Authority: High Court of Judicature at Madras

Order Date: 09 July 2026

Case Overview

  • Parties: Petitioner – M/s Dinakar Textiles (prop. Mr. D. Senthil Kumar, Coimbatore); Respondents – Indian Bank (formerly Allahabad Bank) represented by its authorised officers at Sultanpet Branch, Coimbatore, Zonal Office Coimbatore, and Chennai branch.
  • Nature of Proceeding: Writ petition under Article 226 of the Constitution seeking a writ of mandamus directing the bank to consider the petitioner’s representation dated 28‑04‑2024 and to issue a No‑Due Certificate and discharge receipt, returning the original security documents.
  • Background: The petitioner obtained a financial facility from Allahabad Bank, later merged into Indian Bank. Due to non‑payment, the loan account was classified as NPA on 01‑01‑2019 with an outstanding liability of Rs 26,13,001/‑.
  • One‑Time Settlement (OTS): The bank conducted a recovery camp; the petitioner offered Rs 8 lakhs as a one‑time settlement. The offer was accepted, and the petitioner paid the full Rs 8 lakhs in two instalments on 28‑07‑2021. The bank issued receipts dated the same day acknowledging receipt “towards OTS settlement” and a letter from the branch manager confirming the amount received.
  • Subsequent Bank Position: Despite the receipts, the bank later issued several letters demanding the balance of the original Rs 26 lakhs, asserting that the Rs 8 lakhs was only a part payment and that a No‑Due Certificate could be issued only after full settlement.
  • Bank Representation: Mr. H. Chandramouli, Chief Manager, Indian Bank, Sultanpet, testified that the officer who issued the receipts was not aware of the settlement terms and that the bank continued to pursue the remaining amount.
  • Court Findings: The court noted that the petitioner’s offer was accepted, receipts were issued, and the bank did not return the security documents. It held that once an OTS is accepted, the loan account is deemed closed, and any subsequent demand for the balance is untenable. The bank failed to produce any document showing that the OTS required head‑office approval or that the settlement was only provisional.

Final Outcome

  • The writ petition is allowed. Indian Bank is directed to issue the No‑Due Certificate and, if required, register the discharge receipt, returning the original security documents to the petitioner. No order as to costs.

Topics: Court Order, Banking Settlement