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2023 Supreme(Kar) 352
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
KRISHNA S. DIXIT, J.
Sri. N. Ravindranath Kamath, S/o. Late Venkatesh Kamath & Ors. - Petitioners
Versus
Sri Subramanyeshwara Co-Operative Bank Limited & Ors. - Respondents
Writ Petition No. 3791 of 2021 (GM-RES) c/w Writ Petition No. 1 of 2023 (GM-RES)
Decided On : 07-08-2023
For the Petitioner: Sri. Diwakar K., Senior Counsel a/w Sri. N. Ravindranath Kamath.
For the Respondent: Smt. Lakshmy Iyengar, Senior Counsel a/w Sri. K.S. Venkataramana, Smt. Shweta Krishnappa, AGA.
Point of law: A borrower is a borrower, whether he is a practising lawyer or a sitting Judge. Loan laws do not provide for favourable treatment to them differential qua other borrowers, when they become chronic defaulters.
Headnote:
Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 – Multi-State Cooperative Societies Act, 2002 - Karnataka Co-operative Societies Act, 1959 – Chronic loan defaulter – Interest - Loan recovery proceedings instituted – Encashment on presentation - All this needs to be briefly adverted to because, the first Respondent also happens to be a cooperative banking institution and therefore, it has to take all measures as are necessary for recovering the outstanding loans, speedily if not on a warfooting. [Para 4]
Finding of the court: Writ court cannot grant indulgence to an unscrupulous litigant who does not keep up his words given repeatedly – Borrower is a borrower, whether he is a practising lawyer or a sitting Judge – Loan laws do not provide for favourable treatment to them differential qua other borrowers, when they become chronic defaulters – An argument to contrary offends equality/parity in matters of loan recovery and therefore, cannot be countenanced – Showing any more indulgence in favour of Petitioner would give scope for public criticism that courts are favouring unscrupulous borrowers only because they happen to be in legal fraternity.
Result: Writ petition dismissed.
ORDER :
The tone for this judgment may be set by quoting what Richard Brinsley Sheridan, an acclaimed Irish dramatist of 18th century, on being asked by his tailor for the payment of at least the interest on his bill amount, had retorted :
"It is not my interest to pay the principal, nor my principle to pay the interest".
2. In these Petitions, Petitioner a designated Senior Advocate being a chronic loan defaulter of the 1st Respondent – Cooperative Bank is knocking at the doors of Writ Court for assailing the coercive loan recovery proceedings instituted under the provisions of SARFAESI Act, 2002 on the ground that the due procedure established under law has not been followed. Learned Sr. Advocate appearing for the Petitioner argues that his client was not given the reprieve admissible on account of Covid-19 Pandemic and that he had no fair deal at the hands of the lender – Bank. Having so argued, he lastly said that should a period of three months be granted, entire loan amount would be cleared by recourse to ‘taking over’ or the like.
3. After service of notice, Respondents have entered appearance through their Panel Advocate and filed the Statement of Objections resisting the Writ Petitions. Learned Sr. Advocate appearing for the Bank makes vehement submission in justification of the subject coercive proceedings of loan recovery. She points out that the Petitioner had borrowed a huge sum of Rs. 1.50 Crore way back in February, 2017 agreeing to repay the same in 120 equivalized monthly installments each of Rs.2,37,431/-. The rate of interest is 14.50% per annum with monthly rests. The said loan account was branded as NPA on 02.07.2017 i.e., within five months of availment, Petitioner proving to be a loan defaulter; she also draws attention of the Court to the letters dated 19.12.2020 & 04.07.2020 wherein the Petitioner having acknowledged the debt, had sought for extension of time for regularizing the loan account; however, the same came to be rejected. Turning pages of several interim orders, counsel reads out the conditions subject to which reprieve was granted and complains that these conditions have remained repeatedly unfulfilled. She hastens to add that the Petitioner does not have any respect for the court orders and that the Cheque given by him assuring its encashment on presentation, has bounced, despite he having been warned of possible contempt action should that happen. So contending, she seeks dismissal of the Writ Petitions.
4. Having heard the learned counsel for the parties and having perused the Petition papers, this Court declines indulgence in the matter for the following reasons :
(a) The structure of banking in India comprises several categories of banks. Amongst these, the Cooperative Banks are registered as Cooperative Societies under the provisions of either the State Cooperative Societies Act(s) or the Multi-State Cooperative Societies Act, 2002. Respondent – Bank is registered under provisions of Karnataka Co-operative Societies Act, 1959. This Court takes judicial notice of the fact that in the recent past, several cooperative banks in the country have committed legal suicide owing to mindless lending coupled with culpable failure to recover the outstanding debts. This Court cannot leave it unsaid that a serious problem of cooperative credit is the overdue loans of the cooperative banks which have been continuously proliferating over the years. Large amounts of overdues restrict the recycling of funds and thereby, adversely affect the lending & borrowing capacity of the cooperative institutions. In fact, two statutory committees, viz., the Narasimham Committee and The Madhav Rao Committee had suggested stringent remedial actions in this regard. All this needs to be briefly adverted to because, the first Respondent also happens to be a cooperative banking institution and therefore, it has to take all measures as are necessary for recovering the outstanding loans, speedily if not on a warfooting.
