If the defaulting borrowers are given an opportunity to settle the dues according to an existing policy, it cannot be changed later to their disadvantage, the Supreme Court ruled in the case, Devidayal Castings Ltd vs Haryana Financial Corporation. In this case, two borrowing firms did not repay the loans and therefore they were declared non-performing assets.
In 2005, the corporation promulgated a policy whereby borrowers were given an option to settle their dues on the basis of the principal amount of the outstanding in the loan accounts as on the date on which the accounts were declared as NPA. The two firms were given the offer and asked to deposit 10 per cent of the dues as pre-condition for consideration of their cases. The borrowers accepted the offer.
However, in 2015, the corporation changed the policy and according to the new one, where the value of the securities was more than the settlement amount, the corporation should resort to the sale of the secured properties. Thus the applications of the firms invoking the earlier policy were rejected. They moved the Punjab and Haryana High Court, which dismissed their petitions.
On appeal, the Supreme Court overruled the high court and stated that when the firms have acted on the policy, it could not be departed from. Though non-essential features of a policy could be altered, the core could not be changed. Moreover, the firms showed the Supreme Court that their RTI inquiries had shown that the corporation had departed from the new policy in the cases of several other firms.
Defaulters have no claim on sale price
Defaulting borrowers have no right to claim any share in the proceeds of sale after the lender-bank becomes the owner of the mortgaged property, the Supreme Court ruled in the appeal case, State Bank of Travancore vs R Sobhana. In this case, the bank granted a loan for Rs 15,000 to a couple against an equitable mortgage.
When the loan was not repaid, the bank sold it in auction for Rs 10 lakh. The borrowers claimed a share in the excess amount received by the bank. The request was rejected. The borrowers moved the Kerala high court, which allowed their petition and asked the bank to pay them Rs 6.5 lakh. The high court also made scathing remarks about the attitude of the bank. The Supreme Court expunged the adverse remarks against the bank and ruled that the borrower had no right to the proceeds of the sale.
However, in this case, the husband had died, the widow was paralysed, her daughter was mentally retarded and the son was a psychiatric patient. So the court exercised its extraordinary powers to order the bank to give the widow Rs 5 lakh.
35 years, 61 adjournments in Gujarat
Though it is not rare to find decades-old cases gathering dust in court files, some instances jolt even the conscience of the judges. The first appeal case of Bava Karshan vs State of Gujarat was pending for 35 years in the Gujarat high court and the number of adjournments are 61 and counting.
The reason given for adjournments by the government is that certain documents had to be translated and it has not been done so far. When the hapless petitioner moved the Supreme Court pointing out the situation, the court remarked: "We are extremely shocked to note that as many as 61 adjournments have been granted and the high court has still not been able to dispose of the first appeal pending before it".
The case was pending in the high court since 1981and still translations are not ready. "This is absolutely no justification for adjournments granted for the asking," the order said, and observed that "it is more than high time that justice delivery is taken more seriously by all." The Supreme Court directed that a copy of this order be placed before the chief justice of the high court "to ensure that such unconscionable number of adjournments are not granted."
Bank guarantee cannot be stopped
The Supreme Court last week set aside the judgment of the Gujarat High Court which had restrained Gujarat Maritime Board from invoking an unconditional bank guarantee executed by L & T Infrastructure Development Projects. The maritime board invited bids for development of Sutrapada port, and was issued a letter of intent. Yes Bank gave a bank guarantee.
However, as the project could not be completed, the LoI was cancelled and the bank guarantee was invoked. L& T moved the high court against it and it directed the board from encashing it. In the appeal, Supreme Court stated that according to the terms of the guarantee, the decision of the board is binding on the bank.
The justifiability of the decision is a different matter and the high court could not into disputed questions of facts between the board and L&T. The bank guarantee is a separate contract which could not be linked to the performances of the works contract.
Middlemen to acquire farm lands
The Supreme Court severely indicted the Karnataka government for acquisition of land "hiring middlemen to get lands of the poor agricultural workers in favour of a cooperative society; it is abhorrent and cannot be granted the sanction of law." Narrating a series of gross violations of the land acquisition law, the apex court set aside the 1988 acquisition as reeking in "legal mala fides and legal malice".
It also quashed the high court order upholding the acquisition of agricultural land in Bangalore suburb in the case, R Rajashekhar vs Trinity House Building Coop. The court rejected the argument of public purpose and the doctrine of eminent domain.
Regularisation of contract workers
The Supreme Court has asked BCCL to pay its erstwhile contract workers Rs 1.5 lakh as full and final settlement, as they cannot be absorbed after 20 years of litigation. Moreover, they have been getting wages without work from 2004 till 2012. The industrial tribunal in Dhanbad had allowed the petition of the Coal Washeries Union and ordered reinstatement of the 35 workers with full back wages. However, the Jharkhand high court and the Supreme Court modified the order to finally settle the dispute.
In another case, Bharat Singh v Union of India, parcel-porters of Eastern Railway won their claim for regularisation from 2008 with full back wages. The issues had already been decided by the Supreme Court in 2003, but the authorities had failed to absorb the porters.
