2002 (2) TMI 1247 - HC - Companies Law

Summary

Issues:
- Application of RBI Circular for one-time settlement under recovery guidelines to a pending court case.
- Interpretation of RBI guidelines for recovery of non-performing assets by public sector banks.

Analysis:
- The petitioner, engaged in manufacturing non-ferrous castings, borrowed from the respondent-bank and defaulted on repayments, leading to a decree against them. The petitioner sought to set aside the ex parte decree and proposed a one-time settlement under an RBI Circular. The Circular provided guidelines for recovery of dues related to non-performing assets of public sector banks, including provisions for settlements. The petitioner's proposal under the Circular was to settle the amount due in installments, but the bank did not respond.
- The respondent argued that the one-time settlement scheme under the RBI Circular does not apply to cases where decrees have been obtained by public sector banks. The guidelines specify that cases pending before courts are covered, but cases with decrees are not. The respondent's counsel highlighted that the scheme does not extend to cases where decrees have been obtained, emphasizing that the guidelines are not applicable once a decree is in place.
- The court analyzed the RBI guidelines and noted that the scheme for one-time settlement does not apply to cases where decrees have been obtained by banks. While the petitioner had filed an application to set aside the decree, the court held that the suit cannot be considered pending until the decree is set aside. Therefore, the court concluded that the RBI guidelines for one-time settlement do not apply to the petitioner's case, leading to the dismissal of the writ petition seeking direction for consideration of the settlement proposal under the Circular.