Patna High Court - Orders
M/S Goenka Agencies vs The State Bank Of India & Ors on 28 February, 2012
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.5056 of 2011
======================================================
M/S Goenka Agencies, a proprietorship firm, having its place of business at
Delhi House, Dr. R. P. Road, Police Station Kotwali, Town & District
Bhagalpur through its Proprietor Shri Bl Mukund Goenka, son of late Sagar
Mal Goenka, resident of Dwarikapuri Colony, P.S. Kotwali, Town and
District Bhagalpur
.... .... Petitioner/s
Versus
1. The State Bank Of India, a Banking company constituted under the
State Bank of India Act, 1955 having its corporate office at State Bank
Bhawan, Madame Cama Road, Mumbai-400021 through its Chairman-
cum-Managing Director.
2. The Chief Manager, State Bank of India, Bhagalpur City Branch,
Sonapatti, Bhagalpur-812002
3. The Assistant General Manager, RASECC, Stressed Assets Resolution
Centre, Third Floor, Annexe Building, Zonal Officer, Khanjarpur,
Bhagalpur.
4. The Union of India through the Recovery Officer, Debts Recovery
Tribunal, Bihar, Patna.
.... .... Respondent/s
======================================================
For the Petitioner : Mr. Gautam Kumar Kejriwal, Advocate
For the State Bank of India : Mr. Mukundjee, Advocate
For the Union of India : Mr. P.L.Jaiswal, (C.G.C.)
=====================================================
PRESENT
HONOURABLE MR. JUSTICE S. N. HUSSAIN
ORDER
28 28.02.2012This writ petition has been filed by the petitioner for the following reliefs :-
(i) For issuance of a writ in the nature of certiorari for quashing of the letter dated 18.05.2010 issued under the signatures of the respondent-Assistant General Manager, Zonal Officer, State Bank of India, Bhagalpur whereby the petitioner has been denied the benefit of settlement under the SBI-OTS-SME-
2010 Scheme on ground of misconceived
2 Patna High Court CWJC No.5056 of 2011 (28) dt.28-02-2012
2 / 12
interpretation of the clauses of the said scheme being violative of the guidelines of the Reserve Bank of India.
(ii) For issuance of a writ in the nature of mandamus directing the respondents to admit the petitioner‟s case to one-time settlement under the aforesaid SBI OTS SME Scheme, 2010 and, accordingly, receive the settlement amount from the petitioner without any baseless and misconceived objection as has been raised vide the impugned letter dated 18.05.2010 and by way of considering the proposal dated 29.06.2010 made by the petitioner well within time. .
(iii) For issuance of a writ in the nature of mandamus directing the respondents to accept the proposal dated 29.06.2010 made by the petitioner for settlement of the cash credit account under the scheme and issue `no dues certificate‟ as well as release the entire collateral securities free from any charge on account of the financial assistance.
(iv) For grant of any other relief or reliefs to which the petitioner is found entitled to in the facts and circumstances of the case.
2. Learned counsel for the petitioner stated that it is a proprietorship firm and had availed financial assistance by way of cash credit facility at respondent-State Bank of India, City Branch, Bhagalpur (hereinafter referred to as `the SBI‟ for the sake of brevity), but due to some unavoidable circumstances, the said cash credit account became classified as a Non-Performing Account (hereinafter referred to as `the NPA‟ for the sake of brevity) in the year 1995, whereafter the SBI proceeded to institute a suit bearing Title Suit No. 3 Patna High Court CWJC No.5056 of 2011 (28) dt.28-02-2012 3 / 12 73 of 1995 before the Civil Court, Bhagalpur for realization of loan amount from petitioner-firm. Subsequently in view of the provisions of the Recovery of Debt Due to Bank and Financial Institution Act, 1993 (hereinafter referred to as `the DRT Act‟ for the sake of brevity) , the said suit was transferred to the Debts Recovery Tribunal, Patna, where it was registered as PT No. 50/1999, in which liability of the petitioner was determined and certificate dated 07.09.2001 was issued by the Debt Recovery Tribunal in favour of SBI under section 19(22) of the DRT Act for an amount of Rs.30,59,662.97 along with pendente lite and future interests at the rate of 16.5% per annum. Pursuant to the said certificate, proceeding for recovery of the said amount was instituted before the Recovery Officer, Debt Recovery Tribunal, Patna vide R.P. Case No. 131/2001 and notice dated 08.06.2004 was issued to the petitioner with respect to the order of attachment of immovable properties.
3. Learned counsel for the petitioner further submitted that thereafter the petitioner approached the SBI on 30.06.2004 with a proposal for settlement under One Time Settlement Scheme (hereinafter referred to as `the OTS Scheme‟ for the sake of brevity) promulgated by the Reserve Bank of India (hereinafter referred to as `the RBI‟ for the sake of brevity) as OTS Scheme of 2003. Thereafter, the SBI accepted the proposal and sent letter to the petitioner dated 05.07.2004 directing the petitioner to deposit 25% of the upfront amount by 31.10.2004, but the petitioner did not deposit 25% of the said amount, rather deposited a meagre amount by the cut off date, which is lying in the No-lien Account with the S.B.I. 4 Patna High Court CWJC No.5056 of 2011 (28) dt.28-02-2012 4 / 12
4. It is further claimed by the petitioner that subsequently on 05.03.3010 SBI OTS-SME, 2010 Scheme was introduced by the SBI for the period up to 31.03.2011, by which loan accounts having attracted NPA classification were notified for settlement at considerable discounted figures and the SBI also issued letter dated 15.04.2010 to the petitioner inviting to settle its cash credit account in terms of the said Scheme. However, the SBI, by its impugned letter dated 18.05.2010, intimated the petitioner that the said benefit of settlement of the loan account of the petitioner under the OTS Scheme was not available to it as the petitioner‟s case was covered by the exception of clause 1.6 of the Scheme on account of being a decreed case.
5. Learned counsel for the petitioner claimed that the coverage clauses 1.1 and 1.2 of the OTS Scheme of 2010 were applicable in the petitioner‟s case, whereas, clause 1.6 of the said Scheme was not applicable as there was no decree and hence the settlement formula as per clause 2 of the OTS Scheme of 2010 was fully applicable to its case.
6. Learned counsel for the petitioner argued that the decree is not defined anywhere and section 19 of the DRT Act, 1993 is with respect to application for issuance of certificate and as such certificate is issued under sub-section (22) of the said section and hence this cannot be termed as decree because the said provision in the DRT Act is similar to the provision of the Bihar & Orissa Public Demand Recovery Act, 1914 (hereinafter referred to as `the PDR Act‟ for the sake of brevity), out of which one would be before the 5 Patna High Court CWJC No.5056 of 2011 (28) dt.28-02-2012 5 / 12 Certificate Officer and the other before the District Collector. He also averred that in the DRT Act, there is no mention of decree and only certificate is mentioned as has been mentioned in the PDR Act. He also stated that on the one hand the respondents are claiming the OTS Scheme of 2010 to be beneficial and on the other hand they are ousting the beneficiaries treating the certificate as a decree. In this regard, he relied upon a decision of the Apex Court in case of Nahar Industrial Enterprises Ltd. vrs. Hongkong and Sanghai Banking Corporation, reported in 2009(8) SCC 646, in which it was held that the Debt Recovery Tribunal cannot pass a decree as it is only a Certificate Court and not a Civil Court.
7. The next point raised by learned counsel for the petitioner is with respect to discrimination, claiming that even if certificate is a decree, sub-clauses of clause 1 of the OTS Scheme of 2010, if read independently, show that the petitioner is covered under clause 1.1 of the Scheme, whereas, other clauses thereof could not affect it. He also averred that only clause 1.6 goes against the petitioner, but if it is read along with clause 1.1, it would provide that the certificate issued on or after 05.03.2010, will not affect its claim for OTS, hence it would become discriminatory against the preamble of the Scheme and it would also make the graded discounts to be futile in cases 10 years or more old as in those old cases certificates must have been issued.
8. Learned counsel for the petitioner stated that clause 1.2 of the Scheme provided for consent decree of Courts/DRT/BIFR, but DRT has three wings, namely, Registry, Bench and Recovery 6 Patna High Court CWJC No.5056 of 2011 (28) dt.28-02-2012 6 / 12 Office and hence the term `DRT‟ includes recovery proceeding also and the petitioner‟s case being pending before Recovery Officer, the said clause would be applicable. He also relied upon section 27 of the DRT Act, sub-sections (2) and (4) of which provided amendment and withdrawal of the said certificate and hence the scope of settlement has not yet vanished and the DRT has authority under section 19(25) of the DRT Act and Rule 18 of the DRT (Procedure) Rule, 1993. He, thus, submitted that if the Scheme and the aforesaid provisions are harmoniously considered, the petitioner would be fully entitled to avail the OTS Scheme of 2010 and certificate could have been amended accordingly.
9. Learned counsel for the petitioner also averred that if clause 1.3 of the OTS Scheme of 2010 is read with clause 1.6 thereof, it would clearly show that section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as `the SARFAESI Act‟ for the sake of brevity) is the final decision of the claims of the parties, whereafter, recovery proceeding is to follow and hence the certificate has to be included as per clause 1.3 of the Scheme and only decree of Civil Court would create a bar under clause 1.6 of the Scheme.
10. Learned counsel for the petitioner relied upon a decision of the Supreme Court in case of Transcore vrs. Union of India & another, .reported in 2008(1) SCC 144(125), in which it was held that the demand notice under section 156 of the Income Tax Act, after assessing the liabilities of the assesses, was akin to section 13(2) of the SARFAESI Act. Hence its claim is that all such provisions 7 Patna High Court CWJC No.5056 of 2011 (28) dt.28-02-2012 7 / 12 are post determination of liabilities stage, it be section 13(2) of the SARFAESI Act or section 19 of the Act or section 156 of the Income Tax Act and none of them can be presumed to be a decree as mentioned in clause 1.6 of the OTS Scheme of 2010. Hence there can be no discrimination in a non-discriminatory scheme.
11. Learned counsel for the petitioner also argued that in the counter-affidavit, the respondents have not explained how they equate this case with cases under the other enactments mentioned above. Further, he averred that other classification violates the specific provision of Article 14 of the Constitution and a class within a class creates hostile discrimination. In this respect, learned counsel for the petitioner relied upon four decisions of the Apex Court, in case of E.V. Chinnaiah vrs. State of Andhra Pradesh, reported in 2005(1)SCC 394, in case of Aashirwad Films vs Union of India & Ors. reported in 2007(6) SCC 624, in case of Leelabai Gajanan Pansare & ors. vrs. Oriental Insurance Company Limited & Ors., reported in 2008(9) SCC 720 as well as in case of State of Uttar Pradesh & Ors. vrs. Deepak Fertilizer & Petro Chemical Corporation Ltd. & Ors., reported in 2007(10) SCC 342.
12. On the other hand, learned counsel for the respondents submitted that the OTS Schemes of the RBI are coming since 2003 and the petitioner itself made a proposal, but could not even pay upfront amount by the date fixed (31.10.2004) in the said OTS Scheme of 2003 and hence the said Scheme went abegging and, thereafter, also the petitioner never availed any OTS Scheme till 2010. Learned counsel for the respondents also stated that the 8 Patna High Court CWJC No.5056 of 2011 (28) dt.28-02-2012 8 / 12 certificate in question had been issued on 07.09.2001 and had never been challenged and hence it has attained finality and cannot be now interfered with, nor the petitioner can invoke provision of sections 25, 26 and 27 of the DRT Act. He also averred that now the OTS Scheme of 2010 has lost its force on 31.03.2011 and hence in any view of the matter it cannot be revived now.
13. Learned counsel for the respondents also argued that the claim of the parties decided by the competent courts cannot be affected by any Scheme of the Bank and keeping in view the decisions of the competent courts, be it under the C.P.C or any other statutory provisions, the SBI is competent to make such Scheme as it is the same as RBI Scheme, namely, Revised Guidelines for Compromise Settlement of Chronic Non-performing Assets of Public Sector Banks.
14. It is not in dispute that the OTS Scheme in question provided by SBI is legal and proper and it is the same as RBI Schemes, under its revised guidelines. However, considering the averments made by learned counsel for the parties and the materials on record, the claims of both the parties are dependent upon One Time Settlement Scheme of NPAs in SME for 2010 (SBI-OTS-SME, 2010) of the SBI and hence it is necessary to consider the relevant clauses of the said Scheme in the light of the respective claims of parties.
15. Clause 1 of the aforesaid Scheme is with respect to Coverage, in which Clause 1.1 is with respect to all NPAs in the SME Sector, classified as "doubtful" or "loss" on or before 31.03.2009, with 9 Patna High Court CWJC No.5056 of 2011 (28) dt.28-02-2012 9 / 12 outstanding balance of Rupees 1 crore and below on the date on which the account was classified as "doubtful" or "loss". Clause 1.2 provides that the cases pending before Courts/DRTs/BIFR will be also eligible, subject to consent decree being obtained from the Courts/DRTs/BIFR. In this regard, it may be noted that the petitioner‟s account had been declared NPA in the year 1995, but no consent decree had been obtained from any Court/DRT/BIFR.
16. Clause 1.3 of the said Scheme provides that the cases where Bank had issued notice or taken action under section 13(4) of the SARFAESI Act will be eligible. In this connection, it may be noted that the SARFAESI proceeding itself is a mechanism of secured creditor for recovery from secured assets and not by any Court or authority. Hence no certificate or decree is prepared under the SARFAESI Act. On the other hand, the proceeding under the DRT Act is held by a Court/Tribunal, which passes certificate and such certificate happens to be equivalent to a decree.
17. Clauses 1.4 and 1.5 of the said Scheme are for limited purpose and internal accountancy of the Bank and hence they are not attracted to the facts and circumstances of this case. Similarly Clauses 1.7, 1.8 and 1.9 of the said Scheme are also not applicable in this case as no question of fraud or „Not Readily Realizable Account‟ or Government accounts is involved in the instant case. Clause 1.6 of the said Scheme provides that the decree cases will not be eligible for the said Scheme because the claimed of the parties already decided by a competent Court cannot be legally affected by any such Scheme of the Bank.
10 Patna High Court CWJC No.5056 of 2011 (28) dt.28-02-2012
10 / 12
18. Considering the aforesaid provisions of the Scheme in their entirety, it is quite apparent that the word `decree‟ is used in Clause 1.2 of the Scheme in a much wider sense including certificates as against such certificates or for such certificates/decrees, no suit can be instituted in a civil court. In the said circumstances, it cannot be said that due to inclusion of Clause 1.2 in the Scheme, the specific Clause 1.6 will not be applicable. If the Scheme is interpreted in such a narrow compass, the purpose of the Scheme is bound to be frustrated, specially Clause 1.6 thereof, which is quite clear and without any ambiguity.
19. So far proceeding under the DRT Act is concerned, it is not in dispute that SBI had filed Title Suit No. 73 of 1995 before Civil Court, Bhagalpur for a decree of realization of loan amount from the petitioner-firm, but subsequently the said suit was transferred to the Debt Recovery Tribunal, where it was registered as PT No.50/ 1999, in which the liability of the petitioner was determined and certificate dated 07.09.2001 was issued by the Tribunal in favour of SBI under section 19(22) of the DRT Act for the amount concerned along with interest. The aforesaid certificate of the Tribunal was never challenged by the petitioner under any provision of the DRT Act nor it took any step in accordance with sections 25, 26 and 27 of the DRT Act. Hence the said certificate has attained finality and cannot be ignored or interfered with. The said certificate having force of a decree, the provision of Clause 1.6 of the Scheme would squarely cover the case of the petitioner. In the said circumstances, the decision of the Apex Court in case of Nahar Industrial Enterprises 11 Patna High Court CWJC No.5056 of 2011 (28) dt.28-02-2012 11 / 12 Ltd. (supra) is not applicable to the facts and circumstances of this case.
20. On the other hand, section 13 of the SARFAESI Act and its various sub-sections are with respect to demand notice and steps to be taken pursuant thereto. As no certificate having force of a decree is prepared therein, such matters are decided by the authorities of the Bank itself without any intervention of any Court or Tribunal. Hence it cannot be equated with the provisions of the DRT Act, specially section 19 thereof. Furthermore Clause 2 of the Scheme is Settlement Formula-Amount & Cut-off date, but there is a difference between NPA account and Ledger balance as the latter, namely Ledger balance includes interest. On the other hand, NPA account does not include any interest. The petitioner has wrongly tried to equate them, in which it has miserably failed. In the said circumstances, the decision of the Supreme Court in case of Transcore (supra) is not attracted to the completely different facts and points involved in this case.
21. Apart from the aforesaid provisions and their applicability, it is not in dispute that in the year 2003 the petitioner made a proposal as per the OTS Scheme of 2003 and the said proposal was accepted by the SBI, which sent a letter to the petitioner dated 05.07.2004 directing it to deposit 25 per cent of the upfront amount by 31.10.2004, but the petitioner did not deposit 25 per cent of the said amount, rather it deposited a meagre amount by the said date, which is lying in No-lien Account with the SBI. Hence the petitioner did not avail the opportunity given to it and more than six 12 Patna High Court CWJC No.5056 of 2011 (28) dt.28-02-2012 12 / 12 years thereafter it had raised the issue afresh for taking benefit of OTS Scheme of 2010, to which it is not entitled as per the discussions made above.
22. Another point raised by learned counsel for the petitioner is that over classification violates the provisions of Article 14 of the Constitution and a class within a class creates hostile discrimination. However, from the facts of this case as well as from the provisions of the different enactments and the Scheme, it is quite apparent that there is no such classification as claimed by the petitioner, which could violate any provision of law, specially Article 14 of the Constitution. Neither by impugned order, nor by any clause of the Scheme, nor by the provisions of law, the petitioner could show that any class within a class has been created causing hostile discrimination, rather it is quite apparent from the entire arguments and points raised by learned counsel for the petitioner that such points are being raised merely to conceal its own negligence and conduct.
23. In the said circumstances, the case laws relied by learned counsel for the petitioner in that regard in cases of E.V. Chinnaiah (supra); Ashirvad Films (supra); Leelabai Gajanan Pansare & ors. (supra) and State of Uttar Pradesh & ors. (supra) do not help a wee bit the case of the petitioner.
24. Accordingly, this Court does not find any merit in this writ petition, which is, thus, dismissed.
( S. N. Hussain, J. ) MPS/ AFR