Kerala High Court
M/S. Suprime Steel Industries vs Union Of India on 27 June, 2017
Author: P.B.Suresh Kumar
Bench: P.B.Suresh Kumar
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR
FRIDAY, THE 16TH DAY OF MARCH 2018 / 25TH PHALGUNA, 1939
WP(C).No. 23366 of 2017
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PETITIONER :
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M/S. SUPRIME STEEL INDUSTRIES
A PARTNERSHIP FIRM,
REPRESENTED BY ITS MANAGING PARTNER,
MR. M.K ABDUL KAREEM,
KUTTAMASSERY, THOTTUMUGHAM POST,
ALUVA 683105,ERNAKULAM DISTRICT.
BY ADVS.SRI.K.C.ELDHO
SRI.JIJO THOMAS
SRI.MALLENATHAN.M.
SRI.ANEESH JAMES
RESPONDENTS :
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1. UNION OF INDIA
REPRESENTED BY SECRETARY TO THE GOVERNMENT,
DEPARTMENT OF INDUSTRY, CENTRAL SECRETARIAT,
NEW DELHI 110 001
2. SECRETARY TO THE GOVERNMENT, MSME,
CENTRAL SECRETARIAT, NEW DELHI 110 001
3. DIRECTOR GENERAL OF FOREIGN TRADE,
OFFICE OF THE DIRECTOR GENERAL OF FOREIGN TRADE,
UDYOG BHAVAN, H-WING,
MAULANA AZAD ROAD, NEW DELHI 112 306
4. THE SOUTH INDIAN BANK LIMITED
REPRESENTED BY ITS CHIEF EXECUTIVE OFFICER AND
MANAGING DIRECTOR, T,B ROAD, MISSION QUARTERS,
THRISSUR 680 001
5. THE SOUTH INDIAN BANK LIMITED
REPRESENTED BY ITS CHIEF MANAGER
BRANCH AT ANGAMALY NORTH,
ANGAMALY P.O, PIN 683572,ERNAKULAM DISTRICT.
WP(C).No. 23366 of 2017 (U)
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6. STATE OF KERALA
REPRESENTED BY THE SECRETARY TO GOVERNMENT,
DEPARTMENT OF INDUSTRIES AND COMMEERCE,
GOVERNMENT SECRETARIAT,
THIRUVANANTHAPURAM 695 001
7. RESERVE BANK OF INDIA
REPRESENTED BY ITS GOVERNOR
CENTRAL OFFICE BUILDING,
SHAHID BHAGAT SINGH ROAD, FORT, MUMBAI-400 001
R1 TO R3 BY SRI.N.NAGARESH, ASG OF INDIA
BY SMT. VANDANA, CGC
R4 & R5 BY SRI.K.K.JOHN,SC,SOUTH INDIAN BANK
BY SRI.K.K.CHANDRAN PILLAI SENIOR ADVOCATE
BY ADVS. SMT.S.AMBILY
SRI.K.S.DILIP
SRI. SAJU.N.A
SMT. DHANYA.V.PAVANA
SRI. FLONY.P.J
SMT. UMA. G. KRISHNAN
R6 BY GOVERNMENT PLEADER SRI. MATHEW GEORGE VADAKKEL
R7 BY SRI.VIVEK VARGHESE ,SC
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 16-03-2018, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
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17/3/2018
WP(C).No. 23366 of 2017 (U)
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APPENDIX
PETITIONER(S)' EXHIBITS
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EXHIBIT P1 A TRUE COPY OF THE CERTIFICATE OF PERMANENT
REGISTRATION ISSUED BY THE 6TH RESPONDENT IN
FAVOUR OF THE PETITIONER
EXHIBIT P2 A TRUE COPY OF THE BALANCE SHEET OF THE
PETITIONER FIRM AS ON 31-03-2013
EXHIBIT P2(A) A TRUE COPY OF THE BALANCE SHEET OF THE
PETITIONER FIRM AS ON 31-03-2014
EXHIBIT P2(B) A TRUE COPY OF THE BALANCE SHEET OF THE
PETITIONER FIRM AS ON 31-03-2015
EXHIBIT P3 A TRUE COPY OF THE VALUATION REPORT PREPARED
BY THE APPROVED VALUER OF THE 5TH RESPONDENT
BANK
EXHIBIT P4 A TRUE COPY OF THE VALUATION CERTIFICATE OF THE
PLANT AND MACHINERY OF THE PETITIONER FIRM
PREPARED BY MECC ASSOCIATES
EXHIBIT P5 A TRUE COPY OF THE BANK STATEMENT SHOWING
TRANSACTIONS FOR SIX MONTHS PRIOR TO 08-11-2016
EXHIBIT P6 A TRUE COPY OF THE WRITTEN REPRESENTATION
SUBMITTED BY THE PETITIONER BEFORE THE 5TH
RESPONDENT ON 14-01-2017
EXHIBIT P7 A TRUE COPY OF THE DEMAND NOTICE DTED 22-02-2017
ISSUED BY THE 5TH RESPONDENT
EXHIBIT P8 A TRUE COPY OF THE REPRESENTATION DATED
27-06-2017 SUBMITTED BY THE PETITIONER BEFORE THE
1ST RESPONDENT WITH COPY TO OTHEER
RESP[ONDENTS
EXHIBIT P9 A TRUE COPY OF THE POSTAL RECEIPTS EVIDENCING
THE DISPATCHING OF EXHIBIT P8 TO THE
RESPONDENTS
EXHIBIT P10 A TRUE COPY OF THE POSTAL ACKNOWLEDGEMENT
RECEIPT SIGNED BY THE 4TH RESPONDENT
WP(C).No. 23366 of 2017 (U)
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EXHIBIT P10(A) A TRUE COPY OF THE POSTAL ACKNOWLEDGEMENT
RECEIPT SIGNED BY THE 5TH RESPONDENT
EXHIBIT P10(B) A TRUE COPY OF THE POSTAL ACKNOWLEDGEMENT
RECEIPT SIGNED BY THE 6TH RESPONDENT
EXHIBIT P10(C) A TRUE COPY OF THE POSTAL ACKNOWLEDGEMENT
RECEIPT SIGNED BY THE 7TH RESPONDENT
EXHIBIT P11 A TRUE COPY OF THE NOTIFICATION ISSUED BY THE
7TH RESPONDENT DATED 29-12-2016
EXHIBIT P12: PHOTOGRAPHS SHOWING THE FUNCTIONING OF THE PETITIONER'S
FACTORY
EXHIBIT P13: COPY OF THE ELECTRICITY BILLS OF THE PETITIONER'S INDUSTRY
FOR THE MONTHS OF AUGUST, 2017 AND SEPTEMBER, 2017.
RESPONDENT'S ANNEXURES :
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ANNEXURE 1: COPY OF REPLY GIVEN TO EXT.P7 BY THE PETITIONER DATED
10/3/2017.
//TRUE COPY//
P.A. TO JUDGE
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17/3/2018
P.B.SURESH KUMAR, J.
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W.P.(C) No.23366 of 2017
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Dated 16th March, 2018.
JUDGMENT
Petitioner is a firm engaged in the business of manufacturing steel. The petitioner has been enjoying a cash credit facility as also a letter of credit facility from the fourth respondent bank (the bank). The case of the petitioner is that the products manufactured by them were being purchased mainly by persons dealing in cash and as such, the cash flow of the petitioner was affected adversely on account of the demonetisation came into being in the country from 08.11.2016. It is stated by the petitioner that though they have requested the bank to restructure the credit facilities extended to them to tide over the financial crisis faced by them on account of the demonetization, the bank has not considered their request and consequently the industrial activity of the petitioner has come to a grinding halt. Ext.P6 is the request WPC No. 23366 of 2017 2 made by the petitioner before the bank in this connection. It is stated that the petitioner, in the said circumstances, though preferred Ext.P8 representation before the Central Government, requesting them to issue appropriate directions to the bank to extend them additional credit facilities so as to enable them to tide over the financial crisis faced by them, the Central Government is also not taking any action in this regard. It is alleged by the petitioner that on 29.12.2016, the Reserve Bank of India has issued directions to all banks to extend additional credit facilities to micro and small enterprises for facilitating timely and adequate credit flow to overcome the difficulties arising out of cash flow mismatching on account of the demonetization. It is stated by the petitioner that though the petitioner is falling under the categories of borrowers within the scope of Ext.P11, the petitioner is not being extended the benefit of the same by the bank. The petitioner, therefore, seeks directions to the Central Government to take appropriate action on Ext.P8 representation. The petitioner also seeks directions to the bank to take a decision on Ext.P6 WPC No. 23366 of 2017 3 representation preferred by them for re-structuring the credit facilities.
2. A statement has been filed on behalf of the bank. The stand taken by the bank in the statement is that the credit facilities extended by the bank to the petitioner became irregular long before the demonetization; that when the credit facilities became irregular, in order to enable the petitioner to come out of the problems faced by them, the bank had extended to the petitioner a temporary cash credit facility of Rs.75 lakhs on 14.07.2016; that as per the terms of the said facility, the petitioner should have repaid the outstanding in the account of the said facility on or before 12.09.2016 and that the petitioner has not only not remitted the dues in respect of the facilities earlier extended to them, but also not remitted the dues in respect of the temporary overdraft facility extended to them. It is stated by the bank that, in the circumstances, the bank had classified the loan accounts of the petitioner as non- performing assets and initiated proceedings for realisation of the amounts due, including proceedings under the WPC No. 23366 of 2017 4 Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the Act).
3. Heard the learned counsel for the petitioner as also the learned Senior Counsel for the bank.
4. The very basis of the case set up by the petitioner in the writ petition is that the industry of the petitioner has collapsed on account of the demonetization came into being with effect from 08.11.2016. This case of the petitioner is stoutly denied by the bank contending that the loan accounts became irregular long prior to the demonetization. Ext.P5 is the statement of account of the cash credit facility extended by the bank to the petitioner. The specific case of the bank is that there has been absolutely no payments forthcoming in the account since July, 2016 and the credit entries in Ext.P5 statement of account are proceeds of the various deposits made by the petitioner and adjusted against the liability. A perusal of Ext.P5 statement indicates beyond doubt that the stand taken by the bank is correct. Further, it is seen that Ext.P6 is a representation preferred by the petitioner to the WPC No. 23366 of 2017 5 bank for restructuring of the facility on 14.01.2017. There is no whisper about the demonetization in Ext.P6 representation. Had demonetization been the cause for the issues faced by the manufacturing unit of the petitioner, the same would have been stated by the petitioner in Ext.P6 representation. Further, after Ext.P6 representation, the bank had issued a notice to the petitioner calling upon them to liquidate the liability invoking Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Annexure I is the reply sent by the petitioner to the said notice on 10.03.2017. Annexure I also does not refer to the impacts of the demonetization alleged to have been faced by the industry of the petitioner. Further, as noted above, the bank had extended a temporary overdraft facility to the petitioner on 14.07.2016 itself and if the activities of the industry the petitioner were smooth during July 2016, there would not have been any occasion for the bank to provide the said facility to the petitioner, for, in banking practice, such facilities are extended only when borrowers face cash flow issues in the WPC No. 23366 of 2017 6 course of their business. In the circumstances, the petitioner cannot claim any relief on the basis that their industry faced cash flow crunch on account of demonetisation.
5. Coming to the direction sought by the petitioner to the bank for restructuring the credit facilities, it has to be noted that restructuring is basically a credit decision to be taken by the bank. No court can direct any bank to provide financial assistance to any person. It is all the more so since the industry of the petitioner is not in operation for the last so many years and the bank had already initiated proceedings against the petitioner for realisation of the amounts due.
The writ petition, in the circumstances, is without merits and the same is, accordingly, dismissed.
Sd/-
P.B.SURESH KUMAR, JUDGE.
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