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TMI Blog2009 (7) TMI 1274X X X X Extracts X X X X X X X X Extracts X X X X ..... India. The Appellate Tribunal affirmed the judgment as also the validity of the recovery certificate dated 23.11.2006. It furthermore permitted the appellants and the Proforma Respondent Nos. 2 to 11 to sell the secured properties for clearing the dues in terms of one time settlement scheme and ordered that such an exercise must be completed within a period of four months during which period the bank was restrained from taking any coercive steps against them. Respondent Bank filed writ application thereagainst which by reason of the impugned judgment has been allowed. Appellants filed a review application before the High Court which has been dismissed. HELD THAT:- The Reserve Bank of India is a statutory authority. It exercises supervisory power in the matter of functionings of the Scheduled Banks. The matter relating to supervision of Scheduled Banks is also governed by the Reserve Bank of India Act. For the aforementioned purpose, the Reserve Bank is entitled to issue guidelines from time to time. The Parliament also enacted the 1949 Act to consolidate and amend the law relating to banking. We may, however, place on record that the Parliament, in its wisdom, inse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same by itself did not preclude the appellants to approach the Appellate Tribunal. The jurisdiction of the appellate tribunal is co-extensive with the powers of the Tribunal. The memo of appeal filed by the appellants before the Tribunal clearly shows that the contentions with regard to the enforcement of the aforementioned provisions had been made therein. It is, therefore, not correct to contend that no pleadings were made for the purpose of enforcing the RBI guidelines in respect of one time settlement. Keeping in view the provisions of the 2002 Act, did not preclude the Appellate Tribunal to consider the offer of the appellants. The Appellate Tribunal in terms of the provisions of the Act like the original Tribunal is interested only in recovery of the amount. While doing so, it, in our considered opinion, has the requisite jurisdiction to consider the prayer made by a debtor for one time settlement particularly in view of the fact that the same is within the purview of One Time Settlement Scheme of the RBI. If a public sector bank is otherwise bound by any guidelines issued by the RBI, we see no reason as to why the same cannot be enforced in terms of the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the 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 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 with an order passed by the Appellate Tribunal which was entitled to consider the effect of such one time settlement. In BSNL anr. v. BPL Mobile Cellur Ltd. ors.[ 2008 (5) TMI 648 - SUPREME COURT] , it was held that the direction contained in the said circular letters are relevant for the officers who are authorised not only to grant licenses but also enter into contracts and prepare bills. The circular letters having no statutory force undoubtedly would not govern the contract . A distinction, thus, must be made between statutory and non-statutory guidelines. A distinction must also be made between the circular which are relevant but not binding on the third parties and which are imperative in character. As regards the Reserve Bank of India guidel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stood as guarantors. Appellant Nos. 1 and 2 as also Proforma respondent Nos. 5 and 7 also mortgaged their properties in favour of the respondent Bank by way of security to the said amount. Defaults having been made in discharging their liabilities, their assets were declared as NPA as per the guidelines issued by the Reserve Bank of India. 4. A proceeding was initiated by the respondent Bank purporting to be under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short the 2002 Act ) for recovery of the said amount together with interest upon due service of a notice in terms of Sub-section (4) of Section 13 thereof. The total amount of claim laid before the Tribunal by the bank as against the debtors was ₹ 4,16,85,443.62 inclusive of interest upto 31.07.2003. The said application was allowed by the Tribunal whereagainst an appeal was preferred before the Appellate Tribunal. 5. Indisputably, pursuant to the judgment and order of the Tribunal, a recovery certificate was issued for recovery of a sum of ₹ 4,16,58,581.62 along with pendent lite and future interest at the rate of 12% p.a. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lement scheme and ordered that such an exercise must be completed within a period of four months during which period the bank was restrained from taking any coercive steps against them. 11. Respondent Bank filed writ application thereagainst which by reason of the impugned judgment has been allowed. Appellants filed a review application before the High Court which has been dismissed. 12. Dr. Abhishek Manu Singhvi, learned senior counsel appearing on behalf of the appellants would contend that the scheme in relation to one time settlement having been issued by the Reserve Bank of India in exercise of its statutory power conferred upon it under Section 21 of the Banking Regulation Act, 1949 (for short the 1949 Act ), the impugned judgment cannot be sustained. The learned counsel in this behalf has furthermore drawn our attention to various correspondences exchanged by and between the parties to urge that the respondent Bank entertained the said application asking for proposal from the appellants and, thus, they are estopped and precluded from contending that the Board of Directors of the respondent Bank themselves had made a scheme which was required to be followed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Reserve Bank to control advances by banking companies (1) Where the Reserve Bank is satisfied that it is necessary or expedient in the public interest or in the interests of depositors or banking policy so to do, it may determine the policy in relation to advances to be followed by banking companies generally or by any banking company in particular, and when the policy has been so determined, all banking companies or the banking company concerned, as the case may be, shall be bound to follow the policy as so determined. (2) Without prejudice to the generality of the power vested in the Reserve Bank under subsection (1) the Reserve Bank may give directions to banking companies, either generally or to any banking company or group of banking companies in particular, as to- (a) the purposes for which advances may or may not be made, (b) the margins to be maintained in respect of secured advances, (c) the maximum amount of advances or other financial accommodation which, having regard to the paid-up capital, reserves and deposits of a banking company and other relevant considerations, may be made by that banking company to any one company, firm, associat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erve Bank; (iii) require the Board of directors of the banking company or any committee or any other body constituted by it to give in writing to any officer specified by the Reserve Bank in this behalf at his usual address all notices of, and other communications relating to, any meeting of the Board, committee or other body constituted by it; (iv) appoint one or more of its officers to observe the manner in which the affairs of the banking company or of its offices or branches are being conducted and make a report thereon; (v) require the banking company to make, within such time as may be specified in the order, such changes in the management as the Reserve Bank may consider necessary. 17. We may, however, place on record that the Parliament, in its wisdom, inserted Section 36A of the Act by the Banking Companies (Amendment) Act, 1959 in terms whereof some of the provisions of the 1949 Act were not to be applied to certain banking companies. 18. Indisputably, the guidelines were issued by the Reserve Bank of India by reason of a letter dated 3.09.2005 addressed to the Chairman/ Managing Director of all public sector banks. It clearly refers to a circular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear together with interest at the existing Prime Lending Rate from the date of settlement up to the date of final payment. XXX XXX XXX (V) Non-discretionary treatment: Banks shall follow the above guidelines for one time settlement of all NPAs covered under the scheme, without discrimination and a monthly report on the progress and details of settlement should be submitted by the concerned authority to the next high authority and their Central Office. Banks may go for wide publicity and also give notice January 31, 2006 to the eligible defaulting borrowers to avail of the opportunity for one time settlement of their outstanding dues in terms of these guidelines. Adequate publicity to these guidelines through various means must be ensured. XXX XXX XXX 4. Any deviation from the above settlement guidelines for any borrower shall be made only by the Board of Directors. The said circular letter was issued by the Chief General Manager of the Reserve Bank of India. The High Court in its impugned judgment inter alia was of the opinion that he had no authority therefor. 20. Before, however, adverting to the question as to whether the Board of Directors of the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sted to come forward as per policy for settlement of the account at your earliest. The respondent Bank yet again in its letter dated 01.03.2006, stated: This is in continuation of our letter dated 17.02.2006 on the above subject. Please note the OTS scheme of RBI is valid upto 31.03.2006 as such please send your request well within the last date so that the proposal may be put up to the competent authority. 23. It is on the aforementioned premise, the merit and purport of the correspondences exchanged between the parties must be considered. The said correspondences clearly show that the respondent Bank had resorted to the guidelines issued by the Reserve Bank of India alone and pursuant to or in furtherance of the offer made by the bank, a proposal came to be made by the appellants in terms of its letter dated 2.03.2006; the relevant portion whereof reads as under: 2. As per RBI guidelines, the minimum amount that shall be recovered in respect of one time settlement of NPAs classified as doubtful of loss as on march 31, 2004 will be 100% of the outstanding balance in the account as on the date on which the account was categorized as doubtful NPA. As the ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued by the Reserve Bank of India. 25. It is not necessary to place on record the further correspondences exchanged between the parties although our attention has been drawn thereto in terms whereof the appellants had all along been making sincere efforts to one time settlement within the parameters of the guidelines issued by the Reserve Bank of India. 26. It may be true that the appellants filed a writ petition before the Punjab and Haryana High Court which was dismissed on the ground of suppression. In Arunima Baruah v. Union of India and Ors. [(2007) 6 SCC 120] the question involved was how far and to what extent suppression of fact by way of non- disclosure would affect a person's right of access to justice which is a human right. It was held: 21. Ubi jus ibi remedium is a well-known concept. The court while refusing to grant a relief to a person who comes with a genuine grievance in an arguable case should be given a hearing. (See Bhagubhai Dhanabhai Khalasi.) In this case, however, the appellant had suppressed a material fact. It is evident that the writ petition was filed only when no order of interim injunction was passed. It was obligatory on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings were made for the purpose of enforcing the RBI guidelines in respect of one time settlement. 29. It may be that no specific prayer was made but the same, in our opinion, keeping in view the provisions of the 2002 Act, did not preclude the Appellate Tribunal to consider the offer of the appellants. The Appellate Tribunal in terms of the provisions of the Act like the original Tribunal is interested only in recovery of the amount. While doing so, it, in our considered opinion, has the requisite jurisdiction to consider the prayer made by a debtor for one time settlement particularly in view of the fact that the same is within the purview of One Time Settlement Scheme of the Reserve Bank of India. If a public sector bank is otherwise bound by any guidelines issued by the Reserve Bank of India, we see no reason as to why the same cannot be enforced in terms of the provisions of the Act by the Tribunal and consequently by the Appellate Tribunal. It is not a case where the appellants had prayed for quashing of a policy decision taken by the respondent Bank. The question which arose for consideration before the Appellate Tribunal as also before the High Court was as to whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the respondent Bank itself had made an offer to accept the proposal of the appellants in regard to enforcement of one time settlement pursuant to the RBI guidelines. Indisputably, it was all along aware that the amount of securities was lying with it. It is only pursuant thereto the directions had been issued by the Tribunal 36. The question as to whether the guidelines issued by the Reserve Bank of India are binding or not now stands concluded by reason of a Constitution Bench Judgment of this Court in Central Bank of India v. Ravindra and Others [(2002) 1 SCC 367] in the following terms: 55 (5) The power conferred by Sections 21 and 35-A of the Banking Regulation Act, 1949 is coupled with duty to act. The Reserve Bank of India is the prime banking institution of the country entrusted with a supervisory role over banking and conferred with the authority of issuing binding directions, having statutory force, in the interest of the public in general and preventing banking affairs from deterioration and prejudice as also to secure the proper management of any banking company generally. The Reserve Bank of India is one of the watchdogs of finance and economy of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank of India on 29-1-2003 for compromise settlement of chronic non-performing assets (NPAs) of public sector banks were not at all applicable to the facts and circumstances of the case and no direction could be issued to declare the respondents account as NPA from 31-3-2000. 39. Judicial discipline mandates the bench comprising of two Judges to follow the judgments of the Constitution Bench having regard to Article 141 of the Constitution of India. 40. If in terms of the guidelines issued by the 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 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 with an order passed by the Appellate Tribunal which was entitled to consider the effect of such one time settlement. 41. The question pertaining to the present matter is regarding whether or not a circular issued by a statutory body for the governance and regulati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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