Important Decisions Of Court

Gratuity payment can be stopped

The Calcutta High Court held last week that service regulations of a public sector bank will override the provisions of the Payment of Gratuity Act. The court set aside the decision to the contrary of the controlling authority under the Act in its judgment, United Bank of India vs Pranab Kumar. In this case the chief regional manager for north India was terminated for sanctioning loans violating norms and causing losses to the tune of Rs 26 crore. His services were terminated and gratuity forfeited though the disciplinary proceedings continued. 

The bank's view was that under the service regulations, the employer would be entitled to forfeit the damage suffered out of the amounts payable towards gratuity. 

The labour commissioner and the controlling authority under the Act ruled that gratuity cannot be denied as the main Act will prevail over the regulations. They maintained that the statute was a beneficial legislation and therefore, any regulation inconsistent with the object of the Act was not valid. 

The high court ruled that they were wrong. It explained that according to the 1970 law taking over and establishing the public sector bank, the regulations were specifically framed by the Board of Directors. "It is a special piece of subordinate legislation which because of their very special nature must give pre-eminence and precedence over the general principal or any general provision of law covering the same field. All that the court is required to find that in such a situation, the subordinate legislation is not overreaching or overstepping the principal Act."

New employer to pay PF penalty-Business Standard-21st July 2014

M J Antony  

July 20, 2014

The Supreme Court has held that a company which takes over another is liable to pay damages for default in payment of contributions to the provident fund committed by the latter. The damages is punitive in nature and it could be recovered from the transferee employer, the court held in the judgment, Mcleod Russel India vs Regional PF Commissioner, Jalpaiguri. In this case, Saroda Tea Company defaulted in payment of PF contributions. Later it was taken over by Eveready Industries, later named Mcleod Russel. According to the take-over agreement, the Mcleod cleared all PF arrears of the tea company. However, it contested the imposition of penalty for the default of the tea company. It pointed out the agreement in which the damages was the liability of the tea company. The Calcutta High Court rejected the argument. On appeal, the Supreme Court upheld the high court view and underlined that even if there was such an agreement, the liability was that of the new employer. The court asked the company to pay interest on the damages also.

Director can't be tried without company 

Prosecution of a director of a company for issuing a cheque which bounces cannot be sustained if the company is not made a party, the Supreme Court has ruled while setting aside the decision of the Delhi High Court in the case, Anil Gupta vs Star India Ltd. In this instance, a cable television distributor issued three cheques to Star India, which bounced. It filed criminal complaints underSection 138 and 141 of the Negotiable Instruments Act to the distributing company and the director. They moved the high court to quash the complaint on the ground of limitation. The high court quashed the complaint against the company but allowed the prosecution of the director, though he had argued that he was only vicariously liable for the default. He moved the Supreme Court. It relied upon earlier decisions and emphasised that proceedings against a director cannot be continued in the absence of the company.

Pre-deposit rule doesn't bar order to pay 

The Supreme Court has ruled that the National Consumer Commission can direct a company which appeals against the state commission order to deposit half of the decreed amount as a condition to hear the appeal. The Consumer Protection Act has a similar provision in Section 19. But the Supreme Court clarified that the statutory provision was different from the power of the commission to pass interim order. The statutory provision was a condition precedent to entertain an appeal. The commission can pass interim order on the basis of the merit of the appeal during the proceeding, the court explained. Several companies against whom state commissions had passed awards for deficiency in service and unfair trade practices moved the National Commission to set aside the orders. The National Commission ordered that they must first deposit half the amount decreed by the state commissions. The companies moved the appeals, titled Shreenath Corp vs Consumer Education and Research Society, against the order. The Supreme Court dismissed all of them.

Creditor can stand outside revival plan 

The Delhi High Court has ruled that neither the Board for Industrial and Financial Reconstruction (BIFR) nor the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) can compel a bank to join or continue in a recovery scheme for a sick company. A creditor bank can opt out of the scheme and realise outstanding dues from the company according to law, the judgment in the case, Indusind Bank Ltd vs ITI Ltd said. The order of the appellate authority to the bank to continue in the consortium of creditor banks set up to revive the firm was set aside. The company had approached BIFR following which the board set up the consortium. It set up an operating agency headed by State of Bank of India to revive the company, according to the Sick Industrial Companies Act. Indusind Bank was reluctant to join the consortium. But it was compelled by AAFIR by an order. The bank appealed to the Supreme Court arguing that no one can be compelled to enter into a contract without one's consent and that participation in the consortium agreement as a creditor has to be based upon volition and not compulsion. The Supreme Court accepted this contention.

Injunction against trade name 

The Bombay High Court has passed an injunction against Twilight Mercantile Ltd in a trade mark petition moved by Medley Pharmaceuticals Ltd alleging violation of trade names of its medicines. Medley is manufacturing medicines with the trade names O2 and OTwo. The other company introduced a medicine with the brand name O2B. On the application of Medley, the court found that the names were bound to be confusing because they were "phonetically, visually and structurally similar." Therefore, Twilight was barred from "exhibiting for sale and advertising pharmaceutical and medicinal preparation under the trade mark O1B and or O1B" PLUS till the issues are finally decided.

Link Business Standard

Bank manager arrested on charges of fraud-Business Standard 21.07.2014

A branch manager of public sector bank has been arrested for allegedly swindling about Rs 1.40 crore fixed deposits from some bank customers. 

Acting on a complaint filed by Indian Overseas Bank zonal manager G Kalyanam, a special team of Central Crime Branch officials arrested M Parasuramamurthy, the bank's Adambakkam branch manager yesterday from his residence here, a police release said. 

He was later remanded to judicial custody and has been lodged at the Puzhal prison, the release said. 

Investigations revealed that Parasuramamurthy while working in Rajapalayam branch had swindled several crores of rupees deposited as fixed deposits by A K D Venkataramanraja, who is the attorney of A K D Kumar (both NRIs), it said. 

Parasuramamurthy, who was later elevated to the level of Senior Manager at Rajapalayam main branch, had given fake renewal letters to Venkataramanraja as the deposits matured.

Later, he had withdrawn about Rs 80 lakh deposited by a customer at the Rajapalayam main branch, as Venkataramanaraja wanted to withdraw cash from his fixed deposit account, it said. 

Meanwhile, Parasuramamurthy was transferred to Adambakkam branch as its manager in Chennai and when Venkataramanaraja wanted the maturity amount, he swindled another Rs 61 lakh deposited by another customer in the branch, the release said.

Link Business Standard

Car agency booked for aiding in car loan fraud-Times of India 

LUCKNOW: A car agency located at Faizabad Road was booked by police here on Sunday for allegedly aiding in car loan fraud. The police took the action on the report of fraud filed by manager of UCO Bank Indiranagar branch at Ghazipur police station on July 18.

A couple, identified as Dheeraj Pal and Kavita Pal, had approached the bank to get a loan of Rs 4 lakh. The bank issued a pay order in the name of the car agency on the basis of the documents submitted by the couple. When they defaulted in paying EMIs, the bank employee sent reminders to them

through posts. Failing to get any response from them, the bank staff approached the car agency.

The bank staff discovered that the car had been sold by the couple to some other person without obtaining NOC from the bank. Sub-inspector NH Khan, is handling the case said that it was to be ascertained if any RTO official was involved in the fraud. He said that owner of the car agency would also be questioned in this connection. The police are trying to trace the couple for making further inquiries, he added.

Link times of India

Pakistan gangs use Indian banks for fraud-Hindustan Times

If an alert from India’s external intelligence agency Research and Analysis Wing (R&AW) is anything to go by, Pakistan-based gangs are running fake lottery rackets through 349 Indian bank accounts.

“Input from R&AW indicates that 349 bank accounts are being used/operated by Indian associates for facilitating Pak-based groups running fake lottery rackets,” an official note accessed by HT said adding that details of 99 users of Indian telephone numbers who are the local collaborators of the Pak groups “are under watch”.

In the country-wide network operated by Indian associates of the Pakistani gangs, at least 133 bank accounts in the State Bank of India, 33 in ICICI bank, 18 in Punjab National Bank and others in Bank of Baroda, Oriental Bank of Commerce, Union Bank of India, Central Bank of India and the United Commercial Bank of India, are being operated by Pak-based gangs. About 139 accounts are of unidentified banks.

“Details of these bank accounts and the telephone numbers are being shared with other intelligence agencies”, a senior government official told HT.

The vast lottery scam came to the notice of the Indian authorities in 2011. But the extent of the misuse of Indian bank accounts came to light in February 2013 when a Pak-operated lottery network was neutralised in Roorkee (Uttarkhand) and the kingpin arrested with 132 ATM cards of various Indian banks and details of 25 bank accounts. Before this, cases of similar arrests had come in from Delhi (January 2012), Jharkhand (June 2012), Gujarat (July 2012) and Punjab (November 2012).

The modus operandi involves a phone call from Pakistan with the information that the would-be victim has won a lottery and to collect the entire amount, a certain amount has to be deposited for collection and processing charges in certain Indian bank accounts. After the amount is deposited, someone withdraws the cash and disappears.

“The amount is then handed over to hawala operators who send it to Pakistan usually routed through Saudi Arabia and UAE. In this entire swindle, Indian operators get about 5% of the proceeds of the crime,” a senior government official tracking the crime told HT.

http://www.hindustantimes.com/india-news/pakistan-gangs-use-indian-banks-for-fraud/article1-1242733.aspx

Calcutta High Court to decide whether Vijay Mallya is a wilful defaulter-DNA

Kingfisher Airlines promoter Vijay Mallya faces another litigation in the Calcutta High Court today (July 21), where the company is battling with United Bank of India for not to be classified as wilful defaulter.

A person declared as a wilful defaulter will lose directorship in companies, and will not be able to borrow from any other bank.

As per the regulations of the Reserve Bank of India (RBI), borrowers should be allowed to meet the grievance redressal committee of the bank before classifying them as wilful defaulter as a natural course of justice. But Mallya wanted to meet the grievance cell with a lawyer that the bank has disallowed. The bank's contention is that it should be a meeting exclusively between the bank and the company, without any outsiders.

The grounded Kingfisher Airlines had moved the Calcutta High Court pleading for a lawyer to be allowed to accompany the company officials while meeting the bank grievance cell. The bank alleged that the company is willfully defaulting loan outstanding of Rs 360 crore. Outside the consortium, the bank gave a Rs 60 crore loan to Kingfisher for pre-delivery payment.

The counsels for Kingfisher submitted a plea for withdrawal of the notice for wilful default by United Bank of India, and they be allowed a personal hearing along with legal representative on the issue.

The United Bank of India was the first to take Kingfisher Airlines to court in 2013 when most other banks were giving a long rope to the company. The bank had filed a winding-up petition against the company for "wilful" defaults. The contention of the bankers was that no concerted action was taken by the company to revive its fortunes.

The consortium of 17 banks, led by State Bank of India (SBI), has an outstanding debt of about Rs 4,022 crore from the carrier. On July 18, the Goa Bench of the Bombay High Court allowed SBI-led lenders to initiate action against Kingfisher Airlines by approaching a magisterial court for permission to take possession of the Kingfisher Villa in Goa. In April 2013, a lower court had issued an injunction restraining lenders from taking possession of the Goa Villa of Kingfisher.

The lenders may be allowed to take possession and then sell the villa, depending on the final decision of the district magistrate.

Meanwhile, in another matter, the apex court has held it can allow banks to sell the Kingfisher House in Mumbai and retail the sale proceeds, subject to the final outcome of the ongoing litigation between the airline and lenders.

Supreme Court Permits Publishing Photos Of Loan Defaulters

Name & shame: Banks can publish photos of wilful defaulters, says SC-Financial Express 18th July 2014

In a move that may discourage firms from defaulting on bank loans, the Supreme Court has allowed lenders to publish names and photographs of wilful defaulters in newspapers in the larger public interest. The apex court said that the decision to resort to this measure would be taken by officers of the rank of general managers and above.

By giving the ruling on the matter, a bench headed by justice Fakkir Mohamed Ibrahim Kalifulla upheld the Bombay High Court’s November 2013 order that allowed State Bank of India (SBI) to publish names and photographs of directors and guarantors of Mumbai-based defaulter firm DJ Exim (India) in newspapers on the grounds that Rule 8 framed under the Securitisation Act specifically authorised the banks to publish the names and addresses of wilful defaulters and there is also no legal bar that prohibits them from publishing such information. The SC accepted the bank’s stand that the move does not violate the defaulter’s right to privacy as the same is not absolute. From the bank’s point of view, the duty to maintain secrecy is superseded by a larger public interest as well as by the bank’s own interest under certain circumstances, it held.

In the past, while the Bombay, Madras and Madhya Pradesh HCs had allowed banks to publish the names and photographs of defaulters, the Calcutta and Kerala HCs held such moves as unconstitutional and impermissible in law while ruling on some cases.

In the matter under review, DJ Exim had failed to pay SBI more than Rs 53.18 crore with interest despite repeated requests. The bank in October last year warned the company that if it failed to pay, names and photographs of its directors and guarantors would be published in national newspapers and action would be taken under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

The company moved the high court stating that the SBI letter was highly coercive in nature and no rule permitted banks to publish photos to embarrass the defaulters.

Link Financial Express

United Bank to 'name and shame' wilful defaulters: Deepak Narang

State-owned United Bank of India will soon embark upon process to 'name and shame' its wilful defaulters as part of its effort to recover dues.

"Since the Supreme court has recently permitted banks to name and shame wilful defaulters. Now the bank would initiate process," United Bank of India executive director Deepak Narang told PTI.

As part of this, the bank will publish photographs of defaulters and other details in newspapers and at notice boards of bank branches.

Kolkata-based lender was the first PSU lender to initiate the process of declaring Vijay Mallya and three other directors on the grounded Kingfisher Airlines as wilful defaulter.

However, Kingfisher Airlines approached the Kolkata High Court seeking permission of being represented by a lawyer in the proceedings of the Grievance Redressal Commission of the bank.

Hearing on the matter before the division bench of the Kolkata High Court is scheduled on July 21.

Earlier on July 10, Justice Dipankar Dutta of the High Court rejected Kingfisher Airlines' plea to send an external legal practitioner to appear before the grievance redressal committee.

The bank had served a notice, asking Mallya and three other directors of Kingfisher Airlines to appear before its grievance panel on July 9.

If declared a wilful defaulter, the person would not be able to borrow in future and lose director-level positions in companies.

The bank's exposure to Kingfisher Airlines was around Rs 350 crore as part of consortium lead by State Bank of India. Outside consortium, the bank gave about Rs 60 crore loan for Pre-Delivery Payment.

The consortium of 17 banks, led by SBI, has an outstanding debt of about Rs 4,022 crore from the now-grounded carrier.

As part of the recovery process, banks in February last year decided to sell a portion of the collateral with them, including shares of group companies United Spirits Ltd and Mangalore Chemicals & Fertilizers Ltd, Mallya's Goa villa, Kingfisher House in Mumbai and the Kingfisher brand, which was valued at over Rs 4,000 crore at the time it was pledged.

Supreme Court Suggests On Cheque Bounce Case

To fast-track cheque-bounce cases, SC issues guidelines-Indian Express-26.04.2014

The court said that summons should apprise an accused that he could show up in the court and compound the offence on the same day.

With more than 40 lakh cheque-bounce cases choking the justice delivery system in the country, the Supreme Court has issued slew of guidelines, including issuance of summons through e-mails and completion of evidence within three months, to prevent further piling up.

A bench of Justices K S Radhakrishnan and Vikramjit Sen laid down guidelines to be uniformly followed by all magisterial courts dealing with cheque-bounce cases under pertinent provisions of the Negotiable Instruments Act for a “speedy and expeditious disposal”.

Directing for a day-to-day trial, the court said that a magistrate shall issue summons on the same day he receives a complaint, provided documents are in order. It held that a magistrate need not call a complainant twice for recording his statement, once at pre-summoning stage and another after issuance of summons, and taking an appropriate affidavit from him should suffice.

The summons should be issued immediately by post as well through e-mails. The court said that summons should apprise an accused that he could show up in the court and compound the offence on the same day.

“Once the court issues summons and the presence of the accused is secured, an option be given to the accused whether, at that stage, he would be willing to pay the amount due along with reasonable interest and if the accused is not willing to pay, court may fix up the case at an early date and ensure day-to-day trial,” it said.

At the stage of recording of evidence, the bench said, the court concerned must ensure that examination-in-chief, cross-examination and re-examination of the complainant is conducted within three months of assigning the case. “The court has option of accepting affidavits of the witnesses, instead of examining them in court,” it added.

The order came on a petition by the Indian Banks Association, which is the representative body of banks in India with over 174 banks and financial institutions as its members. Its counsel Lalit Bhasin had asserted the need to have uniform practice across courts in the country to ensure cases do not drag in courts on account of unnecessary and unwarranted procedural delays.

What the court says

* No need for complainant to record his statements in court more than once; affidavit can be filed.
* Summons to be issued to the accused on the same day the magistrate receives the complaint.
* Summons to be issued also through e-mails, besides normal post.
* Accused can offer a settlement the day he shows up in court and the magistrate shall dispose of the case.
* All evidence to be recorded within three months and verdict to be delivered shortly.
* Magistrate can receive affidavits from the witnesses too, dispensing their personal presence.

Link Indian Express

Wrong Debiting To Bank account Is Bad

Wrong debiting of bank account-Business Standard-28.04.2014

 selection of key court orders

The Supreme Court ruled last week that State Bank of India (SBI), Overseas Branch, Mumbai, was wrong in debiting the account of an exporting firm after a long delay of two and a half years on the ground that it was wrongly deposited in the account. When the firm moved the Bombay High Court with the complaint, it dismissed it on the ground that it would not interfere in contractual matters in a writ petition. The firm,Metro Exporters Ltd, therefore appealed to the Supreme Court. SBI argued that the amount credited to the firm did not belong to it but it exclusively belonged to the bank. The amount was deposited in the firm's account by mistake and hence it could be recovered debiting its account. It is a 'normal' practice and was done in good faith, it was argued. Rejecting the contention, the judgment emphasised that the exporter should not suffer for the mistake committed by the bank.

Fresh tender for tea estate sale
The Supreme Court last week set aside the sale of a tea estate in Assam and asked the authorities to call for a fresh tender. The official liquidator of a tea coop floated tenders without the prior sanction of the government as required under law and the price was far below the market price. The low price was justified on the ground that 70 per cent of the land was encroached upon. The Gauhati High Court had given the green signal for the tender process. But the state appealed to the Supreme Court and in its judgment, State of Assam vs Susrita Holding Ltd, the High Court order was set aside.

Bajaj Allianz to pay damages to engineer 
A 24-year-old metallurgical engineer who lost his leg in a road accident was awarded Rs 33.10 lakh as compensation, to be paid by Bajaj Allianz General Insurance Ltd with interest. The motor accident tribunal awarded Rs 30 lakh, which was reduced by the Karnataka High Court to Rs 6.32 lakh. The Supreme Court raised it, setting aside the computation formula adopted by the High Court. Dinesh Singh had suffered 60 per cent permanent injury. He lost his job in the steel company and had to work in a bank on a temporary basis. He suffered loss of future earnings, prospects of marriage and other amenities and has to continue medical treatment. All these factors were considered by the Supreme Court while enhancing the damages.

Borrower must take Sarfaesi remedies 
A borrower must avail of the remedies provided in the Securitisation ("Safaesi") Act, in the first instance, and it should not rush to the High Court with a writ petition, the Supreme Court has stated in its judgment in the case, Devi Ispat Ltd vs State Bank of India. In this case, the bank classified the account of the steel company as non-performing asset (NPA) since its outstandings crossed the permissible limit. When the bank issued notice under the Act the firm moved the Calcutta High Court against the declaration as NPA. The High Court dismissed it on the ground that the firm has an alternative remedy under Section 13 (3A) of the Act. According to this provision, the borrower can raise objections to the creditor against the latter's action. On appeal, the Supreme Court upheld that view.

Sterlite appeal on power dismissed
The Supreme Court last week dismissed the appeal of Sesa Sterlite Ltd against the ruling of the appellate tribunal of electricity in Odisha. The tribunal had affirmed the orders of the Odisha Electricity Regulatory Commission that said that even if the firm was a 'deemed distribution licencee', it was still liable to pay cross subsidy charge to WESCO which is a distribution licencee for the area in question. Sesa Sterlite, manufacturer and exporter of aluminium, argued that it has its unit in Special Economic Zone (SEZ) and it is a developer in the area. It is not drawing electricity from WESCO for its unit, VALE-SEZ. It has a Power Purchase Agreement (PPA) with Sterlite Energy Ltd. Moreover, it had applied for approval of the PPA, but the state commission rejected it and directed it to pay charges to WESCO holding it to be a 'consumer'. The court rejected these contentions.

Delegation of power a necessity
The Supreme Court has stated that in view of the complexity of modern day administration and expansion of state functions to economic and social spheres, delegation of powers has become a compelling necessity. It cannot be expected that the head of the administrative body performs each and every task himself. The court stated so in its judgment, Sidhartha Sarawgi vs Port Trust of Kolkata, while upholding the eviction of two lessees of land belonging to the port trust. The land manager ordered demolition of the illegal constructions and ejectment of sub-tenants. The lessees protested, but the land manager terminated their 30-year licence leading to writ petitions in the Calcutta High Court. They were dismissed. In the appeal before the Supreme Court, it was argued that the land manager had no power to terminate leases; only the chairman of the port trust could do it. The Supreme Court rejected the contention and stated that the chairman had authorised the land manager to take action against the lessees and he had the jurisdiction to do so.

Deadline to complete national highway
Setting aside the judgment of the Punjab and Haryana High Court, the Supreme Court last week asked the contractor of the Panipat-Jullundhar national highway to complete the widening work by March 31 next year. The High Court had cancelled the Rs 4,500 crore contract altogether due to slow work since 2008. Soma Isolux, the contracting firm, appealed to the Supreme Court. It directed the firm to submit quarterly progress reports to the national highway Authority (NHAI). The court further clarified that neither NHAI nor the contractor shall raise any further litigation over the project in any court as the work had already been enmeshed in litigation at the fag end of the project. If it is further delayed, NHAI shall decide the quantum of penalty.

Link Business Standard

District Magistrate & SARFACIE ACT For Loan Recovery

Court order puts a spoke in banks’ loan recovery process in non-metros

L. N. REVATHY

COIMBATORE, JAN. 8:  

Non-performing assets are mounting but our hands are tied, say bankers in non-metropolitan cities, pointing to a recent observation made by the Madurai Bench of the Madras High Court.

A Bench — comprising judges N. Paul Vasanthakumar, T. Mathivanan and P. Devadoss — observed that secured creditors in metropolitan areas could approach either the Chief Metropolitan Magistrate or District Magistrate for relief under the SARFAESI Act. The SARFAESI Act lets banks and financial institutions take possession of properties and auction them when a borrower fails to repay his/her loans. Before proceeding further on this, here is a look at how the NPAs in banks are handled.

Often, banks try to settle NPA cases out of court. If that doesn’t work, the banker issues a possession notice in newspapers that is mandated under Section 13 (4) of the Act, in order to initiate recovery proceedings.

Then the banker has to wait for 30 days for the party to come to settle the dues. If there is no response, the bank can initiate legal possession under Section 14 (this Section deals with persons who are eligible to take security possessions). The crux of the observation lies here.

The Madurai Bench was constituted following a reference made by a Division Bench to decide on whether the reference made in the SARFAESI Act to the Chief Metropolitan Magistrate under Section 14 would include Chief Judicial Magistrates in the non-metropolitan areas.

The observation was made in the case of K. Arockiyaraj vs The Chief Judicial Magistrate, Srivilliputhur, and the Housing Development and Finance Corporation and D. Visalakshi vs The Authorised Officer, Indian Bank, Sivagangai Branch.

But in non-metros, where the Chief Metropolitan Magistrate would not be available, the secured creditors could seek the assistance of District Magistrates alone, as no power is vested or given to Chief Judicial Magistrates to give assistance to secured creditors.

As a consequence of the above observation, banks have stopped issuing notice for possession under Section 13 (4) of the Act, a law officer of a nationalised bank told Business Line.

No power for CJMs

Though Section 14 deals with persons who are eligible to take security possessions, the observation has simply tied the hands of bankers in non-metropolitan cities. Following the observation of the Full Bench, all Chief Judicial Magistrates have returned applications and wherever orders were passed and advocate commissioner not appointed, orders have been withdrawn.

To take possession, the banker has to go along with the advocate commissioner. “But to get the orders passed we have to go to the District Collector now and most times they are tied up with other jobs,” the officer said.

“The number of applications pending with each of the banks is piling up as we cannot expect this to be done quickly. It takes more than a month to get the orders passed,” the officer lamented.

Asked why the bank had not gone on appeal, the officer said: “We want to, but are not a party to the case. But the pity is, even the Indian Banks’ Association has not taken up the Full Bench judgment as a Special Leave Petition.”

http://www.thehindubusinessline.com/industry-and-economy/banking/court-order-puts-a-spoke-in-banks-loan-recovery-process-in-nonmetros/article5554324.ece

High Court Gives Relief To Defaulter Company

HC relief for company against bank in loan default case-Times of India 03.01.2014

Swati Deshpande,
MUMBAI: The Bombay high court on Thursday continued an order of interim protection granted earlier to a company against the State Bank of India. The HC restrained the Bank from publishing, photographs, names and addresses of the Petitioners as wilful defaulters in any newspaper or other media. 

The Bank had issued notice on December 21, 2013 to Icaro Machines India Private Limited and others. The company challenged the notice in the HC. 

On January 2, the matter was heard by vacation judge Justice Gautam Patel. The issue whether the Banks are at all entitled to publish the photographs was considered by a division bench of the HC earlier in November last year. The HC in that case, also involving SBI, had held that Rule 8 regarding sale of immovable secured assets of the Security Interest (Enforcement) Rules, 2002 did not prohibit such publication, and, indeed even contemplated it. 

Rohan Cama counsel for the company did not dispute that the HC judgment presently holds the field. However, he pointed out that in the present case there was an interim order passed in December, 2012 restraining the bank from proceeding under the SARFAESI Act, 2002, subject to certain conditions. That order was initially for a limited period of time. The order was in force even now, the HC observed and continued that protection till January 17, 2014.
http://timesofindia.indiatimes.com/city/mumbai/HC-relief-for-company-against-bank-in-loan-default-case/articleshow/28306302.cms

SBI to Pay Fine Because It Cancelled A Loan It Already Sanctioned

Bank cancels loan after approval, set to pay 1 lakh fine-Times of India 02.01.2014

CHENNAI: Cancelling a loan that it had sanctioned has earned State Bank of India a stiff fine of 1 lakh. 

The State Consumer Disputes Redressal Commission ruled in favour of a garment export company and directed SBI to pay the owner of the firm the sum as compensation for causing him mental agony. 

The firm's proprietor, K Ramani, applied for a loan of 24 lakh from the Small and Medium Enterprise City Credit Centre of State Bank of India, Egmore.

In his submission to the consumer redressal commission, he said bank officials thoroughly scrutinised documents pertaining to the expansion of his enterprise and sanctioned a loan of 22.5 lakh. He submitted all documents required for the loan, including the title deed of land owned by his daughter as mortgage. 

However, the bank later refused to release the loan, stating that it found discrepancies in the submitted documents. The bank's action was arbitrary and unjust, Ramani said. 

In its counter, the bank said it did release the loan because Ramani had cited an inflated amount for purchases and bank officials had doubts regarding a business unit that had placed an order with his firm. The bank said it could cancel the disbursement of a loan at any stage if doubts arose regarding the viability of the project for which it was extending credit. It said Ramani's daughter was a minor and could not execute a title deed. 

The bench comprising president R Regupathi and judicial member A K Annamalai pointed out that the bank had not verified all documents before sanctioning the loan. 

Though the bank had the authority to reject the loan, the bench questioned the manner in which it exercised that authority, stating that it should not have caused "embarrassment to a customer" and made him "run from pillar to post for several months". The bench said the bank's refusal to disburse the loan after sanctioning it amounted to deficiency in service. 

It directed SBI to pay a compensation of Rs 1 lakh for mental agony to the complainant and 10,000 as costs. However, it said it could not issue directions to the bank to disburse the loan.
http://timesofindia.indiatimes.com/city/chennai/Bank-cancels-loan-after-approval-set-to-pay-1-lakh-fine/articleshow/28253600.cms