Demand notice by bank cannot be quashed in writ proceedings: Madras High Court

The case was filed against State Bank of India's demand notice against payment of loan by an individual who contended that his loan should have been waived in light of a new scheme benefitting agriculture loans.

Justice SM Subramaniam of Madras High Court has held that a demand notice issued by banks cannot be quashed in writ proceedings as it requires verification of documents and evidences.

The judgment further holds that loans are sanctioned based on terms and conditions agreed upon between parties and if any dispute arises, it is to be resolved through the competent court.

In this case, the petitioner had filed a writ petition under Article 226 of the Constitution for quashing of the demand notice issued to him by State Bank of India. The petitioner contended that State Bank of India had announced a scheme for waiver of agricultural loan and the benefit was not extended to him.

The bank contended that a pre-condition for waiver of the loan is that the borrower ought to have cleared 75% of the loan. However, the petitioner has not complied with the terms and conditions and is therefore not entitled for the scheme, which was introduced in the year 2008. The bank further contended that the writ petition itself is filed after a lapse of about 6 years from the implementation of the scheme.

The court in its judgment held that these kind of issues cannot be decided on "certain misplaced sympathy" as loans are granted from and out of the public money by Nationalised Banks and hence, the investors interest is also involved.

The court held that the money which involved is a "public money" and any such misplaced sympathy would cause greater prejudice to the public interest and the power of judicial review under Article 226 is not meant for such adjudications.

In conclusion, the court noted that ,

“This Court is of an opinion that keeping the writ petition pending for years together may cause prejudice and giving unnecessary hope for such litigation should be averted in all circumstances and therefore, this Court is not inclined to consider the relief as the petitioner has not established even a resemblance of legal right.”

It is to be noted that the writ petition was filed in 2014.

Case title: Krishna Vinayagam & Ors Vs The Branch Manager, SBI