Madras High Court
M/S.New Concrete India Private Ltd vs The Reserve Bank Of India on 28 July, 2016
Author: M.Jaichandren
Bench: M.Jaichandren
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 28.07.2016 CORAM THE HON'BLE MR.JUSTICE M.JAICHANDREN W.P.No.7858 of 2014 and M.P.No.1 of 2014 M/s.New Concrete India Private Ltd., represented by its Managing Director Mr.Jame Isidore Plot No.45, Victory Avenue Extension Vengambakkam Chennai-600 127. .. Petitioner Vs. 1.The Reserve Bank of India represented by its Regional Director Fort Glacis, Rajaji Salai, Ghennai-1. 2.The Axis Bank Ltd., represented by its Head Small Medium Enterprises Centre No.225, Anna Salai, Chennai-2. 3.The Axis Bank Ltd., represented by its Assistant Vice President Small Medium Enterprises Centre Tambaram Chennai-45. .. Respondents The writ petition is filed under Article 226 of the Constitution of India praying for the issue of a writ of mandamus, directing the third respondent to dispose of the representation of the petitioner, dated 13.2.2014 strictly in accordance with the provisions of the Master Circular-Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances, dated 2.7.2013 issued by the first respondent to exercise its powers under Sections 21 and 35-A of the Banking Regulation Act, 1949. For Petitioner : M/s. Shyam Gopal For Respondent No.1 : No appearance For Respondents No.2 & 3 : Mr.A.S.Kailasam for M/s.A.S.Kailasam & Associates - - - - - ORDER
Heard the learned counsel, appearing on behalf of the petitioner, as well as the learned counsel, appearing on behalf of the respondents 2 and 3. There is no representation on behalf of the first respondent.
2. This writ petition has been filed by the petitioner, praying that this Court may be pleased to issue a Writ of Mandamus, directing the third respondent to dispose of the representation of the petitioner, dated 13.2.2014, strictly in accordance with the provisions of the Master Circular-Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances, dated 2.7.2013, issued by the first respondent.
3. The petitioner has stated that the petitioner is a Firm, carrying on the business of supplying ready-mix concrete to a wide range of consumers. The petitioner firm had availed a Small and Medium enterprises loan, from the second respondent. However, due to the severe financial crunch, the petitioner firm had not been in a position to pay back the loan availed by it, by way of equated monthly instalments. Therefore, the second respondent had initiated an action against the petitioner firm, for the recovery of the loan availed by it. While so, the petitioner had given a representation to the third respondent, on 13.2.2014, for clarification on the levy of notional interest on the cash credit. However, the third respondent had not replied to the said representation, till date. In such circumstances, the petitioner has preferred the present writ petition before this Court.
4. The learned counsel appearing on behalf of the respondents 2 and 3 had submitted that the said Bank is a fully owned private bank and it does not fall under the definition of "the State", under Article 12 of the Constitution of India. As such, the present writ petition filed by the petitioner is not maintainable.
5. The learned counsel appearing on behalf of the respondents 2 and 3 had placed before this Court a decision of the Supreme Court, made in Federal Bank Ltd. Vs. Sagar Thomas and others, reported in (2003) 10 SCC 733, in support of his claim that the writ petition, under Article 226 of the Constitution of India, cannot be maintained against the respondent Bank.
6. He had also placed before this Court a decision of the Division Bench of this Court, made in Tamil Nadu Industrial Investment Corporation Ltd., rep by its Managing Director Vs. Millenium Business Solutions Pvt. Limited, rep by its Managing Director and another [ W.A.No.2690 of 2004, dated 20.12.2004]. Paragraphs 16 and 18 of the said judgment read as follows :
"16.A loan is granted in terms of the contract, and grant of one time settlement or re-scheduling of the loan amount is really a modification of the contract, which can only be done by mutual consent of the parties, vide Section 62 of the Contract Act, 1872. The Court cannot alter the terms of the contract.
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18.Before parting with the case we would like to mention that recovery of tens of thousands of crore rupees of loans of banks and financial institutions has been held up by Court orders under Article 226 proceedings which were really unwarranted. However, much sympathy a Court may have for a party, a writ Court must exercise its jurisdiction on well settled principles, and not on mere sympathy or compassion. No doubt, there may be hardship to a party, but unless violation of law is shown the Court cannot interfere. Holding up recoveries of loans by unwarranted Court orders is causing incalculable harm to our economy, since unless the loan is recovered a fresh loan cannot be granted to needy persons. The Courts must keep these considerations in mind."
7. The learned counsel had also relied on a decision of the Division Bench of the Madurai Bench of the Madras High Court, dated 28.10.2013, made in W.P.(MD)No.8499 of 2013. Paragraphs 4 and 5 of the said decision read as follows :
"4.Per contra, the learned Counsel appearing for the respondent Bank had submitted that the writ petition filed by the petitioner is not maintainable, under Article 226 of the Constitution of India, in view of the decision of the Honourable Supreme Court, in United Bank of India v. Sathyawathi Tondon, reported in 2010 8 MLJ 1069 and in GM, Sri Siddeshwara Co-operative Bank Limited and another vs. Sri Ikbal and others reported in 2013 6 MLJ 571 (SC).
5.In view of the submissions made by the learned Counsels appearing for the parties concerned, we are of the considered view that for the present the writ petition, filed by the petitioner, is not maintainable."
8. In view of the averments made in the affidavit filed in support of the writ petition and in view of the submissions made by the learned counsel appearing on behalf of the respondents 2 and 3 and in view of the decisions cited supra, this Court is of the considered view that the present writ petition, filed by the petitioner, is not maintainable. The respondent Bank, being a private entity, does not fall under the definition of "the State", under Article 12 of the Constitution of India. The decision of the Supreme Court, in Federal Bank Ltd. Vs. Sagar Thomas and others, lends support to the said proposition. Further, a contract, entered into between the petitioner and the second and third respondents Bank, cannot be enforced, amended or modified, by the directions issued by this Court, under Article 226 of the Constitution of India. In such circumstances, this Court is of the considered view that the writ petition is not maintainable. Hence the writ petition stands dismissed. No costs. Consequently, connected miscellaneous petition is also dismissed.
28.07.2016 Index : Yes/No rnb To
1.The Reserve Bank of India represented by its Regional Director Fort Glacis, Rajaji Salai, Ghennai-1.
2.The Axis Bank Ltd., represented by its Head Small Medium Enterprises Centre No.225, Anna Salai, Chennai-2.
3.The Axis Bank Ltd., represented by its Assistant Vice President Small Medium Enterprises Centre Tambaram Chennai-45.
M.JAICHANDREN, J.
rnb W.P.No.7858 of 2014 and M.P.No.1 of 2014 28.07.2016