After Borrower Paid Dues In Notices That Included Interest, Karnataka HC Cancels Bank’s Later ₹19.79-Lakh Demand

The appellant had obtained two separate loans from the Bank: ₹4,00,000 and ₹3,30,000.

After the loans became irregular, the Bank issued demands for ₹2,01,298 and ₹2,31,657, respectively.

The appellant paid the demanded amounts by bankers’ cheques.

The Bank subsequently issued a communication dated 14 February 2013 claiming further dues of ₹7,63,079.48 on the cash-credit account and ₹12,16,202.33 on the term-loan account, together with future interest

The appellant challenged that communication under Article 226 of the Constitution.

The Single Judge dismissed the petition on the ground that disputed questions of fact could not be determined in writ proceedings.

The appellant appealed under Section 4 of the Karnataka High Court Act, 1961

The Bank’s second demand notice was issued under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, calling on the borrower to discharge the specified liabilities

The appeal was brought under Section 4 of the Karnataka High Court Act, 1961, and the underlying petition invoked the High Court’s jurisdiction under Article 226 of the Constitution

The Court applied the principle that a bank cannot, after issuing demands specifying liabilities and receiving payment of those demands, seek to impose additional liability inconsistently with its earlier demands where the record establishes the relevant facts through documents

No judicial precedent was cited.

The Court examined the demand notices, payment instruments and the Bank’s later communication.

It concluded that the earlier notices specified the amounts demanded and that the appellant had paid those amounts; it therefore rejected the Bank’s explanation that interest had been omitted from the earlier demands and added later

Because the documents themselves established the relevant transactions and payments, the Court held that the matter did not present disputed questions of fact warranting dismissal of the writ petition

The Single Judge’s refusal to intervene therefore required correction

It also held that the appellant was entitled to all consequential benefits