IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 29TH DAY OF JANUARY 2019 BEFORE THE HON’BLE MR. JUSTICE ALOK ARADHE WRIT PETITION NOs.33885-33888 OF 2016 c/w WRIT PETITION NOS.36781-36784 OF 2015 (GM-RES) W.P.NOS.33885-33888/2016 BETWEEN:
1. SAI TEJA MININING INDUSTRIES NO. 152/2, BANDIHATTI VILLAGE TORANGALLU HOBLI, SANDUR TALUK BELLARY DISTRICT-583 101 BY ITS MANAGING DIRECTOR.
2. SAI TEJA MINING TRADERS NO.166, WARD NO.25 PRASANTHA NILAYA, VIDYA NAGAR AIR PORT ROAD, 5TH CROSS BELLARY-583 104 BY ITS PROPRIETRIX SMT. PADMAVATHI .C AGED ABOUT 44 YEARS.
3. C. SRINIVASA RAO SON OF LATE GANGADHARA RAMA RAO AGED ABOUT 52 YEARS RESIDENT OF NO. 166, W. NO.25 PRASANTHA NILAYA, VIDYA NAGAR AIR PORT ROAD, 5TH CROSS BELLARY-583 104.
4. SMT. PADMAVATHI C WIFE OF C SRINIVASA RAO AGED ABOUT 45 YEARS RESIDENT OF NO.166, W. NO.25 PRASANTHA NILAYA, VIDYA NAGAR AIR PORT ROAD 5TH CROSS, BELLARY-583 104.
(By Mr. X.M. JOSEPH, ADV.) AND:
1. STATE OF KARNATAKA BY ITS CHIEF SECRETARY VIDHANA SOUDHA BANGALORE-560 001.
2. STATE LEVEL BANKERS COMMITTEE-KARNATAKA 5TH FLOOR, CORPORATE OFFICE GANDHINAGAR BANGALORE-560 009 REP. BY ITS CONVENER.
3. KARNATAKA BANK LIMITED REGISTERED & HEAD OFFICE MAHAVEERA CIRCLE KANKANADY, MANGALORE-575 002 REP. BY ITS MANAGING DIRECTOR.
… PETITIONERS 4. THE CHIEF MANAGER & AUTHORISED OFFICER KARNATAKA BANK LIMITED REGISTERED & HEAD OFFICE MAHAVEERA CIRCLE KANKANADY, MANGALORE-575 002.
… RESPONDENTS (By Mr. Y.D. HARSHA, AGA FOR R1 Mr. K. RADHESH PRABHU, ADV., FOR R2 Mr. Y.V. PARTHASARATHY, ADV., FOR R3 & R4) - - -
THESE WRIT PETITIONS ARE FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, PRAYING TO DIRECT THE R-3 & R-4 TO CONSIDER ANNEX-C DTD.8.4.2015, THE ONE SETTLEMENT OF THE PETITIONERS LOAN ACCOUNTS OFFERED BY PETITIONERS BY TAKING INTO CONSIDERATION & ETC.
W.P.NOS.36781-36784/2015 BETWEEN 1. SAI TEJA MININING INDUSTRIES NO.152/2, BANDIHATTI VILLAGE TORANGALLU HOBLI, SANDUR TALUK BELLARY DISTRICT-583101 BY ITS MANAGING PARTNER.
2. SAI TEJA MINING TRADERS NO. 166, W NO.25 PRASANTHA NILAYA VIDYA NAGAR, AIR PORT ROAD 5TH CROSS, BELLARY-583104.
3. C. SRINIVASA RAO S/O LATE GANGADHARA RAMA RAO AGED ABOUT 51 YEARS RESIDENT OF NO.166 W NO. 25, PRASANTHA NILAYA VIDYA NAGAR, AIR PORT ROAD 5TH CROSS, BELLARY-583104.
4. SMT. PADMAVATHI .C W/O C SRINIVASA RAO AGED ABOUT 45 YEARS RESIDENT OF NO. 166 W NO. 25, PRASANTHA NILAYA VIDYA NAGAR, AIR PORT ROAD 5TH CROSS, BELLARY-583104.
(By Mr. X.M. JOSHEPH, ADV.) … PETITIONERS AND:
1. UNION OF INDIA MINISTRY OF FINANCE-DEPARTMENT OF BANKING 3RD FLOOR, JEEVAN DEEP BUILDING SANSAD MARG, NEW DELHI-110001 BY ITS SECRETARY (FINANCIAL SERVICES) 2. STATE OF KARNATAKA BY ITS CHIEF SECRETARY VIDHANA SOUDHA BANGALORE-560001.
3. STATE LEVEL BANKERS COMMITTEE-KARNATAKA 5TH FLOOR, CORPORATE OFFICE GANDHINAGAR, BANGALORE-560009 REP. BY ITS CONVENER.
4. KARNATAKA BANK LIMITED REGISTERED & HEAD OFFICE MAHAVEERA CIRCLE KANKANADY MANGALORE-575002 REP. BY ITS MANAGING DIRECTOR.
5. THE CHIEF MANAGER & AUTHORISED OFFICER KARNATAKA BANK LIMITED REGISTERED & HEAD OFFICE MAHAVEERA CIRCLE KANKANADY, MANGALORE-575002.
… RESPONDENTS (By Mr. C. SHASHIKANTH, ASG FOR R1 Mr. Y.D. HARSHA, AGA FOR R2 Mr. K. RADHESH PRABHU, ADV., FOR R3 Mr. Y.V. PARTHASARATHY, ADV., FOR R4 & R5) - - -
THESE WRIT PETITIONS ARE FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, PRAYING TO DIRECT THE GOVERNMENT OF INDIA AND GOVERNMENT OF KARNATAKA R-1 AND 2 TO CONSIDER FORMULATING A SCHEME TO FOR WAIVER OF PORTIONS OF LOAN AND ENTIRE INTEREST ON BANK LOAN FROM DATE OF BANNING IRON ORE MINING AND TRANSPORTATION BY THE GOVERNMENT OF KARNATAKA AND HON'BLE SUPREME COURT OF INDIA IN RESPECT OF LOANS IN IRON ORE BASED SECTORS AS HAS BEEN DONE BY THE GOVERNMENT OF GOA SO AS TO EXTENT SUCH BENEFIT TO THE LOANS OF PETITIONERS GIVEN BY R-4 & ETC.
THESE WRIT PETITIONS COMING ON FOR ORDERS THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER Mr.X.M.Joseph, learned counsel for the petitioners. Mr.Y.D.Harsha, learned Additional Government Advocate for respondent No.1.
Mr.K.Radhesh Prabhu, learned counsel for respondent No.2.
Mr.Y.V.Parthasarathy, learned counsel for respondent Nos.3 & 4.
2. The writ petitions are admitted for hearing.
With consent of the parties, the same are heard finally.
3. In these petitions under Article 226 of the Constitution of India, the petitioners inter alia seek a direction to respondent Nos.3 and 4 Bank to consider the offer of the petitioners dated 08.04.2015 contained in Annexure-C by way of one time settlement of the petitioners loan account by taking into consideration payment made by the petitioners to the tune of Rs.110.78 Lakhs as against total due of Rs.2,37,00,000/-. The petitioners also seek quashment of cancellation of licence issued to the petitioners project. The petitioners have also sought quashment of communication dated 10.06.2016, by which respondent- Bank has intimated that the auction sale in respect of the petitioners dwelling house has been confirmed. The petitioners also seek a writ of mandamus directing the State Government to expedite the decision with regard to grant of reliefs to iron ore based enterprises in the State of Karnataka as decided in the State level meeting dated 04.03.2015 as well as 04.01.2016. In W.P.No.36781-784/2015, the petitioners have prayed for a direction to the Government of Karnataka for formulate a scheme for waiver of loan and interest on bank loan on iron ore based industries. The petitioners have also seek a direction to respondent No.4 to the State Level Bankers Committee to defer recovery action against the petitioners till respondent No.3 takes a decision.
4. Facts giving rise to the filing of the petitions briefly stated are that sometime in the year 2009, the petitioners invested a sum of Rs.250 Lakhs and obtained loan from the respondent-Bank to the tune of Rs.175 Lakhs for setting up of iron ore stock yard along with iron ore processing beneficiation, storage and trading. It is averred in the Writ Petition that in July, 2010, the petitioners project was ready for commencing the business activity, which was funded by respondent- Bank. The State Government on 17.08.2010 pursuant to a ban on iron ore mining activities, cancelled the licence issued to the petitioners. Thereafter, on 04.03.2015, Government of Karnataka decided to examine the problems of the borrowers of iron ore sector and directed the State Level Bankers Committee, Karnataka to initiate process of grant of relief to the borrowers in iron ore sector. However, it is the stand of the petitioners that the respondent-Bank initiated the proceeding under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the Act’ for short) by ignoring the resolution made by the Karnataka Government. It is also averred that on 08.04.2015, petitioners made payment to the Bank and ultimately sought one time settlement. However on 23.06.2015, the respondent-Bank took symbolic possession of the petitioners project as well as the business assets as well as dwelling house. On 30.04.2016, an auction notice was issued by which auction was scheduled to be held on 07.06.2016. The respondent-Bank by a communication dated 10.06.2016, informed the petitioners that auction has been held and the auction sale has been confirmed.
5. Learned counsel for the petitioners submitted that merely for default in making payment of the amount due, an account cannot be declared as Non Performing Asset. In this connection, attention of this Court is invited to Sections 2(1)(j) & 2(1)(o) and Section 13(2) of the Act. It is also urged that Debt Recovery Tribunal (hereinafter referred to as ‘the Tribunal’ for short) has no jurisdiction to deal with the aforesaid aspect of the matter as the Tribunal in an appeal under Section 17 of the Act can only examine the procedural aspect in carrying out the proceedings under Section 13 of the Act. It is also submitted that the sale of the dwelling of the petitioners was also held in a clandestine manner and the respondent-Bank itself has purchased the dwelling house of the petitioners. It is further submitted that the powers of this Court under Article 226 of Constitution of India are wide and this Court can exercise the same notwithstanding existence of an alternative remedy. In support of aforesaid submissions, reliance has been placed on decisions of the Supreme Court in ‘KESHAVLAL KHEMCHAND AND SONS PRIVATE LIMITED AND OTHERS VS. UNION OF INDIA AND OTHERS’, (2015) 4 SCC 770 and ‘JANET JEYAPAUL VS. SRM UNIVERSITY AND OTHERS’, (2015) 16 SCC 530. It is argued that petitioners are not contributory to the default and the Doctrine of Frustration is applicable to the fact situation of the case. Therefore, the Bank be directed to accept the principal amount from the petitioners.
6. On the other hand, learned counsel for respondent- Bank has invited the attention of this Court to the affidavits filed by the Officer of the Bank and has submitted that the offer of one time settlement submitted by the petitioners has already been rejected. It is also submitted that the petitioners have neither challenged the notice under Section 13(2) of the Act nor the order under Section 13(4) of the Act and has challenged the communication, by which the petitioners have been informed that their dwelling house has been sold. It is further submitted that in the notice issued to the petitioners under Section 13(2) of the Act, the amount due and payable to the petitioners was disclosed to be Rs.3.23 Crores, which the petitioners have not disputed in reply to the notice under Section 13(2) of the Act. It is also submitted that Karnataka Bank Limited has been held not to be state within the meaning of Article 12 of the Constitution and therefore, the writ petition against the Karnataka Bank Limited which is a private bank has been held to be not maintainable. In support of aforesaid submission reference has been made to an order dated 08.08.2008 passed in W.P.No.10053/2008 (S-TR) and the Division Bench decision of this court in W.A.Nos.8541- 8549/1996 dated 29.11.2001.
7. I have considered the submissions made on both the sides and have perused the records. From perusal of the preliminary objection filed on behalf of Karnataka Bank limited, it is evident that offer made by the petitioner under one time settlement scheme contained in Annexure-C dated 08.04.2015 has been rejected which is evident from the affidavits which have been sworn in by Senior Branch Manager, Chief Manager and General Manager (Legal and Recovery department of the Bank) which have been annexed as Annexures-R1 to R3. The petitioners have not controverted the aforesaid stand by filing a rejoinder. It is well settled in law that if an averment of fact is not denied the same is taken to be accepted [See: ‘SMT. NASEEM BANO VS STATE OF U.P.’, 1993 SUPP (4) SCC 46]. Therefore, no relief can be granted to the petitioners so far as consideration of offer under one time settlement scheme is concerned. For yet another reason, no relief can be granted as the petitioners have failed to challenge the aforesaid action of the respondent-Bank. The issue raised by the petitioner that his account could not be declared non-performing asset merely on account of non- payment of the amount of debt is rendered academic on account of efflux of time as subsequently, the action under Section 13(2) and 13(4) of the Act has already been taken and the secured asset has been sold which has been challenged in these petitions. The petitioners seek quashment of notice dated 10.06.2016, by which the petitioners have been informed that his dwelling house has been sold. The petitioners have neither challenged the notice under Section 13(2) nor Section 13(4) of the Act. Therefore, in the absence of the challenge of the aforesaid orders in pursuance of which the dwelling house of the petitioners is sold, no relief can be granted to the petitioners.
7. So far as with regard to the direction to the State to grant the reliefs to iron based enterprises in the State of Karnataka is concerned, in view of decisions taken in the State Level Meeting dated 04.03.2015 and 04.01.2016, the Writ petition is disposed of with a direction to the Competent Authority of the State Government to take a decision in this regard within a period of two months from the date of receipt of the certified copy of the order passed today. So far as the relief of formulating a scheme for waiver of the loan is concerned, the same falls in the realm of policy decision and this Court cannot issue a writ of mandamus to the State government to frame a particular policy, in the absence of any legal right in favour of the petitioners in this regard. So far as relief with regard to deferment of the recovery action is concerned, the same has already been rendered infructuous as the proceeding for recovery has already been initiated and has been undertaken against the petitioners. However, liberty is granted to the petitioners to take recourse to the remedy as may be available to the petitioners under the Act for redressal of the his grievance with regard to action taken under the Act.
With the aforesaid directions, writ petitions are disposed of.
In view of the disposal of the writ petitions, pending interlocutory applications do not survive for consideration and are accordingly, disposed of.
Sd/- JUDGE SS