IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 35887 of 2009(E)
1. M/S.KRS LATEX (INDIA) PVT.LTD.
... Petitioner
2. M/S. KRS LATEX (INDIA) PVT LTD 31 IST
Vs
1. CHIEF MANAGER,
... Respondent
2. THE CHIARMAN & MANAGIN DIRECTOR
For Petitioner :SRI.PIUS C.MUNDADAN
For Respondent :SRI.MOHAN JACOB GEORGE
The Hon'ble MR. Justice C.K.ABDUL REHIM
Dated :22/12/2009
O R D E R
C.K.ABDUL REHIM, J.
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W.P.(C).No.35887 of 2009
and
W.P.(C).No.35932 of 2009
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Dated this the 22nd day of December, 2009
J U D G M E N T
———————-
1. These writ petitions are filed seeking direction for
consideration of the petitioners representations, Ext.P11 in WP
(C).No:35887/09 and Ext.P9 in WP(C).No:35932/09. In both
these cases the petitioners are establishments which availed
loans from the respondent Bank, and proceedings are pending
under the provisions of the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002
(SARFAESI Act), which are initiated consequent to default
committed in repayment. It is evident that in both these cases
the respondents have already issued notices under Section 13(2)
of the SARFAESI Act. On a perusal of the representations
mentioned above, it is revealed that the petitioners are seeking
re-structuring of the loans/advances in view of guidelines issued
by the Reserve Bank of India.
2. Heard, counsel for the petitioners and standing
counsel appearing for the respondents. Learned standing
counsel opposed the writ petitions on the ground that the
W.P.(C).35887 & 35932/09 2
respondent Bank is not amenable to jurisdiction under Article
226 in view of decision of the Hon’ble Supreme Court in Federal
Bank Ltd. v. Sagar Thomas (2003 (3) KLT 876). It is further
contended that the guidelines issued by the Reserve Bank of
India, upon which reliance is placed by the petitioners, is not
having any statutory force and those are only in the nature of
guidelines. The respondents relied on a decision of the Hon’ble
Supreme Court in Oriental Bank of Commerce v. Sunder Lal
Jain ((2008) 2 SCC 280) in support of such contention. It is
also contended that on considering the request for re-structuring
the respondent Bank had already found that it is not feasible to
have any re-scheduling of the loan accounts as demanded by the
petitioners. Even a direction for consideration of the
representation was opposed on the ground that there is no
statutory right vested upon the petitioners to claim any such re-
structuring, as requested.
3. Learned counsel appearing for the petitioners on the
other hand pointed out that the Hon’ble Supreme Court in
Sardar Associates v. Punjab and Sind Bank ((2009) 8 SCC
257), held that Reserve Bank of India is a statutory authority
which exercises supervisory power in the matter of functioning
of all the Scheduled Banks, and it is governed by the provisions
W.P.(C).35887 & 35932/09 3
of the Reserve Bank of India Act 1934. Referring to Section 21
of the Banking Regulation Act, it is held that the RBI is entitled
to formulate policies which the Banking Companies are bound to
follow, and Section 21 mandates that every Banking Company
shall be bound to comply with the directions given in terms
thereof. The standing counsel for respondents on the other hand
contended that the decision referred above is dealing only with
matters pertaining to public sector Banks and the dictum
contained therein is not applicable to the respondent Bank,
which proposition was also opposed by the petitioners.
4. Considering the factual situations, I am not proposing
to enter upon any findings regarding merits of the rival
contentions. None of the action initiated under the provisions of
the SARFAESI Act is under challenge before this court. The
petitioners could not raise any such challenge also, in view of the
provisions contained in Section 13(2) and also in view of the
statutory remedy available under Section 17(1) of the SARFAESI
Act. The limited direction which is sought for in these cases is
for a consideration of the requests made for re-structuring of the
loans. The contention as to whether the petitioners can claim
benefit under the guidelines issued by RBI is seriously disputed
by the respondents. Subject to such dispute, I am of the opinion
W.P.(C).35887 & 35932/09 4
that no prejudice will be caused to the respondent Bank in
considering such requests and in intimating the petitioner about
result of such consideration. The Bank can intimate the
petitioner about reasons, if they propose to reject such requests.
It is also left to the respondents to consider feasibility regarding
re-structuring sought for by the petitioners, and to take a
decision thereof considering its merits. Based on the principles
of natural justice, I am of the opinion that the petitioners are
entitled to know about fate of their requests, eventhough they
may not be entitled to claim consideration of the requests, as a
matter of any statutory right.
5. Under the above mentioned circumstances the writ
petitions are disposed of directing the respondents to take
appropriate decision on the representations, Ext.P11 in WP(C).
No.35887/09 and Ext.P9 in WP(C).No.35932/09 respectively, and
to communicate such decisions to the petitioners, before
proceeding with further steps under the provisions of the
SARFAESI Act.
C.K.ABDUL REHIM, JUDGE.
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