Laxminarayan Mishra vs State Of M.P

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IN THE HIGH COURT OF MADHYA PRADESH
AT GWALIOR

BEFORE
HON'BLE SHRI JUSTICE MILIND RAMESH PHADKE
th
ON THE 29 OF OCTOBER, 2026
WRIT PETITION No. 2605 of 2012
CNR No.: MPHC030074922012
LAXMINARAYAN MISHRA
Versus
STATE OF M.P AND OTHERS
Appearance:
Shri S.S. Gautam - Advocate for the petitioner.
Shri Aman Parasar - Advocate for respondents No.2 and 3.
ORDER
This petition, under Article 226 of the Constitution of India, has been
filed by the petitioner seeking following reliefs:-
"(i) Notice annexure P/1 issued by the Respondent
Bank be quashed and the amount already deposited by the
petitioner towards the loan be adjusted.
(ii) The respondents be further directed to release the
tractor No.MP-33M-6528 of the petitioner forthwith in the
interest of justice and enquiry be ordered agains against
erring bank officials.
(iii) Any other relief doing justice may also be awarded
in the interest of justice."
Signature Not Verified
Signed by: PAWAN KUMAR
Signing time: 10/30/2026
12:49:51 PM

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Learned counsel for the petitioner submits that the petitioner had

availed agricultural loans from the respondent Bank and had been making
payments towards the same. However, despite the payments made by him,
the respondent Bank issued the impugned demand notice dated 15.03.2012,
demanding a sum of Rs.8,59,971/-, without furnishing a proper and complete
account of the transactions and adjustments made in the loan accounts. It is
further submitted that the petitioner's tractor, which was being used for
carrying out agricultural operations and was an important source of his
livelihood, was seized by the bank officials on 05.01.2012. The petitioner
disputed the outstanding amount claimed by the Bank and sought disclosure
of the relevant account statements and adjustment of the amounts already
deposited by him. It is further submitted that, by order dated 24.05.2012, this
Court directed that, upon deposit of Rs.1,00,000/- by the petitioner within
two months, the respondent Bank shall release the tractor within one week
from the date of deposit. The Bank was also directed to disclose the details of
the accounts and to arrange a meeting with the petitioner for repayment of
the remaining amount in instalments over a period of one year. The petitioner
complied with the aforesaid direction by depositing the amount of
Rs.1,00,000/- on 21.06.2012. It is contended that the subsequent conduct of
the Bank, particularly its failure to satisfactorily reconcile the disputed loan
accounts, warrants interference by this Court.
Per contra, learned counsel for respondent Nos.2 and 3 submits that
the petitioner had committed defaults in repayment of the loan amounts and
the demand notice was issued on the basis of the outstanding amounts
Signature Not Verified
Signed by: PAWAN KUMAR
Signing time: 10/30/2026
12:49:51 PM

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reflected in the loan accounts. In the return filed on behalf of the Bank, it

was stated that an amount of Rs.4,42,968/-, together with accrued interest,
was outstanding towards the tractor loan, whereas an amount of
Rs.2,32,213/-, together with accrued interest, was outstanding towards the
Kisan Credit Card loan. The Bank has, therefore, denied any illegality in the
recovery proceedings and has prayed for dismissal of the petition.
Heard learned counsel for the parties and perused the record.
The principal controversy in the present petition concerns the
outstanding liability of the petitioner towards the respondent Bank, the
correctness of the demand raised vide notice dated 15.03.2012 and the
consequential action taken in respect of the petitioner's tractor. The record
reveals that the petitioner had disputed the amount claimed by the Bank from
the very inception and had sought disclosure of the details of his loan
accounts. This Court, while considering the grievance of the petitioner by
order dated 24.05.2012, had directed the Bank to disclose the account
particulars and had contemplated a meeting between the parties for
settlement of the remaining liability through instalments.
A perusal of the statements of account subsequently produced by the
respondent Bank as Annexure R/1 assumes significance. The statements
reflect that the relevant agricultural loan accounts were closed on 06.12.2018
and the closing balances recorded therein are nil. In the absence of a
satisfactory explanation reconciling the amounts claimed as outstanding in
the return with the subsequent account-closure entries, the Bank's assertion
regarding the subsistence of the same outstanding liability cannot be
Signature Not Verified
Signed by: PAWAN KUMAR
Signing time: 10/30/2026
12:49:51 PM

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accepted without further supporting material. The Bank has not satisfactorily

explained, on the basis of the material placed on record, how the amounts
claimed in its return are to be reconciled with the recorded closure of the
accounts.
It is well settled that a financial institution, while exercising its right to
recover a loan, is required to act in accordance with law and the terms
governing the loan transaction. The power to recover outstanding dues
cannot be exercised arbitrarily, and the liability claimed from a borrower
must be capable of being substantiated by the relevant account statements
and supporting records. Where the borrower disputes the amount demanded
and the Bank's own records subsequently disclose closure of the concerned
accounts with nil balances, the demand cannot be sustained merely on the
basis of an unexplained assertion of outstanding dues.
In the present case, the impugned demand notice dated 15.03.2012 was
issued for recovery of Rs.8,59,971/-. The subsequent statements produced by
the Bank record closure of the relevant accounts on 06.12.2018 with nil
closing balances. The respondent Bank has not placed any satisfactory
reconciliation on record to establish the subsisting liability forming the basis
of the impugned demand. In these circumstances, continuation of recovery
proceedings founded upon the disputed demand would not be justified.
So far as the petitioner's grievance regarding the amount of
Rs.1,00,000/- deposited pursuant to the interim order dated 24.05.2012 is
concerned, the petitioner has asserted that the deposit was made on
21.06.2012 and has relied upon the receipt filed along with the rejoinder. In
Signature Not Verified
Signed by: PAWAN KUMAR
Signing time: 10/30/2026
12:49:51 PM

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view of the subsequent closure of the relevant loan accounts and the absence

of any satisfactorily established outstanding liability in the material placed
before this Court, the respondent Bank cannot retain the said amount towards
the disputed loan liability without furnishing a lawful basis for doing so.
In view of the foregoing discussion, this Court finds that the impugned
demand notice cannot be sustained on the material presently available on
record. The petitioner is, therefore, entitled to relief in respect of the
impugned demand and the consequential recovery action founded thereon.
Accordingly, the petition is allowed. The demand notice dated
15.03.2012, issued by respondent No.3 and filed as Annexure P/1, is hereby
quashed. The consequential recovery proceedings founded solely upon the
said notice shall stand set aside.
The respondent Bank is directed to verify the deposit of Rs.1,00,000/-
stated to have been made by the petitioner on 21.06.2012 pursuant to the
order dated 24.05.2012. Upon verification of the deposit and adjustment of
any amount, if legally recoverable under a separately established and duly
reconciled liability, the balance amount shall be refunded to the petitioner
within a period of eight weeks from the date of receipt of a certified copy of
this order. In the event the Bank claims any subsisting liability in respect of
the relevant loan accounts, it shall furnish to the petitioner a complete and
duly reconciled statement of account, together with the supporting records
and the legal basis of such liability, before making any adjustment.
In view of the fact that the tractor was seized in connection with the
recovery proceedings arising out of the impugned notice, no coercive action
Signature Not Verified
Signed by: PAWAN KUMAR
Signing time: 10/30/2026
12:49:51 PM

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for recovery shall be taken against the petitioner on the basis of the notice

hereby quashed. The petitioner's prayer for an independent enquiry against
the bank officials is not being separately adjudicated in the absence of
specific material warranting such a direction. The petitioner shall, however,
be at liberty to pursue any remedy available to him in accordance with law in
respect of any independently substantiated grievance.
With the aforesaid directions, the petition stands allowed and disposed
of.
No order as to costs.
(MILIND RAMESH PHADKE)
JUDGE
pwn*

Signature Not Verified
Signed by: PAWAN KUMAR
Signing time: 10/30/2026
12:49:51 PM