SCA/6513/2008 1/22 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 6513 of 2008 With SPECIAL CIVIL APPLICATION No. 6455 of 2008 To SPECIAL CIVIL APPLICATION No. 6456 of 2008 With SPECIAL CIVIL APPLICATION No. 6570 of 2008 With SPECIAL CIVIL APPLICATION No. 6662 of 2008 With SPECIAL CIVIL APPLICATION No. 6965 of 2008 To SPECIAL CIVIL APPLICATION No. 6966 of 2008 With SPECIAL CIVIL APPLICATION No. 7161 of 2008 With SPECIAL CIVIL APPLICATION No. 7166 of 2008 To SPECIAL CIVIL APPLICATION No. 7168 of 2008 With SPECIAL CIVIL APPLICATION No. 7233 of 2008 With SPECIAL CIVIL APPLICATION No. 8926 of 2008 With SPECIAL CIVIL APPLICATION No. 9314 of 2008 With SPECIAL CIVIL APPLICATION No. 9681 of 2008 For Approval and Signature: HONOURABLE MR.JUSTICE JAYANT PATEL ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= SCA/6513/2008 2/22 JUDGMENT ANUBHAI HAMIRBHAI KHASIYA - Petitioner(s) Versus SHREE KODINAR TALUKA CO OP BANKING UNION LTD & 4 - Respondent(s) ========================================================= Appearance : MR HR PRAJAPATI for Petitioner(s) : 1, MR CHINTAN S POPAT for Respondent(s) : 1, None for Respondent(s) : 2 - 3. MR KL PANDYA, AGP for Respondent(s) : 4 (in all the matters), MS ARCHANA U AMIN for Respondent(s) : 5, ========================================================= CORAM : HONOURABLE MR.JUSTICE JAYANT PATEL Date : 10/09/2008 ORAL JUDGMENT 1. As in all the petitions common questions arise for consideration they are being considered by this common judgement. The learned Counsel for both the sides are heard for final disposal. 2. All the petitioners are the agriculturists, who had taken agricultural loans from the respondent Bank namely; Shree Kodinar Taluka Coop. Banking Union Ltd. It appears that the loan was not fully paid and, therefore, the procedure was undertaken by the respondent Bank for recovery of the amount in certain cases 3. It appears that the Scheme was declared by the Central Government known as Agricultural Debt SCA/6513/2008 3/22 JUDGMENT Waiver and Debt Relief Scheme 2008 (hereinafter referred to as the “Scheme”) and as per the said Scheme certain debts of the agriculturists are to be given relief. In respect to the loans to the farmers through Cooperative Banks or through Cooperative Societies the scheme is to be regularised by Reserve Bank of India (hereinafter referred to as 'RBI') or National Bank for Agriculture of Rural Department (hereinafter referred to as 'NABARD'). However, it appears that since the details of the scheme were immediately not communicated to the respondent Bank, it proceeded for recovery of the amount by resorting to the provisions of the Gujarat Cooperative Societies Act (hereinafter referred to as the 'Act') for recovery of the amount as per the award or as per the recovery certificate, as the case may be. The respondent Bank also proceeded for attachment of the land of the concerned agriculturists and in certain cases the auction was also held. At that stage, all the petitioners, except petitioners of Special Civil Applications No.8926 and No.9314 SCA/6513/2008 4/22 JUDGMENT of 2008, had challenged the said auction on the part of the Bank for recovery of the amount by auctioning the property of the petitioners and others and with other prayers. This Court initially had directed for not to finalize the auction and, therefore, as a result thereof, the offer of the auction purchaser remained as it is and no further steps were taken. Ultimately, this Court, vide order dated 9.5.2008, after hearing both the sides, had directed the petitioner to deposit certain percentage of the outstanding dues by providing different time periods and so far as the auction held by the Bank in respect to the properties of the debtors are concerned, direction was also given to the concerned agriculturists to pay additionally the interest at the rate of 8% per annum. The relevant direction to that aspect shall be referred to at later stage. It appears that thereafter the petitioners, barring petitioners of SCA Nos.8926 and 9314 of 2008, carried the matter by preferring Letters Patent Appeal before the Division Bench in LPA No.567 of 2008 SCA/6513/2008 5/22 JUDGMENT and allied matters and in the said LPA, one of the contentions raised on behalf of the respondent Bank was that the scheme is not applicable to the debts of the petitioners and, therefore, the Division Bench took the views that the question of applicability of the scheme was required to be decided prior to directing the concerned agriculturists to deposit the amount and, therefore, the matter has been remanded back to this Court. The pertinent aspect is that so far as the auction held pending the proceedings are concerned, it was also observed by the Division Bench as under:- “The appellants are also held liable to pay interest on the amounts deposited by the auction purchasers from the respective dates of the deposits till the date on which the learned Single Judge decides the petitions, at such rate as may be decided by the learned Single Judge.” 4. Therefore, the liability to pay interest to the SCA/6513/2008 6/22 JUDGMENT auction purchaser on the amount, which was deposited by the respective auction purchasers for participating in the auction of the property of the concerned petitioners is not modified by the Division Bench. Under these circumstances, the present petitions have come up for consideration before this Court. 5. Heard Mr.Prajapati, Mrs.Sangeeta Pahwa and Mr.Prachhak, learned Counsel appearing for the respective petitioners, Mr.Ashish Shah for Mr.Popat, learned Counsel in all the petitions for respondent No.1 Bank, Mr.Raval, learned Counsel for the concerned Respondent, Ms.Archana Amin, learned Counsel for respondent No.5 Bank, Mr.Pandya, learned AGP for the Government Authorities and Mr.Dagli, learned Counsel for respondent No.4 in Special Civil Application No.9314 of 2008. 6. It appears from the scheme read with the affidavit-in-reply filed on behalf of NABARD – respondent No.5 herein that the scheme applies to all agricultural debts, which remained unpaid as on 28.2.2008. The definition speaks for SCA/6513/2008 7/22 JUDGMENT various loans namely; Direct Agricultural Loans, Short Term Production Loan, Investment Loan, etc. The scheme is available to marginal and small farmers and other farmers. The definition of the marginal farmers provide for holding of the land up to 1 hectare (2.5 acres), for small farmers, it provides for holding of the land more than 1 hectare, but up to 2 hectares (5 acres) and for other farmers, it has been provided for holding of the land more than 2 hectares (more than 5 acres), which may include all the farmers irrespective of their holding in the category of other farmers. It is true that as per the scheme different treatment is to be given for disbursement and set off of the debts by extending relief through Central Government in respect of the marginal farmers or small farmers or other farmers, but in view of the scope provided under the Scheme, it is difficult to accept the contention of the learned Counsel for the respondent No.1 Bank that the scheme is not applicable to the debts of the petitioners, who are admittedly agriculturists and the SCA/6513/2008 8/22 JUDGMENT transaction of the loan pertains to the category of the direct agricultural loans or short term production loan or the investment loan, as covered in the scheme. The aforesaid is apparent from the scope of the scheme, which, inter alia, provides at 2.1 as under:- “2.1 The scheme will cover direct agricultural loans extended to 'marginal and small farmers' and 'other farmers' by Scheduled Commercial Banks, Regional Rural Banks, Cooperative Credit Institutions (including Urban Cooperative Banks) and Local Area Banks (hereinafter referred to compendiously as 'lending institutions') as indicated in the Guidelines.” 7. As observed earlier if all the categories of the farmers are considered, it would also include the farmers holding the agricultural lands exceeding 2 hectares, which would mean all the farmers since the upper limit of holding of the agricultural lands has not been provided to SCA/6513/2008 9/22 JUDGMENT exclude certain farmers in the category of other farmers”. It is not the case of the respondent Bank that the loans were not pertaining to the agricultural loans or short term production loans or investment loans. It is also an admitted position that the loans were granted by the bank, which is a cooperative credit institution. Under these circumstances, it cannot be said that the scheme is not applicable to the petitioners, who are farmers and who obtained agricultural loans from the respondent No.1 Bank and, therefore, the said contention of the learned Counsel for the respondent No.1 Bank deserves to be rejected and hence, rejected. 8. As per the scheme, various modalities have been provided for implementation of the scheme. The cut-off date for calculating the eligibility amount can be gathered from paragraph 4.1(A) as well as (B), which speak for amounts remaining unpaid or over due until February 29, 2008. It is also an admitted position that the amounts in respect to the loans of the petitioners, may be by way of the award or by way of recovery SCA/6513/2008 10/22 JUDGMENT certificate of the competent authority, were unpaid or they were over due. Therefore, if the scheme is to apply and the debts of the petitioners are to be covered in the scheme, it will be required by the respondent No.1 Bank to give the same treatment to all its agriculturist debtors and the petitioners would fall in the same category of agriculturists' status so as to claim the benefits of the scheme as floated by the Central Government. Therefore, the consequence would be that the petitioners would be entitled for the benefits of the scheme pertaining to the debts in question, which are subject matter of the present petition. 9. The next aspect, which may be required to be considered is for examining the action on the part of the respondent No.1 Bank in proceedings for recovery of the amount and the consequence thereof, whether should be allowed to remain or if to be set aside or nullified, what the equitable considerations should prevail qua the parties, who have acted in bonafide. 10.It appears that as per the respondent No.1 SCA/6513/2008 11/22 JUDGMENT Bank, though the scheme was floated, it had no details, whereas it is the case of the petitioners that the scheme was also available to the respondent No.1 Bank and it had started extending benefits to the other similarly situated agriculturists, in spite of the same, a different treatment was given in respect of the debts of the petitioners by the respondent No.1 Bank by proceeding with the recovery of the amount. 11.In normal circumstances, if the Bank, who is holding the award in its favour or recovery certificate in its favour, would be justified in proceeding for recovery of the amount, unless there is any prohibitory order of the competent forum known to law. It is an admitted position that there were no prohibitory orders against the respondent No.1 Bank in recovery of the amount. Therefore, if the action is taken for recovery of the amount, at least the same cannot be said as without any competence or jurisdiction or authority on the part of the respondent Bank. May be that had the scheme in SCA/6513/2008 12/22 JUDGMENT detail been well within the knowledge of the respondent No.1 Bank and in spite of the same, it proceeded further, the action at the most could be said as unreasonable or arbitrary. The petitioners, who are admittedly defaulters of the loan transaction cannot pitch their case beyond the same. As it has happened in the present case, the Bank has proceeded for recovery of the amount by disposal of the properties by holding auction, but the fact remains that at the initial stage in respect of all the petitions, since the petitions were filed at the later stage after holding of the auctions in certain cases, in certain cases auction was already held before the matter was considered by this Court, the direction was already given not to finalize the auction. Therefore, the consequential result is that the auction was held, but not finalized. It is only in cases of Special Civil Application Nos.8926 and 9314 of 2008, since no Letters Patent Appeal was preferred, the Bank proceeded for finalization of the auction and the respective SCA/6513/2008 13/22 JUDGMENT auction purchaser has paid the remaining amount of the auction. It is the case of the respondent No.1 Bank as well as the auction purchaser in one of the matters represented through Mr.Dagli, learned Counsel that the sale certificates have been issued and the entry is also mutated in the revenue record. However, the fact remains that there is no authenticated record produced by either side to show that the possession of the lands concerned to Special Civil Application Nos.8926 of 2008 and 9314 of 2008 is handed over or that there are additional rights created by altering the situation thereafter. 12.As observed earlier, if the scheme is floated by the Central Government in respect of all agriculturists and the petitioners are the persons, who are covered by the said scheme and their debts are also required to be given the same treatment as per the scheme and when as per the scheme, the cut-off date is 29.2.2008, it would not be a case to deprive the petitioners from the benefits of the scheme on the ground SCA/6513/2008 14/22 JUDGMENT that the respondent No.1 Bank during the later period proceeded for recovery of the amount or that the auction has been held and in two cases the amount is fully paid by the auction purchaser. 13.As such this Court, when earlier considered the matter, vide order dated 9.5.2008, it was, inter alia, observed that if the petitioners are desirous to get the benefits of the scheme, it would be required for the petitioners to deposit the amount not less than the amount received by the Bank so as to protect the land plus interest at the rate of 8% per annum, so as to compensate the auction purchaser towards the loss of interest, in the event the matter was to be considered for issuing directions to the Bank for refund of the amount to the auction purchaser. Thereafter, the directions were given accordingly and as observed earlier, the Division Bench of this Court in Letters Patent Appeal has also not modified the said aspect of the liability of the concerned petitioners/land holders to pay interest for compensating to the SCA/6513/2008 15/22 JUDGMENT auction purchaser, but it only left to the discretion of this Court about the rate of interest to be made payable. In my view, interest at the rate of 8% per annum can be said as reasonable for compensating the auction purchaser, who did part with the amount, may be acting in bonafide, for participating at the auction and at the later stage, either the auction is not finalized or if finalized, the same is set at naught by this Court. Even on equitable consideration also, the auction purchaser, if after acceptance of the auction, is to be told that the offer is not accepted or that the auction is to be cancelled, it would be just and proper for the competent authority, who is to set aside the auction to reasonably compensate the auction purchaser, who acted in bonafide. 14.As per the observations made hereinabove, since the petitioners are found as eligible and entitled for the benefits of the scheme, it would be required for the respondent No.1 Bank to extend the benefits as per the Scheme to the SCA/6513/2008 16/22 JUDGMENT respondent petitioners. If the scheme is to operate in respect of the debts, which are subject matter of the petitions, there may not be any question for disposal of the properties of the concerned agriculturists, at least until the default is made by concerned agriculturists in paying the amount as per the scheme. Therefore, if the date is taken as the basis, as was prevailing on 29.2.2008, no useful purpose would be served in allowing the auction to stand and thereby to deprive the auction purchaser from the land and it would be just and proper to set aside the auction in view of the present facts and circumstances and consequently to direct the respondent bank to refund the amount with interest at the rate of 8% per annum, but it will be required for the concerned petitioners, who is seeking cancellation of the auction to bear the liability of the interest at the rate of 8% per annum since the petitioners are desirous to protect the land and the action of the Bank cannot be said as wholly without jurisdiction. Even on the aspects of SCA/6513/2008 17/22 JUDGMENT reasonableness, if the matter is examined the petitioners are defaulters of the loans and, therefore, if the payment has not been made and the bank has proceeded for recovery of the amount, such an action cannot be said as unreasonable, more particularly when as per the respondent Bank, all the details of the scheme were not available or that the scheme was not applicable to the Bank or the debts of the petitioners. In normal circumstances, if the debtor is to save the property at the auction held for recovery of the amount, the burden of bearing the liability to pay the interest, which is to be paid by way of compensation to the auction purchaser at the ultimate setting side of the auction, is required to be passed over to the person, who is seeking the setting aside of the auction. Considering the facts and circumstances, it appears to the Court that the burden for bearing of the interest at the rate of 8% per annum for compensating to the auction purchaser shall be required to be borne by the respective petitioners. SCA/6513/2008 18/22 JUDGMENT 15.As observed earlier, since the petitioners are found as covered by the Scheme and the debt which is subject matter of the petition is also covered by the Scheme, it will be required for the respondent Bank to intimate the respective petitioners about the actual amount to be paid by the concerned petitioners for entitling the benefits of the scheme and also the interest at the rate of 8% per annum, as observed earlier, on the amount deposited by the auction purchaser for participating at the auction or at the later stage by complying with the conditions of the auction. The bank may give reasonable time to the petitioners to deposit the amount and it will also be required to the bank to undergo the necessary formalities for getting the undertaking etc., as per the scheme and such formalities may be completed, in any case, before 30th September, 2008. 16.In view of the above, the following order:- (a) It is declared that the petitioners and the debts, which are subject matter of SCA/6513/2008 19/22 JUDGMENT the petitions are covered by the Agricultural Debt Waiver and Debt Relief Scheme 2008. Consequently, the respondent No.1 Bank would be required to extend the benefits as per the Scheme to the concerned petitioners and the concerned petitioner(s) shall be required to comply with the conditions for availing the benefits of the Scheme. (b) The respondent No.1 Bank shall intimate to the petitioners within one week from today, the amount payable by respective petitioners for availing the benefits of the Scheme plus interest at the rate of 8% per annum to be paid to the auction purchaser on the amount deposited by the auction purchaser from the date of deposit until 30th September, 2008. While calculating the said amount, the Bank shall deduct or shall give set off the amount already deposited by the petitioners pending the petitions or the Letters Patent Appeal. SCA/6513/2008 20/22 JUDGMENT (c) The petitioners shall deposit the requisite amount with the respondent Bank within two weeks from the date of intimation or, in any case, on or before 30th September, 2008. (d) Upon the compliance of the aforesaid direction, the auction shall stand set aside and the respondent Bank shall refund the amount deposited by the auction purchaser may be 10% of the offer or the full amount, as the case may be, with the interest at the rate of 8% per annum from the date of deposit of the respective amount until 30th September, 2008. The said amount shall be returned preferably on or before 15th of October, 2008. (e) Upon the compliance of the aforesaid directions, the action of the respondent Bank for recovery of the outstanding amount or for disposal of the SCA/6513/2008 21/22 JUDGMENT property of the petitioners shall not survive and the Bank shall give the same treatment to the debts of the petitioners as is required to be given as per the Scheme of the Central Government. (f) If there is any dispute in implementing the Scheme, as per the Scheme, the forum is provided for grievance redressal officer. Therefore, in case of any difficulty, it would be open to the petitioners to approach before such officer, including for calculation. 17.Mr.Shah, learned Counsel appearing for the respondent No.1 Bank, states that the operation of this order be stayed qua Special Civil Application No.8926 of 2008 and Special Civil Application No.9314 of 2008 since the auction has been held and finalized as no Letters Patent Appeal was preferred. In my view, the Bank as such cannot have a better right than the auction purchaser. Further, same treatment is to be SCA/6513/2008 22/22 JUDGMENT given to all similarly situated persons. Therefore, the said request is declined. 18.Mr.Dagli, learned Counsel for the auction purchaser also prayed for suspending the operation of this order for some time, so as to enable his client to approach before the higher forum. Considering the facts and circumstances, even otherwise also the order is to take effect for return of the amount after 30th September, 2008. Therefore, the said request is declined. 19.The petitions are allowed to the aforesaid extent. Rule made absolute accordingly. No order as to costs. 10.9.2008 (Jayant Patel, J.) vinod