Kannan T v State Bank of India and others

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT** **THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR** **&** **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **TUESDAY, THE 02ND DAY OF FEBRUARY 2021 / 13TH MAGHA,1942** **WA.No.249 OF 2021** **AGAINST THE JUDGMENT IN WP(C) 164/2021(U) OF HIGH COURT OF KERALA DATED 5.1.2021** ## **APPELLANT/PETITIONER:** **KANNAN T AGED 48 YEARS, S/O LATE THANKAPPAN, SAYABI, TOWN LIMIT, KADAPPAKKADA, KOLLAM – 691 008.** **BY ADVS. SHRI.THOMAS ABRAHAM SMT.MERCIAMMA MATHEW SRI.ASWIN.P.JOHN SRI.R.ANANTHAPADMANABAN SHRI.THAYYIB SHA P.S.** ## **RESPONDENTS/RESPOONDENTS:** - **1 THE ASSISTANT GENERAL MANAGER STATE BANK OF INDI, VIKAS BHAVAN P.O., THIRUVANANTHAPURAM -695 033** - **2 THE DEPUTY GENERAL MANAGER, STATE BANK OF INDIA,VIKAS BHAVAN P.O., THIRUVANANTHAPURAM-695 033** - **3 THE CHIEF MANAGER, STATE BANK OF INDIA,VIKAS BHAVAN P.O., THIRUVANANTHAPURAM-695 033** - **4 THE BRANCH MANAGER, STATE BANK OF INDIA,COMMERCIAL BRANCH, CHAMAKKADA P.O., KOLLAM – 691 001** **SRI. JAWAHAR JOSE, SC FOR STATE BANK OF INDIA** **THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 02.02.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** _**W.A.249/2021**_ 2 ## JUDGMENT Dated this the 2[nd] day of February, 2021 ## S. Manikumar, CJ. Impugned judgment in W.P(C). No.164 of 2021, which has summarised the facts, submissions, decisions considered and the directions, is reproduced: “The petitioner concedes that he has availed of certain large loan facilities from the respondent – State Bank of India (hereinafter referred to as 'the Bank' for short) and has approached this Court impugning Ext.P1 notice of sale issued by the said Bank for sale of secured asset. 2. According to the petitioner, he has been always willing and ready to pay off the loan liability, but that on account of the fact that he has been classified incorrectly and illegally as a “willful defaulter”, he has been mulcted with larger penalties and detriment, thus incapacitating him from liquidating the liability. The petitioner, therefore, prays that Ext.P1 be set aside and the Bank be directed to allow him to settle the loan liability under the One Time Settlement Scheme, as is discernible from Ext.P3. 3. In response to the submissions of Shri.I.Dinesh Menon, learned counsel for the petitioner as afore, Shri.Jawahar Jose, learned counsel for the respondents, submitted that the petitioner is not entitled to seek settlement of the loan liability under Ext.P3 because he did not even pay the first instalment under it until now. He _**W.A.249/2021**_ 3 submitted that the term of the said One Time Settlement is now over; but added that the petitioner has been offered another settlement at Rs.3 Crores and that if he pays this amount within a period of one month, the loan liabilities will stand fully liquidated. He added that this is the best offer that the Bank can offer to the petitioner, because, as per the accounts, more than Rs.23.23 Crores is due from him, in three loan accounts and that Ext.P1 has been issued for recovery of the same. 4. Shri. Jawahar Jose, therefore, prayed that either the petitioner be directed to pay Rs.3 Crores within a period of one month from today in full and final settlement of all the three loan accounts; or that this Court dismiss this writ petition, finding it be not maintainable. 5. It is indubitable, going by the affirmative declarations of the Hon'ble Supreme Court in Union Bank of India v. Satyawati Tondon [2010 (8) SCC 110] and in Authorised Officer, State Bank of Travancore and Another v. Mathew K.C. [2018 (1) KLT 784], that the jurisdiction of this Court in dealing with matters arising under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act ('the SARFAESI Act' for brevity) is severely restricted and even proscribed. 6. However, since the Bank now offers that the petitioner can be allowed to liquidate the loan liability by payment of Rs.3 Crores within a period of one month from today, I asked Shri.I.Dinesh Menon - learned counsel for the petitioner, whether his client is interested in accepting this suggestion. 7. Shri.I.Dinesh Menon, in response, submitted that since his client has no other option, he will agree to the offer _**W.A.249/2021**_ 4 now made by the Bank and thus prayed that this Court order this writ petition on such terms. In the afore circumstances, without entering into the merits of any of the dialectical contentions of the parties, I order this writ petition and direct the Bank to defer the sale of the properties, as notified through Ext.P1, until 05/02/2021; with a concomitant direction to the petitioner to pay an amount of Rs.3 Crores - which is stated to be the One Time Settlement figure - so as to liquidate the liability in all the three loan accounts, on or before 05/02/2021. It goes without saying that if the petitioner pays the amounts as afore directed and within the time granted, then the Bank will cease all further proceedings pursuant to Ext.P1 and return the title documents of the secured assets to the petitioner or to the mortgagor, as the case may be; but if on the contrary, the petitioner defaults in payment as ordered above, the Bank will be at liberty to continue further proceedings from the stage at which it is available today based on Ext.P1 for sale of the secured assets without having to seek any further orders from this Court. At this time, Shri.Jawahar Jose brought to my notice a practical difficulty that may be faced by the Bank when the sale is deferred, namely, that a fresh sale notification will have to be published, should the petitioner default payment in terms of this judgment. This certainly is an issue that the Bank will have to face and I, therefore, asked Shri.I.Disnesh Menon, learned counsel for the petitioner, whether his client will suffer the cost of the said publication also, if it becomes so warranted. Shri.I.Dinesh Menon, in answer submitted that his client will take full responsibility for this and that if he is unable to _**W.A.249/2021**_ 5 make payment as per this judgment, the Bank may left liberty to charge the amount for the next publication also to his account. He also submitted that his client will not insist on a fresh publication in such event and that the Bank may be left liberty to take a decision on this appropriately. This is recorded.” 2. Assailing the correctness of the same, appellant has filed instant appeal on the following grounds : “A. Within a space of 2 months, from the time Exhibit P3 scheme was offered to the time the above writ petition came up for consideration, the bank had increased its claim by around Rs.80 lakhs. In the present financial climate, allowances ought to have been made to ensure that business do not fail owing to unworkable demands. If a reasonable amount was required to be paid by the appellant and either the benefit of Exhibit P3 or a similar scheme was extended or instalment facility was provided for repayment of the entire dues, the appellant would have been able to raise the required amount and settle the dues. The bank authorities ought to have taken into account the request for such indulgence, taking into account the economic crises brought about by Covid-19 pandemic. B. In his efforts to repay the amounts due, appellant had sold several parcels of property. He sold 7.50 cents of land in Anchal Village for around Rs.23 lakhs and 7.25 cents of land in Kadappakkada village for around Rs..27 lakhs to meet the dues. Apart from the above, the Bank had sold 79.20 cents of land at Thickanamcode which had a market value of Rs.1.60 crores for Rs.94 lakhs; 20 cents at Perinadu Village for Rs. 58 lakhs and 49 cents at Elampalloor Village for around Rs. 1.25 _**W.A.249/2021**_ 6 crores. Thus it can be seen that he is infact not a wilful defaulter, but merely a victim of the present economic crises. The bank authorities ought to have taken a lenient view taking the aforesaid aspects into account. C. The financial crisis affecting the Cashew Industry was exacerbated by prolonged closure owing to Covid-19 pandemic and all sources of revenue of the appellant had dried up as a result. Unless some indulgence is shown by the bank authorities enabling the appellant to raise the required funds to clear the dues, the present steps initiated would virtually lead to closure of the appellant's business. While such actions may enable the bank to recoup some of the dues in the short term, the same would not be as beneficial as the appellant's business recovering and flourishing in the long term. Therefore, it is in the interest of the bank also to allow all eligible concessions which have been extended to persons similarly placed like the appellant. If such relaxations are granted, the appellant would very well be able to repay the amounts thus found liable to be paid. D. It is humbly submitted that a distress sale in the form of a bank sale will not fetch an amount close to the actual market price of the property. If the bank proceeds with their proposed step, not only will the bank not realize the entire amounts due, but the appellant will also lose his residential house. If the bank can display willingness to extend some time for the appellant to raise and repay the amounts due, neither party will be put to a loss. E. Appellant's valuable rights guaranteed under Articles 14, 19(1) (g), and 21 of the Constitution of India will be infringed if the sale of his residential house is allowed to take place.” _**W.A.249/2021**_ 7 3. Mr. Thomas Abraham, learned counsel for the appellant submitted that periodical payments has been made by the appellant and on the grounds raised in this Writ Appeal, sought for extension of time, by two months. 4. Per contra, Mr. Jawahar Jose, learned Standing Counsel for the Bank submitted that earlier One Time Settlement offer was made by the Bank in October, 2020, wherein the appellant agreed to pay Rs.2.5Crores. However, appellant failed to honour the One Time Settlement and thereafter filed a writ petition, challenging the subsequent claim for One Time Settlement of NPAs & AUCAs (SBI OTS 2020) dated 19.10.2020. 5. During the pendency of the writ petition, bank has offered another One Time Settlement on payment of Rupees Three Crores on or before 5.2.2021. Appellant agreed for the settlement and that is evident from the directions issued in the impugned judgment in W.P(C). No.164 of 2021. As on today, appellant has to pay a sum of Rs.23,22,245/-. 6. Mr. Thomas Abraham, learned counsel for the appellant disputes the said amount. Request for extension of time by the appellant is seriously opposed by the learned Standing Counsel for the Bank. 7. On the aspect as to whether the High Court under Article 226 of the Constitution of India, can enter into the disputes, as to what _**W.A.249/2021**_ 8 amount is due and payable, rescheduling of the loan amount, it is trite law that it is purely contractual and under Article 226 of the Constitution of India, court cannot issue any direction to grant extension of time and it is entirely left to the Bank. 8. In similar circumstances, taking note of the decisions of the Hon'ble Madras Court in Tamilnadu Industrial Investment Corporation v. Millenium Business Solutions Private Limited, [2004 (5) CTC 689] and M/s. Digivision Electronics Ltd., Registered Office at No.A5 & 6, Industrial Estate, Guindy, Chennai - 32 v. Indian Bank, rep. by its Deputy General Manager, Head Office, 31, Rajaji Salai, Chennai-1 and another, [2005 (3) LW 269] , and another decision of the Allahabad High Court in Vipin Kumar Gupta v. Branch Manager, Union Bank of India, Gyanpur and Others [AIR 2004 ALL. 319], this Court, by judgment in W.A. No.1264 of 2020 dated 28.9.2020, dismissed the appeal, filed by the defaulter. Relevant paragraphs from the judgment in W.A. No.1264 of 2020 are extracted hereunder: “30. In Tamilnadu Industrial Investment Corporation v. Millenium Business Solutions Private Limited, [2004 (5) CTC 689], the Hon'ble Madras High Court, at paragraph Nos.7, 8, 16 and 18, held as under: "7. In our considered opinion it is not proper for the Court to interfere in such matters relating to recovery of loans. Such matters are contractual in nature and writ jurisdiction is not the proper remedy for this. A writ lies when there is an error of law apparent on the face of the _**W.A.249/2021**_ 9 record, or there is violation of law. No writ lies merely for directing one time settlement or for directing rescheduling of the loan or for fixing instalments in connection with the loan. It is only the bank or the financial institution which granted the loan which can reschedule it or fix one time settlement or grant instalments. The Court has no right under Article 226 of the Constitution to direct grant of one time settlement or for re-scheduling of the loan, or to fix instalments. No doubt Article 226 on its plain language states that a writ can be used by the High Court for enforcing a fundamental right or for 'any other purpose'. However, by judicial interpretation the words 'any other purpose' have been interpreted to mean the enforcement of any legal right or performance of any legal duty, vide Calcutta Gas Co. v. State of West Bengal, AIR 1963 SC 1044. In the present case, the writ petitioner has really prayed for a Mandamus to the Corporation to grant it a one time settlement, but no violation of any law has been pointed out. In our opinion, no such mandamus can be issued in this case, and hence the writ petition should not have been entertained. A mandamus is issued only when the petitioner can show that he has a legal right to the performance of a public duty by the party against whom the mandamus is sought. 16. A loan is granted in terms of the contract, and grant of one time settlement or re-scheduling of the loan amount is really a modification of the contract, which can only be done by mutual consent of the parties, vide Section 62 of the Contract Act, 1872. The Court cannot alter the terms of the contract. 18. Before parting with the case we would like to mention that recovery of tens of thousands of crore rupees of loans of banks and financial institutions has _**W.A.249/2021**_ 10 been held up by Court orders under Article 226 proceedings which were really unwarranted. However, much sympathy a Court may have for a party, a writ Court must exercise its jurisdiction on well settled principles, and not a mere sympathy or compassion. No doubt, there be hardship to a party, but unless violation of law is shown the Court cannot interfere. Holding up recoveries of loans by unwarranted Court orders is causing incalculable harm to our economy, since unless the loan is recovered a fresh loan cannot be granted to needy persons. The Courts must keep these considerations in mind." 31. In M/s. Digivision Electronics Ltd., Registered Office at No.A5 & 6, Industrial Estate, Guindy, Chennai - 32 v. Indian Bank, rep. by its Deputy General Manager, Head Office, 31, Rajaji Salai, Chennai-1 and another, [2005 (3) LW 269], a Hon'ble Division Bench of the Madras Court, at paragraph No.42, held as follows: "42. Some of the learned counsel submitted that the Court should direct one time settlement or fixing of installment or rescheduling the loan. In Tamilnadu Industrial Investment Corporation Vs. Millenium Business Solutions Private Limited, 2004 (5) CTC 689, it has been held that this Court cannot pass any such order in writ jurisdiction, since directing one time settlement or granting installments is really re-scheduling the loan, which can only be done by the bank or financial institution which granted the loan. This Court under Article 226 of the Constitution cannot reschedule a loan. A writ is issued when there is violation of law or error of law apparent on the face of the record, and not for rescheduling loans. The Court must exercise restraint in such matters, and not _**W.A.249/2021**_ 11 ## depart from well settled legal principles". At paragraph No.46, in M/s. Digivision Electronics Ltd., (cited supra), the Hon'ble Division Bench further held as follows: "46. Writ is a discretionary remedy, and hence this Court under Article 226 is not bound to interfere even if there is a technical violation of law, vide R.Nanjappan Vs. The District Collector, Coimbatore, 2005 WLR 47, Chandra Singh Vs. State of Rajasthan, JT 2003 (6) SC 20. The Managing Director, Tamil Nadu State Transport Corporation (Madurai Division-IV) Ltd., Dindigul Vs. P.Ellappan, 2005 (1) MLJ 639, Ramniklal N.Bhutta and Another Vs. State of Maharashtra, 1997 (1) SCC 134, etc." 32. In Vipin Kumar Gupta v. Branch Manager, Union Bank of India, Gyanpur and Others [AIR 2004 ALL. 319], the Hon'ble Allahabad High Court held as under: “6. The correct interpretation of Art. 226 is that a writ can be issued to the persons to whom and, for the purpose for which, writs were traditionally issued by the British Court on well established principles, vide Election Commissioner v. Saka Venkat (1953) SCR 1144 : (AIR 1953 SC 210), Basappa v. Nagappa, AIR 1954 SC 440, etc. One of the well established principles, on which the British Court issued writs was that a writ of certiorari will issue only when there is error of law apparent on the face of the record and a mandamus will issue for enforcement of a legal right or performance of legal duty, vide Fertilzer Kamgar Union v. Union of India, AIR 1981 SC 344 (para 10), State of Orissa v. Madangopal Rungta (1952) SCR 28 (33) : (AIR 1952 SC 12), Calcutta Gas Co. v. State of West Bengal, AIR 1962 SC 1044 (1047-8). 7. Similarly, although Art.226 on the face of it says that a _**W.A.249/2021**_ 12 writ can be issued to any person, by judicial interpretation the Courts have placed a restricted interpretation to the language of Art.226, and it has been held that writs except (a writ of habeas corpus) can only be issued to the State or an instrumentality of the State, and not to private persons vide Dr. Anand Kumar Gupta v. Rajghat Education Centre, 2003 All LJ 587, General Manager, Modipan Fibre Co. v. Narendra Pal Gahlot, 2003 All LJ 980, G. Basi Reddy v. International Crops Research Institute, 2003 (2) All WC 1199 (SC) : AIR 2003 SC 1764, Federal Bank Ltd. v. Sagar Thomas 2003 (3) UPLBEC 2728 : AIR 2003 SC 4325, Anil Kumar Agarwal v. U. P. Stock Exchange, 2004 (1) AWC 280 : (2004 All LJ 365) etc. 8. We have elaborated on this because a large number of petitions are being filed in this Court in which the only prayer is that the High Court should fix instalments of the loan taken by the petitioner or to grant one time settlement. In our opinion the High Court has no power to do this. It should exercise judicial restraint and observe the well settled principles on which writs are issued.” 33. The decisions, extracted above, can be made applicable to the case on hand. 34. From the above, it could be deduced that sufficient indulgence has been granted by the respondent bank, rescheduling the payment. As rightly held by the writ court, directions cannot be issued under Article 226 of the Constitution of India, against the bank for restructuring the payment. In the light of the above discussion and decisions, reliefs sought for by the appellant in the writ petition cannot be granted. There is no error in the impugned judgment, warranting interference in appeal. Writ appeal is, therefore, dismissed. ” _**W.A.249/2021**_ 13 In the light of the above decisions and discussion, we are not inclined to interfere with the impugned judgment. Writ appeal is dismissed. It is made clear that dismissal of the Writ Appeal would not foreclose the right of the appellant under the extant, if any action is taken for recovery of the balance amount. Sd/S. Manikumar, Chief Justice Sd/Shaji P. Chaly, Judge sou.