Writ petition not maintainable for a contract breach when an alternative civil redress is available: Calcutta High Court

In cases surrounding contractual breaches, a writ petition may only be filed in instances where there is an impediment to file an alternative civil redress. This was opined by the bench of Arindam Mukherjee J. who further stated that 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 matter of Maa Nandi Keshri Rice Mill v Union Of India W.P.A. [1998 OF 2020].

The petitioner 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. The petitioners said 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.

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.

Further, the bench observed that 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.

In the light of the ratio laid down in ABL International Ltd. v Export Credit Guarantee Corporation of India Ltd (2004) 3 SCC 553 if it was assumed 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, even then the contract in question would be non-statutory in nature wherein remedy for a breach of contract pure and simple has been sought for.

The court ruled that, “The writ petition therefor, fails and the same is dismissed on the ground of maintainability as discussed above, however, without any order as to costs. The petitioners will, however, be free to avail any other remedy that may be available to them in law on the selfsame cause as I have not gone into the merits of the matter save as required for adjudicating the maintainability point.

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