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TMI Blog2016 (4) TMI 1351X X X X Extracts X X X X X X X X Extracts X X X X ..... ter the SBI). Owing to defaults committed by the SBI, Piyarelall suffered loss and damages whereby its business was permanently impaired. A civil suit was instituted by Piyarelall claiming diverse relief. As a retaliatory measure, the SBI issued a notice dated November 27, 2014 threatening to include the name of Piyarelall in the list of wilful defaulters as provided for by the Reserve Bank of India (hereafter the RBI) in a document captioned "Master Circular for Wilful Defaulters" (hereafter the master circular). The said notice purported to convey to Piyarelall that if it had any grievance against the decision of the SBI i.e. the proposal to include the names of Piyarelall, its directors and corporate guarantors in the list of wilful defaulters, it may send a representation or appeal in writing within a period of 15 days from date to the Grievance Redressal Committee of the SBI (hereafter the GRC) at the Corporate Centre, Mumbai. It was also informed that if it so desires, it may request for a personal hearing before the GRC. Piyarelall perceived that prior to determination and/or decision to include its name in the list of wilful defaulters it had a right to be heard in complian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neral Manager of the SBI issued a notice dated February 16, 2016 reading as follows: "Madam/Dear Sir, PERSONAL HEARING BEFORE THE WILFUL DEFAULTER IDENTIFICATION COMMITTEE We refer to the notice dated 27.11.2014 issued to you. 2. Your submissions/representations submitted in response to the notice under reference will be examined by the appropriate committee in its meeting to be held on 03.03.2016 at 11 am at State Bank Of India, SAMG, Corporate Centre, Mumbai. You are hereby granted an opportunity for personal hearing to make your submissions before the committee. Accordingly you may remain present at the aforesaid venue or make your submissions through video conferencing arranged at Stressed Assets Management Branch-II, Jeevandeep Building, 1st Floor, 1, Middleton Street, Kolkata 700071 on 03.03.2016 at 11 am. 3. Please note that Lawyers/Chartered Accountants/Consultants who are not partners/Directors/Officers/Employees of the firm/Company will bot be allowed to represent your case before the Committee. 4. If you fail to avail the opportunity of personal hearing on the above mentioned date, the committee will pass necessary orders. 5. This communication is issued as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be set aside and that the SBI be directed to fix a further date to enable the petitioners to present their version through their advocates/chartered accountants. 7. Per contra, Mr. Pramanick, learned advocate for the SBI and its officers contended that the master circular of the RBI does not envisage representation of any defaulting borrower to be represented by either an advocate or a chartered accountant. He referred to the decisions reported in (2008) 4 SCC 406 [Railway Protection Force v. K. Raghuram Babu], (2006) 11 SCC 645 [National Seeds Corporation Ltd. v. K. V. Rama Reddy] and (1999) 1 SCC 626 [Bharat Petroleum Corporation Ltd. v. Maharashtra General Kamgar Union] to submit that the petitioners in a proceeding before the GRC, or for that matter the Identification Committee, cannot claim any right to be represented by advocates/chartered accountants and that the SBI by issuing the impugned notice neither acted illegally or arbitrarily nor in a highhanded manner, as alleged. 8. It would appear from the rival contentions that a short issue arises for determination on this writ petition i.e. whether the petitioners are entitled to be represented by advocates/chartered accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n advocate for the hearing purpose is not likely to defeat the purpose of the hearing. In this case, we do not find any reason to say that the grounds stated by the appellant for permission to engage advocate to appear before the GRC for the hearing purpose have constituted a case that absence of the service of an advocate for the hearing purpose is likely to defeat the purpose of the hearing." 10. The aforesaid decision of the Hon'ble Division Bench is binding on this Bench. Although the decision was rendered in the context of appearance before the GRC of the UBI, the same applies with equal force to appearance before the Identification Committee constituted by the lender banks. Therefore, the petitioners can claim no right of representation by an advocate before the Identification Committee of the SBI. 11. The claim for representation by an advocate advanced on behalf of the petitioners could be rejected here and now, but since Mr. Mitra has referred to a decision of an Hon'ble Division Bench of the Delhi High Court on the same point taking a different view, it is considered necessary to proceed with an open mind and to ascertain as to whether the Delhi High Court has laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o appear before the Labour/Industrial Court save for the fact that they appear not as advocates wearing black coats and robes but as agents of the employer. This Court cannot shut its eyes to the reality of life and we are of the view that the law may rather be in consonance with the practice than such what is practiced in breach. (Q) That takes us to Section 30 of the Advocates Act supra conferring in the advocates a right to practice. Chief Justice of India Justice T.S. Thakur speaking for the High Court of Karnataka in M/s. Kothari Industiral Corporation Limited v. The Coffee Board MANU/KA/0414/1999 held that the right of an advocate to practice before any Court or Tribunal, contained in Section 30 of the Advocates Act, necessarily means that a litigant before any such Court, Tribunal, Authority or person will have a right to engage and avail the services of an advocate. (T) However to invoke Section 30 supra, the GRC constituted under the Master Circular supra would have to satisfy the test thereof. (U) GRC is definitely not a Court within the meaning of Clause (i) of Section 30 and neither the Master Circular nor any other legislation within the meaning of Clause (iii) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with the requirements of the Master Circular and if so satisfied, to declare the borrower as a wilful defaulter and which declaration vitally affects the rights and reputation of the person so declared. Not only does the Master Circular so provide but we have already noted above the dicta of the Supreme Court in Kulja Industries Limited supra holding that the hearing in this regard has to satisfy the requirement of fairness. (LL) We are therefore of the opinion that the GRC satisfies the tests prescribed to qualify as a Tribunal. (MM) Once the GRC is held to be a Tribunal within the meaning of Section 30 of the Advocates Act, the advocates would have a right to practice before it and axiomatically the borrower before such GRC will have a right to engage and avail the services of an advocate." 14. The observation in paragraph (P) (supra) could have been made based on consideration of what actually happens in the Labour/Industrial Courts in the capital, without examining the relevant provision of the Industrial Disputes Act, 1947 i.e. section 36. Unless the pre-conditions laid down in sub-section (4) of section 36 are satisfied, there is no question of any legal pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court while examining whether an Industrial Tribunal functioning under the Industrial Disputes Act, 1947 was a 'tribunal' within the meaning of Article 136 of the Constitution, considered what is meant by a 'court'. In its decision reported in AIR 1950 SC 188 [Bharat Bank Ltd. v. Employees], the Bench ruled that before a person or persons can be said to constitute a 'court', it must be held that they derive their powers from the State and are exercising the judicial powers of the State. It was also held therein that the expression 'tribunal' as used in Article 136 does not mean the same thing as court but includes, within its ambit all adjudicating bodies, provided they are constituted by the State and are invested with judicial as distinguished from purely administrative or executive functions. 19. What constitutes the 'judicial power' of the State needs to be understood at this stage. This Bench can do no better but refer to some other Constitution Bench decisions of the Supreme Court. 20. In the decision reported in AIR 1965 SC 1595 [Associated Cement Companies Ltd. v. P.N. Sharma], the principal point of law which arose in the civil appeal by special leave was wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e judicial powers which inherently vest in a sovereign State. **** 25. It would thus be seen that in dealing with the question as to whether Respondent 2, while it exercises its appellate power under Rule 6(6), is a tribunal under Article 136(1), we must enquire whether Respondent 2 has been clothed with the State's inherent judicial power to deal with disputes between parties and determine them on the merits fairly and objectively. That is the test which has been consistently applied by this Court in considering the question about the status of any body or authority as a tribunal under Article 136(1). Before we proceed to apply this test to Respondent 2's status under Rule 6(6), we think it is necessary to advert to one aspect of the matter which sometimes creates some confusion. 26. We have referred to the three essential attributes of a sovereign State and indicated that one of these attributes is the legislative power and legislative function of the State, and we have also seen that in determining the status of an authority dealing with disputes, we have to enquire whether the power conferred on the said authority or body can be said to be judicial power conferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... courts and the possession of subsidiary powers which are given to courts to try the cases before them, are described as trappings of the courts, and so, it may be conceded that these trappings are not shown to exist in the case of the State Government which hears appeals under Rule 6(5) and Rule 6(6). But as we have already stated, the consideration about the presence of all or some of the trappings of a court is really not decisive. The presence of some of the trappings may assist the determination of the question as to whether the power exercised by the authority which possesses the said trappings, is the judicial power of the State or not. The main and the basic test however, is whether the adjudicating power which a particular authority is empowered to exercise, has been conferred on it by a statute and can be described as a part of the State's inherent power exercised in discharging its judicial function. Applying this test, there can be no doubt that the power which the State Government exercises under Rule 6(5) and Rule 6(6) is a part of the State's judicial power. It has been conferred on the State Government by a statutory rule and it can be exercised in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State by a statute/statutory rule to examine a dispute between rival groups and to decide the rights of the parties. 23. While deciding Associated Cement Companies (supra), the Supreme Court referred to an earlier Constitution Bench decision reported in AIR 1964 SC 1140 [Indo- China Steam Navigation Co. Ltd. vs. Jasjit Singh, Additional Collector of Customs, Calcutta]. That was a case governed by the Sea Customs Act, 1878. An order was passed by the Collector of Customs confiscating the appellant's motor vessel under Section 167(12A) of the Act of 1878 and giving it option under Section 183 thereof to pay a fine of Rs. 25 lakhs in lieu of confiscation. It was contended that the order was passed on a misconception of Section 52A. An appeal was preferred before the Central Board of Revenue. The Board expressed its concurrence with the conclusion of the Collector of Customs. Revision filed against the appellate order also failed whereupon the Supreme Court was moved and special leave to appeal was obtained. The Additional Solicitor General had urged that none of the Customs authorities that had dealt with the appellant's case is a 'tribunal' within the meaning of Article 136 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Delhi School Education Act, 1973 that rejected the plea of the appellant to refer the dispute between it and the respondent no.1, a dismissed teacher, to arbitration under the Arbitration and Conciliation Act, 1996. 26. The aforesaid decisions are authorities for the proposition that in India, the State i.e. either the Union or its component states, has an inherent judicial power. The courts of law and other bodies such as tribunals and other statutory authorities have been obliged to perform judicial functions, and powers are vested in this behalf by the State by a statute/statutory rule. In discharge of their functions, these courts, tribunals and other statutory authorities are considered to be the delegates of the State. Since the judicial power of the State for administration of justice to its subjects are exclusively vested in courts or tribunals, these fora necessarily have to decide disputes between parties that are brought before it according to accepted norms of judicial procedure. That a true judicial decision presupposes an existing dispute between two or more parties, and then involves four requisites i.e. (1) The presentation (not necessarily orally) of their ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra) in respect of two aspects, i.e. the GRC has no power to compel the attendance of a witness for adducing evidence, and that the master circular does not provide for representation by an advocate and hence clause (iii) of section 30 would have no application in a case of the present nature. However, taking a cue from the above decisions and applying the test formulated by the Supreme Court, there can hardly be two opinions that insofar as the present dispute is concerned, the GRC/Identification Committee of the SBI does not wear the hat of an adjudicator upon entrustment of judicial functions to it by the State by any legislation; on the contrary, it would proceed to discharge a purely administrative function as a part of its duty envisaged in the RBI's master circular. Although the master circular may have statutory force, the same does not envisage adjudication of a dispute between a borrower and a lender by an outside authority. In the real sense, between the lender and the borrower there is no lis that as an adjudicator the GRC/Identification Committee is required to decide, ~ lis here meaning an affirmation by one party and denial by another involving the rights and obligati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that the GRC/Identification Committee of the lender bank has not been delegated judicial functions by the State and cannot be regarded as a 'tribunal' within the meaning of clause (ii) of section 30 of the Advocates Act. In terms of the master circular of the RBI, it is nothing more than an administrative authority and its decision to either identify or declare a defaulting borrower as a wilful borrower is effectively an administrative decision although in the process of giving such administrative decision, the GRC/Identification Committee may have to comply with principles of natural justice and give its decision in a fair manner supported with reasons. If only the master circular being the law relevant for the present purpose had entitled an advocate to practice before the GRC/Identification Committee, the right of representation of a borrower before it could have been extended to an advocate, and not otherwise. 31. Should the decision in Punjab National Bank (supra) hold the field and the GRC/Identification Committee be regarded as a 'tribunal' within the meaning of section 30(ii) of the Advocates Act, it would have to be regarded as a "tribunal' within the meaning of Artic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight it out alone against his mighty employer. If such a poor employee is not entitled to assistance, does a defaulting borrower in the absence of a right of representation being recognised in the master circular stand on a better footing? No, never! The High Courts are bound by the law laid down by the Supreme Court and the ingenuity on display in search of providing succour to parties who do not blink an eye-lid to ruin the nation's economy has to be eschewed. 35. Now, the other decisions cited by Mr. Mitra are taken up for consideration. 36. The decisions reported in AIR 1983 SC 109 [Board of trustees of the Port of Bombay v. Dilipkumar Raghavendranath Nadkarni], (1991) 2 SCC 283 [J.K. Aggarwal v. Haryana Seeds Development Corporation Ltd.] and (1972) 3 SCC 542 [C.L. Subramaniam v. Collector of Customs, Cochin] were relied on in support of the proposition that the petitioners have a right to be represented by an advocate/chartered accountant when the committee consists of legally trained persons. 37. In Dilipkumar Raghavendranath Nadkarni (supra), regulation 12(8) of the Bombay Port Trust Employees Regulations came into force from May 8, 1976 and it permitted representation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o defend him, lest the scales should be weighed against him; keeping in mind such circumstance and bearing in mind rule 15(5) of the Central Civil Services (Classification, Control and Appeal) Rules, 1957 and its contravention, the Court had proceeded to grant relief to the appellant. This Bench has failed to comprehend the materiality of this decision for deciding the issue that has emerged here. 40. The next decision that calls for consideration is the one reported in (2013) 4 WBLR (Cal) 919 [Santanu Ghosh and ors. v. State Bank of India and ors]. It appears on perusal thereof that a coordinate Bench of this Court proceeded to strike down the decision of the bank basically on the ground that the written representation of the petitioner was not considered and it was the ipse dixit of the officers comprising the committee that the petitioner was a wilful defaulter, which was recorded. The stage at which Santanu Ghosh (supra) was decided and the stage at which the petitioners have approached this Bench are wholly different and, therefore, the observations in Santanu Ghosh (supra) are of no help to them. 41. The decision reported in (2004) 2 ARB LR 163 [Faze Three Exports Ltd. v. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law that the Commission is to give decision only after making an enquiry, wherein an opportunity of hearing is to be given to the representatives of the political party, we are of the view that the Election Commission under Section 29-A is required to act judicially and in that view of the matter the act of the Commission is quasi-judicial." 43. The observations made in the decision ought to be borne in mind while deciding whether a particular act is administrative in nature or quasi-judicial. Much would depend on the applicable law. Take the case of an application made by a person for a permit to operate stage carriage service or one made for a liquor licence. Can the applications be rejected on the mere ipse dixit of the permit granting/licensing authority, if the relevant statute provides guidelines for fair consideration thereof? The answer has to be in the negative. Not only are the guidelines to be followed, opportunity of hearing has to be afforded unless the statute expressly or by implication excludes a hearing. The administrative act of grant/refusal to grant must be preceded by quasi-judicial exercises. Insofar as the master circular is concerned, there is no doubt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioners did in fact seek representation by an advocate/chartered accountant. Attention was invited to letters dated March 3, 2015 and March 23, 2015. Regrettably, such letters were not proved to the satisfaction of the Bench to have been served on the SBI. 46. Insofar as representation by a chartered accountant is concerned, such right of representation is not to be readily inferred. The petitioners have also not in their response to the notice dated November 27, 2014 set up any necessity of being assisted by a chartered accountant. There is, thus, no question of the petitioners being allowed the assistance of a chartered accountant. However, the accountant of the petitioners or any one directly related to the affairs of the petitioner no.1 and in its pay roll may be allowed to assist the petitioners. 47. For all the reasons aforesaid, there is no merit in W.P. 3989(W) of 2016, which stands dismissed accordingly. For identical reasons, W.P. 3990(W) of 2016 also stands dismissed. 48. The Identification Committee of the SBI shall fix a date in May, 2016 with at least 72 hours' advance notice to the petitioners for hearing them and shall thereafter pass appropriate orders in accor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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