S.Ashkar Khan Musaliar vs Canara Bank
2021 Latest Caselaw 22854 Ker

W.P.(C) No.19318/21             -:1:-


             IN THE HIGH COURT OF KERALA AT ERNAKULAM

                              PRESENT

          THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS

 TUESDAY, THE 23RD DAY OF NOVEMBER 2021/2ND AGRAHAYANA, 1943

                      WP(C) NO. 19318 OF 2021

PETITIONER:

                S.ASHKAR KHAN MUSALIAR,
                AGED 46 YEARS
                S/O. A.M. SAINULABDEEN MUSALIAR,
                PROPRIETOR, M/S. ASHKAR CASHEW INDUSTRIES,
                KARIKODE, KOLLAM-691 005,
                RESIDING AT SHAFI MANZIL,
                KARIKODE, KOLLAM-691 005
                BY ADVS.
                E.D.GEORGE
                LINU G. NATH
                BENET SELVAN S.
                BRISONE T. MATHEW

RESPONDENT/S:

      1         CANARA BANK,
                KOLLAM MAIN BRANCH, THAMARAKKULAM,
                KOLLAM, PIN-691 001,
                REP. BY ITS MANAGER.
      2         STATE LEVEL BANKERS COMMITTEE (SLBC),
                REPRESENTED BY ITS CONVENER/ GENERAL MANAGER,
                CANARA BANK, SLBC CELL, CORPORATE OFFICE,
                CANARA BANK BUILDING, PB NO. 159, M.G. ROAD,
                TRIVANDRUM-695 001
      3         STATE OF KERALA,
                REPRESENTED BY PRINCIPLE SECRETARY, GOVERNMENT
                SECRETARIAT, GOVERNMENT OF KERALA,
                THIRUVANANTHAPURAM, PIN-695 001
      4         THE BRANCH MANAGER,
                STATE BANK OF INDIA, KARIKODE BRANCH,
                MUMTHAS COMPLEX, T.K.M.C. P.O,
                KOLLAM, KERALA, PIN-691 005
                BY ADVS.
                THANKOM.G
                JAWAHAR JOSE
 W.P.(C) No.19318/21             -:2:-


                E.M.MURUGAN

OTHER PRESENT:

                SRGP.SRI.JUSTIN JACOB


     THIS WRIT PETITION         (CIVIL) HAVING COME UP   FOR
ADMISSION ON 23.11.2021,        THE COURT ON THE SAME    DAY
DELIVERED THE FOLLOWING:
 W.P.(C) No.19318/21                      -:3:-




                      BECHU KURIAN THOMAS, J.
                      ............................................
                      W.P.(C) No.19318 OF 2021
                   ...........................................
           Dated this the 23rd day of November, 2021


                                JUDGMENT

Petitioner is a processor and exporter of cashew. The

entire cashew industry in Kerala is going through trying times.

Several steps are being initiated by the Government to revive

the industry which was at one point in time, a highlight of this

State's industrial activity. A Cashew Revival Committee had even

been constituted by the Government in 2018 to assess the

cashew processing units for their financial viability. The State

Level Bankers Committee (SLBC) was also roped in by the

Government in their attempts to revive the industry. On the

basis of the recommendations of the said Committee, a revival

scheme was mooted.

2. In the meantime, several cashew industrialists

approached this Court and obtained directions to the Banks to

consider ways and means to revive the industry by providing

reconstruction of loan facilities. The Reserve Bank of India

issued circulars to facilitate the restructuring of Micro, Small and

Medium Enterprises.

3. While so, the 1st respondent initiated proceedings under

the Securitisation and Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002 (for short, 'the Act'),

ignoring the binding circulars and notifications, alleges the

petitioner. Though petitioner had, along with a few others,

challenged the proceedings initiated under the Act, this Court

dismissed the same. The writ appeal was also rejected by

Ext.P9, leaving it open to the appellants therein to challenge the

steps initiated, if any, under the Act.

4. Later, few other cashew processors filed W.P.(C)

No.23721 of 2020 and connected cases, wherein this Court, by

Ext.P13 judgment, directed the respondent Bank to consider the

applications for restructuring of the petitioners therein. Petitioner

relies upon Ext.P13 judgment and seeks regularisation or

restructuring of the loan. Petitioner also sought for the benefit of

the Government order dated 06-07-2019, which is produced as

Ext.P2 and further sought to keep in abeyance all proceedings

for dispossession of the petitioner pursuant to Ext.P10.

5. Sri.E.D.George, the learned counsel for the petitioner

vehemently asserted that, petitioner cannot be treated

differently from other similarly situated persons, especially in the

matter of considering the possibility of restructuring the loan

liability of the petitioner. It was also argued that the 1 st

respondent is even ignoring the Covid-19 pandemic and its

impact on all industries including the already reeling cashew

industry.

6. The 1st respondent and the 4th respondent have filed

separate counter affidavits opposing the claim of the petitioner.

Adv.E.M.Murugan, appearing for the 1st respondent invited the

attention of the Court to paragraph 3 of the counter affidavit of

the 1st respondent and pointed out that, even though the Bank

had offered sufficient opportunity to the petitioner to come out

with a restructuring proposal, the petitioner failed to provide

such a proposal within time and therefore the Bank could not

consider the same. It was also stated that, the unit of the

petitioner remains closed since 2017 and that, the revival or

restructuring proposal even if accepted, will not serve any

purpose. It was also averred that petitioner's business did not

come under the MSME category and the request for revival was

even rejected.

7. The 4th respondent had no specific contention regarding

the claim in the writ petition as they were arrayed only because

the said Bank was a tenant of the petitioner, who was directed to

pay the rent of Rs.63,281/- payable to the petitioner, to the 1 st

respondent as per Ext.P11, in view of section 13(4)(d) and

section 13(5) of the Act.

8. No doubt, the cashew industry is undergoing one of the

worst periods ever, as evident from the attempts of the

Government in Ext.P1 and Ext.P2. The unemployment that will

befall the State, if cashew factories are abruptly brought to an

end, is also a matter that is worrying the State. Coupled with the

general decline of the cashew industry, the Covid-19 pandemic

has also added to the woes of the cashew processors.

9. The Kerala Government has apparently been canvassing

for the grant of breathing time to the cashew industries to

enable the industry to revive back to its old glory. The learned

counsel for the petitioner contended that, petitioner has even

started its operations, though on a limited scale. The revival, if

it fructifies, benefits even the lending banks. Exceptional

circumstances require an extraordinary approach. On a holistic

appreciation, it can be noticed that the situation warrants a

special procedure.

10. In this context, this Court notices that petitioner had in

fact, prepared a proposal for restructuring of the loan taken from

the respondents. This is evident from Ext.P15 viability

assessment dated 21-08-2019, allegedly submitted by the

petitioner for restructuring of MSME. Though the counsel for the

respondents disputed the receipt of such document, petitioner

asserts that the same was submitted.

11. Since there is a dispute on the receipt of the proposal

submitted by the petitioner to the 1st respondent, I am of the

view that the petitioner must be given an opportunity to submit

a fresh proposal in a time-bound manner, to enable the 1st

respondent Bank to consider the proposal for restructuring the

loan, as was granted to similarly situated persons in Ext.P13

judgment.

12. In this context, it is appropriate to observe that when

restructuring proposals are submitted, fairness of the occasion

demands that the Bank applies its mind effectively to such

proposals. It is more often rejected, without any application of

mind. The intention of restructuring proposals requires a proper

consideration of the various factors, including the nature of the

industry, the prevailing circumstances, and the history of the

individual borrower. This is a facet of the lender's fairness that

must prevail in all their actions. A holistic approach has to be

thus adopted, rather than a rigid method.

13. Thus, having regard to the various contentions raised

in this case, this Court is of the opinion that, petitioner must also

be given the benefit of consideration of the proposal for

restructuring, as was given to those petitioners in Ext.P13

judgment of this Court.

14. Therefore, I direct the petitioner to submit a fresh

restructuring/revival proposal to the respondent Bank within a

period of 15 days from the date of receipt of a copy of this

judgment. If such a proposal is received, respondent Bank shall

consider the same and pass appropriate orders thereon, after

hearing the petitioner, in a time bound manner. Needless to

mention, petitioner shall not be dispossessed from the properties

that were offered as security interest for the loan account, till

such a decision is taken.

This writ petition is disposed of with the above

observations.

Sd/-

BECHU KURIAN THOMAS, JUDGE AJM

APPENDIX OF WP(C) 19318/2021

PETITIONER EXHIBITS Exhibit P1 PHOTOCOPY OF MINUTES OF THE MEETING HELD ON 6.2.2019 IN THE CHAMBER OF HON'BLE CHIEF MINISTER, IN THE LEGISLATIVE ASSEMBLY COMPLEX.

Exhibit P1(A) TRUE ENGLISH TRANSLATION OF ANNEXURE A1.

Exhibit P2 PHOTOCOPY OF THE GOVERNMENT ORDER GO(MS) NO. 643 OF 2019 DATED 6.7.2019.

Exhibit P2(A) TRUE ENGLISH TRANSLATION OF ANNEXURE A2.

Exhibit P3 PHOTOCOPY OF THE CIRCULAR DATED 1.1.2019.

Exhibit P4 PHOTOCOPY OF THE CIRCULAR DATED 11.2.2020.

 Exhibit P5         PHOTOCOPY OF RELEVANT PAGES OF THE
                    REPORT    OF     THE     COMMITTEE     DATED
                    31.1.2019.
 Exhibit P6         PHOTOCOPY     OF     THE     NOTICE    DATED
                    10.01.2020 ISSUED TO THE APPLICANT.
 Exhibit P7         PHOTOCOPY OF LETTER DATED 18.3.2019
                    ISSUED   BY    THE    BANK    TO   THE   1ST
                    APPLICANT.
 Exhibit P8         PHOTOCOPY OF JUDGMENT DATED 13.11.2020
                    IN W.P.C NO. 5232/2020 OF THE HON'BLE
                    HIGH COURT OF KERALA.
 Exhibit P9         PHOTOCOPY    OF    THE     JUDGMENT    DATED
                    8.12.2020 IN W.A. NO. 1587/2020 OF THE
                    HON'BLE HIGH COURT OF KERALA.
 Exhibit P10        PHOTOCOPY OF THE NOTICE ISSUED BY THE
                    RESPONDENT UNDER SEC. 13(4) OF THE
                    SARFAESI ACT.
 Exhibit P11        PHOTOCOPY OF THE NOTICE ISSUED BY THE
                    CANARA BANK TO THE STATE BANK OF INDIA.
 Exhibit P12        PHOTOCOPY OF THE LETTER ISSUED BY THE
                    STATE BANK OF INDIA TOE THE APPLICANT.
 Exhibit P13        PHOTOCOPY    OF    THE     JUDGMENT    DATED
                    06.01.2021 BY HON'BLE HIGH COURT OF
                    KERALA.
 Exhibit P14        TRUE COPY OF THE REQUEST FOR REVIVAL TO

THE 1ST RESPONDENT BANK FOR RESTRUCTURE OF LOAN AND CASH CREDIT FACILITY.

 Exhibit P15        TRUE COPY OF THE VIABILITY ASSESSMENT
                    FORMAT   FOR     RESTRUCTURING     OF   MSME



                      BORROWAL ACCOUNTS FROM THE CHARTERED
                      ACCOUNTANT.
 Exhibit P16          TRUE COPY OF THE PETITION DATED 17-03-
                      2020 TO THE 1ST RESPONDENT.
 Exhibit P17          TRUE COPY OF THE PROCEEDINGS DATED 03-
                      02-2021 INITIATED BY THE GOVT. OF
                      KERALA.
 Exhibit P18          TRUE COPY OF THE MINUTES OF THE MEETING

HELD ON 1-10-2021 UNDER THE LEADERSHIP OF THE JOINT SECRETARY FOR INDUSTRIAL DEPARTMENT FOR PROVIDING SUPPORT AND HELP TO THE CASHEW INDUSTRY.

Exhibit P19 TRUE COPY OF THE DETAILS OF THE THREE SECURED ASSETS.

Exhibit P20 TRUE COPY OF THE GST RETURN DATED 17-

10-2021.

Exhibit P21 TRUE COPY OF THE LETTER DATED 1-11-2020 ISSUED BY THE 1ST RESPONDENT BANK TO THE 4TH RESPONDENT.

                       //TRUE COPY//             PA TO JUDGE