Patna High Court
Kavita Pigments And Chemical (P) Ltd. ... vs Allahabad Bank And Ors. on 1 March, 2000
Equivalent citations: AIR2001PAT66, [2001]107COMPCAS27(PATNA), AIR 2001 PATNA 66, (2002) 3 BANKCLR 389, (2000) 3 PAT LJR 241, (2001) 107 COMCAS 27
Author: Aftab Alam
Bench: Aftab Alam
JUDGMENT
1. M/s. Kavita Pigments and Chemical (P) Ltd., Bokaro is a debtor. It has over shot its cash credit limit. Simply, it is running an overdraft with its Bank, the Allahabad Bank, Bokaro Steel City Branch, Bihar.
2. In the writ petition, no details have been given as to how much and when the petitioners as a customer borrowed from the Bank and details of the transactions. The amount was not a loan against a security. The amount, which the petitioners have to repay to the Bank, is shown in the records of the Bank as borrowings made against a cash credit account. While the petitioners ran an overdraft a stage came when the Bank would not permit any further borrowings by withdrawals. The Bank made a request to the petitioners to fortify the overdraft by securities. The petitioner did not regularise the position.
3. The state of the record lay thus :
The petitioners ran an overdraft but declined to respond to the request of the Bank to furnish securities. The petitioners were loosing the confidence of it's bank on their credibility. The Bank was left with no option but to deliver a notice to the petitioner. The notice is dated 27 February, 1997. This in itself should have been the end of the matter, yet the petitioner did not clear the overdraft over-shooting the cash credit limit. This left the Bank with no option but to file an application under the Recovery of Debts Due to Banks and Financial Institution Act, 1993 before the Tribunal. The Tribunal dismissed the request of the petitioners that witnesses of the Bank be produced for cross-examination. The contention of the petitioners on the writ petition was that whatever may be the debt it has not been determined as there must be a final order. The purpose of raising such a plea was that the alternate remedy so provided under the Act under Section 20 can only be resorted to, should there be a final order.
4. The writ petition was dismissed by a learned judge on the ground that the alternate remedy is available if only the petitioner would, utilise it. Against the order dismissing the writ petition, the order dated 26 August, 1999, the present letters patent appeal has been filed.
5. Very lengthy arguments have been made to emphasize that the order of the learned Judge on the writ petition is illegal and needs to be set aside. The contention is that an alternative remedy as found by the learned Judge under the Act can only be utilised at the opportune moment and the situation only will arise after total adjudication on the determination of the debts. The Court does know this much from the record of the writ petition that the loan was processed against a sanclioned limit of Rs. 4.5 lacs and about the year, 1990 the petitioners were seeking enhancement of the limit up to Rs. 5,30,000/-. As the matter went before the Tribunal the Bank indicated its debt, as on 28 December, 1997, at Rs. 18,38,475.24/-.
6. The trade transactions between the petitioners as a customer and the Bank as a creditor had taken prior to the year, 1990. The petitioners do not disclose this in the writ petition nor in the present appeal. Nor do they indicate the date when they ran into the overdraft.
7. One aspect is clear and on this there is no Issue that the petitioners applied and sought credit from the Bank. On this faith the Bank evaluated the credit of the petitioners as a customer and further, on this evaluation and faith, the petitioners were indicated the limit of their credit. If the petitioner had maintained its credit-worthiness implying thereby, had cleared the overdraft when asked to do so, the credit would have been maintained and sustained. Credit with a bank is a two way traffic. The petitioners made no effort to clear the overdraft. Now the petitioners expect that the Bank should forget the limits of the overdraft. An issue has been born shaking the creditworthiness of the petitioners. Equity is against the petitioners and in such a situation the law does not favour them either.
8. This is a frivolous litigation which erodes all canons of banking ethics. The petitioners, who are seeking a forced confidence and faith from the Bank, are not prepared to abide by the first canon of banking ethics; not to cross over the cash credit limit. Even worst, the petitioners are not prepared to clear the over-draft; this is like a dishonoured cheque.
9. The writ petition which is sans the record as to how the cash credit was permitted to the petitioners. This Court cannot permit legal engineering to work in the High Court's prerogative writ jurisdiction for the benefit of bad debtors. These are fiscal matters. If persons like the petitioners were added-up together in hundreds or thousands it will throw the economy hay-wire. Bad debts cannot be written off so easily. Otherwise, such debt will contribute to the deficit financing of a planned economy. Innocent persons, who have nothing to do with these bad debts, as a nation will be paying taxes, direct or indirect, to make up for this deficit.
10. The reason the petitioner would not file an appeal under the Act is that it requires the deposit of 75% of the amount which is due, which the petitioners say has yet to be determined by a final order, which if not done the appeal is not maintainable. The petitioners perhaps do not appreciate that this much tolerance has been provided by the legislature to ensure deposit of three quarters of the amount which is undisputed. The petitioners, clearly, are evading the deposit of 75% of the amount which the petitioners know is due but are avoiding to deposit, as stipulated under the Act.
11. The Court is not inclined to interfere in this appeal and, accordingly, it is dismissed.
12. Let a coy of this order be sent to the Governor, Reserve Bank of India, by the Registrar General of the High Court.