Disputed Questions of Fact and Third-Party Defaults Cannot Negate a Borrower’s Contractual Liability to Repay Bank Loans

The petitioner applied for financial assistance under a rural employment scheme to establish a Bell Metal Rolling Mill

Upon approval by the District Industries Centre, the West Bengal State Cooperative Agriculture and Rural Development Bank (Respondent No. 3) issued an account payee cheque of Rs. 4,39,530/- directly to a private supplier (Respondent No. 6) for three specific machines

The petitioner alleged that the supplier failed to deliver the Diesel Oil Engine, rendering the mill non-functional

Conversely, the Bank and the supplier contended that the machinery was delivered on 17.04.2006, producing a delivery challan purportedly signed by the petitioner

The petitioner sought a Writ of Mandamus to compel legal action against the supplier and to restrain the Bank from charging interest or recovering the loan until delivery was completed

1. Whether a borrower can be exempted from the liability to repay a bank loan and accrued interest due to a third-party supplier's alleged failure to deliver machinery

2. Whether the High Court, under its writ jurisdiction (Article 226), can adjudicate a dispute involving seriously contested questions of fact regarding the delivery of goods and forgery of signatures

The court applied the principle that the liability to repay a loan arises strictly from the contract between the borrower and the lender and is not contingent upon the performance of a third party unless specifically provided for in the agreement

the court relied on the established jurisdictional principle that Article 226 of the Constitution is not the appropriate forum for resolving "seriously disputed questions of fact" that require the leading of oral and documentary evidence

The court also noted the availability of "efficacious alternative remedies" for breach of commercial contracts, such as suits for specific performance or damages

The Court observed that the Bank acted merely as a lender, disbursing funds based on quotations and a supplier chosen by the petitioner herself

The Court found no "arbitrariness or illegality" in the Bank's actions, as it had no nexus with the private supplier's alleged default

Regarding the non-delivery of the Diesel Oil Engine, the Court highlighted a direct factual conflict: the respondents produced a signed delivery challan, while the petitioner claimed the signature was forged

The Court reasoned that determining the authenticity of a signature and the occurrence of delivery are matters of evidence that cannot be decided in writ jurisdiction

the Court held that the petitioner remains contractually bound to the Bank regardless of the supplier's conduct, as the Bank did not undertake responsibility for the delivery

The writ petition was dismissed. The Court clarified that the petitioner is at liberty to pursue alternative legal remedies against the private respondent for damages or specific performance. All interim orders were vacated