JAMMU RURAL BANK v. MOHD. DIN AND ORS

Citation: [2008] 12 S.C.R. 1035

Court: Supreme Court of India

Bench: P. SATHASIVAM, AFTAB ALAM

Case summary

JAMMU RURAL BANK v. MOHD. DIN AND ORS.pdf

Judgment text

[2008] 12 S. C. R. 1035 -i JAMMU RURAL BANK v. MOHD. DIN AND ORS. (Civil Appeal Nos. 4817-4851 of 2002) AUGUST 29, 2008 ' 8, ..... .. [P. SATHASIVAM AND AFTAB ALAM, JJ. ] . Bank/Banking - Loan waiver scheme - Indebtedness and inability of Respondent-borrowers in the State of Jammu and Kashmir to repay loan amount due to continuous militant activities in the State - Amounts borrowed less than Rs. 10, 0001- - Debt Relief Scheme floated by Government for borrowers in the State - Scheme provided for waiver of bank Joans upto Rs. 50,0001- - Liberal interpretation of the scheme by Courts below and consequent dismissal of suits filed by Appellant-banks against Respondent-borrowers - Justification l" of - Held: Justified, considering the peculiar facts and "" circumstances of the case and in light of the vari0us clauses in the Scheme itself and also in view of the fact that subclause (a) of Section 3 of the scheme provided for reimbursement of waived Joan to the concerned banks.

Respondents belong to the State of Jammu & Kashmir~ They obtained loans upto Rs. 10,000/- from Appellant-Banks for rearing of sheep and buffaloes and for establishing dairy units. The loans remained unpaid ·-\. • on which, the Appellant-baR=ks filed suits against the Respondents. During pendency of the s_aid suits, the Government framed a Debt Relief Scheme for bo. rrowers in the State of Jammu & Kashmir to give them r~lief considering the continued militancy and other difficulties in the State during the relevanttime. The scheme provi~ed for waiver of bank loans taken by borrowers in the State upto Rs. 50,000/- for purpose of their business activities. Taking suo motu notice of the said Scheme, the I ~- } Courts below held that the loans obtained by Respondents could be presumed to be for trade purpose and after applying the said scheme, dismissed the suits filed by Respondents.

The questions which arose for consideration in the present appeals were as to i) whether the loan obtained by Respondents for purchasing sheep and buffalos and for establishing dairy units was covered by the said Scheme and ii) whether, in absence of a specific plea by the Respondents, the High Court was justified in granting \ relief in terms of the said Scheme. Dismissing the appeal, the Court HELb:1. 1. The Debt Relief Scheme in question applies to borrowers in the State of Jammu & Kashmir who borrowed loan amount for the purpose of their business activities. Business activities have not been specifically defined in the scheme. Sub-clause (i) of clause 2(d) of the Scheme refers certain examples viz. , tourism, transport, small scale industry, trade sector, hotel, houseboat business, retail trade, etc..

Though purchase of buffalos and sheep relates to agriculture and allied activities, it cannot be denied that from the buffalos, the ) borrower can establish a dairy unit and earn from the said business. In view of clause 2(d)(i), the word "etc. " in the definition of "eligible loans" connotes that besides the activities cited as example for business activity there are other business activities which could be included under the Scheme. The s~id liberal interpretation cannot l:>e ruled out particularly, when the Debt Relief Scheme was introduced mainly as a relief to the borrowers in the militant dominated State during the relevant time. Following the very reason for introduction of the said . Scheme i. e. to offer financial help to the poor and ir. debted borrowers of militancy hit Jammu & Kashmir, the Courts below rightly concluded that the agricultural and allied ........ { business activities viz.

, the types of trade/business which are substantially or partially depending on agriculture and/ or agricultural produce as a business activity under the said Scheme. Further, the Reserve Bank of India Guidelines cannot be strictly followed as it has not been mentioned to be followed in the Scheme and, therefore, , 8 the term 'business activity' cannot be interpreted under the strict rule of interpretation. [Paras 9, 10, 13] [1045,C- D; 1045,E-G; 1047,D-E] 1. 2. Besides, sub-clause (a) of Section 3 of the Scheme makes it clear that the amount waived off will be reimbursed to the concerned Bank/Financial Institution by the Department of Jammu & Kashmir Affairs, Government of India on recommendation of the Committee to be set up at the State Level. Even after the orders passed· by the sub-Court and thereafter by the 0 District Court, the Banks could have availed the benefit of reimbursement as provided under clause 3(a) of the Scheme.

However, the appellant-Banks instead of availing the same, agitated the matter up to the level of this Court by spending more money for recovery of petty amounts from the small borrowers. The appellant-Banks are free to approach the Department of Jammu & Kashmir Affairs, Government of India who brought the Debt Relief Scheme, under clause 3(a) for reimbursement, if the same is permissible, at this juncture for which no opinion is expressed by this Court. [Para 14] [1047,H; 1048,A-C] 2. As regards the contention that in absence of specific plea in the form of written statement or counter affidavit, the Court should not have given relief applying the said scheme, it is true that all the respondents were served by publication in the daily newspapers and in most of the cases, the amount borrowed was less than Rs. 10,000/-, which may be one of the reason, the respondents failed to contest the suit.

In those circumstances when the Government of India itself with the assistance of the State of Jammu ~1 Kashmir brought a' Sch'em€fcalled "DeQt Relief Scheme" and the same was iivailable on· tlie date when all the suits were pending, c'ohsideririg the· special circumstances, the course adbpted-by the Courts below cannot be faulted with. [Para 11f [1046,A-D] . , . ,..... ' : ,) ~ ; . · ·--· - ' 3. Considering all the peculiar aspects of the present ca~e, p~rticularly, indebtedness and inability to repay the loan amount by the borrowers due to continuous militant activities in the State of Jammu & -Kashmir particularly, at ,_. 1J . , • ' ' - - - . the relevant time~·the amounts borrowed which were less ttlan ·Rs. 10,000/- in' most'of the cases, liberal interpretation of. _tlle _Gou~,below in'the ! i9tit of the various clauses in the' Scheme itSelf and also of the fact that sub-clause (a) -~ .. • l _.... . , I ' I I , • - . '? f1JS~. 9~i~~_3 :_of .

the scheme, provides reimbursement of waived loan. amounts,. this Court is not inclined to interfere o ~i~h. ~~e~~rde~s. of tt~e ~ou~, beiow. [Para 15] [1048,D-E] 1 ··- . 'CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. ~8~~~. ~~~! of 20,,~~-, '. ;~,. ' _ . ,,;:; ,From Jhe final. Judgment and Order . dated 3. 11. 2000 of the ttigh . Court of J & K qt jammu in CSA Nos. 30, 44, 56, 50, 46,· 72;~74, 47, 55, 51, 71, 66, 45,_78,. 61, 73, 49, 63, 62, 76, 53, 69, 64, 68, 57, 41, 67, 65, 43, 42, 58;_ 54, 52, 48 & 40 of 1999 ,' . Y\'ITH \ . C. A. Nos. 4852-4854 of 2002 & 5315 of 2008 ,>-- . : ~ !. ' : traders for business activities and herein the respondents t. _ ' borrowed loans for purchase of sheep and buffalos, establishing dairy units etc. which are alike to agricultu1e and are not eligible to avail of the Debt Relief Scheme. Clause 2(d) of the Debt Relief Scheme speaks about the "Eligible Loans".

The following Iisub~ciauses of clauses 2(d) are relevant: ) "2(d)(i) Fresh loans/credit limits upto and inclusive of /« ~- Rs. 50,000/- as principal granted by banks/financial institutions and disbursed upto and outstanding as on the effective date i. e. 30th June, 1996 to the borrowers in the State of Jammu & Kashmir for the purpose of their business activity for example tourism, transport, small scale industry, trade sector, hotel, house-boat business, retail trade, etc. . )<-- (ii) Short term loans/credit limits which were converted into term loans upto and inclusive of R<::.. 50,000/- granted to the borrowers in the State of Jamrnu & Kashmir as the "'---{ short term loans, credit limits became irregular as a result of loss of stocks/assets due to militancy in the State. (iii) Eligible loans mentioned at i) and ii) above should be outstanding in books of accounts of banks/financial institutions as on the effective date i. e. 30th June, 1996.

In other words, the accounts which already stand closed 8 -1on or before 30th June, 1996 would not qualify for any relief under the Scheme. " 9. It is true that the Scheme applies to the borrowers in the State of Jammu & Kashmir who borrowed loan amount for the purpose of their business activities. As rightly observed by the Courts below, business activities have not been specifically defined. On the other hand, sub-clause(i) of clause 2(d) refers certain examples viz. , tourism, transport, small scale industry, trade sector, hotel, house-boat business, retail trade, etc. ):,; 10. Mr. Raju Ramachandran, learned senior counsel. • appearing for the Banks, argued that the loan, advanced for • such purposes, namely, purchase of sheep and buffalos, am:! running of dairy unit etc. being agriculture loan, does not fal'! within the purview of the Scheme as such loan cannot be waived off under the Scheme.

The very same submission was pressed into service before the sub-Court, Rajouri as well as before the District Court. Though purchase of buffalos and sheep related to agriculture and allied activities1 it cannot be denied that from. the buffalos, the borrower can establish a dairy unit and earn ,J -~ from the said business. As rightly pointed out by the Courts· below, in view of clause 2(d)(i), the word "etc. " in the definition. of "Eligible Loans" connotes that besides the activities cited as. example for business activity there are other business activities· which could be included under the Scheme. The said liberal interpretation cannot be ruled out particularly, the Debt Relief. d Scheme was introduced mainly as a relief to the borrowers. · (emphasis supplied) in the militant dominated State during the rele\'ant time. In the light of the intention of the Government, object of the Scheme, namely, to help the borrowers who were .

indebted and unable to repay, we are unable to accept the · stand taken by the appellant-Banks and concur with the liberal interpretation of the Courts below. 11. Learned senior counsel further contended that in the absence of specific plea in the form of written statement or counter affidavit, the Court should not have given such relief applying the Scheme. As observed earlier, it is true that all the respondents were served by publication in the daily newspapers. We have already. referred to the fact that in most of the cases amount borrowed was less than Rs. 10,000/-, that may be one of the reasons, the respondents failed to contest the suit. In those circumstances when the Government of ln9i~ itself Vt{i_th the assistance of the State of Jammu . & Kas~mir broughi a Scheme called "Debt Relief Scheme" . and the same was available on the date when all, the. suits . \/Vere_,p~~ding, considering the special ci'rcumstances, we ar~.

of the view,that the course adopted by the Courts below cannot be faulted with. Though such~ ~ecourse· is alien'to the civil proceedings~ in view of ttie pecL1liar f~cts and' circumstances as"'rioted in the idan waive} schem'e and th'e other reasorismentioned in the par~graphs ? Upra which were noted. by the Courts below, we . ar~.. riqt ! )1cli~ed to interfere in these ~ppeals. · · ' · ... ' ~ ' ! ' ,. , I • I •\_, • j , ' . · · •. 12: Regarding . the order dated 28,9. 2000 p~ssed by the High Court in GivilHevision Na. ,•. 165 of 19~99. , it is trlje th~t while ·considering' the civil revision,. petition ~filed· against the order passed· by the executing Court,· the High Court relying on the . F : prdvisions in. the:. Hand Book of instructions. issued. by. the Reserve Bank of India that the activities i. e. ,:dairying and. rearing ;. of sheep are. allied to agriculture and, therefor~, excluded from the scheme, ·quashed the order of the_. trjal Court.

an<~ dire~ted -the executing Courtto restore to its original number ~m~ proce~d ' · with·thennatter in-accordance with law. Learned senior cou[! Sel, by pointing:out the above said order of·the very same High Court; submnted. thatthe sa;dorder passed in. th~ civil revision petition is in consonance with the Scheme· and prayed for sirQilar · order in all the 1other 'appeals. For the reasons stated in: the ·- -. ·earlier paragraphs with regard to the Civi1Appeals481:? -4851/ . _--t 2002 and Civil Appeal Nos. 4852-4854 of 2002, we are not . inclined to accept the same. In view of the peculiar position as explained by both the Courts below and considering the fact \ that the amounts involved are less than Rs. 10,000/- in most of the cases and those loans were advanced prior to 1996 during the prevalence of militancy in the State of Jammu & Kashmir, we are not inclined to interfere with any of the reliefs granted by -}, the Courts below. 13.

In the light of the above discussion, we conclude the above-mentioned questions as under: In the Debt Relief Scheme issued by the Government of India, the very definition of 'business activity' has nowhere been defined exhaustively but only a few examples are mentioned which can be extended up to a number of other activities which have not explicitly mentioned for the term 'etc. ' which has been used in the Scheme. Following the very reason for introduction ). :_ of the said Scheme i. e. to offer financial help to the poor and » indebted borrowers of militancy hit Jammu & Kashmir, the courts below rightly concluded that the agricultural and allied business activities viz. , the types of trade/business which are substantially or partially depending on agriculture and/or agricultural produce as a business activity under the said Scheme.

Further, the Reserve Bank of India Guidelines cannot be strictly followed as it has not been mentioned to be followed in the Scheme and, therefore, we should not interpret the term 'business activity' under the strict rule of interpretation. ,Accordingly, we approve '\ . the conclusion and the ultimate decision of courts below granting relief to the respondents. Though the course adopted by the sub-judge, Rajouri or the District Judge were not acceptable, . -. in view of our conclusion on the merits of the orders passed, the dismissal of execution petitions should not be set aside ;i only due to procedural irregularities. 14. Apart from these aspects, it is pertinent to mention that sub-clause (a) of Section 3 of the Notification makes it clear that the amount waived off will be reimbursed to the concerned Bank/Financial Institution by the Department of Jammu & Kashmir Affairs, Government of India on recommendation of the Committee to be set up at the State Level.

Even after the orders passed by the sub-Court and thereafter by the District Court, the Banks could have availed· the benefit of reimbursement as provided under clause 3(a) of . , l the Scheme. Unfortunately, the appellant-Banks instead of availing the same, agitated the matter up to the level of this Court by spending more money for recovery of petty amounts from the small borrowers. The appellant-Banks are free to approach the Department of Jammu & Kashmir Affairs, Governmentof India who brought the Debt Relief Scheme, under clause 3(a) for reimbursement,. if the same is permissible, at this juncture for which we express no opinion. 15. Considering all these peculiar aspects, particularly, indebtedness and inability to repay the loan amount by the borrowers due to continuous militant activities in the State of Jammu &Kashmir particularly, at the relevant time, the amounts borrowed which were less than Rs.

10,000/- in most of the cases, liberal interpr~tation of the Courts below in the light of the various clauses in the Scheme itself and also of the fact that sub-clause (a) of Section 3 of the scheme provides reimbursement of waived loan amounts, we are not inclined to interfere with the orders of the Courts below. Consequently, all the appeals fail and are, accordingly, dismissed. No costs. B. B. B. Appeals dismissed.