Orissa High Court
Case Details
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 05-May-2025 19:35:07 IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No. 12295 of 2024 (In the matter of an application under Articles 226 and 227 of the Constitution of India, 1950). Rabindra Kumar Patnaik …. Petitioner(s) -versus- The Chief General Manager, State Bank of India, Khurda & Ors. …. Opposite Party (s) Advocates appeared in the case through Hybrid Mode: For Petitioner(s) For Opposite Party (s) : : Mr.Bidyadhar Pradhan, Adv. Mr.Dillip Kumar Mohapatra (for O.P.2) CORAM: DR. JUSTICE S.K. PANIGRAHI DATE OF HEARING:-20.02.2025 DATE OF JUDGMENT:-25.04.2025 Dr. S.K. Panigrahi, J. 1. In this Writ Petition, the Petitioner seeks a direction from this Court to compel the State Bank of India to disburse the entire sanctioned loan amount of ₹50,00,000/- as a lump sum under the Reverse Mortgage Loan Scheme, alleging arbitrary denial despite contractual sanction and personal financial hardship. I. FACTUAL MATRIX OF THE CASE:
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2. The brief facts of the case are as follows: Page 1 of 11 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 05-May-2025 19:35:07 (i) The petitioner is a senior citizen and a retired employee of the State Bank of India (SBI), currently residing in Bhubaneswar, Odisha. He is also a pensioner of the bank, holding P.F. Index No. 0914045. (ii) On 22.02.2023, the petitioner applied for a loan amounting to ₹50,00,000/- under the Reverse Mortgage Loan (RML) Scheme of the State Bank of India, which is designed to provide financial support to senior citizens by allowing them to mortgage self-acquired property in exchange for periodic or lump sum payments. The intended use of the loan was to repay personal debts and carry out renovations to the petitioner’s residential property. (iii) The loan application was submitted through SBI’s Forest Park Branch and was forwarded to the Retail Assets Central Processing Centre (RACPC), Unit-1, Bhubaneswar, for processing and approval. Based on the bank’s assessment, the application was sanctioned on 29.04.2023. (iv) The property offered as security was valued at approximately ₹2.28 crores according to the petitioner. However, internal assessments and Net Present Value (NPV) calculations were undertaken by the bank in accordance with its lending norms and circulars. (v) On 02.05.2023, the petitioner entered into a loan arrangement letter and loan agreement with the bank, setting out the terms of disbursement. According to these documents, a portion of the loan was to be disbursed as a lump sum and the remaining balance was to be released in periodic (quarterly) instalments. Page 2 of 11 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 05-May-2025 19:35:07 (vi) The petitioner contends that he was entitled to a full lump sum disbursal of ₹50,00,000/- based on the valuation of his property and the guidelines of the Reverse Mortgage Scheme. He claims that the bank’s NPV calculation was flawed and that the scheme allows such full lump sum disbursement. (vii) The bank, on the other hand, states that the Reverse Mortgage Scheme, as per its official policy, limits lump sum disbursement to the lower of 50% of the NPV or ₹15,00,000/-. It asserts that the petitioner contractually agreed to these terms, which were clearly recorded in the arrangement letter and agreement. (viii) On 06.05.2023, an amount of ₹15,00,000/- was disbursed to the petitioner as a lump sum. The petitioner claims this was insufficient and continues to seek the release of the remaining sanctioned amount in one go, i.e., ₹35,00,000/-. (ix) The petitioner made multiple requests to the concerned SBI officials, including a formal appeal under the bank’s “SamadhanPakhwada” grievance mechanism on 12.05.2023. SBI responded on 15.09.2023, reiterating that the lump sum disbursement limit had been complied with as per policy. (x) Dissatisfied with the bank’s response, the petitioner approached the Banking Ombudsman of the Reserve Bank of India on 16.10.2023. The Ombudsman dismissed the complaint on 12.01.2024, stating that the grievance involved a commercial judgment of the bank, which falls outside the Ombudsman’s jurisdiction. Page 3 of 11 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 05-May-2025 19:35:07 (xi) The petitioner contends that the non-disbursement of the full loan amount has caused him significant hardship, especially in view of his age and the purpose for which the loan was sought. He alleges that SBI has acted in violation of the spirit and intent of the RML Scheme, which is aimed at senior citizen welfare. (xii) SBI maintains that it has complied fully with both the terms of the contract and the policy norms of the RML Scheme, and that any further lump sum disbursal would be inconsistent with the agreed- upon loan documentation and bank guidelines. (xiii) The petitioner, asserting that he has no other efficacious legal remedy, has approached this Court under Articles 226 and 227 of the Constitution of India, seeking a writ directing the SBI to disburse the entire sanctioned loan amount of ₹50,00,000/- as a lump sum. II. SUBMISSIONS ON BEHALF OF THE PETITIONER: 3. (i) Learned counsel for the Petitioner earnestly made the following submissions in support of his contentions: The petitioner contends that the sanctioned loan amount of Rs. 50,00,000/- was not disbursed in full, and only Rs. 15,00,000/- was provided on 06.05.2023. Despite multiple efforts, the remaining Rs. 35,00,000/- has not been disbursed by the bank. (ii) The petitioner claims that the bank’s calculation of the Net Present Value (NPV) was incorrect, leading to the wrong sanctioned loan amount. The petitioner argues that the qualifying loan amount should have been Rs. 75,00,000/- as per the bank’s own guidelines. Page 4 of 11 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 05-May-2025 19:35:07 (iii) The petitioner asserts that despite repeated appeals to various authorities within the bank, including the Assistant General Manager, the bank has failed to disburse the full loan amount. (iv) The petitioner has raised the issue with the Banking Ombudsman, but the complaint was closed without due consideration of the petitioner’s grievance, violating the norms of the Reverse Mortgage Loan Scheme. (v) The petitioner argues that the Reverse Mortgage Loan Scheme is intended to provide senior citizens with funds for personal loans and home renovations. The non-disbursement of the full sanctioned amount goes against the objectives of the scheme. (vi) The petitioner has no other legal recourse and has invoked the writ jurisdiction of this Hon’ble Court to seek redressal of the grievance and to ensure the disbursement of the full loan amount as per the terms of the sanctioned loan. III. SUBMISSIONS ON BEHALF OF THE OPPOSITE PARTIES: 4. (i) The Learned Counsel for the Opposite Parties earnestly made the following submissions in support of his contentions: The petitioner voluntarily entered into a loan arrangement and agreement, both dated 02.05.2023, wherein it was clearly stated that the lump sum disbursal would be Rs. 8,74,504/-, and the rest would be paid periodically. Despite this, the bank disbursed a higher lump sum of Rs. 15,00,000/- as a gesture of flexibility. (ii) The demand for disbursal of the remaining Rs. 35,00,000/- as a single payment is in direct violation of the agreed terms and the official SBI Reverse Mortgage Loan Scheme. Such a demand is unreasonable, Page 5 of 11 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 05-May-2025 19:35:07 contrary to bank policy, and outside the scope of permissible disbursement. (iii) The petitioner’s repeated claims that the bank has failed to act or that it has ignored his grievances are false. The bank has responded appropriately to all complaints, both under the "SamadhanPakhwada" mechanism and via the official reply provided by the Ombudsman process. (iv) The petitioner’s calculations or interpretations of loan eligibility and NPV are self-derived and do not align with the official guidelines or the contractual terms signed by him. The petitioner is estopped from raising these claims after voluntarily accepting and benefiting from
Legal Reasoning
the loan disbursement under the agreed terms. (v) The petitioner is not entitled to claim further lump sum disbursement beyond Rs. 15,00,000/- and the bank is obligated to disburse the remaining amount only through quarterly payments, subject to request and in line with the terms of the arrangement letter and loan agreement. IV. COURT’S REASONING AND ANALYSIS: 5. 6. Heard Learned Counsel for parties and perused the documents placed before this Court. The dispute primarily concerns a reverse mortgage loan availed by the petitioner from the SBI, where the petitioner seeks full lump sum disbursement of ₹50,00,000/- despite having entered into a loan agreement specifying different disbursal terms. Page 6 of 11 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 05-May-2025 19:35:07 7. It is not in dispute that the petitioner voluntarily executed a loan arrangement letter and agreement dated 02.05.2023, wherein the agreed mode of disbursement comprised a partial lump sum amount and the remainder in periodic installments. Notwithstanding this agreement, the petitioner seeks judicial intervention under Article 226 to direct the bank to release the entire sanctioned amount as a lump sum, alleging hardship and deviation from the intended spirit of the RML scheme. 8. The petitioner has heavily relied upon the objective of the Reverse Mortgage Loan Scheme, which is indeed welfare-oriented and intended to support senior citizens in financial need. However, this Court is of the opinion that policy objectives cannot override the specific contractual terms freely agreed upon by the parties, particularly when the policy itself caps lump sum disbursal limits. 9. It is now a well-established principle of law that disputes arising out of lending contracts and loan terms are matters quintessentially suited to the domain of civil adjudication, unless there is a clear demonstration of mala fide intent or a breach of statutory obligation. Even when a public sector entity is involved, what governs judicial scrutiny is not merely the status of the body but the nature of the function it performs. The determinative test lies in whether the act in question bears the hallmark of a public duty or is merely a commercial transaction cloaked in administrative form. Page 7 of 11 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 05-May-2025 19:35:07 10. In this regard, the Supreme Court, while substantiating on this stance, in the case of LIC of India v. Escorts Ltd.1 held as follows: “The question must be decided in each case with reference to the particular action, the activity in which the State or the instrumentality of the State is engaged when performing the action, the public law or private law character of then action and a host of other relevant circumstances.” 11. This stance was reiterated by the Supreme Court in the recent case of S. Shobha v. Muthoot Finance Ltd.2wherein it was held as follows: “7. Applying the above test, the respondent herein cannot be called a public body. It has no duty towards the public. It’s duty is towards its account holders, which may include the borrowers having availed of the loan facility. It has no power to take any action, or pass any order affecting the rights of the members of the public. The binding nature of its orders and actions is confined to its account holders and borrowers and to its employees. Its functions are also not akin to Governmental functions. 8. A body, public or private, should not be categorized as “amenable” or “not amenable” to writ jurisdiction. The most important and vital consideration should be the “function” test as regards the maintainability of a writ application. If a public duty or public function is involved, any body, public or private, concerned or connection with that duty or function, and limited to that, would be subject to the extraordinary writ jurisdiction of Article 226 of the Constitution of India.” scrutiny under judicial 12. Applying the abovementioned judicial precedents to the case in hand, it becomes abundantly clear that the petitioner’s grievance arises not 1 AIR 1986 SC 1370 22025 INSC 117. Page 8 of 11 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 05-May-2025 19:35:07 from a breach of statutory duty but from a contractual disagreement over the mode and quantum of disbursement, a matter governed entirely by the terms of the Reverse Mortgage Loan agreement voluntarily executed between the parties. 13. The petitioner, though a senior citizen and entitled to protection under welfare schemes, cannot seek equitable relief from a writ court to rewrite commercial terms that are neither demonstrably unlawful nor arbitrary. What the petitioner perceives as unfair stems from commercial expectations, not from any violation of a public law duty. The function exercised by the State Bank of India in this context, evaluating loan eligibility, determining Net Present Value, and disbursing funds, is purely financial and internal in nature, not one imbued with any statutory or public character that would invite intervention under writ jurisdiction. 14. Indeed, the bank’s decision to disburse ₹1500000 as a lump sum, despite the agreement indicating ₹874504, reflects a degree of administrative accommodation rather than rigidity. The petitioner’s continued insistence on a complete lump sum disbursement of ₹5000000 lacks both contractual basis and legal sustainability. 15. This Court is conscious of the formidable reach of Article 226 of the Constitution. It stands as a sentinel against public wrongs and a guardian of constitutional values. Yet, it is not an avenue to recast private contracts or to substitute judicial discretion for commercial judgment enshrined within the domain of regulated financial policy. The power vested in this Court is not to be invoked for altering the Page 9 of 11 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 05-May-2025 19:35:07 contours of an agreement merely because one party, post facto, finds the outcome inconvenient or inequitable. 16. If courts were to intervene in structured lending arrangements, especially in welfare oriented financial schemes such as the Reverse Mortgage Loan, they risk upsetting the careful balance between protecting senior citizens and maintaining the financial discipline these schemes require. The purpose of such programs is not defeated by the enforcement of reasonable safeguards or limitations, particularly when those conditions have been accepted voluntarily. The role of the Court is not to supervise commercial contracts or to second guess banking policies in the absence of any breach of public duty. Where parties have acted with awareness and mutual consent, the Court must be cautious not to intrude into what is essentially a private regulated transaction. 17. A word of caution must be noted for the petitioner and, by extension, for those who have advised and represented him. The remedies available under the Constitution are not intended to be applied to every dispute that arises out of a commercial transaction. The writ jurisdiction of this Court is an exceptional remedy, not a replacement for appropriate legal avenues or a means to revisit commercial decisions made within the bounds of law. Those who come before this Court, especially with the guidance of legal counsel, are expected to do so with thoughtfulness and respect for the limited and serious nature of this jurisdiction. Page 10 of 11 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 05-May-2025 19:35:07 V. CONCLUSION: 18. In summation, no violation of law, statutory duty, or fundamental rights has been demonstrated. What is at stake is a disagreement over expectations, not a breach of constitutional guarantees. The Petitioner, having accepted the terms and benefited from partial disbursement, cannot now approbate and reprobate the agreement. Accordingly, this Court finds no merit in the present petition. The Writ Petition stands dismissed. Interim order, if any, passed earlier stands vacated. 19. 20. (Dr.S.K. Panigrahi) Judge Orissa High Court, Cuttack, Dated the 25th April, 2025/ Page 11 of 11