HIGH COURT OF CHHATTISGARH ‘ DIVISION BENCH: HON. MR. DHIRENDRA MISHRA, & .. HON MR RN CHANDRAKAR J'J' AFK Wri'l’ Pe1'l'1'ion No. 3029/06 W r‘i‘l’ Pe‘l'ih'on No.6049/06 W rif Petition No. 6146/06 & A , Sd/— Dhirendra Mishra Judge GS/O3/2010w n m HON'BLE SHRI JUSTICE R.N. CHANDRAKAR $aLYpaz- Sdl— R.N. Chandrakar Judge POST FOR ORDERS ON 08 /O3/2010 Sd/- Dhirendra Mishra Judge of/O3/2010 ORDER FOR CONSIDERATION PETITIONER CenTral Bank of India Vs RESPONDENT M/s Shared Rice Indusfr'ies PETITIONER Cem‘ral Bank of India Vs ‘ RESPONDENT M/s Sunil Indus’rries I PETITIONER Cenfral Bank of India Vs RESPONDENT M/S Kishor‘e Traders & ofher‘s Wri‘l’ Pe‘rifion No.6047/O6 PETITIONER CenTral Bank of India Vs RESPONDENT M/s Handulal Kishanlal & o’rher‘s HIGH COURT OF CHHATTISGARH AT BILASPUR DIVISION BENCH: HON'BLE SHRI DHIRENDRA MISHRA & HON‘BLE SHRI R.N. CHANDRAKAR JJ. Wr‘H‘ Pe‘rl'fion No. 3029/2006 PETITIONER Central Bank of India, Main Road, Dh‘a'mfar'i City, Tehsil & DisH. Dham’rar‘i (CG) Vs RESPONDENT M/s Shared Rice Indusfr'ies, ’rhrough Prop. Shri Anil Kumar- Agarwal, IndusfriahAr‘ea, Behind Bus S’rand, Dhamfari, (CLG.) and Basfar Road, Dham’rari (CG) Wrii Petition No. 6047/2006 PETITIONER Cen‘rr‘al Bank of India, Main Road, Dhamfar‘i Ci’ry, Tehsil & DisH. Dham’rar‘i (CG) 'Vs RESPONDENTS 1.M/s Handulal Kishanial,‘BasTar Road, Dham’rari, Distric’r Dham’rari (CG) 2.Kishanlal Agrawal, S/o Shri Handulal Agr'awal. i 3.Ashok Kumar Agrawal, S/o Shri Handulal Agrawal. Responden’rs No.2 & 3 are R/o Bas’rar' Road, Dhamfari, Disir‘icf Dhamfar-i (CG) Wri‘r Pefiiion No.6049/2006 PETITIONER Cenh‘al Bank of India, Main Road, Dhamfar‘i Ci‘ry, Tehsil & Dish”. ‘Dhamfar‘i (C6) Vs RESPONDENTS M/s Sunil Indusfries, Through Propriefor' Shri Sunii Kumar Agarwal, Indusfriai Area, Behind Bus Stand, Dham’r’ari, (C.G.) d ,& Writ Pe‘ri'rion No.6146/2006 PETITIONER Cen’rral Bank of India, Main Raad, Dhamfari Ci’ry, Tehsil & Dis’r’r. Dhamfari (C6) Vs RESPONDENTS 1.M/s Kishor‘e Traders, Through’Pr‘op. Kishor' Kumar‘ Agrawal, Indusfr'ial Ward, Dham’rari & also of S‘ra’rion Road, Dhamfar'i (CG) 2.M/s Handulal Kishanlal. 3.$hr'i Kishanlal Agrawol, S/o Shri Handulal AgrawaL 4.5hr‘i Ashok Kumar Agrawal,,S/o Shri Handulal Agrawal. Responden’rs No.2 To 4 are R/o 'BasTar‘ Road, Dhamfur‘i, DisTr'ic‘r Dhom’rar‘i (CG) Presen’r: Mr‘. B.D. Guru, AdvocaTe : For fhe pe’ri’ri‘oner’ in all wri’r pe’ri’rions For The responden‘r in . all wri’r pe’ri‘rions Mr‘. Sanjay K Agarwal, AdvocaTe ORDER (Passed on j‘f‘March, 2010) Dhirendra Mishra, J 1. The above wrif pefi’rions are being disposed of by This common order as The issue involved in fhese peTifions is same. However, for The purpose of This order, reference is made To The facTs of W.P. No.3029/2006 (CenTral Bank of & India V‘s. M/s Sharad Rice IndusTries). 2. The peTiTioner by The insTanT peTiTion has prayedLfor following subsTanTial relief:- “i. Tha’r, ‘rhe Hon'bie Cour* may kindly be pleased To by wri‘r of cer’rior‘ar‘i To quash ’rhe order dafed 19.12.2005 (Annexur'e P/1) passed by 'DRAT Allahabad and The order dafed 28.09.2001 (Annexure P/Z) passed by The DRT Jcbalpur. ‘ ii.- ThaT, The sTricTure passed by The Tribunal / AppellaTe Tribunal againsT The officers of The Bank may ‘kindly be deleTed/sTruck off in The inTeresT of jusTice." \ (T 3. Briefly sTaTed, facTs of The case are ThaT The respondenT borrower was sancTioned loan of Rs.6 Lac for consTrucTion of rice mill and purchase of planT & machineries and Rs.5 Lac as Cash CrediT (HypoThecaTion) on 12.10.1987. The respondenT-borrower commiTTed defaulTs in making repaymenT. The peTiTioner—bank filed an original applicaTion for recovery of balance of loan accounT TogeTher wiTh inTeresT @-14.5% p.a. on 14.8.2001 Mide Annexure P—4 in The DebT Recovery Tribunal, Jabalpur (for breviTy ‘DRT'). r In The said proceedings, The respondenT moved an applicaTion of Annexure P—5 under SecTion 22 of,The Recovery of DebTs Due To Banks and Financial InsTiTuTions ACT, 1993 (for shorT ‘The AcT of 1993') read wiTh Rule 18 of The DebTs Recovery Tribunal (Procedure) Rules, 1993 (for shorT 'The Rules of 1993') and prayed for issuance of direcTion To The peTiTioner bank To follow and implemenT The guidelines of The Reserve Bank of India (for shorT 'RBI’) for 'One Time SeTTlemenT Scheme' (for shorT ‘OTS scheme') To The accounT of The respondenT or direcT The bank To seTTle The ouTsTanding in The capTio’ned r , é . recovery applicaTion for Rs.8,20,000/- and To .exfend benefi‘r of RBI guidelines. In i’rs reply (Annexure P—6) the bank expressed ifs willingness To se’rTIe fhe accoun‘r a’r Rs.50,98,983/- minimum compromise amoum‘ as per module approach of Annexure P—7. .The DRT direci’ed fhe respondenf-borrower To make paymenf of Rs.8,20,000/- ’rowards full and final settlemem‘ of dues being balance as Von 31.3.1992, as calculafed by fhe bank, since The accoun’r was cafegorized . as ‘Non Performing Assef' (NPA) on 31.3.1992 and Therefore, The benefi’r of RBI guidelines dafed 20.7.2000 musf be extended fo fhe respondenf borrower. While passing fhe impugned order certain sfricfures/ observafions have also been made againsf The officers of The bank by The DRT. . The bank preferred an appeal under SecTions 20 & 17‘ of fhe AcT of 1993 before The DebTs Recovery AppeIlaTe Tribunal, Allahabad (for shorT ‘DRAT'), however, The f appeal sTands dismissed b'y The impugned order Annexure P-1. . Mr. Guru, learned counsel for The peTiTioner—bank submiTs ThaT The Tribunals below commiTfed error of law and jurisdicfion in holding Thaf The RBI OTs scheme is enforceable and The bank can be direcTed To seTTle fpr a lesser amounf Than whaT The bank is demanding by way of a compromise. The DRT failed To appreciafe ThaT case of The respondenT borrower is noT covered under The RBI OTS scheme Though The sfand of The bank was ThaT The accounT Turned NPA on 31.3.1992. IT was also pleaded ThaT inTeresTs were remiTTed in bofh The accounTs Till 7 a. o 1994 & 1995 respectively. RBI'S guidelines for The OTS scheme have no’r been issued in exercise of s‘ra‘ru’rory powers under Sections 21 & 35 of ’rhe Bank Regulofion Ac‘r and Therefore, ’rhe said guidelines do no’r pariroke character of sfa’rufory circular/ guidelines/ directions and do no? have binding effec’r. I‘r was also argued iha’r fhe DRT passed The impugned order wi’rhou’r following The mandafory provisions of Sec’rion 19 of. ’rhe Ac’r of 1993. The responden’r-borrower did no’r file reply ’ro ’rhe oriéinal applica‘rion, however, The original applicafion has been disposed of while deciding The applica‘rion preferred by 'The respondenf under Section 22 of the Act of 1993, which is not permissible under the law. Reliance is placed on the judgment in the matter of Nahar Industrial Enterprises Ltd. Vs. Hong Kong & Shanghai Banking Corporationl . On the other hand, Mr. Agarwal, learned counsel for‘the respondent would argue that only issue raised in the writ petition is regarding the OTS scheme issued by the RBI. It is settled law that guidelines i53ued by the RBI regarding the OTS Scheme have been held to have statutory force and the same are enforceable by the Courts and the tribunals. Amount under the scheme has to be a NPA amount and the same, in the instant case, has been determined by the bank itself, which is evidentfrom the documents of Annexure R-5 (Si R—14. From the documents available on record, it is clear that account of the respondent was categorized as NPA on 31.3.1992 and once the account is categorized as NPA, no interest can be d_e_t),ij;e.d_in_the account as per guidelines of the RBII. ¢ . ,,/— 12009 AIR SCW 6262 . We have heard learned counsel for the parties and We have perused The impugned orders. .In a recovery proceedings initiated against the res‘ponden‘r by The pe‘rHioner—bank under Sec’rion 19‘ of the ACT of 1993, fhe responden’r fHed' an applica’rion under SecTion 22 of fhe Acf of 1993 read wifh Rule 8 of #he Rules bf 1993 and s‘ra‘red that his account wHh the bank was marked as ‘NPA' on 31.3.1992 and ‘was categorized as ‘Bad Debt' prior to 31.3.1997. Since the account was marked as ‘NPA' prior to 31.3.1997, the respondent was entitled to take benefit of the 0T5 scheme of the RBI. The respondent was invited to settle the outstanding as per the RBI guidelines. Finally, terms of repayment were agreed strictly as per RBI guidelines and the respondent informed that even 25% of the settlement amount was deposited in the shape of FDRs. The account for settlement was further amended1at Rs.8,20,000/— and the bank recommended the above settlement vide its letter dated 28.6.2001 (Annexure R- 14). r 1 parties following issues were framed by the DRT; “1. Whether account of the defendant No.1 was marked‘NPA on 31" March 1992? Whether benefit of RBI Scheme can be extended totthe defendants? 2. Whether the dues of the applicant bank can be settled based on the calculations made by the applicant bank itself as per the RBI guidelines? 3. Whether the RBI guidelines are enforceable by the courts/tribunals and whether the banks are 0.0n the basis of rivat contentions of the respeative bound ’ro comply wi’rh and follow The guidelines of RBI? 11. Relying upon fhe undispu’red documen‘rs available on record, prepared by #he bank ifseh‘, and ulso considering the avermenfs in Para—10 of The 'originol applica‘rion, if has been held fha‘r The occoun‘r was categorized as 'NPA' on 31.3.1992 and ‘l’herefor‘e, benefif of circular of RBI daTed 20.7.2000 musT be exfended ’ro The defendanT. IT was furTher' held ThaT RBI vide iTs circular daTed 20.7.2000 decided To exTend same concession To Those borrowers whose accounTs have been caTegorized as NPA prior To 31.3.1997. The scheme was finally exTended Till 30.6.2001 wiTh a direcTion To decide The applicaTions by 30.9.2001. Applying The provisions for seTTlemenT under The scheme iT was held ThaT since The accounT was marked as NPA on 31.3.1992 and was classified as ‘doubTful accounT‘ prior To 31.3.1997, The t. respondenT's accounT ca'n be seTTled under The OTS scheme. Since The bank has calculaTed The balance as on 31.3.1992 aT Rs.8,20,000/-, The applicanT is bound To seTTle iTs dues for The aforesaid amounT inrThe lighT of The guidelines of The RBI and The respondenT was direcTed To make paymenT of Rs.8,20,000/— To The applicanT in full and final. seTTlemenT of The dues of The applicanT bank prayed for recovery in The capTioned recovery applicaTion on The Terms provided in The RBI Scheme. On paymenT of The aforesaid amounT, The bank shall diScharge The hypoThecaTed sTocks. IT has been furTher held ThaT all The naTionalized banks are bound by The guidelines of The RBI and The same are enforceable by The CourTs and The Tribunals asMWell. Thus, all The Three issues have been decided in favour of The respondenT borrower and againsT The bank. Finally, The DRT has also observed Tha‘r despi’re The fac‘r Tha’r casa of The defendam‘ is covered under The RBI 0T5 Scheme, The benefifs of the OTS scheme was no? extended to 1he borrower, which amouMs To harassmenf by fhe bank officials, and fhey have chosen fo file presen‘r application for recovery of their dues and in the process have spent about Rs.90,000/-, which amounts to waste of public amount, in filing application and other legal and incidental charges. 12. Appeal preferred by the petitioner bank against the order passed by the DRT has been further dismissed by the impugned order and the DRAT has held that the contention of the petitioner bank that RBI guidelines dated 20.7.2000 has no statutory effect as the same has not been issued under Sections 21 & 35 of the Banking Regulation Act, has no force and since the petitioner bank have themselves categorically admitted that,the.account became 'dotlbtful account' on 31.3.1992, they cannot be permitted to reverse their own stand in categorizing the account as NPA. The prayer of the petitioner bank to expunge the remark/stricture has also been rejected. 13. Mr. Guru, learned counsel for the~petitioner bank, ‘in addition to the grounds taken by the bank before the tribunals below, has also tried to attack the procedure followed by the DRT in disposing of the original application of the bank while considering the application filed under Section 22 of the Act of 1993 read with Rule 8 of the Rules of 199,3 on the ground that the same is de-hors the scheme of the Act of 1993, though, no such objection was taken by the petitioner bank before the tribunals below. Referring to Paras 22 to 27 of the judgment in the matter of Nahar Industrial Enterprises Ltd.1, it was o o . vehemenily argued Tha’r the sTaTufor‘y framework under The ACT of 1993 clearly provides Thaf the DRT is consTiTuTed 1’0 facili’ra’re recovery. of huge amoun’r of public money belonging To The public sec’ror, banks and r financial ins’rifu‘rions, which are locked—up in the pending litigations. As per procedure prescribed for the tribunals, on application for recovery of dues by the institutions, the respondents are required to file written statement, as envisaged under sub—section (7) of Section 19 of the Act, 1993 with. liberty to set up a cross—objection/ counter claim, and the tribunal is to decide both, the original and the counter claim, by passing a final order under sub-section (9) of the Section 19 of the Act However, in the instant case the respondent, without filing any reply to the original application submitted an appliccition under Section 22 of the Act of 1993 read With Rule 8 of the Rules of 1993 and the DRT, while passing the orders on the said applicatibn, also disposed of the original, application, which is not permissible under the law. 14. Section 22 of the Act of 1993 provides for procedure and power of the tribunal and the appellate tribunal, which reads as under:— “22. Procedure and Powers of the Tribunal and the Appellate Tribunal—(1) The Tribunal and the Appellate Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908), but shall be guided by the principles of natural justice and, subject to the other provisions of this Act and of any rules, the Tribunal and the Appellate Tribunal shall powers to regulate their own procedure including the places at which they shall have their sittings. filing of financial ofi1993. have g e (2) The Tribunal and The AppeHaTe Tribunal skull have, for The pur‘pdses of discharging Their functions under This Ac‘r, fhe same powers as are vesfed in a civil courf under fhe Code of Civil Procedure, 1908 (5 of 1908), while frying a suir, in respecT of fhe following maffers, namely:— a. summoning and enforcing fhe affendance of any person and examining him on oath; b. requiring The discovery and producfion of documents: c. receiving evidence on affidavifs; d. issuing commissions for The examinaTion of wiTnesses or documenTs,‘ e. reviewing iTs decisions; f. dismissing an applicoTion for defaulT or deciding iT eXparfe' A g. seTTing aSIde any order of dismissal of any applicaTIon for defaulT or any order passed by iT ex pam‘e h any ofher maTTer which may be prescribed (3) Any proceeding before The Tribunal or The AppellaTe Tribunal shall be deemed To be a JudICial proceeding WiThin The meaning of SecTions 193 and 228, and for The purposes of SecTion 196, of The Indian Penal Code (45 of 1860) and The Tribunal or The AppellaTe Tribunal shall be deemed To be a civil courT for all The purposes of 'SecTion 195 and CHAPTER XXVI of The Code of Criminal Procedure, 1973 (2 of 1974)." 15.Rule 8 of The Rules of 1993 deals wiTh The conTenTs The applicaTion. 16.From a bare reading of SecTion 22 of The AcT of 1993 iT is clear ThaT The Tribunals below are noT bound by The procedure laid down by The Code of Civil Procedur‘e and They are only guided by The principles of naTural‘ jusTice subjecT To provisions of The ACT and any Rules. They are aT of 11 $ 3 liberty *o regulate fheir own procedure inchjding *he places a‘r which they shall have fhen‘ sl’r’rmgs In ’rhe ins’ranT case the responden‘r obJecmd to fhe orlgmal 17. application filed by the petitioner bank on the grounds taken by him in his application under Section 22 of the Act of 1993. The DRT, on the basis of objection taken by the respondent, framed issues and decided the same on the basis of material available on record and reached to the conclusion that the account of the respondent was declared as NPA account on 31 3 1992 which was categorized as bad debt. Balance as on 31.3.1992 has been calculated by the bank as Rs.8,20,000/v and therefore the bank is bound to settle its dues for the aforesaid amount in the light of the guidelines of the RBI. A y In view of specific provisions of the Act of 1993, we are of 18. the opinion that procedure followed by the DRT while deciding the original application preferred by the petitioner bank cannot be faulted. Next question for our consideration is whether the DRT (Si the DRAT were justified in h'olding that the RBI guidelines for the ’OTS Scheme are enforceable by the courts/tribunals and the banks are bound to complyvwith 19. and follow the guidelines? 20.The above issue came up for consideration before the Hon‘ble Supreme Court in its latest judgment in the matter of sardar Associates and others Vs. Punjab & Sind Bank 8i othersz and the Hon‘ble Supreme Court referring to Para 15 of the Constitution Bench judgment in the matter of l l i l l i l Z (2009) 8 SCC 257 12 Central Bank of India Vs. Ravindras has observed in Para- # . 32 of its judgmenf fhus: “32. If a public sector bank is ofherwise bound by‘ any guidelines issued by Reserve Bank of India, we see no reason as ’ro why ’rhe some cannof be enforced in Terms of ’rhe" provisions of The Acf by The Tribunal and consequenfly by fhe Appellate Tribunal. If is nof a case where ’rhe appellan‘rs had prayed for quashing of a policy decisionli Taken by The respondenT Bank." 21.0bservaTions of The Division Bench of The Hon‘ble Supreme Court in Para-8 of The judgmenf in ’rhe maTTer of OrienTal Bank of Commerce Vs. Sunder Lal Jain and anoTher‘ has held To be per incur/am as The decision was wiThouT noTicing The decision of The ConsTiTuTion Bench in CenTral Bank of India‘l and finally iT has been. obServed in Para-42 Thus:— “42.If in Terms of The guidelines issued by Reserve Bank of India a righT is creaTed in a borrower, we see no reason as To why a wriT of mandamus could noT be issued. We would assume, as has been conTended by Mr Singh, ThaT while t exercising iTs power under ArTicle 226 of The ConsTiTuTion of India, The High CourTs may or may noT issue such a direcTion buT The same, in our opinion, by iTself, would noT mean ThaT The High CourT would be correcT in inTerfering wiT-h ———~] an order passed by The AppellaTe Tribunal which was enTiTIed To consider The effecT of such one- Time seTTIemenT." 3 (2002) 1 SCC 367 4 (2008) 2 5CC 280 22.Following ’rhe judgmen‘r of ’rhe Hon'ble Supreme Cour? in The maf’rer‘ of Sardar‘ Associatesz we are of View. Tha’r Thé‘ DRT as well as DRAT were en‘ri’rled To consider ’rhe effec’r of fhe OTS scheme of The RBI. On The basis of ma‘rerial available on record, The DRT held ThaT The respondenT's accounT was marked as NPA on 31.3.1992 and was classified as ‘doubTful accounT' prior To 31.3.1997, Therefore, accounT can be seTTled under The OTS scheme and The bank was direcTed To seTTle The accounT on paymenT of Rs.8,20,000/—, The balance calculaTed by The bank on 31.3.1992. The finding was confirmed by The DRAT in appeal. Since The above finding of facT is based on The maTerial available on record, no inTerference is called. 23.However, The DRT was noT jusTified in passing The adverse remarks againsT The officials of The peTiTioner bank, who Took decision To file recovery applicaTion againsT The respondenT borrower and ThaT Too wiThouT serving any noTice To such officers and affording Them opporTuniTy of hearing. The peTiTioner bank under The bonafide belief ThaT revised guidelines issued by the RBI are only in The naTure of inTernal guidelines for The banks and financial insTiTuTions and as such, execuTive insTrucTions and such‘ execuTive insTrucTions have no sTaTuTory force and They do noT creaTe any righT in favour of The borrowers, as held in Sunder Lal Jain4 by The Hon’ble Supreme CourT, iniTiaTed' proceedings for recovery. Therefore, adverse observaTions /sTricTure againsT The officers of The bank in The concluding paragraph of The order of The DRT, which was subsequenTly confirmed by The DRAT, was absoluTely uncalled for and The same is liable To be expunged/deleTed. 24.In The resuIT, The peTiTions are disposed of in The following Terms:— t i y 14 Prayer of The pefifioner' bank for quashing of The order of Annexure P—1 dafed 19.12.2005 passed 5y fhe DRAT confirming The order da’red 28.9.2001 (Annexure P—2) passed by The DRT is rejec’red. S’rricfure passed by fhe DRT in ifs order dafed 28.9.2001 (Annexure P-2) againsf The officers 6f The bank, which has been subsequen‘fly confirmed by The DRAT vide order dafed 19.12.2005 (Annexure P-1), is hereby expunged. "" 25.No order as fo costs. A. \ 1 Sdl- 1 Sdl— Dhirendra Mishra ‘ R.N.Chandrakar Judge ‘ Judge Roshan/—