Supreme Court Dismisses Writ Petition in Banking Dispute: Punjab National Bank vs. Atmanand Singh (6 May 2020)

Date of the Judgment: 6 May 2020
Citation: Civil Appeal No. …/2020 (Arising out of SLP(C) No. 11603/2017)
Judges: A.M. Khanwilkar, J., Dinesh Maheshwari, J.
Can a High Court use its writ jurisdiction to settle a complex financial dispute involving disputed facts? The Supreme Court recently addressed this question in a case where a customer of Punjab National Bank claimed that the bank had wrongly transferred his funds. The Court ultimately held that such disputes should be resolved through a civil suit, not a writ petition.

Case Background

The case revolves around a loan taken by Atmanand Singh from the Haveli Kharagpur Branch of Punjab National Bank in Munger. Singh had taken a term loan of ₹10,000 in 1984 to run a business. By February 14, 1990, this loan, with interest, had grown to ₹13,386. In 1989, Singh received two cheques of ₹5,000 each from the Earthquake Relief Fund, which he deposited in his savings account. However, the bank transferred these funds to his loan account without his authorization.

Later, Singh sold his wife’s gold jewelry for ₹14,93,268 to pay for his son’s cancer treatment. On August 4, 1989, he went to the bank to deposit ₹14,93,000 and request two bank drafts. The bank accountant, Mr. T.K. Palit, allegedly asked him to deposit the money into his savings account due to a staff shortage. Singh claims that the bank then transferred ₹15,03,000 to his loan account, despite the outstanding dues being only ₹13,386.

Singh complained to the Branch Manager and other bank authorities. He also approached the District Magistrate, who ordered an inquiry by the Circle Officer. This inquiry, Misc. Case No. 4 (DW 1) PNB/1989-90, involved examining various bank officials. Singh claims that the bank agreed to keep ₹14,89,614 in a fixed deposit, payable with interest by September 1997, as per an agreement dated May 27, 1990. However, when the bank allegedly refused to honor this agreement, Singh filed a writ petition.

Timeline

Course of Proceedings

The High Court initially ruled in favor of Singh, directing the bank to pay the amount agreed upon. The single judge, while acknowledging the bank’s objection about the maintainability of the writ petition, noted that the documents presented by Singh appeared genuine and that the bank was trying to avoid its responsibility. The court directed the bank to pay the money as per the agreement, clarifying that it was not enforcing the agreement itself, but ensuring the proper maintenance of customer accounts, which is a public duty of the bank.

The bank appealed to the Division Bench of the High Court, which also dismissed the appeal, affirming the single judge’s decision. The Division Bench relied on the voluminous documents submitted by Singh and the statements of the Circle Officer’s office staff to conclude that the agreement was not a “figment of imagination.”

Legal Framework

This case primarily concerns the scope of the High Court’s writ jurisdiction under Article 226 of the Constitution of India. Article 226 empowers High Courts to issue writs for the enforcement of fundamental rights and for any other purpose. However, this power is discretionary and subject to certain self-imposed limitations.

The Supreme Court has consistently held that writ jurisdiction is not meant to be an alternative to civil suits, especially where complex factual disputes are involved. The Court has also clarified that a writ petition seeking a refund of money is generally not maintainable, as such claims can be pursued through a civil suit.

Arguments

Appellant (Punjab National Bank) Arguments:

• The bank argued that the writ petition was not maintainable because it involved complex factual disputes that could not be resolved in writ jurisdiction.
• The bank denied the existence of the agreement dated May 27, 1990, claiming it was a fabricated document.
• The bank asserted that Singh had not deposited ₹14,93,000 as claimed and that the bank officials never participated in the inquiry proceedings.
• The bank relied on affidavits from bank officials and a report from the District Magistrate stating that the documents related to the inquiry were forged.
• The bank contended that the matter should be addressed through a civil suit, not a writ petition, citing the decisions in Thansingh Nathmal & Ors. vs. Superintendent of Taxes, Dhubri & Ors.* and Suganmal vs. State of Madhya Pradesh & Ors.*

Respondent (Atmanand Singh) Arguments:

• Singh argued that the High Court has a wide jurisdiction under Article 226 of the Constitution and can examine all aspects of the matter, including cross-examining affiants if necessary.
• Singh contended that the certified copies of the inquiry proceedings and the dispatch register substantiated his claim and that there is a presumption of genuineness of these documents.
• Singh asserted that the bank had admitted its liability in the inquiry proceedings and that the agreement was valid.
• Singh claimed that the bank was trying to avoid its responsibility and that it would be unfair to force him to file a civil suit at this point.
• Singh relied on the decisions in Smt. Gunwant Kaur & Ors. vs. Municipal Committee, Bhatinda & Ors.*, Babubhai Muljibhai Patel vs. Nandlal Khodidas Barot & Ors.*, M/s. Hyderabad Commercials vs. Indian Bank & Ors.* and ABL International Ltd. & Anr. vs. Export Credit Guarantee Corporation of India Ltd. & Ors.* to support his claim that the writ petition was maintainable.
• Singh further relied on Bhinka & Ors. vs. Charan Singh* and Kaliya vs. State of Madhya Pradesh* for the admissibility of certified copies.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was whether the High Court was justified in exercising its writ jurisdiction under Article 226 of the Constitution to adjudicate a dispute involving complex and disputed questions of fact, particularly when the primary relief sought was the enforcement of a disputed agreement and the refund of money.

Treatment of the Issue by the Court

Authorities

Cases Relied Upon by the Court:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Court relied on Thansingh Nathmal* and Suganmal* to reiterate that writ jurisdiction should not be used for complex factual disputes or for seeking a refund of money.
• The Court referred to Smt. Gunwant Kaur* to emphasize that the High Court can decline to try a petition involving complex factual disputes.
• While acknowledging Babubhai Muljibhai Patel*, the Court noted that the power to cross-examine affiants does not change the principle that complex disputes should be resolved through civil suits.
• The Court distinguished Hyderabad Commercials*, noting that the bank had admitted its liability in that case, unlike the present case.
• The Court noted that ABL International Ltd.* reiterated that High Court has the discretion to entertain a writ petition but should not do so when other remedies are available unless there is a violation of Article 14.
• The Court noted that Bhinka* and Kaliya* dealt with the admissibility of certified copies in suits/trials, not in writ proceedings.

The Supreme Court held that the High Court had erred in entertaining the writ petition. The Court found that the matter involved complex factual disputes, including the genuineness of the agreement, which could not be resolved in writ jurisdiction. The Court emphasized that the High Court had failed to analyze the affidavits and reports submitted by the bank and had instead relied on the volume of documents submitted by Singh. The Court also noted that the primary relief sought was a refund of money, which is generally not granted in writ jurisdiction.

The Court observed that the High Court should have relegated the parties to a civil suit for proper adjudication of their claims. The Court set aside the judgments of the single judge and the Division Bench of the High Court and dismissed the writ petition, granting liberty to Singh to pursue other remedies as available in law.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• The presence of complex and disputed questions of fact.
• The lack of an admitted position or indisputable facts.
• The nature of the relief sought, which was primarily a refund of money.
• The existence of an alternative remedy through a civil suit.
• The High Court’s failure to analyze the evidence and the bank’s submissions properly.

The Court emphasized that the High Court should not have entertained the writ petition, given the nature of the dispute and the availability of an alternative remedy. The Court’s reasoning was based on established principles regarding the scope of writ jurisdiction and the need to avoid deciding complex factual issues in such proceedings.

Logical Reasoning

The Court considered alternative interpretations but rejected them because the facts were heavily disputed and the relief sought was not appropriate for writ jurisdiction.

The Court’s final decision was to set aside the High Court’s orders and dismiss the writ petition, allowing Singh to pursue a civil suit.

“The High Court does not generally enter upon a determination of questions which demand an elaborate examination of evidence to establish the right to enforce which the writ is claimed.”

“The very amplitude of the jurisdiction demands that it will ordinarily be exercised subject to certain self-imposed limitations.”

“We therefore hold that normally petitions solely praying for the refund of money against the State by a writ of mandamus are not to be entertained.”

Key Takeaways

• Writ jurisdiction under Article 226 of the Constitution is not meant to be an alternative to civil suits, especially in cases involving complex factual disputes.
• High Courts should be cautious in entertaining writ petitions seeking a refund of money, as such claims can be pursued through a civil suit.
• When a case involves disputed facts, the High Court should analyze the evidence and submissions of both parties properly.
• Parties seeking to enforce a contract or agreement with disputed facts should pursue a civil suit rather than a writ petition.

Directions

The Supreme Court dismissed the writ petition filed by the respondent, Atmanand Singh, and granted him the liberty to pursue other alternative remedies as permissible under law. The Court also directed that any future proceedings should be decided on their own merits, uninfluenced by the observations made in the High Court’s judgment or the Supreme Court’s judgment. Furthermore, the Court left all contentions available to both parties open, including the option for the bank to proceed against the respondent if it is found that he made false statements or produced forged documents.

Development of Law

The ratio decidendi of this case is that High Courts should not exercise their writ jurisdiction under Article 226 of the Constitution to adjudicate disputes that involve complex factual issues, especially when the primary relief sought is the enforcement of a disputed agreement or a refund of money. This reaffirms the established legal position that writ jurisdiction is not an alternative to civil suits and that such disputes should be resolved through the appropriate legal channels. The judgment reinforces the principle that writ jurisdiction is a discretionary remedy and should be exercised with caution, particularly in cases where a full trial with oral and documentary evidence is necessary.

Conclusion

In conclusion, the Supreme Court allowed the appeal filed by Punjab National Bank, setting aside the High Court’s decision to entertain a writ petition involving complex factual disputes and directing the respondent to pursue a civil suit. This judgment underscores the limitations of writ jurisdiction and the importance of adhering to established legal procedures for resolving complex financial disputes.