The Reserve Bank of India guidelines for recovery of non-performing assets are not meant for willful defaulters and cannot be utilized by borrowers who have diverted funds in violation of their contractual liabilities with the bank.

( 1 ) THIS writ petition has been filed for a writ of certiorari to quash the impugned letter dated 8-3-2003. Annexure 3 to the writ petition issued by the respondent Bank of India. The petitioner has also prayed for a mandamus directing the respondent Bank to accept one time settlement offer of the petitioner as contained in the letter dated 4-3-2003, Annexure 2 to the writ petition.

( 2 ) HEARD learned counsel for the parties.

( 3 ) THE petitioner is a Private Limited Company registered under the Indian Companies Act and is having its factory at Sikandra Industrial Area, Agra. The petitioner took a loan from the respondent Bank whose sanctioned limit is Rs. 27 lacs as stated in paragraph 5 of the writ petition. It is alleged in paragraph 6 of the writ petition that the factory ran into financial difficulties soon after the production began because of the low demand in the market of the petitioners product. Hence the petitioner could not achieve the expected profits and hence could not meet the interest liability on the loan. It is alleged in paragraph 7 of the writ petition that the Reserve Bank of India framed guidelines dated 27-7-2000 for recovery of dues relating to Non Performing Assets (hereinafter referred to as npa) of public sector Banks. These were revised on 29-1-2003 which has been quoted in paragraph 7 of the writ petition. True copy of the guidelines is Annexure 1 to the writ petition. It is alleged in paragraph 11 of the writ petition that the cash credit facility falls under the category of NPA from 31-12-1997 upto 31-3-2000. The account became a doubtful asset since it remained NPA for a period exceeding two years on 31-3-2000 and hence it is alleged that a compromise settlement as stated in Clause (A) (i) as mentioned in the letter dated 29-3-2003 became applicable to the petitioners case. It is alleged in para 12 that the petitioner became entitled to the one time settlement and hence it sent a letter dated 4-3-2003 to the Zonal manager, S. B. I. Branch, Bank of India, Agra pointing out that the account falls under the NPA category as per the R. B. I. guidelines and the petitioner was ready to pay the outstanding dues as on the relevant date the account become doubtful. Photocopy of the letter dated 4-3-2003 is annexure 2 to the writ petition. It is alleged in para 13 that instead of accepting the petitioners offer the Chief Manager of the respondent Bank sent a letter dated 8-3-2003 informing the petitioner that its account does not fall under the R. B. I. guidelines for one time settlement vide annexure 3 to the writ petition. It is alleged by the petitioner that the contention of the respondent Bank that the petitioner is not entitled to one time settlement is patently illegal. It is alleged in para 15 that the petitioner falls under the Doubtful Asset Classification and therefore was clearly entitled for one time settlement. It is alleged in paragraph 20 of the writ petition that no reason has been given in the letter dated 8-3-2003 as to why the petitioners account does not fall under the R. B. I. guidelines for one time settlement, and only a bald statement has been made which is apparently against the record. It is alleged that the guidelines of the R. B. I. are statutory in nature and the respondent Bank is a nationalized Bank and hence it was obligatory on the part of the Bank to comply with the said guidelines.

( 4 ) A counter affidavit has been filed by the Chief Manager of the respondent No. 1 and we have perused the same. In paragraph 3 it is alleged that the petitioner is a wilful defaulter who is trying to get undue advantage of the R. B. I guidelines by getting a declaration that his account has been declared as NPA with retrospective effect so that he may get the benefit of one time settlement to which he is not entitled. It is alleged that in case the petitioners claim is granted it will open a Pandoras box for unscrupulous borrowers who will seek declaration of their account