MAA NANDI KESHRI RICE MILL Vs. UNION OF INDIA
LAWS(CAL)-2021-5-4
HIGH COURT OF CALCUTTA
Decided on May 06,2021

Maa Nandi Keshri Rice Mill Appellant
VERSUS
UNION OF INDIA Respondents




JUDGEMENT

- (1.)The petitioner no. 1 is a Rice Mill. On or about 22th July, 2005, the petitioner no. 1 made an application for sanction of a Term Loan amounting to Rs.108 Lakhs and a Working Capital Loan amounting to Rs.40 lakhs to the United Bank of India, a nationalized bank at its Sainthia Branch (hereinafter referred to as the said bank). The said two facilities were given to the petitioner no. 1 on 5th September, 2005. To avail the credit facilities, the petitioner created an equitable mortgage of a land with building at Ward no. 1, P.O. Sainthia, Khatian no. 432, Dag no. 45, J.L. No. 95 measuring about 10 decimals standing in the name of petitioner no. 2. The value of which was Rs.20 lakhs on or about 5th September, 2005. The petitioners also created an equitable mortgage of a land with twostoried building also at Ward no. 1, P.O. Sainthia, P.S. Suri, having an area of about 9 decimals standing in the name of one Gayatri Saha, the value of which as on 5th September, 2005 was approximately Rs. 30 lakhs. The properties so mortgaged are hereinafter for the sake of convenience jointly referred to as "mortgaged properties".
(2.)Submission of the Petitioners:-
a) The petitioners say that the Term Loan of Rs. 108 lakhs has been duly repaid by the petitioners to the satisfaction of the Bank. The Bank has also issued a certificate declaring closure of the Term Loan Account on 16th August, 2013 upon full payment having been made. The petitioner no. 2 on behalf of the petitioners requested the said Bank to release the two mortgaged properties on the ground that the Term Loan has already been repaid. The Bank has refused to release the mortgaged properties as will appear from a letter dated 15th September, 2014 on the ground that the Cash Credit account has not been closed and unless the outstanding amount against the same is repaid, the mortgaged properties cannot be released. Challenging the rejection of the petitioners' prayer to release the mortgaged properties, the petitioners have filed the instant writ petition inviting this Court to pass mandatory orders directing release of the mortgaged properties.

b) The petitioners say that the Term Loan has been repaid. The Working Capital Loan of Rs.40 Lakhs also referred to as Cash Credit limit is secured by the petitioner no. 2 as the personal guarantee given by the proprietor of petitioner no. 1 and one Gayatri Saha. That apart and in any event, the Cash Credit Loan is also otherwise secured by the stock, work in progress and raw materials of the Rice Mill. In such circumstances, the petitioners say that the said bank could neither refuse to release the mortgaged properties nor can contend that the mortgaged properties will be released only upon repayment of the entire outstanding against the Cash Credit limit. The petitioners also say that by refusing to release the mortgaged properties, the bank has infringed the rights guaranteed under Article 300 A of the Constitution of India. In such circumstances, the petitioners say that mandatory order should be passed for release of the mortgaged properties, failing which the petitioners will suffer irreparable loss and injury.

(3.)Submission of the Respondents : -
a) On behalf of the Bank, it is submitted that the sanction granted on 5th September, 2005 was a composite one. The petitioners had mortgaged the properties both for the Term Loan and the Cash Credit facility. The mortgage, being a composite one cannot be released unless the outstanding amount in the Cash Credit Account is fully repaid even if the Term Loan has been fully repaid. The said bank has also raised an issue as to the maintainability of the writ petition in view of the nature of the contract pursuant to which the equitable mortgage was credited. The respondent bank says that no relief in the facts and circumstances of the case can be granted by this Court in exercise of its jurisdiction under Article 226 of the Constitution of India as the petitioners are seeking enforcement of the terms of a Contract simplicitor entered by the bank while carrying out commercial activities.

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