IN THE HIGH COURT OF KERALA AT ERNAKULAM
WA No. 2459 of 2005()
1. T.K.RAJAN, S/O.KESAVAN, AGED 62 YEARS,
... Petitioner
Vs
1. STATE BANK OF TRAVANCORE, KALAMASSERY
... Respondent
2. STATE BANK OF TRAVANCORE, HEAD OFFICE,
3. THE REGIONAL DIRECTOR, RESERVE BANK OF
For Petitioner :SRI.P.A.ABDUL JABBAR
For Respondent :SRI.M.PATHROSE MATTHAI (SR.)
The Hon'ble the Chief Justice MR.V.K.BALI
The Hon'ble MR. Justice M.RAMACHANDRAN
Dated :23/01/2007
O R D E R
(V.K.BALI, C.J. & M.RAMACHANDRAN, J)
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W.A.No. 2459 of 2005-A
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Dated this the 23rd day of January, 2007
JUDGMENT
Ramachandran, J:
Writ Petition filed by the petitioner [W.P.(C).No.16837 of
2005] had been disposed of by the learned single Judge holding
that the demand made by the first respondent–Bank could not
have been stated to be unreasonable and consequently the
proceedings before the Debt Recovery Tribunal could not have
been faulted. But, however, it was held that if he made the
payment as demanded by the Bank and settled the liability within
the time prescribed, coercive proceedings as against the
petitioner were to be kept in suspension. The learned single
Judge had noticed that the petitioner had availed of a loan about
15 years back and the initial liability of Rs.7 lakhs had jumped to
Rs.27 lakhs and although the petitioner had offered to pay
Rs.8.25 lakhs on 20-10-2004, the Bank had been demanding
Rs.9,72,589/-. This sum, according to the learned single Judge,
was reasonable in all respects. The contention raised by the
[WA No.2459 of 2005] -2-
petitioner was that the guidelines issued by the Reserve Bank of
India required to be implicitly followed, and if so, any lesser
amounts would have been payable. But, according to the learned
Judge, guidelines were not enforceable by a court of law, since
such guidelines could not have overruled the contract between the
parties and the Reserve Bank was not competent to supersede
agreements executed between the borrower and the creditor.
Feeling aggrieved about the judgment as above, the petitioner has
filed this appeal.
2. The primary contention of Mr.Abdul Jabbar, appearing
for the appellant, is that the learned single Judge had erred in
entering the finding that the guidelines issued by the Reserve Bank
was not binding on the first respondent–Bank. The further
submission is that if such guidelines were applied in the matter of
interest payable, and also declaration of the date when the
transaction became a non-performing asset, the demand as made
by the Bank would have come down.
3. On the other hand, Mr.M.Pathrose Mathai, senior
counsel appearing for the respondents, submitted that since the
issue was already before the Debt Recovery Tribunal and there
might be element of interest as payable during the pendency of the
[WA No.2459 of 2005] -3-
writ petition as well as writ appeal, it would have been more
appropriate to remit the issue back to the Tribunal. It is also
suggested that the guidelines were not statutory and the argument
of the appellant therefore may not be sustainable.
4. Mr.Abdul Jabbar referred to two decisions of the
Supreme Court, namely Central Bank of India v. Ravindra [AIR
2001 SC 3095] and Mardia Chemicals v. Union of India [2004
(2) KLT 273], which conclusively speak that directions/circulars
dealing with charging rate of interest and capitalisation
procedure, which were issued by the Reserve Bank from time to
time are binding on the other Banks. Therefore, we find that the
observations of the learned single Judge to the contrary require to
be vacated. Otherwise arbitrariness will govern the field.
5. However, it is necessary that attention in some detail
is to be invested as to the liability of the appellant and this has to
be determined in the light of the Circulars which govern the
transactions. It will be beneficial for the parties therefore to
agitate the matter before the Debt Recovery Tribunal in the
pending proceedings [O.A.No.51 of 1999]. The Tribunal has to
take notice of the rival contentions appropriate and come to a
decision in accordance with law and in the light of the
[WA No.2459 of 2005] -4-
observations made earlier.
6. The writ appeal is disposed of as above. All coercive
proceedings taken as against the appellant/petitioner will stand
suspended till such time final orders are passed by the Debt
Recovery Tribunal.
Sd/-
V.K.BALI
(CHIEF JUSTICE)
Sd/-
M.RAMACHANDRAN
(JUDGE)
mks/
– True Copy –
P.S.to Judge