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2008 (1) TMI 867 - SC - Indian LawsWhether the High Court erred in issuing a writ of mandamus directing the appellant bank to declare the respondents account as NPA from 31st March, 2000 and to apply the RBI Guidelines to their case and communicate the outstandings which shall be recoverable by quarterly instalments over a period of two years? Whetehr the order passed by the High Court wherein a direction has been issued to stay the recovery proceedings and the recovery certificate issued against the respondents has been cancelled is also wholly illegal as the decree passed by the DRT had attained finality and proceedings for execution of decree could not be stayed in an independent writ petition when the respondents had not chosen to assail the decree by filing an appeal, which is a statutory remedy provided under Section 20 of Recovery of Debts Due to Banks and Financial Institutions Act, 1993?
Issues Involved:
1. Maintainability of the writ petition filed by the respondents. 2. Applicability of the Reserve Bank of India (RBI) guidelines for Non-Performing Assets (NPA). 3. Issuance of a writ of mandamus by the High Court. 4. Legality of the High Court's order to stay execution proceedings and cancel the recovery certificate. Issue-wise Detailed Analysis: 1. Maintainability of the Writ Petition: The respondents filed a writ petition before the Delhi High Court seeking a direction to the appellant bank to declare their account as NPA from 31st March, 2000 and to apply RBI guidelines for reconciliation and settling the accounts. The High Court directed the appellant to declare the account as NPA from 31st March, 2000. The Supreme Court noted that the respondents did not file any appeal challenging the decree passed by the Debt Recovery Tribunal (DRT), which had attained finality. Therefore, the writ petition filed by the respondents was not maintainable, and the order passed by the High Court was erroneous in law. 2. Applicability of the RBI Guidelines: The revised guidelines issued by the RBI on January 29, 2003, for the compromise settlement of chronic NPAs were discussed. These guidelines apply to NPAs classified as sub-standard as on 31st March, 2000, which subsequently became doubtful or loss. The account of the respondents was a performing account between 1.4.2000 and 31.3.2001 and was declared as NPA on 31.3.2001. Therefore, the revised guidelines were not applicable to the respondents' case, and no direction could be issued to declare the account as NPA from 31st March, 2000. 3. Issuance of a Writ of Mandamus: The principles for issuing a writ of mandamus were outlined. A writ of mandamus can be issued only when there is a statutory duty imposed upon the officer concerned, and there is a failure to discharge this duty. The revised RBI guidelines are internal guidelines for banks and do not have statutory force. They do not create any right in favor of borrowers. The respondents failed to show any statute or rule imposing a duty on the appellant bank to declare their account as NPA from 31st March, 2000. Therefore, the High Court erred in issuing a writ of mandamus. 4. Legality of the High Court's Order: The High Court's order to stay the recovery proceedings and cancel the recovery certificate issued against the respondents was illegal. The decree passed by the DRT had attained finality, and the execution proceedings could not be stayed in an independent writ petition. The respondents had not availed the statutory remedy of filing an appeal under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. Conclusion: The Supreme Court allowed the appeal, set aside the impugned judgment and order dated 17.8.2005 passed by the High Court, and held that the appellant bank would be entitled to its costs.
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