IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 31ST DAY OF MAY, 2019 BEFORE THE HON' BLE MR. JUSTICE B. VEERAPPA WRIT PETITION No.14809/2019 AND WRIT PETITION Nos.16754-16758/2019(GM-RES) BETWEEN:
SRI. SAI SAPTAGIRI SPONGE PRIVATE LTD., REGD OFFICE NO.83/A, TUMATI ROAD, BELGAL VILLAGE, PIN CODE: 583104, BELLARY TQ & DIST, REPRESENTED BY ITS DIRECTOR DR. P. RAMAKRISHNA CHOWDARY.
(BY SRI R.S. RAVI, ADVOCATE FOR SRI M. A. RAJENDRA, ADVOCATE) AND:
1. THE GOVERNOR, RESERVE BANK OF INDIA NEW CENTRAL OFFICE BUILDING SHAHID BHAGATH SING ROAD, FORT, MUMBAI-400001.
... PETITIONER 2. THE CHAIRMAN & MANAGING DIRECTOR-STATE BANK BHAVAN, STATE BANK OF INDIA, CORPORATE CENTRE MADAME CAMA ROAD, NARIMAN POINT, MUMBAI-400021 3. THE DY. GENERAL MANAGER STATE BANK OF INDIA STRESSED ASSETS MANAGEMENT BR. LOCAL HEAD OFFICE COMPLEX ST. MARKS ROAD , BANGALORE-560001 ... RESPONDENTS (BY SRI K. SHASHI KIRAN SHETTY, SENIOR COUNSEL FOR SRI VIGNESH SHETTY, ADVOCATE FOR R2 & R3;
VIDE ORDER DATED 31.05.2019 NOTICE TO R1 IS DISPENSED WITH) … THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECT THE RESPONDENT BANK TO SETTLE THEIR ENTIRE DUES UNDER APPLICABLE OTS SCHEME SBI OTS - 2018, BASED ON THE CLASSIFICATION OF THE ACCOUNT AS "NON PERFORMING ASSETS", AS ON 21.09.2014, BY QUASHING/SET ASIDE THE CANCELLATION OF OTS BENEFITS COMMUNICATED TO THE PETITIONERS, VIDE RESPONENT BANK'S LETTER DATED 22.10.2018 ANNEXURE-L AND IMPUGNED LETTER DATED 25.03.2019 ANNEXURE-A BY R-3 WITHOUT ANY DISCRETIONS AND DISCRIMINATION IN ACCORDANCE WITH LAW.
THESE WRIT PETITIONS COMING ON FOR ORDERS THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER The petitioner/Company has filed the present writ petitions for a writ of mandamus directing the respondent-Bank to settle the entire dues under the applicable SBI OTS-2018 Scheme based on the classification of the account as ‘non-performing assets’ as on 21.9.2014 by quashing/setting aside the cancellation of OTS benefits communicated to the petitioner by respondent-bank’s letters dated 22.10.2018 as per Annexure-L and the impugned letter dated 25.3.2019 as per Annexure-A by the 3rd respondent without any discretions and discrimination in accordance with law.
2. It is the case of the petitioner, that it is a company, which had availed the financial facility during the year 2010-14 from the respondent-bank. The said loan though was restructured by the respondent-bank, but the bank did not release the funds and subsequently the said loan account was classified as ‘Non Performing Assets’ on 21.9.2014. The respondent- bank issued a Demand Notice dated 24.11.2014 and however, the same has been withdrawn, since the said loan was restructured by the respondent-bank. The respondent-bank issued further demand notice on 22.2.2016 which was the subject matter in S.A.No.370/2016 before the Debt Recovery Tribunal and the same came to be allowed on 18.10.2016. Thereafter, the respondent-bank preferred review petition in R.A.No.1/2017 which also was dismissed by upholding the orders passed in S.A.No.370/2016. Thereafter, the respondent-bank issued the Third Demand Notice on 22.2.2018 classifying the account as ‘Non-Performing Assets’ as on 11.2.2016 claiming a sum of Rs.16,84,75,308/- and the respondent-bank also offered for settlement of Rs.13,06,56,833/- under SBI OTS 2018. The petitioner sought clarification with regard to the said amount of Rs.13,06,56,833/- with an intention of settling the entire dues and remitted a sum of Rs.48,99,631/- being 5% on the said amount as stated supra which is not the legally recoverable debt in respect of arriving at as ‘One Time Settlement’.
3. It is further stated that subsequently, if the respondent-bank on appropriating the remittances made subsequent to 28.12.2012 or as on 21.9.2014 as requested in the letter dated 11.9.2018, then the petitioner would have to remit only a sum of Rs.4 Crores as per OTS Scheme. But the respondent-bank rejected the plea of the petitioner. Therefore, the petitioner was forced to file writ petition before this Court in W.P.No.41934/2018 seeking direction to the respondent-bank to settle the entire due under applicable OTS Scheme without discretion and discrimination and in accordance with law and Annexure-F therein.
4. This Court considering the contention of both the parties, by the order dated 31.1.2019 disposed of the writ petition reserving liberty to the petitioner to file an application under Section 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 which was the subject matter of W.A.No.384/2019 before the Division Bench. The Division Bench of this Court by the order dated 27th February, 2019 disposed of the writ appeal on the request made by the learned Counsel for the appellant for one time settlement as per RBI Guidelines and in accordance with law and also sought that the respondent-bank shall not precipitate the matter, till consideration of his prayer sought therein. In pursuance of the submission made by the learned Counsel for the appellant, the learned Counsel for the respondent-bank submitted that if the appellant makes a request within one week, the same would be considered within two weeks therein and appropriate orders would be passed thereafter. Therefore, in view of the submission made by the learned Counsel for the respondent-bank, the appellant was permitted to make a request for One Time Settlement within one week from that day and if such a request was made, the same shall be considered and disposed of within two weeks thereafter, in accordance with law and as per the RBI Guidelines.
5. On the basis of the order passed by the Division Bench of this Court, the petitioner filed an application on 11.3.2019 for settlement of the entire outstanding amount under the Scheme for One Time Settlement of NPAs and AUCAs (SBI OTS 2018). The said application was considered and rejected by the respondent-Bank on the ground that the ‘One Time Settlement Scheme 2018’ of SBI is already closed and it cannot consider the offer under the expired Scheme since the Scheme is non discretionary and non discriminatory and hence, the bank cannot extend the Scheme for consideration of the petitioner’s request for settlement under the Scheme. It was also stated that the Division Bench of this Court had permitted the appellant-petitioner to make an offer for settlement but not to renew the offer for settlement under the expired Scheme SBI OTS 2018. Hence, the present offer made the petitioner is bad in law. It was further observed that without prejudice to the contentions raised, petitioner was advised that, in view of the expiry of the SBI OTS 2018, the petitioner’s present offer for settlement of dues of Rs.8,03,47,524/- was considered as an independent offer and was examined and considered by the Bank. The total dues payable by the petitioner to the bank as on 24.3.2019 was Rs.19,16,64,513.60 and therefore, the application found therein was not acceptable by the respondent-bank and hence, it rejected the same. Hence, the present writ petition is filed.
6. I have heard the learned Counsel for the parties on three occasions continuously.
7. Sri R.S. Ravi, learned Counsel for the petitioner reiterating the grounds urged in the writ petition contended that the provisions of the SARFAESI Act is in other words called as ‘Non Performing Assets Act’ which is applicable only in cases where the accounts are classified as ‘Non Performing Assets’, as contemplated under Section 2(o) of the RBI Guidelines and are entitled for OTS benefits. Hence, the petitioner is entitled for settlement of account under SBI-OTS 2018, since the account is classified as ‘Non-performing Assets’ as on 21.9.2014 when the balance stood at Rs.12,47,96,857/-. Therefore, the respondent-bank ought to have considered the request of the petitioner as per Annexure-A. He would further contend that the last date to file OTS Scheme was 30.9.2018 and since the petitioner had fulfilled the terms and conditions of the SBI OTS Scheme and the RBI Guidelines by depositing 5% of the OTS amount of Rs.48,99,631/- on 29.9.2018 the respondents ought to have considered his application to process the OTS application within the time frame. Hence, the petitioner was forced to file writ petition i.e., W.P.Nos.41394/2019 before this Court which came to be rejected on 31.1.2019. Aggrieved by the said order, he preferred an appeal i.e., W.A.No.384/2019 wherein this Court by the order dated 27.2.2019 permitted the appellant-petitioner to make a request within a week and directed the respondents to consider the same within two weeks thereafter. He would further contend that accordingly, the appellant- petitioner filed an application within time, but as per Annexure-B, the respondents proceeded to reject the request without considering the material on record, which is erroneous and contrary to the RBI Guidelines.
8. In support of his contentions, Sri R.S. Ravi, learned Counsel for the petitioner relying upon the judgment of the Hon’ble Supreme Court in the case of M/s. Sardar Associates & Others –vs- Punjab & Sind Bank & Others reported in 2009 SCC 257 (paragraphs-18, 33, 36, 38 and 40) sought to allow the writ petitions.
9. Per contra, Sri Shashikiran Shetty, learned Senior Counsel for the respondents filed a detailed statement of objections and contended that a writ of mandamus cannot be issued by this Court.
10. At this stage, Sri R.S. Ravi, learned Counsel for the petitioner submits that without prejudice to his case, the petitioner is ready to pay the OTS amount of Rs.9,79,92,625/- after deducting Rs.2 crores already deposited in terms of the demand made by the respondent-Bank on 16.8.2018 and the respondents shall consider the same in terms of the Scheme.
11. Sri Shashikiran Shetty, learned senior Counsel for the respondents submits that if the petitioner submits his representation/request giving details, the respondents will consider the same in terms of the directions dated 27.2.2019 issued by the Division Bench of this Court in W.A.No.384/2019 for One Time Settlement under the Scheme framed under the RBI Guidelines.
The said submissions are placed on record.
12. In view of the above, without adverting to the merits and demerits of the contentions raised by the learned counsel for the parties, it is suffice to direct the petitioner to file representation furnishing the details within a week from the date of receipt of a copy of this order. If any such representation is made, the respondents shall consider and proceed with the same under the Scheme framed under the RBI Guidelines and pass appropriate orders within a week thereafter, without being influenced by the impugned order dated 25.3.2019, Annexure-A and in accordance with law.
13. Till consideration of the representation of the petitioner, the respondents shall not precipitate the matter further.
Accordingly, writ petitions are disposed of.
Sd/- Judge Nsu/-