SHRIRAM REFRIGERATION INDUSTRIES LTD Vs. STATE BANK OF INDIA

JUDGEMENT

(1.) These are four writ applications for quashing certain circulars and orders issued by General, Manager, Agricultural Banking Division of State Bank of India. The petitioners have prayed for quashing the circulars issued by the Bank as also for a writ of mandamus directing the Bank to finance the products of the petitioners like those of other manufacturers. The petitioners are manufacturers of Diesel Motor Pumps,

(2.) Petitioner No. 1 in C. W. J. C. Nos. 4689 of 1982 and 43 of 1083 are manufacturers of diesel pumps under the brand name of Usha Diesel Engine/Pump sets and Bharat Shakti Diesel Engines/ Pumping sets respectively. Petitioner No. 2 in both the applications are sole selling Agents of the manufacturers. The petitioner in C. W. J. C. No. 78 of 1983 is partnership firm manufacturing "Kaushal" Diesel Eingine and Pumping Sets. Their Distributor for Bihar is Messrs Saluja Agency, Patna. Petitioner No. 1 in C. W. J. C. No. 67 of 1983 is a partnership firm manufacturing "Bharat Diesel Engine Pump Sets" and petitioner No. 2 is one of its partners. Petitioner No. 1 in C. W. J. C. No. 4689 of 1982 is the only incorporated Company in these applications. The others are partnership firms. The points falling for consideration in these writ applications being common, they have been heard together and will be disposed of by this common Judgment.

(3.) The facts emanating in C. W. J. C. No. 4689 of 1982 are that petitioner No. 1 manufacturers Diesel Engine Pumps. M/s. Shriram Refrigeration Industries Ltd., petitioner No. 1 appointed M/s. Usha International. Ltd., another incorporated Company at New Delhi as its selling Agent for the diesel pump sets. The selling Agent has its branches in various cities of India. At Patna it has its Divisional. Office by the name of M/s. Nalanda Sales Corporation. The selling Agent, petitioner No. 2 appointed authorised dealers of its own in the State of Bihar. The dealers sold the motor pumps. The averment is that petitioner No. I used to sell diesel engine to . petitioner No. 2 on 'principal to principal basis'. The Nalanda Sales Corporation appointed M/s. Usha Diesel Centre at Gogri Jamalpur in the district of Monghyr as its authorised dealer for sale of Usha Diesel Engines. Their dealership agreement came into effect from 20-8-1979 to 31-3-1982. The dealers in turn also used to make all purchases as independent principal on outright sale basis. In the course of selling diesel engine pumps the dealer came in contact with Maheshkhunt Branch of State Bank of India. The manner of contact was as follows. The State Government in collaboration with the Banks in Bihar introduced a Scheme whereby the Banks were to finance sale of diesel motor pumps to farmers. Under the Scheme the Bank was to finance 75% of the price of the motor pumps as loan and, the farmers only 25%. After a process of application for loans and scrutiny thereof was gone through, the Banks would agree to advance loans to farmers. The Bank, however did not pay any money in cash to the farmers but only authorised dealers of engine sets of the choice of the farmers, to deliver and instal the engine sets at the places required by the farmers. The dealer was to be paid by the Bank. The loan was to be repaid by the farmers in easy instalments to the Bank. This policy and method was called "Agricultural Term Loan". The introduction of this Scheme being beneficial, and convenient to the farmers 95% of the purchase of diesel pump sets in the State is now funneled through the Banks by the process of Agricultural Term Loan. For obvious reasons the State Bank appears to be the favourite of the, farmers and it was financing more than 50% of such loans in the State.