2013 (9) TMI 1195 - HC - Indian Laws

Summary

Issues involved: Dispute over refund of processing fee paid to a bank for taking over a cash credit account, maintainability of writ petition against a scheduled bank governed by banking regulations.

The petitioner, a proprietorship concern trading surgical items, paid a processing fee of &8377; 1,79,238 to respondent No. 3-Bank for taking over its cash credit account from respondent No. 4-Bank. However, respondent No. 3-Bank did not proceed with taking over the account, leading to a demand for refund by the petitioner. Despite no resolution, the banking Ombudsman's intervention, and a letter from respondent No. 3-Bank justifying the non-refundable nature of processing charges, the petitioner filed a writ petition seeking refund with interest under Article 226 of the Constitution of India.

Respondent No. 3-Bank's defense was that they processed the application and kept pay orders ready, but the petitioner requested to hold the matter. They claimed to have made efforts with respondent No. 4-Bank for the account takeover, which was denied by respondent No. 4-Bank. Respondent No. 3-Bank submitted pay orders with an endorsement "P.O. cancelled as per mail," without producing the alleged mail from the petitioner. A preliminary objection on the maintainability of the writ petition was raised by respondent No. 3-Bank due to its private bank status, countered by the petitioner citing relevant banking regulations.

The High Court considered the nature of respondent No. 3-Bank as a Scheduled Bank governed by banking regulations and found the writ petition maintainable. It noted the lack of documentary evidence supporting respondent No. 3-Bank's claims regarding the petitioner's request to hold the matter and respondent No. 4-Bank's refusal for the account takeover. The court observed that the excuses made by respondent No. 3 seemed unsubstantiated, leading to the conclusion that the petitioner was entitled to a refund of the processing fee with interest at 12% per annum if not refunded within 30 days.

In conclusion, the High Court allowed the writ petition, directing respondent No. 3-Bank to refund the processing fee of &8377; 1,79,238 to the petitioner within 30 days, with interest at 12% per annum in case of delay. Each party was left to bear its own costs in the matter.