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2012 Supreme(Pat) 332
IN THE HIGH COURT OF JUDICATURE AT PATNA
S.N. HUSSAIN, J.
M/S Goenka Agencies, a proprietorship firm, having its place of business at Delhi House, Dr. R. P. Road, Police Station Kotwali, Town & District Bhagalpur through its Proprietor Shri Bal Mukund Goenka, son of late Sagar Mal Goenka, resident of Dwarikapuri Colony, P.S. Kotwali, Town and District Bhagalpur - Petitioners
Versus
The State Bank Of India, a Banking company constituted under the State Bank of India Act, 1955 having its corporate office at State Bank Bhawan, Madame Cama Road, Mumbai-400021 through its Chairman-cum-Managing Director & Ors.- Respondents
Civil Writ Jurisdiction Case No.5056 of 2011
Decided on: 28.2.2012
Advocate Appeared:
For the Petitioner: Mr. Gautam Kumar Kejriwal.
For the State Bank of India: Mr. Mukundjee.
For the Union of India: Mr. P.L. Jaiswal.
The finality of the certificate issued under the DRT Act and the clear provisions of the OTS Scheme were central to the court's decision.
Headnote:
OTS Scheme - Financial Settlement - Recovery of Debt Due to Bank and Financial Institution Act, 1993 (DRT Act) - Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) - [19(22) DRT Act, 13(4) SARFAESI Act, 1.1, 1.2, 1.3, 1.6 OTS Scheme] - The court discussed the applicability of the OTS Scheme, the interpretation of clauses, and the legal implications of the DRT Act and SARFAESI Act on the petitioner's case. It highlighted the finality of the certificate issued under the DRT Act, the distinction between NPA account and Ledger balance, and the lack of discriminatory classification under Article 14 of the Constitution. The court's decision was influenced by the clear provisions of the OTS Scheme and the legal implications of the DRT Act and SARFAESI Act.
Fact of the Case:
The petitioner, a proprietorship firm, sought relief from the court to quash a letter denying the benefit of settlement under the SBI-OTS-SME-2010 Scheme. The petitioner's cash credit account had become a Non-Performing Account in 1995, leading to legal proceedings and a certificate issued under the DRT Act. The petitioner contested the denial of settlement under the OTS Scheme based on the interpretation of relevant clauses and legal provisions.
Finding of the Court:
The court found that the certificate issued under the DRT Act had attained finality and could not be ignored or interfered with. It also determined that the petitioner's attempt to avail the OTS Scheme in 2010 was not entitled based on the provisions of the Scheme and the legal implications of the DRT Act and SARFAESI Act. The court dismissed the writ petition, citing the lack of merit.
Issues: The issues revolved around the applicability of the OTS Scheme, the interpretation of relevant clauses, the finality of the certificate issued under the DRT Act, and the alleged discriminatory classification under Article 14 of the Constitution.
Ratio Decidendi: The court's decision was based on the finality of the certificate issued under the DRT Act, the clear provisions of the OTS Scheme, and the lack of discriminatory classification under Article 14 of the Constitution.
Final Decision: The court dismissed the writ petition, finding no merit in the petitioner's claims.
This writ petition has been filed by the petitioner for the following reliefs :-
(i) For issuance of a writ in the nature of certiorari for quashing of the letter dated 18.05.2010 issued under the signatures of the respondent-Assistant General Manager, Zonal Officer, State Bank of India, Bhagalpur whereby the petitioner has been denied the benefit of settlement under the SBI-OTS-SME-2010 Scheme on ground of misconceived interpretation of the clauses of the said scheme being violative of the guidelines of the Reserve Bank of India.
(ii) For issuance of a writ in the nature of mandamus directing the respondents to admit the petitioner’s case to one-time settlement under the aforesaid SBI OTS SME Scheme, 2010 and, accordingly, receive the settlement amount from the petitioner without any baseless and misconceived objection as has been raised vide the impugned letter dated 18.05.2010 and by way of considering the proposal dated 29.06.2010 made by the petitioner well within time.
(iii) For issuance of a writ in the nature of mandamus directing the respondents to accept the proposal dated 29.06.2010 made by the petitioner for settlement of the cash credit account under the scheme and issue ‘no dues certificate’ as well as release the entire collateral securities free from any charge on account of the financial assistance.
(iv) For grant of any other relief or reliefs to which the petitioner is found entitled to in the facts and circumstances of the case.
2. Learned counsel for the petitioner stated that it is a proprietorship firm and had availed financial assistance by way of cash credit facility at respondent-State Bank of India, City Branch, Bhagalpur (hereinafter referred to as ‘the SBI’ for the sake of brevity), but due to some unavoidable circumstances, the said cash credit account became classified as a Non-Performing Account (hereinafter referred to as ‘the NPA’ for the sake of brevity) in the year 1995, whereafter the SBI proceeded to institute a suit bearing Title Suit No. 73 of 1995 before the Civil Court, Bhagalpur for realization of loan amount from petitioner-firm. Subsequently in view of the provisions of the Recovery of Debt Due to Bank and Financial Institution Act, 1993 (hereinafter referred to as ‘the DRT Act’ for the sake of brevity) , the said suit was transferred to the Debts Recovery Tribunal, Patna, where it was registered as PT No. 50/1999, in which liability of the petitioner was determined and certificate dated 07.09.2001 was issued by the Debt Recovery Tribunal in favour of SBI under section 19(22) of the DRT Act for an amount of Rs.30,59,662.97 along with pendente lite and future interests at the rate of 16.5% per annum. Pursuant to the said certificate, proceeding for recovery of the said amount was instituted before the Recovery Officer, Debt Recovery Tribunal, Patna vide R.P. Case No. 131/2001 and notice dated 08.06.2004 was issued to the petitioner with respect to the order of attachment of immovable properties.
3. Learned counsel for the petitioner further submitted that thereafter the petitioner approached the SBI on 30.06.2004 with a proposal for settlement under One Time Settlement Scheme (hereinafter referred to as ‘the OTS Scheme’ for the sake of brevity) promulgated by the Reserve Bank of India (hereinafter referred to as ‘the RBI’ for the sake of brevity) as OTS Scheme of 2003. Thereafter, the SBI accepted the proposal and sent letter to the petitioner dated 05.07.2004 directing the petitioner to deposit 25% of the upfront amount by 31.10.2004, but the petitioner did not deposit 25% of the said amount, rather deposited a meagre amount by the cut off date, which is lying in the No-lien Account with the S.B.I.
4. It is further claimed by the petitioner that subsequently on 05.03.3010 SBI OTS-SME, 2010 Scheme was introduced by the SBI for the period up to 31.03.2011, by which loan accounts having attracted NPA classification were notified for settlement at considerable discounted figures and the
