Maunang Farms Pvt Ltd vs State Of Gujarat
2022 Latest Caselaw 1087 Guj

    C/SCA/8255/2012                                    ORDER DATED: 02/02/2022




          IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

            R/SPECIAL CIVIL APPLICATION NO. 8255 of 2012

                                With
            R/SPECIAL CIVIL APPLICATION NO. 12972 of 2017
================================================================
                  MAUNANG FARMS PVT LTD & 12 other(s)
                               Versus
                     STATE OF GUJARAT & 4 other(s)
================================================================
Appearance in SCA/8255/2012 :
MR VISHAL K SEVAK(5237) for the Petitioner(s) No.
1,10,11,12,13,2,3,4,5,6,7,8,9
MS MANISHA LAV KUMAR SHAH, SENIOR ADVOCATE WITH MS
AISHVARYA(8018) for the Respondent(s) No. 4
MR DHAWAN JAYSWAL, ASST. GOVERNMENT PLEADER for the
Respondent(s) No. 1
MR CHIRAYU A MEHTA(3256) for the Respondent(s) No. 5
MR PY DIVYESHVAR(2482) for the Respondent(s) No. 3
RULE SERVED for the Respondent(s) No. 2

Appearance in SCA/12972/2017 :
MR IH SYED, SENIOR ADVOCATE WITH MR YH MOTIRAMANI(3720) for
the Petitioner(s) No. 1,2,3,4,5
MS MANISHA LAV KUMAR SHAH, SENIOR ADVOCATE WITH MS
AISHVARYA(8018) for the Respondent(s) No. 1
DELETED(20) for the Respondent(s) No. 3
MR PY DIVYESHVAR(2482) for the Respondent(s) No. 2
================================================================

 CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA

                              Date : 02/02/2022

                                ORAL ORDER

Heard learned Senior Advocate Mr.I.H. Syed assisted by learned advocate Mr.Y.H. Motiramani and learned advocate Mr.Vishal K. Sevak for the respective petitioners, learned Assistant Government Pleader Mr.Dhawan Jayswal for the respondent - State and learned Senior Advocate Ms.Manisha Lav Kumar Shah assisted by learned

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advocate Ms.Aishwarya Gupta, learned advocate Mr.P.Y. Divyeshwar and learned advocate Mr.Chirayu A. Mehta for the respective respondents.

2. Special Civil Application No.8255 of 2012 is preferred with the following prayers :

"(A) Your Lordships be pleased to issue a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, order or direction quashing and setting the order passed by the respondent No.3 dated 11/01/2012 at Annexure-A to the petition as well as the order passed by the respondent No.2 - Expert Committee, which has been communicated by the respondent No.3 by an order dated 07/04/2012 at Annexure-C to the petition;

(AA) Your Lordships be pleased to issue writ of mandamus or any other appropriate writ order or direction quashing and setting the decision taken by the Expert Committee appointed by the respondent No.1 dtd. 31/12/11 at ANNX. "L" to the petition;

(B) Your Lordships be pleased to issue a writ of mandamus or a writ in the nature of mandamus or nay other appropriate writ, order or direction commanding the respondent authorities to grant the benefit of OTS Scheme to the petitioners as per the application at Annexure "B" to the petition;

(C) Pending admission and final disposal of this petition, Your Lordships will be pleased to stay the further execution, operation and implementation of the order dated 11/01/2012 at Annexure "A" to the petition and also the order dated 07/04/2012 at Annexure-C to the petition and further be pleased to permit the petitioners to deposit the amount as per the certificate issued by the Chartered Accountant at Annexure-J to the petition;

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(D) Be pleased to award the cost of this petition;

(E) Such other and further relief that is just, fit and expedient in the facts and circumstances of the case may be granted."

3. Special Civil Application No.12972 of 2017 is filed with the following prayers :

"(A) that the Honourable Court may be pleased to issue a writ of mandamus and/or a writ in the nature of mandamus and/or any other appropriate writ order or direction against the respondents for complying with the undertaking dated 28.01.2004 filed in SCA No.332/2004 and for complying with the order dated 28.01.2004 passed in SCA No.332/2004 and be further pleased to direct the respondents to release the mortgaged lands of the petitioners;

(B) pending the hearing and final disposal of this petition, the Honourable Court be pleased to restrain the respondents from acting in defiance of undertaking dated 28.01.2004 filed in SCA No.332/2004 and the order dated 28.01.2004 passed in SCA No.332/2004;

(C) for costs;

(D) for such other and further relief as the circumstances of case may require."

4. The Special Civil Application No.8255 of 2012 is filed by 13 Private Limited Companies through Authorized Signatory of all these Companies Shri Ramanbhai B. Patel, who is petitioner in Special Civil Application No.12972 of 2017.

5. It appears that by these two petitions, the petitioners of both the petitions, with a view to

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not to pay the outstanding dues of the respondents - Ahmedabad District Co-operative Bank Limited and Visnagar Nagrik Sahakari Bank Limited (in Liquidation), have filed these petitions.

6. The brief facts of both the cases are as under :

6.1 The petitioners are running the business of development of lands and construction of buildings and for that purpose financial assistance was obtained from the respondent Banks by mortgaging the properties.

6.2 It is the case of the petitioners that in view of the Visnagar Nagrik Sahakari Bank being taken into liquidation, the petitioners of SCA No.12972 of 2017 file Special Civil Application No.332 of 2004 challenging the legality and validity of the notices dated 3rd March, 2003 and 12th March, 2003 issued by the Ahmedabad District Co-operative Bank Limited under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short "the SARFAESI Act, 2002").

6.3 It appears that outside the Court, settlement arrived at between the petitioner and Ahmedabad District Co-operative Bank and Visnagar

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Nagrik Sahakari Bank in the year 2004 and an undertaking was filed by the petitioners on 20th January, 2004 before this Court in SCA No.332 of 2004. This Court, therefore, in terms of the undertaking, disposed of the SCA No.332 of 2004.

6.4 According to the petitioners, they have complied with the terms of the undertaking by payment of more than Rs.8.20 Crore out of Rs.16.20 Crore, as agreed by them as per the undertaking. The petitioners have, therefore, filed SCA No.12972 of 2017 with a prayer to issue a writ of mandamus against the respondent Banks for complying with the undertaking dated 28th January, 2004 filed in SCA No.332 of 2004 and further to direct the respondents to release the mortgaged lands of the petitioners.

6.5 The Private Limited Companies, who have availed financial assistance from the respondent Banks, have filed SCA No.8255 of 2012 with a prayer to direct the respondent Banks to grant the benefit of One Time Settlement Scheme (for short "OTS Scheme") as floated by the Urban Co- operative Banks in liquidation in the year 2010, which was refused by the Expert Committee appointed by the respondent Banks.

6.6 Both the petitions are admitted by this Court and were ordered to be heard together.

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6.7 This Court passed the following order on 19th November, 2018 :

"1. Having heard the learned counsel appearing for the parties and having gone through the materials on record, more particularly, the undertaking on record, which is at page : 13 (Annexure : "A" to this petition) duly signed by all the parties concerned, I am of the view that it is necessary to understand the stance of the respondents Nos.1 and 2 respectively herein.

2. This Court would like to know from Mr. Divyeshwar, the learned counsel appearing for the respondent No.1 - Bank as to whether any amount is due and payable as on date by the petitioners towards the loan transactions. I am saying so because Mr.Syed, the learned counsel appearing for the petitioners makes a statement that the undertaking filed by his clients, which is at page : 13 to this petition, has been fully complied with. According to Mr. Syed, as the entire liability towards the Bank has been discharged, the Bank is now obliged to release the properties in favour of the petitioners. Mr. Syed, the learned counsel appearing for the respondent No.1 - Bank shall seek appropriate instructions in this regard and file an appropriate reply. The respondent No.2 represented by Mr. Divyeshwar, the learned counsel shall also file an appropriate reply.

3. Post the matters on 4th December, 2018."

6.8 Thereafter, following order was passed on 17th January, 2022 :

"1. Heard, learned Advocate Mr. Y.H. Motiramani for the petitioners and learned Advocate Mr. P.Y. Divyeshwar for the Respondent - Visnagar Nagrik Sahakari Bank (in liquidation) and learned Senior Advocate Ms. Manisha Lavkumar Shah with learned

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Advocate Ms. Aishvarya for the Respondent No.1.

2. Learned Advocate Mr. Motiramani prays for time to take instructions with regard to the compliance of the undertaking given on 28th January, 2004 in light of the order dated 19th November, 2018 passed by this Court.

3. Learned Advocate Mr. Divyeshwar for the Respondent-Visnagar Nagrik Sahakari Bank (in liquidation) submitted that the liquidator of the Bank has changed and therefore he prayed for time to take instructions from the newly appointed liquidator of the Respondent-Bank and to place on record the latest details with regard to the amount due and payable as on today by the petitioner towards the loan transaction.

4. Stand over to 2nd February, 2022. Affidavit with the aforesaid details on behalf of the petitioners as well as the Respondent-Bank shall be filed on or before 27th January, 2022. To be listed on the top of the Board."

7. Learned Senior Advocate Mr.I.H. Syed assisted by learned advocate Mr.Y.H. Motiramani for the petitioners of SCA No.12972 of 2017 submitted that the respondent Banks have failed to comply with the terms of the undertaking filed before this Court and therefore, this petition is maintainable so as to direct the respondent Banks to abide by the terms of the undertaking. It was submitted that the petitioners have already deposited Rs.8,24,99,998/- with the respondent No.1 Ahmedabad District Co-operative Bank Limited during the period from February-March, 2004 to September, 2004 and as per the undertaking filed before this Court, the Visnagar Nagrik Sahakari

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Bank Limited was to transfer Rs.3 Crore to Ahmedabad District Co-operative Bank Limited and thus, an amount of Rs.11,24,99,998/- is paid by the petitioners as per the undertaking filed in SCA No.332 of 2004. It was submitted that the remaining amount of about Rs.5 Crore could not be paid by the petitioners as the respondent Banks did not release the properties from the mortgage. It was submitted that the petitioners applied for OTS Scheme and total amount paid by the petitioners to the respondent No.2 - Visnagar Nagrik Sahakari Bank towards the OTS Scheme was Rs.32,44,78,686/-, including the amount paid as per the undertaking filed in SCA No. 332 of 2004, and as the petitioners have been denied the benefits of OTS Scheme, the SCA No. 8255 of 2012 is filed before this Court with a prayer to seek the benefits of OTS Scheme applicable to the Co- operative Societies / Banks.

7.1 Learned Senior Advocate Mr.Syed further submitted that the petitioners also preferred Letters Patent Appeal No.1230 of 2012 being aggrieved by no interim order being passed in SCA No.8255 of 2012 and the petitioners have deposited further amount of Rs.19,32,11,314/-. Therefore, according to learned Senior Advocate Mr.Syed, an amount of Rs.51,76,90,000/- towards dues with the respondent No.2 - Visnagar Nagrik Sahakari Bank Limited.

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7.2 Learned Senior Advocate Mr.Syed therefore, submitted that in view of the internal disputes, if any, between respondent No.1 Ahmedabad District Co-operative Bank Limited and respondent No.2 - Visnagar Nagrik Sahakari Bank Limited for appropriation of the amounts paid by the petitioners, the petitioners should not suffer and therefore, the respondent Banks are required to be directed to release the properties mortgaged by the petitioners for availing the financial assistance in view of the above facts.

8. On the other hand, learned Senior Advocate Ms.Manisha Lav Kumar Shah assisted by learned advocate Ms.Aishwarya Gupta appearing for the respondent No.1 Ahmedabad District Co-operative Bank Limited submitted that the petition is not maintainable for the reliefs prayed by the petitioners with regard to directing the respondent Banks to grant OTS as well as to comply with the undertaking filed before this Court because, it is not in dispute and as admitted by the petitioners, the amount of Rs.4.95 Crore is not paid by the petitioners as per the undertaking and therefore, there is a breach of the undertaking.

8.1 It was therefore, submitted that such facts would lead to disputed questions of facts which may not be decided while exercising jurisdiction under Article 226 or 227 of the

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Constitution of India. It was also submitted that the respondent No.1 Bank has taken over all the assets and liabilities of the Visnagar Nagrik Sahakari Bank Limited and the entire property of the Visnagar Nagrik Sahakari Bank Limited, which is in liquidation, vest with the Ahmedabad District Co-operative Bank Limited and therefore, there is no question of any dispute or controversy between the two Banks as alleged by the petitioners.

8.2 It was pointed out that the petitioners have deposited Rs.8.20 Crore only, out of Rs.16.20 Crore as per the undertaking filed before this Court and therefore, there is no question of complying with the undertaking by the respondent No.1 Bank as the petitioners have failed to abide by such undertaking. Learned Senior Advocate Ms.Shah further submitted that the petition is hopelessly time barred and suffer from delay and laches because the petition is filed in the year 2017 for complying with the undertaking filed in the year 2004 i.e. almost after 13 years, which is beyond the period of limitation by any stretch of imagination. It was further submitted that even if the petition is held to be maintainable, the same cannot be entertained as it suffers from delay and laches.

9. Learned advocate Mr.P.Y. Divyeshwar appearing for the respondent No.2 - Visnagar Nagrik

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Sahakari Bank Limited (in liquidation) relied upon the averments made in the affidavit-in-reply filed on behalf of the respondent No.2, which reads as under :

"4.1 It is submitted that petitioners and others have taken loan from the respondent no.2 from total 13 Loan Accounts on different firms amounting to the tune of Rs.40.10 crore after placing different lands in the mortgage with visnagar bank. Meanwhile Visnagar bank was weak in financial position and bank needed financial support from respondent no. 3 and bank was given its own properties as mortgage and also put mortgage of petitioners properties to respondent no. 3 through tri-party agreement. Copy of the tri-party agreement is annexed herein and marked as "Annexure-R1" to this affidavit. After very few payment of installments the firms and companies has defaulted the payment and installments. The accounts became NPA and no payment were made as per the law the properties were attached and proceedings were filed before the Co- Operative Nominee court. Due to such non payment the visnagar Bank fall to the weak financial situation and as per Co-operative Law the Liquidator was appointed by the State of Gujarat, and now only liquidator is administrating the closed bank as it is under the control of the Government.

4.2 Meanwhile the Gujarat government had declared one time settlement scheme-2010 specially for co-op bank in liquidation and above petitioners have applied to availed benefit of OTS. After sanctioning of the same by the State Government, petitioners have paid 52.50 crore as per OTS. Copy of the statement of the Bank of the amount paid as per OTS of the petitioners is annexed herein and marked as "Annexure-R2" to this affidavit. Thus visnagar bank gave petitioner Conditional No Due Certificate.

4.3 After respondent no.2 got under administration of the liquidator every payment to the creditors /

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account holder was to be made by the DICGC (Deposit Insurance and Credit Guarantee Corporation, Reserve Bank of India). The respondent no.1 Ahmedabad District Co-op Bank is Apex Bank from whom all the funds were taken by the Visnagar Bank as per the Co- operative laws and therefore the respondent no.1 ADC Bank is directly connected to the funds of the visnagar bank. For the payment petitioner have not taken any steps , and to secure the funds the respondent no.1 ADC bank have taken all the mortgage security of the Visnagar bank in to its hands and entered Tri-party agreement for the mortgage and lien. Thus the petitioner was acquainted with the fact that real pendency of their own statement of dues is with the ADC bank. Thus without any payment to the Bank the petitioners wants to have benefit of their own wrong.

4.4 As per the tri party agreement, Mr. Ramanlal B. Patel, Mr. Dasrathbhai B. Patel and Saritaben N. Patel admitted in letter of Agreement and undertaking that:

" Now I, hereby agree and undertake with we shall continue as guarantor till all dues of The Ahmedabad Dist. Co. Op . Bank Ltd. is paid with interests, costs, charges etc. and I will not claim redemption of mortgage even though the above companies and firm will repay their dues to the Visnagar Nagrik Sahakari bank Ltd."

As per above agreement it is very clear that Mr. Ramanlal B. Patel, Mr. Dasrathbhal B. Patel and Saritaben N. Patel agree and undertake as guarantor till all dues of the Ahmedabad Dist. Co. Op. Bank Ltd. is paid with interest. So claim of the petitioner will not survive.

4.5 As per the records the Visnagar bank has started the disbursements to the creditors as per the priorities but the same was challenged by the DICGC before the high court of Gujarat by way of Special Civil Application no. 4260 of 2009 and the Hon'ble Court was pleased to pass order as under :

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"If the facts of the present case are examined in light of the observations made herein above, it appears that the Liquidator, while fixing the priority has not at all taken into consideration the aforesaid aspects and he has been guided by the Government Circular, which was quashed by this Court in the earlier proceedings. Even if it is considered that the Liquidator had exercised the power independently, then also the same cannot be sustained in view of the reasons recorded hereinabove on the aspects of priority as required to be taken into consideration by the Liquidator.

25. In view of the aforesaid, the impugned decision of the Liquidator is quashed and set aside in the respective petitions for fixation of the priority and the Liquidator is directed to decide the question of priority in light of the observations made by this Court in the present judgment and to take further steps for disbursement of the Payment in accordance with law, preferably within a period of four weeks from the date of receipt of the order of this Court. The petitions are partly allowed to the aforesaid extent. Rule made absolute accordingly. No order as to costs. 26.2.2010."

4.6 It is submitted that the above order was challenged by Apex bank by way of LPA No.1304 of 2010 and Hon'ble Division Bench pleased to pass following order :-

"The sum and substance of the above shall be that the DICGC shall be entitled to the first preference over the payment/amount with the available with the concerned pank in liquidation. However, after making necessary provisions by the official liquidator, for the expenses in relation to the liquidation proceedings and for declaration of dividend. In view of the above and for the reasons stated above, the impugned common judgment and order

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passed by the learned Single Judge passed in Special Civil Application No. 4260 of 2009, Special Civil Application No. 7617 of 2009 and Special Civil Application No. 6978 of 2009 are hereby quashed and set a side and the Letters Patent Appeals are allowed to the aforesaid extent by directing the concerned official liquidator of the concerned bank in liquidation to make the payment first to DICGC. The amount which is paid by DICGC to the concerned depositor/s to the extent of Rs. 1 Lac each, however after making necessary provisions for the expenses relation to the liquidation proceeding and for declaration of dividend. Rest of the Letters Patent Appeal Nos.1305 of 2010, Letters Patent Appeal No. 1755 of 2010, Letters Patent Appeal No.1304 of 2010, Letters Patent Appeal No.1306 of 2010, Letters Patent Appeal No.1307 of 2010, Letters Patent Appeal No.2458 of 2009, Letters Patent Appeal No.238 of 2013 and Letters Patent Appeal No.239 of 2013 stand disposed of with the aforesaid observations and directions. However, in the facts and circumstances of the case, there shall be no order as to costs, in each of the appeals."

Copy of the order passed in the Group of Appeals is all annexed herein and marked as "Annexure-R3" to this reply.

4.7 It is submitted that this order was challenged by Ahmedabad District Co-operative Bank in Letters Patent Appeal No.1305 Of 2010, Which was disposed by judgment and order dated 6.7.2015. The same order was challenged by the Ahmedabad State Co-operative Bank Ltd. before the Hon'ble Supreme Court of India being Special Leave to Appeal (C) No.22043 of 2015 with SLP (C) No.22305 of 2015 wherein DICGC, ADC Bank and GSC Bank with VNSB is also as parties and the delay is condoned by the Hon'ble Supreme Court of India, leave is granted and Hon'ble Supreme Court of India was pleased to pass order that -

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"payment shall be subject to further orders to be passed by this Court."

Therefore, when whole subject and issued of priority of payment is already pending and open at large before the Hon'ble Supreme Court of India in above stated SLP, in that circumstances, no party should try to overreach the process of Hon'ble the Supreme Court of India and last hearing was takes place on 5-9-2016 and status of the Special Leave to Appeal (C) No.22043 of 2015 with SLP (Cc) No.22305 of 2015 as it was showing from the official site of the Supreme Court Case the same is pending . Copy of the order passed by the Supreme court of India in Special Leave to Appeal (C) No.22043 of 2015 with SLP (CC) No.22305 of 2015 is annexed herein and marked as "Annexure-R4" to this reply.

4.8 It is submitted that under the above circumstances under the order of this Hon'ble Court in petition filed by the petitioner to take benefit of OTS in that event the Hon'ble Court pleased to pass order of the declaration ex-party without hearing the other side and therefore all the facts of above was not placed before the court. The petitioner himself have said and filed undertaking of payment with the Apex Bank respondent no.1 herein and now wants to take benefit of his own wrong, that under taking was also not honored by petitioners. But when some payment were done by the petitioner belatedly the respondent no.2 Visnagar bank have granted NOC to the petitioner subject to the dues of the respondent no.1 bank. Those NOC issued by the Respondent no.2 bank are on record of the petition and they are conditional can be seen from the record. Thus respondent no.2 bank is unable to pass any amount to the Respondent no.1 under the order of the Supreme Court in Special Leave to Appeal (C) No.22043 of 2015 with SLP (C) No.22305 of 2015 and on other hand the petitioners are demanding the release of the property or the execution of the declaration/under taking of them with respondent no.1 bank.

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4.9 The respondent no.2 is in awkward box under the pressure and duty of the order of the Hon'ble supreme court in Special Leave to Appeal (C) No.22043 of 2015 with SLP (C) No.22305 of 2015 and do not want to be breach of any and party to contempt of the order of the supreme court of India. Respondent reserve its right to file further affidavit explaining the details or dealing the petition Para wise."

9.1 Relying upon the above averments, it was submitted that the petitioners are not entitled to the benefits of OTS Scheme as held by the Expert Committee and the petitioners have also not stated the correct facts with regard to the dispute pending before the Apex Court in relation to the payment to be made to the DICGC (Deposit Insurance and Credit Guarantee Corporation, Reserve Bank of India) by the Bank in liquidation. It was therefore, submitted that both the petitions are liable to be dismissed.

10. Having heard the learned advocates for the respective parties and having gone through the documents produced on records of both the petitions, it appears that the petitioners have, after filing the undertaking in the year 2004, waited till 2012 when the SCA No.8255 of 2012 was preferred challenging the denial of OTS Scheme to the petitioners. Though the petitioners did not pay the amount as per the undertaking with the respondent No.2 - Visnagar Nagrik Sahakari Bank Limited (in liquidation), the SCA No.12972 of

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2017 is filed by the petitioners with a prayer to issue a writ directing the respondent Banks to comply with the undertaking filed before this Court is concerned, the question arises whether such writ petition is maintainable under Article 226 or 227 of the Constitution of India in the facts emerging from the records or not.

10.1 The SCA No.332 of 2004 was filed before this Court challenging the notice issued under the SARFAESI Act, 2002. During the pendency of this petition, undertaking is filed before this Court by the petitioners, signed by the respondent Banks. The undertaking reads as under :

"UNDERTAKING ON BEHALF OF PETITIONERS

The petitioners with the consent of the loanees, file this undertaking before this Hon'ble Court and beg to undertake to this Hon'ble Court as under :-

(1) The petitioners agree that the ADC Bank is entitled to encash the security and adjust the payment made by us towards the amount due from Visnagar Nagrik Sahakari Bank and on this payment, our security stands released.

(2) The petitioners agrees and undertake to pay to the Ahmedabad District Co-operative Bank Ltd, a total sum of Rs. 16.20 Crores towards the discharge of the securities of lands at Godhavi and Thaltej given by Visnagar Co-op Bank Ltd., against their borrowing from Ahmedabad District Co-operative Bank.

(3) the petitioners agree and undertake to an order of this Hon'ble Court directing the Visnagar Bank to transfer Rs. 3 crores to Ahmedabad District Co-

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operative Bank which is at present lying with Visnagar Bank which is paid by the petitioner No, 2 asper the order passed in Criminal Miscellaneous Application No.2859 of 2003.

(4) That the entire land situated at Village Thaltej admeasuring 70000 sq.yds mortgaged to Visnagar Bank and assigned to Ahmedabad District Co-operative Bank by Visnagar Bank shall be allowed to be sold by owner/petitioners thereof. Both the Banks shall issue No Objection Certificate in favour of petitioners for the purpose of appropriate documentation. The petitioner agree to make the payment of balance amount i.e. to say Rs. 13.20 crores as under :-

(a) The amount of Rs. 5 crores shall be paid by petitioners to ADC Bank before 31st March, 2004 as under :-

i) Payment of Rs. 1 crore 10/2/2004

ii) Payment of Rs. 1 crore 28/2/2004

iii) Payment of Rs. 1 crore 10/3/2004

iv) Payment of Rs. 1 crore 20/3/2004

v) Payment of Rs. 1 crore 30/3/2004

(b) The petitioners shall issue the post dated cheques for the amount referred above totaling to Rs. 5.00 crores in the name of The Ahmedabad District Co-operative Bank with an undertaking to this Hon'ble Court that the same will be honoured on their respective due dates. The post-dated cheques will be issued within 10 days from to-day.

The credit of the same shall be given by the Visnagar Rank in the loan account of 13 loanees after the ADC Bank gives credit advice to Visnagar Bank.

(c) That the petitioners further agree and undertake to this Hon'ble Court that they shall pay the remaining amount of Rs. 8.20 crores to the Ahmedabad District co-Op. Bank subject to

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both banks issuing No Objection Certificate in respect of sale of agricultural land at Godhavi Taluka Sanand and entire land of Bodakdev which is mortgaged to the Banks. The said amount of Rs. 8.20 crores shall be paid within a period of 12 months from 1st April, 2004 to 31 st March 2005 in monthly installments of Rs. 65 lacs for 11 months and last installment of Rs. 115 lacs. The petitioners will give the post dated cheques as aforesaid in the name of Ahmedabad District Co-operative Bank totaling to Rs. 8.20 crores drawn in the name of AhmedaBad District Co-operative Bank within 10 days from to-day with an undertaking that the same shall be honoured on their respective due dates. However, the credit of the same shall be given by Visnagar Bank in the loan account of 13 loanees.

(D) The Ahmedabad District Co-Op. Bank agrees to release only its charge over the properties situated at Thaltej-Bodakdev on the amount of Rs. 3 crores being deposited by Visnagar Bank with ADC Bank and on the petitioners paying the total sum of Rs. 11.00 crores to the ADC Bankl.

(E) The ADC Bank will release only its charge over the properties situated at Village Godhavi on the petitioners paying the entire sum of Rs. 16.20 crores.

(F) The ADC Bank is not concerned with the inter-se disputes between the petitioners, the loanee whose advances ars secured by the petitioners and the Visnagar Bank either in respect of the principal amount, the interest thereon or regarding the memorandum of understanding and its validity as claimed by the petitioners. The said dispute is pending adjudication before the competent courts and the inter-se rights and obligations between the said parties are subject to the adjudication by the competent courts.

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(G) The ADC Bank agrees to the aforesaid terms and has agreed to defer the auction as per the previous order on the Visnagar Bank agreeing before this Hon'ble Court that a part from the amount of Rs. 16.20 crores to be realised by ADC Bank, as per the undertaking filed by the petitioners, the Visnagar Bank will pay the entire balance amount of principal and interest accrued thereon from the amount realised by the Visnagar Bank in from the outcome of proceedings filed by the Visnagar Bank for recovery of its dues from the petitioners/loanees. The Visnagar Bank and the petitioners agree before this Hon'ble Court to first pay the said amount directly to ADC Bank till the dues between them of ADC Bank are realized if and when the adjudication of the dispute between them results into payment of money by the petitioners to Visnagar Bank. In case of any due of ADC Bank remaining outstanding Visnagar Bank will pay remaining amount with interest to ADC Bank.

(H) This undertaking given to the Court is without prejudice to their rights and contentions against Visnagar Bank and also without prejudice to the pending Civil and Criminal Proceedings before the Board of Nominees court and Civil Court against and/or filed by Visnagar Bank and other legal proceedings pending before the appropriate Court in respect to the dispute in question. No dispute, however, persists or survives between the petitioners, the loanees and the ADC Bank on compliance with all the terms of this undertaking.

(I) This is final settlement so far as the dispute between the petitioners and ADC Bank is concerned. The petitioners and the loanees agrees and undertakes to withdraw all proceedings including the suit for damages against the Ahmedabad District Co-operative

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Bank and not to file any further proceedings.

The present undertaking is filed on behalf of all the petitioners and 13 loanees of Visnagar Bank and the signatory is the persons who is duly authorised to file this undertaking on their behalf and he undertakes to file the undertakings of other petitioners and loanees within 15 days from to-day in this Hon'ble Court."

10.2 The aforesaid undertaking was required to be adhered to by the petitioners. However, as per the facts emerging from the records, it appears that the petitioners were not able to comply with the undertaking as stated on oath in the affidavit filed by one Chhaganbhai Bholidas Patel on 25th January, 2022, wherein, it is stated as under :

"1. I say that as per undertaking filed in Special Civil Application No.332/2004 (SCA 332/2004) a sum of R8.8,24,99,998/- is deposited with the respondent no.1 -- Ahmedabad District Cooperative Bank Lid. (ADC Bank) during the period from February-March 2004 to September 2004. I say that the original record pertaining to proof of payments made to respondent no.1 - ADC Bank is seized by Income Tax Department. However, on the basis of available statements of respondent no.2 - Visnagar Nagrik Sahakari Bank (VNSB), the respondent no.1 - VNSB has given credits in following companies upon payment to respondent no.1 - ADC Bank during the period from February- March 2004 to September 2004:

Sr.No. Name of Company Amount (in Rs.) i Prathmesh Investments Pvt. Ltd. 60,11,360.00 ii Ramyuri Investment Pvt. Ltd. 62,11,364.00 iii Nasalvish Investment Pvt. Ltd. 58,86,364.00 iv Dashrath Investment Pvt. Ltd. 26,18,180.00

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v Ramyuri Farms Pvt. Ltd. 1,13,18,182.00 vi Maunang Farms Pvt. Ltd. 1,13,18,180.00 vii Krinesh Farms Pvt. Ltd. 1,13,18,186.00 viii Dasharath Farms Pvt. Ltd. 1,13,18,180.00 ix Priyesh Housing Developers 75,45,457.00 x Prathmesh Land Developers 89,54,545.00 Total 8,24,99,998.00

2. Over and above this, a sum of Rs.3,00,00,000/- (Rupees Three Crores Only) was lying with respondent no.2 ---VNSB as per clause 3 of undertaking filed in SCA No.332/2004. The said amount was to be transferred by respondent no.2 to respondent no.1. Considering the payment of Rs.8,24,99,998/- paid to respondent no.1 - ADC Bank and Rs.3,00,00,000/- lying with respondent no.2 -- VNSB; in all a sum of Rs.11,24,99,998/- (Rupees Eleven Crores Twenty Four Lakhs Ninety Nine Thousand Nine Hundred Ninety Eight Only) is paid as per undertaking filed in SCA 332/2004.

3. I say that the petitioners thereafter addressed letters dared 31.10.2004 (pp.111-112), 25.10.2004 (pp.113-114), 55.03.2005 (pp.115-116) and 23.04.2005 (pp.119-121) and sought release of properties at Thaltej, Ahmedabad. The petitioners have specifically mentioned that a sum of Rs.4,95,00,000/- (Rupees Four Crores Ninety Five Lakhs Only) was outstanding then and showed their readiness to pay the said amount upon release of properties as per the undertaking. However, the said properties have not been released as per undertaking filed in SCA No.332/2004.

4. I say that owing to non-release of properties at Thaltej by the respondent no.l -- ADC Bank, a sum of Rs.4,95,00,000/- has not been paid. Moreover, the petitioners, being borrowers of respondent no.2 -- VNSB, applied for One Time Settlement Scheme and made further payments. The total amount paid by the petitioners to the respondent no.2 -- VNSB towards One Time Settlement Scheme and paid further amounts to make a total of Rs.32,44,78,686/- (including the

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amount paid as per undertaking in SCA No.332/2004). However, the petitioners were denied the benefit of One Time Settlement Scheme. Hence the petitioners had filed Special Civil Application No.8255/2012 (SCA 8255/2012) (pp.122-152) before this Honourable Court inter alia with a prayer to seek the benefit of One Time Settlement Scheme applicable to cooperative societies / banks. The petitioners had thereafter filed Letters Patent Appeal No.1230/2012 being aggrieved by the interim order passed in SCA 8255/2012, wherein the petitioners deposited further amount of Rs.19,32,11,314/-. Thus in all the petitioners have paid a total a sum of Rs.32,44,78,686/- + Rs.19,32,11,314/-, totaling to Rs.51,76,90,000/- towards their dues with respondent no.2 -- VNSB.

5. I submit that now there is internal dispute between respondent no.1 -- ADC Bank and respondent no.2 - VNSB for appropriation of amounts paid by petitioners. Thus the respondent no.1 - ADC Bank is not releasing the properties of the petitioners."

10.3 From the above affidavit it is clear that the terms of the undertaking as extracted hereinabove are admittedly not adhered to and therefore, there is no question of complying with the undertaking filed before this Court by the respondent Banks. Even otherwise, for compliance of the undertaking filed before this Court, no writ would lie under Article 226 or 227 of the Constitution of India, more particularly, after more than 13 years. The SCA No.12972 of 2017 therefore, suffers from delay and laches and is hopelessly time barred.

10.4 It appears that the SCA No.8255 of 2012 was preferred by the petitioners namely, Private

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Limited Companies for availing the benefits of OTS Scheme. However, such petition also cannot be entertained by compelling the respondent Banks to accept the OTS, in view of the settled legal position as held by the Supreme Court in case of Bijnor Urban Cooperative Banks Limited, Bijnor & Others vs. Meenal Agarwal and Others1 as under :

"21. It is further submitted that as such the original writ petitioner was being harassed by the Bank even when she was eligible to the benefit under the OTS Scheme. It is submitted that the Bank with an ill/ulterior motive deliberately refused to grant the benefit under the OTS Scheme just to grab her property. It is therefore prayed not to interfere with the impugned judgment and order passed by the High Court, in exercise of powers under Article 136 of the Constitution of India.

22. Having heard learned counsel for the respective parties at length, the following issues/questions are posed for consideration of this Court:

i) Whether benefit under the OTS Scheme can be prayed as a matter of right?;

ii) Whether the High Court in exercise of powers under Article 226 of the Constitution of India can issue a writ of mandamus directing the Bank to positively consider the grant of benefit under the OTS Scheme and that too de hors the eligibility criteria mentioned under the OTS Scheme?

24. Therefore, as per the guidelines issued, the grant of benefit of OTS Scheme cannot be prayed as a matter of right and the same is subject to fulfilling the eligibility criteria mentioned in the scheme. The defaulters who are ineligible under the OTS Scheme are mentioned in clause 2, reproduced hereinabove. A willful defaulter in repayment of

1 2021 SCC Online SC 1255

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loan and a person who has not paid even a single installment after taking the loan and will not be able to pay the loan will be considered in the category of "defaulter" and shall not be eligible for grant of benefit under the OTS Scheme. Similarly, a person whose account is declared as "NPA" shall also not be eligible. As per the guidelines, the Bank is required to constitute a Settlement Advisory Committee for the purpose of examining the applications received and thereafter the said Committee has to take a decision after considering whether a defaulter is entitled to the benefit of OTS or not after considering the eligibility as per the OTS Scheme. While making recommendations, the Settlement Advisory Committee has to consider whether efforts have been made to recover the loan amount and the possibility of recovery has been minimized, meaning thereby if there is possibility of recovery of the amount, either by initiating appropriate proceedings or by auctioning the property mortgaged and/or the properties given as a security either by the borrower and/or by guarantor, the application submitted by the borrower for grant of benefit under the OTS Scheme can be rejected.

27. While passing the impugned judgment and order, the High Court, in response to the submissions on behalf of the Bank that, there are all possibilities of recovery of the loan amount and the efforts are being made to recover the amount by initiating proceedings under the SARFAESI Act and that the properties mortgaged can be auctioned, has observed that the proceedings under the SARFAESI Act have remained pending for seven years and the Bank has been unable to recover its dues and therefore the hope of recovery is illusory. This conclusion is not supported by any material on record. Merely because the proceedings under the SARFAESI Act have remained pending for seven years, the Bank cannot be held responsible for the same. No fault of the bank can be found. What is required to be considered is a conscious decision by the Bank that the Bank will be able to recover the entire loan amount by auctioning

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the mortgaged property and a due application of mind by the Bank that there are all possibilities to recover the entire loan amount, instead of granting the benefit under the OTS Scheme and to recover a lesser amount. It is ultimately for the Bank to take a conscious decision in its own interest and to secure/recover the outstanding debt. No bank can be compelled to accept a lesser amount under the OTS Scheme despite the fact that the Bank is able to recover the entire loan amount by auctioning the secured property/mortgaged property. When the loan is disbursed by the bank and the outstanding amount is due and payable to the bank, it will always take a conscious decision in the interest of the bank and in its commercial wisdom.

28. Even otherwise, as observed hereinabove, no borrower can, as a matter of right, pray for grant of benefit of One Time Settlement Scheme. In a given case, it may happen that a person would borrow a huge amount, for example Rs. 100 crores. After availing the loan, he may deliberately not pay any amount towards installments, though able to make the payment. He would wait for the OTS Scheme and then pray for grant of benefit under the OTS Scheme under which, always a lesser amount than the amount due and payable under the loan account will have to be paid. This, despite there being all possibility for recovery of the entire loan amount which can be realised by selling the mortgaged/secured properties. If it is held that the borrower can still, as a matter of right, pray for benefit under the OTS Scheme, in that case, it would be giving a premium to a dishonest borrower, who, despite the fact that he is able to make the payment and the fact that the bank is able to recover the entire loan amount even by selling the mortgaged/secured properties, either from the borrower and/or guarantor. This is because under the OTS Scheme a debtor has to pay a lesser amount than the actual amount due and payable under the loan account. Such cannot be the intention of the bank while offering OTS Scheme and that cannot be purpose of the Scheme which may encourage such a dishonesty.

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29. If a prayer is entertained on the part of the defaulting unit/person to compel or direct the financial corporation/bank to enter into a one-time settlement on the terms proposed by it/him, then every defaulting unit/person which/who is capable of paying its/his dues as per the terms of the agreement entered into by it/him would like to get one time settlement in its/his favour. Who would not like to get his liability reduced and pay lesser amount than the amount he/she is liable to pay under the loan account? In the present case, it is noted that the original writ petitioner and her husband are making the payments regularly in two other loan accounts and those accounts are regularised. Meaning thereby, they have the capacity to make the payment even with respect to the present loan account and despite the said fact, not a single amount/installment has been paid in the present loan account for which original petitioner is praying for the benefit under the OTS Scheme.

30. The sum and substance of the aforesaid discussion would be that no writ of mandamus can be issued by the High Court in exercise of powers under Article 226 of the Constitution of India, directing a financial institution/bank to positively grant the benefit of OTS to a borrower. The grant of benefit under the OTS is always subject to the eligibility criteria mentioned under the OTS Scheme and the guidelines issued from time to time. If the bank/financial institution is of the opinion that the loanee has the capacity to make the payment and/ or that the bank/financial institution is able to recover the entire loan amount even by auctioning the mortgaged property/secured property, either from the loanee and/or guarantor, the bank would be justified in refusing to grant the benefit under the OTS Scheme. Ultimately, such a decision should be left to the commercial wisdom of the bank whose amount is involved and it is always to be presumed that the financial institution/bank shall take a prudent decision whether to grant the benefit or not under the OTS Scheme, having regard to the public

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interest involved and having regard to the factors which are narrated hereinabove.

31. In view of the aforesaid discussion and for the reasons stated above, we are of the firm opinion that the High Court, in the present case, has materially erred and has exceeded in its jurisdiction in issuing a writ of mandamus in exercise of its powers under Article 226 of the Constitution of India by directing the appellant- Bank to positively consider/grant the benefit of OTS to the original writ petitioner. The impugned judgment and order passed by the High Court is hence unsustainable and deserves to be quashed and set aside and is accordingly quashed and set aside."

10.5 In view of the above settled legal position, the SCA No.8255 of 2012 is also not required to be entertained.

11. In view of the foregoing reasons, both the petitions are ordered to be dismissed. Rule is discharged. Interim relief, if any, stands vacated.

(BHARGAV D. KARIA, J)

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