Case reference:
By Bank -
1) Calcutta High Court Writ Petition No. 10315 of 2013 - Ujjal Kumar Das & Anr. vs. State Bank of India & Ors.
2) Calcutta HC - Writ Petition No. 9850 of 2013 Messrs. Allianz Convergence Private Limited & Ors. vs. The General Manager, State Bank of India & Anr. 3) 3) Kerala High Court in Writ Petition No. 10864 of 2013
4) Kerala Writ Petition No. 20686 of 2013
5) Ku. Archana Chauhan v. State Bank of India, Jabalpur and [2007 136 Comp. Cas 568 (Mad)
6) Mr. K.J. Doraisamy v. the Assistant General Manager, State Bank of India, Erode Branch 2006(4) MLJ 1877 = [2007] 136
By borrower -
Supreme Court in the case of V. T. Khanzode & Ors. vs. Reserve Bank of India & Anr. (1982) 2 Supreme Court Cases 7.
Defined:
1) doctrine of ultra vires in relation to the powers of a statutory corporation
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO. 2808 OF 2013
D. J. Exim (India) Pvt. Ltd. & Ors.
vs.
State Bank of India & Ors.
DATE : NOVEMBER 28, 2013
...............
10] After having heard both the counsel at length, in our view, submissions made by the learned counsel for the Petitioners cannot be accepted. It is an admitted position that the Petitioners have not denied that they are unable to pay the amount which is payable to the bank in fact the proposal for restructuring of land has also been given by the petitioners to the State Bank of India. It is not in dispute therefore that the Petitioners are defaulters and the total amount claimed by the bank comes to about Rupees Fifty Three crores approximately. The bank has also initiated proceedings under the Securitization Act and notices have issued under Section 12(2) of the said Act and further action has been taken under the provisions of the said Act.
Rule 8 of the said Rules merely permits and allows the bank to publish the names of the wilful defaulters. Rule 8 reads as under:-
“8. Sale of immovable secured assets.-
.........
11] A perusal of the said Rule clearly indicates that the Bank has the right to publish the name of the defaulters by giving their names and addresses and two fold purpose is served as a result of the said publication of the names, firstly the fact that these persons are wilful defaulters is made known to the public at large and secondly it also tends to caution the prospective buyers who may be offered the property which is mortgaged by these defaulters with the bank. This being the primary objective for the publication of the notice, in our view, there would be no impediment in publication of photograph of wilful defaulters and particularly those defaulters who has committed various acts of misfeasance.
In the affidavit in reply filed by the State Bank of India they have stated in paragraph 16 various acts of misfeasance purportedly committed by the petitioners therein. It is stated that the Petitioners have failed to pay interest and the loan amounts and that they admitted their default in the letters which were addressed to the bank. Secondly it is contended in the affidavit in reply that the conduct of the Petitioners was not bonafide, fair and honest. The report which was received by the bank suggested that the Petitioners had tried to divert the sale proceeds by (a) squaring off sales against purchases made by the company, (b) by cash against sales realization from the debtors / buyer act of routing the sales receipts through Bank transaction.Thirdly it is contented that the Petitioners had also availed loan from Dhanalakshmi Bank without the consent of the Respondent bank. Fourthly it was contended that the company has extended its corporate guarantee to secure the loan of its associate concern without the prior consent/NOC from the Respondent bank. Fifthly, it is stated in the affidavit in reply that the CBI had already started investigation in respect of certain transactions in the month of October 2102 and FlR has been registered on 26.06.2012 for the offences punishable under Section 120-B r/w 420, 465, 467, 468, 471 of I.P.C. The Petitioners further state that the Petitioner company has statutory dues of Rs.9.2 crores as per the audited balance sheet of the year 2012-2013. These allegations however are disputed by the learned senior counsel appearing on behalf of the Petitioners. Further the fact remains that the bank has come to the conclusion that the Petitioners were not only wilful defaulters but had committed various acts of misfeasance and a report to that effect was received and was shown to the committee which considers the question as to whether the photographs of the wilful defaulters should be published or not. In the present case therefore we are satisfied that after having arrived at a conclusion about the acts of misfeasance by the Petitioner bank, the Senior Executive officer not below the rank of Chief General Manager has arrived at a decision to publish the photographs.
13] We are also of the view that in each and every case whenever person is declared as a wilful defaulters bank should not publish the photographs in a routine manner and only after following mechanism of examining the facts and circumstances of each case the bank should consider whether the photographs should be published. We are satisfied that the decision taken by the bank in this matter cannot be faulted.
14] So far as two judgments on which reliance has been placed on behalf of the petitioners are concerned, the said decisions are challenged by the bank and the intra-count appeal is pending before the Division Bench. Even otherwise after going through the said judgment with respect we do not agree with the view expressed by the two learned Single Judges of the two High Court. Further the Apex Court in the case of V. T. Khandoze vs. Reserve Bank of lndia has observed in paragraph as under:
“Section 58(1) of the Act confers power on the Central Board of Directors of the Bank to make regulations in order to provide for all matters for which provision is necessary or convenient for the purpose of giving effect to the provisions of the Act. It seems to us clear that it is not only convenient but manifestly necessary to provide for the service conditions of the the Bank's staff in order to give effect to the provisions of the Act. The Act was passed in order to constitute a Bank for achieving economic purposes of the highest national importance : regulating the issue of Bank notes, keeping reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country its advantage. It is, in our view, not open to any question either on the basis of reason or authority that the power to provide for service conditions of the staff is at least incidental to the obligation to carry out the purposes for which the Bank was constituted. As observed in Armour v. Liverpool Corporation 1939 Ch. 422, 434,435.
To assist in removing from the minds of its employees the fear of an unprotected old age, to foster their happiness and contentment, and to procure their good and efficient service, are objects which, even if economic considerations alone count, are incidental, if not vital, to the proper carrying on of any undertaking as well by a municipal as by any other corporation.
The doctrine of ultra vires in relation to the powers of a statutory corporation has to be understood reasonably and so understood, “whatever may fairly be regarded as incidental to, or consequential upon, those things which the legislature has authorised ought not (untess expressly prohibited) to be held by judicial construction, to be ultra vires.” (See Attorney- General v. Great Eastern Rly. Co.) (1880) 5 ACT 473 (HL). The Central Board has, therefore, the power to make service regulations under Section 58(1) of the Act.”
The Apex Court has therefore clearly held that whatever has to be done fairly and is also regarded as incidental to or consequential upon those things which the legislature has authorised to do ought not to be held by judicial construction to be ultravires. In the present case Rule 8 specifically authorised the bank to publish the names ahd addresses of the wilful defaulters. There is no legal bar either in the said rule or under any provisions of the Act which expressly prohibits the bank from publication of photographs and therefore the action of the bank in publishing the photographs cannot be held to be ultravires. Ratio of the judgment in our view squarely applies to the facts of the present case. In the result, it is not possible to accept submissions of learned counsel appearing on behalf of the bank, the petition therefore is dismissed.
At this stage, learned counsel appearing on behalf of the Petitioners states that the statement made by the bank not to publish the photographs may be extended for a period of four weeks from today. Learned appearing on behalf of the banks submits that the said statement is extended for a period of one week. In our view it would be appropriate if this statement made by the bank is extended for a period of three weeks.
15] Parties to act on a copy of the order duly authorisd by the registry of this court.
[M. S. Sonak, J.] [V. M. Kanade, J.]
By Bank -
1) Calcutta High Court Writ Petition No. 10315 of 2013 - Ujjal Kumar Das & Anr. vs. State Bank of India & Ors.
2) Calcutta HC - Writ Petition No. 9850 of 2013 Messrs. Allianz Convergence Private Limited & Ors. vs. The General Manager, State Bank of India & Anr. 3) 3) Kerala High Court in Writ Petition No. 10864 of 2013
4) Kerala Writ Petition No. 20686 of 2013
5) Ku. Archana Chauhan v. State Bank of India, Jabalpur and [2007 136 Comp. Cas 568 (Mad)
6) Mr. K.J. Doraisamy v. the Assistant General Manager, State Bank of India, Erode Branch 2006(4) MLJ 1877 = [2007] 136
By borrower -
Supreme Court in the case of V. T. Khanzode & Ors. vs. Reserve Bank of India & Anr. (1982) 2 Supreme Court Cases 7.
Defined:
1) doctrine of ultra vires in relation to the powers of a statutory corporation
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO. 2808 OF 2013
D. J. Exim (India) Pvt. Ltd. & Ors.
vs.
State Bank of India & Ors.
DATE : NOVEMBER 28, 2013
...............
10] After having heard both the counsel at length, in our view, submissions made by the learned counsel for the Petitioners cannot be accepted. It is an admitted position that the Petitioners have not denied that they are unable to pay the amount which is payable to the bank in fact the proposal for restructuring of land has also been given by the petitioners to the State Bank of India. It is not in dispute therefore that the Petitioners are defaulters and the total amount claimed by the bank comes to about Rupees Fifty Three crores approximately. The bank has also initiated proceedings under the Securitization Act and notices have issued under Section 12(2) of the said Act and further action has been taken under the provisions of the said Act.
Rule 8 of the said Rules merely permits and allows the bank to publish the names of the wilful defaulters. Rule 8 reads as under:-
“8. Sale of immovable secured assets.-
.........
11] A perusal of the said Rule clearly indicates that the Bank has the right to publish the name of the defaulters by giving their names and addresses and two fold purpose is served as a result of the said publication of the names, firstly the fact that these persons are wilful defaulters is made known to the public at large and secondly it also tends to caution the prospective buyers who may be offered the property which is mortgaged by these defaulters with the bank. This being the primary objective for the publication of the notice, in our view, there would be no impediment in publication of photograph of wilful defaulters and particularly those defaulters who has committed various acts of misfeasance.
In the affidavit in reply filed by the State Bank of India they have stated in paragraph 16 various acts of misfeasance purportedly committed by the petitioners therein. It is stated that the Petitioners have failed to pay interest and the loan amounts and that they admitted their default in the letters which were addressed to the bank. Secondly it is contended in the affidavit in reply that the conduct of the Petitioners was not bonafide, fair and honest. The report which was received by the bank suggested that the Petitioners had tried to divert the sale proceeds by (a) squaring off sales against purchases made by the company, (b) by cash against sales realization from the debtors / buyer act of routing the sales receipts through Bank transaction.Thirdly it is contented that the Petitioners had also availed loan from Dhanalakshmi Bank without the consent of the Respondent bank. Fourthly it was contended that the company has extended its corporate guarantee to secure the loan of its associate concern without the prior consent/NOC from the Respondent bank. Fifthly, it is stated in the affidavit in reply that the CBI had already started investigation in respect of certain transactions in the month of October 2102 and FlR has been registered on 26.06.2012 for the offences punishable under Section 120-B r/w 420, 465, 467, 468, 471 of I.P.C. The Petitioners further state that the Petitioner company has statutory dues of Rs.9.2 crores as per the audited balance sheet of the year 2012-2013. These allegations however are disputed by the learned senior counsel appearing on behalf of the Petitioners. Further the fact remains that the bank has come to the conclusion that the Petitioners were not only wilful defaulters but had committed various acts of misfeasance and a report to that effect was received and was shown to the committee which considers the question as to whether the photographs of the wilful defaulters should be published or not. In the present case therefore we are satisfied that after having arrived at a conclusion about the acts of misfeasance by the Petitioner bank, the Senior Executive officer not below the rank of Chief General Manager has arrived at a decision to publish the photographs.
13] We are also of the view that in each and every case whenever person is declared as a wilful defaulters bank should not publish the photographs in a routine manner and only after following mechanism of examining the facts and circumstances of each case the bank should consider whether the photographs should be published. We are satisfied that the decision taken by the bank in this matter cannot be faulted.
14] So far as two judgments on which reliance has been placed on behalf of the petitioners are concerned, the said decisions are challenged by the bank and the intra-count appeal is pending before the Division Bench. Even otherwise after going through the said judgment with respect we do not agree with the view expressed by the two learned Single Judges of the two High Court. Further the Apex Court in the case of V. T. Khandoze vs. Reserve Bank of lndia has observed in paragraph as under:
“Section 58(1) of the Act confers power on the Central Board of Directors of the Bank to make regulations in order to provide for all matters for which provision is necessary or convenient for the purpose of giving effect to the provisions of the Act. It seems to us clear that it is not only convenient but manifestly necessary to provide for the service conditions of the the Bank's staff in order to give effect to the provisions of the Act. The Act was passed in order to constitute a Bank for achieving economic purposes of the highest national importance : regulating the issue of Bank notes, keeping reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country its advantage. It is, in our view, not open to any question either on the basis of reason or authority that the power to provide for service conditions of the staff is at least incidental to the obligation to carry out the purposes for which the Bank was constituted. As observed in Armour v. Liverpool Corporation 1939 Ch. 422, 434,435.
To assist in removing from the minds of its employees the fear of an unprotected old age, to foster their happiness and contentment, and to procure their good and efficient service, are objects which, even if economic considerations alone count, are incidental, if not vital, to the proper carrying on of any undertaking as well by a municipal as by any other corporation.
The doctrine of ultra vires in relation to the powers of a statutory corporation has to be understood reasonably and so understood, “whatever may fairly be regarded as incidental to, or consequential upon, those things which the legislature has authorised ought not (untess expressly prohibited) to be held by judicial construction, to be ultra vires.” (See Attorney- General v. Great Eastern Rly. Co.) (1880) 5 ACT 473 (HL). The Central Board has, therefore, the power to make service regulations under Section 58(1) of the Act.”
The Apex Court has therefore clearly held that whatever has to be done fairly and is also regarded as incidental to or consequential upon those things which the legislature has authorised to do ought not to be held by judicial construction to be ultravires. In the present case Rule 8 specifically authorised the bank to publish the names ahd addresses of the wilful defaulters. There is no legal bar either in the said rule or under any provisions of the Act which expressly prohibits the bank from publication of photographs and therefore the action of the bank in publishing the photographs cannot be held to be ultravires. Ratio of the judgment in our view squarely applies to the facts of the present case. In the result, it is not possible to accept submissions of learned counsel appearing on behalf of the bank, the petition therefore is dismissed.
At this stage, learned counsel appearing on behalf of the Petitioners states that the statement made by the bank not to publish the photographs may be extended for a period of four weeks from today. Learned appearing on behalf of the banks submits that the said statement is extended for a period of one week. In our view it would be appropriate if this statement made by the bank is extended for a period of three weeks.
15] Parties to act on a copy of the order duly authorisd by the registry of this court.
[M. S. Sonak, J.] [V. M. Kanade, J.]
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