RAM ESTATE Vs. CORPORATION BANK

JUDGEMENT

(1.) This writ petition prays for a mandamus directing the 1st respondent-Bank not to collect any amount from the petitioner in connection with the guarantee fee payable to the 3rd respondent-Corporation under the Loans Guarantee Scheme, 1971 and to refund to the petitioner the amount collected on that account till date.

(2.) With a view to develop an abandoned Coffee Estate, the petitioner submitted a scheme to the 2nd respondent, seeking financial assistance. The scheme was approved for a sum of Rs. 73,309 lakhs, credit facilities to which extent were granted by the 2nd respondent-Bank subject to the terms and conditions set out in the sanction letter as also the agreement and deed of hypothecation, executed in that regard.

(3.) During April, 1990, the 1st respondent appears to have debited a sum of Rs. 85,213.30 to the petitioner's account. On being questioned about the said entry the Bank by its letter dated 28th May, 1990, informed the petitioner that the amount debited represented the levy of guarantee fee paid by the Bank to the 3rd respondent-Corporation under the Deposit Insurance and Credit Guarantee Corporation-Small Guarantee Scheme, 1971. The petitioner protested against the said debit entry and disputed the 1st respondent's right to collect the guarantee fee. Representations made in that regard were however rejected by the Bank by its letter dated 26th of July, 1990 stating that the guarantee scheme having been made applicable to the priority sector advances all such advances are required to be covered and that the fee paid in connection with the said coverage had to be collected from the borrowers concerned. Subsequent debit entries also were on that basis made by the 1st respondent-Bank. Aggrieved by the collection of the guarantee fee, the petitioner has come up with the present writ petition for a mandamus as already indicated earlier.