| SooperKanoon Citation | sooperkanoon.com/56547 |
| Court | DRAT Allahabad |
| Decided On | Dec-19-2005 |
| Judge | P Deb |
| Reported in | I(2006)BC182 |
| Appellant | Central Bank of India |
| Respondent | Sharad Rice Industries |
Without giving much details about factual aspect of the cases, it must be mentioned that the impugned orders in these appeals have been passed on the basis of a petition filed by the respondent-defendants under Section 22 of the DRT Act read with Rule 18 of the DRT Procedure Rules and on the basis of principle of natural justice. The taking of loans by the respondents on factual aspects had not been denied and as such without filing of reply to the original application filed in the cases, petitions were filed as mentioned above for settlement of the claims on the basis of RBI Guidelines.
The appeal has arisen out of the final order dated 28.9.2001 in original application No. 105/01. The claim of the appellant Bank was for Rs. 51,76,453/- and order has been passed by the impugned order for issuance of recovery certificate for Rs. 8,20,000/-.
The appeal has arisen against the final order passed on 28.9.2001 in the Original Application No. 107/01 passed by the then Presiding Officer, DRT, Jabalpur. The claim of the Bank was for Rs. 41,41,018/- with cost. By the impugned order the claim of Bank has been allowed for Rs. 6,70,000/- on the basis of RBI Guidelines.
The appeal has been preferred against the final order passed in O.A. No. 115/ 01 on 28.9.2001 passed by the then Presiding Officer, DRT, Jabalpur. The claim of the Bank was for Rs. 18,49,940/- and the claim of the Bank has been allowed to the tune of Rs. 3,45,000/-.
4. Appeal No. 72/01 (Central Bank of India v. Handu Lal Kishan Lal and Ors.) This appeal has been preferred against the final order passed on 28.9.2001 in O.A. No. 116/01 by the then Presiding Officer, DRT, Jabalpur. The claim of the Bank was for Rs. 28,80,778/- with usual reliefs of future and pendente lite interest and cost. The claim of the Bank has been allowed to the extent of Rs. 4,75,000/- as per RBI Guidelines.
2. In all the cases as mentioned above, as per the original application filed by the appellant-Bank, the accounts of the respondents became NPA in March, 1992. After the applications were registered and notices being issued to the respondent-defendants, they appeared in all the cases by filing petitions under Section 22 of the DRT Act read with Rule 18 of the DRT Procedure Rules and also on principle of natural justice with guidelines given by the Reserve Bank of India on 27.7.2000 for one time settlement in respect of the cases of accounts of the loans categorized as non-performing assets. Such applications were filed in the month of September, 2001 with apetition for early hearing of the matter in issue as the RBI Guidelines as referred to above were going to expire on 30.9.2001. On such applications filed by the defendant-respondents, objections were invited from the appellant Bank and they filed their objections stating various facts and also referring some circulars of the RBI to the effect that non-performing assets of the respondent which were made in the year 1992 had never remained non-performing assets, as on 31.3.1997 the cut-off date made in the circular of the RBI Guidelines is 27.7.2000. Their case was that after the accounts declared as NPA of the respondents-defendants in the year 1992, then again at the requests of the respondent-defendants some transactions were made including that of granting of some more loans.
The non-performing assets had lost their character and became performing assets. Nowhere in the reply being made, it was challenged that the RBI Guidelines as referred to above had no binding effect with the Banks, rather it became a discretionary power of the individual branches of the Banks to apply such Guidelines for the purpose of settlement/ compromise of the debts of the borrowers, but in the appeals the main point taken is of the binding effect of the RBI Guidelines dated 27.7.2000. On hearing the parties and on the points raised on the petitions filed by the respondents and the objections raised from the side of the appellant Bank, learned Presiding Officer, DRT, has passed the impugned orders accepting the plea of the respondent-defendants holding that the accounts of the respondent-defendants were NPAs on 31.3.1997 as per the Guidelines itself and such NPAs had never become performing assets, even when some transactions were there after the year 1992.
(a) That the RBI Guidelines dated 27.7.2000 has no statutory effects and the same had never been issued under Sections 21, 35 of the Banking Regulations Act and hence the Tribunal committed error in passing the impugned judgment on the basis of the RBI Guidelines taking the same of having statutory effect.
(b) That the Tribunal had committed error in holding the accounts of the respondent-defendants as NPAs on 31.3.1997. The cut-off date of that circular as mentioned above.
4. Mr. Satish Agarwal and Mr. V.D. Chauhan have argued the appeals for and on behalf of the respondents and by referring to the legal position, they supported the impugned judgments in toto.
5. Let me take up the first point of attack regarding effect or not of the RBI Guidelines.
6. Mr. S.N. Verma, Senior Counsel appearing for and on behalf of the appellant in support of his contention has submitted by referring to the copy of the Guidelines itself, which were marked as Exhibit No. D-1 to the effect that in the said circular nowhere there is any mention that the same had been issued either under Section 21 or under Section 35 of the Banking Regulation Act and as such those circulars can at best be construed as Guidelines given on the administrative capacity to the Banks and cannot have any binding effect on the Bank to promulgate the same, rather it remains always as discretionary one on the part of the appellant Bank and when the said Guidelines are only circulars issued as Guidelines to the Banks under RBI, the same cannot be acted upon by the Courts or Tribunal for the purpose of passing a decree on the basis of such Guidelines taking away the rights of the appellant Bank. In support of his contention, he has referred to two judgments namely State Bank of India v. Eastern Paper Mills Machinery (P) Ltd. and Ors. 2004(1) Bank CLR 289 (DRAT Kolkata), wherein it has been held by the learned Chairperson of the DRAT, Kolkata that the Tribunal has no authority to settle the claim of the Bank on the basis of the RBI Guidelines, rather the same remains to be considered by the Banks on their discretion. He further referred to another judgment namely Raghvendra Theatre and Anr. v. Bank of India 2004(1) Bank CLR 136 (DRAT), Chennai, wherein it was held that RBI Circulars and Guidelines have no statutory nature until and unless the same is being issued under Sections 21 and 35 of the Banking Regulation Act. This judgment of DRAT, Chennai is based on a judgment of the Karnataka High Court in Writ Petition No. 11556/01.
7. In reply to such contention, Mr. Agarwal for and on behalf of the respondent has submitted that those judgments referred are bad, as they do not rely on the judgment of the Apex Court, which was published long back in the year 1992, as in Peerless General Finance & Investment Co.
Limited and Anr. v. Reserve Bank of India 1992 SCC 343, wherein it has been held that the Circular and Guidelines issued by the RBI has the binding effect on the Banks and that the same has got the flavour of statutory in nature. It has further been submitted by Mr. Agarwal that the judgment of DRAT, Kolkata had already been reversed by the Calcutta High Court as reported in II (2005) BC 414 and according to him, the judgment of the DRAT, Chennai has also not referred the Supreme Court cases, which had already been decided long back including celebrity judgment of Central Bank of India v. Ravindra and Ors. I (2002) BC 150 (SC) : IV (2001) CLT 127 (SC) : 2002(1) Supreme Court 367.
8. The contention of Mr. Agarwal is that there is no other provisions under the Banking Regulation Act except that of Sections 21 and 35, whereby and whereunder the Reserve Bank of India can issue Guidelines to the Banks and his further submission is that such Circular-Guidelines have the statutory effect when the violation of it attracts penal provisions. In support of his contention that the Guidelines given by the Reserve Bank of India has statutory effect, he has relied on various other judgments namely Krupa Alloys and Metals v.Chief Manager, State Bank of India I (2003) BC 417 (Andhra Pradesh High Court), Saraf Trading Corporation v. S.B.I. I (2003) BC 74 (DRAT Chennai), Neeru Autos Pvt. Ltd. v. UCO Bank I (2003) BC 62 (DRAT, Chennai), Cross Country Hotel v. Tourism Finance Corporation of India Ltd. I (2003) BC 66 (DRAT, Delhi), Jameela Beevi v. State Bank of Travancore I (1999) BC 418 (Kerala High Court), Canara Bank v. C.H.Venkataraman and Ors. I (2004) BC 32 (DRAT Chennai), Johny Kuruvilla v.Reserve Bank of India II (2005) BC 182 (Kerala High Court) and lastly he has relied on a judgment of this Appellate Tribunal as passed in Bank of Baroda v. Shree Mahalaxmi Refinery and Ors. R-36/01.
9. It is true that in the circular Exhibit No. D-1, it has nowhere been mentioned that the same has been issued under Section 21 and Section 35 of the Banking Regulation Act, but the Act itself has got no other provisions giving any authority to the Reserve Bank of India to issue Circulars/Guidelines to the Banks. In that way non-mention of the Section of the Banking Regulation Act does not classify the circular being issued outside the purview under Section 21 and Section 35 of the Banking Regulation Act and the same must be construed to have been issued within four corners of the Banking Regulation Act. In one of the referred judgments it appears that the Courts have held that even some circulars regarding the administrative region of the Bank not connected with loan matters to be having binding and statutory effects. In that way, I hold and find that this submission of the appellant Bank has got no force. Moreover, this point has been raised only at the appellate stage at the time of arguments only but being a point of law referring to the jurisdictional matter can be raised even if not raised before the Tribunal Court. However, I find that the first point as raised from the side of the appellant has got no force.
10. The second point is with regard to the determining of the loan accounts of the respondent as NPA is valid or not. Nowhere it has been stated in the original application that after the accounts became NPAs in the year 1992, the same had been transformed into the P.As. when after 1992 some transactions were made with the respondent Bank, rather just before filing of the original applications, the Bank itself had termed the accounts as NPAs in their correspondences being made in the Exhibit D series and they have specifically calculated the amount to be paid on the basis of the compromise formula as per the Guidelines dated 27 7.2000 and in one of the cases even after calculation the amount has been slightly raised also and all were the actions from the side of the Bank itself in the year 2001 specifically claiming that the amounts of the respondents were NPAs as on 31.3.1997 and for the first time they attempted to deviate from their own stand in the objection filed on the petitions of the respondents filed under Section 22 of the Act. They made an attempt but in futile to turn the accounts of the respondents as performing assets on the basis of a circular of the Reserve Bank of India, but the said circular had also been very ably considered by the learned Tribunal in the impugned judgment, wherein it was held that as the outstanding dues have been regularized, rather it has been categorically admitted in the objection of the appellant Bank that the account became doubtful NPA on 31.3.1997.
11. From the above position and circumstances, there remains no scope of the appellant Bank to reverse their own stand in categorizing the accounts as NPAs, hence this submission in attacking the impugned judgments from the appellant side has also got no force.
12. At the last stage, the learned Senior Counsel for the appellant has submitted that the action of the Branch Manager or officials of the Branch concerned ought not to have been taken as an action of the Bank.
If the Bank Manager or officials of the Bank had made some statement or admission in collusion with the respondent/defendants, then the same should be turned down by the Court. Nowhere any such allegations were made at any point of time, rather when query was made to the Bank regarding NPA and circular itself, the Bank officials had submitted before the Tribunal that the matter had been sent for compromise to the higher authorities, but nowhere it is there that higher authorities had ever turned down the cases of the respondents. In that way, such submission has also got no force.
13. In the result, I hold and find that the present appeals have got no force and hence the same are dismissed, but in the circumstances, no order as to cost.
14. Send down the records as called for from the Tribunal concerned immediately.