HIGHLIGHTS OF BANKING CASES JOURNAL JULY 2014

BC. JULY 2014                           Subject Index (Topic Wise)

ADMINISTRATIVE LAW —In matters ofpolicy decisions of Government in respect of economic matters, Courts cannot interfere unless such policy is contrary to Constitution.

Holy star Natural Resources Pvt. Ltd, v. Union of India     (Delhi HQ (DB) 233

ALTERNATIVE REMEDY — Enforcement of Security Interest — Secured creditor can proceed against any of the securities and borrower can have no objection — Remedy under Section 17 of Act is an efficacious remedy and High Court should not ordinarily interfere

under Articles 226 and 227 of Constitution      [See SARFAES1 Act, 2002—Sections 17,

13(2), (4)]

Santosh Sheetgrah Pvt. Ltd. v. Syndicate Bank & Ors. (Allahabad HQ (DB) 160

APPEAL AGAINST ACQUITTAL — In face of admission of accused that he had issued cheque not as a gift to complainant, but towards purchase of land, accused was obliged to see that cheque was honoured — Faced with prospect ofbeing convicted and there being no defence open, accused may take defence of this type and allege that cheque was issued for something else — If such defences were to be accepted, it would be impossible to achieve object for which Section 13S was brought on statute — Findings of Magistrate thoroughly improbable and unsustainable.

Vithal Tulshidas Zalmi v, Baswaraj Kedarji & Anr,   (Bombay HQ 170

ARBITRATION LAW — Commencement of arbitration proceedings — Bank guarantee

—  Suit for return of margin money along with interest and cost—Dispute between plaintiff and'MGC' (member 'DSE')—'DSE' failed to andactively opposed any attempt to arbitrate dispute between plaintiff' MGC' —It cannot rely on furnishing of Bank guarantee to secure possible arbitral award to delay its obligation to pay plaintiff sum of Rs. 78 lacs — Counter proforma of Bank guarantee was in tune with parties' obligation under compromise order— There was no reason for 'DSE' to reject that proforma— Observations made by Court do not touch upon validity of'MGC's' claim against plaintiff for an amount of Rs. 3,49,530/

—               plus interest -— This has not yet been settled by an arbitral Tribunal as mandated and may be gone into in future m accordance wtih\aw —Tailure to initiate any steps after Order and insistence by 'DSE' that arbitration had been conducted and initiated, relying on previous award which was set aside by AD J, also betrays attempt to block applicant's legitimate rights

—   Inaction to commence arbitration proceedings immediately after compromise order of 28.5.2007 means cause of action to do so has become time-barred in view of Section 37 of Arbitration Act, 1940, as well as Section 43 of Arbitration and Conciliation Act, 1996, read

with Section 3 of Limitation Act      /See Arbitration and Conciliation Act, 1996 —Sectloit

43]

Delhi Stock Exchange Asson. Ltd. v. Hari Om Maheshwari (Delhi HC) (DB) 172

AUCTION SALE — Conducted by Authorised Officer being pre^ttwiditated and itl fraudulent manner colluding with BMW Industries and respondent No. 6 — Sale vitiated and liable to be quashed — No documentary evidence to show that Authorised Officer had fixed reserve price of property to be sold before sale was conducted — Appellants were unaware of mode of sale to be adopted by Authorised Officer and date of sale —■ Respondent No. 1 after selling the secured assets left residual in the custody of BMW industries — No evidence on record to show that Authorised Officer pubtished any notice informing public at large to sell secured assets by way of private treaty — Secured assets would not have fetched the best possible price [See SARFAESI Act, 2002^Sections 13(2), 13(4), 18]

Coventry Spring & Engineering Co. Ltd. v. ARC I Ltd, (DRAT—Mumbai) (DRAT) 40

—■ Setting aside — Mortgaged Properties — Compromise — Redemption of mortgage — Borrower/mortgagor directed to pay Rs. 5.5 lacs as compensation interest to appellant/ auction purchaser — Besides deposit of said amount of Rs. 5,5 lacs, borrower/mortgagor deposited Rs. 5.5 lacs through pay order with Registrar of DRT-III, Delhi — Since amount of Rs. 5.5 lacs deposited by borrower/mortgagor with State Bank of Patiala for payment to auction purchaser has not been paid to him and lying in deposit with it — Tribunal rightly directed for refund of said amount to borrower—This does not warrant any interference in review — No mistake apparent on face of record is seen in order.

Hem Chand Aggarwal v. Oriental Bank of Commerce (DRA T — Delhi) (DRA T) 37

BENAMI TRANSACTIONS — Prohibition of Benami transaction —■ Suit property claimed by defendants to have been transferred to plaintiff for consideration paid by defendant No. 3 — Suit transaction would be Benami transaction which is prohibited under Section 3(1) of Act—Right to recover property by defendant No. 3 held Benami by plaintiff is prohibited by Section 4 of Act •— In view of prohibition of Benami transaction plaintiffs as owners must be taken to be owners — Court would not be enjoined to consider claim of defendant No. 3 as party who is stated to have provided consideration, actually paid by

BENAMI TRANSACTIONS — Prohibition of Benami transaction (Contd.)

plaintiffs to original land owners [See Benami Transactions (Prohibition) Act, 1988—

Sections 4(1), 3(1)]

Hanif Gulamali Somji v. Purnima Agro Projects Pvt. Ltd.    (Bombay HC) 103

CHEATING—Criminal Breach of Trust—Dishonour of Cheque—No document proved to show that any money was entrusted to accused persons — There is heavy transaction of money — Appellate Court rightly found that in absence of any documentary evidence in this

regard only oral evidence could not be relieved upon   .[See Indian Penal Code, I860 —

Sections 406, 420]

Raju Mahato v. State of Jharkhand & Ors.         (Jharkhand HC) 158

—Dishonour of Cheque—'Account closed' at the instance of Commercial Tax Department in the year 2005—Cheque issued on 10.6.2007—Complaint for offence under Section 13 8, N.I. Act cannot be maintained — Accused acquitted for offence under Section 138 of N.I. Act.

Chandran M. v. Raj anna Gowda                          (Karnataka HC) 118

COMPANY LAW—Company in liquidation—Release and relinquishment of leasehold rights — Properties mortgaged with Bank - secured creditor — Disposal of — Lease hold rights in respect of plots ■— Settlement of Bank with owners of plot — Permission sought to release mortgaged rights in favour of owners on receipt of Rs. 1.40 crores — DRT already granted permission — Order of Company Court consequential to such permission — Such order necessary as otherwise Official Liquidator or Bank would not be able to fetch any

income from mortgaged property —• No objection raised by Official Liquidator   [See

SARFAESIAci, 2602—Sections 13(2), 13(4)]

Nagindas Kgsiitrchand v. Official Liquidator, High Court of Bom. (Bombay HC) 34

COMPROMISE ORDER —■ Commencement of arbitration proceedings—Bank guarantee —■ Suit for return of margin money along with interest and cost—Dispute between plaintiff and 'MGC' (member 'DSE')—'DSE' failed to and actively opposed any attemptto arbitrate dispute between plaintiff'MGC' — It cannot rely on furnishing of Bank guarantee to secure possible arbitral award to delay its obligation to pay plaintiff sum of Rs. 78 lacs — Counter proforma of Bank guarantee was in tune with parties' obligation under compromise order— There was no reason for 'DSE' to reject that proforma -— Observations made by Court do not touch upon validity of'MGC's' claim against plaintiff for an amount of Rs. 3,49,530!

-  plus interest—This has not yet been settled by an arbitral Tribunal as mandated and may be gone into in future in accordance with law — Failure to initiate any steps after order and insistence by 'DSE' that arbitration had been conducted and initiated, relying on previous award which was- set aside by ADJ, also betrays attempt to block applicant's legitimate rights  [See Civil Procedure Code, 1908 — Order 23 Rule 3]

Delhi Stock Exchange Asson. Ltd. v. Hari Om Maheshwari (Delhi HC) (DB) 172

—    Parties cannot revenge from their compromises, transformed through an order of the Court under Order 23 Rule 3, CPC,

Delhi Stock Exchange Asson. Ltd. v. Hari Om Maheshwari (Delhi HC) (DB) 172

CONSTITUTIONAL LAW—Constitutional Limit of Delegated Legislation—Delegation CONSTITUTIONAL LAW — Constitutional Limit of Delegated Legislation (ContiL)

is valid only when legislative policy and guidelines to implement it are adequately laid down and delegate is only empowered to carry out policy within guidelines laid down by Legislature — Legislature cannot delegate essential legislative functions, which consist in determination of or choosing of legislative policy and formally enacting that policy into binding rule of conduct.

Holystar Natural Resources Pvt. Ltd. v. Union of India     (Delhi HC) (DB) 233

—  Constitutionality of Enactment—Presumption is always in favour of constitutionality of enactment — Burden heavily lies on person who assails constitutionality of provision.

Holystar Natural Resources Pvt. Ltd. v. Union of India      (Delhi HC) (DB) 233

—    Non-Performing Assets (NPA) — Constitutionality of enactment — Provisions of Section 2(l)(o) of SARFAESI Act and RBI circular dated 1.7.2013 not violative of Arts. 14 and 19(l)(g) of Constitution of India — Petitioner could not place any convincing material to show Section 2(l)(o) of Act and RBI circular dated 1.7.2013 are unreasonable, arbitrary or otherwise repugnant to constitutional principle,

Holystar Natural Resources Pvt. Ltd. v. Union of India      (Delhi HC) (DB) 233

—Repugnancy—Gujarat Stamp Act, 1958—Circular dated30.4.2011 issued by respondent No. 3 is held ultra vires provisions of Gujarat Stamp Act and Article 265 of Constitution of India.

Canara Bank v. Collector of Stamps cfe Ors.    (Gujarat HC) (DB) 89

CRIMINAL BREACH OF TRUST—Cheating—- Dishonour of Cheque—No document proved to show that any money was entrusted to accused persons — There is heavy transaction of money —Appellate Court rightly found that in absence of any documentary

evidence in this regard only oral evidence could not be relieved upon         [See Indian Penal

Code, 1860 — Sections 406, 420]

Rajn Mahato v. State of Jharkhand A Ors.         (Jharkhand HC) 158

CRIMINAL TRIAL—Cardinal Rule—Parties at the trial receiving equal fair opportunity, to place respective case before Court by adducing evidence relating to matters in question, as made permissible under provisions of procedural law.

Tikaram v. Shruti Swapnil Choudhary & Anr.         (Bombay HC) 257

CROSS-EXAMINATION — Refusal to grant permission — Denial of opportunity to petitioners in putting forth their case before Tribunal to be looked into by DRAT — Permission granted to petitioners to file additional affidavit by way of further evidence of petitioners to proceed in matter in accordance with law.

Shh'aganga Leather Crafts & Ors. v. Canara Bank (Karnataka HC) 70

DISHONOUR OF CHEQUE — Appeal against acquittal — In face of admission of accused that he had issued cheque not as a gift to complainant, but towards purchase of land, accused was obliged to see that cheque was honoured — Faced with prospect of being convicted and there being no defence open, accused may take defence of this type and allege

that cheque was issued for something else       [See Negotiable Instruments Act, 1881 —

Section 138}

Vithal Tulshidas Zalmi v. Baswaraj Kedarji & Anr.   (Bombay HC) / 70

(342)

Cheating — 'Account closed' at the instance of Commercial Tax Department in the year 2005 — Cheque issued on 10.6.2007 — Complaint for offence under Section 138, N.I, Act cannot be maintained — Accused acquitted for offence under Section 138 of N.I, Act — Appellant to take appropriate steps to approach Court for offence under Section 420, IPC.

Chandran M. v, Rajanna Gowda               ,            (Karnataka HC) 118

—   Cheques issued for consideration — Respondent - accused failed to discharge statutory onus placed on him to prove that cheques in question were without consideration — Evidence produced by complainant - appellant clearly proves that sum ofRs. 6,71,326/- was due to complainant—Impugned orders set aside—Respondent - accused is convicted under Section 138 of N.I. Act and sentenced to undergo R.I. for 3 months each in both complaints.

Vijay Power Generators Ltd. v, Annai Engineering Works & Anr. (Delhi HC) 216

—    Criminal Breach of Trust — Cheating — No document proved to show that any money was entrusted to accused persons—There is heavy transaction of money—Appellate Court rightly found that in absence of any documentary evidence in this regard only oral evidence could not be relieved upon — No reason for convicting accused persons for offence under Section 420, IPC on same very allegation—No cheque was seized by Investigating Officer nor produced by prosecution — Dishonour of alleged cheque not proved by prosecution — Ingredients for offenpe under Section 138 of N.I. Act could not be proved.

Raju Mahato v. State ofJhariMartd & Ors.          (Jharkhand HC) 158

—   Ingredients of offence.

Chabi Bhoralee v. State of Assam & Anr,                (Gauhati HC) 121

—■ Ingredients required to be fulfilled •— Discussed.

Sri Ajay Sharda v. State of U. P. & Anr.              (Allahabad HC) 149

—     Issue of Process — Challenge against — Prosecution initiated in spite of payment of demand notice within time — Entirejjn.0unt of cheque paid to payee — Complaint filed to recover Gertain other amounts from applicant which are said to be due and payable by her "to respondent No. 2 — Even if such amounts are due, applicant cannot be prosecuted for Offence under Section 138 of N.l. Act as amount of cheque already paid and conditions requisite for initiating prosecution under Section 138 not fulfilled — Fit case to quash prosecution in exercise of inherent powers.        *

Sunita Gajanan G ulawe v. State of Maharashtra & Anr.   (Bombay HC) HI

—   Joint Trial — Multiple cheques — Single complaint — Maintainability — Ten cheques simultaneously presented to banker on the same day and dishonoured on the same very day —Consolidated notice for all cheques issued calling upon drawer to make good the payment of these cheques, does not suffer from the vice of joinder of many offences in one trial — It cannot be said that ten offences have been committed by the accused and therefore, Section 219, Cr.P.C. does not come into piay,

Charashm Kumar Talwani v. Malhotra Poultries    (P&H HC) (DB) 135

—  Multiple cheques — Single complaint — Maintainability — In the case of dishonour of multiple cheques presented together forwhieh a consolidated single notice issued, tantamounts (via)   BANKING CASES         July—2014

DISilONOlillOF CHEQUE—Multiple chequcs— Single complaint — Maintainability (Contd.)

to commission of a single offence under Section 138 after prescribed period of receipt of notice on non-payment of the amount of cheques — A single complaint is maintainable for all these dishonoured cheques.

Char ash ni Kumar Talwani v. Malhotra Poultries   (P&H HC) (DB) 135

—  Notice — Second notice not sent on correct address—No street number or house number mentioned -— Registered cover received back by complai-nant — No postman examined to prove that respondent refused to receive this registered cover — Not an iota of evidence on record to show legal notice sent on correct address — No presumption that notice has been served upon respondent ■— Impugned judgment correct as per law and upheld.

A jay a Industries v. Gulshan Rai Malhotra                 (P&H HC) 154

■— Offence by Company — Complaint filed against Managing Director and Director of company without arraigned company as accused — Cheque was issued by company for repayment of loan — Complaint not maintainable in view ofApex Court decision i nAnceta Hada 's case — Conviction set aside.

B.L. Boolani v. Vasanth Kumar Banger a                (Karnataka HC) 111

—Offence by Company—Issue of Process—Petitioner is Managing Director of Company and responsible to company for managing its day-to-day affairs — Requirements of provisions of Section 202, Cr.P.C. complied with by Court below in terms of order passed by this Court -— It is for petitioner to prove that he is not liable to be prosecuted on plea that offence was committed without his knowledge or he exercised all due diligence to prevent commission of alleged offence during trial and that Court be adjudged within scope of Section 202, Cr.P.C.

Paw an Kumar Agarwal v. State of West Bengal & Anr.      (Calcutta HC) 133

—   Offence by Company — Liability of Director — Merely because one is a Director of company is not sufficient to make him liable under Section 141 ofN.I. Act—Director cannot be deemed to be in-charge of and responsible to company for conduct of its business — Specific averments to be made against accused - Director — Cognizance against petitioner quashed,

Chabi Bhoralee v. State of Assam & Anr,               (Gauhati HC) 121

—   Offence by Company -— Liability of Directors -— Issue of process—- Accused Nos, 3 to 12 were Directors of accused No. 1 - Company — All the accused were in-charge of and responsible for conducting business of accused No. 1 in relation to subject matter of complaint and transaction under offence — There was no error in issue of process-— Applicants may be unable to show that complaint cannot proceed against them — Defences raised may be proved at the time of trial — No justification to discharge applicants.

Salil Dinkarrai Gandhi v. Osmanabad District Central Co-operative Bank Ltd.

(Bombay HC) 206

■— Offence by Company — Territorial jurisdiction — Petitioner was in-charge of and responsible for conduct of affairs of company — If five different acts done in five different localities, anyone of the Courts exercising jurisdiction in one of the five local areas can become place of trial for offence under Section 138 of N.I. Act — Complainant will have (344)

DISHONOUR OF CHEQUE — Offence by Company — Territorial jurisdiction (Conld.)

right in any of the five local areas where cause of action has arisen — Courts having jurisdiction over anyone of the local areas within territorial limits of any of the five acts was done to try the case.

Sri Ajay Sharda v. State ofU.P.& Anr,                (Allahabad HC) 149

—   Offence by Firm — Notice — Company can be 'drawer' of cheque as Well as juristic person committing offence under Section 138 ■— Notice against firm can be deemed to be a notice against all its instrumentalities—No separate notice needto be issued individually under Section 138(b) against each partner.

Susan Zachariah v, Muthoot Capital Services Ltd.      (Kerala HC) 72

—   Offence by Firm — Vicarious liability — All partners cannot be held liable for offences committed by firm—Only those partners who were in-charge of and responsible for conduct of business of firm at time of commission of offence alone can be held liable.

Susan Zachariah v. Muthoot Capital Services Ltd.      (Kerala HC) 72

—   Offence by Firm — Vicarious liability — When offence under Section 138 is committed by a firm and it is proved that offence was committed with the 'consent' or 'connivance' of or is attributable to any 'neglect' on the part of any partner, manager or other officer of firm, he would be deemed guilty of that offence and liable to be proceeded against.

Susan Zachariah v. Muthoot Capital Services Ltd.      (Kerala HC) 72

—   Offence by Firm — Vicarious liability — No averment that petitioners being partners were in-charge of and were responsible to firm for the conduct of business of firm, at the time when offence was committed—Petitioners will not fall under Section 141 (1)—Complaint against petitioners quashed.

Susan Zachariah v, Muthoot Capital Services Ltd.      (Kerala HC) 72

—   Offence by Firm — Vicarious liability — When offence under Section 138 is alleged against partner who has not signed cheque and who allegedly consented and connived to issue the cheque, to make that partner vicariously liable for acts of firm, it is obligatory on part of complainant to make specific allegation of 'acts' or conduct, neglect and omission constituting offence — Averment must also contain specific allegation of his acts deeds as to how and in what manner that partner was responsible for conduct of business of firm.

Susan Zachariah v. Muthoot Capital Services Ltd.      (Kerala HC) 72

—  Offence by Firm — Vicarious liability — When silent partners are specifically <r".eluded from the day-to-day responsibility, they are not liable to be proceeded against, in absence of positive averments indicating their involvement in commission of offence contravening exclusion clause of partnership deed averments in complaint against petitioners do not satisfy statutory requirements under Section 141 —Allegation confined in one sentence with words 'consent' and 'connivance' adopted from section alone does not constitute or disclose offence alleged against them in absence of other 'facts' constituting offence — Complaint against petitioners quashed.

Susan Zachariah v. Muthoot Capital Services Ltd.      (Kerala HC) 72

GOVERNMENT CONTRACT — Construction of bus stand — Cancellation of lease  agreement — At no stage, appellant had any privity of contract with IDA — 'MPRTC' entered into s B0T contract with appellant contrary to terms and conditions of lease which provided specifically that land shall be used for constructing bus stand-cum-commercial complex — 'MPRTC' had no legal right to create any further right in favour of appellant with regard to receiving of premium on constructed units sold, to third parties — 'MPRTC' would not be in a position to continue with lease as it is heavily indebted presently — Even proposed site where bus stand-cum- commercial complex was to be constructed is under attachment — Claim made by appellant is in nature of damages for breach of contract and/ orrelief ofspecific performance of contract—Appellant willhaveno cause of action against IDA as there is no privity of contract between parties — Lease has come to an end by efflux of time —- Even otherwise, these are issues which would involve adjudication of disputed questions of fact which can only be suitably adjudicated in civil suit as directed by High Court in impugned judgment -— Appellant shall be at liberty to seek its remedies against 'MPRTC' for breach of contract.

Sri Ram Builders v. State of M.P. & Ors.  (Supreme Court of India) 186

GUARANTOR'S LIABILITY — Time barred debt — Acknowledgement of debt by principal borrower — Extension of limitation qua guarantor — Continuing guarantee — Acknowledgement of debt by principal borrower waives earlier demands made against guarantors because by acknowledgement executed there is no default of principal borrower

and existence of which is sine qua non for liability of guarantors to commence    .[See

Limitation/

Subhash Chand & Anr. v. State Bank of Patiala & Anr.      (Delhi HC) 266

INTEREST — Rate of, to be chargeable by Bank — Determination — Default in payment ofEMIs—While contesting S.A., it was Bank's case to be entitled to future interest @ 7.25% p.a. — During proceeding of S.A. before Tribunal also, neither any claim qua compounding of interest made nor interest was claimed @ 27% p.a.—Claim of interest with compounding effect made for the first time before this Tribunal in this appeal is not acceptable — Rate of interest payable by appellants is fixed @ 10% p.a. on reducing balance basis — Appellants directed to pay interest w.e.f. 25.8.2006.

Vikas Vij&Anr. v. Standard Chartered Bank & Ors. (DRAT — Delhi) (DRAT) 7

INTERPRETATION OF STATUTES — Taxing statute —-_Qne and th^onlv proper test would be that the question is not at what transaction the sceriefrtSWuned, but whattransaction its language according to its natural meaning fairly and squarely hits.

Canara Bank v. Collector of Stamps & Ors.  . (Gujarat HC) (DB) 89

ISSUE OF PROCESS —Dishonour of Cheque — Offence by Company — Petitioner is Managing Director of Company and responsible to company for managing its day-to-day affairs—Requirements of provisions of Section 202, Cr.P.C. complied with by Court below

in terms of order passed by this Court       [See Negotiable Instruments Act, 1881 —

Sections 138, 141]

Pawan Kumar Agarwal v. State of West Bengal & Anr.       (Calcutta HC) 133

JUDICIAL REVIEW — Contractual matters — Scope of judicial review is very limited

JUDICIAL REVIEW — Contractual matters — Scope of judicial review (Coittd.)

in contractual matters even where one of contracting parties is State or instrumentality of State — Appellant can seek appropriate relief by way of civil suit—High Court in exercise of its jurisdiction under Article 226 of Constitution of India would not normally grant relief of specific performance of contract.

Sri Ram Builders v. State of M.P. & Ors.  (Supreme Court of India) 186

—  In fiscal matters and/or where discretion is conferred on high ranking statutory authorities like RBI, Courts do not ordinarily interfere with in exercise of power of judicial review.

Holystar Natural Resources Pvt. Ltd. v. IJnion of India    (Delhi HC) (DB) 233

LEGAL MAXIM — "Actus curiae neminem gravabit" — Meaning of— "An act of the Court shall prejudice no one".

Delhi Stock Exchange Asson. Ltd. v. Hari Om Maheshwari (Delhi HC) (DB) 172

LIMITATION — Time barred debt — Acknowledgement of debt by principal borrower —Extension of limitation qua guarantor — Continuing guarantee — Acknowledgement of debt by principal borrower waives earlier demands made against guarantors because by acknowledgement executed there is no default of principal borrower and existence of which is sine qua non for liability of guarantors to commence — Once suit against principal borrower is held to be within limitation, suit against appellants/guarantors is also within limitation, inasmuch as suit is not filed as against appellants/guarantors after 3 years of making of demand after signing of acknowledgement of debt letter dated 21.7.1994.

Subhash Chand & Anr. v. State Bank of Patiala & Anr.       (Delhi HC) 266

QUASHING OF PROCEEDINGS — Dishonour of cheque — Power of Attorney — Complaint filed by power of attorney holder of proprietor of firm — He is in-charge of the business ofpayee-complainant firm and is personally aware ofthe transactions—Complaint is signed by him on behalf of the payee-complainant firm — He can be examined as the complainant — Complaint cannot be quashed.

'                                           JL         '

Rifakat Ali Choudhar}> v. State of Rajasthan & Anr.         (Rajasthan HC) 115

RECALL OF WITNESS—Dishonour of Cheque—Application for examination rejected en ground that application failed to disclose relevancy of evidence proposed to be adduced in case — Impugned order cannot be faulted — In interest of justice, opportunity granted to applicant to apply afresh incorporating reason for which he intends to adduce evidence of witness for which he is seeking summons.

Tikaram v. Shruti Swapnil Choudhary & Anr.          (Bombay nC) 257

RECOVERY OF DEBT AMOUNT -— Suit decreed with costs — Suit decided in favour of plaintiff to extent that plaintiff is entitled to recover Rs. 24,90,000/- along with interest

—  Interest to be calculated from dates when amounts were debited from account of plaintiff i.e. 29.6.2007 to 31.7.2007 at rate on which Bank would have awarded interest to plaintiff —This has to be as per terms agreed upon between plaintiff and defendant - Bank at the time and in terms of execution of agreement entered for preparation of FDRs — Plaintiff is also entitled to recover sum of Rs. 1,100/- as costs of notice.

Sham Mahajan v. H.P. State Co-operative Bank Ltd. & Anr. (HP HC) 258

RDDBFI — Company in Liquidation — Only DRT has exclusive j urisdiction in respect of subject matter of such recovery proceedings —- Company Court cannot dispose of such immovable property of company in liquidation in favour of Bank and Financial Institutions and distribute sale proceeds thereof — This Court cannot sanction any sale in favour of such secured creditors in respect of properties of company in liquidation.

Nagindas Kasturchand v. Official Liquidator, High Court of Bom. (Bombay HC) 34

—  Cross-examination — Denial of opportunity—Matter remitted for reconsideration after permitting cross-examination of AW 1.

Shivaganga Leather Crafts & Ors. v. Canara Bank  (Karnataka HC) 70

RBI'S DIRECTIONS AND GUIDELINES -— Have statutory flavour and Banks have to abide by them.

Holystar Natural Resources Pvt. Ltd. v. Union of India      (Delhi HC) (DB) 233

SARFAESI — Assignment of debt — Fully governed by provisions of Section 5 of Act •— Section 13 is only for enforcement of security interest — DRT has nothing to do with issue of assignment of debt, while dealing with application of petitioner under Section 17( 1) of Act

—  Petitioner unnecessa-rily prolonging the dispute on one pretext or other—Plea on which writ petition filed is completely misconceived •— Costs of Rs. 50,000/- imposed on petitioner.

Rita Machine (I) Ltd. v. DRAT & Ors.                   (P&H HC) (DB) 81

—Auction Sale — Conducted by Authorised Officer being pre-meditated and in fraudulent manner colluding with BMW Industries and respondent No. 6 — Sale vitiated and liable to be quashed—No documentary evidence to show that Authorised Officer had fixed reserve price of property to be sold before sale was conducted—Appellants were unaware of mode of sale to be adopted by Authorised Officer and date of sale—RespondentNo. 1 after selling the secured assets left residual in the custody of BMW Industries—No evidence on record to show that Authorised Officer published any notice informing public at large to sell secured assets by way of private treaty — Secured assets would not have fetched the best possible price       [See SARFAESI Act, 2002—Sections 13(2), 13(4), 18]

Coventry Spring c& Engineering Co.. v. ARCILtd. (DRAT — Mumbai) (DRAT) 40

—Auction Sale — Setting aside — Authorised Officer did not serve any advance notice of 30 days of proposed sale to borrower—Non-compliance of mandatory Rules 6(2) and 8(6) of Rules—Authorised Officer sold immovable suit property without any demarcation with proper mark of identification — Sale is vitiated — If impugned sale is conducted by Authorised Officer in violation of Rules, it cannot be protected in the name of equity .

Soma Papers and Industries Ltd. v. Bank of India (DRAT-—Mumbai) (DRAT) 12

—   'Conveyance' —■ Stamp Duty — Recovery of deficit amount—Order passed by District Magistrate or Chief Metropolitan Magistrate under Section 14 of 2002 Act could not be termed as an⁴ instrument' as defined under Section 2(g), (i) of Gujarat Stamp Act—Noright or liability is created in favour of secured creditor so as to bring it within sweep of definition of'conveyance' as defined in Section 2(g) of 1958 Act — Similarly, Panchnama drawn at the time of taking over of physical possession of secured asset pursuant to order passed by District Magistrate or Chief Metropolitan Magistrate under Section 14 of 2002 Act, would

SARFAESI — 'Conveyance' — Stamp Duty — Recovery of deficit amount (Contd.)

also not create any special right in favour of secured creditor so as to bring such Panchnama within the sweep of definition of term 'instrument' under Section 2(i) of 1958 Act       [See

SARFAESI Act, 2002— Sections 13(4), 14]

Canara Bank v. Collector of Stamps & Ors.        (Gujarat HC) (DB) 89

—  Declaration of account as non-performing asset — Default in repayment of loan amount

—   Dispute is between appellant Bank and respondent—State Financial Corporation is not included within definition of'financial institution' given in Section 2(1 )(m) of SARFAESI Act — "Nothing on record to show that respondent is financial institution — Provision of Section 11 of SARFAESI Act not attracted.

State Bank ofPatialav. Haryana State Industrial & Infrastructure Development Corpn. Ltd.                                                               (DRA T — Delhi) (DRA T) 9

—   Non-Performing Assets (NPA) — Classification of account — Legislature has clearly defined NPA under Section 2(1 )(o) of SARFAESI Act — RBI guidelines are issued to improve quality of assets of Bank and recover public money speedily — No excessive delegation or scope for Banks to act upon basing on their whims and fancies [See SARFAESI Act, 2002— Section 2(1) (o)]

Holystar Natural Resources Pvt. Ltd, v. Union of India     (Delhi HC) (DB) 233

—    Non-Performing Assets (NPA) — Constitutionality of enactment — Provisions of Section 2(I)(o) of SARFAESI Act and RBI circular dated 1.7.2013 not violative of Arts. 14 and 19(l)(g) of Constitution of India — Petitioner could not place any convincing material to show Section 2(1 )(o) of Act and RBI circular dated 1.7.2013 are unreasonable, arbitrary or otherwise repugnant to constitutional principle,

Holystar Natural Resources Pvt. Ltd. v. Union of India      (Delhi HC) (DB) 233

—   Non-Performing Assets (NPA) — Declaration of account — Section 2(l)(o) is neither unreasonable nor violative of Arts. 14 and 19(l)(g) of Constitution — Section 2(1 )(o) of SARFAESI Act clearly defines NPA as an asset or an account classified as sub-standard, doubtful or loss asset-—Indian Parliament while enacting SARFAESI Act has not delegated essential legislative function to RBI/Financial Institution with regard to concept of NPA — Impugned circular dated 1.7.2013 issued by RBI which provides guidelines for determining

NPAs, is in conformity with Section 2(l) (o) of SARFAESI Act        [See SARFAESI Act, 2002— Sections 2(1) (o), 13(4)]

Holystar Natural Resources Pvt. Ltd. v. Union of India      (Delhi HC) (DB) 233

—    One Time Settlement — Rejection of request — Declaration of account as Non- Performing Asset—Micro, Small and Medium Enterprises (MSME) Scheme—Entitlement of petitioner to take benefit—Reserve Bank of India guidelines applicable to petitioner — Impugned demand does not refer to reasons based on which decision has been arrived at by respondent-Bank to come to conclusion that petitioner does not fall under category of MSME — Same liable to be quashed — Directions issued to respondent Bank to reconsider case of petitioner taking into consideration materials on record.

Hotel Paraag Ltd. v. State Bank of India             (Karnataka HC) 220

—   Possession Notice—Invocation of writ jurisdiction to remove locks and setting aside of  possession notice—Possession of mortgaged property taken by Bank—Dispute regarding identification of property — Conclusive decision on identification and title of property may require evidence — Respondent No. 1 directed to hand over possession of property sealed within 15 days to petitioner subject to adjudication of title of property from competent DRT

—   DRT shall examine evidence to be led and/or documents produced by parties to identify property mortgaged in favour of respondent No. 1 - Bank.

Daljit Kattr v. State Bank of India & Ors.           (P&H HC) (DB) 2 71

—Recovery ofhousing loan amount—Petitioner ready to liquidate remaining dues of Bank

—  Bank is advised to fix up easy instalments for petitioner to liquidate its dues — Bank shall not take any coercive action till the defaults in payment of instalments,

Ramkrit Ram v. State Bank of India                         (Patna HC) 129

—   Secured Assets — Authorised Officer while selling secured assets has to sell the same in transparent and fair manner which can fetch the best possible price — Borrower should be acquainted with mode of sale, date of sale and reserve price of property.

Coventry Spring de Engineering Co. v. ARC!Ltd. (DRAT— Mumbai) (DRAT) 40

—    Security Interest — Enforcement of — Alternative efficacious remedy — Secured creditor can proceed against any of the securities and borrower can have no objection — Remedy under Section 17 of Act is an efficacious remedy and High Court should not ordinarily interfere under Articles 226 and 227 of Constitution — Petitioner has an alternative remedy to adjudicate his grievance against proceedings initiated by respondent- Bank under Section 13(4) by approaching DRT under Section 17 — No good reasons to interfere in matter.

Santosh Sheetgrah Pvt. Ltd. v. Syndicate Bank & Ors. (Allahabad HC) (DB) !60

—   Security Interest—Enforcement of— Declaration of company as sick— Suspension of legal proceedings— Non-entitlement— Reference under Section 15 of 1985 Act remains pending— Secured creditors fully empowered to take measures under Section 13(4) of2002 Act in accordance with third proviso to Section 15 of 1985 Act-- Reference cannot be said to be not pending after its registration under Section 15 of 1985Act or after declaration of company as sick unit   /See SARFAESI Act, 2002— Sections 13(2), 13(4)}

Uniword Telecom Ltd. & Anr. v. State of U.P. & Ors.         (AllahabadHC) (DB) 1

—  Security Interest—Enforcement of — Notice—Writ jurisdiction — Secured assets not agricultural land but industrial land where factory of second petitioner existed — First ground raised by petitioners that respondent No. 1 - Bank is not a 'Public Financial Institution' or ' Bank' as defined under Sections 2(m) and 2(c) of Act is neither bona fide nor justified — Process of this Court is invoked only for securing an ex parte interim relief to stall confirmation of sale, which has already taken place — Writ petition is misconceived.

Bommidala Purnaiah Tobacco Pvt. Ltd. v. Export Import Bank of India ' (AP HC) (DB) 62

—   Security Interest — Enforcement of — Refund of Amount — Default in repayment of loan amount — Declaration of account as NPA — Appellants are neither borrowers nor

SARFAESI — Security Interest — Enforcement of — Refund of Amount (Contd.)

guarantors or mortgagors of any property qua loan with any of the Banks — Appellants are bona fide purchasers of property in question for value without notice — Alleged equitable mortgage of that property with both Banks is invalid being vitiated by fraud and Court be enforced under provisions of SARFAESI Act—Tribunal below seriously erred in disposing of S.As. filed by appellants by directingthem to make deposits with Bank—Measures taken by both respon dent - Banks for enforcement of its security interest qua-property in question on basis of its alleged mortgage with them were not in accordance with provision of SARFAESI Act and were bad in law — Impugned orders set aside—Appellants entitled for refund of Rs. 10 lacs deposited by them pursuant to Tribunal's order with interest.

Anita & Anr. v. State Dank of India            (DRA T — Delhi) (DRA T) 1

— Statement of Objects and Reasons — Main purpose of Act is to enable and empower secured creditors to take possession of their securities and to deal with them without intervention of Court — It aims at expeditious recovery of NPAs of Banks and financial institutions.

Holystar Natural Resources Pvt. Ltd. v. Union of India     (Delhi HC) (DB) 233

STAMP DUTY—'Conveyance'—Recovery of deficit amount—Order passed by District Magistrate or Chief Metropolitan Magistrate under Section 14 of 2002 Act couid not be termed as an 'instrument' as defined under Section 2(g), (i) of Gujarat Stamp Act — No right or liability is created in favour of secured creditor so as to bring it within sweep of definition of 'conveyance' as defined in Section 2(g) of 1958 Act — Similarly, Panchnama drawn at the time of taking over of physical possession of secured asset pursuant to order passed by District Magistrate or Chief Metropolitan Magistrate under Section 14 of 2002 Act, would also not create any special right in favour of secured creditor so as to bring such Panchnama within the sweep ofdefinition ofterm 'instrument' under Section 2(i) of i 958 Act—Circular dated 30.4.2011 issued by respondent No. 3 is held ^{tmmres provisions of Gujarat Stamp

Act and Article 265 of Constitution of India   [See SARFAESI Act, 2002— Sections

13(4), 141

Canara Bank v. Collector of Stamps & Ors.        (Gujarat HC) (DB) 89

STATE FINANCIAL CORPORATIONS — Possession of mortgaged properties — Restoration of possession — Petitioner is not borrower but auction purchaser—Impugned

action of respondents under Section 29 of Act is quashed   [See State Financial

Corporations Act, 1951 — Section 29]

Ramesh Chander v. Punjab Financial Corporation & Anr. (P&H HC) (DB) 263

TAXATION — Principles—Taxing or fiscal statute demands strict construction — Rule ¹ of construction of a charging section is that before taxing a person it must be shown that he falls within the ambit thereof by clear words used as no one can be taxed by implication.

Canara Bank v. Collector of Stamps <4 Ors.       (Gujarat HC) (DB) 89

TENDER — Bid — Rejection — Lack of sufficient experience — Supply of security holograms to Excise Department — Five years' experience in use of origination systems — Eligibility criteria not fulfilled — Petitioner chose to bid for tender even when it was fully aware that it was not eligible — Vague allegations of mala fide cannot be held against respondents — Petitioner not entitled to any relief.

Uflex Ltd. v. State of Sikkim & Ors.                    (Sikkim HC) 224

•— Doctrine of waiver and acquiescence — After having participated in tender process, it is not permissible for party to raise objections.

Uflex Ltd. v. State of Sikkim & Ors.       ""             (Sikkim HC) 224

—Notice Inviting Tender—Extension of time for submitting and opening of technical bids

—   Production of requisite documents as per requirements authorities not possible on short notice — Time extended for 10 days for submitting and opening of Technical Bids.

G.L. Agarwalla v. State of Meghalaya & Ors.       (Meghalaya HC) 120

TEST OF REASONABLENESS ■— Application of — Criteria is whether law strikes a proper balance between social contract on one hand and rights of individual on the other hand.

Holystar Natural Resources Pvt. Ltd. v. Union of India      (Delhi HC) (DB) 233

WORDS AND PHRASES —'Person' — Meaning of— Word 'person* includes any company or association or body of person whether incorporated.

Susan Zachariah v. Muthoot Capital Services Ltd.      (Kerala HC) 72

—   'Security Interest', 'Collateral Security' -— Meaning of.

Santosh Sheetgrah Pvt. Ltd. v. Syndicate Bank & Ors. (Allahabad HC) (DB) 160

WRIT JURISDICTION — Correctness or otherwise of the order need not be gone into at this stage.

Shivaganga Leather Crafts & Ors. v. Canara Bank  (Karnataka HC) 70

—Enforcement of Security Interest — Notice — Secured assets not agricultural land but industrial land where factory of second petitioner existed — First ground raised by petitioners that respondent No. 1 - Bank is not a 'Public Financial Institution' or 'Bank' as defined under Sections 2(m) and 2(c) of Act is neither bonafide nor justified — Process of this Court is invoked only for securing an ex parte interim relief to stall confirmation of sale, which has already taken place — Writ petition is misconceived.

Bommidala Purnaiah Tobacco Pvt. Ltd. v. Export Import Bank of India

(AP HC) (DB) 62

—   Quashing and setting aside of order passed by DRT — Violation of principles of natural justice — No effective hearing given to petitioner before delivering judgment — Matter remitted to DRT to decide afresh after taking into consideration submissions of both parties.

Pradeep Kumar v. Debt Recovery Tribunal & Ors. (Jharkhand HC) 143

—   Scope of powers and restrictions in exercise of such power — Availability of alternative remedy does not operate as an absolute bar to entertain writ petition.

Canara Bank v. Collector of Stamps & Ors.        (Gujarat HC) (DB) 89