Biju S. v. State of Kerala and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** # **PRESENT** **THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS FRIDAY, THE 17[TH] DAY OF DECEMBER 2021 / 26TH AGRAHAYANA,** **1943** ## **WP(C) NO. 34452 OF 2019** ## **PETITIONER:** BIJU.S AGED 38 YEARS S/O.SADANANDAN, THOTTATHIL VEEDU, THAZHAMEL, ANCHAL P.O., KOLLAM-692406. BY ADVS. B.J.JOHN PRAKASH SRI.P.PRAMEL SRI.C.N.MIDHUN ## **RESPONDENTS:** 1 THE STATE OF KERALA REPRESENTED BY THE PRINCIPAL SECRETARY, FISHERIES, PORTS, ENVIRONMENT AND INDUSTRIES (COIR AND CASHEW), MAIN BLOCK, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM-695001. 2 CSB BANK LTD. (FORMERLY THE CATHOLIC SYRIAN BANK LTD.),, HAVING ITS HEAD OFFICE AT ST.MARY'S COLLEGE ROAD, THRISSUR-680020, REPRESENTED BY ITS CHIEF MANAGER-LAW. 3 DEPUTY SECRETARY, INDUSTRIES DEPARTMENT, GOVERNMENT SECRETARIAT, NORTH BLOCK, THIRUVANANTHAPURAM695001. 4 STATE LEVEL BUILDERS COMMITTEE (SLBS), REPRESENTED BY THE DEPUTY GENERAL MANAGER, CANARA BANK, SLBS CELL, CIRCLE OFFICE, CANARA W.P.(C) No.34452/19 **-:2:-** BANK BLDG., P.B.NO.159, M.G.ROAD, THIRUVANANTHAPURAM-695001. BY ADV SRI.C.A.JOY,SC,CATHOLIC SYRIAN BANK LTD THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 10.12.2021, THE COURT ON 17.12.2021 DELIVERED THE FOLLOWING: **-:3:-** W.P.(C) No.34452/19 ## **BECHU KURIAN THOMAS, J. -------------------------------W.P.(C)NO.34452 of 2019** _**--------------------------------**_ Dated this the 17[th] day of December, 2021 ## **JUDGMENT** The cashew industry, which was once flourishing in Kerala, has seen a downward spiral in the recent past. Cashew industrialists have been knocking at the doors of the Government as well as the banks and financial institutions for relief from their woes. Unfortunately, though several attempts have been made, on the initiative of the State Government, the financial institutions and banks have not relented from initiating proceedings under the various statutes for recovery of amounts due to them. 2. Petitioner is one such cashew industrialist who faces the threat of dispossession from his properties, though he claims to be eligible for the rehabilitation programme under consideration by the Government along with the State Level Banker's Committee (SLBC). Unmindful of the pleas of the cashew industrialists and even those of the State Government, banks are proceeding to recover what they claim to be, W.P.(C) No.34452/19 ## **-:4:-** legitimate dues owed to them. 3. Petitioner is the proprietor of an entity by name 'M/s.Kairali Cashew Company' who had availed credit facility of Rs.3,75,00,000/- and a further facility of Rs.12,00,000/- towards machinery from the second respondent. Petitioner alleges that, though, he had paid a substantial sum towards the loan repayment, the second respondent is purported to have treated those payments towards the interest and other charges and are now proposing to dispossess the petitioner from the properties, thereby, causing injustice and prejudice. Relying upon Ext.P1 judgment of this Court, it was submitted that petitioner is entitled to get the benefit of the deliberations and the conclusions that were arrived at, in the meeting constituted by the State Government along with the SLBC. Petitioner further contends that in the meeting held on 01.10.2021, various decisions were taken which included the banks to desist from proceeding against the cashew industrialists, till the SLBC ( _sic_ ) takes a final decision. According to the petitioner, in total derogation of the decisions taken as mentioned above, the bank is proceeding to recover the amounts due from the petitioner W.P.(C) No.34452/19 **-:5:-** and hence he seeks for restraining physical dispossession of the petitioner and for reconsideration of the proposal for rehabilitation. 4. A statement has been filed on behalf of the second respondent pointing out that the petitioner cannot challenge the proceedings initiated under section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'the Act') through this writ petition, since he has got an effective remedy before the Debts Recovery Tribunal. It was further pointed out that though in Ext.P1 judgment, this Court had directed consideration of a proposal for revival, no such proposal was received and further that petitioner's cashew unit is not at all a running unit to even consider a proposal for revival. According to the respondents, the proposal submitted by the petitioner was in fact, rejected as early as in June 2018. The second respondent further pointed out that, the petitioner had availed various credit facilities from the bank, which were all declared as NPA on 30.09.2016 and that it was after issuance of notice under section 13(2) of the Act in 2016 that, the proceedings under Section 14 of the Act were W.P.(C) No.34452/19 ## **-:6:-** initiated. Even otherwise, it was pleaded by the respondents that, the proposal before the SLBC and the deliberations thereon were all with respect to running cashew industries that were under stress or on the verge of being declared as NPA. The petitioner being a closed unit, was not entitled to any of the reliefs claimed for. 5. I have heard Sri. John Prakash B.J., the learned counsel for the petitioner as well as Sri. C.A.Joy, learne6 Standing Counsel for the second respondent and Sri. Justin Jacob, the learned Government Pleader for respondents 1 and 3. 6. Notice under Section 13(2) of the Act was issued as early as 20.10.2016 after declaring the petitioner as NPA on 30.09.2016. Proceedings under Section 14 of the Act were initiated by filing a petition for assistance on 20.04.2019 and further, an original application is pending consideration before the Debts Recovery Tribunal as O.A. No.336/2017. 7. The State Government along with SLBC is considering a scheme for revival of the cashew industries in the State. Even though various deliberations have taken place and several meetings held, it is noticed that no concrete decision has been W.P.(C) No.34452/19 **-:7:-** arrived at by the Government and the SLBC. However, in the meeting on 01.10.2021, the following conclusions have been arrived at between the SLBC and the Government relating to the cashew industry: _i. The percentage of repayment of 45% as suggested by the representative of the industrialists, will be discussed with SLBC officials and will take a final decision._ _ii. The maximum time of repayment tenure requested of two years will also be discussed with the SLBC officials and a suitable decision will be taken._ _iii. Another meeting will be held within two weeks in this regard and final decisions will be taken._ _iv. Repayment scheme of 1% will be considered and settlement will be discussed with the Government and suitable decision will be taken within two weeks._ _v. No legal action will be taken against the cashew industrialists till SLBC takes a final decision (by considering all the factors in this respect) with regard to the cashew industrialists._ 8. A reading of the above conclusions reveals that 45% repayment was suggested by the representatives of the industrialists themselves and the maximum period of repayment W.P.(C) No.34452/19 ## **-:8:-** tenure of two years was decided to be discussed. Apart from other stipulations, it was decided that no legal action will be taken against the cashew industrialists till SLBC takes a final decision. Similarly in Ext.P8 also it is noticed that the banks had agreed to continue to offer a model one time settlement scheme to the cashew sector to enable them to revive and come out of the financial difficulty. It was further offered by SLBC to the Government that, they were willing to provide all support for the revival and continuance of the cashew sector, though, the regulations of the RBI are to be scrupulously abided by them. It was further decided in the meeting held on 21.12.2020 that, until the Government comes up with the revival package, the banks will not proceed against the cashew industries. 9. The fact that various deliberations are taking place in an attempt to revive the cashew industries by providing revival packages or moratoriums are not in dispute. There is a concerted effort on the part of all stakeholders to revive this industry which was at one point in time, the highlight of industrial progress in Kerala. Unfortunately, no concrete decisions have been arrived at by either of the parties. W.P.(C) No.34452/19 ## **-:9:-** 10. Even while observing that various deliberations are going on to revive the industry, this Court cannot lose sight of the mandate of law that when there is a default in repayment, the banks are entitled to enforce the security interests created and that unless the amounts disbursed as loan are recovered, the economy would be prejudicially affected. 11. In order to balance the above-mentioned conflicting needs of the petitioner as well as the respondents, this Court is of the opinion that though the bank is entitled to proceed against the petitioner, notwithstanding the consideration before the Committee constituted for the said purpose, an attempt to provide a settlement package to the petitioner must be pursued. 12. In the statement filed by the petitioner, it is pointed out that, the petitioner has not submitted any proposal for onetime settlement and that even the SLBC had decided to continue with the model one-time settlement scheme. Since the respondent bank is not averse in considering a suitable settlement scheme, this Court is of the view that an opportunity must be granted to the petitioner to attempt settlement. 13. Accordingly, there will be a direction to the **-:10:-** W.P.(C) No.34452/19 petitioner to approach the second respondent with a feasible offer of settlement. If such a proposal is submitted by the petitioner within a period of 30 days from the date of receipt of a copy of this judgment, the second respondent bank shall convene a meeting with the petitioner and take into reckoning the circumstances prevailing and offer a suitable settlement opportunity to the petitioner. The meetings being conducted at the behest of the State Government and the SLBC must also be given adequate consideration, including the decisions thereon. 14. Till such a decision is taken, the coercive proceedings against the petitioner shall be kept in abeyance. Needless to mention, if a settlement scheme is offered to the petitioner, the terms of such a scheme shall take precedence. With the above observations, the writ petition is disposed of. Sd/- ## **BECHU KURIAN THOMAS** **JUDGE** AJ W.P.(C) No.34452/19 ## **-:11:-** ## **APPENDIX OF WP(C) 34452/2019** PETITIONER EXHIBITS EXHIBIT P1 EXHIBIT P1 TRUE COPY OF THE JUDGMENT DATED 19.03.2019 IN W.P.(C) NO.24646/2017. EXHIBIT P2 TRUE COPY OF THE PROPOSAL ALONG WITH THE ACCOMPANYING DOCUMENTS. EXHIBIT P3 TRUE COPY OF THE PETITION DATED 20.04.2019 FILED BY THE PETITIONER BEFORE THE HON'BLE CHIEF JUDICIAL MAGISTRATE COURT, KOLLAM. EXHIBIT P4 TRUE COPY OF THE OBJECTION DATED 17.06.2019 FILED BY THE 2ND RESPONDENT. EXHIBIT P5 TRUE COPY OF THE NOTICE DATED 04.12.2019. EXHIBIT P6 TRUE COPY OF THE LETTER DATED 3.9.2020 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER