2009 Supreme(SC) 1357

Supreme Court of India
THE HONOURABLE MR. JUSTICE S.B. SINHA & THE HONOURABLE MR. JUSTICE DEEPAK VERMA
M/s. Sardar Associates & Others
Versus
Punjab & Sind Bank & Others
CIVIL APPEAL NOs. 4970-4971 OF 2009 [Arising out of SLP (C) No. 52495250 of 2008]
Decided on : 31-07-2009

IMPORTANT POINTS
RBI circulars issued under Section 21 and 35A of the Banking Regulation Act, 1949 are binding on all banks.
Writ petition dismissed on ground of suppression of facts is no bar to approaching the Appellate Tribunal or the High Court in fresh writ petition disclosing all the facts.
Bank being State within Article 12 of the Constitution could not make a policy which is per se discriminatory.
RBI Guidelines create a right in the borrower for OTS. Tribunal entitled to consider effect of such OTS. Writ of mandamus could be issued but if High Court is not inclined to exercise its jurisdiction, it would not mean that it would interfere with the order of Tribunal.

Headnote:(a) Banking Regulation Act, 1949 – Section 21 and 35A – RBI circular dated 3.09.2005 for one time settlement of NPA below Rs.10 crores – Binding on respondent Bank – Respondent Bank itself invoking the RBI guidelines for OTS prompting the appellant and other respondents to submit proposal in that regard – Cannot resile therefrom. (Para 18, 23, 24)

       (b) Constitution of India – Article 226 – Suppression of fact – Appellant’s writ petition dismissed on ground of suppression of recovery proceedings – No bar to approaching the Appellate Tribunal or the High Court in fresh writ petition disclosing all the facts. (Para 26, 27)

       (2007) 6 SCC 120 – Relied upon

       (2004) 7 SCC 166 – Referred

       (c) Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – Section 13(2) r/w Section 21, Recovery of Debts Due to Banks and Financial Institutions Act, 1993 – Even if no specific prayer was made for enforcing RBI guidelines Tribunal has jurisdiction to consider prayer for one time settlement within purview of RBI guidelines – Bank could not treat the appellants discriminatorily merely because they had furnished securities worth Rs.11 crores – Bank’s own guidelines violative of equality clause of RBI guidelines and Article 14 of the Constitution – Bank being State within Article 12 of the Constitution could not make a policy which is per se discriminatory. (Para 29, 33)

       (d) Banking Regulation Act, 1949 – Section 21 and 35A – Guidelines issued by RBI are binding on all Banks. (Para 36)

       (2002) 1 SCC 367; (1994) 5 SCC 213 – Relied upon

       (2008) 2 SCC 280 – Per incuriam

       (e) Constitution of India – Article 226 – RBI Guidelines – Creating a right in the borrower for OTS – Writ of mandamus could be issued – Tribunal entitled to consider effect of such OTS – High Court not inclined to exercise its jurisdiction – Would not mean that it would interfere with the order of Tribunal. (Para 40)

       (f) Banking Regulation Act, 1949 – Section 21 and 35A – RBI guidelines are statutory in nature – Tribunal, following Central Bank of India, directing settlement following those guidelines – No infirmity. (Para 45, 46, 48)

       (2002) 1 SCC 367 – Relied upon

       (2004) 10 SCC 1; (2002) 1 SCC 633; (1999) 4 SCC 599; 2008 (8) SCALE 106 – Referred

       Facts of the case:

       Appellants herein as also the Performa respondent Nos. 2 to 11 along with one Smt. Darshan Kaur (since deceased) obtained the facilities for grant of loan for a sum of Rs. 3, 54,50,000/- for their business under the name and style of M/s. Sardar Associates Limited, appellant No. 1 herein.

       The appellant No. 2 and the Proforma respondent Nos. 2 to 11 as also the said Smt. Darshan Kaur stood as guarantors. Appellant Nos. 1 and 2 as also Proforma respondent Nos. 5 and 7 also mortgaged their properties in favour of the respondent -Bank by way of security to the said amount.

       Defaults having been made in discharging their liabilities, their assets were declared as NPA as per the guidelines issued by the Reserve Bank of India.

       A proceeding was initiated by the respondent -Bank for recovery of the said amount together with interest upon. The total amount of claim laid before the Tribunal by the bank as against the debtors was Rs. 4,16,85,443.62 inclusive of interest upto 31.07.2003. The said application was allowed by the Tribunal whereagainst an appeal was preferred before the Appellate Tribunal.

       The appellant No. 1 approached the respondent - bank for settlement of their disputes purported to be in terms of the guidelines issued by the Reserve Bank of India. They made an offer for a one time settlement for a sum of Rs. 345.31 lakhs. The said proposal, however, was not accepted by the respondent - Bank.

       Appellants approached the Appellate Tribunal. The appeal was entertained. Respondent – Bank also preferred an appeal before the Appellate Tribunal claiming pendent lite and future interest at the rate of 16.50% with quarterly rests instead of 12% p.a. as had been granted by the Tribunal in its order dated 23.11.2006.

       The Appellate Tribunal dismissed the appeal preferred by the respondent - Bank and allowed that of the appellants and the Performa Respondent Nos. 2 to 11 directing the respondent – Bank to make one time settlement in terms of the guidelines issued by the Reserve Bank of India as was prevailing at the relevant time.

       Respondent - Bank filed writ application thereagainst which by reason of the impugned judgment has been allowed. Appellants filed a review application before the High Court which has been dismissed.

       Finding of the Court:

       Impugned judgment is not sustainable.

       Result:

       Appeal allowed.