Reserve Bank of India (RBI Guidelines) as held in Sagar Thomas (supra), the respondent petitioner though may be a nationalized bank, cannot be said to have failed in discharging any public function or public duty while carrying on business or commercial activity of Bank. Even if, a writ petition is maintainable against the respondent bank then also the facts of the instant case does not permit interference in the matter by this Court in exercise of its jurisdiction under Article 226.
Civil Lawyers in Delhi/ Civil Litigation Law Firm Delhi,India/Leges Juris. 