Mudit Saxena v Union of India, 14th Day of September, 2022 in the High Court of Karnataka
Facts of the Case
All the Petitioners had booked their apartment units with the Respondent Developer i.e., M/s. Mantri Developers Private Ltd in terms of Pre-Emi Scheme, i.e., Pre-Sanctioned loans with Tripartite Loan Agreements entered into by and between the Petitioners, Developers and the Punjab National Bank Housing Finance Limited (PNBHFL). The petitioners were not satisfied with the pace of construction, they withdrew their booking with intimation to PNBHFL. Without ascertaining the stages of construction, PNBHFL had disbursed the loan amount to the Developer.
The Petitioners were seeking to get their amount back from the Developer. RERA directed the Developer to make payment and to discharge the loan raised with all the EMI and interest within 30 days if not it will result into payment of interest at the rate of 10.25%. The Developer had not obeyed any orders and PNBHFL had taken coercive measures against the petitioners.
Arguments of Petitioners
The petitioners argued that Clause (f) of the Tripartite Agreement between the Parties, Developers and PNBHFL envisages that if the borrower desires to withdraw, the entire amount advanced by the PNBHFL would be refunded by the Developer as agreed in the agreement and Clause (l) of the agreement envisages that in case of parties cancelling the booking, the Developer must undertake the refund of entire amount to PNBHFL and after deducting the outstanding charges and cancellation charges, the surplus amount must be refunded.
Arguments of Respondents
PNBHFL argues that clause (k) of the agreement states that the borrower cannot cancel the agreement without obtaining ‘No Objection Certificate’ from the PNBHFL.
Ratio and observations
Banks cannot take any coercive measures against the Allottees homebuyers for recovering any amount comprised in the Loan Agreements and Tripartite Agreements in the event of default committed by the Promoter.
A Constitutional Court cannot shrink the responsibility of adjudging the present matter and it cannot divert the injured litigant to some other legal clinic for treatment as the parties have already spend time, money and energy. Under Article 226 of the Constitution, High Courts have extra ordinary jurisdiction not only to issue prerogative writs for enforcement of fundamental rights but also for any other purposes as well which is wide and expansive although discretionary and equitable.
The Court envisaged that PNBHFL comes under the purview of instrumentalities of state under Article 12 of the Constitution, Therefore the tripartite agreement cannot be said in the exclusive realm of private law of Contract but in the ambit of Public law domain. The Court denied the argument of Respondent that this case comes under the ambit of private law not under the realm of public law, and this case does not have any connections with the petitioners herein. If any loan transaction is of the kind involved in the case at hand, the bankers have to take consent of borrowers as a precautionary measure before releasing the amount to the developers. In this case, PNBHFL failed to do so.
Court reiterated the decision of RERA and ordered Developers to make the refund within 30 days if not it will carry interest at rate of 10.25% and directed the developers to discharge the loan raised in name of the borrowers or petitioners with all its EMI and interest if any. The petitioners directed to cancel the deed in favour of the developer after the entire amount has been realized.
A writ of mandamus besides other reliefs was ordered retraining PNBHFL from taking any coercive measures against the petitioner allottees in course of recovering the amount.
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