2024 (9) TMI 608 - HC - Indian Laws

Permission for withdrawal of petition - improper declaration of account as NPA by respondent bank - seeking discretionary reliefs under Article 226 of the Constitution - HELD THAT - This Court may hasten to point out that although submissions with regard to Clause 8 (2) (d) (f) are tenable in law and the Ombudsman had jurisdiction to pass appropriate orders, learned counsels for respondents No.1 and 2 clearly brought to the fore that the account of the petitioner was never declared as an NPA, instead, it was irregular for their being several blemishes on its part and evidently,the petitioner is not coming clean since after the sanction/ credit facilities by respondent No.2/bank, sale proceeds appear to have been diverted and routed through the other bank i.e. BOB as per the statement of account placed on the record by respondent No.2 (Annexure R1-2), which would show that a credit of Rs. 34,82,875/- and Rs. 39,78,746/- on RTGS from BSF, Jammu was routed and credited in the account with BOB on 23.05.2019 and 30.07.2019 respectively, instead of being credited to the account of respondent No.2/bank. The petitioner sought to withdraw the present writ petition unconditionally. However, since the misconduct of the petitioner comes out into the open, who has taken the Court for a ride, wasting much precious time of this Court and pursuing with this petition right from its institution i.e., since 08.03.2021, it is expedient that such request be not only declined, but also the petitioner should also be visited with exemplary costs. There is no gainsaying that the grant of prerogative writs are discretionary reliefs and can be denied where the petitioner has not come to the Court with clean hands. Unhesitatingly, the petitioner has abused the process of law as he was in wanton breach of the sanction letter and thus, is not entitled to any relief. The present writ petition is dismissed with token costs of Rs. 50,000/-, which be deposited with the Registrar General of this Court within a month from today, failing which the petitioner shall be liable to pay interest @ 6% per annum from the date of this order till payment.

Summary

Issues:
1. Petitioner seeking reliefs under Article 226 of the Constitution
2. Allegation of improper declaration of account as NPA by respondent bank
3. Dismissal of complaint by Banking Ombudsman
4. Jurisdiction of Ombudsman in deciding complaints
5. Violation of terms of sanction letter by petitioner
6. Misconduct of petitioner in diverting funds
7. Discretionary nature of prerogative writs

Analysis:

1. The petitioner, a proprietorship concern registered as an MSME unit, approached the High Court under Article 226 seeking various reliefs, including quashing an order by respondent bank and compensation for declaring the petitioner's account as an NPA without following due procedure.

2. The petitioner alleged that the respondent bank declared the account as NPA, causing a stand-still in business operations, despite clearing outstanding dues. The complaint to the Banking Ombudsman was dismissed, citing procedural grounds, leading to the petitioner seeking judicial intervention.

3. The petitioner argued that the Ombudsman had jurisdiction to consider complaints based on non-adherence to banking practices and RBI directions, emphasizing the need for appropriate damages to be awarded.

4. The court noted the terms of the sanction letter, which required exclusive dealings with the bank and routing of turnover through the sanctioned account. However, it was revealed that funds were diverted to another bank, raising questions about the petitioner's compliance with the terms.

5. Respondents contended that the account was not declared NPA but was irregular due to fund diversion to another bank, contrary to the terms of the sanction. The petitioner's attempt to withdraw the petition unconditionally was rejected due to misconduct and abuse of legal process.

6. The court emphasized that prerogative writs are discretionary and can be denied when the petitioner does not approach the court with clean hands. The petitioner was found in breach of the sanction terms and was not entitled to relief, with the petition dismissed and costs imposed.

7. The judgment highlighted the importance of integrity in legal proceedings and the consequences of abusing the legal process. The petitioner was directed to pay token costs within a specified timeline, failing which interest would accrue on the outstanding amount.

This comprehensive analysis covers the key issues raised in the judgment, detailing the arguments presented by both parties and the court's rationale in arriving at the decision.