JUDGMENT
Dalveer Bhandari, J.
(1) Both these review applications have been directed against the order passed by this Court on 11th December, 1995.
(2) The Company Petition no.98/84 has been Filed by Ferror Alloys Corporation Ltd. under Section 433, 434 and 439 of the Companies Act, 1956 for winding up of M/s National Steel and General Mills Pvt. Ltd. During the pendency of this petition on 28th January, 1976, the Court issued notice to the Allahabad Bank, Ritxganj, Ghaziabad and in pursuance of that, Counsel appeared on behalf of the Allahabad Bank. The National Steel and General Mills Pvl. Ltd. were sanctioned an aggregate limit of Rs.1.70 crores under Cc (Hypothecation), I.B.D. L/C and bank guarantee in the year 1980.
(3) Because of non-payment of amount, the Bank suit against the company was Filed in the year 1985 for Rs.2,73 crores along with interest. The liability with interest, of the National Steel and General Mills Pvt. Ltd. works, out to be about Rs.12 crores which has now been settled with the respondent Bank for Rs.2.74 crores.
(4) Since the learned counsel appearing for the Bank could not satisfy the court, the basis on which the claim o’f the Bank of Rs. 12 crores has been settled for Rs.2.74 crores, a notice was sent to the Chairman of the Bank directing him to File an affidavit explaining the basis on which this settlement has been arrived at. The Chairman was further directed to explain the parameters, norms, rules and the basis on which similar settlements are arrived at with the defaulting parties by the nationalised Bank. The Chairman was also directed to explain whether public interest is also kept in view while arriving at these kinds of settlements. The Court granted four weeks’ time to the Chairman of the Bank to File an afFidavit.
(5) This order was passed on 11th December, 1995. On the very next day, i.e. on 12th December, 1995, a review petition was filed on behalf of the applicant Ajay Sharda. On 14th December, 1995, surprisingly, a review application was also filed on behalf of the Allahabad Bank praying that this court should recall its order dated 11.12.1985 and it is also prayed that the Court may direct the presence of the General Manager, Recovery, who is fully acquainted with the entire facts of the case and details of the compromise.
(6) It is also stated in the review application 961/95 that the error in the order dated 11.12.95 is apparent on the face of record, therefore, it needs to be recalled. Analysis of the order dated 11.12.95 passed by this Court reveals the anxiety of the court to know the basis on which the liabilities of the National Steels Pvt. Ltd. have been settled with the Allahabad Bank, a nationalised Bank for Rs.2.74 crores, particularly when according to the Bank, it is the top secured creditor and according to the applicant in C.A.961/95, the assets exceed the liabilities. It is indeed astonishing that a nationalised Bank like the Allahabad Bank, instead of frankly telling the court, the basis on which this settlement has been arrived at or parameters or considerations which prevailed with the Bank in arriving at settlement where the amount of Rs.l2 crores has been settled for Rs.2.74 crores, chose to file a review application. The review application by the Bank now corroborates the lurking suspicion of the court that the compromise perhaps has not been arrived at on sound basis, norms, parameters or principles. Extraneous considerations may have played important role in arriving at the compromise.
(7) Why should the Chairman of the Bank be hesitant in submitting the required information or even appearing before the court to explain the basis of the settlement? Instead of explaining the basis of settlement to the court, the Bank and other applicant in C.A.961/95 chose to prefer review applications for recalling of the order dated 11.12.1995. In C.A.961/95, the applicant submitted that there is error apparent on the face of the record. Therefore, the order dated 11.12.95 be reviewed and recalled and set aside.
(8) The Court feels totally at loss, what is the error in the order dated 11.12.95 which is apparent on the face of record and it became imperative for the applicant and the Bank to move review application? The anxiety of the .court to know the basis of such a settlement or compromise where liabilities of about Rupees 12 crores have been settled for Rs.2.74 crores, particularly when according to the defaulting party assets exceed the liabilities and according to the Bank it is the top secured creditor. Learned counsel appearing for review petitioners failed to point out any error in the Order which is apparent on record that the order needs to be recalled and set aside.
(9) Transparency in the transactions of nationalised banks is of utmost importance and as a matter of fact the need of the hour. The courts before they give their seal of approval to such settlements are certainly entitled to know the basis on which settlements or compromise have been arrived at. It is beyond comprehension why the nationalised banks should even make an attempt of not disclosing the basis of arriving at such settlements or compromises. The courts would be fully justified in not accepting the settlement or compromise which is not based on sound basis, norms, principles or parameters and are not in public interest. The Courts are as a matter of fact duty bound to reject those settlements and compromises which have been arrived at by the defaulting parties with the nationalised banks. The nationalised banks ought to have total accountability to the public because of the involvement of public money, therefore, these banks cannot be permitted to withhold the basis from the courts and from the public.
(10) The applicant in C.A.961/95 is in error when it says that requiring a bank to explain the terms of settlement or compromise is not within the four corners of the provisions of the Companies Act, or in other words, the court is not entitled to know the terms of settlement arrived at by a defaulting private company with a nationalised bank.
(11) The applicant in C.A.961/95 is not correct when it says that requiring the higher authorities of the Bank to explain the basis of settlement is against public interest and against public policy. In a democratic set up all public servants however highly they may be placed, are accountable to the public through courts regarding their actions and deeds. No one can legitimately claim any immunity.
(12) There is no scope of secrecy or clandestine dealings with a nationalised bank. The actions and deeds of public authorities in a democratic society have to be transparent and only when the terms and the basis of settlement are known to public at large, then alone, the actions and deeds of the public authorities would be in the interest of public policy.
(13) This court fails to understand when according to the Bank, it is the top secured creditor and when according to the company, the Company has more assets than the liabilities, in these circumstances, how is the court unjustified in even knowing the basis on which the liability of about 12 crores has been settled for Rs.2.74 crores particularly, when the counsel appearing for the bank failed to explain any basis and there was no material on record when the order was passed to explain the basis.
(14) Both the review petitions seem to be devoid of any merit. It is rather unfortunate that the bank has chosen to file a review application for recalling of the order dated 11.12.1995. Both these review applications are accordingly dismissed with costs.