DURGA HOTEL COMPLEX Vs. RESERVE BANK OF INDIA

JUDGEMENT

(1.) IN first writ petition, petitioner has sought for direction to the State Bank of India to carry out the directions given to it by the Banking Ombudsman in his order dated 30th March, 2002 in a dispute between the petitioner and the Bank and second writ petition has been filed by the Bank challenging the said order. Vide order dated 7.4.2003 both these writ petitions were directed to be heard together, and, as such, both these writ petitions have been heard together, as prayed by the learned counsel for the parties and are being disposed of by this common order.

(2.) THE petitioner of the first writ petition, which is a partnership firm applied to the Respondent -State Bank of India, hereinafter referred to as 'the Bank', for grant o1 loan in the year 1995 with the total project cost of Rs. 33.33 lacs for construction of Hotel - cum - Shopping Complex. The proposal for a term loan of Rs. 24 lacs was considered at Zonal office level and was finally rejected on 25.7.1996. The petitioners resubmitted the proposal with necessary amendments and finally a loan of Rs. 15 lacs was sanctioned vide Zonal office note dated 24.4.1997. On completion of necessary formalities a sum of Rs. 11,58,750/ -was disbursed till December, 1998, when the Bank decided to call back the loan, and, thus, further disbursement was stopped. According to the Respondent -State Bank of India, the Bank took the decision as there was: (a) diversion of fund (b) unilateral enlargement of project size with material deviations in the parameters of construction. The petitioner -firm submitted a revised project of Rs. 75 lacs. The Advisory Committee of the Bank in its report dated 14.1.1999 recommended that at least the project requires a term loan of Rs. 30.51 lacs on the basis of revised cost project and a working capital of Rs. 15 lacs is required. It further recommended that term loan will be repayable in 60 monthly instalments excluding the year of moratorium period. On consideration of the said recommendation and various other factors like diversion of funds, lack of genuine interest in the project, unsuitability of collateral security, credibility of promoters and unsuitability of projects, a decision was taken to call back the loan and not to take any further exposure and start the recovery proceedings which was communicated to the promoter by letter dated 28.6.1999 (Annex'ure -1 to the first writ petition) and letter dated 31.8.1999 (Annexure -1 to the second writ petition). The Bank in consonance with its decision served a legal notice on 5.2.2000 recalling the loan along with the interest of Rs. 14,30,876/ -and then a proceeding was initiated before the learned Ombudsman on 11.4.2000 vide Complaint Case No. 88 of 2000. The Bank also filed original application bearing No. O.A. 157 of 2000 before the Debt Recovery Tribunal for recovery of the amount which is pending disposal.

(3.) MR . Chittranjan Sinha, learned counsel appearing for the State Bank of India has submitted that the issue of grant of loan is beyond the subject matter and authority of the learned Ombudsman as per Banking Ombudsman Scheme. He submitted that clause 13(b) of the Scheme clearly indicates that learned Ombudsman cannot consider any matter other than what has been mentioned therein. According to him, learned Ombudsman has exceeded in his jurisdiction by issuing directions relating to loan disbursement and has not only fixed period of repayment but at the same time enhanced the period of moratorium. The. impugned award travels even beyond the relief sought for by the petitioners of first writ petition and is bad in law. He further submitted that the matter is pending adjudication in Debt Recovery Tribunal and when a competent court is in seisin of the matter, the learned Ombudsman ought not to have passed the award and the complainant firm may claim their relief in the suit pending before the Debt Recovery Tribunal.