Issuance of a No Dues Certificate precludes subsequent challenges to interest charged on settled loan dues.

The appellant had availed credit facilities of approximately ₹1.5 crore from respondent no. 1 bank and subsequently defaulted in repayment. The bank initiated proceedings under Sections 13(2) and 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”). The proceedings were ultimately settled on 23 September 2025, after which the appellant paid the outstanding amount and obtained a No Dues Certificate from the bank.

Thereafter, the appellant filed a complaint before the Ombudsman alleging that the bank had charged excessive interest and had failed to furnish the calculation of the interest component. The Ombudsman rejected the complaint on 7 May 2026, finding no procedural irregularity, deficiency in service, or violation of banking norms.

The appellant challenged that decision through a writ petition, which was dismissed by the learned Single Judge on 22 July 2026. The Single Judge held that, after repayment pursuant to the bank’s recovery action and closure of the account, no deficiency in service or violation of banking norms had been established.

In the writ proceedings, despite repeated opportunities, the appellant could not produce material showing that it had reserved the right to challenge the alleged excess interest at the time of making payment of the outstanding dues.

Whether the appellant could maintain a challenge to the alleged excess interest after settling the SARFAESI proceedings, paying the outstanding dues, closing the loan account, and obtaining a No Dues Certificate?

Whether the Ombudsman’s finding that there was no procedural irregularity, deficiency in service, or violation of banking norms disclosed any infirmity warranting interference in writ jurisdiction?

Whether the learned Single Judge’s dismissal of the writ petition suffered from any error in the decision-making process or warranted appellate interference?

The Court applied Sections 13(2) and 13(4) of the SARFAESI Act, 2002, which empower a secured creditor to take specified measures for enforcement of security interests upon a borrower’s default.

It further applied the principle that judicial review in writ proceedings is concerned with the legality and propriety of the decision-making process, rather than undertaking a fresh adjudication where the competent authority has found no procedural irregularity, deficiency in service, or violation of applicable banking norms.

The Court also applied the principle that, after settlement of recovery proceedings, payment of the dues, closure of the account, and issuance of a No Dues Certificate, a borrower cannot ordinarily continue stale or otherwise unsupported litigation concerning the settled account; litigation must receive finality and a “quietus”.

The Court noted that the appellant had admittedly defaulted, that the bank’s SARFAESI proceedings had been finally settled, and that the appellant had squared up the account and obtained a No Dues Certificate.

The appellant’s inability to produce any material showing that it had reserved its right to challenge the interest calculation at the time of payment weakened its subsequent claim.

The Ombudsman had considered the parties’ positions and found no procedural irregularity, deficiency in service, or breach of banking norms.

The Court therefore found no defect in the Ombudsman’s decision or in the Single Judge’s assessment that the decision-making process was unimpeachable.

In view of the settled account and absence of any demonstrated legal or procedural violation, the Court considered the subsequent proceedings to be an attempt to reopen a concluded matter and held that appellate or writ interference was unjustified.

The Court held that there was no infirmity in the Ombudsman’s order dated 7 May 2026 or in the Single Judge’s order dated 22 July 2026, and that no legal or procedural ground for interference had been established.

The appellant was directed to pay costs of ₹1,00,000 to respondent no. 1 bank.

MAT 81 of 2026 and all connected applications were disposed of, and any interim order was vacated.