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2025 DIGILAW 311 (BOM)

Ravi Arya v. Reserve Bank of India

2025-02-11

ABHAY AHUJA

body2025
ORDER : (ABHAY AHUJA, J.) 1. The Applicant has filed the above Interim Application seeking to set aside order dated 11 th June, 2024 and 19 th June, 2024 passed by the Additional Prothonotary & Senior Master of this Court of allowing the Third Party Application filed under Rule 268 of the Bombay High Court (Original Side) Rules, 1980 (the “OS Rules”), directing issuance of certified copy of the proceedings in Writ Petition No. 2545 of 2021 (the “Writ Petition”) to the third party Applicant viz. the Respondent herein. 2. Mr. Nankani, learned Senior Counsel for the Applicant has submitted that the order dated 11 th June, 2024 is liable to be set aside on the following grounds:- i) It is ex-facie arbitrary, contrary to law, suffers from vice of non-application of mind and perverse ii) It is based on findings which are ex-facie erroneous and contrary to the settled principles of law as regards grant of certified copies to a third-party applicant and iii) That, the learned Additional Prothonotary has erred in holding that the Respondent had established sufficient cause for grant of certified copies of the Writ Petition. 3. The facts are that the Respondent had filed Third Party Application (L) No. 6221 of 2024 seeking certified copies of the records and proceedings of the above Writ Petition on the premise that the Respondent is a former director of International Marine Trading Company Pvt. Ltd. (“IMTC”), which had sought a term loan facility from Bank of Baroda, the Respondent No. 2 in the Writ Petition. The account of IMTC was declared a Non Performing Asset (NPA) by the Bank and proceedings were initiated against IMTC under the Securitisation And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act, 2002 (the “SARFAESI Act”) and proceedings were also initiated against the directors of the IMTC to declare the directors as willful defaulters in terms of Master Circular dated 1 st July, 2015 on willful defaulters issued by the Reserve Bank of India (the “Master Circular”). The Reserve Bank of India (the “RBI”) is the Respondent No. 1 in the Writ Petition. 4. The Respondent herein had contended that he is also barred from taking any financial assistance from banks in view of the penal measure stipulated in paragraph 2.5(a) of the Master Circular. 5. The Reserve Bank of India (the “RBI”) is the Respondent No. 1 in the Writ Petition. 4. The Respondent herein had contended that he is also barred from taking any financial assistance from banks in view of the penal measure stipulated in paragraph 2.5(a) of the Master Circular. 5. It has been submitted that the Petitioners have filed the Writ Petition, inter-alia seeking a declaration that continued penal measure stipulated in paragraph 2.5(a) of the Master Circular are inapplicable in case of a successful compromise / settlement and consequent recall / withdrawal of declaration of willful defaulter by the lender bank by removal from the list of willful defaulters and also in a case of recall of erroneous declaration of willful defaulter by removal from the list of willful defaulters. 6. It has been submitted that no reliefs are claimed against the Respondent in the Writ Petition and the Respondent cannot claim any prejudice to his purported rights in determination of a plea of the Petitioners in the Writ Petition. 7. Mr. Nankani, learned Senior Counsel, appearing for the Interim Applicant submits that Rule 268 of the OS Rules provides that the Additional Prothonotary and Senior Master may, on an application of a person not a party to a suit or matter, on sufficient cause being shown, allow search or grant certified copies of such papers and proceedings as the learned Additional Prothonotary and Senior Master may think fit, on payment of the prescribed fees and charges. It is submitted that while doing so, the Prothonotary and Senior Master has to consider whether the applicant (the Respondent in this case) has interest in the Suit or matter and such interest has to be a tangible interest. That no cause or interest much less tangible interest is shown by the Respondent. 8. Mr. Nankani, learned Senior Counsel would submit that the Additional Prothonotary and Senior Master has erred in holding that the reasons stated in paragraph 5 of the additional affidavit is enough to accept the request of the Respondent. It is submitted that the Respondent’s apprehension in paragraph 5 of his additional affidavit is misplaced and misconceived and no case is made out by the Respondent for grant of certified copies of the Writ Petition. 9. Mr. It is submitted that the Respondent’s apprehension in paragraph 5 of his additional affidavit is misplaced and misconceived and no case is made out by the Respondent for grant of certified copies of the Writ Petition. 9. Mr. Nankani would submit that perusal of paragraph 6 shows that the Respondent has not made out any cause, much less sufficient cause for grant of certified copies. 10. Mr. Nankani would submit that nothing prevents the Respondent from taking out an appropriate proceedings if he is aggrieved by the penal measure stipulated in paragraph 2.5(a) of the Master Circular. 11. It is submitted that the Petitioners are the ones aggrieved by the penal measure and have accordingly challenged the same. It is submitted that the orders passed in the Writ Petition in favour of the Petitioners will not automatically enure to the benefit of the Respondents without his filing substantial proceedings of his own and that nothing prevents the Respondent to file his own independent Petition to seek reliefs from this Court. 12. Mr. Nankani would submit that the Additional Prothonotary & Senior Master has erred in holding that he only has to consider whether the Respondent has interest in the matter and if such interest is tangible interest even if the Applicant is not a party in the strict sense, the Prothonotary & Senior Master can exercise discretion for granting certified copies. It is submitted that the Additional Prothonotary & Senior Master has also erred in holding that Petitioner No. 1 has not explained how there would be grave error or serious prejudice to him if the Application is granted. It is submitted that in fact the Petitioner No.1 is not even required to prove or explain what or how grave or serious prejudice will be caused to the Petitioner. It is submitted that the Writ Petition is field by the Petitioner for reliefs in personam and not in right in rem. 13. It is submitted that grave and serious prejudice would be caused if the certified copy of the Writ Petition is granted to the Respondent. Mr. It is submitted that the Writ Petition is field by the Petitioner for reliefs in personam and not in right in rem. 13. It is submitted that grave and serious prejudice would be caused if the certified copy of the Writ Petition is granted to the Respondent. Mr. Nankani would submit that the Additional Prothonotary & Senior Master has ignored the vital fact that the Respondent had filed Writ Petition (L) No. 549 of 2018 challenging the Respondent being declared as willful defaulter, which Petition has been rejected under Rule 986 of the OS Rules for non removal of the office objections. 14. It is submitted that the Respondent having already filed the Petition and allowing it to be rejected and not having taken any steps to restore the same, cannot be and ought not to be granted certified copies of the record and proceedings in the Writ Petition No. 2545 of 2021. 15. Mr. Nankani has submitted that the decisions relied upon by the Respondents are not applicable to the facts of the present case. 16. On the other hand, Mr. Narvekar, learned Counsel appearing for the Respondent has submitted that the order dated 11 th June, 2024 and 19 th June, 2024 have been passed by the Additional Prothonotary and Senior Master exercising discretion under Rule 268 of the OS Rules. 17. Mr. Narvekar would submit that the Applicant and the Respondent were both directors / promoters of the IMTC and jointly availed the credit facility from the Bank of Baroda on behalf of IMTC. As IMTC defaulted in payment of the credit facility, the Applicant and the Respondent’s name was enlisted in the list of willful defaulters as per the Master Circular dated 1 st July, 2015 issued by the RBI. It is submitted that despite arriving at a One Time Settlement (“OTS”) and remitting the entire outstanding dues of the bank in full, the Applicant and the Respondent have been barred from taking financial assistance from the banks and financial institutions. 18. It is submitted that the Respondent has a legitimate interest in the Writ Petition: the Applicant has preferred the Writ Petition as a former director of IMTC in which the Respondent was also a director. 18. It is submitted that the Respondent has a legitimate interest in the Writ Petition: the Applicant has preferred the Writ Petition as a former director of IMTC in which the Respondent was also a director. That the relief sought for in prayer Clause (a) clearly fortifies the entire claim of the Respondent that he is a party who will be directly affected by the outcome of the Writ Petition and is entitled to a copy of the same as the Respondent is directly interested in the Writ Petition and will be directly affected by any decision in the Writ Petition as the same not only arises out of the IMTC transaction during which the Respondent was admittedly a director and had jointly applied for the credit facilities along with the Applicant but also because the Applicant is seeking reliefs specifically on account of a successful compromise settlement again jointly exercised by the Applicant and the Respondent. Mr. Narvekar would submit that the Respondent is not only similarly placed as that of the Applicant due to a similar successful compromise but also due to the fact that the settlement pertains to the credit facility jointly availed by the Applicant and the Respondent as directors on behalf of the IMTC. It is submitted that notwithstanding the fact that the Respondent chooses to individually pursue his remedy or not, he is legitimately interested and has no ulterior motive and is entitled to certified copy of the Writ Petition. 19. It is submitted that the order of the Prothonotary is well reasoned as he has used his discretionary powers to allow the Application after considering the objections raised by the Applicant. It has been submitted that where discretionary powers are vested in an authority, the same ought not to be interfered with unless the exercise of discretion is perverse, arbitrary or capricious, none of which is exists in the present case. 20. Mr. Narvekar submits that the decision cannot be interfered with even if the decision of the authority is reasonably possible and relies upon the decision of the Hon’ble Supreme Court in the case of Esha Ekta Appartments CHS Limited and Ors. Vs. Municipal Corporation of Mumbai and Anr., (2012) 4 SCC 689 . 21. It is submitted that the Applicant has failed to prove that the Respondent has an ulterior motive and that no prejudice would be caused to the Applicant. Vs. Municipal Corporation of Mumbai and Anr., (2012) 4 SCC 689 . 21. It is submitted that the Applicant has failed to prove that the Respondent has an ulterior motive and that no prejudice would be caused to the Applicant. Mr. Narvekar submits that the Respondent will be rendered remediless if any adverse order is passed in the Writ Petition as it pertains to the same facts, same credit facility, same company and the same OTS. 22. Mr. Narvekar submits that Rule 268 of the OS Rules is discretionary and can be invoked if a third party is interested in the proceedings and the Application is legitimate and that no prejudice will be caused to the party or person and the Application is not made for ulterior motive. 23. Mr. Narvekar relies upon the following decisions in support of his contentions: (a) Illa Bipin Pandya Vs. Smita Ambalal Patel, (2008) 7 SCC 435 (b) Sharp Construction Company Vs. Himatlal Jasraj, Notice of Motion No. 31 of 2017 of this Court (c) Twinkle Jatin Khanna Vs. Anita Advani, 2014 SCC OnLine Bom 760 24. Mr. Narvekar submits that accordingly the Interim Application be dismissed and the orders dated 11 th June, 2024 and 19 th June, 2024 be upheld. 25. I have heard the learned Senior Counsel and the learned Counsel and have considered the rival contentions. 26. Before proceeding further it would be useful to quote Rule 268 of the OS Rules as under:- “268. Search and certified copies of documents to a person not a party to suit or matter:- The Prothonotary and Senior Master may, on the application of a person not a party to a suit or matter, on sufficient cause being shown, allow search or grant certified copies of such papers and proceedings in the suit or matter as the Prothonotary and Senior Master may think fit, on payment of the prescribed fees and charges. When such person applies for a certified copy of a part of a document on record, the Prothonotary and Senior Master may, in his discretion, grant such copy.” (emphasis supplied) 27. As can be seen, the said Rule provides that the Prothonotary & Senior Master has discretion on sufficient cause being shown by the third party viz. When such person applies for a certified copy of a part of a document on record, the Prothonotary and Senior Master may, in his discretion, grant such copy.” (emphasis supplied) 27. As can be seen, the said Rule provides that the Prothonotary & Senior Master has discretion on sufficient cause being shown by the third party viz. a person not a party to a suit or matter to allow search or grant certified copies of such papers and proceedings in the Suit or matter as he may think fit. The Rule has invested discretion in the Prothonotary & Senior Master on sufficient cause being shown by the third party to allow search or certified copies. 28. Settled law including the decisions cited by Mr.Narvekar, suggests that the third party making the application under Rule 268 of the O.S. Rules must have legitimate interest in the proceedings in respect whereof the certified copies are being sought and the Application should not be made for ulterior purposes and also that no prejudice should be caused if the search or certified copies of the proceedings is granted. Any exercise of discretion should be judicious. Further it has been held in the case of Esha Ekta Appartments CHS Limited and Ors. Vs. Municipal Corporation of Mumbai and Anr. (supra) by the Hon’ble Supreme Court held that where discretionary powers are vested in an authority the same ought not to be interfered with unless the exercise of discretion is perverse, arbitrary or capricious and cannot be interfered with if the decision of the authority is reasonably possible. 29. It is not in dispute that in the facts of this case that the Respondent and the Applicant were both directors and promoters of IMTC and pursued the credit facility from Bank of Baroda for IMTC. As IMTC defaulted in the payment of the credit facility, both the Applicant and Respondent’s name came to be enlisted in the list of willful defaulters as per the Master Circular dated 1 st July, 2015 issued by the RBI. It has been submitted that despite arriving at an OTS and remitting dues to Bank of Baroda the Applicant and the Respondent have been barred from taking financial assistance from banks and financial institutions. It has been submitted that despite arriving at an OTS and remitting dues to Bank of Baroda the Applicant and the Respondent have been barred from taking financial assistance from banks and financial institutions. The Applicant has filed Writ Petition No. 2545 of 2021 as a former director of the IMTC in which the Respondent was also a director, seeking a declaration that the continued penal measure stipulated in paragraph 2.5(a) of the Master Circular on willful defaulters issued by the RBI is inapplicable in the case of a successful compromise / settlement, which if allowed would also benefit the Respondent who was also a director in the IMTC. 30. It, therefore, cannot be said that the Respondent is not legitimately interested in the outcome of the said Writ Petition even if the orders in the Writ Petition will not directly enure to the benefit of the Respondent. The Additional Prothonotary and Senior Master has in his reasons referred to paragraph 10 of the Third Party Application and paragraph 5 of the additional affidavit, where the Respondent has given a reason for filing the Third Party Application as the same is with regard to the very same term loan facility between IMTC and Bank of Baroda as a result of which all the then directors of IMTC including the Respondent herein and the Applicant were listed as willful defaulters, having also been barred from availing institutional finance in any company promoted by the Applicant as well as the Respondent. It cannot be disputed that the outcome of the Writ Petition will also have a bearing on the situation of the Respondent herein. In the above circumstances, the Respondent in my view has shown sufficient cause for grant of certified copy. 31. The Additional Prothonotary & Senior Master has exercised his discretion and given reasons for exercise of the said discretion which he is entitled to and the decision or the reasoning cannot be said to be unreasonable or impossible and certainly not perverse, arbitrary or capricious but as noted above, a possible view. The Additional Prothonotary & Senior Master has observed that the Respondent has tangible interest in the matter and if that is the case even if the Applicant is not a party he can exercise discretion for granting certified copy. No fault can be found with this reasoning. The Additional Prothonotary & Senior Master has observed that the Respondent has tangible interest in the matter and if that is the case even if the Applicant is not a party he can exercise discretion for granting certified copy. No fault can be found with this reasoning. In fact, the whole purpose of law is interest reipublicae ut sit finis litium, which means it is in the interest of the State that there should be an end to litigation. The Applicant and the Respondent were directors in IMTC and have been declared willful defaulters in respect of the same term loan, which fact is not disputed. The purpose of the procedure including Rule 268, in my view is to avoid multiplicity of the proceedings. The order passed by the Additional Prothonotary & Senior Master therefore cannot be said to be erroneous. I, am therefore, not persuaded by Mr.Nankani’s submissions. I therefore, see no reason to interfere with the order dated 11 th June, 2024 of the Additional Prothonotary & Senior Master. 32. It is for the Respondent to chose whether to file a Writ Petition or to intervene in the proceedings filed by the Applicant as per advice that the Respondent may receive. But it cannot be denied that the Respondent who is still in the willful defaulters list would also be affected by the outcome of Writ Petition No. 2454 of 2021. 33. No material has been brought to my notice to demonstrate that grave and serious prejudice would be caused to the Interim Applicant if the certified copy of the writ proceedings are given to the Respondent. I therefore agree with the findings of the Additional Prothonotary & Senior Master that no prejudice will be caused to the Applicant if the certified copy of the records and proceedings in the Writ Petition No.2545 of 2021 is granted to the Respondent. 34. In the circumstances of the case, the rejection of the writ petition filed by the Respondent under Rule 986 of the O.S. Rules, would in my view, not have any bearing on the Application by the Respondent under Rule 268 of the O.S. Rules. 35. The Interim Application accordingly stands dismissed with no order as to costs. 36. 34. In the circumstances of the case, the rejection of the writ petition filed by the Respondent under Rule 986 of the O.S. Rules, would in my view, not have any bearing on the Application by the Respondent under Rule 268 of the O.S. Rules. 35. The Interim Application accordingly stands dismissed with no order as to costs. 36. Let the certified copy of the record and proceeding in the Writ Petition No. 2545 of 2021 be furnished to the Respondent within a period of two weeks upon payment of prescribed fees and charges, subject of course to paragraph 12 of the order dated 11 th June, 2024 of the Additional Prothonotary & Senior Master. 37. After the order is pronounced, Mr. Durgaprasad Poojari, learned Counsel appearing for the Applicant seeks a stay on the order. 38. For the reasons that have been stated in the order, this Court does not find any cause to stay the order. Therefore, the request for stay is rejected.