Case BriefsHigh Courts

Punjab and Haryana High Court: The Division Bench of Rajan Gupta and Karamjit Singh, JJ., allowed the petition seeking writ of mandamus against the impugned order of District Magistrate whereby the Magistrate refused to restrain the respondent from taking physical possession of the mortgaged property of the petitioner on breach of the terms and conditions of the One Time Settlement (“OTS”).

In the instant petition, the petitioner was a partnership firm which availed a loan of Rs 1.55 crore from the respondent Bank. The petitioner defaulted in repaying the same and it was declared as Non-Performing Asset (NPA) by the Bank on 06-10-2018. The proceedings under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“the Act”), were initiated against it. The Bank also filed an application before the District Magistrate to take possession of the secured assets.

Subsequently, the petitioner effected OTS dated 31-05-2019 with the Bank, as per which, he was to pay Rs 1.29 crore by 30-11-2019. Pursuant to the said settlement, the petitioner deposited an amount of Rs 51,00,000. For the payment of the remaining amount, the petitioner was banking upon the assurance given by his son, Vikas Goel and his brother-in-law, Prem Nath Garg, who were running separate business of Commission Agent Firm. Prem Nath Garg handed over the keys to his Accountant. In the absence of both the partners, the said accountant had stolen the cheques and other important documents lying in the locker. Due to aforesaid unforeseen circumstances, the petitioner was unable to deposit the balance amount of Rs 78 lakhs as per OTS. Consequently, the petitioner made a request to the Magistrate for extension of time to make the payment of balance amount. However, the Magistrate rejected the said request.

It is contended by counsel for the petitioner, Aalok Jagga that the petitioner was ready to make payment of the balance amount within next six months alongwith reasonable interest for the period of delay. It was further argued that, the petitioner being a deserving borrower who is willing to clear his loan account should be given one opportunity to do so, by extending the time.

The Bank contended that the petitioner paid an amount of Rs 51 lakhs upto 31-10-2019 but failed to pay the balance amount of Rs 78 lakhs as per OTS. It was prayed by the Bank that the writ petition be dismissed.

The Court observed that in the present case, the amount paid was just 40% of the settled amount and reasons put forth by the petitioner for failure to pay the balance amount, were not plausible. The Court relied on Union Bank of India v. Anil Kumar Wadhera, 2017 SCC OnLine All 2942, where it was held that, no separate orders are required to be passed in the matter of the OTS having become defunct for non-compliance of its conditions by the borrowers and the logical consequence in case of breach of the terms and conditions of the OTS is that the Bank becomes free to recover the money outstanding in accordance with law irrespective of the OTS.

In light of the above, the Court observed that the petitioner itself affected OTS and agreed to pay the entire amount within a period of six months. The petitioner had failed to convince this Court that he failed to pay the balance amount within the stipulated period due to the reasons beyond his control and to show his bonafide intent to make the payment of balance amount. Therefore, it was held that no ground is made out for this Court to interfere in this case. Accordingly, the instant petition was dismissed, being devoid of merits. However, the Court stated that the petitioner is at liberty to avail the appropriate remedy available to under the law and to approach the Bank under the new OTS scheme. [Milkhi Ram Bhagwan Dass v. District Magistrate, 2020 SCC OnLine P&H 2293, decided on 23-12-2020]

Case BriefsHigh Courts

Jharkhand High Court: Deepak Roshan, J., while allowing the present writ application, said, “This court is having no hesitation to hold that there is a procedural irregularity in passing the impugned order of punishment. As such, the impugned order of punishment and all subsequent orders deserve to be quashed and set aside.”

Background

The facts of the instant writ application are briefly mentioned hereunder;

  1. That while the petitioner was posted as Manager at Jamshedpur Branch of the respondent Bank, a memorandum of charge was issued on 19-07-1999 and delivered to him on 30-07-1999 whereby, it was proposed to hold a departmental enquiry against him with regard to imputation of misconduct.
  2. Thereafter, in terms of the aforesaid charge-sheet, departmental enquiry has been conducted in which the petitioner filed a detailed written brief denying all allegations leveled against him.
  3. Thereafter, the Inquiry officer submitted his enquiry report on 18-02-2002, which was delivered to the petitioner on 28-02-2002.
  4. Pursuant to that, petitioner filed a detailed reply against the finding of the Inquiry Officer and finally the order for removal from service was passed against the petitioner by the Disciplinary authority.
  5. Being aggrieved, the petitioner filed an appeal on 16-01-2003, which was also dismissed vide order dated 02-01-2004.
  6. Thereafter, the petitioner filed a writ application; W.P.(S) No. 444 of 2005 before the present Court and the said writ application was disposed of by order dated 1st March, 2012, whereby the petitioner was directed to prefer a review application and the reviewing authority was directed to consider the case of the petitioner.
  7. Pursuant to the aforesaid order of this court, the petitioner filed a review application which was also dismissed.

 Contentions

Krishna Murari, Counsel for the petitioner, submitted that the impugned order of punishment, as well as the appellate and review order, are bad in law, inasmuch as, the issue raised by the petitioner, right from the stage of enquiry proceedings, has not been considered by either of the authorities. He further referred to Rule 6(5) and 6(10) of the Central Bank of India Officer Employees (Conduct) Regulations, 1976 and contended that it is a mandatory requirement that the Inquiry Authority, where the Officer/Employee does not admit all or any of the article of charge, furnish to such officer a list of documents and list of witnesses along with the article of charge. However, in the instant case, the mandatory requirement as enshrined in the aforesaid Regulation has not been complied with. It was further submitted that the stand taken by the petitioner, wherein it has been specifically stated that the “list of witnesses proposed and the documents relied upon by the Bank were never supplied to the petitioner and the witnesses were produced on a particular date without the knowledge of the petitioner, thus, depriving him of the opportunity to prepare himself for the cross-examination of the witnesses as per rule,” has been replied evasively by the respondent Bank. In this regard, the Counsel emphasized on Order VIII Rule 4 and 5 of the Code of Civil Procedure which clearly says that denial must be specific and not evasive, and further placed reliance on State of U.P. v. Saroj Kumar Sinha, (2010) 2 SCC 772 and G.V. Aswathanarayana v. Central Bank of India, (2004) 1 LLJ 36.

P.A.S. Pati, Counsel for the respondent Bank, supports the impugned order, however, could not demonstrate that the mandatory requirement as envisaged in Rule 6(5) and 6(10) of the Regulation was complied with. He cannot dispute the averment made in the counter affidavit while replying to the categorical statement made in the writ application, however, he reiterated that principle of natural justice has been complied with.

 Observations

Court reproduced the allegation as well as the reply made by the respondent bank and further reproduced the language of Order VIII Rule 4 and 5(1) of the CPC, 1908.

Rule 4. Evasive denial – Where a defendant denies an allegation of fact in the plaint, he must not do so evasively, but answer the point of substance. Thus, if it is alleged that he received a certain sum of money, it shall not be sufficient to deny that he received that particular amount, but he must deny that he received that sum or any part thereof, or else set out how much he received. And if an allegation is made with diverse circumstances, it shall not be sufficient to deny it along with those circumstances.

Rule 5. Specific denial – (1) Every allegation of fact in the plaint, if not denied specifically or by necessary implication, or stated to be not admitted in the pleading of the defendant, shall be taken to be admitted except as against a person under disability: Provided that the Court may in its discretion require any fact so admitted to be proved otherwise than by such admission.”

It went on to conclude, “After going through the specific provision under Code of Civil Procedure and in the background of the statement given in the counter affidavit it can be easily inferred that the statement made in Paragraph 38 of the writ application regarding non-supply of documents and list of witnesses, are not denied specifically by the respondents.

 Decision

Allowing the present writ application, the Court held, “Normally, in such type of cases, the matter should have been remitted back to the competent authority to start the proceeding from the stage of the irregularity commenced, by following principles of natural justice. However, in the instant case, the petitioner has already retired on 31-03-2010 and at present he is about 74 years. Further, the case relates to the year 1999 and calling the management witness now will be a futile exercise, as such, no fruitful purpose would be served to remit the case back to the Disciplinary authority for compliance of mandatory requirements of the Regulation. Consequently, the Impugned Order and all subsequent orders are hereby quashed and set aside. The Respondents are directed to give consequential benefits to the petitioner.”[Rama Shankar v. Central Bank of India, 2020 SCC OnLine Jhar 1039, decided on 15-12-2020]


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Case BriefsHigh Courts

Punjab and Haryana High Court: Rajbir Sehrawat, J., allowed the instant second appeal challenging the concurrent judgments and decrees passed by the trial Court and district judge for recovery of arrears of rent and the electricity charges for the premises which had been leased out to the appellant bank.

Brief facts of the case follows as, the plaintiff was the owner in possession of SCO No.147-148, Sector 17-C, Chandigarh which was leased out to the appellant. When the said lease came to end the appellant issued a notice intimating the plaintiff to take possession of the premises. However, the plaintiff insisted upon the bank to first clear the water and electricity dues; and further vaguely insisted to ensure the handing over of the said property in the same condition in which it was handed over to the appellant.

Appellant contended that the plaintiff never approached the appellant formally, instead filed a police complaint stating that the appellant is restraining them from committing civil work in their premises, which was sought only to create proofs of appellant’s possession as the complaint was withdrawn when the bank admitted its possession over the premises as the plaintiff has not formally accepted the possession. Later on, the plaintiff preferred a rent petition before the Rent Controller, Chandigarh for eviction of the appellant on the ground of non-payment of rent, that too, when the appellant was already willing to hand over the possession. Hence, it is clear that the plaintiff was avoiding taking possession of the property only to prolong the matter so as to raise the claim of rent at a very hefty amount of about 12 lakhs per month.

The plaintiff preferred the present suit before the Civil Court on 18-02-2014 seeking recovery of amount of 1,27,96,137 rupees on account of arrears of rent which was decreed in his favour. The contentions of the petitioner were that he could not take possession of the premises since the appellant had not removed the construction of RCC. It was further stated that since, the appellant had paid complete rent; therefore, the security deposits, which were lying with the plaintiff, are to be adjusted towards the outstanding rent. The counsel further argued that both the courts below have recorded concurrent findings of facts against the appellant. Therefore, in second appeal the appellant cannot be permitted to raise the same issue once again.

The Court while reversing the decrees of lower Courts held that lease deed specifically shows that it was the sole responsibility of the plaintiff to raise the RCC construction. Therefore, the appellant could not be fastened with any liability to remove the same. It was observed that the plaintiff had no right to refuse taking over of possession of the premises in question for any reason whatsoever. Also, the delay in transfer of possession was only creation of the plaintiff themselves. Therefore, they are not entitled to claim any compensation or arrears.

The Court further established that there could not be any blanket rule that the concurrent findings cannot be interfered with in second appeal. It would depend upon the facts of the case, if the courts below record a finding in ignorance or against the evidence on the file, then the Court in second appeal should not only interfere with such findings, rather, it is the legal duty cast upon such a court to bring the same in consonance with the evidence led on file. [HDFC Bank Ltd. v. Sanjiv Kumar Jain, 2020 SCC OnLine P&H 2253, decided on 02-12-2020]

Case BriefsHigh Courts

Delhi High Court: Pratibha M. Singh, J., observed that:

Complaints of sexual harassment are initially filed with enormous reluctance. The power of the ICC to hold the enquiry and give a report ought to be within the scheme and the four corners of the statute itself.

In the instant petition, recommendations of the Internal Complaints Committee have been challenged as given in the report as well as further action taken by the Punjab National Bank on the basis of ICC’s report.

A complaint was filed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 against respondent 3 who was working as the General Manager of respondent 1 Bank, in Mumbai.

The above-stated complaint was referred to the ICC, which was constituted by the Bank, consisting of four members.

What was the analysis of ICC?

ICC came to the conclusion that the relationship between the petitioner and respondent 3 was based on personal grounds with mutual consent, and that the allegations of sexual, emotional and mental harassment were not substantiated by the petitioner.

Hence, the complaint against respondent 3 was rejected.

ICC made additional observations that the behaviour of the parties had been inappropriate and unbecoming of officers/employees of the Bank and accordingly recommended the Competent Authority to take suitable action against the petitioner and the respondent 3.

Based on the above report, a charge sheet was issued against the petitioner under Regulation 6 of the Punjab National bank Officer Employees’ (Discipline & Appeal) Regulations, 1977, hence in view of the same, petitioner has filed the instant petition.

Single Judge in his order had stayed the ICC’s recommendation and the consequent charge-sheet.

Later during the pendency of the petition, the petitioner became eligible to be considered for promotion. Petitioner stated that her promotion was being held up in view of the pendency of the present petition.

Thereafter, the Bank was directed to independently consider the petitioner’s candidature for promotion, however, it was directed that the same shall not be given effect to and kept in a sealed cover. Due to the lockdown, the matter could not be heard.

Analysis and Decision

Bench on perusal of the facts and circumstances of the matter raised the question as to whether the ICC could have, in the first place, made a recommendation directing the competent authority to take action?

ICC in its report had concluded that the allegations were not substantiated and the complaint was not made out. and further added remarks in regard to the conduct of the petitioner and respondent.

High Court made an observation in light of Section 13 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, that is the allegations of sexual harassment or any other form of harassment, as contemplated under the Act, are not proved before the ICC, the ICC can only recommend the employer to not take any action in the particular matter.

In the instant case, ICC has gone beyond its statutory mandate and has made observations that both the parties indulged in inappropriate/unbecoming conduct and indiscipline action against them.

Bench held that the above-stated recommendation by the ICC was beyond jurisdiction.

Moral Policing

‘Moral Policing’ is not the job of the Management or of the ICC.

With regard to Moral Policing, Court expressed that, any consensual relationship among adults would not be the concern of the Management or of the ICC, so long as the said relationship does not affect the working and the discipline of the organisation and is not contrary to the Rules or code of conduct binding on the said employees. It is only if a complaint is made of sexual harassment under the Act that the Management can constitute the ICC to enquire into the same.

Bench in view of the above discussion found the last paragraph of ICC’s report in the instant case to be commenting on the conduct of the parties which is against the statute and hence the same was not tenable and liable to be set aside.

In view of the above position, the fact that the Petitioner has become eligible for promotion means that the Bank would accordingly offer her promotion in accordance with her seniority, performance and merit, as per the applicable service rules. [Bibha Pandey  v. Punjab National Bank,  2020 SCC OnLine Del 1639, decided on 16-12-2020]

Case BriefsHigh Courts

Bombay High Court: A Division Bench of Ujjal Bhuyan and Abhay Ahuja, JJ., while addressing an issue with regard to the Cooperative Societies, made an observation that,

We find it a bit perplexing that for a dispute having its genesis in charging or billing of an individual shareholder member, drastic steps, such as, dissolution of the managing committee and appointment of Administrator have been resorted to.

Petition challenges the Order passed by the Dy. Registrar i.e. respondent 2 directing the Shyamrao Vitthal Co-operative Bank — respondent 4 not to allow the petitioner to operate the Society bank account and challenging the order passed by respondent 2 also directing respondent 4 Bank to permit the administrator appointed by respondent 2 to operate the bank account of Viddhisha Shantiniketan CHS Ltd. i.e. Respondent 7 Society.

Bench on perusal of the facts and circumstances of the present case noted that the present matter is a very hotly contested dispute between the office bearers of the Society on the one hand and an individual of the Society on the other hand.

High Court declined to entertain the present petition as the appeal is still pending for the present matter.

Court directed respondent 3 to decide the pending appeal so that the day-to-day functioning of the Society is not hampered due to the dispute.

Till the disposal of the appeal is done Society shall be jointly managed under the Chairmanship of the petitioner and the Respondent 6 only for day to day affairs including payment of municipal taxes, light bills and other outgoings of Respondent 7 Society.

Bench added to its direction that respondent 4 shall unfreeze the account to allow the operation of the respondent 7 account.

Co-operative societies are now a part of the constitutional scheme as cooperative societies have been inserted in the Constitution of India as Part IX B by way of the Constitution (Ninety-seventh Amendment) Act, 2011 w.e.f 15-02-2012.

Therefore, in view of the above-stated position, co-operative societies should have the necessary space and autonomy to function and develop to its full potential. Also, interference in their matter should be avoided unless there is a serious statutory breach.

Court disposed of the present petition in view of the above terms. [Rambujarat Ramraj Chaurasia v. State of Maharashtra, 2020 SCC OnLine Bom 901, decided on 02-09-2020]

Case BriefsForeign Courts

Supreme Court of the United Kingdom: A Full Bench of Lady Hale (President), Lord Reed (Deputy President), Lord Lloyd Jones, Lord Sales, and Lord Thomas, dismissed the appeal filed by a bank.

In the present case, the respondent company, “Singularis”, is registered in the Cayman Islands, which was set up to manage the personal assets of Mr Maan Al Sanea. He was the company’s sole shareholder and also one of the directors. The other 6 directors did not have any influence over the company’s management. A loan financing for the purchase of shares was provided to Singularis in 2007, by the appellant investment bank i.e., Diawa. This loan was also the security for the repayment of the loan. In the year 2009, after the shares were sold and the loans were repaid, a surplus amount of money (US$204m) was held by the bank for the account of the respondent company. As per the instruction given by Al Sanea, Daiwa paid out the surplus funds to third parties. The payments were misappropriation of Singularis’ fund and as a result of that Singularis was unable to meet the demands of the creditors. Singularis consequently entered into liquidation. On 18.09.2009, the Cayman Islands made a winding-up order and a joint liquidator were appointed for the same.

Respondent company herein (Singularis) held a certain sum of money as a deposit with the appellant bank (Daiwa). In 2009, the bank Daiwa was instructed by an authorised signatory of Singularis (Mr. Al Sanea) to make payments out of Singularis’ account. The Bank approved and completed the transfers notwithstanding many obvious and glaring signs that Mr. Al Sanea was perpetrating a fraud on the company. In 2014, Singularis issued a claim against the bank for USD 204 million (the total amount transferred in 2009). There were two bases for the claim: (i) dishonest assistance in Al Sanea’s breach of fiduciary duty in misapplying Singularis’ funds; and (ii) breach of the Quincecare duty of care owed by the Bank to Singularis by giving effect to the payment instructions.

The Quincecare duty arises when bankers are asked to make payments in circumstances where there are reasonable grounds to suspect possible fraud. In such a situation, banks owe a duty of care to their customers to refrain from making payments. When “on inquiry” in this way, banks have a positive duty to investigate the potential fraud, they have to be satisfied, by enquiring as far a reasonable banker could be expected to do so, that the payment is not fraudulent before they can be “off inquiry” and go on to comply with their contractual obligations and make the payment.

The claim allowed by the High court was the breach of the Quincecare duty of care. Since Daiwa’s appeal against the finding of liability on the negligence was dismissed, it appealed to the Supreme Court.

The main issue which arose in this matter was, whether the appellant bank was in the breach of its duty towards their customers by transferring the money regardless of circumstances which were suspicious. Also, whether the customer’s claim against the bank was precluded by the fact that the fraudulent acts of the director should be attributed to the customer so as to bar the claim of the customer against the bank.

According to the findings of the case, the judge held that there was a clear breach of Quincecare duty of care by the appellant bank towards the respondent company. The possible defences raised by Daiwa were: illegality, causation, countervailing claim in deceit and attribution. The Court opined that whether or not Mr. Al Sanea’s fraud was attributed to the company, the said defences would fail in any circumstance. It was held that Daiwa was liable to Singularis for its breach of Quincecare duty. It was the appellant bank’s duty to realise something suspicious was going on and a reasonable inquiry should have been done for the same. Due to Daiwa’s negligence, the company (and through the company, its creditors) had to suffer and be victims of fraudulent incidents.

Thus, the claims of Daiwa were dismissed and the judgment of the trial court was upheld. [Singularis Holdings Ltd. v. Daiwa Capital Markets Europe Ltd., [2019] 3 WLR 997, decided on 30-10-2019]

Case BriefsHigh Courts

Gujarat High Court: The Bench of N.V. Anjaria, J. dismissed a petition challenging the eligibility criteria in Advertisement No. RC-0719/2019 published by the respondents, for the position of Civil Judge, holding that a Deputy Manager working in the legal branch of a bank could not be treated as an employee working in the ‘department allied to Court’.

Rule 7(2)(b) of the Gujarat State Judicial Services Rules, 2005 states that the eligibility required for selection to the position of a Civil Judge. is that a candidate “must be practicing as an Advocate in Courts of Civil and/or Criminal Jurisdiction on the last date fixed for receipt of application; or must be working in the Courts or other allied Departments on the last date fixed for receipt of application.” 

Petitioner herein who was working as a Deputy Manager (Law) in the real estate department of a bank, was determined as ineligible for the post of Civil Judge and his application was rejected on the ground that it did not fall within the aforestated eligibility criterion. The petition questioned the ambit of “other allied Departments” in Rule 7(2)(b) and whether it included a candidate working as a Deputy Manager (Law) in a Government Bank.

Learned counsel on behalf of the petitioner, Jenil M. Shah submitted that the petitioner had cleared the All India Bar Examination and had the license to practice as an Advocate in the courts of India. Thereafter, he was appointed as the Deputy Manager (Legal) of State Bank of India. His work description indicated that he had been dealing with all kinds of legal work, including consultation and drafting. Hence, there was no reason to exclude the bank from “other allied Departments” and exclusion of bank from the ‘list of allied departments’ as stated under Instruction 10 of the Advertisement, was unjust and arbitrary.

Learned Advocate on behalf of the respondent, Shalin Mehta, submitted that the word ‘other allied departments’ in Rule 7(2)(b) has been used in conjunction with the word ‘courts’. The categories enumerated under the head of ‘other allied departments’ in Instruction 10 were those by which only the employees associated with courts or those familiar with court work are able to apply for the post of Civil Judges.

The Court noted that the impugned instruction categorized four departments as ‘allied to Court’: (i) High Courts or any courts subordinate; (ii) Office of the Government Pleader, Gujarat High Court; (iii) Office of the Government Pleader, City Civil Court Ahmedabad; and (iv) Legal Section or Legal Department, Government of Gujarat.

It was opined that selection of eligibility conditions is within the domain of the employer or the appointing authority; and judicial review thereof may extend only to see that the norms prescribed and the eligibility contemplated are relevant and have a rational nexus with the post concerned. Reliance in this regard was placed on Chandigarh Admn. v. Usha Kheterapal Waie, (2011) 9 SCC 645.

Further, the Court relied on K.C. Vasanth Kumar v. State of Karnataka, 1985 Supp SCC 714 and applied the interpretation rule of noscitur a sociis which states that where general words follow a specific word, the general words must be confined to things of the same kind as those specified. It was opined that the categorization of ‘allied departments’ in the advertisement was aimed at inviting candidates having proficiency and experience in relation to Court. Thus, there was a balance and blend between the context and purpose of the impugned condition.

In view of the above, it was held that the petitioner was not eligible for participating in the recruitment process for appointment to the post of Civil Judge. [Avinash Detha v. Registrar (Recruitment), 2019 SCC OnLine Guj 804, Order dated 25-04-2019]

Case BriefsHigh Courts

Bombay High Court: Sunil K. Kotwal, J., allowed SBI Insurance Co. (insurer) to recover, from the owner of the offending bus (insurer), the amount paid to a third party claimant) under a policy which was cancelled by the insurer on account of non-payment of the premium amount by the insured.

An accident occurred between a motorcycle and the offending bus, as a result of which the driver of the motorcycle passed away. A claim petition was filed by the claimants under which an award was passed by the Motor Accident Claims Tribunal. The insurer paid the claim amount in the discharge of its liability towards the claimant. It, however, claimed to recover the said amount from the insured. Insurer’s case was that the insured issued a cheque in his favour towards payment of the insurance premium for the policy taken on 10-11-2015. The accident occurred on 19-11-2015. Pertinently, the cheque issued by the insured towards payment of premium got dishonoured by the bank and, therefore, the insurer cancelled the policy on 14-12-2015. As such, the insurer claimed recovery of the amount paid to the third party.

After perusing the authorities cited, the High Court was of the opinion that in such type of cases, if the policy is cancelled before the accident occurs, then the insurer is not liable to pay compensation to the claimant. However, if the policy is cancelled after the accident happens, then he is so liable. But, in the latter category of cases, the insurer is entitled to recover the amount so paid to the claimant from the insured. It was observed that a contract of insurance between an insurer and an owner of the offending vehicle includes reciprocal promised by both the parties. In such view of the matter, the owner of the offending bus (insured) was directed to pay back the amount of the award to the insurer along with interest thereon. [SBI Insurance Co. v. Madhubala, 2019 SCC OnLine Bom 639, decided on 15-04-2019]

Case BriefsHigh Courts

Kerala High Court: The Bench of R. Narayana Pisharadi, J. quashed criminal proceedings against a person accused of cheating a bank holding that the case against him would be an abuse of process of the Court.

Petitioner herein was a customer of Bank of Baroda for many years. He introduced accused’s 1 to 3 to the said bank to enable them to open an account therein. Subsequently, the accused used credit/purchase facility given to them by the bank and obtained approximately Rs 1 crore from it. It was alleged that the accused had hatched a conspiracy to cheat the bank and cause loss to it. A case was registered against the accused and the petitioner under Section 120B, and Sections 420 and 406 read with Section 34 of the Penal Code, 1860. The instant petition was filed under Section 482 of the Code of Criminal Procedure, 1973 requesting quashing of proceedings against petitioner.

The Court noted that the only allegation against the petitioner was that he introduced accused to the bank to enable them to open an account. He did not falsely misrepresent the bank; there was no material indicating any transaction between the petitioner and other accused. No material was produced by the prosecution to prove that the introduction of accused to the bank, by the petitioner, was part of a conspiracy to cheat the bank. Therefore, no question of dishonest misappropriation of any amount by him arose.

It was held that it is a normal banking practice that a person who wants to open an account in a bank will have to get himself introduced by another account holder in the same bank. The mere act of introducing a person to a bank to enable such person to open an account in the bank, without anything more, does not attract the offence of cheating punishable under Section 420 IPC against the person who makes the introduction, even when the person introduced by him subsequently commits an act of cheating against the bank. Reliance in this regard was placed on Manoranjan Das v. State of Jharkhand, (2004) 12 SCC 90.

In view of the above, the petition was allowed. [K.J. Hubert v. Sub Inspector of Police, 2019 SCC OnLine Ker 1122, Order dated 04-04-2019]

Case BriefsHigh Courts

Kerala High Court: The Division Bench of K. Surendra Mohan and A.M. Babu, JJ. dismissed an appeal filed by a bank and concluded that deposit collectors, who act as agents of the bank, are ‘employees’ for the purpose of Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act).

The instant appeal was filed assailing dismissal of a petition challenging order of Regional Provident Fund Commissioner whereby deposit collectors of the appellant bank were held to be persons to whom the EPF Act would apply, and accordingly, contributions were directed to be paid in respect of such employees.

The question herein was that whether contributions under the EPF Act is due or payable in respect of the commission that is paid to deposit collectors.

Mr M.R. Anison, learned counsel on behalf of the appellant submitted that deposit collectors are not ‘employees’ under the EPF Act. Therefore, no contributions under the EPF Act were either due or payable in respect of such employees.

The Court relied on Indian Banks Assn. v. Workmen of Syndicate Bank, (2001) 3 SCC 36 where it was held that deposit collectors are covered under the definition of ‘workmen’ in the Industrial Disputes Act, 1947. It was opined that commission paid to deposit collectors depends upon the terms of the agreement entered into between the bank and deposit collectors. An agent is paid commission at the rate or rates determined by the Board of Directors of the bank from time to time. Therefore, commission so paid to the deposit collectors constitutes their wages.

In view of the above, it was held that there was no infirmity in the impugned order.[South Malabar Gramin Bank v. Regional Provident Fund Commr., 2019 SCC OnLine Ker 843, Order dated 27-02-2019]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): Justice V.K. Jain (Presiding Member) set aside the order of District Forum and State Commission and set aside their orders holding a national bank liable for returning educational certificates of the complainant.

Respondent herein had taken a loan from the petitioner bank under Pradhan Mantri Rozgar Yojana (PMRY) Scheme in 1984. He stated that he had deposited his educational certificates with the bank on the assurance that after repayment of the loan, the said documents would be returned to him. After repayment of the loan, respondent approached the bank for return of his original documents; but the same were not returned to him. Being aggrieved, he approached District Forum by way of a consumer complaint. District Forum allowed the complaint, and the bank’s appeal against the said order was dismissed. Thus, the bank approached filed the instant revision petition.

The Commission noted that no documentary proof of the alleged deposit had been filed by the respondent. Petitioner, being a nationalized bank and respondent being an educated person, it was difficult to accept that he deposited such important documents with the bank, without even taking an acknowledgment from it. Moreover, no evidence had been led by the respondent to prove that the submission of such documents was necessary under rules of the bank or PMRY Scheme.

In the absence of any evidence, it was opined that the view taken by the fora was perverse, and therefore the impugned orders could not be sustained.[Allahabad Bank v. Subhash Kumar Mittal, 2019 SCC OnLine NCDRC 25, Order dated 01-03-2019]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): The Bench comprising of R.K. Agarwal, J., M. Shreesha, Member, dismissed the revision petition filed against the order of Haryana State Consumer Disputes Redressal Commission.

The respondent had purchased an insurance policy from Oriental Insurance Company which was valid till 28-12-2015, however, the respondent had requested for renewal of the said policy and subsequently, the petitioner-bank had deducted a sum of Rs. 4,726/- from respondent’s account for preparing a draft in favour of the insurance company. The draft was not submitted to the insurance company and hence the policy expired. Thereafter, petitioner’s wife met with an accident and the petitioner had to spend Rs. 3,50,000/- for his wife’s treatment.

The Commission, in this case, observed that the fact about the existence of the demand draft was not contested by the petitioner-bank, neither it was denied that they had deducted Rs. 4,726/- from respondent’s account. Had the draft been deposited in time, the policy would have been renewed and the expenses incurred by petitioner would have been covered by the policy.

The Commission held that since the petitioner-bank had deducted the amount and also prepared the draft but did not give it to the insurance company, this amounted to deficiency in services on the part of the petitioner bank. The Commission upheld the order of the state commission, directing petitioner to pay Rs. 3,10,000/- to the respondent as compensation on account of deficiency of services. [Oriental Bank of Commerce v. Rajesh Kumar,2018 SCC OnLine NCDRC 307, order dated 30-07-2018]

Case BriefsHigh Courts

Delhi High Court– While deciding a case wherein the issue involved was whether a person who is proposed to be classified as a wilful defaulter by a Bank / FI and who, in accordance with the Master Circular dated 01.07.2013 issued by the RBI, has availed of opportunity to be heard by Grievance Redressal Committee (GRC) of the said bank/FI to oppose such a proposal, has a right to be represented by an advocate in the said hearing, the division bench of G. Rohini CJ and R.S. Endlaw J held that the restriction placed by the GRC of the appellant banks to appearance of advocates on behalf of borrowers before it, not by any law but otherwise, cannot be sustained and is bad. The Court further observed that the opposition of the GRC of the appellant bank regarding appearance is based on an illogical presumption that the borrower’s advocate might delay the proceedings before it, which has no basis. The Court also pointed out that the members of GRC can always control and guide the proceedings before it and as per the exigencies limit the time of hearing.

In the instant case, the appellants had challenged the high court order which had allowed lawyers to represent the borrower in the proceedings before GRC to decide whether the borrower can be held wilful defaulters. In order to reach the decision the Court also dealt with the issue as to whether the GRC can be called a ‘Tribunal’ within the meaning of clause (ii) of Section 30 of the Advocates Act.

Relying on a catena of cases like, ICICI Bank Ltd. v. Official Liquidator of APS Star Industries Ltd. (2010) 10 SCC 1 and Peerless General Finance & Investment Co. Limited v Reserve Bank of India (1992) 2 SCC 343, the Court stated that GRC satisfies the test of having been constituted by the State and thus can be held to be a Tribunal within the meaning of Section 30 of the Advocates Act. The advocates would have a right to practice before it and axiomatically the borrower before such GRC will have a right to engage and avail the services of an advocate. [Punjab National Bank v. Kingfisher Airlines Limited,  2015 SCC Online Del 14128, decided on 17.12.2015]