Califf India Chambers and Others Vs. Syndicate Bank , Kalamassery and others
EmailAppeal: Civil Appeal No. . . . of 1997
(Arising out of SLP (C) No. 4469 of 1994)
(Arising out of SLP (C) No. 4469 of 1994)
Petitioner: Califf India Chambers and Others
Respondent: Syndicate Bank , Kalamassery and others
Apeal: Civil Appeal No. . . . of 1997
(Arising out of SLP (C) No. 4469 of 1994)
(Arising out of SLP (C) No. 4469 of 1994)
Judges: S.C. AGRAWAL & G.T. NANAVATI , JJ.
Date of Judgment: Jul 25, 1997
Head Note:
BANKING LAWS
Kerala Revenue Recovery Act, 1998
Section 69 (2) and 71 with notification dated 13.10.87 – Bank loan – Recover – No scheme floated by bank – If recovery can be enforced by invoking Act of 1968 . Held that in absence of any development scheme , provisions of Act of 1968 cannot be invoked . Appeal allowanced .
Held:
A bank can invoke the provisions of the Act when the loan has been advanced by the Bank under various development schemes . The expression ” development scheme ” has been defined in clause (1) of the explanation . The said definition is an inclusive definition . The learned counsel for the respondent-Bank has not been able to show that the bank has framed any development scheme and the loan was advanced by the respondent-Bank to Appellants I and 2 under such scheme . Nor is there anything to show that any development scheme was approved by the State/Central Government or other government agencies with a view to meet living condi-tions of the economically and socially weaker sections of the community and the loan was advanced to Appellants I and 2 under such a scheme . There is thus no material on record to show that the loan advanced by the appellant-Bank was under any development scheme . In these circumstances , the provisions of the Act could not be invoked by the respondent-Bank for recovery of its dues . ( Para 5 )
JUDGEMENT:
ORDER
1 . Special leave granted .
2 . The only question that falls for consideration in this appeal is whether the respondent , a nationalised scheduled Bank , is entitled to invoke the provisions of the Kerala Revenue Recov-ery Act , 1968 ( hereinafter referred to as ” the Act ” ) for the purpose of recovering the dues payable by the appellants to the respondent-Bank .
3 . Appellants I and 2 are engaged in the manufacture of Quadre sheets and chappals at their factory situated on the industrial development plot at Kalamassery . For the purpose of carrying on the said business the said appellants were in need of funds and they approached the respondent-Bank for loan . The respondent-Bank sanctioned an overdraft facility to the extent of Rs 2 lakhs and discounting facility to the extent of Rs 3.25 lakhs . For due payment of the said loan the stock-in-trade of Appellant I was given as security and the land of Appellant 3 was given as col-lateral security . Appellants 2 to 4 also made themselves per-sonally liable . Since the appellants failed to pay the dues , the respondent-Bank initiated proceedings for recovery of the same under the provisions of the Act by issuing a notice under Section 69(2) of the Act . The provisions of this Act have been invoked on the basis of the notification of the Government of Kerala dated 13-10-1987 issued under Section 71 of the Act . Section 71 of the Act provides as under :
” The Government may , by notification in the Gazette , declare , if they are satisfied that it is necessary to do so in public interest , that the provisions of this Act shall be applicable to the recovery of amounts due from any person or class of persons to any specified institution or any class or classes of institutions , and thereupon all the provisions of this Act shall be applicable to such recovery . “
4 . The notification dated 13-10-1987 issued in exercise of the power conferred by Section 71 provides as follows :
” SRO No . . . . /87 . In exercise of the powers conferred by Sec-tion 7 of the Kerala Revenue Act , 1968 ( 15 of 1968 ) , the Gov-ernment of Kerala being satisfied that it is necessary to do so in public interest , hereby declare that the provisions of the said Act shall be applicable to the recovery of amounts due from any person or class of persons to any bank on account of any loan advanced by that bank under various development schemes .
Explanation .-For the purpose of this notification-
(a) ‘ Bank ‘means :
* * *
(iv) a corresponding new bank constituted under the Banking Companies ( Acquisition and Transfer of Undertakings ) Act , 1970 ( Central Act 5 of 1970 ) ; . . . .
(b) ‘ Development Schemes ‘ shall include all financial assis-tance given through the Banks under the schemes approved by the State/Central Government or other government agencies or the schemes administered by the Development Department with a view to improving the living conditions of the economically and socially weaker section of the community . “
5 . In the impugned judgment the Division Bench of the High Court has held that the respondent-Bank is entitled to avail of the benefit of the said notification on the ground that the loan that was advanced by the Bank to Appellants I and 2 has to be treated as having been advanced under a Development Scheme . With due respect we find ourselves unable to agree with this view of the High Court . The main part of the notification postulates that a bank can invoke the provisions of the Act when the loan has been advanced by the Bank under various development schemes . The expression ” development scheme ” has been defined in clause (1) of the explanation . The said definition is an inclusive definition . The learned counsel for the respondent-Bank has not been able to show that the bank has framed any development scheme and the loan was advanced by the respondent-Bank to Appellants I and 2 under such scheme . Nor is there anything to show that any development scheme was approved by the State/Central Government or other government agencies with a view to meet living conditions of the economically and socially weaker sections of the community and the loan was advanced to Appellants I and 2 under such a scheme . There is thus no material on record to show that the loan ad-vanced by the appellant-Bank was under any development scheme as envisaged under the notification dated 13-10-1987 . In these circumstances , the provisions of the Act could not be invoked by the respondent-Bank for recovery of its dues .
6 . The appeal is , therefore , allowed , the impugned judgment of the High Court dated 4-2-1994 in WA No. 70 of 1994 as well as the judgment of the learned Single Judge of the High Court dated 1-12-1993 in OP No. 3270 of 1993 filed by the appellants are set aside. OP No. 3270 of 1993 is allowed and the proceedings ini-tiated by the respondent-Bank for recovery of its dues against the appellants under the provisions of the Act are quashed . No orders as to costs .
1 . Special leave granted .
2 . The only question that falls for consideration in this appeal is whether the respondent , a nationalised scheduled Bank , is entitled to invoke the provisions of the Kerala Revenue Recov-ery Act , 1968 ( hereinafter referred to as ” the Act ” ) for the purpose of recovering the dues payable by the appellants to the respondent-Bank .
3 . Appellants I and 2 are engaged in the manufacture of Quadre sheets and chappals at their factory situated on the industrial development plot at Kalamassery . For the purpose of carrying on the said business the said appellants were in need of funds and they approached the respondent-Bank for loan . The respondent-Bank sanctioned an overdraft facility to the extent of Rs 2 lakhs and discounting facility to the extent of Rs 3.25 lakhs . For due payment of the said loan the stock-in-trade of Appellant I was given as security and the land of Appellant 3 was given as col-lateral security . Appellants 2 to 4 also made themselves per-sonally liable . Since the appellants failed to pay the dues , the respondent-Bank initiated proceedings for recovery of the same under the provisions of the Act by issuing a notice under Section 69(2) of the Act . The provisions of this Act have been invoked on the basis of the notification of the Government of Kerala dated 13-10-1987 issued under Section 71 of the Act . Section 71 of the Act provides as under :
” The Government may , by notification in the Gazette , declare , if they are satisfied that it is necessary to do so in public interest , that the provisions of this Act shall be applicable to the recovery of amounts due from any person or class of persons to any specified institution or any class or classes of institutions , and thereupon all the provisions of this Act shall be applicable to such recovery . “
4 . The notification dated 13-10-1987 issued in exercise of the power conferred by Section 71 provides as follows :
” SRO No . . . . /87 . In exercise of the powers conferred by Sec-tion 7 of the Kerala Revenue Act , 1968 ( 15 of 1968 ) , the Gov-ernment of Kerala being satisfied that it is necessary to do so in public interest , hereby declare that the provisions of the said Act shall be applicable to the recovery of amounts due from any person or class of persons to any bank on account of any loan advanced by that bank under various development schemes .
Explanation .-For the purpose of this notification-
(a) ‘ Bank ‘means :
* * *
(iv) a corresponding new bank constituted under the Banking Companies ( Acquisition and Transfer of Undertakings ) Act , 1970 ( Central Act 5 of 1970 ) ; . . . .
(b) ‘ Development Schemes ‘ shall include all financial assis-tance given through the Banks under the schemes approved by the State/Central Government or other government agencies or the schemes administered by the Development Department with a view to improving the living conditions of the economically and socially weaker section of the community . “
5 . In the impugned judgment the Division Bench of the High Court has held that the respondent-Bank is entitled to avail of the benefit of the said notification on the ground that the loan that was advanced by the Bank to Appellants I and 2 has to be treated as having been advanced under a Development Scheme . With due respect we find ourselves unable to agree with this view of the High Court . The main part of the notification postulates that a bank can invoke the provisions of the Act when the loan has been advanced by the Bank under various development schemes . The expression ” development scheme ” has been defined in clause (1) of the explanation . The said definition is an inclusive definition . The learned counsel for the respondent-Bank has not been able to show that the bank has framed any development scheme and the loan was advanced by the respondent-Bank to Appellants I and 2 under such scheme . Nor is there anything to show that any development scheme was approved by the State/Central Government or other government agencies with a view to meet living conditions of the economically and socially weaker sections of the community and the loan was advanced to Appellants I and 2 under such a scheme . There is thus no material on record to show that the loan ad-vanced by the appellant-Bank was under any development scheme as envisaged under the notification dated 13-10-1987 . In these circumstances , the provisions of the Act could not be invoked by the respondent-Bank for recovery of its dues .
6 . The appeal is , therefore , allowed , the impugned judgment of the High Court dated 4-2-1994 in WA No. 70 of 1994 as well as the judgment of the learned Single Judge of the High Court dated 1-12-1993 in OP No. 3270 of 1993 filed by the appellants are set aside. OP No. 3270 of 1993 is allowed and the proceedings ini-tiated by the respondent-Bank for recovery of its dues against the appellants under the provisions of the Act are quashed . No orders as to costs .
