State Bank of India

Case BriefsHigh Courts

   

Telangana High Court: While exercising its powers under Article 226 in case relating to delay in payment under One Time Settlement (‘OTS’) Scheme, K. Lakshman, J., grants extension of time to repay the Bank as there was only a day’s delay in making the payment, hence the OTS Scheme will not be cancelled.

Facts:

The petitioner is in the real estate business, constructing and selling flats. He took a loan from State Bank of India (‘Bank’) during his course in business. Due to Covid- 19 pandemic situation, the petitioner sustained huge losses. The petitioner was unable to repay the loan amount therefore, the Bank declared the account of the petitioner as Non-Performing Asset (‘NPA’) on 30-10-2020. However, to pay the said amount in terms of OTS, the petitioner sold his agricultural land.

Vide circular dated 12.10.2020, SBI OTS Scheme was offered which was applicable to all the NPAs as on 31-03-2020 with outstanding dues of above Rs. 20 lakh and up to Rs. 50 Crore.

According to the terms and conditions of the OTS Scheme, the balance amount was supposed to be paid by 27-07-2021. The petitioner submitted a letter dated 28-07-2021 enclosing the cheque which the bank refused to accept based on time lapse. On 31-07-2021, the bank cancelled the OTS scheme and demanded the entire outstanding amount with interest.

Arguments:

The Counsel for the petitioner contended that there is delay of only one day as on 28-07-2021. Further the counsel contended that the bank failed to consider the request made by the petitioner that due to the present COVID-19 pandemic situation, the petitioner is unable to pay the loan amount within the stipulated time.

Observation and Analysis

The Court relied on the illustrative guidelines laid down in Anu Bhalla v. DM, Pathankot, 2020 SCC OnLine P&H 4387 where the division bench held that the Court has power to extend the period of settelement while exercising its jurisdiction under Article 226 of the Constitution. Keeping in view of the guidelines, the Court held that the petitioner is granted extension to repay the OTS amount within 10days.

The Court held that as there is only one day’s delay hterefore, it is a fit case to extend the time to the petitioner to repay the loan amount.”

[Md. Afroz Baig v. State Bank of India, 2022 SCC OnLine TS 1804, decided on 19-09-2022]

Advocates who appeared in this case:

For the Petitioner: E. Madan Mohan Rao, Senior Counsel

For the Respondents: Mettu Srinivas Reddy, SC for SBI

Madras High Court
Case BriefsHigh Courts

Madras High Court: S M Subramaniam, J. upheld the decision taken by Indian Banks Association to unilaterally withdraw the facility for State Bank of India officers to visit overseas countries as part of Leave Travel Concession ‘LTC’/ Home Travel Concession ‘HTC’.

The instant writ was filed challenging the validity of the circular dated 07-4-2014 issued by Indian Banks Association (‘R3’) read with the e-Circular dated 15-4-2014 issued by State Bank of India (‘R1’). The circulars under challenge unilaterally took a decision to withdraw the Leave Travel Concession ‘LTC’ covering overseas travel for SBI officers, and the officers were not entitled to visit overseas countries/ centers as part of LTC or HTC (Home Travel Concession) with immediate effect.

The Indian Bank’s Association issued a Circular dated as early as on 18-09-1982 pursuant to bilateral discussions with the All India State Bank Officers Federation and All India Bank Officers Confederation (‘Petitioners’) being trade unions permitting LTC facility to cover foreign travel also within the eligibility to travel within the Country. This was continued and reiterated in a Circular dated 08-10-2008 issued by Indian Banks Association (R3). All the public Sector Banks, the State Bank of India and the Scheduled Commercial Banks have implemented and extended the facilities to their officers. There is no additional expenditure for the Banks as the amount paid is only as per the eligibility to travel within the country.

Rule 44 of the State Bank of India Officers, Service Rules, 1992, contemplates Leave Travel Concession and Leave Encashment and sub rule-1 to rule-44 provides that

“(1) During each block of four years, an officer shall be eligible for leave travel concession for travel to his home-town once in each block of two years. Alternatively, he may travel in one block of two years to his home-town and in the other block to any place in India by the shortest route.”

The Court noted that Rule 44 of the State Bank of India Officers, Service Rules, 1992 specifically contemplates that the travel is permissible to any place in India, extension of benefit to travel abroad granted by the State Bank of India itself is not in consonance with the terms of Rule 44. Therefore, it is to be construed as an additional facility or concession extended to the officers, which is otherwise not in consonance with the Statutory Rules in force and therefore, cannot have any statutory force.

Placing reliance on Director General of Foreign Trade v. Kanak Exports, (2016) 2 SCC 226 wherein it was observed

“We may state, at the outset, that the incentive scheme in question, as promulgated by the Government, is in the nature of concession or incentive which is a privilege of the Central Government. It is for the Government to take the decision to grant such a privilege or not. It is also a trite law that such exemptions, concessions or incentives can be withdrawn at any time. In such circumstances, even the Doctrine of Promissory Estoppel cannot be ignored.”

The Supreme Court in Balco Employees Union v. Union of India, (2002) 2 SCC 333, held that “Laws, including executive action relating to economic activities should be viewed with greater latitude that laws touching civil rights such as freedom of speech, religion etc., that the legislature should be allowed some play in the joints because it has to deal with complex problems which do not admit of solution through any doctrine or straitjacket formula and this is particularly true in case of legislation dealing with economic matters, where having regard to the nature of the problems greater latitude require to be allowed to the legislature. The question, however, is as to whether it can be done retrospectively, thereby taking away some right that had accrued in favour of another person?”

The Court noted that when the Government of India specifically passed a memorandum that the Leave Travel Concessions to the officers of the Public Sector Undertakings and others to be restricted on par with the Government of India scheme, then there is a context and meaning with reference to certain foreign affairs and therefore, there is no infirmity in respect of the order impugned passed by the respondents in canceling the concession extended to travel abroad under Leave Travel Concession facility. Rule 44 of the State Bank of India Officers’ Service Rules, 1992, regarding Leave Travel Concession and Leave Encashment are comprehensive and provides the procedures, definitions etc., the said Rule alone would have the statutory enforceability.

On the contention of the petitioner with respect to opportunity of hearing not being provided before the decision was taken, the Court observed that when the concession to travel abroad has been permitted without entering into bipartite agreement or through a statute, question of granting an opportunity to the officers does not arise. Such an additional facility to travel abroad is a policy decision taken by the respondent / Management and such a policy has been withdrawn, taking note of the memorandum issued by the Government of India, Ministry of Finance and based on the decision taken by the Indian Bank Association. Thus, the decision taken without providing an opportunity to the petitioners would not constitute violation of principles of natural justice nor their service rights are infringed.

The Court further noted that the concession and the facility extended to get reimbursement of the foreign travel expenses, was given by way of an additional facility through a letter and such letter was cancelled and the facility was withdrawn pursuant to the orders of the Government of India, Ministry of Finance and the Circular issued by the Indian Bank Association. The policy of the Government of India, Ministry of Finance is to be followed in the interest of public by all the Public Sector Banks, which was adopted by the Indian Bank Association.

The Court opined that the petitioners could not establish that the additional facility to travel abroad under the Leave Travel Concession is a service right or condition of service. Thus, the withdrawal would not infringe the rights of the employees nor caused any prejudice and thus, held “this Court do not find any perversity in respect of the decision taken for withdrawal of the additional concession granted to the officers of State Bank of India to travel abroad under Leave Travel Concession scheme. However, it is made clear that the officers are entitled to the Leave Travel Concession and Leave Encashment as contemplated under Rule 44 of the State Bank of India Officers Service Rules, 1992.”

[All India State Bank Officers Federation v. State Bank of India, 2022 SCC OnLine Mad 3372, decided on 24-06-2022]

Advocates who appeared in this case :

R. Vaigai, Senior Advocate, for the Petitioners;

Om Prakash, Senior Advocate, for R1 and R2;

Mr. S. Rajesh, Advocate, for R4;

No appearance, for R3.

*Arunima Bose, Editorial Assistant has reported this brief.

Business NewsNews

Press Release

The Reserve Bank of India (RBI) has imposed, by an order dated 15-07-2019, monetary penalty of 70 million on State Bank of India (the bank) for non-compliance with the directions issued by RBI on (i) Income Recognition and Asset Classification (IRAC) norms (ii) code of conduct for opening and operating current accounts and reporting of data on Central Repository of Information on Large Credits (CRILC), and (iii) fraud risk management and classification and reporting of frauds. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A (1)(c) read with Sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949 (the Act).

This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

Background

The statutory inspection of the bank with reference to its financial position as on 31-03-2017 revealed, inter alia, non-compliance with directions issued by RBI on IRAC norms, sharing of information about customers with other banks, reporting of data on CRILC, fraud risk management, and classification and reporting of frauds. Based on the inspection report and other relevant documents, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with directions issued by RBI. After considering the bank’s reply and oral submissions made in the personal hearing, RBI came to the conclusion that the aforesaid charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty.

[Press Release dt. 15-07-2019]

Reserve Bank of India

Case BriefsHigh Courts

Kerala High Court: The Division Bench comprising of Hrishikesh Roy, C.J. and A.K. Jayasankaran Nambiar, J. dismissed a PIL for being frivolous in nature and further explaining the concept and seriousness of misuse of public interest litigations by citing two prominent Supreme Court Judgments, i.e. State of Uttaranchal v. Balwant Singh Chaufal, (2010) 3 SCC 402 and Tehseen Poonawalla v. Union of India, (2018) 6 SCC 72.

Now, coming onto the issue raised by the petitioner, the public interest litigation was based on a newspaper report which alleged that there was security lapse in the conduct of banking operation by SBI. The stated petition was filed against State Bank of India and their General Manager. Petitioner basing his allegation on the newspaper report further stated that “there are serious lapses by the Bank and this has resulted in customer data leakage and disruption of online services.” Petitioner sought investigation and further direction to General Manager, SBI to remit Rs 5 crores to Kerala State Legal Services Authority.

Respondents denied the allegations and asserted that customers details are fully secure in the servers maintained by SBI, and there are enough inbuilt safeguards in the conveyance of data, for the usual banking transactions.

Therefore, the High Court noted and further stated that the PIL mechanism is being misutilised by the litigant since the material has not been verified on the basis of which the public interest litigation was filed.

The Court cited the case of State of Uttaranchal v. Balwant Singh, (2010) 3 SCC 402, in which various guidelines were issued in order to preserve the purity and sanctity of the Public Interest Litigations. Another case cited was of Tehseen Poonawalla v. Union of India, (2018) 6 SCC 72, where the Supreme Court once again addressed the issue and stated that:

“Misuse of public interest litigation is a serious matter of concern for the judicial process. Frivolous or motivated petitions, ostensibly invoking the public interests detract from time and attention which courts must devote to genuine causes.”

High Court dismissed the petition with costs by explaining the severity of the time of the Court and seriousness of the judicial process. [Shaheer Ali v. SBI, 2019 SCC OnLine Ker 2048, decided on 25-06-2019]

Case BriefsHigh Courts

Allahabad High Court: The Bench of Pankaj Mithal and Saumitra Dayal Singh, JJ. dismissed a petition filed against the order which rejected the candidature of the petitioner for the U.P. Higher Judicial Service Examination-2018 on the ground that he was in full-time employment and thus did not have the required experience for the candidature.

The facts of the case were that in the petitioner had enrolled himself as an advocate with the Bar Council of Delhi in 2010. Thereafter he got in full-time employment as Law Officer with the State Bank of India and the Punjab National Bank respectively in 2014. However, he never surrendered his license to practice and it was never suspended despite the information of employment to the Bar Council. During his employment with the SBI, he appeared in courts and provided legal assistance to the senior counsel of the Bank at Allahabad and Lucknow. The contention arose when he appeared for the preliminary examination for the U.P. HJS in 2018 and his name was rejected as indicated due to the fact that he was in ’employment’. He made a representation against this which was rejected as the Selection Committee opined that he was in permanent employment as Deputy Manager (Law) in SBI from 2014 onwards. Accordingly, he was not an advocate of the standing required in Rule 5(c) of the U.P. Higher Judicial Service Rules, 1975. The Counsel for the petitioner, Tarun Verma, submitted that despite his full-time employment he continued to practice law by appearing before the courts thus he was eligible for appointment in the U.P. HJS.

The Court to adjudicate this looked into Article 233(2) of the Constitution which in unequivocal term provides that a person not already in service shall be eligible for appointment as District Judge if he has been in practice as an advocate or pleader for not less than 7 years thus making 7 years of practice a mandate. After the above constitutional provision came the Bar Council of India Rules framed under Section 49 of the Advocates Act, 1961 which completely prohibits an advocate from taking any full-time employment during his continuance of the practice. Further, Rule 5(c) of The U.P. HJS Rules, 1975 stated that the eligibility for direct recruitment to the U.P. HJS is from amongst the advocates of not less than 7 years standing meaning thereby that a minimum of 7 years standing as an Advocate is a sine-qua-non for selection/appointment in U.P. HJS through direct recruitment. The Court thus held that it was elementary for holding the post of DJ/U.P. HJS to have atleast 7 years of actual standing as an advocate and not the theoretic knowledge of the law as in full-time employment. Further, it was stated that Rule 49 of the Bar Council of India Rules created a legal fiction to the effect that a person duly enrolled as an advocate ceases to be one as soon as he takes full-time employment on salary even if continues to occasionally appear in law Court. This legal fiction has to be recognized as real. The petition was thus dismissed. [Shiv Kumar Pankha v. High Court of Allahabad, WRIT – A No. – 25580 of 2018, Order dated 05-04-2019]