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2006 DIGILAW 509 (PNJ)

G. S. Atwal v. Union Of India

2006-02-16

D.K.JAIN, SURYA KANT

body2006
Judgment , J. 1. Challenge in this writ petition is to the legality and propriety of a letter, dated 10.1.2006, issued by the Punjab and Sindh Bank, Zonal Office, chandigarh, respondent No.3 herein, informing the petitioner that its proposal for one-time settlement of accounts at Yamunanagar and Asansol, in terms of guidelines issued by the Reserve Bank of India on 3.9.2005, cannot be accepted. The reasons for rejection of the proposal are stated to be : (i) the guide-lines having been formulated for NPAs up to 10 crores in Small and Medium Enterprises sector, petitioners case does not fall in that category; (ii) decreed cases are not covered under the guide-lines and (iii) petitioner is a wilful defaulter. 2. Briefly stated, the material facts, as emerging from the petition, are as under: the petitioner-firm, along with its sister concerns, availed of various kinds of facilities from respondent No.3-Bank in the form of Deferred Payment guarantee, overdraft limits and term loans, under three loan accounts. The petitioner having failed to adhere to the repayment schedule of credit facilities, vide notice dated 14.2.1999, the bank called upon the petitioner and the guarantors to pay the loan amounts due from them. On petitioners failure to do so, an original application was filed by the bank before the Debts Recovery Tribunal (for short, `the Tribunal ). On 8.12.2000, the Tribunal passed an order against the petitioner and other defaulters directing recovery of Rs.14,67,06,333/- along with future interest etc. Another original application was filed against petitioners sister concern before the Tribunal, which also resulted in a final order dated 30.4.2002 for recovery of Rs.6,09,25,756.41 p. along with interest etc. Similarly, on account of default in repayment in the third loan account, opened in the name of the petitioner in the Asansol branch of the bank, yet another original application was filed in the Tribunal, Calcutta Branch, for recovery of over Rs.4 crores, which is stated to be still pending. 3. According to the petitioner, during the pendency of this application, they approached the bank for settling all the loan accounts. Responding to the said offer by the petitioner and its sister concerns, vide its letter dated 16.5.2001, the bank asked the petitioner to pay an amount of Rs.571.10 lacs within one year, which time was extended by another one year. The entire amount, including interest, was to be paid by 31.3.2004. Responding to the said offer by the petitioner and its sister concerns, vide its letter dated 16.5.2001, the bank asked the petitioner to pay an amount of Rs.571.10 lacs within one year, which time was extended by another one year. The entire amount, including interest, was to be paid by 31.3.2004. Admittedly, the petitioner and its sister concerns again failed to adhere to the payment schedule. Consequently, the recovery proceedings were revived against the petitioner. Fearing action against it, the petitioner preferred a writ petition, seeking stay/quashing of execution proceedings. The writ petition was, however, withdrawn with liberty to approach the bank again for settlement as per the guide-lines dated 3.9.2005. Pursuant thereto, a representation was made by the petitioner on 30.11.2005, which has now been rejected by the impugned order. 4. We have heard Mr. M. L. Sarin, learned senior counsel appearing for the petitioner. Mr. Sarin has vehemently submitted that the stand of the bank that the aforementioned guide-lines issued by the Reserve Bank of India were not applicable in cases where the debt had been decreed, is fallacious, inasmuch as, the bank had itself accepted the earlier offer of the petitioner for one-time settlement, when, vide their letter dated 16.5.2001, the petitioner was asked to deposit rs.571.10 lacs, with interest, when two decrees against the petitioner had already been passed for much larger amounts. It is also urged that the petitioner had been declared NPA much prior to 31.3.2004 and the outstanding balance, when the said account was declared as NPA was below Rs.10 crores and therefore, petitioners case was covered under the revised guide-lines. Learned counsel, while asserting that the petitioner could not be termed as a "wilful defaulter", has contended that such a finding could not be returned against the petitioner without affording an opportunity of hearing. In nut-shell, the plea of the petitioner is that rejection of its representation is arbitrary, unjust, violative of principles of natural justice and therefore, deserves to be set aside. 5. We are of the considered view that the petition is misconceived. In nut-shell, the plea of the petitioner is that rejection of its representation is arbitrary, unjust, violative of principles of natural justice and therefore, deserves to be set aside. 5. We are of the considered view that the petition is misconceived. The relevant portion of the guide-lines, relied upon by the petitioner, reads as under: " (A) Guidelines for one-time settlement of chronic NPAs up to rs.10 crore (i)Coverage a) The revised guidelines will cover all NPAs in SME sector which have become doubtful or loss as on March 31,2004 with outstanding balance of Rs.10 crore and below on the date on which the account was classified as doubtful. (b) The guidelines will also cover NPAs classified as sub- standard as on 31st March, 2004, which have subsequently become doubtful or loss where the outstanding balance was Rs.10 crore and below on the date on which the account was classified as doubtful. (c) These guidelines will cover cases on which the banks have initiated action under the Securitisation and Reconstruction of financial Assets and Enforcement of Security Interest Act, 2002 and also cases pending before Courts/ DRTs/bifr, subject to consent decree being obtained from the Courts/drts/bifr. (d)Cases of wilful default, fraud and malfeasance will not be covered. (e) The last date for receipt of applications from borrowers will be as at the close of business on March 31,2006. The processing under the revised guidelines shall be completed by June 30,2006. " 6. From a bare reading of clause (c), it is clear that these guide-lines are applicable to all cases of chronic NPAs where action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 has been initiated or cases are pending against the defaulter before Courts, debts Recovery Tribunal or BIFR. To put it differently, the clause applies where proceedings before the said forums has not attained finality, which, except for the third original application, stated to be pending before the Calcutta Bench of the tribunal, is not the case here. Admittedly, in two other applications, decrees had been passed in the years 2000 and 2002. Therefore, no fault can be found with the view taken by the bank that cases, where decrees have been obtained, are not covered under the policy guide-lines. 7. Admittedly, in two other applications, decrees had been passed in the years 2000 and 2002. Therefore, no fault can be found with the view taken by the bank that cases, where decrees have been obtained, are not covered under the policy guide-lines. 7. In this view of the matter, we are unable to persuade ourselves to agree with the learned senior counsel that having accepted proposal for settlement on an earlier occasion, the bank cannot now be permitted to change its stand on same set of facts. In the light of the afore-extracted stipulation in the guide-lines, we are unable to comprehend as what weighed with the bank in accepting the proposal for one-time settlement, though ultimately the petitioner failed to honour the settlement. Be that as it may, bearing in mind the past conduct of the petitioner, briefly referred to above, we find it difficult to hold that in rejecting petitioners representation for one-time settlement, the bank has acted unreasonably or in violation of the guide-lines, warranting our interference in exercise of extra ordinary jurisdiction under Article 226 of the Constitution. 8. For the view we have taken above, we deem it unnecessary to deal with other contentions urged on behalf of the petitioner, particularly when we are not examining the impugned decision as an appellate authority. Resultantly, the writ petition is dismissed. Dasti.