Calcutta High Court
Kejriwal Mining Pvt. Ltd. & Ors vs Indian Bank & Anr on 22 August, 2022
APO No. 72 of 2020
with
WP No. 78 of 2020
IN THE HIGH COURT OF CALCUTTA
In appeal from its
CONSTITUTIONAL WRIT JURISDICTION
CIVIL APPELLATE JURISDICTION
Kejriwal Mining Pvt. Ltd. & Ors.
Versus
Indian Bank & Anr.
Before:
The Hon'ble Justice I. P. MUKERJI
And
The Hon'ble Justice SUBHENDU SAMANTA
Date: 22nd August 2022
Appearance:
Mr. Joy Saha, Sr. Advocate
Mr. Prantik Garai, Advocate
Mr. Surojit Dasgupta, Advocate
Mr. Meghajit Mukherjee, Advocate
Mr. Vidhya Bhushan Upadhyay, Advocate
for the appellants
Ms. Deblina Lahiri, Advocate
Mr. Debasish Sarkar, Advocate
Mr. Mrinmoy Chatterjee, Advocate
Ms. Teresa Chetri, Advocate
for the respondent bank
The Court: This is an appeal from a judgment and order made by
a learned single judge on 26th June 2020 in a writ application (WP No. 78
of 2020 Kejriwal Mining Pvt. Ltd. & Others vs. Allahabad Bank And
Another).
By the said order the review committee was directed to review the
order dated 3rd July 2019 of the Wilful Defaulter Identification Committee
(WDIC) declaring the appellants as wilful defaulters.
By its order dated 28th July 2020 this bench admitting the appeal
inter alia directed that the appellants would have the option of depositing
Rs. 64 lakhs with the respondent bank. The bank was to rectify its
records by inserting against the words "wilful defaulter" "sub-judice
before the High Court at Calcutta". Upon Rs. 64 lakhs being deposited
the respondent bank would not take any further step towards declaration
of the appellants as wilful defaulters. We are told that this amount has
been duly deposited by the appellants.
The declaration of an account as non-performing is serious
enough for a borrower. More drastic and damaging is the declaration that
he is a wilful defaulter. This declaration by the lending institution
immediately affects the business of the borrower, disqualifies him from
availing of loan from other financial institutions and in general carries a
very bad reputation of him in the business circle. Therefore, this
declaration should only be made by a lending institution most cautiously
only if the facts and circumstances so permit. A borrower may be a
defaulter by circumstance. His business may not be running profitably
enough to enable him to repay the loan. Hence he may be in default. This
default is not wilful. "Wilful defaulter", in our opinion, signifies a culpable
or guilty state of mind where inspite of ability the borrower does not
make payment of his outstanding dues to the financial institutions
intentionally and remains in default. Or misapplies or misappropriates
the loan fund knowing fully well that his action will result in default in
its repayment.
On 16th March 2015 the bank by a letter approved a "compromise
offer" by the appellants. The accepted amount was Rs.4,11,02,726/-
which has been described as "one time settlement". This settled amount
was to be liquidated by a down payment of 5% amounting to Rs.
20,55,136/- and the balance by equated monthly instalments. On 27th
March 2019 WDIC decided to issue a show cause to the appellants for
declaring them as wilful defaulters, apparently as per the master circular
dated 1st July 2013 of the Reserve Bank of India.
On 6th April 2019 a show cause notice was issued. On 18th
January 2020 the appellants were declared as wilful defaulters.
Mr. Saha, learned senior advocate appearing for the appellants
made out his case first on the basis that there was no premise or
foundation on which the respondent bank could have proceeded to issue
the show cause notice to declare the appellants as wilful defaulters.
Apart from this main attack on the show cause notice, Mr. Saha's
other ground was that this declaration was made by WDIC without
complying with the rules of natural justice. The reply to the show cause
made by the appellants, although received before consideration by WDIC
of the case, was not considered by it on the ground of delay.
Furthermore, he submitted that his grievance about non-consideration of
his case by WDIC could not be remedied by the review committee which
had only limited jurisdiction.
With regard to the first ground taken by Mr. Saha which is
considered by us to be most important, it does appear from a
supplementary affidavit prepared and filed by the appellants that from
19th January 2015 till 11th August 2020 substantial payments
aggregating to Rs. 4,11,02,726/- were made and only the interest
amount of Rs. 1,46,98,630/- was outstanding. Furthermore, Mr. Saha
submitted that his clients were willing to repay whatever outstanding of
the respondents on such terms as the court may set.
Ms. Lahiri appearing for the bank has also handed up a
statement showing outstanding dues, credits and adjustments in relation
to the account of the appellants. She prays for further time to produce
more accounts. That would not be necessary in view of her submission
that what is due and payable by the appellants to the bank is interest as
stated by her client in the affidavit. The principal sum appears to have
been paid.
In this situation prima facie it is not possible for this court to
accept that the appellants could be declared as wilful defaulters. Prima
facie the intention to deprive the bank appears to be lacking. The factum
of periodic payments by the appellants of the loan amount which has
resulted in repayment of the entire principal and their willingness to pay
off the outstanding would at least, prima facie, not depict the appellants
as wilful defaulters. On the contrary, they have also shown their bona
fides by depositing Rs. 64 lakhs with the bank further to our said interim
order in the appeal.
In those circumstances, we are of the opinion that this case
requires readjudication by WDIC. The review committee does not have
the jurisdiction to decide the factual issues involved.
In view of our findings above, the decision of the respondent bank
dated 18th January 2020 declaring the appellants as wilful defaulters is
set aside. The declaration of the appellants as wilful defaulters or
proposed wilful defaulters has to be forthwith erased completely from the
records of the respondent bank. We direct readjudication of the show
cause notice by the WDIC without such declaration, upon considering
the reply filed by the appellants, upon hearing them and by passing a
reasoned order to be passed within three months of communication of
this order.
The impugned judgment and order dated 26th June 2020 is set
aside.
All points are kept open before the WDIC.
The appeal is allowed to the above extent.
No order as to costs.
(I. P. MUKERJI, J.)
(SUBHENDU SAMANTA, J. )
R. Bose
