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2009 DIGILAW 241 (CAL)

C. Panchavarnam v. UNION OF INDIA

2009-03-20

PARTHA SAKHA DATTA

body2009
Judgment : Partha Sakha Datta, J.: The writ petitioner was having a parcel of land bearing Survey No. 26/2/1 measuring an area of 333.3 square meters which is a homestead land at Deadline within Tehsil Port Blair and it was mutated in her name. She applied for a house loan before the United Commercial Bank to the tune of Rs.5 lakhs. The loan was advanced and also repaid. Again the petitioner applied for a loan of Rs.10 lakhs for completing the building and though the amount was sanctioned she was only given Rs. 6,04,199/- sometime in August, 2004. Then followed earthquake in the Islands on 26th December, 2004, followed by Tsunami in consequence of which the building fell down. The Tehsildar, Port Blair upon necessary enquiry issued a certificate that the building was fully damaged by the Act of God. Though the Administration offered an ex gratia of Rs.10,000/- the petitioner declined the offer because she suffered a total loss of Rs.44,26,814/-. The loan was sanctioned by the concerned respondent after the petitioner had mortgaged the land in favour of the Bank and it is the grievance of the petitioner that though it was the duty of the respondents to insure the land and the building that stood thereon, the Bank did not take any step .as a result of which the petitioner has been put to heavy financial loss. Her representation dated 5th January, 2005 for claim of insurance in respect of the building was not conceded to- On 18 February, 2005 the petitioner sent an advocate's letter upon the respondents to exonerate her of the liability of the repayment of loan on the ground of non-insurance of the building as also the land. Having got no response she filed a Writ application being W.P. No.80 of 2005 in the matter of non-insurance of the building and on 12th January, 2006 the respondent was directed to supply the necessary information about the property in terms of the guidelines of the Reserve Bank of India and the Senior Manager of the Bank was further directed to look into the representation of the petitioner. On 5th April, 2007 the petitioner made application before the UCO Bank for complete waiver of loan as has been done in the cases of the inhabitants of the Southern Group of Islands in terms of revival package as also the circular issued by the RBI. On 5th April, 2007 the petitioner made application before the UCO Bank for complete waiver of loan as has been done in the cases of the inhabitants of the Southern Group of Islands in terms of revival package as also the circular issued by the RBI. Another representation was also submitted on 18th December, 2007 to the same effect. The Empowered Task Force comprising the respondent Nos.4 to 12 was constituted for the purpose of ascertaining the actual loss on damage sustained by the inhabitants of the entire A & N Islands due to Act of God with a view to taking appropriate steps for waiver of entire house loan. But, the said committee in gross violation of the directions recommended only the cases of inhabitants of Southern Group of Islands that comprised Little Andaman and entire Nicobar District to the exclusion of the inhabiiams of Northern Group of Islands within which the petitioner's house was situated. The Empowered Task Force and the UCO Bank did not inspect the land and building of the petitioner and her case was not recommended to the RBI for waver of house loan. Thus, the circular of the RBI dated 11th May, 2006 is said to be ultra vires of the Constitution because even in the revival package of the Government of India no benefit of total waiver of house loan has been extended to the inhabitants of the Northern Group of Islands. Finding no other way she filed a writ application being W.P. No. 001 of 2008 which was disposed of on 20th February, 2008 directing the respondents to consider the case of the petitioner. Pursuant to the order of this Court the respondent Bank heard the petitioner at Kolkata but the respondent UCO Bank passed an order on 16th May, 2008 rejecting the case of the petitioner. The order dated 16th May, 2008 is also illegal because it violated a circular of the RBI which on the face is ultra vires. Pursuant to the order of this Court the respondent Bank heard the petitioner at Kolkata but the respondent UCO Bank passed an order on 16th May, 2008 rejecting the case of the petitioner. The order dated 16th May, 2008 is also illegal because it violated a circular of the RBI which on the face is ultra vires. Accordingly, the following reliefs have been prayed for: "a) A Writ and/or Writs do issue in the nature of Mandamus directing the respondents authorities to act accordingly in accordance with law; b) A Writ and/or Writs do issue in nature Mandamus setting aside and/or quashing and/or annulling and/or canceling the impugned orders; c) A Writ and/or Writs do issue in the nature of Mandamus setting aside and/or quashing the revival package of Government and Circulars as ultra vires; d) A Writ and/or Writs do issue in the nature of Mandamus directing the respondents to waive the housing loan of the petitioner; e) An interim order directing the respondents not harass the petitioner by issuing the recovery letter for the outstanding due till disposal of the present writ application;" 2. In this application there are 13 respondents. It is the respondent Nos.1, 2, 3, 4, 12 and 13 which included Union of India, Reserve Bank of India, UCO Bank, and General Manager, Rural Planning and Credit Department, RBI, Kolkata who have been contesting the application. In the affidavit-in-opposition of the respondent Nos.1, 2, 3, 4 and 13 it has been contended as follows : "... ... ...That the Reserve Bank of India set up an Empowered Task Force for adopting a bank specific approach in the Union Territory of Andaman and Nicobar Islands to expedite relief measures for Tsunami affected borrowers. The Empowered Task Force was headed by the Regional Director, RBI, Kolkata and the members were Development Commissioner and Secretary (Finance) of Andaman & Nicobar Administration, Deputy General Manager, NABARD, Port Blair, Managing Director, Andaman & Nicobar State Cooperative Bank Ltd., Lead District Manager, State Bank of India, Port Blair, Chief Manager, Syndicate Bank, Port Blair and bank wise representatives of the concerned bank. The Task Force collected information to review the extent of the damage for the northern and southern group of Islands. The Task Force collected information to review the extent of the damage for the northern and southern group of Islands. Taking note of the revival package announced by Government of India, for small traders and businessmen in Andaman & Nicobar Islands, the Empowered Task Force made some additional recommendations on the following lines: (i) Given the fact that the extent of damage and destruction of life and property in the southern group of Islands comprising little Andaman Island in Andaman District and the entire Nicobar District was much more severe compared to the damage in the Northern Group of Islands caused more due to earthquake, the Empowered Task Force felt that there should be separate dispensation for the two parts of Andaman and Nicobar Islands. Accordingly, the Empowered Task Force formulated separate relief packages for the northern and southern group of Islands. The Task Force recommended that there should be complete waiver of all loans irrespective of outstanding amounts in the Southern Group of Islands. (ii) In case of housing loans in the personal segments, not covered by insurance claim, the Empowered Task Force recommended that the party may be considered for relief, as applicable to respective outstanding amounts envisaged in the Revival Package of Government of India. (iii) The borrowers with outstanding loans above Rs 5 lakhs in the Northern group of Islands, except those under personal segment and covered by financial securities should be given interest remission on the balance outstanding as on December 26, 2004 for one year up to December 31, 2005, subject to minimum benefit of Rs.1.80 lakh. It was further recommended that housing loan may also be included to the extent they were not covered by insurance claim payments. (iv) The Task Force also recommended that the entire additional burden arising out of the implementation of the above recommendations may be considered by the banks/other financial institutions at their option." 3. Further the petitioner's residence was at the relevant point of time in the Northern Group of Islands in the Andaman district, but complete waiver of house loan to the extent they are not covered by the insurance claim was recommended by the Empowered Task Force for Southern Group of Islands, The petitioner's case was considered by the concerned Bank and it was disposed of through the package of the Government of India which was not malafide or arbitrary. It has further been contended as follows: "...the Empowered Task Force took a broader view while observing the extent of damage in Southern and Northern group of Islands. It is submitted that it was not possible nor within the scope of Empowered Task Force to inspect individual land and property and to conduct door to door enquiry of the entire Andaman & Nicobar Islands. Keeping the time frame of three months for completion of the assignment the Empowered Task Force was also not directed to recommend any case to Reserve Bank of India. Rather the recommendations of the Empowered Task Force were made optional to the banks and burden was to be borne by the banks. Therefore, the allegation of non inspection of the land of the petitioner and subsequently not making of recommendation for waiver of housing loan is denied." 4. The UCO Bank filed a separate affidavit-in-opposition reiterating the principal grounds set up in the affidavit-in-opposition by the Reserve Bank of India and it is not necessary to reproduce the identical averments once again. 5. The question that calls for consideration is whether the policy of the Government of India or for that matter of the Reserve Bank of India formulated through RBI circular being No. RPOD(KOL)NO/2556 dated 11.05.2006 is ultra uires the Constitution on the alleged ground that it has discriminated the petitioner against the inhabitants of the Southern Group of Islands. In other words, the question is whether the executive action by placing the inhabitants of the Southern Group of Islands on a footing better than that of the inhabitants of the Northern Group of Islands can be rationally justified on the objective foundation of facts. It is not in dispute that it was a virtual deluge. In A & N Islands originally there were two districts namely Andaman and Nicobar. Now Andaman has been divided into two districts namely North & Middle Andaman and South Andaman. What is called Little Andaman falls within the jurisdiction of South Andaman, but as it is situated far off from South Andaman and practically is at the entry point of Southern Group of Islands the said Little Andaman and the inhabitants of the Southern Group of Islands falling under Nicobar district have been sympathetically considered, as distinguished from the people of the Northern Group of Islands. The reason is not far to see in fact. The reason is not far to see in fact. It is common knowledge that deluge took place in the Southern Group of Islands and it washed away the entire population of those Islands by Tsunami. What happened in Northern Group of Islands is not directly the effect of Tsunami but earthquake that happened on 26th December, 2004 and this is the rational for making some discrimination in favour of the Southern Group of Islands against the Northern Group of Islands. 6. Mr. K.M.B. Jayapal, learned advocate for the petitioner submitted that the circular of the RBI which was followed by other Banks in the matter of waiver of loans cannot make distinction between the two kinds of people for the simple reason that no matter whether one suffered loss more than another the people of entire Andaman & Nicobar Islands are one composite block and, one cannot be put into disadvantageous position by administrative action by discrimination. 7. Mr. Mohd. Tabraiz, learned Advocate for the respondent Nos. 3 and 4 and Mrs. Tamali Biswas, learned Advocate for the respondent No. 12 namely UCO Bank have submitted that if the recommendation of the Empowered Task Force which consisted of highly placed officials of the Government of India and those of the A & N Administration it wilt be clear that there has been justification for two different kinds of treatment in conformity with the extensity of havoc suffered by the people of Southern Group of Islands which was much less in the case of the people of Northern Group of islands. It is submitted that after much deliberation the Task Force made recommendations and they cannot be said to be arbitrary. 8. Annexure-A is the report of the Empowered Task Force to accelerate resolution of relief measures to earthquake/Tsunami affected borrowers in the A & N Islands. I quote some of the observations of the Empowered Task Force Committee: "In this backdrop, the Committee observed that the extent of damage to life and property in the Southern Group of Islands comprising Little Andaman Island in Andaman District (part of South Andaman block) and the entire Nicobar District was much more severe, with mosi of the assets there being completely washed away by Tsunami, while the damage in the Northern part of the Island comprising 3 blocks of Andaman district was more due to earthquakes. Further, the extent of banking coverage in the Southern Group of Islands with 7 branches out of a total of 62 branches in the Union Territory and total advances at Rs. 7.45 crore out of Rs. 149.26 crore outstanding advances of the Union Territoriy as on 26th December, 2004, the Committee fell that there should be a separate dispensation for the two parts of Andaman & Nicobar Islands and accordingly it formulated the following separate relief packages for the Northern and Southern Groups of Islands : 5.2 Proposed package for Southern Group of Islands. All earthquake/Tsunami affected borrowers in the entire Nicobar District and Little Andaman in Andaman District excluding borrowers in the personal segment loans and loans against financial securities but including housing loans to the extent they were not covered by insurance claim payments will be considered for complete waiver for outstanding amount with interest as on December 26, 2004 after deducting the amount of insurance claim received (i.e. net amount of loss). 5.3 Package for Northern Group of Islands: The package for the Northern Group of Islands was designed after considering pros and cons of interest waiver vs. interest remission for large borrowers. 5.3.1 Category-1: Outstanding upto Rs.2 lakhs : All earthquake/Tsunami affected borrowers from the entire Andaman District other than Little Andaman excluding borrowers in the personal segment loans and loans against financial securities but including housing loans to the extent they were not covered by insurance claim payments may be considered for complete waiver of outstanding amount upto Rs.2 lakh, with interest as on December 26, 2004 after deducting the amount of insurance claim received (i.e. net amount of loss). 5.3.2 Category-2: Outstanding amount above Rs.2 lakh upto Rs.5 lakh: The borrowers, except those under personal segment and covered by financial securities, may be given waiver of notional interest on the balance outstanding as on December 26, 2004 for 3 years upto December 31, 2007 and rephasement facility. Housing Loans may also be included to the extent they were not covered by insurance claim payments. 5.3.3 Category-3: Outstanding amount more than Rs.5 lakh : The borrowers except those under personal segment and covered by financial securities would be given interest remission on the balance outstanding as on December 26, 2004 for one year upto December 31, 2005 subject to minimum benefit of Rs. 5.3.3 Category-3: Outstanding amount more than Rs.5 lakh : The borrowers except those under personal segment and covered by financial securities would be given interest remission on the balance outstanding as on December 26, 2004 for one year upto December 31, 2005 subject to minimum benefit of Rs. 1.80 lakhs (as the amount of relief extended to the borrowers under category 2 above). Housing Loans may also be included to the extent they were not covered by insurance claim payments." 9. Following the report of the Empowered Task Force the RBI circulated the following to all the Banks:- "As you are aware, an Empowered Task Force had been constituted for adopting a bank specific approach in the Union Territory of Andaman and Nicobar Islands to expedite relief measures for Tsunami affected borrowers. Taking note of the revival package announced by Government of India, for small traders and businessmen in Andaman and Nicobar Islands, the Empowered Task Force has made the following additional recommendations : (i) Given the fact that the extent of damage and destruction of life and property in Southern Group of Islands comprising of Little Andaman (in Andaman district) and entire Nicobar district was much more severe, compared to the damage in the Northern Group of Islands (caused more due to earthquake), it is felt that there should be separate relief packages for the two groups of Islands and therefore, the Task Force has recommended that there should be complete waiver of all loans irrespective of outstanding amounts in the Southern Group of Islands. (ii) Housing loans, in the personal segments, not covered by insurance claim payment may be considered for relief, as applicable to respective outstanding amounts envisaged in the Revival Package of Government of India. (iii) The borrowers with outstanding loans above Rs.5 lakhs in the Northern group of Islands except those under personal segment and covered by financial securities should be given interest remission on the balance outstanding as on December 26, 2004 for one year up to December 31, 2005, subject to minimum benefit of Rs.1.80 lakh. Housing loans may also be included to the extent they were not covered by insurance claim payments. (iv) The Task Force has also recommended that the entire additional burden arising out of implementation of the above recommendations may be considered by the banks/other financial institutions at their option. Housing loans may also be included to the extent they were not covered by insurance claim payments. (iv) The Task Force has also recommended that the entire additional burden arising out of implementation of the above recommendations may be considered by the banks/other financial institutions at their option. (v) If the above-recommendations are implemented along with the Government of India package, the overall relief package will be comprehensive with small additional sacrifice. 2. We advise you to please take immediate steps for early implementation of the above - recommendations of the Task Force under advice to us. In view of the almost total devastation and loss and assets, you are requested to view this situation in its proper perspective and take a considerate decision in the matter. The progress made in this regard would be invariably monitored in the UTLBC meetings held on quarterly basis. You are therefore advised to submit to the LDM, Port Blair the details of the relief extended to the constituent borrowers." 10. Giving the extensive reasoning of the Empowered Task Force following which circular has been issued by the RBI providing for different modes of relief for the people differently circumstanced it can hardly be said that equality clause has been violated without any rhyme and reason. Rather this so called discrimination was necessary to bring about equality. 11. So far as the petitioner's Bank is concerned the respondent No. 12 UCO Bank provided the petitioner with relief to the extent of Rs.l,57,500/and complete waiver of the entire loan with interest was not permissible in terms of guidelines of the RBI. The Bank replies: "It was pointed out to your representatives that the relief for which you were eligible was granted to you by deposing Rs, 1,57,500/- in the respective account on 15.12.06 and also the relief in respect of M/s. Prabha Snack Bar Proprietor Sh. N. Chelladurai amounting to Rs. 1,42,820.18p was also granted on 15.12.06 by crediting the said amount in the respective account." 12. Learned Advocate for the petitioner submitted that the claim of crediting an amount of Rs. 1,57,500/- and Rs.1,42,820.18 is not reflected in the statement for the period from 01.01.2004 to 9.6.2008 and as such Bank's claim is not maintainable. But, the submission of Mr. 1,42,820.18p was also granted on 15.12.06 by crediting the said amount in the respective account." 12. Learned Advocate for the petitioner submitted that the claim of crediting an amount of Rs. 1,57,500/- and Rs.1,42,820.18 is not reflected in the statement for the period from 01.01.2004 to 9.6.2008 and as such Bank's claim is not maintainable. But, the submission of Mr. Jayapal is not acceptable because the statement produced before the Court shows credit of the amount of Rs.1,57,500/- to the joint account of the writ petitioner and her husband. As regards the other amount of Rs.l,42,820.18 it was credited to a different account of Shri N. Chelladurai, the proprietor of Prabha Snack Bar and it would not be reflected in the joint statement of account of the writ petitioner and her husband and the statement sheet of that account has not been produced. 13. The extensive argument was made that if the Bank would have taken any step for insurance of the building then obviously the writ petitioner could have been compensated by the insurer and as such the Bank should be held responsible for that. Mrs. Tamali Biswas, learned Advocate for the UCO Bank submitted that it is totally wrong to say that it is the liability of the banker to get the property of the borrower insured. The writ petitioner, it is submitted had never taken any step to have her land, building insured before the earthquake with any insurance company and the Bank was nowhere liable under any obligation to carry out insurance. 14. Once it is held that recommendation of the Empowered Task Force and the circular of the Reserve Bank of India are not violative of the principle of equality then obviously the petitioner cannot raise any cavil, and as such, the writ petition stands dismissed. 15. There would be no order as to costs. Appeal dismissed.