Madhya Pradesh High Court
Revati Cements Private Limited Through ... vs Allahabad Bank on 4 December, 2015
1
HIGH COURT OF MADHYA PRADESH
BENCH AT INDORE
Division Bench: Hon'ble Mrs. Justice S.R. Waghmare
and Hon'ble Shri Justice Sujoy Paul
Writ Appeal No.549/2015
M/s Revati Cements Private Limited
Vs.
Allahabad Bank through its Head Office
at 2, N.S. Road, Kolkata and Branch office at New
Palasia, Indore.
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Shri Ashok Chitale, learned Senior Advocate with Shri Ganesh
Mawle, learned Counsel for the appellant.
Shri A.K. Sethi, learned Senior Advocate with Shri R.C. Sinhal,
learned Counsel for the respondent.
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ORDER
(Passed on 04 /12/2015 Per Smt. S.R. Waghmare, J.
By this Writ Appeal under Section 2(1) of Madhya Pradesh Uchcha Nyayalaya (Khand Nyaya Peeth Ko Appeal) Adhiniyam, 2005, appellant M/s Revati Cements Pvt. Ltd. is aggrieved by the order dated 2/11/2015 passed by the learned Single Judge in W.P. 14214/2013 refusing to grant order restraining the respondent Bank from making any 2 publication in newspaper.
02. Briefly stated the facts of the case are that the appellant/petitioner was sanctioned a loan of Rs.100 crores by the respondent Bank and after making regular payment of interest for some time, the appellant/petitioner had requested for reschedulement/restructuring the loan and deferment of payment but without considering the difficulties faced by the appellant/petitioner, the respondent Bank had sent the notice dated 13.12.2013 threatening to publish the borrower's/guarantor's name with photographs in the local newspaper and also to put up a flexi board at the unit cautioning the public not to deal with the appellant petitioner. A reply has been filed by the respondent Bank stating that the loan agreement was executed by the appellant petitioner and the account of the appellant petitioner was declared as NPA and in terms of Clause 24 of the Term Loan Agreement, the respondent Bank is entitled to publish the names of 3 the appellant petitioner as defaulter. The learned Writ Court after hearing the parties, rejected the writ petition and hence the present writ appeal.
03. Counsel for the appellant/petitioner has vehemently urged the fact that the learned Writ Court had failed to consider that the loss to be assessed in terms of the loan agreement required that the borrower should become a Non-Performing Asset as per Reserve Bank of India norms only then, the respondents shall publish the name of the appellant petitioner in the news paper. In the present case Counsel urged that only partial loan has been disbursed by the respondent Bank. Similarly the respondent has failed to consider the vital fact that it is the upcoming project of the appellant petitioner, which is likely to be affected and to suffer irreparable harm, if the name and photographs of the appellant petitioner are published in the news paper.
Counsel further submitted that the appellant/petitioner company is not a wilful defaulter 4 and the respondent Bank had sanctioned a total loan of Rs.100crores, out of which only Rs.15,50,39,091/-have been disbursed by the respondent and every paisa of the loan has been utilized by the appellant/petitioner entirely in the implementation of the project by purchasing the machinery establishing infrature etc. Out of the total term loan Rs.871crores sanctioned by the consortium banks, only about Rs.66 crores have been disbursed while the promoters of the project have invested over Rs.79 crores from their own personal sources. The total loan disbursement by the respondent is Rs.15.50 crores and the said amount has been utilized by the appellant/petitioner for construction, making advance payment to suppliers of plant and machinery and other works necessary for the project. Counsel submitted that the appellant/petitioner alone was not responsible for the delay of the project. The State Bank of India insisted on the appellant mortgaging land held by the appellant form the State Government through the 5 Collector, Satna for mining lease of limestone, which is the basic raw material for the manufacture of cement. The land held on mining lease from the Collector, Satna is not of the ownership of the appellant/petitioner and, therefore, cannot be mortgaged and insistence on the part of the State Bank of India created deadlock in the project of the appellant/petitioner. Counsel submitted that vide a letter dated 29.11.2013 the respondent Bank called upon the appellant/petitioner to regularize the account and the letter was a notice of recall of the loan. Counsel further vehemently urged the fact that the judicial opinion regarding publication, which is allegedly unlawful, is 'varied' on the issue. Counsel also urged that although in W.P. No.9222/2012 M/s Jain Teerthankar Education Society and three others vs. State Bank of India, Indore the Writ Court of this High Court has observed that while publishing photograph of the borrower and the surety, there is no violation of any right or legal provision by the respondent Bank. Counsel 6 submitted that another decision of our own Court in the matter of Ku. Archana Chauhan vs. State Bank of India reported in 2006 LAWS (MPH)-3-84 and the High Court of Kerala and Calcutta had taken up a different view. In the case of K.J. Doraisamy vs. The Assistant General Manager, State Bank of India, Erode Branch and another (W.P. No.17761/2006 and M.P. Nos. 1 & 2/2006) the right of privacy of the borrowers had been protected by the Court. In the matter of Allahabad Bank vs. M/s Revati Cements Pvt. Ltd. the petitioner Bank claimed for transferring the petition from the High Court of M.P. Indore Bench to the Apex Court, which has been declined by the Hon'ble Supreme Court. In the matter of D.J. Exim (India) Pvt. Ltd. and others vs. State Bank of Bombay and others, the Apex Court had also dismissed the writ petition. The Bombay High Court in the said case has observed that the action of the Bank in publishing the photographs cannot be held to be ultravires and the order of the High Court has 7 been affirmed by the Hon'ble Supreme Court. However, granted a short time to the petitioner to file statement made by the Bank to publish photographs was extended for sometime. Counsel further submitted that the condition was unduly harsh and prayed for considering the matter and direction to the respondent Bank publishing of any photographs with names of the appellant/petitoner also likely to affect in the name of the Company borrowers, who were on the verge of financial crisis. Hence, Counsel prayed that the order of the Writ Court be set aside and interim relief be granted and the appeal be admitted for final hearing.
04. Shri A.K. Sethi, learned Senior Counsel for the respondent Bank has vehemently urged the fact that alternative remedy was available to the appellant/petitioner under Section 17 of the SARFAESI Act and the present appeal is also infructuous in the light of the fact that the publication has already taken place by the 8 respondent Bank and Rs.18 crores is outstanding as dues to the Bank and the appellant/petitioner was a chronic defaulter and not entitled to any relief as claimed. That Clause 24 of the Term Agreement is reproduced in the Writ Petition and the petitioner had agreed the same but no averment was made nor argued on the points raised by filing additional rejoinder.
Besides even if the Clause 24 of the Term Agreement is properly scrutinized, it is not properly appreciated by the Writ Court and the action was held to be legal in several of the decisions even in the citation presented by the Counsel for the appellant/petitioner company itself. Counsel submitted that the appellant/petitioner had slipped into NPA on 31.10.2013 and declaration has been transmitted to the appellant/petitioner vide Annexure P/10 filed by the petitioner company itself and despite repeated requests to regularize the loan account nothing has been done and not a single paise has been paid by the appellant petitioner. Besides 9 Clause 24 of the Loan Agreement also indicates that the borrower hereby further agrees that in case the loanee/borrower fails to pay the bank's dues or comments default in the repayment of the loan instalment(s) or interest thereon on due date(s), or the account of the loanee/borrower becomes Non- Performing Asset as per the Reserved Bank of India's norms, the bank will be at liberty to disclose or publish the name(s) and address(es) of the loanee/ borrower or its directors as defaulter in the newspaper. And Counsel urged the fact that the objection by the appellant/petitioner was thus misdirected and several grounds were available to the respondent Bank to invoke the said clause. Besides this Court in writ petition had referred to the case of D.J.Exim (India) (supra). Counsel submitted that the Apex Court also held that the Banks were entitled to make publication and there is no bar under the circumstances; the Transfer Petition of the Bank also categorically points to the fact that the Apex Court had found there was no 10 merit in the writ petition and upheld the decision of the High Court and that no legal ground exists regarding legality of the publication to be made in Clause 24 of the Term of Loan Agreement. Hence,Counsel prayed for dismissal of the present Writ Appeal.
05. On considering the above submissions and considering the fact that the publication has already been made in the news paper on 9/11/2015 regarding default of the payment of loan amount by the appellant/petitioner, we find that the appellant/petitioner, as alleged by the Counsel for the respondent Bank, had committed acts of misfeasance and as per policy of the State Bank of India, it is only in case of wilful defaulters and those who are guilty of misfeasance that the Bank resorted to publication of photographs. We find from the letter dated 13/12/2013 issued by the respondent Assistant General Manager of the Bank to the appellant petitioner that he was called that the loan account had slipped to NPA on 31/10/2013 11 itself and to take the matter and situation seriously and regularize the account by 15/12/2013 otherwise as per the Rules and notice under SARFAESI Act 2002 would follow. Similarly several reminders including the fourth reminder dated 28/9/2013 is also indicative of the said fact that persistent to over due interest would force the bank to turn the account NPA. Several such reminders are already on record, then it cannot be said under the circumstances that the action of the respondent was unilateral and without notice to the appellant/petitioner as observed in D.J. Exim's case by the Bomay High Court. Rule 8 under the SARFAESI Act, the final decision was taken because the appellant was a wilful defaulter and even in the present appeal it has not been denied that the appellant is unable to pay back the amount of outstanding dues to the respondent Bank. Moreover, considering Clause 24 in its proper prospective, we find that the respondent Bank was entitled to publish the names and photographs of the appellant/defaulter on other grounds also: such as 12 failure of the borrower to pay the outstanding loan amount, or interest on due dates, or is declared to be NPA. Under these circumstances, we do not find any merits in the contents put forth by the Counsel for the appellant/petitioner. The learned Writ Court has rightly rejected the writ petition and consequently, this writ appeal must naturally as a corollary be dismissed under the circumstances.
06. In this light, the present Writ Appeal is without merit and it is, therefore, dismissed as such.
C.c. as per rules.
(Mrs. S.R. Waghmare) (Sujoy Paul)
Judge Judge
moni