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Database updates
Judgments
State of M.P. and others vs Sanjay Nagayach and others
[SUPREME COURT OF INDIA, 16 May 2013]
Banking & Finance - Madhya Pradesh Co-operative Societies Act, 1960, ss. 53(1) and 53(2) - Supersession - Reinstatement - Entitled to - Respondents Board of directors of Bank was elected to office and while in office they were served with show-cause notice issued by Joint Registrar u/s. 53(2) of the Act - Joint Registrar served order of supersession on Board, followed by appointment of an Administrator in gross violation of second proviso to s. 53(1) of the Act - Respondents challenged the order of Joint Registrar before HC on ground of violation of second proviso to s. 53(1) of the Act that was non-consultation with Reserve Bank of India (RBI) before taking a decision to supersede respondents - Single Judge directed the parties to avail of alternative remedy provided u/s. 78 of the Act - On appeal, DB set aside the order of supersession on ground of non-compliance of second proviso to s. 53(1) of the Act - Aggrieved, appellant State preferred instant appeal - Whether DB was justified in passing the impugned order - Held, 7 charges leveled against respondents were relating to period of previous Committee, for which first respondent Board of Directors could not be held responsible - Board had taken charge in October 2007, audit report was submitted before Board only after 9 months and that respondents took follow up action on basis of audit report - Joint Registrar, was satisfied with detailed replies submitted by respondents possibly, due to that reason, even though show- cause-notice was issued on 22-3-2009, it took about two and half years to pass the order of supersession - Order of supersession was not only in clear violation of second proviso to s. 53(1) of the Act, but also allegations raised in show-cause-notice were deficiencies mostly relating to systems and procedures and were of general nature and not grave enough to overthrow a democratically elected Board of Directors - RBI had expressed the view that charges leveled against Board of Directors do not provide strong ground to supersede Board - Respondents should get benefit of that proviso, which was statutory in nature - DB of HC justified in passing the impugned order - It was directed re-instatement of respondent No. 1 back in office forthwith and be allowed to continue for period they were put out of office by impugned order which was quashed - Order accordingly.
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Frukan Ali vs State of Uttarakhand
[UTTARAKHAND HIGH COURT, 15 May 2013]
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Peep Ram vs Roshan lal and Another
[HIMACHAL PRADESH HIGH COURT, 14 May 2013]
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Kishore Kumar and another vs Bank of India, Lucknow Through Its Chief Manager and another
[ALLAHABAD HIGH COURT, 10 May 2013]
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Dr. Shyama Prasad and another vs Bank of India and others
[JHARKHAND HIGH COURT, 08 May 2013]
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(1) TATA Motor Finance Limited, Himachal Pradesh; (2) TATA Motor Finance Limited, Thane West vs Umesh Thakur S/o N. R. Thakur
[STATE CONSUMER DISPUTES REDRESSAL COMMISSION, 08 May 2013]
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Vivek Chand Ray vs District Cooperative Agriculture and Rural Development Bank Maryadit
[CHHATTISGARH HIGH COURT, 08 May 2013]
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Bank of Maharashtra vs Pandurang Keshav Gorwardkar and others
[SUPREME COURT OF INDIA, 07 May 2013]
Banking & Finance - Labour & Industrial Law - Recovery of Debts Due to Banks and Financial Institutions Act, 1993, ss. 19(19) - Companies Act, 1956, ss. 529A, 529(1)(c) - Liquidation of company - Recovery officer - Claims adjudicated by Tribunal - Claims of workmen - Pari passu - Writ petition filed by workmen/employees of company praying therein that direction be issued to the Recovery Officer, DRT (Tribunal) to recover the amount of Rs. 3 crores from appellant/bank which was allowed to be withdrawn being the money realised from the sale of movables of the Company and for issuance of further direction to the Recovery Officer to adjudicate the claims/dues of the workmen/employees - After adjudication, in priority over all the claims, release the amount due to them - Workmen/employees also prayed in the writ petition for direction to the Central Govt. to make rules laying down procedure to be followed by the Recovery Officer under 1993 Act - HC allowed the petition - Hence instant appeals - Whether the claims of the workmen who claimed to be entitled to payment pari passu have to be considered by the official liquidator or whether their claims have to be adjudicated upon by the Tribunal was likely to arise in a large number of cases where recoveries were sought to be made pursuant to the certificates issued by Tribunal - Held, if the debtor company was not in liquidation nor any provisional liquidator was appointed and merely winding up proceedings were pending, there was no question of distribution of sale proceeds among secured creditors in the manner prescribed in s. 19(19) of the 1993 Act - Where a company was in liquidation, statutory charge was created in favour of workmen in respect of their dues over the security of every secured creditor and this charge was pari passu with that of the secured creditor - Such statutory charge was to the extent of workmen's portion in relation to the security held by the secured creditor of the debtor company - Pending final disbursement of the proceeds realized from the sale of security in execution of recovery certificate issued by the debt recovery tribunal, if debtor company becomes company in winding up, s. 529A r/w s. 529(1)(c) proviso come into operation and statutory charge was created in favour of workmen in respect of their dues over such proceeds - Relevant date for arriving at the ratio at which the sale proceeds were to be distributed amongst workmen and secured creditors of the debtor company was the date of the winding up order and not the date of sale - Where the sale of security effected in execution of recovery certificate issued by the Tribunal under the 1993 Act, the distribution of sale proceeds had to be made by the Tribunal alone in accordance with s. 529A of the 1956 Act and by no other forum or authority - Workmen of the company in winding up acquire the standing of the secured creditors on and from the date of winding up order (or where provisional liquidator has been appointed, from the date of such appointment) and they become entitled to the distribution of sale proceeds in the ratio as explained in the illustration appended to s. 529(3)(c) of the 1956 Act - S. 19(19) of the 1993 Act did not clothe Tribunal with jurisdiction to determine the workmen's claim against the debtor company - Adjudication of workmen's dues against the debtor company in liquidation had to be made by the liquidator - S. 19 (19) of the Act would attracted only where a debtor company was in winding up or a provisional liquidator was appointed in respect of such company - If the debtor company was not in liquidation or if in respect of such company no order of appointment of provisional liquidator was made and merely winding up proceedings were pending, the question of distribution of sale proceeds among secured creditors in the manner prescribed in s. 19(19) of the 1993 Act did not arise - Claims of the workmen who claim to be entitled to payment pari passu had to be considered and adjudicated by the liquidator of Debtor Company and not by the Tribunal - Impugned judgment was set aside - Appeals allowed.
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Mahindra and Mahindra Financial Services Limited vs (1) Vishal S. Bagadia and another; (2) Veera Kersi Guzdar and another
[BOMBAY HIGH COURT, 06 May 2013]
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Tek Singh vs Himachal Gramin Bank and others
[HIMACHAL PRADESH HIGH COURT, 03 May 2013]
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(1) Ujjal Kumar Das and another; (2) Messrs Allianz Convergence Private Limited and others vs (1) State Bank of India and others; (2) General Manager, State Bank of India and another
[CALCUTTA HIGH COURT, 03 May 2013]
Banking & Finance - Securitisation and Reconstruction of Financial Asset and Enforcement of Security Interest Act, 2002, ss. 13(2), 17, 17(3), 17(1) - Publication of photographs - Defaulting borrowers - Validity - Challenged - Instant petitions filed challenging the publication of photograph(s) of the defaulting borrower(s) and guarantor(s) as a measure for recovery of the secured debt - Petitioners contended that secured creditors did not enjoy legislative sanction and, therefore, the secured creditors might be permanently restrained from proceeding in that direction - Whether or not a secured creditor, which had initiated action for enforcement of its security interest in terms of the provisions of the 2002 Act was entitled to publish the photograph(s) of the defaulting borrower(s)/guarantor(s) in newspapers/magazines etc. - Held, there was little doubt that the 2002 Act conferred wide powers on the secured creditors to enforce the security interest without judicial intervention up to the stage of taking measures u/s. 13(4) of the 2002 Act thereof - Classification of loan account as non-performing asset, computation of the quantum of dues and taking over possession of the secured asset upon rejection of the response to the notice u/s. 13(2) of the Act were the various steps that were required to be taken for enforcing the security interest - In course thereof, the secured creditors might not ordinarily face interference by the courts, since the vires of the 2002 Act was upheld - It was only at the stage of s. 17(1) thereof that there was scope for a judicial determination of the issues raised by a borrower/guarantor by the Debts Recovery Tribunal having jurisdiction - Till such time the Tribunal was approached and requested to consider a prayer for interim relief, it was a totally one-sided affair - Secured creditor unilaterally decide whether one was a defaulter or not and further as to whether the photograph of such defaulter ought to be published or not - If it were accepted that the secured creditor enjoys the unfettered power of publishing the photograph of a defaulting borrower/guarantor and does so even before the Tribunal u/s. 17 of the 2002 Act could be approached, and quite some time thereafter the Tribunal u/s. 17(3) holds that the secured creditor had acted contrary to the other provisions thereof while enforcing the security interest u/s. 13(4) and ultimately directed restoration of possession, the damage that could be caused to the reputation and dignity of an honest borrower/guarantor by reason of publication of his photograph in the interregnum would be irretrievable - It might not be possible to compensate such damage by money, if a borrower/guarantor, who was proceeded against contrary to law by the secured creditor and whose photograph was published, was unable to bear the ignominy and takes a drastic step - Since publication of photograph of a defaulting borrower/guarantor had the potential of exposing him to irreparable loss, injury and prejudice, publication of photograph cannot be resorted to in the absence of an express power or an agreed term in this behalf - Petitioners challenge restricted to the threat of publication of their photographs was upheld - Publication of photographs in newspapers, magazines etc. neither being permissible in terms of the 2002 Act or the Rules framed thereunder nor under any other rule/notification/guideline having binding effect - HC further hold that the threat to publish photographs borders on extra-legal means to recover the dues - Secured creditors were, accordingly, restrained by a prohibitory order from taking such recourse - Petition disposed of.
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Shiva Corporation (India) Limited vs State of Rajasthan and others
[RAJASTHAN HIGH COURT, 02 May 2013]
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(1) Arshdeep Finance Limited; (2) Oak India Multistate Credit Cooperative Society Limited; (3) Green Ray International Limited and others; (4) Basil International Limited and others; (5) Dhanolty Developers Limited vs State of Jharkhand and others
[JHARKHAND HIGH COURT, 26 Apr 2013]
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Devis Ispat Limited and another vs State Bank of India and another
[CALCUTTA HIGH COURT, 26 Apr 2013]
Banking & Finance - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, ss. 13(2) and 13(3A) - Inconsistency in cash credit - Declaration of non-performing asset - Validity - Appellant company was enjoying credit facilities from respondent bank with overall limit of Rs. 29,50,00,000/- - However, said facilities were enhanced to Rs. 68,50,00,000/- Appellants made an application for further enhancement of limit of such facilities to 93,00,00,000/-, but same was not sanctioned by appropriate authority - Respondent bank by letter dt. 10-1-2013 informed appellants that its Cash Credit account was irregular as outstanding limit therein was Rs. 11,71,52,559.66 against permissible over drawal limit of Rs. 5,60,00,000/- and that there was no service of interest in Cash Credit, FCNB (DL) and SLC accounts - Appellants were advised to regularise accounts within 14-1-2013, failing which accounts should become non-performing asset (NPA) - Thereafter, authorized officer declared appellants facilities as NPA and issued notice u/s. 13(2) of the Act upon appellant company - Appellant filed petition before Single Judge, which was rejected on ground of existence of alternate statutory remedy by way of representation u/s. 13 (3A) of the Act to respondent bank - Hence, instant appeal - Whether Single Judge was justified in passing the impugned order - Held, incorporation of statutory mechanism empowering borrower to make a representation was an effective statutory mechanism and provides an adequate and effective statutory mechanism to expeditiously resolve any difficulty or objection raised by borrower relating to classification of its securities or otherwise - However, issues relating to validity of decision of declaring an account as non-performing asset essentially relates to disputed questions of fact and accounting and same had rightly left to be adjudicated in first instance by respondent bank - In instant case, writ petition was filed even prior to making representation u/s. 13 (3A) of the Act to respondent bank - During pendency of appeal such representation was made and dealt with elaborately by respondent bank by passing a speaking order which was communicated vide its letter dt. 28-1-2013 to appellants - Internal adjudicatory mechanism as envisaged in Mardia Chemicals Limited and Others v Union of India and Others, 2004 Indlaw SC 258 to deal with objections raised by a borrower with regard to demand notice including classification of its accounts as NPA appears to had effectively complied with in instant case - Appeal dismissed.
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Housing Development Finance Corporation Limited vs District Consumer Disputes Redressal Forum(I) Lucknow and others
[ALLAHABAD HIGH COURT, 26 Apr 2013]
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Defence Personal Cooperative Sahkari Awas Samiti Limited vs State of Uttar Pradesh and others
[ALLAHABAD HIGH COURT, 25 Apr 2013]
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Usha W/o K. P. Haridasan (Late) vs (1) Malappuram District Co-Operative Bank Limited, Represented By Its Secretary, Malappuram; (2) Authorized Officer, Malappuram District Co-Operative Bank Limited, Malappuram
[KERALA HIGH COURT, 23 Apr 2013]
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Andhra Bank and others vs Dinesh Kumar Agarwal and others
[CALCUTTA HIGH COURT, 23 Apr 2013]
Banking & Finance - Practice & Procedure - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, ss. 13(2), 13(4), 14 - Default in repayments - Possession u/s. 13(4) of the Act - Restoration - Legality - Appellant (bank) sanctioned credit facility to respondents as working capital for which respondents executed personal guarantee in favour of appellant - However, appellant issued notice u/s. 13(2) of the Act - Appellant ultimately took physical possession of flat belonged to respondent - Aggrieved by action of appellant, respondent filed a petition before HC, which was allowed quashing action took by appellant u/s. 13(4) of the Act coupled with liberty to proceed afresh - Aggrieved appellant filed instant appeal - Whether impugned order passed by Single Judge was justified - Held, Single Judge was not only correct but was also accurate to interpret provision of law - It was clearly mean from s. 14 of the Act, legislature did not intend to bring Court of law at the stage of ss. 13 or 14 of the Act - It entrusted the Chief Executive of District to exercise power u/s. 14 of the Act - Only exception was made in case of Metropolis that was entrusted to Chief Metropolitan Magistrate - Once the District Magistrate was clearly mentioned in s. 14 of the At, the intent was clear and unambiguous - It was agreed that in a case of Metropolis, Chief Metropolitan Magistrate having the expertise to examine the provisions of law, would judiciously exercise such power whereas in case of other cities or towns District Magistrate being an Executive without having the legal expertise would not be so competent like Chief Metropolitan Magistrate - In instant case, it appeared that Asst. General Manager of appellant bank took possession on behalf of appellant and not District Magistrate or Chief Judicial Magistrate or police authority, thus, such possession was u/s. 13(4) of the Act not u/s. 14 of the Act - Possession so took by appellant bank was u/s. 13(4) of the Act and not u/s. 14 of the Act - Single Judge held, the approach of appellant u/s. 14 was contrary to law, approach was not u/s. 14 of the Act but u/s. 13(4) of the Act, thus direction to restore possession could not be sustained and was set aside - Appeal allowed.
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Salem Textiles Limited, Represented by its Managing Director, Salem District vs (1) Authorized Officer, Phoenix ARC Private Limited, Mumbai; (2) Industrial Development Bank of India Limited, Represented by its Chairman and Managing Director, Mumbai; (3) Salem Textiles, National Textile Workers Union, Salem District; (4) Salem Mavatta Dravida Panchalai Thozhilalar Munnetra Sangam, Salem District; (5) Salem District Textile, Anna Workers Union, Salem District; (6) Salem Textiles, Textile Workers Union, Salem District
[MADRAS HIGH COURT, 22 Apr 2013]
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Vinod Textiles and another vs Prem Spinning and Weaving Mills
[PUNJAB AND HARYANA HIGH COURT, 22 Apr 2013]
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M. Venkatesh Kumar S/o Late Mukundaiah vs (1) Millennium Credit Co-operative Society Limited, Represented by its Secretary, Bangalore; (2) Sale Officer, M/s. The Millennium Credit Co-operative Society Limited, Bangalore; (3) Joint Registrar of Co-operative Societies, Bangalore
[KARNATAKA HIGH COURT, 19 Apr 2013]
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Steel Authority of India Limited vs Unit Construction Company Private Limited and another
[CALCUTTA HIGH COURT, 19 Apr 2013]
Banking & Finance - Invocation of Bank guarantee - Restraint order - Validity - Respondent was a construction company and they entered into a contract for purchase of TMT bars from appellant on credit basis - Ensuring payment of dues, respondent furnished bank guarantees in favour of appellant through their banker - Respondent No. 2/Bank issued guarantees in favour of appellant - There were diverse supplies from time to time followed by part payments - Appellant invoked guarantee dt.2-3-2009 for Rs.1.8 Crores on the plea of recovery of outstanding - Respondent paid a sum of Rs.60 lakhs on 30-7-2009 - Respondent made further payment of Rs12.77 lakhs vide letter dt.5-8-2009 - Appellant again invoked said guarantee dt.25-3-2009 inter-alia making a claim of Rs.1.08 crores - Respondent filed a suit against appellants inter-alia, claiming for an order of restraint against invocation of bank guarantees dt.6-3-2009 and 25-3-2009 and obtained an ex- parte ad-interim order of injunction on 24-8-2009 that was extended on 9-9-2009 - Trial Court disposed of application vide judgment and order inter-alia confirmed interim order - Hence, instant appeal - Appellant contended that bank guarantee was an independent contract between appellant and bank - Trial Court should not have passed an order of restraint that too, at the instance of respondent who was not a party to contract - Held, appellant, having a definite claim of Rs.83,43,060 duly informed to the bank hence, bank would have no other option but to honour the same - Trial Court should not have continued the order of injunction - In fact, Trial Court should not have passed any interim order - However, appellant did not prefer any appeal - HC once again deprecate attempt to forestall invocation of a guarantee that would deny the well-settled principle of law - It would rather an attempt to circumvent the settled proposition at SC level - Appeal allowed.
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Dr. Hriday Ram Yadav vs State of Uttar Pradesh and another
[ALLAHABAD HIGH COURT, 18 Apr 2013]
Criminal - Banking & Finance - Negotiable Instruments Act, 1881, s. 138 - Code of Criminal Procedure, 1973, s. 200 - Cheque bounce - Summoning order - Quashing of - Complainant filed a complainant u/s. 200 of CrPC before Trial Court for the offence u/s. 138 of the act - Trial Court issued summons against petitioner to face trial - Aggrieved petitioner filed revision before Lower Appellate Court, which was dismissed - Aggrieved petitioner filed instant petition challenging said orders - Hence, instant petition - a complaint u/s. 138 of the Act should establish relevant dates either by documentary or by oral evidence - In instant case, it transpired that cheques were issued on 4-5-2004 and said cheques were presented on 6-5-2004 and were dishonoured and notice was issued on 1-11-2004 the date on which memo from bank dishonouring the cheque was issued had not mentioned in counter affidavit nor there was any material on record to verify said date - Unless and until the date on which memo, dishonouring the cheque was received the issue of notice could not be said to be within time because as per law it had to be within 30 days from the date of refusal - Admittedly, in instant case, notice was issued on 1-11-2004, thus, there was a long gap between presentation of cheques and issuing of notice - Trial Court was directed to pass afresh orders on complaint - Impugned orders were set aside - Petition allowed.
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Metro Malleable Manufacturers Private Limited, Represented by its Director M. R. Rajath S/o Late M. Ramachandra, Bangalore vs (1) Canara Bank, Bangalore; (2) M. Gangadhar S/o Patel Muddanna Gowda; (3) H. N. Anantharaman; (4) H. S. Mohan Kumar; (5) G. D. Manjunatha Rao; (6) S. R. Anantharaman; (7) H. H. Nasur; (8) M. G. Jayadev; (9) Z. H. Nassur
[KARNATAKA HIGH COURT, 18 Apr 2013]
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Devindrappa S/o Yankappa Shantpur vs Shababulala Kumaji, by It's Partner Ghever Chand S/o Babulala Jain
[KARNATAKA HIGH COURT, 18 Apr 2013]
Criminal - Practice & Procedure - Banking & Finance - Negotiable Instruments Act, 1881, ss. 138, 143 - Dishonor of cheque - Conviction - Sustainability - Petitioner/accused purchased tractor from respondent/ complainant/ partnership firm - Petitioner gave a cheque to respondent as security - Petitioner applied for loan from bank, remitted loan amount to respondent - Cheque given to respondent was dishonored - A case was registered against petitioner u/s. 138 r/w s. 143 of IPC - Trial Court passed conviction order - On appeal before Appellate Court - Appellate Court affirmed order of Trial Court - Hence instant revision - Whether order passed by Lower Courts were just and proper or does it call for interference - Held, bank had issued no due certificate and also had issued an endorsement to Insurance Company - Main case of petitioner was that there was no such enforceable debt - Complainant had misused cheque which was given as security - Both Lower Courts had ordered to pay compensation of Rs.2,00,000/- without taking into consideration that agreed payment had been made to complainant - Impugned orders passed by Lower Courts were set aside - Matter was remitted to Trial Court to cross-examine complainant to point out non-production of power of attorney and render decision in accordance with law - Revision partly allowed.
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