Madras High Court
H.Banumathi vs The General Manager And Zonal Head on 19 February, 2025
Author: D.Bharatha Chakravarthy
Bench: D.Bharatha Chakravarthy
2025:MHC:687
W.P.No.22064 of 2024
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 19.02.2025
CORAM :
THE HON'BLE MR.JUSTICE D.BHARATHA CHAKRAVARTHY
W.P.No.22064 of 2024
and W.M.P.No.34551 of 2024
H.Banumathi .. Petitioner
Vs.
1.The General Manager and Zonal Head
Bank of Baroda
New No.41, 3rd Floor
Luz Church Road, Mylapore
Chennai.
2.The Chief Manager
Bank of Baroda
Thiruvateeswaranpet Branch
No.280, Triplicane High Road
Chennai – 600 005. .. Respondents
Prayer: Writ Petition filed under Article 226 of the Constitution of India
seeking a Writ of Mandamus, directing the respondents to consider the
petitioner's representations dated 10.04.2024 and 23.04.2024 and close the loan
after accepting the payment made by the petitioner and return the documents
mortgaged with the Bank and pass such further order.
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W.P.No.22064 of 2024
For the Petitioner : Mr.C.K.Chandrasekkar
For the Respondents : Mrs.Revathi Manivannan
ORDER
This Writ Petition is filed to direct the respondents to consider the petitioner's representations dated 10.04.2024 and 23.04.2024, close the loan account after accepting the payment made by the petitioner and return the documents mortgaged with the Bank, and pass any further or other orders.
2. The brief factual matrix in which the Writ Petition arises is that the petitioner's husband mortgaged a property and secured a loan of Rs.4,60,000/-. However, it appears that he has not repaid the loan, and the account was classified as a Non-Performing Asset long ago, in 2005. In 2023, when the respondent Bank took up the recovery by issuing a notice to come for pre- litigation settlement through L o k A d a l a t . Upon receiving the notice, the petitioner approached the Bank. The Bank demanded a total sum of Rs.16,30,000/-, which the petitioner also paid. Subsequently, when the petitioner sought the release of documents and NOC, the Bank communicated that the Page 2 of 14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 14/03/2025 08:34:51 pm ) W.P.No.22064 of 2024 previously quoted amount, accepted by the Bank, was based on a miscalculation. In addition to the Rs.16,30,000/- paid by the petitioner, she must pay an additional Rs.32,64,518/-. Only upon receiving this amount the Bank will grant the NOC and release the documents. Aggrieved by this, the petitioner has filed the present Writ Petition.
3. M r. C . K . C h a n d r a s e kk ar, the learned counsel for the petitioner, submits that the petitioner is a 72-year-old widow, whose husband had only mortgaged the property. The outstanding balance was conveyed through the notice. She approached the bank, and upon being informed by the bank of the amount, as full and final settlement, she paid it. Once this agreement was honoured by the parties, the bank cannot now go back and claim an additional sum of Rs. 32,64,518/-
4. Per contra, M s . R e v a t h i M a n i v a n n a n, the learned counsel representing the respondents – Bank would argue that the Bank merged with another institution, resulting in a transition from one software system to another. During this migration, specific interest calculations were omitted, and the total Page 3 of 14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 14/03/2025 08:34:51 pm ) W.P.No.22064 of 2024 outstanding amount was not accurately reflected in the system. Without recognising this issue and mistakenly considering the incorrect amount due, an offer was made and subsequently accepted. Due to the error in the system, the Bank should not be held accountable for receiving the same amount. This constitutes a bona fide mistake, and no valid contract exists. The entire issue is within the realm of contract law. This Court, under Article 226 of the Constitution of India, cannot intervene in this matter. Given that the Bank asserts there was a bona fide mistake and no consensus a d i d e m , particularly since the amount was misrepresented in the system, this Court should refrain from intervening. If the petitioner desires, she can approach the Civil Court, or if she seeks a complete and final settlement from the Bank, the Bank will also provide terms.
5. I have considered the rival submissions from both sides and examined the material records of the case.
6. At the outset, this considers whether the issue has to be dealt with by this Court in exercise of jurisdiction under Article 226 of the Constitution of Page 4 of 14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 14/03/2025 08:34:51 pm ) W.P.No.22064 of 2024 India or to relegate the parties to Civil Suit. In this regard, the following facts are considered:
(a) The petitioner is a 72-year-old woman who has lost her husband;
(b) Her husband mortgaged the house in 2004 to obtain a loan of Rs. 4,60,000/-;
(c) The account was classified as NPA from the year 2005 (17.05.2005), and the Bank took no action for recovery until 2023. Of course, the primary responsibility lies with the borrower to approach the Bank and repay the loan;
(d) The demand was made for the first time by utilising the Alternative Dispute Resolution method of Lok Adalat, through the issuance of a pre-
litigation settlement notice, seeking the outstanding principal amount of Rs. 4,60,000/-, along with interest totalling Rs. 10,28,686.03/-.
(e) It can be observed that even in the notice, the principal amount and an interest amount of 2 ½ times the principal were demanded;
(f) The petitioner approached the bank and resolved the issue after receiving a written offer from the bank for a full and final settlement of Rs. 16,30,000/-;
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(g) Thus, it can be seen that the petitioner settled an amount equivalent to the principal and approximately three times the principal as interest;
(h) Even thereafter, the respondent bank did not take any steps to claim further arrears. Only when the petitioner requested to return of documents and the issuance of a No Dues Certificate, did the bank, being a public sector bank, raise the issue of an additional outstanding amount, claiming another substantial sum of Rs. 32,64,518/-. However, the total claim of Rs. 48,94,518/- includes both the principal amount and approximately 11 times the principal amount as interest.
Therefore, this matter involves issues of fairness and proportionality on the part of the respondent, a public sector bank. Consequently, the unique facts make this is a fit case for examination under the extraordinary writ jurisdiction.
7. This is not a case of mutual mistake to claim that the transaction/contract is void under Section 20 of the Indian Contract Act, 1972. The Bank has a duty of care concerning the maintenance of statement of Page 6 of 14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 14/03/2025 08:34:51 pm ) W.P.No.22064 of 2024 accounts. In this context, it only pleads its own negligence while issuing the demand notice, negotiating for a settlement, and accepting the full and final settlement, and now wishes to rescind or escape from the settlement. In this regard, a useful reference can be made to paragraphs 43 and 44 of the judgment of the Hon’ble Supreme Court of India in Canara Bank Vs. Canara Sales Corporation and Others1, where it is held that if there is negligence in respect of the very transaction, where there is a duty of care, then this may lead to estoppel. The relevant portion reads as follows:
“4 3 … . . We m a y u s e f u ll y r e a d t h e f o ll o w i n g p a s s a g e r el ati n g t o n e g li g e n c e i n th e c o n t e xt o f a p l e a b a s e d o n e st o p p e l : ( S C R p .
873) “ A p a r t fr o m t hi s a s p e ct o f t h e m a tt er, th er e is a n o t h e r s e r i o u s o b j e c ti o n w h i c h h a s b e e n t a k e n b y M r S e t a l v a d a g a i n st th e vi e w w h i c h p r e v a il e d w i t h M u k h a r ji, J . H e a r g u e s t h at w h e n a p l e a o f e st o p p e l o n t h e g r o u n d o f n e g l i g e n c e is r a i s e d , n e g l i g e n c e t o w h i c h r ef e r e n c e is m a d e i n s u p p o r t o f s u c h a p l e a is n o t th e n e g li g e n c e a s i s u n d e r st o o d i n p o p u l a r l a n g u a g e o r i n c o m m o n s e n s e ; it h a s a t e c h n i c a l d e n o t ati o n. I n s u p p o r t o f a p l e a o f e st o p p e l o n th e g r o u n d o f n e g li g e n c e, it m u s t b e s h o w n t h at t h e p a r t y a g a i n st w h o m th e p l e a i s r a i s e d o w e d a d u t y t o t h e p a r t y w h o r a i s e s th e p l e a . J u st a s e st o p p e l c a n b e p l e a d e d o n t h e g r o u n d o f m i s r e p r e s e nt ati o n o r a c t o r o m i s s i o n, s o c a n e st o p p e l b e p l e a d e d o n t h e g r o u n d o f n e g li g e n c e ; b u t b e f o r e s u c h a p l e a c a n s u c c e e d, n e g l i g e n c e m u s t b e e st a b li s h e d i n t hi s te c h n i c a l s e n s e. A s H a l s b u r y h a s o b s e r v e d :
‘ b e f o r e a n y o n e c a n b e e st o p p e d b y a r e p r e s e nt ati o n i nf e r r e d fr o m n e g li g e nt c o n d u c t, t h er e m u s t b e a d u t y t o u s e d u e c a r e t o w a r d s t h e p a r t y m i s l e d , o r t o w a r d s t h e g e n e r a l p u b li c o f w h i c h h e i s o n e ” [ H a l s b u r y's L a w s o f E n g l a n d , V o l. 1 5 , p . 2 4 3 , p a r a 4 5 1 ] . T h e r e i s 1 (1987) 2 SCC 666 Page 7 of 14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 14/03/2025 08:34:51 pm ) W.P.No.22064 of 2024 a n o t h e r r e q u ir e m e nt w h i c h h a s t o b e p r o v e d b e f o r e a p l e a o f e st o p p e l o n t h e g r o u n d o f n e g l i g e n c e c a n b e u p h e l d a n d t h at r e q u ir e m e n t is t h at ‘ t h e n e g l i g e n c e o n w h i c h it is b a s e d s h o u l d n o t b e i n d ir e ctly o r r e m o t e l y c o n n e c t e d w it h t h e m i s l e a d i n g e ff e ct a s si g n e d t o it, b ut m u s t b e th e p r o x i m a t e o r r e a l c a u s e o f t h at r e s u lt’ [ I b i d , p . 2 4 5 , p a r a 4 5 3 ] . N e g l i g e n c e , a c c o r d i n g t o H a l s b u r y, w h i c h c a n s u st ai n a p l e a o f e st o p p e l m u s t b e i n t h e tr a n s a c ti o n its elf a n d it s h o u l d b e s o c o n n e ct e d w it h t h e r e s u lt t o w h i c h it l e d t h at it is i m p o s s i b l e t o tr e at t h e t w o s e p a r a t el y. T h i s a s p e ct o f t h e m a tt e r h a s n o t b e e n d u l y e x a m i n e d b y M u k h a r j i, J. w h e n h e m a d e h i s fi n d i n g a g a i n st t h e a p p e l l a nt.” 4 4 . T h i s is h o w t hi s C o u r t u n d e r st o o d h o w a p l e a o f e st o p p e l b a s e d o n n e g li g e n c e c a n b e s u c c e s s f u ll y p u t f o r w a r d .” (emphasis supplied)
8. Factually, the reason provided by the Bank for demanding an additional sum of Rs. 32,64,518/- is outlined in paragraphs 5 and 6 of the counter, and it is extracted as follows:
“5.I submit that, the petitioner approached the Bank seeking One Time Settlement vide letter dated 14.12.2023. The Bank, was under the impression that, outstanding amount was Rs.16,30,000/- and so informed the petitioner to pay the said amount vide letter dated 18.12.2023. Pursuant to the above, the petitioner made the payment of Rs.16,30,000/- on 20.01.2024 through RTGS (UTR No.IDIBR52024012037168867).
6.I submit that, during this period, the Bank had undergone a comprehensive Core Banking Solution (CBS) system migration an upgradation exercise. During this migration process, it was discovered that certain historical interest calculations and charges were not properly reflected in the old system. Upon completion of the system migration and reconciliation, the correct outstanding amount including accumulated interest, penal charges, and other legitimate charges as per the loan agreement was calculated.” Page 8 of 14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 14/03/2025 08:34:51 pm ) W.P.No.22064 of 2024
9. Except for filing a computer generated statement of accounts, absolutely no material whatsoever is placed by the bank in support of their claim that the error occurred in the old system. When they migrated to the new system is not specified. When and how the mistake was unearthed is not even pleaded. The statement, at best, can only be considered as a bald statement without particulars.
10. On the contrary, a consideration of the documents filed with the Writ Petition, it is evident that on 26.11.2023, a notice was sent by the Branch Manager of the respondent Bank, inviting the petitioner to the L o k A d a l a t under Section 22 of the Legal Services Act. The letter states that the total outstanding dues were Rs. 4,60,000/- along with interest amounting to Rs. 10,28,686.03/-. Subsequently, when the petitioner approached the bank, a letter in the standard format maintained by the bank was obtained from her. The letter reads as follows:-
“From Page 9 of 14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 14/03/2025 08:34:51 pm ) W.P.No.22064 of 2024 Bhanumathi, M/o Arun Babu, Plot No.23, N.No.6/378, VOC Street, Lakshmi Nagar, Pozhichallur, Chennai – 600 074.
To Ms.S.Rajeshwari, The Chief Manager, Bank of Baroda, Thiruvateeswaranpet Branch, Triplicane, Chennai, Tamil Nadu 600005.
Sir, Ref:Loan Account No.06780400000101 Sub:Request Letter for One Time Settlement of Loan I am writing concerning the payment you are requesting for the above-referred account. The loan in question was taken by my late husband, Mr.Harirama Pandian, and my late son, Mr.Arun Babu. On their behalf, I am stepping forward to settle the outstanding amount of Rs.__________ which can be broken down as follows:
Principal Outstanding – Rs.4,60,000/-
Interest Overdue as of 30.11.2023 -
In light of the financial challenges our family is currently experiencing, I am diligently working towards resolving your loan, including the accrued interest. Therefore, I kindly ask you to furnish us with a settlement proposal letter outlining the reduced interest amount, incorporating the following aspects.
1) The proposal letter should clearly state that the settlement amount quoted will remain valid until January 31 , 2024. st
2) The proposal letter should explicitly state that the quoted amount represents the full and final settlement, and no further claims will be made beyond this amount.
3) The proposal letter should confirm that the bank will refrain from pursuing any legal actions or removing any attachments on our property, if applicable, upon receiving the full and final settlement.
Thank you for your attention to this matter.
Page 10 of 14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 14/03/2025 08:34:51 pm ) W.P.No.22064 of 2024 Thanks & Regards H.BHANUMATHI (Emphasis supplied)
11. The subject matter of the aforementioned letter refers to a request for a one-time loan settlement. It indicates that the principal outstanding amount is Rs. 4,60,000/- with overdue interest as of 30.11.2023. It is explicitly stated that the proposal must specify that the quoted settlement amount will remain valid for a specific period and must clearly indicate that this amount represents full and final settlement, with no further claims to be made beyond it. The proposal letter should also confirm that the Bank will refrain from pursuing any additional legal actions and will release any attachments on the property, if applicable, upon receiving the full and final settlement. These terms are included in the printed format provided by the Bank, and the letter was submitted after completing the form. Upon submission of the letter, a response was received on 18.12.2023. The response reads as follows:-
“To Mrs.Bhanumathi W/o Hariramapandian Plot no 23, N no 6/378, Voc Street, Lakshmi Nagar, Pozhichallur, Chennai 600 074 Sub: Closure amount of OD A/c no 06780400000101 Page 11 of 14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 14/03/2025 08:34:51 pm ) W.P.No.22064 of 2024 Dear Madam, Ref to your request letter for closure of OD A/c no 06780400000101 dated 14.12.2023, as you are aware that account is presently in NPA status.
Kindly note the closure amount is Rs.16,30,000/- (Approx- including other charges) valid for 30 days, beyond which the amount is subject to change.
Thanking you Yours Sincerely”
12. Therefore, the One-Time Settlement being requested is granted, and it is also stated that the offer is valid for another 30 days. Within the timeframe granted by the Bank, the entire amount due was paid. Consequently, once this amount was paid, it is no longer permissible for the Bank to recalculate the sum due with additional compound interest, penal interest and other charges. Now the total sum claimed for a principal amount of Rs. 4,60,000/- is Rs. 48,94,518/-, which is more than ten times the principal amount, within a period from 2005
-2024(approximately 19 years), that too when several payments have also been shown in the statement of accounts.
13. In any event, the case pleaded by the Bank in paragraphs 5 and 6 is Page 12 of 14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 14/03/2025 08:34:51 pm ) W.P.No.22064 of 2024 not proved and stands rejected. A sum of Rs. 4,60,000/- was only the principal, and by calculating the interest up to the year 2023, a total sum of Rs. 16,30,000/-
was received from the petitioner. Therefore, merely because the Bank has now found that the petitioner is capable of paying an additional amount, they cannot retract from a concluded transaction and ask for another sum of Rs. 32,64,518/-. Having stated that the offer is valid only for 30 days, and within that period, the petitioner has paid the amount, it would now be impermissible for them to demand more.
14. Accordingly, this Writ Petition stands allowed. The respondent bank is directed to issue a NOC and return the documents, as the petitioner has already paid the sum. Such an exercise shall be completed within twelve weeks from the date of receipt/production of the website-uploaded copy of this order without waiting for the certified copy. No costs. Consequently, the connected miscellaneous petition is closed.
19.02.2025
Neutral Citation : Yes
Jer
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W.P.No.22064 of 2024
D.BHARATHA CHAKRAVARTHY, J.
Jer
To
1.The General Manager and Zonal Head
Bank of Baroda
New No.41, 3rd Floor
Luz Church Road, Mylapore
Chennai.
2.The Chief Manager
Bank of Baroda
Thiruvateeswaranpet Branch
No.280, Triplicane High Road
Chennai – 600 005.
W.P.No.22064 of 2024
19.02.2025
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