At, High Court of Karnataka
By, THE HONOURABLE MR. JUSTICE V. GOPALA GOWDA
For the Appearing Parties: K. Shila, Vigneshwar Shastry, Advocates.
V. Gopala Gowda, J.
(1) THE petitioner and Jay Cement Pipes are two concerns. The petitioner borrowed two loans from Karnataka State Financial Corporation (hereinafter referred to as KSFC) and the said loans have been fully repaid. The KSFC issued two letters vide Annexure-A and B stating that the loans have been repaid and calling upon the petitioner to take back the documents offered as security for the loans. Subsequently, the impugned letter at Annexure-F dated 6/7-5-1999 has been issued to the petitioner stating that the documents will not be released/returned since the petitioner has filed a case in the Kerala High Court arraying KSFC a party to the same which calls expensive. It is further stated that until the disposal of the said case or the petitioner got the name of KSFC deleted, documents will not be returned to the petitioner. The petitioner has filed this writ petition seeking to quash the letter at Annexure-F and to direct the respondents to execute release deed and to return the documents.
(2) IN the statement of objections, the KSFC does not dispute the case of the petitioner. But, reference is made to the suit filed by a firm by name M/s. Vijayaprakash Industrials against the petitioner for the recovery of certain amount towards the machinery supplied. In that suit KSFC is arrayed as party. The said suit was decreed against the petitioner. However, the suit was dismissed against KSFC. The petitioner preferred appeal against the decree in the Kerala High Court. Plaintiff in the aforesaid suit filed execution case and the KSFC received notice of the same. It is therefore, stated that the KSFC has been unnecessarily subjected to expenditure on litigation. The details of the amount spent are mentioned in the counter and it is not necessary to refer to the same. With these pleas, the respondents have not only sought for dismissal of writ petition but also prayed to direct the respondent (it should have been the petitioner) to get the execution petition dismissed.
(3) THE stand taken by the respondents in the counter statement cannot be accepted and the impugned endorsement is liable to be quashed. The relationship between the petitioner and the KSFC is that of borrower and lender. Once the borrowed loan is cleared, the lender has no right whatsoever to withhold the documents executed by the borrower at the time of taking loan. When a loan transaction is concluded with the repayment of whole amount and nothing is due towards the same, the relationship of borrower and lender comes to an end. In loan transactions, there is an obligation on the part of the borrower to discharge the loan fully. Once such discharge is done, a duty is cast upon the lender to handover the loan documents or documents obtained for the security to the borrower. The lender cannot escape from that obligation under any pretext.
(4) THE lending, borrowing and discharge of the same is a transaction between the parties. The loan transaction cannot be linked to any other transaction, much less the litigation in Courts as is being done in this case, to deprive the borrower from securing the documents executed at the time of obtaining the loan.
(5) IF KSFC is arrayed in any litigation, the same should not be called as unnecessary. For a litigation there would be necessary parties and also proper parties depending upon the facts of the case. If such parties are not arrayed in the litigation, the case will be dismissed for non-joinder of necessary or proper parties. A litigant approaching a Court will not be ready to take risk to get his case dismissed on such technical grounds. As a precautionary measure he will implead all the parties required for the litigation. Such parties may be necessary on account of their involvement directly or indirectly. The same shall not be construed as unnecessary. Once a party is arrayed in a litigation, it is up to the party to engage a counsel to defend the case or to face the consequences of the outcome of such case. Once counsel is engaged, the party has to meet the expenses of litigation. Documents of a cleared loan transaction cannot be withheld on the ground of expenses incurred in connection with a case which was nothing to do with the loan transaction. The KSFC has utterly failed to discharge its duty by issuing the impugned endorsement withholding the loan documents despite the loan is fully cleared. The impugned endorsement is also contrary to the letters at Annexures-A and B.
(6) IN the impugned letter at Annexure-F it is stated that the competent authority has decided not to release/return the documents. Once the loan amount is cleared, the competent authority has no power or authority to take such a decision. It is not an administrative matter for the competent authority to take it's own decision. It is a commercial transaction and once such transaction is completed in all respects, the documents secured in connection with that transaction have to be returned without any undue delay. But the decision of the competent authority in this case is quite opposite and contrary to their own letters at Annexure-A and B and also law. The decision of the so-called competent authority is highly contemn able and the Chairman/managing Director of
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KSFC has to take note of this seriously and take appropriate action against the concerned officers for having taken a decision contrary to Annexures-A and B and driving the petitioner to approach this Court unnecessarily to secure the documents deposited with the KSFC thereby he is constrained to spend money on this unnecessary litigation. (7) FOR the aforesaid reasons, this writ petition is allowed. Rule is made absolute. The impugned letter at Annexure-F is quashed. Respondents are hereby directed to return the documents to the petitioner within a period of two weeks.