Case BriefsTribunals/Commissions/Regulatory Bodies

Central Information Commission (CIC): Suresh Chandra (Information Commissioner) observed that disclosure of the names of the donors and donees of electoral bonds from books of accounts may be in contravention of Section 8(1)(e) and (j) of the RTI Act.

Facts of the Case

The appellant filed an application under the Right to Information Act, 2005 before the Central Public Information Officer, State Bank of India seeking the following information:

  • Furnish me (Yearwise from 2017 to 2018) the relevant portion of Statutory Report/Audit Report/any other report/certificates submitted by Chartered Accountants relating to Electoral Bonds from the books of accounts of SBI.
  • Guidelines, Circulars, Notifications, Office Memorandum Rules and Regulations, Copy of Act etc. issued to Statutory Auditor i.e. to Chartered Accountants to conduct relating to certification/audit/signing of Balance sheets, Profit and Loss Account, Financial Statement, Trial Balance of Electoral Bonds.
  • Name and Designation of Officer who is supposed to issue Guidelines, Circulars, Notifications, Office Memorandum Rules and Regulations, Copy of Act relating to certification of Balance sheets, Profit and Loss Account, Financial Statement, Trial Balance by Statutory Report i.e. Chartered Accountants relating to Electoral Bonds.
  • Furnish me (Yearwise from 2017 to 2018) relevant portion Accounting Standards, Guidance Notes applicable to conduct the certification/audit/signing of Balance sheets, Profit and Loss Account, Financial Statement, Trial Balance of Electoral Bonds.
  • Whether the details of Donor and Donee are available to Chartered Accountants relating to Electoral Bonds while certification/audit/signing of Balance sheets, Profit and Loss Account, Financial Statement, Trial Balance of Electoral Bonds.
  • Details of Donor and Donee made available to Chartered Accountants relating to Electoral Bonds while certification/audit/signing of Balance sheets, Profit and Loss Account, Financial Statement, Trial Balance of Electoral Bonds.
  • Details of Donor and Donee of Electoral Bonds from the books of accounts of (a) SBI Mumbai Main Branch Code 00300 (b) SBI Chennai Main Branch Code 00800 (c) SBI Kolkata Main Branch Code 00001 d) SBI New Delhi Main Branch Code 00691.
  • Letter written by Election Commission to The Secretary, Legislature Department Ministry of Law and Justice, Shastri Bhavan New Delhi relating to Electoral Bonds and its impact on Transparency, corruption in India.
  • Details/Records, Correspondence and the impact of certain amendments in the Income Tax Act, the Representation of the People Act 1951 and the Companies Act 2013 to introduce/issue Electoral Bonds for funding political parties of Transparency, corruption in India.
  • Telephone No. and Email ID of CPIO and Appellate Authority as per Official Memorandum of Det of Personnel and Training available on www.rti.gov.in>Circulars.

Dissatisfied with the response, the instant second appeal was filed before this Commission.

Appellant submitted that CPIO’s response was wrong, incomplete and misleading.

Further, the appellant pleaded that the SBI was supposed to uphold public interest and not the interest of political parties and that the SBI was not in fiduciary capacity with any political party and hence had no legal duty to maximize the benefit of any public sector or private sector bank; there was no relationship of “trust” between them.

Adding to the above, appellant requested the Commission to direct the CPIO to provide the complete information and take necessary action as per Section 20(1) of the RTI Act.

With respect to point nos. 6 and 7 of the RTI application it was stated that the information in respect to those points was exempted under Section 8(1)(e) and (j) of RTI Act; information in respect of point no. 11 of the RTI application was not covered within the definition of “information” under Section 2 (f) of RTI Act and no link was maintained in respect of point no. 12 of the RTI Application.

The FAA held that the information relating to electoral bonds issued to various political parties sought by the appellant was held by the bank in fiduciary capacity and hence was denied to the appellant.

Decision

Commission of perusal of the facts and circumstances observed that the respondent revisited the RTI application and reiterated its earlier stand in respect of pint nos 6 and 7 of RTI application that disclosure of the information was exempted under the provisions of Section 8(1)(e) and (j) of the RTI Act.

Bench upheld the respondent’s contention that the disclosure of the names of the donors and donees of electoral bonds from books of accounts may be in contravention of Section 8(1)(e) and (j) of the RTI Act.

While parting with order, Commission stated that there appeared no larger public interest overriding the right to privacy of the concerned donor and donees.

Hence, the appeal was dismissed. [Vihar Durve v. CPIO, SBI; 2020 SCC OnLine CIC 1327; decided on 21-12-2020]

Case BriefsTribunals/Commissions/Regulatory Bodies

SUPREME COURT ALERT

This NCLAT Order has been set aside by the Supreme Court, the detailed report of which can be found at the end of this piece.

National Company Law Appellate Tribunal (NCLAT): The Coram of Justice Bansi Lal Bhat (Judicial Member), V.P. Singh and Shreesha Merla, Technical Members, addressed a grievance with regard to the appointment of Resolution Professional.

Independent Umpire?

Ex-employee of Financial Creditor appointed as Resolution Professional | NCLT’s position

State Bank of India (Financial Creditor) had filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 with regard to initiation of Corporate Insolvency Resolution Process before the National Company Law Tribunal, Delhi.

NCLT on noting the objection regarding the proposed ‘Interim Resolution Professional’ — Shailesh Verma directed the Financial Creditor to perform it’s statutorily mandatory obligation by substituting the name of the ‘Resolution Professional’ to act as an ‘Interim Resolution Professional’ in place of Shailesh Verma as it was of the view that Shailesh Verma having worked with the State Bank of India for 39 years before his retirement in 2016, there was an apprehension of bias and was unlikely to act fairly and could not be expected to act as an Independent Umpire.

No disqualification

Aggrieved with the above position, Financial Creditor preferred the instant appeal on the ground that the proposed ‘Interim Resolution Professional’ Shailesh Verma fulfils the requirement for appointment as ‘Interim Resolution Professional’/ ‘Resolution Professional’ under the ‘I&B Code’ and admittedly bears no disqualification.

Question for Consideration

Whether an ex-employee of the ‘Financial Creditor’ having rendered services in the past, should not be permitted to act as ‘Interim Resolution Professional’ at the instance of such ‘Financial Creditor’, regard being had to the nature of duties to be performed by the ‘Interim Resolution Professional’ and the ‘Resolution Professional’?

Analysis 

Regulation 3(1) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 provides that an Insolvency Professional shall be eligible for appointment as a ‘Resolution Professional’ for the ‘Corporate Insolvency Resolution Process’ of a ‘Corporate Debtor’ if he or his partners and directors of the Insolvency Professional Entity are independent of the ‘Corporate Debtor’.

In view of the above-stated regulation, Mr Shailesh Verma came under the ambit of a qualified Insolvency Professional and neither he nor any of his associates were alleged to be connected with the ‘Corporate Debtor’ in a manner rendering him ineligible to act as a ‘Resolution Professional’.

Tribunal referred to the Supreme Court’s decision in Ranjit Thakur v. Union of India, (1987) 4 SCC 611, wherein following was held:

“17. As to the tests of the likelihood of bias what is relevant is the reasonableness of the apprehension in that regard in the mind of the party. The proper approach for the judge is not to look at his own mind and ask himself, however, honestly, “Am I Biased?”; but to look at the mind of the party before him.”

Tribunal’s Opinion

Coram on considering the given set of circumstances opined that the apprehension of bias expressed by the ‘Corporate Debtor’ qua the appointment of Shailesh Verma as proposed ‘Interim Resolution Professional’ at the instance of the Appellant — ‘Financial Creditor’ cannot be dismissed offhand and the Adjudicating Authority was perfectly justified in seeking his substitution.

The said position was notwithstanding the fact that Mr Shailesh Verma was not disqualified or ineligible to act as an ‘Interim Resolution Professional’.

Hence, no legal flaw in the impugned order of NCLT was found. [State Bank of India v. Metenere Ltd., Company Appeal (AT) (Insolvency) No. 76 of 2020, decided on 22-05-2020]


Supreme Court Alert

Supreme Court: The 3-Judge Bench of Arun Mishra, B.R. Gavai and Krishna Murari, JJ., set aside the NCLAT’s Order with regard to the appointment of Resolution Professional.

In the above background, Bench observed at the outset that NCLAT’s approach was not correct that merely Resolution Professional who remained in the service of SBI and is getting pension, was disentitled to be Resolution Professional.

Solicitor General, Tushar Mehta as well as Senior Counsel, Krishnan Venugopal agreed for the appointment of new Resolution Professional by NCLT.

Hence, the Bench held that new Resolution Professional be appointed by the NCLT in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016.

While concluding the order, Court observed that the change of Resolution Professional shall not reflect adversely upon the integrity of Resolution Professional concerned, who has been replaced.

Since the impugned order does not reflect the correct approach, the same shall not be treated as a precedent.[State Bank of India v. Metenere, 2020 SCC OnLine SC 837, decided on 19-08-2020]

Case BriefsHigh Courts

Bombay High Court: A Division Bench of R.K. Deshpande and N.B. Suryawanshi, JJ., while addressing an issue with regard to the deduction of pension by the Bank without any confirmation from the employer, observed that,

“The pension payable to the employees upon superannuation is a ‘property’ under Article 300-A of the Constitution of India and it constitutes a fundamental right to livelihood under Article 21 of the Constitution of India.”

“Pension cannot be deducted without authority of law.”

Petitioner a retired assistant foreman had a basic pension of Rs 1,334 as on 01-10-1994, consequent upon an increase in the pension and dearness allowance, the basic pension of Rs 25, 634 was fixed, for which the petitioner was entitled to and accordingly he was paid.

Right to Information Act, 2005

In the month of August, 2019 petitioner’s pension was reduced without consent or knowledge of the petitioner and thus he filed an application under the Right to Information Act, 2005 to know the reason for deduction and details as to the revision of the pension during the period 2015-16 and 2016-17.

Excess Payment of Pension

Respondent stated that there was an excess payment of pension to the petitioner.

Petitioner in view of the above approached the Court challenging the action of the respondent and sought a further direction to the respondents to restore the position in respect of payment of pension, prevailing prior to the deduction which commenced from 01-08-2019.

Excess Payment by SBI

State Bank of India-respondent stated that an amount of Rs 872 per month was erroneously paid in excess to the petitioner due to technical error in the system.

Reserve Bank of India

According to Circular No.RBI/2015-16/340-DGBA.GAD.No.2960/45.01.001/2015-16 dated 17-3-2016, clause (c), the bank claims to have an authority to recover the excess payment to the petitioner.

“c) In case the pensioner expresses his inability to pay the amount, the same may be adjusted from the future pension payments to be made to the pensioners. For recovering the over-payment made to pensioner from his future pension payment in installments 1/3rd of net (pension + relief) payable each month may be recovered unless the pensioner concerned gives consent in writing to pay a higher installment amount.”

Employer’s stand is very clear in the present case that the fixation of the petitioner’s pension was correct and proper.

Further, the employer has supported the claim of the petitioner and has no role to play in the matter of reduction of pension or its recovery.

Bench states that it is not the authority of the Bank to fix the entitlement of the pension amount of the employees other than the employees of the respondent-Bank.

Hence the action of the Bank to reduce the pension of the petitioner is unauthorised and illegal.

Furthermore, the Bank has failed to demonstrate any technical error in the calculations.

With regard to the RBI clause as stated above, Court stated that “once we hold that in fact there was no excess payment made to the petitioner, the question of applicability of the instructions issued by the RBI or undertaking given by the petitioner does not arise.” 

Principles of Natural Justice

Without following the principles of natural justice in the manner of either carrying out correspondence with regard to the correctness of the pension or an explanation in respect of the deduction, the said action on the part of the Bank is arbitrary, unreasonable, unauthorised and in flagrant violation of the principles of natural justice.

Breach of Trust

Bank is the trustee of the pensioner’s account and has no authority in the eyes of the law to dispute the entitlement of the pension payable to the employees other than those who are employed in the bank.

To tamper with the account is nothing but a breach of trust.

Court directed Bank to refund the amount of Rs 3,26,045 to the petitioner by crediting it in his pension account with interest at the rate of 18% p.a. from the date of deduction.

Further, the bank is required to be directed to pay the costs of Rs 50,000 to the petitioner towards the expenses of this petition.

Unfortunately, the time has come to tell the Bank that the aging is natural process, which leads to weakening of the body and mind.

Adding to its conclusion, Court stated that the Bank officials must realize that tomorrow it may be their turn, upon superannuation, to fight for the pension or post-retiral benefits. The thought process, therefore, to be adopted should be of a person in a situation like the petitioner.

Respect, dignity, care, sensitivity, assistance, and security would automatically follow.

Senior Citizens

It is a high time for the Banks to create a separate cell and to device a method to provide personal service through the men of confidence, at the door-step to the old aged, disabled and sick persons who are the senior citizens.

Bench directed registry to forward the copies of the Judgment to the Centralized Processing Pension Centres of all the Nationalized Banks and also to the Reserve Bank of India and the Chief Secretary, Government of Maharashtra, to consider the question of the constitution of separate cell and release of appropriate guidelines so as to attain the constitutional goal of providing respect, dignity, care, sensitivity, assistance and security to all the pension account holders in the Banks.[Naini Gopal v. Union of India, LD-VC-CW-665 of 2020, decided on 20-08-2020]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Company Appellate Tribunal (NCLAT): Justice Bansi Lal Bhat (Judicial), V.P. Singh (Technical) and Shreesha Merla  (Technical) held that an ex-employee of the ‘Financial Creditor’ having rendered services in the past, should not be permitted to act as ‘Interim Resolution Professional’ at the instance of such ‘Financial Creditor’, regard being had to the nature of duties to be performed by the ‘Interim Resolution Professional’ and the ‘Resolution Professional’.

Background of the case:

The appellant- ‘State Bank of India’- is the ‘Financial Creditor’ has filed an appeal against the NCLT’s cognizance of the objection raised by the ‘Corporate Debtor’- ‘Metenere Limited’- regarding the proposed ‘Interim Resolution Professional’- Mr. Shailesh Verma whose employment under SBI for 39 years created an apprehension of bias, since Mr. Shailesh Verma was unlikely to act fairly and could not be expected to act as an Independent Umpire. The question that arose before the court was whether an ex-employee of one of the parties is qualified to act in the position of ‘Interim Resolution Professional’.

Decision

  • In the current appeal, the tribunal has laid emphasis on the current relationship between IRP and the Financial Creditor, where the former derives a pension from the latter. The Tribunal finds the IRP qualified to be an ‘Interim Resolution Professional’ in his personal capacity but the fact that the Appellant restricted its choice to propose him as IRP shows regard to past loyalty and the long services rendered by him. Further, the filing of instant appeal by ‘Financial Creditor’ shows their dismay at the IRP being asked to be substituted by the impugned order.
  • The relevant statutory provision which the bench looked into for qualification of the IRP is Regulation 3 (1) of the Insolvency and Bankruptcy Board of India,  Company Appeal (AT) (Insolvency) No. 76 of 2020 (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which reads as under: “(1) An insolvency professional shall be eligible to be appointed as a resolution professional for a corporate insolvency resolution process of a corporate debtor if he, and all partners and directors of the insolvency professional entity of which he is a partner or director, are independent of the corporate debtor.”
  • The likelihood of bias has been measured via the case of Ranjit Thakur v. Union of India, (1987) 4 SCC 611, in which the Supreme court said: “As to the tests of the likelihood of bias what is relevant is the reasonableness of the apprehension in that regard in the mind of the party. The proper approach for the judge is not to look at his own mind and ask himself, however, honestly, “Am I Biased?”; but to look at the mind of the party before him”. The committee finally upholds the impugned order, by saying the Appellant- ‘Financial Creditor’ should not have been aggrieved of the impugned order as the same did not cause any prejudice to it.

[SBI v. Metenere Ltd., Company Appeal (AT) (Insolvency) No. 76 of 2020, decided on 22-05-2020]

Case BriefsHigh Courts

Delhi High Court: Rajiv Shakdher, J., directed the Union of India and RBI to submit affidavits stating what propelled RBI to take action in public interest to secure interest of depositors of Yes Bank and how are depositors of PMC Bank different circumstanced from depositors of Yes Bank.

In the present matter, pursuant to a query raised by the Court in its order dated 18th May 2020, the Union of India has filed an affidavit wherein it has stated that no funds have been invested by them in Yes Bank. It was however averred that the State Bank of India had invested in the share capital of Yes Bank, upon sanction being accorded by it to the Yes Bank Limited Reconstruction Scheme, 2020 as alluded to in the notification dated 13th March, 2020 — G.S.R. 174(E).

However, as per the Court, what emerged upon perusal of the notification was that both the Reserve Bank of India as well as UOI had a crucial role to play in the decision taken to permit the Reconstruction Scheme and funding the same.

On noting the above-stated circumstances, the High Court directed that RBI will file an affidavit as to what propelled it to take action in the”public interest” to secure the interest of the depositors of Yes Bank and the reason why Union of India accorded sanction to the reconstruction Scheme mentioned above.

Additional affidavits to be filed by both RBI and UOI will establish the reasons that propelled the forging of the Reconstruction Scheme.

“Affidavits to delve into the aspect as to how the depositors of PMC Bank are differently circumstanced in comparison to the depositors of Yes Bank.”

UOI’s affidavit to also indicate as to the shares it holds in SBI and the representation it has on the SBI’s Board of Directors.

Court after stating the above asked the affidavits to be filed within 3 weeks.

Counsel who appeared on behalf of the Administrator conceded that up until now one of the assets of PMC Bank which have been seized have been liquidated.

Court with regard to the PMC bank aspect stated that,

Given the dire state in which the depositors of PMC Bank are placed today, the Administrator, to my mind, should approach the Court concerned and make an endeavour to hasten the process.

Thus, administrator has also been directed to revert on the above matter by filing an additional affidavit.

Matter to be re-notified on 6-08-2020. [Sandeep Bhalla v. RBI, 2020 SCC OnLine Del 671, decided on 25-06-2020]

Case BriefsSupreme Court

Supreme Court: In a case where the 3-judge bench of Arun Mishra, BR Gavai and MR Shah, JJ was hearing a reference in a plea of SBI employees seeking pension on completion of 15 years of service as per the State Bank of India Voluntary Retirement Scheme, it was held that the employees who completed 15 years of service or more as on cut­off date are entitled to proportionate pension under SBI VRS to be computed as per SBI Pension Fund Rules.

Refraining from burdening the bank with interest, the bench directed,

“Let the benefits be extended to all such similar employees retired under VRS on completion of 15 years of service without requiring them to rush to the court.”

Factual Background

  • After obtaining approval of the Government of India, the Indian Bank Association (IBA) evolved a Voluntary Retirement Scheme. The Central Board of Directors of SBI adopted and approved the scheme in its meeting held on 27.12.2000 for implementing the VRS for the employees of the bank by retiring them on completion of 15 years of service with the benefit provided in the scheme. The heart and soul of the scheme were that benefits to be given on completion of 15 years of service. The eligibility for benefits was provided to those who had completed 15 years of service as on 31.12.2000.
  • The SBI submitted that it reserved a right under the scheme to modify, amend or cancel it or any of the clauses and to give effect to it from any date deemed fit. The Deputy Managing Director­cum­CDO was the competent authority for the purpose.
  • As specific queries were raised, a clarification was issued by the Deputy Managing Director on 15.1.2001, stating that as per the existing rules, employees who had not completed 20 years of pensionable service, were not eligible for pension.
  • The respondent before the Supreme Court questioned the refusal of the bank to pay pension. He retired on 31.3.2001 under the SBI VRS. On 18.3.2001, the bank accepted the offer of the employee to retire him voluntarily. He was aged 59 years three months and had nine months service still to go before attaining the age of superannuation. On 31.3.2001, when the VRS became effective, he had put in 19 years, nine months, and 18 days of pensionable service. He had to retire on completion of 60 years and would have put in a little more than 20 years of pensionable service.

Taking note of the facts, the Court noticed that once the Central Board of Directors accepted the memorandum for making payment of pension, in case it was not accepting the proposal in the memorandum, it ought to have said clearly that it was not ready to accept the proposals of the Government and the IBA and rejects the same. Once it approved the proposals referred to in the memorandum, which were on the basis of IBA’s letter and Government of India’s decision it was bound to implement it in true letter and spirit cannot invalidate its own decision by relying on fact it failed to amend the rule, whereas other Banks did it later on with retrospective effect.

“They cannot invalidate otherwise valid decision by virtue of exclusive superior power to amend or not to amend the rule and act unfairly and make the entire contract unreasonable based on misrepresentation.”

It further said that while construing a contract, the language and surrounding circumstances of the overall scheme, memorandum and letters are to be read conjointly to find out whether any departure made by the Board of Directors in its Resolution dated 27.12.2000 is of pivotal significance. In this case, the decision was taken by it of approval of the IBA scheme as proposed. Its binding effect cannot be changed on the basis what parties choose to say afterward, nor they can   be permitted to wriggle out. The contract is required to be read as a whole. It is apparent on a bare reading that optees will be eligible for proportionate pension under the Pension Regulations of the bank and therefore, the bank bears the risk of lack of clarity, if any.

 “It was not the provision in the VRS scheme that incumbents having completed 20 years of service would be entitled for pensionary benefits. The scheme was carved out specially for attracting the employees by providing pension and other benefits to eligible persons like ex gratia, gratuity, pension and leave encashment. Deprivation of pension would make them ineligible for the benefits and would run repugnant to the eligibility clause.”

The Court concluded by saying that the basic framework of socialism is to provide security in the fall of life to the working people and especially provides security from the cradle to the grave when employees have rendered service in heydays of life, they cannot be destituted in old age, by taking action in an arbitrary manner and for omission to complete obligation assured one. Though there cannot be estoppel against the law but when a bank had the power to amend it, it cannot take shelter of its own inaction and SBI ought to have followed the pursuit of other banks and was required to act in a similar fair manner having accepted the scheme.

[Assistant General Manager, State Bank of India v. Radhey Shyam Pandey, 2020 SCC OnLine SC 253, decided on 02.03.2020]

Case BriefsHigh Courts

Kerala High Court: In the instant case where question was raised upon the legality of the acquisition of State Bank of Travancore (SBT) by the State Bank of India (SBI), the Division Bench of Navaniti Prasad Singh,C.J. and Antony Dominic, J. held that the law of meeting is well settled on points as to where the decision of the Board of Directors is to be taken, except otherwise provided, a majority decision would be considered the ultimate decision of the Board of Directors. The Court observed that since the dissent by the two directors as to the acquisition of SBT by SBI were in gross minority, therefore it would not vitiate the ultimate decision of the Board of Directors who were in the favour of the process of acquisition.

Petitioners in the instant case contended that the SBT was created by an Act of Parliament i.e. The State Bank of India (Subsidiary Banks) Act, 1959, thus, banking business of the SBT could not be taken over/ acquired by the SBI and only Parliament could have authorised such acquisition. However the Court rejected the argument stating that it is wrong to state and submit that the creation of the SBT under the 1959 Act meant that was a bank created by  Parliament. Moreover Section 35 of the State Bank of India Act, 1955 authorises SBI to acquire business of any other Banks subject to conditions laid down in the Act.

Perusing the facts of the case and relevant statutory provisions the Court observed that the SBT was created as subsidiary of the SBI under the SBI Act, 1955. It was further observed that reports regarding the acquisition were placed before the Board of Directors of both the Banks and the scheme was approved by the Central government which thereby leaves no room for the Court to interfere in the matter. Thus, on the basis of all the arguments, the Court was unable to find any merit in the writ petitions and dismissed it. [Save SBT Forum v. Union of India, 2017 SCC OnLine Ker 1257, decided on 23.03.2017]

 

Case BriefsSupreme Court

Supreme Court: Deciding the question as to whether the State Bank of India (SBI) and its branches, which are registered dealers under the Bengal Finance (Sales Tax) Act, 1941 would be liable to levy of purchase tax under Section 5(6a) of the Act for accepting the Exim Scrips (Export Import Licence) on payment of premium of 20 per cent of the face value of the scrips in compliance with the direction contained in the letter of Reserve Bank of India (RBI) dated 18th March, 1992, the bench of Dipak Misra and Shiva Kirti Singh, JJ held the SBI was not liable to levy of purchase tax under the Act.

The Court said that the replenishment licences or Exim scrips are “goods”, and when they are transferred or assigned by the holder/owner to a third person for consideration, they would attract sale tax.However, it was held that the SBI is an agent of the RBI, the principal. The SBI, when it took the said instruments as an agent of the RBI did not hold or purchase any goods. It was merely acting as per the directions of the RBI, as its agent and as a participant in the process of cancellation, to ensure that the replenishment licences or Exim scrips were no longer transferred. The intent and purpose was not to purchase goods in the form of replenishment licences or Exim scrips, but to nullify them. The “ownership” in the goods was never transferred or assigned to the SBI.

The Court further said that the initial issue or grant of scrips is not treated as transfer of title or ownership in the goods. Therefore, as a natural corollary, it must follow when the RBI acquires and seeks the return of replenishment licences or Exim scrips with the intention to cancel and destroy them, the replenishment licences or Exim scrips would not be treated as marketable commodity purchased by the grantor. [Commercial Tax Officer v. State Bank of India, 2016 SCC OnLine SC 1245 , decided on 08.11.2016]