9911796707
TMI Blog2009 (1) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... Advocate General, assisted by MS Sangeeta Vishan, AGP, for Opponent(s) CAV JUDGMENT (Per : HONOURABLE MR.JUSTICE D.A.MEHTA) (1) This group of appeals has been preferred challenging the judgment and order dated 09.07.2007 of the learned Single Judge (hereinafter referred to as 'the Company Court') dismissing Company Application No.489 of 2006 filed by the appellant of Appeal No.156 of 2007, and similar other matters. (2) It is an accepted position that the facts stated in Appeal No.156 of 2007 are similar to those involved in other appeals and the learned advocates appearing for the respective parties have treated O.J. Appeal No.156 of 2007 as the principal appeal. Hence, hereinafter reference to the facts shall be from the record of O.J. Appeal No.156 of 2007, unless specifically mentioned otherwise. The appellant has formulated the following 19 questions of law, stated to be arising out of the judgment of the Company Court: "QUESTIONS OF LAW: (i) Whether the Company Court has erred in adopting a completely erroneous procedure in the conduct of this application, particularly in impleading the Chief Controlling Revenue Authority vide order dated 20.09.2006, complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with Section 65 thereof that the registration of document at one place, where one of the properties in any of the loan transactions is situated is sufficient to fulfill the requirements of the Registration Act, 1908? (xi) Whether the Company Court was justified in rejecting the contention raised in Question (x) above, inter alia, on the ground that details of properties with separate identification, etc. as required under Section 21 of the Registration Act, 1908 have not been met by the Deed of Assignment and the Appellant cannot be heard to say relying upon Section 65 that it is the duty of Sub-Registrar to forward the document at various places for registration where the property is situated? (xii) Whether the Company Court has erred in not calling upon the Appellant to place before the Court the original document and examine the same particularly before opining that the details in respect of immovable properties are not sufficient to comply with the requirement of Section 21 of the Registration Act, 1908? (xiii) Whether the Company Court was justified in opining that it cannot give any directions for registration of the document in other districts in absence of document no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he defined purchase price. On behalf of the Company (in liquidation), the Official Liquidator and the workmen of the Company (in liquidation), a preliminary objection was raised resisting the application for substitution made by the Assignee Bank. (4) The Company Court has found that the Deed of Assignment is not a valid piece of document for various reasons set out in the judgment and thus held that the request for substitution cannot be granted. The operative part of the impugned judgment reads as under: "39. In view of the aforesaid observations and discussion, as the rights are not acquired by the assignee through the process known to law, the applicants cannot be permitted to be substituted in place of secured creditors of the company in liquidation (assignor) However, in view of the aforesaid, the situation has arisen, resulting into abandonment of the rights by the assignor and non-acquiring of the rights by the assignee. It may be that in a given case on account of ultimate establishing of the right before the appropriate forum, the Official Liquidator In-charge of the company in liquidation may be required to pay the dues of the secured creditor(s), may be pro rata or o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said issue, joined Reserve Bank of India (RBI) as a necessary party in the Company Application, RBI had filed two detailed affidavits along with the guidelines issued for purchase/sale of Nonperforming Financial Assets, and thereafter RBI was deleted from the array of the respondents. Thus in fact, the said issue had been considered by the Company Court and it can be presumed to have been held by the Company Court that such an exercise viz. sale and purchase of NPAs, was permissible under the provisions of the B.R. Act. Therefore, neither the Assignees nor the Assignors could be called upon to once again submit as regards an issue which was concluded in their favour by the Company Court, in appeals filed by the Assignee Banks. However, subsequently the learned counsel accepted that it was open to the Appellate Court to go into the said legal issue and various submissions have been made on the basis of the provisions of the B.R. Act. (7) It was submitted that the provisions of the Transfer of Property Act, 1882 (the T.P. Act) permitted sale and purchase of debts and there was no prohibition in the B.R. Act and, therefore, the entire transaction was in accordance with the law of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of any of its claims, and correspondingly it was permissible to the Assignee to acquire and hold and generally deal with any such property which is dealt with as aforesaid by the Assignor Bank. That once it was accepted that lending of monies and recovery thereof was a permissible form of business under the B.R. Act, acquiring and undertaking the whole or part of any such business was a permissible activity forming part of the same business. That it was open to do all such other things as are incidental or conducive to the promotion or advancement of the business of the banking company; meaning thereby, the Assignor Bank was entitled to sell away its NPAs as an incidental activity, or it was conducive to the promotion or advancement of the business of the Assignor Bank to get rid of its debts so as to ensure a better financial position. That the assignment of debt was only one of the modes of recovery. In summary it was submitted that the Assignee of an NPA got substituted as the lender and the account of the borrower was transferred from the books of the Assignor to the books of the Assignee Bank entitling the borrower to be treated in the like manner as the borrower was enti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it was always possible to gift immovable or movable property by one document, or mortgage various immovable properties situated in different parts of the country by one document, etc. 7.5) Similarly, it was submitted that the findings of the Company Court on the issue of registration are not correct. That registration of a document was permissible at a place where one of the properties was situated as provided under Section 28 of the Registration Act, 1908 (the Registration Act) and under Section 65 of the Registration Act the registering authority was under an obligation to inform other registering authority under whose jurisdiction the other properties were located. Similarly, in so far as provisions of the Bombay Stamp Act, 1958 (the Stamp Act) are concerned, it was submitted that the document was adequately stamped and the entire procedure adopted by the Company Court of calling upon the Chief Controlling Revenue Authority, Gujarat State, seriously prejudiced the rights of the Assignee Banks as the said authority was an appellate authority under the Stamp Act after adjudication by the Collector. Thus in fact, the statutory right of appeal under the Stamp Act was taken aw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company had been constituted in accordance with the provisions of the Securitisation Act. The assignee bank was thus acting as a Securitisation Company without following the required procedure under the provisions of the Securitisation Act. 8.1) Referring to provisions of Section 23 of the Indian Contract Act, 1872 it was submitted that object of an agreement or consideration of an agreement is lawful, unless forbidden by law, or if permitted, would defeat the provisions of any law, etc. and, therefore, permitting the assignee bank to go ahead with the assignment would defeat the provisions of the Securitisation Act. The transaction in question was also opposed to public policy, as the assignee bank would show in its balance-sheet an NPA of the assignor bank as if it was not an NPA considering the fact that the assignor bank had transferred the NPA at throw away price. That when the provisions of the Securitisation Act only envisage either the original lender, or the Securitisation Company or the Reconstruction Company, as a deemed lender, to exercise powers available under the Securitisation Act, the Deed of Assignment cannot create a new class of lenders by permitting the assig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion in so far as calculation of the stamp duty is concerned without expressing any final view of the matter because the said authority had been called upon by the Company Court to assist the Court. The views expressed in the affidavitin- reply were only prima facie views and not an expression of opinion after adjudication of an issue. Therefore, the said expression cannot be permitted to be concluding the issue in so far as the assignor or the assignee banks are concerned. (10) In rejoinder, apart from reiterating what was stated in the principal address it was submitted that though vide Clause No.2.2.3 and 7.1.3 the Deed of Assignment talked of obligations being transferred, a reasonable construction of the Deed would show that the obligation vis-a-vis the debtor remained with the assignor and the agreement between the assignor and the assignee does not bind the customer. 10.1) That in so far as the modification of the charge and registration thereof was concerned, under provisions of the Companies Act, the assignee banks had taken steps by making the application, but in all cases as the companies are in the process of being wound up, no action has been taken. Responding to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r upon or without security; the drawing, making, accepting, discounting, buying, selling, collecting and dealing in bills of exchange, hoondees, promissory notes, coupons, drafts, bills of lading, railway receipts, warrants, debentures certificates, scrips and other instruments and securities whether transferable or negotiable or not; the granting and issuing of letters of credit, traveller's cheques and circular notes; the buying, selling and dealing in bullion and specie; the buying and selling of foreign exchange including foreign bank notes; the acquiring, holding issuing on commission, underwriting and dealing in stock, funds, shares, debentures, debenture stock, bonds, obligations, securities and investments of all kinds; the purchasing and selling of bonds, scrips or other forms of securities on behalf of constituents or others, the negotiating of loans and advances; the receiving of all kinds of bonds, scrips or valuables on deposit or for safe custody or otherwise; the providing of safe deposit vaults; the collecting and transmitting of money and securities; (c) contracting for public and private loans and negotiating and issuing the same; (f) managing, selling and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ney is for lending or investment. Thus, the core business of any bank is to accept money deposited by a customer and utilise the same for lending to another customer or for the purposes of an investment. In other words, the deposits of money are accepted at certain rates of interest and such monies are invested or lent out at a rate of interest which is normally, marginally higher than the rate at which the deposits have been accepted entitling the bank to record profits by such differential rate of interest. The activity of lending would definitely include the right to recover the amount lent just as an investment carries with it a right to recover the amount invested after earning interest therefrom. In the simplest form of this business, "banking" as defined by Section 5(b) of the B.R. Act does not envisage any right to deal in the securities which have been acquired at the time of lending. The securities are only to ensure the recovery of the outstandings. On failure of the borrower to honour the commitment, it is open to the bank to realise the security. The plain language of the said provision does not permit any other view of the matter. (14) The concept of "banking policy" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued and guidelines cannot be equated with directions. If at all any directions have been issued they have not been placed on record and attention of the Court is not invited to any such directions. (15) At this stage, a contention based on a decision of this Court in the case of Barkha Investment and Trading Co. Vs. Commissioner of Income-tax, [2006] 281 ITR 316 (Guj.), may be considered. It was submitted that the aforesaid decision has laid down that a decision by the RBI would be final in so far as the financial system is concerned. The reliance is misplaced. The Court was concerned with efficacy of directions issued by RBI under the provisions of the Reserve Bank of India Act, 1934, namely, Reserve Bank of India's Non-banking Financial Companies (Directions), 1977. In the present, as noted, no directions are issued. There is no provision under the B.R. Act similar to Section 45Q of the Reserve Bank of India Act. Hence, the said decision is not applicable, even by analogy, to the facts of the case. (16) Section 6(1) of the B.R. Act specifies forms of business in which a banking company may engage. The said section occurs in Part-II under the heading "BUSINESS OF BANKING CO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d specie; or foreign exchange, including foreign bank notes; dealing in stock, funds, shares, debentures, etc.; bonds, scrips or other forms of securities on behalf of constituents or others. The activity of purchasing and selling of bonds, scrips or other forms of securities on behalf of constituents or others, the negotiating of loans and advances is one form of business, but the kind of transaction that is under consideration in the present case cannot fall within such an activity. The activity under contemplation in the clause is negotiating of loans, etc. for the constituents, namely, for whom bonds, scrips, etc. are purchased or sold. (19) Similarly, the second of the activities relating to lending or advancing of money either upon or without security only permits such an activity, meaning thereby, when read in juxtaposition with other activities the concept of buying and selling the debts with the underlying securities cannot be a part of the said activity. When certain activities specifically permit the activity of buying and selling the said exercise cannot be read into this activity of lending by taking recourse to the provisions of the general law, more particularly the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be where a suit for recovery is filed and the debtor offers some property, movable or immovable, in satisfaction of the claim; or, in a case where, when the suit is decreed in favour of the creditor, the Court or the Tribunal orders handing over possession of certain properties, may be of the guarantor also and not only of the borrower, towards satisfaction of the outstanding dues. Therefore, the activity of purchasing and selling debts cannot fall within clause (f) of sub-section (1) of Section 6 of the B.R. Act. (22) A great deal of emphasis was laid on behalf of the assignor and the assignee banks on provisions of Section 6(1)(g) of the B.R. Act to submit that this was one clause which permits dealing in any property or any right, title and interest in any such property which may form the security or part of the security for any loans or advances, or which may be connected with any such security. Once again the entire contention proceeds on a fallacy. The error occurs because one tends to read the clause divested of the opening portion of the sub-section which talks of permitting a banking company to engage in any one or more of the specified forms of business in addition to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted to function to the detriment of its financial well being. When a debt is purchased at a price fixed, may be after ascertaining the worth of the borrower by the seller, it is not possible for the assignee bank to say with certainty that the assignee bank shall earn therefrom, namely, recover more than what was paid for the debt to the assignor bank. This fact was accepted by the learned counsel appearing for both the assignor and the assignee banks, namely, the likelihood of incurring of loss in a transaction. More so when the transaction consists of a basket of debts wherein even the assignor bank is not in a position to specify the amount for which a particular debt falling within the basket is sold. To put it differently, the entire activity is based on a speculative form of transaction : where a profit may accrue in future or a loss may be incurred in future. That can never be a permissible mode of activity as part of, or in addition to, or incidental to, or conducive to the promotion or advancement of the business of the banking company. The words "incidental to, conducive, etc." form part of clause (n) of sub-section (1) of Section 6 of the B.R. Act. Therefore, the activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or immovable property which a bank may acquire or hold as a person, like a building in which the bank is housed, the furniture, fixtures, etc. which the bank acquires and holds, which can be sold, improved, managed, developed, exchanged, leased out, mortgaged, disposed of or turned into account or otherwise dealt with. Therefore, even this clause cannot permit any trading in debts. (26) The next clause, i.e. clause (m) of subsection (1) of Section 6 of the B.R. Act relates to acquiring and undertaking the whole or any part of the business of any person or company, when such business is of a nature enumerated or described in the sub-section. In other words, the entire business of another bank or a part of the business of another bank can be acquired and then undertaken as a business, the caveat being it has to be business of a nature set out or described in sub-section (1) of Section 6 of the B.R. Act. To put it differently, any of the activities falling within clauses (a) to (l) can be acquired or undertaken, as whole or any part of the business of any person or any banking company, but such a person or the banking company must, in the first instance, be carrying on such a busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment has, by notification in the official gazette, specified to be a form of business in which it would be lawful for a banking company to engage as stipulated by clause (o) of subsection (1) of Section 6 of the B.R. Act. (29) The issue may be considered from a slightly different dimension. Section 6(2) of the B.R. Act provides that no banking company shall engage in any form of business other than those referred to in Section 6(1) of the B.R. Act. Under Section 8 of the B.R. Act a banking company is prohibited from trading in goods, either by way of buying or selling or bartering of goods, except in connection with the realisation of security given to or held by the banking company. The Proviso to Section 8 of the B.R. Act carves out an exception laying down that any such business as specified in pursuance of clause (o) of subsection (1) of Section 6 of the B.R. Act shall not be prohibited by Section 8. As already noticed the activity does not form part of clause (o). The Explanation in Section 8 specifies that "goods" means every kind of movable property, other than those referred to in clause (a) of sub-section (1) of Section 6 of the B.R. Act. Therefore, on a conjoint reading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f business other than those specified by Sections 5(b), 6(1) and the exception stipulated by Section 8 of the B.R. Act. The prohibition is absolute in terms when one reads Sections 6(2) and 8 together. Therefore, the recourse to provisions of general law cannot be had either by the assignor or the assignee bank, and the transaction in question cannot be said to be a transaction within the meaning of the provisions of the B.R. Act as a business and cannot be permitted. (31) During course of hearing the learned counsel for the assignor and the assignee banks placed heavy reliance on the following observations of this Court in the case of Commissioner of Income-tax Vs. Baroda Peoples Co-operative Bank Ltd., [2006] 280 ITR 282 (Guj.): "However, the business of banking is primarily a business in trust, a business of putting trust in a banker. How does a bank ensure that the customer places trust. It has to offer not only good returns but also safety and liquidity. In other words, the depositor must be ensured that the depositor will get good returns on its deposit, the deposits would be safe and deposits would be available for withdrawal as and when required, subject to the terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... understood in the context of the controversy brought before the High Court in the said case i.e. : "Whether, on the facts and circumstances of the case, the Income-tax Appellate Tribunal was right in allowing deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961, on interest income as being attributable to the business of banking?" The basic contention of the revenue therein was that the profits and gains envisaged by Section 80P of the Income-tax Act, 1961 must be profits and gains of business attributable to any one or more of the specified activities and the interest income earned on investments can be said to be attributable to investments which are only statutorily required and investment of any surplus funds cannot be termed to be investment attributable to the specified activity. It was in this context that the aforesaid observations have been made by the Court. Secondly, the contention that when NPAs are removed from the books of the assignor banks such assignor banks would reflect a better balance-sheet is a myopic or ostrich like attitude. The contention fails to consider that the other side of the same transaction would reflect a poor balance-sheet in so fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substitute for a notice prior to the transaction being undertaken by the assignor bank. (35) The legislature has in the past, while framing laws relating to taking over / acquiring properties of citizens, not provided for an opportunity of hearing, but when such legislations have been challenged, the Apex Court has consistently laid down that a notice granting an opportunity of hearing is a must, even in absence of a provision. The case of C.B. Gautam Vs. Union of India & Ors., [1993] 199 ITR 530, relates to compulsory acquisition of property under provisions of Chapter XX-C of the Income-tax Act, 1961 wherein the Court has read in the requirement of a reasonable opportunity being given to the concerned parties in the provisions of Chapter XX-C. Similarly, as recently as in 2004 when the provisions of the Securitisation Act were challenged, as originally framed, in the case of Mardia Chemicals Ltd. & Ors. Vs. Union of India & Ors., (2004) 4 SCC 311 (S.C.), the Apex Court has read in the requirement of a duty of meaningfully considering the objections raised by the borrower which includes a right to know the reasons for nonacceptance of the objections. Subsequently the legislature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it would become well nigh impossible for any one to locate the debt relatable to the second charge, and thus, the entire purpose of enacting Section 529A of the Companies Act would get frustrated. Hence, the exercise undertaken by the assignors and the assignees cannot be permitted in law. (38) The Scheme of the Securitisaction Act can be broadly divided into two parts. The first part being under Chapter II of the Securitisation Act dealing with REGULATION OF SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS OF BANKS AND FINANCIAL INSTITUTIONS; while the second part forming Chapter III relating to ENFORCEMENT OF SECURITY INTEREST. Thus as stated in the STATEMENT OF OBJECTS AND REASONS the Securitisation Act enables the banks and financial institutions to realise long-term assets, manage problems of liquidity, asset liability mis-match and improve recovery by exercising powers to take possession of securities, sell them and reduce nonperforming assets by adopting measures for recovery or reconstruction. The Securitisation Act further provides for setting up of asset reconstruction Companies which are empowered to take possession of secured assets of the borrower including the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out security, under the provisions of the B.R. Act, which lay down the kinds of business which the assignor or the assignee bank can, as banking companies, undertake. Therefore, unless and until the provisions of the B.R.Act permit transfer by way of the transaction in question, there is no question of undertaking an exercise to find out a prohibition and then, say that in absence of a specific prohibition treat the activity to be a permissible activity. To the contrary the position in law is, that only certain defined, specified activities laid down in the B.R.Act, and subsequently in the Securitisation Act, are permissible. Otherwise, as noted hereinbefore, the B.R. Act has specifically prohibited any form of business, except those permitted, by virtue of Section 6(2) and Section 8 of the B.R. Act. Therefore, recovery also is permissible only in the prescribed mode. (41) The assignor Bank is not in fact effecting recovery of its outstandings. The deed of assignment itself indicates that a debt is assigned for a lump-sum after the lumping of a debt in the basket with all other debts covered by the deed of assignment. Recovery of a loan presupposes simultaneous discharge of liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have varied to the said extent, and thus there is a novatio. In such an eventuality the customer, unless and until a party to a contract with the assignee bank, would have no liability. The submission on this count, that the deed of assignment should be reasonably construed and that any such clause transferring obligation would not bind the customer, but would be binding only the parties to the agreement, requires to be noted only to be rejected. The agreement has to be read as a whole : it cannot be read to mean that one part binds the parties to the agreement and also the customer; while the other part is binding only to the parties entering the contract and not the customer. If the customer is a third party to the deed of assignment, he is a third party for all intents and purposes, and is not bound by such a deed, is not liable in any manner to the assignee bank. However, for the present, it is not necessary to deal with the said aspect any further. Suffice it to state that the transaction in question is not a valid transaction in eyes of law. (43) A further contention was that Company Court had failed to appreciate the true scope of the application and the only inquiry that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act was inserted on the statute book vide Act No. 35 of 1985 with effect from 24.5.1985 and, therefore, would override all other provisions of the Act as well as any other law in force on the said date. 14. Therefore, prima facie, provisions of Section 42 of ULC Act cannot claim primacy over provisions of Section 529-A of the Act considering the fact that ULC Act was brought on statue in 1976 while Section 529-A of the Act is a subsequent legislation brought on statute book in 1985. Possibly this aspect of the matter, may not have been brought to the notice of the Company Court. However, the jurisdiction vested in a Company Court is a special jurisdiction and considering the true scope and object of the provisions of Section 529-A of the Act, Official Liquidator functions under the directions of the Company Court and acts for and on behalf of the Company Court, primarily to ensure that the interest of workmen of a Company ( in liquidation) do not go unrepresented and are taken care of. This salutary feature of functioning of Company Court could not have been overlooked by the Company Court while determining the issue in question. 15. In fact, when Section 529-A of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors are to be treated pari passu and have to be treated as prior to all other dues. 9. Therefore, the law is clear on the matter as held in UCO Bank's case that Section 529-A will override all other claims of other creditors even where a decree has been passed by a Court. 10. Therefore, claims, if any, of O.N.G.C. will have to be worked out in accordance with Sections 529 and 529-A of the Companies Act as well. The contention advanced on behalf of O.N.G.C. by Shri Raju Ramchandran that if a mandamus had been issued, it will prevail over any law is not tenable and is rejected." (45) The same ratio would be applicable in the facts of the present case. Even if one assumes for the sake of argument, that the provisions of the T.P. Act are available to the assignor and the assignee banks, the provisions of the T.P. Act cannot claim primacy over provisions of the B.R. Act and the Companies Act, more particularly Section 529A of the said Act. In fact there have been cases before the Company Court when the dues of all the creditors stand satisfied upon disbursement being ordered by the Company Court, not leaving anything to be urged, agitated or adjudicated before any other forum. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... securities acquired at the time of lending; (c) the right to realize a security to ensure recovery of outstanding debt cannot be stretched to mean a right to deal in securities; (d) the definition of "banking policy" under Section 5(ca) of the B.R. Act cannot permit framing of such a policy which permits trading in debts as the debts are not acquired as a part of banking activity but come into existence upon advancement of a loan. The requirements of Section 5(ca) of the B.R. Act cannot be said to have been met with by such an assignment; (e) any guidelines formulated by RBI cannot be part of banking policy because under Section 35A of the B.R. Act RBI has powers to issue directions after recording satisfaction that it is necessary to issue directions to banking companies having regard to the factors stated in Section 35A of the B.R. Act. The present transaction cannot fall within any of the four prescribed requirements so as to enable RBI to record satisfaction for the purposes of issuing directions. No directions are in fact issued and guidelines cannot be equated with directions; (f) none of the clauses (a), (c), (f), (g), (l), (m), (n) and (o) of Section 6 (1) of the B. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6(2) of the B.R. Act read with Section 8 of the B.R. Act and the Explanation under Section 8 of the B.R. Act make it clear that the kind of activity reflected by the present transaction cannot be permitted under the provisions of the B.R. Act. From this it cannot be inferred that because of the prohibition in the B.R. Act recourse can be had to general law; (q) the activity undertaken in the form of the transaction in question cannot be termed to be either in the interest of the bank or in the interest of the customer or in the interest of banking industry in general; (r) to lump all outstanding loans and as a consequence the respective borrowers, in one basket by treating each one of them as one category would be doing injustice to the basic fabric of the trust reposed by the customer in the bank or the banker; (s) when a property of a person is required to be taken over/acquired a meaningful and reasonable opportunity of hearing has to be granted and mere intimation, after the assignment is complete, cannot be treated as sufficient compliance of this requirement in law. The transaction in question cannot be equated with recovery of outstanding loan, even in the hands of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the amount payable, the amount which were otherwise payable to the assignor prior to the deed of assignment, only to the assignor subject to the conditions that the assignor shall file an undertaking as directed. Therefore, no further directions are required to be made as the assignee banks have not been substituted in effect. (50) All the appeals are accordingly dismissed. There shall be no order as to costs. (51) At this stage, learned advocate for the appellants and the assignor banks makes a request to continue the interim arrangement as per directions made in order dated 09.08.2007 and 17.10.2007. The request cannot be granted firstly because the order dated 09.08.2007 made in various Civil Applications has thereafter merged in the final order dated 17.10.2007 wherein all the Civil Applications have been disposed of by the Court in light of the directions made in order dated 17.10.2007 in Civil Application Nos.376 of 2007 and 377 of 2007. In so far as the direction to disburse the amount payable, namely, the amount which was otherwise payable to the assignor prior to the Deed of Assignment, only to the assignor, the said direction attains finality as the assignment itself ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
