M/S. K. Krishna Reddy Contractors vs. The State Of Telangana

Facts

The petitioner, M/s K. Krishna Reddy Contractors, a partnership firm, approached the High Court seeking a writ of mandamus. The firm had availed a term loan from the Andhra Pradesh State Financial Corporation (APSFC), respondent No. 2. The loan was secured by depositing original title deeds. The petitioner claims to have repaid the entire loan amount. However, APSFC has allegedly not released the original documents deposited as collateral security, despite the petitioner's payments and requests. The petitioner seeks a direction for APSFC to execute a re-conveyance deed in their favour. The dispute centers around the amount due for loan closure and the release of collateral documents.

Held

The Court considered the averments in the petition and counter-affidavit, along with the submissions of both counsel. It noted that while the sanction letter (Clause 19 and Condition 41) stipulated a 3% premium for advance principal payments exceeding two installments, this was not clearly communicated to the petitioner in the initial email dated 13-07-2020 regarding loan closure. The subsequent email dated 18-07-2020, however, mentioned premature premium charges including GST of Rs. 6,85,000/-. The Court opined that APSFC could have clearly stated the 3% premium in the earlier communication. Citing the principle that a party may be precluded by their conduct or silence from asserting a right, the Court found that the petitioner's representation dated 05.09.2022 to release the mortgaged properties needed consideration. The Court directed the 2nd respondent (APSFC) to consider the petitioner's representation dated 05.09.2022 in accordance with law and principles of natural justice and pass appropriate orders within four weeks, communicating the decision to the petitioner.

Key Issues

1. Whether the action of the 2nd Respondent (APSFC) in not releasing the original documents deposited as collateral security, despite the petitioner claiming full repayment of the loan, is illegal, arbitrary, and in violation of Article 300-A of the Constitution? Petitioner's arguments: The petitioner contends that they have made substantial payments towards the loan, as evidenced by various letters and cheque details, and have fulfilled their repayment obligations. They argue that APSFC's refusal to release the documents and execute a re-conveyance deed is unjust. They rely on their representations and the sanction letter terms. Respondent's arguments: APSFC disputes the petitioner's claim of full repayment and argues that certain clauses in the sanction letter, particularly regarding advance payments and pre-payment premiums, were not adhered to by the petitioner. They also contend that a development agreement and NOC were prerequisites for property sale, which were not followed. They refer to specific clauses in the sanction letter and their counter-affidavit.