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CRN________

Head Office
Law
Department
10, B.T.M.
Sarani,
7th Floor
KOLKATA-700
001

( )

(A Government of India
Undertaking)
HONOURS YOUR TRUST

Circular No.

CHO/Law/18/201516
Date:
12.11.2015

To,
All Branches and Offices in Indian Union.
Sub: Relevant Judgements of various High Courts & NCDRC affecting
Bankers.
1. Judgement dated 17.10.2015 in Writ Petition No. 1726 of 2013
before Honble High Court of Judicature at Bombay - Messrs Eminent
Agencies & Another vs. Bank of Baroda & Others- (CDJ 2015 BHC
2240).
In the year 1999, the Respondent No.1 Bank granted various credit facilities to the
Petitioner No.1 which was secured by an equitable mortgage of three properties
situated at Andheri(E) and Vasai, District Thane. These properties were owned by Mr.
Jujee A. Poonawala, Mr. Moiz A. Poonawala and Ms. Fatima M. Baxamusa, the
guarantors of Petitioner No.1.
As the Petitioner No.1 failed to pay its dues, the Respondent Bank filed an Original
Application before the Debt Recovery Tribunal against the Petitioner No.1, its
partners and the guarantors. Petitioner Nos.1 and 2 contested the Original
Application while the guarantors and other partners of Petitioner No.1 did not
contest the same. On 09.06.2006, during the pendency of the Original Application,
the Petitioner No.1 submitted a compromise/settlement proposal for a sum of
Rs.65.77 lacs which was duly accepted by the Respondent Bank on the terms and
conditions set out in its letter dated 26.06.2006.
The Respondent Bank gave several opportunities and extensions to the Petitioners
to deposit the compromise amount but admittedly the Petitioners defaulted in
adhering to the terms and conditions of the said settlement proposal. As such, the
Original Application filed by the Respondent Bank was proceeded with and by an
order dated 20.11.2008, the Original Application was allowed in favour of the Bank
and the Petitioners were directed to pay to the Respondent Bank a sum of
Rs.87,48,616.06 together with simple interest @ 10% per annum from the date of
filing of the Original Application till payment. A Recovery Certificate was also issued
accordingly.
On 19.12.2008, the Petitioners once again approached the Respondent Bank and
submitted a proposal to settle the matter for a sum of Rs.75 Lacs which was also
accepted by the Respondent Bank and duly communicated to the Petitioners by
letter dated 16.02.2009. The terms and conditions of this settlement provided, inter
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alia, that (a) Rs.50 lacs would be payable within 10 days of sanction and the
documents in respect of one of the mortgaged properties (in the name of Mr.
Abbasbhai Poonawala) would be released and (2) the balance amount of Rs.25 lacs
would be payable on or before 28.02.2009 and thereafter, the documents in respect
of the mortgaged property in the names of Mr. Moiz A. Poonawala and Mr Jujee A.
Poonawala would be released. But the Petitioners could not adhere to the timeframe
as set out in the said letter. The Respondent Bank vide its letter dated 10.06.2009
granted one more opportunity to the Petitioners to pay the amount of Rs.75 lacs,
failing which the Petitioners were informed that Respondent Bank would take over
possession of the mortgaged properties and recover its dues. Since the payment
was not made, the Respondent Bank vide its letter dated 25.06.2009 informed the
Petitioners that Bank had withdrawn the compromise proposal as the Petitioners
failed to abide by the terms and conditions of settlement.
As the Petitioners failed to pay the settlement amount within the stipulated
timeframe, the Recovery Officer proceeded to execute the Recovery Certificate
issued in favour of the Respondent Bank to recover the decreetal amount.
Accordingly, on 30.04.2010 the Recovery Officer published a sale notice in the
newspaper fixing 31.05.2010 as the date for conducting sale of the mortgaged
properties. The auction sale was accordingly conducted on the said date. It was not
disputed that these mortgaged properties were sold in the public auction for an
amount of Rs.52,00,000/- and Rs.37,50,000/- respectively to the auction purchaser
and the sale has been confirmed in their favour.
In the meanwhile, on 24.05.2010 the Petitioners filed Miscellaneous Application
No.101 of 2010 under Section 19(25) of the Recovery of Debts Due to Banks and
Financial Institutions Act, 1993 (for short, the RDDB Act, 1993) before the DRT
praying, inter alia, that the Respondent Bank be ordered and directed to accept the
balance OTS amount of Rs.64.50 lacs together with interest at the rate of 10% p. a.
from 16.02.2009 or such other rate as the DRT deems fit. In other words, by the said
Miscellaneous Application, the Petitioners sought enforcement of the settlement
proposal dated 19.12.2008. This Miscellaneous Application was heard by the DRT-III,
Mumbai and by a detailed order dated 26.07.2010, the DRT dismissed the same.
Being aggrieved, the Petitioners preferred Miscellaneous Appeal No.184 of 2010
before the DRAT, Mumbai. The DRAT also, by an elaborate and reasoned order dated
28.07.2013 dismissed the Petitioners' Appeal. It is in these circumstances the
Petitioners filed the above Writ Petition questioning the validity and legality of the
order dated 28.06.2013 passed by the DRAT in Miscellaneous Appeal No.184 of
2010.
The Honble High Court of Bombay after hearing both the sides held as
16.Looking to the totality of the facts of this case and as narrated above, it is clear
that the Respondent Bank had taken a very lenient view in the matter. Despite
several extensions being granted to the Petitioners, they failed to deposit/pay the
settlement amount to the Respondent Bank. ..we do not think that the DRT
or the DRAT can be faulted in dismissing Miscellaneous Application No.101 of 2010
or Miscellaneous Appeal No.184 of 2010 respectively. The DRT as well as the DRAT
have passed detailed reasoned orders considering the arguments of the Petitioners
including the judgments/decisions on which reliance was placed. After considering
all the arguments, the DRT and the DRAT dismissed the Miscellaneous Application as
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well as the Appeal of the Petitioners. On going through these orders, we do not think
that they suffer from any patent illegality and/or perversity that would persuade us
to interfere in our extraordinary, equitable and discretionary jurisdiction under
Article 226 of the Constitution of India. We do not think that in the facts of the
present case, justice lies on the side of the Petitioners for us to interfere with the
impugned orders.
17. Before parting, we must mention here that we seriously doubt whether the DRT
had jurisdiction to entertain the prayer sought for by the Petitioners in Miscellaneous
Application No.101 of 2010. In the said Application, the Petitioners, in effect sought
enforcement of the settlement proposal dated 19.12.2008. In view of the fact that
the DRT had already decreed the Original Application filed by the Respondent Bank,
it had become functus officio and therefore we seriously doubt that at the instance
of the debtor such a Misc. Application seeking enforcement of the settlement
proposal dated 19.12.2008 could have been entertained by the DRT under Section
19(25) of the RDDB Act, 1993. However, since this issue was neither argued nor
raised by the parties, we leave this point open to be considered in an appropriate
case. In view of our discussion earlier, we find no merit in this Writ Petition. It is
accordingly, dismissed. However, in the facts and circumstances of the case, we
leave the parties to bear their own costs.
2. Judgement dated 16.10.2015 in Revision Petition Nos. 3882 of
2014,3883 of 2014, 3884 of 2014, 3885 of 2014 before Honble
National Consumer Dispute Redressal Commission (NCDRC) - Shri
Lal Nathrirlal Aswani & Others vs. Rupee Co-operative Bank Ltd.
(CDJ 2015 (Cons.) Case No. 661).
M/s Aswani Builders had a current account with Thane Peoples Co-op Bank Ltd.,
Kopri Branch which has subsequently merged with the opposite party Bank by the
orders of Additional Registrar Cooperative Societies, Pune dated 24.08.1995. On
12.10.1993, M/s Aswani Builders issued a cheque of Rs.1,69,000/against their
current account to obtain a pay order for the same amount in favour of Lal Mahal
Cooperative Housing Society Ltd. On the same day, Aswani Builders issued
instructions of stop payment of the subject Pay Order which was presented for
encashment through Union Bank of India but it was returned unpaid on the ground
that the payment was stopped by Aswani Builders.
The Lal Mahal Co-operative Housing Society Ltd thus filed a complaint under Section
138 of Negotiable Instruments Act and other provisions against Aswani Builders and
officers of the Bank. A civil suit for recovery of the amount of Pay Order was also
filed. The aforesaid criminal and civil proceedings ultimately came to be dismissed
for
non-prosecution on 29.01.2008 and 12.03.2008. Before the dismissal
of the said two proceedings, M/s Aswani Builders persuaded the Bank to convert the
amount of Pay Order into four fixed deposit receipts in the name of the respective
complainants and mark a lien on the receipts as security for any future liability
arising out of the above noted criminal and civil litigation. Thane Peoples Cooperative Bank Ltd., therefore, converted the amount of the Pay Order into four fixed
deposit receipts and kept them in the Bank with lien against any future liability.

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After the dismissal of civil as well as criminal proceedings, the complainants

approached the petitioner Bank for release of the fixed deposit receipts and
payment of the amount of fixed deposit receipts with interest. The petitioner Bank
declined to release the fixed deposit receipts and asked M/s Aswani Builders to bring
an order from the Civil Court directing the Bank to pay the fixed deposit receipts
amount.
Being aggrieved of the refusal of the Bank to release the fixed deposit receipts
amount with interest, the respective complainants filed separate complaints. The
District Forum vide separate orders partly allowed the complaints and directed that
petitioner opposite party has committed deficiency in service by refusing to refund
fixed deposit receipts. It was also directed that opposite party shall reinvest the said
fixed deposit receipts @12.5 % and shall renew the fixed deposit receipts and give
original FD receipts/certificates to the respective complainants if the complainants
so demand. The opposite party was also directed to pay F.D. amount and the
interest accrued. In addition cost of litigation was also imposed.
Being aggrieved of the order of the District Forum, the Opposite party filed four
appeals being No. A/14/246 to A/14/249. The complainants not being satisfied with
the interest awarded also filed appeals no. A/1/250 to A/14/253 seeking
enhancement in the rate of interest. The State Commission vide impugned order
dismissed the appeals. This led to filing of the revision petitions by the respective
parties.
The Honble NDRC observed as it is clear that on 21.02.2013, Reserve Bank of India
has issued directions to Rupee Cooperative Bank Ltd calling upon the Bank not to
release any sum exceeding Rs.1000 out of total balance in every saving Bank or
current account or any other deposit without prior instructions from Reserve Bank of
India. Clause (ii) of the Directions, however, provides for renewal of the existing term
deposits on maturity in the same name and the capacity. There is nothing on the
record to suggest that complainants have moved any petition before the Reserve
Bank of India praying for direction to Rupee Cooperative Bank Ltd. to release the
money against their FDRs deposit alongwith interest. The complainants have failed
to show any direction in this case issued by Reserve Bank of India. Therefore, in our
considered view, the orders of the fora below directing the petitioner Bank to release
the amount of fixed deposit receipts with interest being against the expressed
direction of the Reserve Bank of India cannot be sustainedThe Opposite Party
Bank shall keep on renewing the fixed deposit receipts of the complainants on year
to year basis with the rate of interest applicable at the time of renewal till the
requisite permission for release of the fixed deposit receipts amount is received from
the Reserve Bank of India. The complainants, however, shall be at liberty to file an
application in the Reserve Bank of India explaining the circumstances and request
for direction for release of the fixed deposit receipts amount with interest, and if the
permission is granted, the amount shall be paid to the respective complainants.
3. Judgement dated 19-10-2015 Revision Petition Nos.186 of 2009
before Honble
National Consumer Dispute Redressal Commission (NCDRC)- Andhra
Bank vs. Dibakar Sahu -(CDJ 2015 (Cons.) Case No. 668).

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The facts of the case are that the Complainant/Respondent Dibakar Sahu availed a
loan of Rs. 1,08,000/- from the Petitioner/Opposite Party Andhra Bank for purchasing
an ambassador car worth Rs.1,59,200/- in the year 1989, repayable in 48 monthly
installments. The said vehicle was stolen on 27.01.90, during the period of insurance
(i.e. 06.12.1990 to 05.02.1991). An FIR was lodged with the police station on
27.01.90. A claim was also lodged with the Insurance Company, but on their failure
to settle the claim, a Consumer Complaint No. 340/92 was filed before the State
Commission, which was decided vide an Order dated 13.09.95 of the said
Commission and the Insurance Company was directed to pay a sum of Rs.1,30,000/as assessed by the surveyor with interest @18% p.a. from 01.01.1991 till the date of
payment.
Being aggrieved, the Complainant filed an appeal before the National Commission
which was decided on 29.05.2002 and a direction was given to pay a sum of
Rs.1,43,280/- to the Complainant after deducting depreciation of 10% from the value
of the vehicle, i.e., Rs.1,59,200/-, as the vehicle had been used for less than 2 years
at the time of loss. The rest of the Order regarding payment of interest etc., was
upheld.
The case of the Petitioner Bank was that the insurance company, in pursuance of the
Order dated 13.09.95 of the State Commission, sent an amount of Rs.2,43,089/- vide
cheque 0048149 dated 08.11.95 to the petitioner Bank. The Bank after calculating
the interest as per the agreed sanctioned letter, adjusted the said amount towards
the term loan account of the petitioner on 27.11.95. The term loan account of the
complainant showed an amount of Rs.2,69,414.25 against his name and hence,
after adjusting the said amount of Rs.2,43,089/-, there was still a sum of
Rs.26,325.25/- outstanding against the name of the complainant. The Bank has
further stated that after the decision of the National Commission on 29.05.2002, the
complainant received a further amount of Rs.41,290/- from the Insurance Company
but the same was not deposited with the Bank. Had that amount been paid to the
Bank, the term loan account of the complainant would have been satisfied.
The complainant approached the petitioner Bank for waiver of interest on the said
loan, but the same was not granted. In the meantime, the Complainant filed second
complaint No. 96/2002 against the petitioner Bank before the District Forum, Angul,
praying that the Bank should be directed to declare the loan account of the
complainant as the Non Performing Asset (NPA) and waive the interest and penal
interest charged from the complainant. It was also stated that the Opposite Party
Bank should be directed to pay Rs.50,000 /-as compensation towards mental
harassment and Rs.5,000/- as the litigation cost. The said complaint was decided by
the District Forum vide order dated 24.01.2003 and the Opposite Party Bank was
directed as follows:
The Opp. party is directed to calculate interest @18% p.a. on the loan account of
the complainant from 1.1.91 onwards and adjust the amount received from the
Insurance Company on 27.11.1995 towards the said loan account and return to the
complainant the excess amount, if any received from the Insurance Company,
alongwith 10% interest per annum towards compensation, loss of business etc. from
27.11.1995 to till the date of payment. The opp. party is directed not to debit any

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premium amount towards DICGCI to the loan account of the complainant and recast
the loan account accordingly.
Aggrieved against this order, the Bank filed appeal before the State Commission
which was dismissed on 29.10.2008 vide impugned order and the order of the
District Forum was confirmed. Being aggrieved against this order, the petitioner
Bank filed the present revision petition.
After hearing both parties Honble Commission ordered as A perusal of the
record makes it clear that in the earlier consumer complaint No.340/92 filed by the
complainant against the Insurance Company, the National Commission passed order
on 29.05.2002 in appeal, saying that a sum of Rs.1,43,280/- should be paid to the
complainant alongwith interest @18% p.a. with effect from 1.1.99 till the date of
realization. However, the Insurance Company had already released Rs.2,43,809/- to
the Bank in pursuance of the orders passed by the State Commission on 13.09.1995.
Following the order of the National Commission on 29.05.2002, a further sum of
Rs.41,290/- was paid by the Insurance Company to the complainant. It was the duty
of the complainant at that time and even before, that he should have paid the
necessary amount outstanding in his account to the Bank and have his loan
satisfied, but instead of doing that, he filed another consumer complaint against the
petitioner Bank. It may be stated here that if the insured vehicle of the complainant
gets stolen or lost by any means, it does not entitle a person to withhold the amount
of loan alongwith interest, due to the petitioner Bank. It is the duty of the
complainant as loanee to repay the entire outstanding loan of the Bank alongwith
interest whether the vehicle remains intact or not. The litigation between the
complainant and the Insurance Company has nothing to do with the claim of the
Bank against the complainant. Moreover, the National Commission, nowhere stated
that any particular amount of interest should be charged by the Bank from the
Complainant. There was no justification for making the second consumer complaint
in question, rather the complainant should have approached the Bank and deposited
the necessary amount due against him.
It may further be stated that a perusal of the impugned order passed by the State
Commission and the order of the District Forum reveals that they have instructed
the Bank to charge a particular quantum of interest on the loan account from 1.1.91
onwards. It is not understood by any stretch of imagination that the consumer fora
below could have issued any direction to the Bank to charge a particular rate of
interest. The stand taken by the petitioner Bank that they had calculated the
amount chargeable strictly in accordance with the loan documents executed with
the complainant is legally sound and there could not have been any deviation from
the same on any ground. It is not understood, therefore, how the consumer Fora
below gave directions to the Bank to charge a particular rate of interest. The learned
counsel for the petitioner Bank also stated that the factum of declaring the said loan
account as NPA was not relevant in the present case, as the Bank was liable to
recover the amount due from the complainant as per the agreed terms and
conditions. The learned counsel for the respondent stated that in reply before the
State Commission, the Bank had stated that the rate of interest had been fixed at
18% p.a. The loan agreement between the parties was, therefore, no longer in force.
The learned counsel further stated that if the Bank had declared the said account as
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NPA, they were not liable to charge interest on the same. In reply, the learned
counsel for the Bank stated that as per the agreement with complainant, the
minimum rate of interest to be charged was 12.5%. At the time of filing reply before
the State Commission, they were charging interest @18% p.a. as per their policy.
There was, therefore, no inconsistency in the stand taken by the Bank.
Based on the discussion above, we do find that a grave irregularity has been
committed by the Consumer Fora below in passing the orders being challenged
before us in giving directions to the petitioner Bank to charge a particular rate of
interest on the loan advanced to the complainant. In the exercise of our revisional
jurisdiction, therefore, we allow the present revision petition and set aside the orders
passed by the State Commission as well as the District Forum. The petitioner Bank
shall be at liberty to calculate the outstanding amount liable to be charged from the
complainant in accordance with the terms and conditions settled between the
parties and then to take steps to recover the said amount in accordance with due
process of law. The consumer complaint in question is, therefore, found to be
frivolous and is ordered to be dismissed.
All Offices/Branches are advised to take a careful note of the above judgements and
act accordingly.

(D P Panda)
General Manager
(Law & Recovery)

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