SBI

Madras High Court
Case BriefsHigh Courts

Madras High Court: S M Subramaniam, J. upheld the decision taken by Indian Banks Association to unilaterally withdraw the facility for State Bank of India officers to visit overseas countries as part of Leave Travel Concession ‘LTC’/ Home Travel Concession ‘HTC’.

The instant writ was filed challenging the validity of the circular dated 07-4-2014 issued by Indian Banks Association (‘R3’) read with the e-Circular dated 15-4-2014 issued by State Bank of India (‘R1’). The circulars under challenge unilaterally took a decision to withdraw the Leave Travel Concession ‘LTC’ covering overseas travel for SBI officers, and the officers were not entitled to visit overseas countries/ centers as part of LTC or HTC (Home Travel Concession) with immediate effect.

The Indian Bank’s Association issued a Circular dated as early as on 18-09-1982 pursuant to bilateral discussions with the All India State Bank Officers Federation and All India Bank Officers Confederation (‘Petitioners’) being trade unions permitting LTC facility to cover foreign travel also within the eligibility to travel within the Country. This was continued and reiterated in a Circular dated 08-10-2008 issued by Indian Banks Association (R3). All the public Sector Banks, the State Bank of India and the Scheduled Commercial Banks have implemented and extended the facilities to their officers. There is no additional expenditure for the Banks as the amount paid is only as per the eligibility to travel within the country.

Rule 44 of the State Bank of India Officers, Service Rules, 1992, contemplates Leave Travel Concession and Leave Encashment and sub rule-1 to rule-44 provides that

“(1) During each block of four years, an officer shall be eligible for leave travel concession for travel to his home-town once in each block of two years. Alternatively, he may travel in one block of two years to his home-town and in the other block to any place in India by the shortest route.”

The Court noted that Rule 44 of the State Bank of India Officers, Service Rules, 1992 specifically contemplates that the travel is permissible to any place in India, extension of benefit to travel abroad granted by the State Bank of India itself is not in consonance with the terms of Rule 44. Therefore, it is to be construed as an additional facility or concession extended to the officers, which is otherwise not in consonance with the Statutory Rules in force and therefore, cannot have any statutory force.

Placing reliance on Director General of Foreign Trade v. Kanak Exports, (2016) 2 SCC 226 wherein it was observed

“We may state, at the outset, that the incentive scheme in question, as promulgated by the Government, is in the nature of concession or incentive which is a privilege of the Central Government. It is for the Government to take the decision to grant such a privilege or not. It is also a trite law that such exemptions, concessions or incentives can be withdrawn at any time. In such circumstances, even the Doctrine of Promissory Estoppel cannot be ignored.”

The Supreme Court in Balco Employees Union v. Union of India, (2002) 2 SCC 333, held that “Laws, including executive action relating to economic activities should be viewed with greater latitude that laws touching civil rights such as freedom of speech, religion etc., that the legislature should be allowed some play in the joints because it has to deal with complex problems which do not admit of solution through any doctrine or straitjacket formula and this is particularly true in case of legislation dealing with economic matters, where having regard to the nature of the problems greater latitude require to be allowed to the legislature. The question, however, is as to whether it can be done retrospectively, thereby taking away some right that had accrued in favour of another person?”

The Court noted that when the Government of India specifically passed a memorandum that the Leave Travel Concessions to the officers of the Public Sector Undertakings and others to be restricted on par with the Government of India scheme, then there is a context and meaning with reference to certain foreign affairs and therefore, there is no infirmity in respect of the order impugned passed by the respondents in canceling the concession extended to travel abroad under Leave Travel Concession facility. Rule 44 of the State Bank of India Officers’ Service Rules, 1992, regarding Leave Travel Concession and Leave Encashment are comprehensive and provides the procedures, definitions etc., the said Rule alone would have the statutory enforceability.

On the contention of the petitioner with respect to opportunity of hearing not being provided before the decision was taken, the Court observed that when the concession to travel abroad has been permitted without entering into bipartite agreement or through a statute, question of granting an opportunity to the officers does not arise. Such an additional facility to travel abroad is a policy decision taken by the respondent / Management and such a policy has been withdrawn, taking note of the memorandum issued by the Government of India, Ministry of Finance and based on the decision taken by the Indian Bank Association. Thus, the decision taken without providing an opportunity to the petitioners would not constitute violation of principles of natural justice nor their service rights are infringed.

The Court further noted that the concession and the facility extended to get reimbursement of the foreign travel expenses, was given by way of an additional facility through a letter and such letter was cancelled and the facility was withdrawn pursuant to the orders of the Government of India, Ministry of Finance and the Circular issued by the Indian Bank Association. The policy of the Government of India, Ministry of Finance is to be followed in the interest of public by all the Public Sector Banks, which was adopted by the Indian Bank Association.

The Court opined that the petitioners could not establish that the additional facility to travel abroad under the Leave Travel Concession is a service right or condition of service. Thus, the withdrawal would not infringe the rights of the employees nor caused any prejudice and thus, held “this Court do not find any perversity in respect of the decision taken for withdrawal of the additional concession granted to the officers of State Bank of India to travel abroad under Leave Travel Concession scheme. However, it is made clear that the officers are entitled to the Leave Travel Concession and Leave Encashment as contemplated under Rule 44 of the State Bank of India Officers Service Rules, 1992.”

[All India State Bank Officers Federation v. State Bank of India, 2022 SCC OnLine Mad 3372, decided on 24-06-2022]

Advocates who appeared in this case :

R. Vaigai, Senior Advocate, for the Petitioners;

Om Prakash, Senior Advocate, for R1 and R2;

Mr. S. Rajesh, Advocate, for R4;

No appearance, for R3.

*Arunima Bose, Editorial Assistant has reported this brief.

Case BriefsTribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): Noting that in respect of cases concerning cartels that are hidden or secret, there is little or no documentary evidence and may be quite fragmentary, Coram of Ashok Kumar Gupta (Chairperson) and Sangeeta Verma and Bhagwant Singh Bishnoi (Members)  imposed penalties on 7 entities and signages for bid-rigging activities and cartelization with respect to the supply of signage for branches, offices and ATMs of State Bank of India.

Factual Matrix

Present matter was taken up by the Commission suo motu pursuant to a complaint received alleging bid-rigging and cartelization in the tender floated by SBI Infra Management Solution (P) Ltd. for the supply and installation of new signages/replacement of existing signages for branches/offices/ATMs of SBI located at specified metro centres of various circles of SBI across India.

With the object of distorting the fair bidding process, certain bidders were coordinating and fixing the prices of their services as well as allocating the market amongst themselves.

As per Commission’s prima facie view, case of contravention of the provisions of Section 3(1) read with Section 3(3) of the Act was made out with respect to the Impugned Tender. Hence, DG was directed to investigate.

DG had concluded that the OP indulged in anti-competitive agreement/conduct and concerted practices to rig the Impugned Tender, as well as geographically allocated amongst themselves the circles for which the tender was issued, thereby contravening the provisions of Sections 3(3)(c) and 3(3)(d) read with Section 3(1) of the Act. The DG also identified certain individuals of the OPs to be liable in terms of Section 48 of the Act.

Conclusion

An ‘agreement’ as given in Section 2(b) of the Act, requires, inter alia, any arrangement or understanding or action in concert, whether or not formal or in writing or intended to be enforceable by legal proceedings.

Definition under Section 2(b) of the Act covers even those situations where the parties act on the basis of a nod or a wink. 

Further, it was observed that there is rarely direct evidence of action in concert, Commission must determine whether those involved in such dealings had some form of understanding and were acting in co-operation with each other.

“Since the prohibition on participating in anti-competitive agreements and bid rigging and the penalties which the infringers may incur are well-known, it is normal for such practices and agreements to take place in a clandestine fashion, for meetings to be held in secret and for associated documentation to be reduced to a minimum.”

 Commission held that OP-1 to OP-7 had entered into an agreement resulting in geographical market allocation as well as bid-rigging in the Impugned Tender.

“…cartelisation, including bid-rigging, is a pernicious form of competition law contravention.”

Additionally, Coram also added that, any collusive or concerted conduct amongst competitors by way of exchange of commercial information resulting in inter alia determining price or geographical allocation of provision of services etc., itself stands captured within the prohibition imposed and is presumed to have AAEC, by virtue of provisions of Section 3(1) of the Act read with Section 3(3).

Liability under Section 48

Commission held that it is no longer res integra that the Commission can simultaneously proceed against individuals of a company under Section 48 of the Act along with the company and the same has been settled by various decisions of the Courts.

Section 48(1) of the Act is a deeming provision, which implies that when contravention of any provision of the Act (say Section 3) is committed by a company, then, an individual(s) who was in-charge of and responsible to the company for the conduct of its business at the time of contravention, shall be deemed to be guilty of such contravention.

Section 48(2) of the Act, all individuals that play an active role in the illegal conduct of a company, are made liable in addition to the company.

Commission decided to impose penalty @1% of the average of individual’s incomes, for the three financial years. Though Commission decided to grant to OP-4 and its individuals, the benefit of reduction in penalty by 90% (per cent) in terms of Regulation 4(a) of the Lesser Penalty Regulations.

Lastly, the Coram directed entities/persons to deposit their respective penalty amounts within 60 days of the receipt of the present order.[Alleged anti-competitive conduct by various bidders in supply and installation of signages at specified locations of State Bank of India across India, In Re., 2022 SCC OnLine CCI 16, decided on 3-2-2022]

Advocates before the Commission:

For Diamond Display Solutions Pvt. Ltd. and its individuals:

Mr. Rajshekhar Rao, Senior Advocate with Ms. Ameyavikrama Thanvi and Mr. Siddharth H. Raval, Advocates and Mr. R.G. Venkatesh (in-person)

For AGX Retail Solutions Pvt. Ltd and its individuals:

Ms. Shivanghi Sukumar, Advocate, Mr. Arjun Reddy and Mr. Ritanshu Mohan (both in-person)

For Opal Signs Pvt. Ltd. and its individuals:

Mr. Anandh Venkatramani, Advocate and Mr. Ramesh Bharadwaj (in-person)

For Avery Dennison India Pvt. Ltd. and its individuals:

Mr. Rudresh Singh, Advocate

For Amreesh Neon Pvt. Ltd. and its individuals:

Mr. Anjaneya Mishra, Advocate

For Macromedia Digital Imaging Pvt. Ltd. and its individuals:

Mr. Rajshekhar Rao, Senior Advocate with : Mr. Nithin Chowdary Pavuluri, Advocate and Mr. Naresh Kumar Dasari (in-person)

For Hith Impex Pvt. Ltd. and its individuals:

Ms. Rohini M. Amin, Advocate

Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Service Tax Appellate Tribunal, Chandigarh: Coram of Ashok Jindal (Judicial Member) and CJ Mathew (Technical Member) addressed whether the assessee will be liable to reverse CENVAT credit on the amount written off as bad debts.

Two appeals were filed against the impugned orders confirming the demand for reversal of CENVAT credit on the amount written off as bad debts and on advertisement & sales promotion services.

Factual Background

Appellant was engaged in providing banking and other financial services, credit card, debit card etc. and business support services, further, the appellant received various input services for providing their output services and availed CENVAT credit thereon.

It was stated that, in some cases, the appellant could not recover certain payments from their customers and wrote them off as bad debts in their financial records.

To launch a co-brand credit card, the appellant entered into a co-brand credit card agreement with Indian Railway Catering and Tourism Corporation Limited (IRCTC). Appellant paid fixed charges to IRCTC for every subscriber of credit card and in turn, IRCTC agreed to promote the credit card by modifying its website, through press advertisements and related collaterals.

IRCTC raised invoices on the appellant for the said purpose and the appellant availed the CENVAT credit of service tax paid thereon.

Two show-cause notices were issued for the reversal of CENVAT credit availed on input services attributable to the amount written off as irrecoverable dues; reversal of CENVAT credit where service tax was paid under reverse charge basis; reversal of CENVAT credit availed on the advertisement, catering and event management services.

Impugned orders were passed by confirming the demands holding that the amount written off as bad debts, the appellant was not entitled to avail CENVAT credit of input services attributable to the amounts written off and denial of CENVAT credit on input services received from IRCTC by classifying them as catering services.

Appellant approached the tribunal against the above-stated orders.

What was the dispute?

The appellant had written off certain amounts for consideration of services, they had not received.

Analysis and Discussion

Rule 3 of the CENVAT Credit Rules, 2004 deals with the situation for entitlement of the CENVAT credit, which prescribes that a provider of the output service shall be allowed to take CENVAT credit of any input service received by the provider of output service on or after 10th day of September, 2004.

The services on which appellant had taken CENVAT credit were ‘input services’ in terms of Rule 2(I) of the CENVAT credit Rules, 2004 and was a provider of output service.

Hence, in terms of Rule 3 of the CENVAT Credit Rules, Tribunal held that the appellant was entitled to avail CENVAT Credit on input services in question.

CENVAT Credit Rules or Finance Act there was no provision for reversal of CENVAT credit for the services provided for which no consideration for service provided was received by an assessee.

Therefore, the appellant had correctly availed the CENVAT Credit on input services although the amount of non-recoverable taxable service had been written off by the appellant for the period prior to 1-4-2011.

Appellant had admitted that they paid service tax on all the taxable services provided by them after 1-4-2011 at the time of provision of service. Hence the appellant cannot be liable for reversal of CENVAT Credit for the services provided after 1-4-2011 on which the service tax was paid.

Denial of CENVAT credit on Invoices issued by IRCTC

Coram found that the description of the service provided by IRCTC was SBI co-brand registered as “SBI” and the said invoice did not prescribe that IRCTC had provided any ‘catering service’ to the appellant.

Concluding the matter, Tribunal held that the appellant was entitled to CENVAT Credit in the services provided by IRCTC as advertisement services.

The impugned orders were set aside in view of the above. [SBI Cards and Payments Services (P) Ltd. v. Commr. Of Service Tax, 2022 SCC OnLine CESTAT 18, decided on 4-1-2022]

Advocates before the Tribunal:

Present for the Appellant: Sh. B.L. Narasimhan, Ms. Krati Singh, Ms. Priyanka Singla, Advocates

Present for the Respondent: Sh. H. S. Brar, A.R.

Case BriefsSupreme Court

Supreme Court: In an interesting case where one SBI account holder was left with a balance of Rs. 59/- only in his account due to the existence of another bank account with strikingly similar name in the same branch, the bench of Sanjiv Khanna and Bela M. Trivedi*, JJ has set aside the “highly erroneous” impugned order passed by the National Consumer Disputes Redressal Commission solely relying upon the suo-moto report called for from SBI during the pendency of the revision application.

Factual Background

Sunil Kr. Maity had a saving account number 01190010167 with SBI since January, 2000. On 24.02.2010, the said account number was changed to number 10140478732. On 15.09.2012, the appellant went to deposit a sum of Rs. 500/- in the said account, when a staff of respondent-bank informed him that the account number had again been changed and wrote account number being 32432609504 on his passbook. The said amount was deposited in the said account number. Thereafter, on 16.01.2013, appellant deposited a cheque being no. 670013 for Rs. 3,00,000/- drawn on SBI of the said Branch.

When the appellant went to update his passbook on 11.12.2013, he noticed that his passbook showed the balance of Rs. 59/- only, though he had not made any transaction between 16.01.2013 to 11.12.2013. On the enquiry having been made, the respondent-bank informed the appellant that there was another customer by the name Sunil Maity whose account number was 32432609504 and the said account number was wrongly given to the appellant whose name was Sunil Kr Maity on 15.09.2012. The said Sunil Maity on 25.01.2013 and 28.01.2013 had withdrawn the sum of Rs. 1,00,000/- and Rs. 2,00,000/- respectively from the said account number.

When the matter reached the National Commission, it not only sought for a report from SBI at the revisional stage but set aside the findings and conclusion recorded by the District and State Forum, simply based on this report. The report indicated that the bank had every reason to believe that wrong account number was intentionally inserted by the appellant himself for reasons best known to the appellant or on account of negligence by the appellant by not keeping the passbook in his safe and proper custody.

Analysis

Explaining the scope of the revisional jurisdiction of the NCDRC under Section 21(b) of the said Act, the Court held that the same is extremely limited. It should be exercised only in case as contemplated within the parameters specified in the said provision, namely when it appears to the National Commission that the State Commission had exercised a jurisdiction not vested in it by law, or had failed to exercise jurisdiction so vested, or had acted in the exercise of its jurisdiction illegally or with material irregularity.

In the instant case, the Court noticed that the NCDRC itself had exceeded its revisional jurisdiction by calling for the report from the bank and solely relying upon such report, had come to the conclusion that the two fora below had erred in not undertaking the requisite in-depth appraisal of the case that was required.

The Supreme Court was at a loss to understand as to how the NCDRC could have sought for a report at the revisional stage, that too from an officer of the party which already had an opportunity to submit all the documents necessary for the purpose of defending itself before the Consumer Forum, and as to how such a report in the form of an additional evidence produced at the revisional stage could be relied upon, in respect of which the two fora below had no opportunity to deal with.

Contrary to the NCDRC’s opinion, the Court observed that both the State Commission as well as the Consumer Forum had elaborately appreciated the documents on record and passed the reasoned orders.

On the reliability of the report submitted by the Bank, the Court said that the report that tries to absolve the respondent-bank of its liability is based on surmises and conjectures as it abstrusely and without evidence holds that the bank has every reason to believe that wrong account number was intentionally inserted by the appellant himself for reasons best known to the appellant or on account of negligence by the appellant by not keeping the passbook in his safe and proper custody.

“The suppositions are contradictory as well as incredulous and fanciful. The appellant did not know the second respondent and would not have known his account number unless given to him by a bank officer. There was no way that the appellant would have known that the second respondent, namely Sunil Maity had an account in the same branch. No sane person would deposit cash or cheque meant to be deposited in his account in an account number belonging to another person with similar name.”

On the other hand, the bank should have been extra cautious given the fact that accounts of the appellant, Sunil Kumar Maity, and the second respondent, Sunil Maity, were with the same bank branch. The Court found it rather surprising that the NCDRC set aside the findings and conclusion recorded by the District and State Forum, by simply relying on this report.

The Court hence, restored the State Commission’s order wherein it was held that,

“Given that it is virtually impossible for one to know the account number of another person, and more so, as passbook is stated to be updated by Group ‘D’ staff of the bank, it would be myopic not to believe that the goof up created at the end of the Appellant itself. Besides this, since the Appellant made a great blunder while crediting the amount of the cheque to the account of Respondent No. 2, we feel, the Appellant must own up due responsibility in this regard.”

[Sunil Kumar Maity v. State Bank of India, 2022 SCC OnLine SC 77, decided on 21.01.2022]

*Judgment by: Justice Bela M. Trivedi

National Consumer Disputes Redressal Commission
Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): C. Viswanath (Presiding Member) while addressing the complaint reiterated the settled position of law, expressed that,

Section 58 of the Act provides that the National Commission shall have jurisdiction to entertain the Complaint where value of the goods or services paid as consideration exceeds rupees ten crores.

Complainant submitted that he was given a cash credit limit of Rs 25 lakhs by the State Bank of India.

It was submitted that OP/SBI had committed deficiency of service as an interest of Rs 18,66,719 had been demanded from the complainant against the outstanding loan of Rs 23 lakhs.

What was the prayer made by the complainant?

  1. Pass an award directing the Opposite Party to pay a sum of Rs 19,85,27,562 to the Complainant towards compensation and damages for negligence, deficiency in service and unfair trade practices;
  2. Pass an award directing the Opposite Party to pay a sum of Rs 5,00,000 to the Complainant for pain and mental agony;
  3. Pass an award directing the Opposite Party to pay a sum of Rs 4,00,00,000 to the Complainant for loss of closing of the industry of the complainant;
  4. Pass an award directing the opposite party to pay a sum of Rs 4,00,00,000 to the Complainant for the loss of reputation;
  5. And directing the Opposite Party to pay the cost of entire proceedings; rectification and
  6. Pass such further or other orders as this National Commission may deem fit and proper in the circumstances of the case and thus render justice.

Decision

Bench remarked that Consumer Protection Act, 2019 provides for a hierarchy of the Consumer Fora to deal with consumer complaints, depending upon the pecuniary value of the complaint.

In the instant case, the complainant had demanded disproportionate compensation to inflate the value of the complaint and reach the pecuniary jurisdiction of this Commission which is nothing but an abuse of the process of law.

Hence, the complaint was dismissed in view of the above discussion, since it did not fall within the pecuniary jurisdiction of the National Commission.[M.V. Madhu Sudhana v. SBI, 2020 SCC OnLine NCDRC 845, decided on 06-04-2021]

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]