High Court Orders Scheduled Bank to Refund Processing Fee with Interest

The High Court found the writ petition maintainable against a Scheduled Bank in a dispute over a processing fee refund for a cash credit account takeover. The court ruled in favor of the petitioner, directing the bank to refund the fee of &8377;1,79,238 within 30 days, with 12% interest per annum for delays. The lack of substantiated evidence supporting the bank's claims and the petitioner's entitlement to the refund influenced the court's decision. Each party was responsible for their own costs.

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Issues involved: Dispute over refund of processing fee paid to a bank for taking over a cash credit account, maintainability of writ petition against a scheduled bank governed by banking regulations.

The petitioner, a proprietorship concern trading surgical items, paid a processing fee of &8377; 1,79,238 to respondent No. 3-Bank for taking over its cash credit account from respondent No. 4-Bank. However, respondent No. 3-Bank did not proceed with taking over the account, leading to a demand for refund by the petitioner. Despite no resolution, the banking Ombudsman's intervention, and a letter from respondent No. 3-Bank justifying the non-refundable nature of processing charges, the petitioner filed a writ petition seeking refund with interest under Article 226 of the Constitution of India.

Respondent No. 3-Bank's defense was that they processed the application and kept pay orders ready, but the petitioner requested to hold the matter. They claimed to have made efforts with respondent No. 4-Bank for the account takeover, which was denied by respondent No. 4-Bank. Respondent No. 3-Bank submitted pay orders with an endorsement "P.O. cancelled as per mail," without producing the alleged mail from the petitioner. A preliminary objection on the maintainability of the writ petition was raised by respondent No. 3-Bank due to its private bank status, countered by the petitioner citing relevant banking regulations.

The High Court considered the nature of respondent No. 3-Bank as a Scheduled Bank governed by banking regulations and found the writ petition maintainable. It noted the lack of documentary evidence supporting respondent No. 3-Bank's claims regarding the petitioner's request to hold the matter and respondent No. 4-Bank's refusal for the account takeover. The court observed that the excuses made by respondent No. 3 seemed unsubstantiated, leading to the conclusion that the petitioner was entitled to a refund of the processing fee with interest at 12% per annum if not refunded within 30 days.

In conclusion, the High Court allowed the writ petition, directing respondent No. 3-Bank to refund the processing fee of &8377; 1,79,238 to the petitioner within 30 days, with interest at 12% per annum in case of delay. Each party was left to bear its own costs in the matter.

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