Banks Have Exclusive Domain On Their Treasury, Discretion To Release Loan Subject To Their Satisfaction, Can't Issue Writ: Patna High Court

In a recent ruling, the Patna High Court dismissed a writ petition seeking a writ of mandamus to direct the Bank authorities to sanction a loan amount of Rs. 25 lakhs.

A single judge bench comprising Justice Sanjeev Prakash Sharma held that a writ petition seeking mandamus to release a loan amount from a Bank was not maintainable as Banks have an exclusive domain on their treasury and also have the discretion to release loans subject to their satisfaction.

The petitioner had previously filed a writ petition seeking a loan from the Bank, which was dismissed by the court. Later, the petitioner had filed a Miscellaneous Jurisdiction Case which was decided by the Court with observations modifying its earlier order that the petitioner may approach the authorities of the Bank who shall consider the same on the basis of merits without being influenced by the dismissal of the writ petition.

The Bank, after considering the earlier application, reached the conclusion that the new documents in support of the claim for a loan had not been produced. A demand was also raised by the Bank through a letter, but the petitioner failed to produce any new documents in support of the claim of a loan, and they, therefore, rejected the claim for the loan.

The basic issue before the Court was whether a writ petition would lie for seeking a mandamus to direct Bank authorities to sanction the loan as claimed by the petitioner to the tune of Rs. 25 lakhs. The counsel for the petitioner was unable to show any law on this point or assist the Court.

While declaring the petition to be “wholly misconceived” Justice Prakash held, “a writ petition would not lie for seeking a mandamus to release loan from a Bank. A Bank has an exclusive domain on its own treasury and has a discretion to release loan subject to its satisfaction of the scheme put up before them. The rejection of application has to be, of course, on cogent ground. However, if such a decision has been taken, the same cannot be subject of judicial review.”

Case Title: Jitendra vs. The State Bank Of India and Ors Civil Writ Jurisdiction Case No.19852 of 2013

Citation: 2023 LiveLaw (Pat) 19

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