Facts of the Case

The petitioners, M/s. Kodai Automobiles Limited and another, approached the Madras High Court seeking a writ of mandamus directing Axis Bank Limited to release the original property documents relating to their property situated at Palayamkottai, Tirunelveli, without insisting upon production of a revocation letter from the office of the Deputy Commissioner of CGST, as stipulated in the One Time Settlement (OTS) proceedings dated 28.09.2022.

Alternatively, the petitioners sought extension of time for payment of the second instalment under the OTS settlement entered into with the bank.

During the pendency of the writ petition, the petitioners informed the Court that they had approached the bank for settlement, the bank had accepted the One Time Settlement proposal, and consequently the grievance raised in the writ petition no longer survived.

 

Issues Involved

  1. Whether the High Court should direct the bank to release the original property documents without insisting upon a revocation letter from the CGST authorities.
  2. Whether the Court should extend the time for payment of the second instalment under the One Time Settlement.
  3. Whether the writ petition survives after acceptance of the One Time Settlement by the bank.

 

Petitioners' Arguments

  • The petitioners contended that the bank should release the original title documents without insisting upon a revocation letter from the CGST authorities.
  • In the alternative, they requested extension of time for payment of the second instalment under the One Time Settlement.
  • During the hearing, the petitioners submitted that after filing the writ petition, they had approached the bank, which accepted their One Time Settlement proposal. Therefore, the dispute had been resolved and the writ petition had become infructuous.

 

Respondents' Arguments

  • No appearance was recorded on behalf of the respondents at the time of disposal of the writ petition.

 

Court Order / Findings

The Madras High Court recorded the submission made by the petitioners that the One Time Settlement had already been accepted by the bank after institution of the writ petition.

Since the grievance raised in the writ petition no longer survived due to the settlement between the parties, the Court held that the writ petition had become infructuous.

Accordingly:

  • The writ petition was dismissed as infructuous.
  • No costs were awarded.
  • The connected miscellaneous petition was also closed.

 

Important Clarification

  • Where parties resolve their dispute through a valid One Time Settlement (OTS) during the pendency of proceedings, the High Court may dismiss the writ petition as infructuous, as no live cause of action survives.
  • The judgment does not decide the legal validity of the bank's insistence upon production of a revocation letter from the GST authorities, since the controversy stood resolved through settlement.
  • The decision reiterates that constitutional writ jurisdiction is ordinarily not exercised where the dispute has already been settled between the parties.

Sections / Provisions Involved

  • Article 226 of the Constitution of India
  • Principles relating to Writ of Mandamus
  • One Time Settlement (OTS) Guidelines (Contractual Settlement between Borrower and Bank)

Link to download the order -

https://www.mytaxexpert.co.in/uploads/1782981286_132compressed.pdf

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