HIGH COURT OP JUDICATURE. CHHATTISGARH AT BILASPUR WRIT PBTITION N0.2057 OF 2003 PETITIONERS: ^^ RESPONDENTS: M/s. Shri Jagdish Rice 65 Oil Mms, A Proprietorship firm fhroiigh its Proprietor Shri Gir-raj Mahaver, Jeyopore Road, Jagdalpur, Distt. Bastar (C.G.) Gir-raj Mahaver, S/o Late KheBichand Mahaver, Aged about 31 years, Occupation: Busiaess, R/o Kumarpara, Jeyopore Road, Jagdalpur, Distt. Bastar (C.G.) Versus Central Baak of India Through its Regional Maiiager, Choubey Colony, Raipur, Distt. Raipur (C.G.) Central Bank oflndia Through itsBraach Maaager, Jagdalpiir Branch, Jagdalpur, Distt. Bastai-(C.G.) POST FOR ORbER ON /S&SEPTEMBER, 2003 Sd/- L.C. Bhadoo Judge /2^ September. 2003 •^ HIGH COURT OF JUDICATURB AT BILASPUR fC.G.I WRIT PBTITION N0.2057 OF 20Q3 PETITIONERS: RESPQNDENTS: M/s. Shri Jagdish Rice & Oil Mffls, A Proprietorship fimi through its Proprietor Shri Gir-raj Mahaver, Jeyopore Road, Jagdalpur, Distt. Bastar(C.G.) Gir-raj Mahaver, S/o Late Kherachaad Mahaver, Aged about 31 years, Occupation: Busiaess, R/o Kumarpara, Jeyopore Road, Jagdalpm-, Distt. Bastar (C.G.) Versus Central Bank of India Through its Regional Maaager, Choubey Colony, Raipur, Distt. Raipur (C.G.) Central Baak of India Through its Braach Maaager, Jagdalpur Braach, Jagdalpzir, Distt. Bastar (C.G.) Present: ~ Shri Kishorc Shrivastava with Shri Sanjay Kumar Agrawal, Advocates: Shri Prashant Mishra, Advocate: Shri Kishore Bhaduri, Advocate: For the petitioners For fhe respondents For the Intervener Before: Hon^ble Shri L.C. Bhadoo. J ORDBR (Passed on/<^< September, 2003) 1. The petitioners have prcfeiTed fhis petition under Article 226 of tiie C^nstitution of India, by which they have chaUenged flie order dated 20th May, 2003, by which respondent No.2, the Maaager, Central Baak of India, Braiich: Jagdalpur, rejected the appUcation of the petitioners for settlenient of term loaa account and cash credit accoiuit under revised guidelmes dated 29.01.2003 for compromise settlenient of chronic Non-Peribrmio.g Assets issued by the Reserve Baak of India, ^- v'^. ^. 2. Facts leadiag to fUuig ofthis writ petition are that Uie petitiouer-'fimi M/s. Shii Jagdish Rice & Oil MUls is a proprietorship firm aiid petitiouer No,2 is fhe sole Proprietor of flie fimi after fhe deafh. of Kheinchaad Maliaver, fhe fhen Proprietor. On fh.e application of the petitiouers, respondent No,2 graated a credit faciMty of Rs.25,00,000/- aad saactioned the term loan of Rs. 10,00,000/- for purchase of laad aad machiaeiy aad iti lieu of that fhe petitioners executed necessary documents in favour of the rcspondents-Baak, In fhe year 1999, the petitioner-firm suffered certam procecduigs by the State authoritles which resulted into tbie seizure of tiie mill aiid ultiiaately lead to stoppage of ftie production ui fhe rice niiU and fliereby, the petitioners failed to make repayment of fhe loaa as per the schedule, In spite of the assuraace given by fhe Proprietor of fhe firm, the rcspondents-Baiik moved an application under Section 19 of fh.e Debts Recoveiy Tribunal Act, before fhe Debts Recovery Tribuual, Jabalpiir, which was registercd as O.A,No,237/2000 aad ultiraately the Tribunal passed final order ofrecoveiy on 08.01.2001 ordering fhe recoveiy of Rs.44,01,196/-, Thereafter, the respondents-Baiik raoved aa execution application before tih.e Debts Recoveiy Tribunal which has been registered as 0,A.No,7/2001, Agaisist fhat order, a Miscellaneous Appeal was filed before the Debts Recovery Tribuual, but flie sanie was rcjected vide order dated 05,09.2001 agamst which fhe petitioner filed a writ petition before this Court which was rcgistered as W.P.No.2108/2001 (M/s. Jagdish Rice & Oil Mills vs. Central Baak of ludia & others), but that writ petition was also dismissed on the ground that it is not maiatainable. 3. In fhe nieaiiwhUe, dumig the year 2003, the Reserve Baak of India (RBI) issued guideUnes on 29,01,2003 aad circulated tiie saine to the Chairmaii-cum-Managmg Directors of all the public sector baaks mcluding tlie respondents-Baak, The rcvised guidetbies for compromise setdement of chronic Non-Performing Assets (NPAs) of pubUc sector baiiks provides for coverage m which 4 categories have been mentioned. The revised guidelmes will over all NPJ\s in all sectors iiTespective of fhe nature of business, which have becorae doubtfiil or loss as on 31st March, 2000, with outetaD.dmg balaace of Rs. 10.00 crores or less aad the scheme was appUcable up to 30t!l April, 2003, and fhe saoie has been extended up to 30th Septeniber, <fy> r- 2003. The guideUnes are Annexure P-3, As per the settleiaent formula clause (a), the aniouutwhich is required to be paid by fhe defaulter has to be NPA balaace if the account has been classi&ed as doubtful or loss as on 31st March, 2000. In fhe iastaiit case, vide letter dated 1st March, 2003, the certi&cate holder Bank has already informed fhat fhe account of certi&cate debtor has been categorized as doubtiful/loss on 31st March, 2000, In the event ifclause (b) has to be appUed tiien what is necessaiy to see is fhat the account should be categorized as NPA prior to 31st March, 2000, but if tiie saoie has became doubtful or loss after 31st March, 2000, fben the defaulter is also required to Diake paynient of existiiig piiuie landuig rate from 1st April, 2000. As per the scheme, the repayiiient has been expected ia one lunip SUBI aad if ftie defaulter is not ia. a position to make fhe lump siini payment theu he should deposit 25% of the amount of seftfclemeut and fhe balaace amount of 75% m iastalhnents wiftiin a period of one year, But it is nientioned that it wUl not be appUcable m case ofwiUful default, fraud or malfeasance. 4. After flie introduction ofthe above scheiae, respondent No,2-Bank sent a letter dated 28.02.2003 to the petitioner under the RBI guideUnes without indicating ftie amount to be deposited by fhe petitioner, A copy offhe said letter is Annexure P-4, The petitiouer vide letter dated 13th March, 2003, submitted 25% of the total outstaadmg balaace as shown on 30th September, 1998, for Rs.33,24,670/- and submitted a TDR for Rs.8,32,000/-. A copy of the saaie is Annexure P-6, But, surprisiagly, the Baak did not took aay fuurther step pursuaiit to the conipronuse aoiount aad that lead to fhe auctionmg of fhe petitioner's property by fhe Recoveiy Officer appouited by the Debte Recovery Tribunal, On fhe coniplaiat niade by the petitioner to the Reserve Bank of India on 14.03,2003, the RBI ioforaied tlie petitioner to take benefit of Uie revised scheme, Vide letter dated 13th March, 2003, the respondents-Baak mformed tiiat the aBiount oflTered by the petitioner for conipromise settlexiient is not m tuue wifh. fhe RBI rcvised guidelines and requested to iniprove fhe compromise oflTer, A copy offlie said letter is Aunexure P-8, It is fdrther stated that fhe offer made by the petitioner is not m accorda^ice wifh the revised guidelmes. The petitioner verified its amount aad on veriiication it is found fhat titie actual NPA amount under the account conies to Rs.35,19,462/-, 25% ofwhich works IIIJ out to Rs.8,79,910/-. Accoidingly, by letter dated 05.04.2003, the petitiouer again deposited a TDR for Rs,47,911/- in order make exactiy 25% of fhe NPA aaiount aad rcquested for appropriation of fhe same towards settlemeut under the One Time Settlement Scheme (OTS Scheme) ofrevised guidetmes issued by the RBI. But respondent No.2-Baiik, ia a most casual and illegal maiiner, by the impugned order dated 25.05.2003 rejected tiie setdement appUcation offhe petitioner, 5. The action of the respondents is contrary to the guideUnes dated 29.01,2003 issued by fhe Reserve Bank of India, Categorizing the petitioner-firm's account as NPA account as on 31st March, 1999, is a fact which is not disputed, The guidelio.es issued by flie RBI are statutoiy aad contravention fhereof or any default in compUaace therewith is punishable under sub-section (4) of Section 46 of the Baakmg Regulations Act, 1949, Therefore, fhe record ofrespondent No,2 be summoned aad the impugned order dated 20,05,2003 be quashed aad set aside and rcspondent No.2 be du'ected to cousider tiie case of the petitioner-firmi ia accordance wifti the revised guideUnes, 6. Retuni has been filed on behalf of the respondeuts ia which it has been laentioned that tiie recoveiy proceeduigs iriitiated by tiie Bank agaiast the petitioners before fhe Debts Recoveiy Tribunal having been coniplete on passiag of tiie certificate of recovexy and the sanie having been put to execution, nothing survives ia fh.is writ petition aa.d it has become mfructuous, fh.erefore it may be dismissed. The credit facility aad tenn loan was saiictioned on 29.11.1997 aad the petitiouer niortgaged the properties on the sasiie day. The legal notice by fhe Baiik for depositmg fhe outstaaduig balaiice was issued on 25.08.1999 aad as on 31st May, 2000, the total amount outstanding agaiast the petitioner-firm was Rs,44,01,196/- with further interest @ 16.83% per annum. On 01.06.2000, aa appUcation under Section 19 of fh-e Debts Recoveiy Tribunal Act was filed aad the Debts Recovery Tribunal, Jabalpur,proceeded ex~ parte aiid recovery certtficate was issued on 08,01,2001 agaiast which fhe petitioners prcferred a misceUaiieous appeal which was rejected on 05,09,2001. Therefore, aii execution was prefen-ed by the rcspoudents aad on 17,07.2001 property auction notice was ordered by the Debts Recoveiy Tribuual to be published aad on 25,07,2001 the auction notice was published. The writ petition chatlenguig the recoveiy certificate issued by the Debts Recovery Tribunal was dismissed by fhis Court on 30.01.2002, On 29.01.2003, flie Reser^e Ban^k of India issued fresh guidetfcaes; property of the petitioner was auctioned on 27.03.2003, aad the auction purchaser has deposited tiie aaiount, In view ofth.e above sequence of events, the petitioner is a witLful defaulter; fherefore, tlie mstaat writ petition is not mamtainable, 7, It has further been mentioned tliat the case oftih.e petitiouer is not covered under fhe guideUnes as fhe recoveiy certificate was already issued aad no case is pendiag beforc fh.e Debte Recovery Tribunal, The Reserve Baak of India has also mterpreted the guideliaes m smiilar Biaauer which has been iaformed to the aaswering respondents by the RBI vide letter dated 16.07.2003. Even otheiwise, the petitioner was not wiUing to uaprove his offer at the time of negotiation which was held by the Bank tentatively to assess fhe petitioiier>s bona&de ao.d desu'e to settle the account which would have been subject to the higher authorities of the Baak iacludiag the Zonal aad Head OflGice and on fhe basis of con'ect uiterpretation aiid applicabiMty of the revised guidelines dated 29,01,2003 of tiie RBI, Therefore, fhe principle of promissoiy estoppel is not attiucted ia such cases, Therefore, fhe petition be dismissed, 8. Aii mtervention appUcation has been filed by Mr. Kishore Bhaduri, Advocate, 011 behatf of Sushil Chaiidra Pagada aiid it has been Bientioued that fhe propert^7 in question has already been auctioned aad fhat has been concluded on 27.03,2003. It is Jfcirther submitted that tiie mtervener (Sushil Chaudra Pagaria) has already deposited Rs,48,33,000/- bemg the highest bidder aad fhe sale was concluded ni favour of fhe uitervener aad he was declared as the piu'chaser. Therefore flie petition be disnussed, 9. I heard fhe leanied couiisel for fhe parties. lO.The 2iiain argunient ofthe leamed counsel for fhe petitioners is tiiat respondent No.2 rejected the offer of fhe petitioner ui a most arbitrary aad unlawful Bianner. Respondent No.2-Baiik himsetf ([^F: requested the petitioners to take fhe benefit of the RBI guidelmes and sent a letter, Annexure P-4, When the petitioner moved for fhe settiement ofthe account under NPA scheme issued by the RBI, tiie rcspondent No,2-Baiik had not rcplied, The leamed counsel fttrther argued Uiat when the case was not settled by respondent No/2-Baiik and the RBI vide Annexure P-7 informed the petitioners to take advaatage of fhe revised guideUnes issued on 29th Januaiy, 2003, vide Anuexure P-8, rcspondent No.2"Bank iaformed fhe petitioners that the offer ofthe petitioners is not m tune wifh the RBI guideUnes aiid asked the petitioners to iaiprove fhe compromise offer, Thereafter, fhe petitioners sent a letter Anuexure P-9 aad also sent additional ainount to Diake-up 25% of the ofifer. But, ultimately, m a most arbitrary niaiiner vide letter Annexure P-10, rcspondent No/2-Baiik mformed the petitioners fhat since the petitioner had not agreed for setdenieut of bofh tlie accounts as per fhe nomis of rcvised RBI guidelines aad the petitioner did not offer flie cooiproimse amouut accordtag to the guideliaes of RBI, therefore, his appUcatiou for compromise settlement is not eMgible to be considered under fhe OTS scheme. The learned counsel further submitted that the said letter rejecting flie ofifer discloses no reasons aiid the respondents ought to have sent a reasoned letter. He further submitted fh.at fhe case of respondeat No.2 is that Uie petitioner is a wiUful defaulter; thereforc, he is not entitied for the beuefit which is iacorrcct aad fhe petitioner was never a wiUful defaulter, 11.0n Uie ofher haad, the leamed counsel for the respondents specificaUy argued fhat fhe case of the petitioner is not covercd under the guideUnes issued by the Reser^e Baoic of India because before mtroduction of the scheme, tiie matter was already over aad uo case was pending before the Debts Recovery Tribunal as fhe Debts Recovery Tribiinal already issued the recovery certi&cate as back as m fhe year 2001, Morcover, the property has been auctioned, the sale has been conJBnaed aad fhe auction purchaser SushU Chaiidra Pagaria has ah-eady deposited fhe auction aDiount. 12.In order to appreciate the arguinents oftheleanied counsel for flie pardes, it wUl be beneficial to reproduce relevaD-t paras of the Reserve Baak of India scheme dated 29th Jaiiuaiy, 2003. Clauses^ (c) & (d) of Part (A) of fhe said scheme which envisages the cases which are covered under the guideUnes is fh.us, c) "These guidetines witl cover cases on which the baxiks have initiated action iinder the Securitisation aiid Reconstruction of Fmaacial Assets aiid Eiiforcement of Security Interest Act, 2002 and also cases pendiag before Courts / DRTs / BIFR, subject to consent decrce beiag obtaiaed from the Courts / DRTs / BIFR." d) "Cases of willful default, fraud aad nialfeasaace will uot be covered." Therefore, a perasal of clause (c) envisages aiid iacludes fhat ouly flie cases pendiag before the Courts/DRTs/BIFR are covered under the scheme aad other matters which are akeady decided and decrced are not covered under fhe scheme, As per this clause, fhe matters which were already decided aad tlie Biatters on which the decree had already been passed werc not covered under tiiis clause. The petitioner's case is already decided by fhe Debts Recoveiy Tribunal aad a recovery certificate was already issued by the DRT on 08,01.2001, Therefore, fhe case of the petitioner-firm is uot covered under the guideUnes issued by fhe RBI on 29.01.2003. IS.For this view, I am supp^rted by the order ofAndhra Pradesh High Court in the case of Krupa Alloys aad Metals vs. Chief Maaager, State Bank of ladia, Secuuderabad and another reported m 2003 (2) Baak CLR 127 (AP), ia which it has been held that this scheme appUes only to fhose cases where the cases are pendiag before the Court. In aiiotlier case i.e. W.P.No.973 of 2003 Chemosyn Limited & aaoth^ vs. Uaion Bank of India fls aaothCT decided on 3rtl July, 2003, a Division Bench of the Bombay High Court has held fhat under fhe RBI circular dated 29th Jaauary, 2003, only the cases which are penduig before the Court are covered aiid fhe niatter ui which fhe cases are already decided by the Court are not covered, because the RBI has made categorical aad unambiguous statenient ui fhe affidavit fhat fhe said cu'cular is not appUcable nor does it cover the cases which have alrcady been decided, Accordmg to Reserve bank of India, fhe objective of circular dated 29th January, 2003 was to provide a fast track chaanel for recoveiy of NPAs. In tlie case where decree has already been passed, fhe banks can straightaway execute the same mid recover the dues and tiierefore, j lu^ §ttl the said circulated dated 29th January, 2003 does not cover the cases where decrees have ah'eady been passed. 14.So, ia view ofthe above two decisions, I aia ofthe opuiion that only pendmg cases are covercd under the guidelines dated 29th Jaauary, 2003, issued by the Reserve Brnik of India aad the cases ia. which the decrce has already been passed by fhe Court are not covered aiid tlie same staiid was taken by the RBI m the case ofChemosya Limited Ss another (supra). In ftie present case, thix>ugh flie letter dated 16,07.2003 (Annexiire R-l), the RBI has informed the respondeut No. 1-Baak that fhe case of the present petitiouer is not covered under the RBI scheiiie. 15.Now, coming to tiie pomt raised by the leamed counsel for fhe petitioners fhat respondent No.2-Baak iteelfasked the petitioner to take the benefit of RBI guideliaes vide Annexurc P-4 aad in pursuaace of that only, fhe petitioner moved appUcation to avail fhe benefit of fhe scheme, therefore, now the Baak cannot take fhe staad fhat the case of the petitioner is not covered under the guidelines dated 29,01.2003. But, ifwe look iato Annexure P-4, m the heading itsetf, it has been mentioned that "Wiihoui Pf'ejudice to the nghts of the BanK! and ia the last, a note has been appended that the deasion of the Bank will be final cmd biiuiing, It has beeii nientioned m the retura fliat whatever the mtimation seut to the petitioner aad tihie proposal niade by the petitioner was not withui the power of respoudeut No,2"Baak itself to decide, If according to respondent No.2-Baak fhe offer iDiade by titie petitioner was in tune witli fhe scheme, eveu ttien that was requircd to be approved and subject to the decision of higher authorities of the Bank mcludmg the Zonal aiid Head Ofiice aad on the basis of the coi-rcct mterpretation aiid applicability of guideliaes issued by the RBI, In view of letter Annexurc P-4 mtimatiag the petitioners to take advaatage of fhe scheme does not stop the Baiik from raisiag fhe pomt that fhe case of the petitioner is not covered uiider fhe RBI guidelines because against fhe statutoiy rules flie principles of promissory estoppel does uot apply and tiie guidelmes issued by flie RBI is statutoiy io. its fonn because fhe RBI issued the guidelines uuder sub-sectiou (4) of Section 46 of fhe Baakmg Regulations Act, ^ 1949. itfe 16.As far as the question ofwillful default is concemed, it is true that fhe case of the petitioner does not faU uuder the wiUful default for fhe reasou that ia para-9 of the retuni fhe dates of various events have been raentioned which itself reveals fhat fhe petitioner was not ta a position to make fh.e paynient and wiUful default comes into play only when the party is ia position to pay fhe aaiount, but tlie party has defaulted deUberately in spite of that fact that fhe party was ia a position to make fhe payment, As has been iaterpreted by the Hon'ble Apex Court m fhe case of P.M. Puaaoose ws. K.M. Muaneruddin fi& others reported in JT 2003 (7) SC 105, "£wiUful default aieaiis a deUberate and uitentional default knowmg fuH well the legal consequences tliereof The iise of the words 'wiUfiU detazilt' ui ihe provision is suggestive of the legislative mtent that default, ia order to be wiUful, inust be iatentional, deUbei^te, calculated and conscious with fuU kuowledge oflegal consequence flowiag therefroin,^ So, fhe present case is not a case ofwiUful default, Siace the case of the petitioner is not covered by the guidelines issued by the Reserve Baak of India, fliere is no need to enter iato further arguments ofthe learned counsel for the petitioners. 17.In the resiilt, flie writ petition of the petitioners has no merit aad fhe same is liable to be dismissed, Accordmgly, the writ petition is dismissed, — Sd/- L.C. Bhadoo Judge Soma <^