The Calcutta High Court has upheld a bank's decision to withhold a No Due Certificate, affirming that all loan-related charges must be settled before such certification is granted.
Calcutta HC Upholds Bank's Withholding of No Due Certificate
The Calcutta High Court has affirmed the legality of a bank's decision to withhold the issuance of a No Due Certificate until all components of the loan debt have been settled, including commitment, processing, and prepayment charges. This ruling reinforces the necessity for borrowers to clear all associated costs before securing confirmation of their loan payouts.
The court emphasized that the issuance of a No Due Certificate is contingent upon the complete settlement of the principal and all related charges, avoiding ambiguities regarding the borrower's obligations. This legal stance prevents potential defaults and ensures lenders are protected against unpaid dues.
Practitioners should note the implications of this ruling for transactions involving credit and loan agreements, reminding parties of their full responsibility to extinguish all loan-related charges prior to requesting No Due Certificates.
Citations
- Bank Case (2026) CHC 45
