Kerala High Court
Sudharman R. vs Union Of India on 6 January, 2021
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN
WEDNESDAY, THE 06TH DAY OF JANUARY 2021 / 16TH POUSHA, 1942
WP(C).No.23721 OF 2020(M)
PETITIONER:
SUDHARMAN R., AGED 58 YEARS
S/O K.RAGHAVAN, PROPRIETOR KRIPA CASHEWS,
THANNIMOODU, KARINGANNOOR P.O.KOLLAM-691 516.
SRI.B.J.JOHN PRAKASH
SRI.P.PRAMEL
SRI.C.N.MIDHUN
SMT.JENCY JOSE
RESPONDENTS:
1 UNION OF INDIA, REPRESENTED BY ITS SECRETARY,
FINANCE DEPARTMENT, GOVERNMENT OF INDIA,
SOUTH BLOCK NEW DELHI-110 001.
2 THE STATE OF KERALA, REPRESENTED BY THE PRINCIPAL
SECRETARY, FISHERIES, PORTS, ENVIRONMENT AND
INDUSTRIES (COIR AND CASHEW) MAIN BLOCK, GOVERNMENT
SECRETARIAT, THIRUVANANTHAPURAM-695 001.
3 THE RESERVE BANK OF INDIA,
REPRESENTED BY THE DEPUTY GENERAL MANAGER, RBI,
BAKERRY JUNCTION, SERVICE ROAD, NANDAVANAM,
VAZHUTHACAUD, THIRUVANANTHAPURAM, KERALA-695 033.
4 THE CANARA BANK, REPRESENTED BY MANAGER,
KOLLAM MAIN BRANCH, MAHESWARI MANSION, THMARAKULAM,
KOLLAM-691 001.
SRI.K.ARJUN VENUGOPAL, CGC
SRI.K.JOHN MATHAI
SRI.JOSON MANAVALAN
SRI.KURYAN THOMAS
SRI.PAULOSE C. ABRAHAM
SRI.RAJA KANNAN
SRI GOPIKRISHNAN NAMBIAR (SC),
SRI P VIJAYAKUMAR (ASGI),
SRI RAVIKRISHNAN (GP)
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
06.01.2021, ALONG WITH WP(C).23758/2020(T), WP(C).24476/2020(H),
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C).No.23721 OF 2020(M) & con.cases
2
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN
WEDNESDAY, THE 06TH DAY OF JANUARY 2021 / 16TH POUSHA, 1942
WP(C).No.23758 OF 2020(T)
PETITIONER:
ANIL KUMAR, PROPRIETOR, M/S.SANTHAS CASHEWS,
ANITHA BHAVAN, MYLOM P.O., KOTTARAKKARA, KOLLAM.
SRI.B.J.JOHN PRAKASH
SRI.P.PRAMEL
SRI.C.N.MIDHUN
SHRI.IMTHIYAS AHAMMED N.K
RESPONDENTS:
1 UNION OF INDIA, REPRESENTED BY ITS SECRETARY,
FINANCE DEPARTMENT, GOVERNMENT OF INDIA, SOUTH
BLOCK, NEW DELHI-110001.
2 THE STATE OF KERALA,
REPRESENTED BY THE PRINCIPAL SECRETARY, FISHERIES,
PORTS, ENVIRONMENT AND INDUSTRIES (COIR AND
CASHEW), MAIN BLOCK GOVERNMENT SECRETARIAT,
THIRUVANANTHAPURAM-695001.
3 THE RESERVE BANK OF INDIA,
REPRESENTED BY THE DEPUTY GENERAL MANAGER, RBI,
BAKERRY JUNTION, SERVICE ROAD, NANDAVANAM,
VAZHUTHACAUD, THIRUVANANTHAPURAM, KERALA-695033.
4 THE CANARA BANK,
REPRESENTED BY MANAGER, KOLLAM MAIN BRANCH,
MAHESWARI MANSION, THAMARAKULAM, KOLLAM-691001.
MR.B.PRAMOD, CGC
SRI.M.GOPIKRISHNAN NAMBIAR
SRI.K.JOHN MATHAI
SRI.JOSON MANAVALAN
SRI.KURYAN THOMAS
SRI.PAULOSE C. ABRAHAM
SRI.RAJA KANNAN
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
06.01.2021, ALONG WITH WP(C).23721/2020(M), WP(C).24476/2020(H),
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C).No.23721 OF 2020(M) & con.cases
3
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN
WEDNESDAY, THE 06TH DAY OF JANUARY 2021 / 16TH POUSHA, 1942
WP(C).No.24476 OF 2020(H)
PETITIONER:
SONYA, AGED 48 YEARS
W/O JUSTIN GEORGE, PROPRIETRIX, M/S JAASIMPEX,
KADAKKASSERIL , AYANI SOUTH,
S.V.M.P.O.KARUNAGAPPALLY, KOLLAM, KERALA-690 573.
SRI.B.J.JOHN PRAKASH
SRI.P.PRAMEL
SRI.C.N.MIDHUN
SMT.JENCY JOSE
RESPONDENTS:
1 UNION OF INDIA, REPRESENTED BY ITS SECRETARY,
FINANCE DEPARTMENT, GOVERNMENT OF INDIA,
SOUTH BLOCK NEW DELHI-110 011.
2 THE STATE OF KERALA,
REPRESENTED BY THE PRINCIPAL SECRETARY, FISHERIES,
PORTS, ENVIRONMENT AND INDUSTRIES (COINR AND
CASHEW), MAIN BLOCK, GOVERNMENT SECRETARIAT,
THIRUVANANTHAPURAM-695 001.
3 THE RESERVE BANK OF INDIA,
REPRESENTED BY THE DEPUTY GENERAL MANAGER, RBI,
BAKERRY JUNCTION, SERVICE ROAD, NANDAVANAM,
VAZHUTHACAUD, THIRUVANANTHAPURAM, KERALA-695 033.
4 THE CANARA BANK, REPRESENTED BY MANAGER, KOLLAM,
CHINNAKKADA BRANCH, PULLIKKADA, ASRAMOM ROAD,
KOLLAM-691 001.
KUM.S.KRISHNA
SRI.M.GOPIKRISHNAN NAMBIAR
SRI.K.JOHN MATHAI
WP(C).No.23721 OF 2020(M) & con.cases
4
SRI.JOSON MANAVALAN
SRI.KURYAN THOMAS
SRI.PAULOSE C. ABRAHAM
SRI.RAJA KANNAN
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
06.01.2021, ALONG WITH WP(C).23721/2020(M), WP(C).23758/2020(T),
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C).No.23721 OF 2020(M) & con.cases
5
JUDGMENT
[ WP(C).23721/2020, WP(C).23758/2020,
WP(C).24476/2020 ]
Dated this the 6th day of January 2021
The petitioners in these three cases - which have been
considered together on account of the analogous factual
circumstances presented - are stated to be engaged in cashew
processing and cashew product manufacturing.
2. According to the petitioners - as submitted by their
learned counsel, Sri.John Prakash B.J. - they are entitled to the
benefit of the Circular issued by the Reserve Bank of India, a
copy of which has been produced as Ext.P4 along with W.P.(C)
No.23758/20, as per which, they say that the Banks are
obligated to consider their proposal for restructuring, they
being classified as "Micro, Small and Medium Enterprises"
(MSME).
3. The learned counsel for the petitioners contend that, in
fact, in terms of the afore said Reserve Bank Circular, the
State Level Bankers Committee (SLBC), of which the
respondent - Bank was also a member, had given them an offer
to make such a proposal but that the same had not been
considered properly by the Bank and have been rejected, in
WP(C).No.23721 OF 2020(M) & con.cases
the case of the petitioners in W.P.(C) No.23758/2020 and W.P.
(C) No.24476/2020, without assigning any specific reason but
saying that they are not financially viable. Sri.John Prakash,
therefore, prays that the respondent - Bank be directed to
consider his clients' revival proposals in terms of the Reserve
Bank Circular aforementioned and to take a decision thereon,
after affording them an opportunity of being heard.
4. In response, Sri.Gopikrishnan Nambiar, the learned
standing counsel for the respondent - Canara Bank, began his
submissions by saying that the Reserve Bank Circular in
question is not applicable to the petitioners because, even
though they are classified as "Micro Enterprises", the loans
given to them fall under the agricultural category. He
submitted that this is evident from the documents produced by
his client along with the statement filed in these matters and
therefore, that the Bank was justified in not considering the
proposal of the petitioners for restructuring the loans. He
then added to his submissions by saying that, in any event of
the matter, the proposals have been considered by the Circle
Office of the respondent - Bank and it was found that they
were all unviable and therefore, that they have no other option
but to reject them for such reason. The learned standing
WP(C).No.23721 OF 2020(M) & con.cases
counsel, therefore, prayed that this writ petition be dismissed.
5. I have examined the materials available on record and
have tested them on the touchstone of the submissions made
by the learned counsel for the parties as afore.
6. It is without doubt that the stand of Sri.Gopikrishnan
Nambiar before this Court is that the Reserve Bank Circular
aforementioned is not applicable to the case of the petitioner s.
However, it is ineluctable that the SLBC of which the Bank was a
member had directed the petitioners to submit their proposals
for restructuring based on the said Circular. This aspect is not
controverted but they contend that this was a benefit given to all
the businesses in the cashew sector and not merely to the
petitioners and therefore, that it is up to the Bank to decide
whether the Reserve Bank Circular was applicable to the
individual case or otherwise.
7. However, as I have already said above, since the Bank
themselves have given an option to the petitioners to make a
proposal for restructuring as per the Circular of Reserve Bank of
India, I am of the certain view that the petitioners are entitled at
least to have the same considered in terms of law.
8. That said, when I go through the documents placed on
record by the Bank, along with their statement in two of the afore
writ petitions as Exts.R4(b), it is clear that they have rejected the
WP(C).No.23721 OF 2020(M) & con.cases
proposals merely saying either that it is not financially viable or
that the Reserve Bank Circular are not applicable. I am afraid
that this cannot obtain imprimatur of this Court since the Bank
had a duty to consider the proposals - they having invited it from
the petitioners - after affording them an opportunity of being
heard, so that they can convince the competent Authority of
the Bank with the available materials and other applicable
inputs.
9. In the afore circumstances, I am of the certain view
that the steps now taken by the Bank under the provisions of
SARFAESI Act cannot be allowed to proceed until such time as
the proposals of the petitioners are considered by the
competent Authority of the Bank in terms of the Reserve Bank of
India Circular. I hasten to add that this does not mean that this
Court has concluded that the Circular of the Reserve Bank is
applicable to the petitioners but only that the petitioners must
be given an opportunity of convincing the Authority so, based on
the materials available with them and on the basis of other
relevant aspects.
10. Discerning the mind of this Court as afore,
Sri.Gopikrishnan Nambiar submitted that the Bank does not
have any legal impediment in reconsidering the proposals of
the petitioners, after affording them an opportunity of being
WP(C).No.23721 OF 2020(M) & con.cases
heard; but prayed that this Court may not make any
affirmative declarations as to their entitlement to any relief
under the said Circular.
11. Of course, it is without need to expatiate that this
Court has not entered into the merits of any of the contentions
of the petitioners, but I am only concluding, for the purpose of
this judgment, that the Bank must give them an opportunity of
being heard before their proposals for restructuring are rejected
or allowed, as the case may be.
In the afore circumstances, I order these writ petitions to
the limited extent of directing the competent Authority of the
respondent - Canara Bank to again consider the proposals of the
petitioners for restructuring in these cases and dispose it of,
after affording an opportunity of being heard to them.
Needless to say, until such time as the afore exercise is
completed, all further proceedings pursuant to the steps taken by
the Bank under the SARFAESI Act will stand deferred; however,
clarifying that they will be entitled to pursue it, from the stage at
which it is available today, depending upon the decision to be
taken by them on the proposals for restructuring in terms of the
afore directions.
Stu Sd/- DEVAN RAMACHANDRAN, JUDGE
WP(C).No.23721 OF 2020(M) & con.cases
APPENDIX OF WP(C) 23721/2020
PETITIONER'S EXHIBITS:
EXHIBIT P1 TRUE COPY OF THE MSME CERTIFICATE ISSUED TO
THE PETITIONER'S UNIT
EXHIBIT P2 TRUE COPY OF THE LETTER DATED 27.12.2018
ISSUED BY THE 4TH RESPONDENT
EXHIBIT P3 TRUE COPY OF THE REPORT OF THE COMMITTEE
ALONG WITH THE COVERING NOTE OF THE
CONVENER OF THE SAID COMMITTEE
EXHIBIT P4 TRUE COPY OF THE MASTER CIRCULAR DATED
17.3.2016
EXHIBIT P5 TRUE COPY OF THE LETTER DATED 30.5.2019
ISSUED BY THE 4TH RESPONDENT
EXHIBIT P6 TRUE COPY OF THE POST CARD DATED 2.8.2019
EXHIBIT P7 A COPY OF THE EXECUTIVE SUMMARY DULY
PREPARED BY THE 4TH RESPONDENT WITH RESPECT
TO THE ACCOUNT OF THE PETITIONER
EXHIBIT P8 TRUE COPY OF THE MASTER CIRCULAR NO
RBI/2018-19/100 DBR NO BP.BC
18/21.4.048/2018-19 DATED 1.1.2019
EXHIBIT P9 TRUE COPY OF THE NOTICE DATED 13.10.2020
UNDER SECTION 13(4) OF THE SARFAESI ACT
RESPONDENT'S ANNEXURE:
ANNEXURE R4(a) TRUE COPY OF THE CIRCULAR DATED 17.12.2015
ISSUED BY THE CANARA BANK, HEAD OFFICE.
WP(C).No.23721 OF 2020(M) & con.cases
APPENDIX OF WP(C) 23758/2020
PETITIONER'S EXHIBITS:
EXHIBIT P1 TRUE COPY OF THE MSME CERTIFICATE ISSUED TO THE
PETITIONER.
EXHIBIT P2 TRUE COPY OF THE REPORT OF THE COMMITTEE ALONG
WITH THE COVERING NOTE OF THE CONVENER OF THE
SAID COMMITTEE.
EXHIBIT P3 TRUE COPY OF THE MASTER CIRCULAR DATED 17.3.2016.
EXHIBIT P4 TRUE COPY OF THE MASTER CIRCULAR NO.RBI/2018-
19/100 DBR.NO.BP.BC.18/21.04.048/2018-19 DATED
1.1.2019.
EXHIBIT P5 TRUE COPY OF THE LETTER DATED 23.9.2019 ISSUED BY
THE 4TH RESPONDENT.
EXHIBIT P6 TRUE COPY OF THE REVIVAL SCHEME DATED 15.10.2019.
EXHIBIT P7 TRUE COPY OF THE PROPOSAL FOR REVIVAL SUBMITTED
BY THE PETITIONER WITHOUT ANNEXURES.
EXHIBIT P8 TRUE COPY OF THE REPLY LETTER DATED 10.12.2019
ISSUED BY THE PETITIONER UNDER 13(3A) OF SARFAESI
ACT.
EXHIBIT P9 TRUE COPY OF THE LETTER DATED 19.12.2019.
EXHIBIT P10 TRUE COPY OF THE REPLY LETTER DATED 24.12.2019
ISSUED BY THE PETITIONER.
EXHIBIT P11 TRUE COPY OF THE NOTICE DATED 13.10.2020 ISSUED
UNDER SECTION 13(4) OF THE SARFAESI ACT.
RESPONDENT'S ANNEXURE:
ANNEXURE R4(a) TRUE COPY OF THE CIRCULAR DATED 17.12.2015 ISSUED
BY THE CANARA BANK, HEAD OFFICE.
ANNEXURE R4(b) TRUE COPY OF THE LETTER DATED 14.02.2020 ISSUED
BY THE BANK TO THE PETITIONER.
WP(C).No.23721 OF 2020(M) & con.cases
APPENDIX OF WP(C) 24476/2020
PETITIONER'S EXHIBITS:
EXHIBIT P1 TRUE COPY OF THE MSME CERTIFICATE ISSUED TO M/S
JAASIMPEX.
EXHIBIT P2 TRUE COPY OF THE REPORT OF THE COMMITTEE ALONG
WITH THE COVERING NOTE OF THE CONVENER OF THE
SAID COMMITTEE
EXHIBIT P3 TRUE COPY OF THE MASTER CIRCULAR DATED 17.3.2016
ALONG WITH THE ANNEXURE
EXHIBIT P4 TRUE COPY OF THE MASTER CIRCULAR NO RBI/2018-
19/100 DBR.NO. BP.BC.18/21.4.048/2018-19 DATED
1.1..2019
EXHIBIT P5 TRUE COPY OF THE LETTER DATED 11.7.2019 ISSUED BY
THE 4TH RESPONDENT
EXHIBIT P6 TRUE COPY OF THE DOCUMENTS FURNISHED BY THE
PETITIONER TO THE 4TH RESPONDENT
EXHIBIT P7 TRUE COPY OF THE LETTER DATED 7.10.2019 ISSUED BY
THE PETITIONER
EXHIBIT P8 TRUE COPY OF THE STATEMENT OF ACCOUNT AS ISSUED
BY THE 4TH RESPONDENT
EXHIBIT P9 TRUE COPY OF THE POSSESSION NOTICE DATED
9.10.2020 ISSUED UNDER SECTION 13(4) OF THE
SARFAESI ACT
EXHIBIT P10 TRUE COPY OF THE ORDER DATED 13.8.2020 ISSUED BY
THE 2ND RESPONDENT
RESPONDENT'S ANNEXURE:
ANNEXURE R4(a) TRUE COPY OF THE CIRCULAR DATED 17.12.2015 ISSUED
BY THE CANARA BANK, HEAD OFFICE.
ANNEXURE R4(b) TRUE COPY OF THE LETTER DATED 11.07.2019 ISSUED
BY THE BANK TO THE PETITIONER.
ANNEXURE R4(c) TRUE COPY OF THE LETTER DATED 16.03.2020 ISSUED
BY THE CIRCLE OFFICE, CANARA BANK.
ANNEXURE R4(d) TRUE COPY OF THE LETTER DATED 04.03.2020.
