M/s. Salubrity Biotech Ltd. & Anr. v. Bank of Baroda, Vadodara & Ors. 12 apr 2022

IN THE HIGH COURT OF ORISSA AT CUTTACK 

W.P.(C) No.6998 Of 2022 

(Through hybrid mode) 

M/s. Salubrity Biotech Ltd. and  another 

-versus 

Bank of Baroda, Vadodara and  others 

…. Petitioners Mr. G.M. Rath, Advocate 

…. Opposite Parties 

Order  No. 

Mr. K.M.H. Niamati, Advocate 

 ^{CORAM: JUSTICE ARINDAM SINHA} 

ORDER 

12.04.2022 

3. 1. Mr. Rath, learned advocate appears on behalf of petitioners and  submits, impugned is communication dated 7^th February, 2022, by  which opposite party-bank informed debit of prepayment charges for  closure of credit facilities. He submits, the sanction letter did not  contain any such term. It is an unfair practice as per guidelines issued  by Reserve Bank of India (RBI).  

2. He refers to circular dated 6^th March, 2007 issued by the  Reserve Bank of India laying out ‘Guidelines on Fair Practices Code  for Lenders’. He submits, clear guideline was for including  comprehensive information on, inter alia, pre-payment option. The  apex bank followed up by circulars dated 25^th November, 2008 and 

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12^th November, 2010. He refers to sanction letter dated 5^th November,  2019 and submits, there is only reference to processing charges at  Rs.350 per lac or part thereof and in addition, goods and services tax  (GST). 

3. Mr. Niamati, learned advocate appears on behalf of the bank. He submits, the sanction letter does contain reference to circular of his  client under processing charges. In that circular has been provided pre payment charges. Therefore, the petitioner borrower cannot say that  the information was not available. He submits further, in terms of the  last referred circular dated 12^th November, 2010, the referred circular  was uploaded to and available in his client’s website. 

4. Mr. Rath submits, the circular was not disclosed along with the  sanction letter and by circular dated 12^th November, 2010 RBI  provided additional guideline of the information to ‘also’ be uploaded  in the website of the bank. He reiterates, his client was not made  known in the application form nor sanction letter and therefore Court  should strike down the pre-payment charges imposed by the bank. 

5. Nothing from the counter has been brought to notice of Court  that there was any indication of pre-payment charges to be imposed, as information provided in the loan application to petitioner or in the  sanction letter except the circular referred against entry of processing charges. Furthermore, there is also no evidence that the referred 

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circular was disclosed as attachment to the sanction letter. 

6. In facts and circumstances above, Court is satisfied that the  object of transparency in grant of credit facilities, required to be  fulfilled by the guidelines issued by the Reserve Bank of India, were  not fulfilled in this case. Imposition of pre-payment charges therefore  cannot be sustained. Said charge is struck down. The bank is directed  to forthwith return the security documents on obtaining the processing charges. 

7. The writ petition is disposed of. 

 (Arindam Sinha) 

 Judge 

Sks

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