Court Rules Disputed Facts Cannot Be Decided in Writ Jurisdiction; Borrower Must Explore Alternative Remedies
In a significant judgment delivered by the Calcutta High Court on April 30, 2026, Justice Ajay Kumar Gupta dismissed the writ petition filed by Jayanti Karmakar against the General Manager, District Industries Centre, and others, seeking relief from loan repayment obligations due to alleged non-supply of machinery by a private respondent. The case, registered as WPA 17153 of 2009, revolved around the recovery of a loan amount sanctioned for establishing a Rolling Mill of Bell Metal in Purulia, West Bengal.
Jayanti Karmakar, the petitioner, had sought a writ of mandamus commanding the respondents to initiate legal proceedings against the private respondent for non-supply of machinery, and to restrain the bank from charging interest until the machinery was supplied. The petitioner claimed that the loan amount of Rs. 4,39,530 was disbursed to the private respondent, Jagannath Engineering, but the latter failed to deliver the Diesel Oil Engine, which was critical for starting the mill.
The court, however, found that the dispute centered around seriously disputed questions of fact that required evidence, such as whether the machinery was delivered or not. Justice Gupta noted that the petitioner had an alternative remedy in law to address grievances against the private respondent, and emphasized that writ jurisdiction under Article 226 of the Constitution is not suitable for resolving such factual disputes.
The bank, represented by Respondent No. 3, argued that it had fulfilled its obligations by issuing the cheque to the private respondent as per the petitioner's request and quotations. The bank contended that the petitioner had received part of the machinery, and any issues with the private respondent should be dealt with separately.
The judgment reiterated that the borrower's liability to repay the loan arises out of the contract with the lender and is not contingent upon the performance of a third party unless explicitly provided for in the contract. The court found no arbitrariness or illegality in the bank's actions and ruled that the petitioner could not be exempted from repaying the loan.
Justice Gupta advised the petitioner to pursue legal proceedings for enforcement of rights, including claims for damages or specific performance against the private respondent. The writ petition was ultimately dismissed, with the court not issuing any restraining order against the bank from recovering its dues.
Bottom line:-
A writ petition challenging the recovery of a loan amount due to alleged non-supply of machinery by a private respondent cannot be entertained under Article 226 of the Constitution if the dispute involves seriously disputed questions of fact requiring evidence. The borrower remains liable to repay the loan amount irrespective of the third party's performance unless otherwise specified in the contract.
Statutory provision(s): Article 226 of the Constitution of India, Banking Law on Loan Recovery, Alternative Remedy Principles
