A.RAFILLA V. THE UNION OF INDIA

WP(C)/24646/2017

AI Insights

The case involves multiple petitioners, proprietors of various cashew manufacturing units, who sought relief from the High Court of Kerala to prevent banks from taking recovery actions under the SARFAESI Act until the state and financial authorities could issue directions for the rehabilitation of the cashew industry. The court noted that a consultative process was ongoing and had led to the formation of a committee to assess the financial viability of these units. The court had previously extended similar reliefs to other petitioners under comparable circumstances and decided to grant the same relief to the current petitioners, allowing them to apply for revival under the government orders.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 743155 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 19-03-2019
• Assessment Year: misc
• Other Referred Cases: W.P.(C) No.13397/2017 and connected matters
• Laws Referred To: Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: BASANT BALAJI; T RAJESH; K K JOHN; A ANTONY; R S KALKURA; V B HARI NARAYANAN; PAULY MURICKEN; SANTHEEP ANKARATH; LEELAMMA ANTONY; B J JOHN PRAKASH; KRISHNADAS NAIR; P PRAMEL; RANJITH THAMPAN; P VIJAYAKUMAR; PREMACHANDRA PRABHU
• Assessee Lawyers: K B PRADEEP
• Keywords: Committee; Financial Viability; Revival and Rehabilitation; SARFAESI Act; Cashew Manufacturing Units
• Section: 13(2)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN TUESDAY ,THE 19TH DAY OF MARCH 2019 / 28TH PHALGUNA, 1940 WP(C).No. 24646 of 2017 PETITIONERS: 1 A.RAFILLA, AGED 52, S/O.ABDUL RASHEED, PROPRIETOR, SR CASHEW TRADERS, GARDEN VILLA, KUTTICHIRA,TKMCPO, KOLLAM -691005. 2 SAJILA M.H., W/O.NIZAM, AGED 36, PROPRIETOR, FN CASHEWS, NIZAM MANZIL, AISWARYA NAGAR, KALLUMTHAAZHUM, P.O.KILIKOLLUR, KOLLAM,PIN-691004. 3 S.SASHIDHARAN ACHARY AGED 67, S/O.SANKU ACHARY, PROPRIETOR, MAHALEKSHMI CASHEW INDUSTRIES, VIJAYAMANDIRAM, KARINPUZHA P.O., PUTHOOR, KOLLAM, PIN-691507. 4 NIZAM, AGED 43, S/O.SATHU KUTTY, PROPRIETOR, MSK CASHEW COMPANY, AISWARYA NAGAR 61, KALLUMTHAAZHUM, P.O.KILIKOLLUR, KOLLAM,PIN-691004. 5 V.SABU, AGED 50, S/O.KOSHY VARGHESE, PROPRIETOR, ANGEL CASHEWS, MYLOM P.O., KOTTARAKKARA. 6 BIJU S., AGED 36, S/O.SADANANDAN, PROPRIETOR, KAIRALI CASHEW COMPANY, THOTTATHIL VEEDU, THAAZHAMEL VAKKUMUKKU, ANCHAL P.O.,KOLLAM DISTRICT, 691306. 7 GOPALAKRISHNA PILLAI AGED 58, S/O.THANKAPPAN PILLAI, PROPRIETOR, SREEKRISHNA CASHEW INDUSTRIES, LAKSHMI NIVAS, MEYYANOR P.O., KOLLAM, PIN-691537. 8 S.VIJAYAN S/O.SADANANDAN, PROPRIETOR, POOJA CASHEW FACTORY,SREEMANGALATHU HOUSE, MANKKALA P.O.,ADOOR, PATHANAMTHITTA DISTRICT, PIN-691551. 9 N.BHARATHAN S/O.NANU, AGED 72, PROPRIETOR, JAYLESH CASHEW FACTORY, KARUVELIL P.O.,EZHUKONE, KOLLAM, PIN-691505. WP(C).No. 24646 of 2017 2 10 S.VIMALAN, AGED 52, PROPRIETOR, RV CASHEWS, ELLAMPALLICKAL, PAYYANALLUR, ADOOR. 11 NIDHEESH R., AGED 30, S/O.RAMACHANDRAN NAIR, MANAGING PARTNER, M/S.JYOTHIS CASHEW FACTORY, JYOTHIS, MARU SOUTH, AALUMKADAVU P.O., KARUNAGAPALLY, KOLLAM-690573. 12 PREM SHAJI R. AGED 47, S/O.V.K.RAGHAVAN, PROPRIETOR, AISWARYA CASHEW COMPANY, KADUVINAVILAPUTHENVEEDU, KUNNATHOOR EAST P.O., KUNNATHOOR, KOLLAM,PIN-690540. 13 S.VAHEED KUTTY, AGED 53, S/O.SULAIMANKUNJU, PROPRIETOR, MUKHATHALA CASHEW PROCESSING, THASNI MANZIL, KIZHAVUR, MUKHATHALA P.O., KOLLAM-691577. 14 R.SUDHARMAN, AGED 54, S/O.K.RAGHAVAN, PROPRIETOR, KRIPA CASHEWS, PUTHENVILA VEEDU, KATTAYIL, ODANAVATTOM P.O., KOTTARAKKARA, PIN-691512. 15 MANJU RAJESH AGED 38, D/O.MOHANAN PILLAI, PROPRIETRIX, GANGA CASHEWS, GANGA, PARAKUNNU P.O.,NAVAIKKULAM, PIN-695603. 16 B.PRASANNA KUMAR AGED 53, S/O.BHASKARAN, MANGALATH CASHEW FACTORY,KARUVELIL P.O., EZHUKONE, KOLLAM, PIN-691505. 17 SHIKKAR A.M. S/O.ABDUL MAJEED, BAITH AL-SALMA, COLLEGE NAGAR 31, VADAKKEVILA P.O.,KOLLAM-691010. 18 BRIGHT P.V. AGED 56, PROPRIETOR, BRIGHT TRADING CORPORATION, S/O.P.G.VNAYACHANDRAN, ADWAITH, ASRAMOM GARDENS, ARAMOM WEST, KOLLAM. 19 M.A.ANZAR AGED 52, M/S.AA NUTS, M/S.AL AZIZ & CO.,AA SNACKS, SHAMNA GARDENS, KILIKOLLUR, KOLLAM-4. BY ADV. SRI.K.B.PRADEEP RESPONDENTS: 1 THE UNION OF INDIA REPRESENTED BY ITS SECRETARY, FINANCE DEPARTMENT, GOVERNMENT OF INDIA, SOUTH BLOCK, NEW DELHI-110001. WP(C).No. 24646 of 2017 3 2 THE STATE OF KERALA REPRESENTED BY THE PRINCIPAL SECRETARY, FISHERIES, PORTS, ENVIRONMENT & INDUSTRIES(COIR & CASHEW), MAIN BLOCK, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM-695001. 3 THE RESERVE BANK OF INDIA REPRESENTED BY THE DEPUTY GENERAL MANAGER, RBI,BAKERY JUNCTION, NANDAVANAM, VAZHUTHACAUD, THIRUVANANTHAPURAM, KERALA-695033. 4 STATE LEVEL BANKERS COMMITTEE SLBC REPRESENTED BY DEPUTY GENERAL MANAGER, SLBC, KERALA, SLBC CELL, CANARA BANK, CIRCLE OFFICE, CANARA BANK BUILDING, M.G.ROAD, TRIVANDRUM-695001. 5 STATE BANK OF INDIA REPRESENTED BY ITS GENERAL MANAGER(RETAIL NETWORK- 1),STATE BANK OF INDIA, KSHB BUILDING, SANTHI NAGAR, THIRUVANANTHAPURAM-695001. 6 CATHOLIC SYRIAN BANK LTD. REPRESENTED BY ITS CHIEF MANAGER-KERALA,CATHOLIC SYRIAN BANK LTD., HEAD OFFICE, ST.MARY'S COLLEGE ROAD, THRISSUR-680020. 7 FEDERAL BANK LIMITED REPRESENTED BY ITS CHIEF GENERAL MANAGER, FEDERAL BANK LIMITED, HEAD OFFICE, FEDERAL TOWERS, P B NO.103, ALUVA-683101. 8 SOUTH INDIAN BANK LIMITED REPRESENTED BY ITS SENIOR GENERAL MANAGER, CREDIT DEPT., SOUTH INDIAN BANK LIMITED, SIB HOUSE, MISSION QUARTERS, T.B.ROAD, HEAD OFFICE, THRISSUR-680001. 9 SYNDICATE BANK REPRESENTED BY ITS DEPUTY GENERAL MANAGER, SYNDICATE BANK, REGIONAL OFFICE, HOSPITAL ROAD, SASTHAMANGALAM, THIRUVANANTHAPURAM-695010. 10 PUNJAB NATIONAL BANK. REPRESENTED BY ITS DEPUTY GENERAL MANAGER, PUNJAB NATIONAL BANK, CIRCLE OFFICE, PNB HOUSE, 2ND FLOOR, 40/1461, MARKET ROAD, ERNAKULAM-682011. WP(C).No. 24646 of 2017 4 11 CORPORATION BANK LTD. REPRESENTED BY ITS DEPUTY GENERAL MANAGER, CORPORATION BANK LIMITED, NO.25/298/4,GOVT. PRESS ROAD, THIRUVANANTHAPURAM-695001. 12 H D F C BANK REPRESENTED BY ITS CHIEF MANAGER, RETAIL AGRI DEPT., 1ST FLOOR, SL PLAZA, PALARIVATTOM, KOCHI-682025. 13 IDBI BANK LIMITED REPRESENTED BY ITS ASSISTANT GENERAL MANAGER, KATTUKARAN BUSINESS CENTRE, BIDG NO.37/715,S.A.ROAD, KADAVANTHARA, KOCHI-682020. 14 TAMILNAD MERCANTILE BANK LTD. THIRUVANANTHAPURAM REGIONAL OFFICE,TC NO.54/2(4-7), FIRST FLOOR, KURAISHA PLAZA, PAPPANAMCODE, THIRUVANANTHAPURAM-695018,REPRESENTED BY DEPUTY GENERAL MANAGER. 15 PHOENIX ARC PRIVATE LIMITED DANI CORPORATE PARK, 7TH FLOOR, 158, C.S.T.ROAD, KALINA, SANTHACRUZ(E),MUMBAI-400098, INDIA,REPRESENTED BY CHIEF OPERATING OFFICER. 16 THE KERALA FINANCIAL CORPORATION HEAD OFFICE, VELLAYAMBALAM, THIRUVANANTHAPURAM, PIN-695001,REPRESENTED BY ITS MANAGING DIRECTOR. 17 CANARA BANK, REGIONAL OFFICE, PALAYAM, THIRUVANANTHAPURAM-695001,REPRESENTED BY DEPUTY GENERAL MANAGER. SRI.BASANT BALAJI, SC SRI.T.RAJESH, SC, HDFC BANK LTD. SRI.K.K.JOHN SC SOUTH INDIAN BANK SRI.A.ANTONY SC SRI.R.S.KALKURA SC SRI.V.B.HARI NARAYANAN SC SRI.PAULY MATHEW MURICKEN SC SRI.SANTHEEP ANKARATH SC SMT.LEELAMMA ANTONY SRI.B.J.JOHN PRAKASH SRI.KRISHNADAS P.NAIR CGC SRI.P.PRAMEL SRI.RANJITH THAMPAN -ADDL.AG, SRI.P.VIJAYA KUMAR-ASG, SRI. PREMACHANDRA PRABHU-SC, THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 19.03.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 24646 of 2017 5 JUDGMENT The petitioners, who claim to be the proprietors and Managing Partners of certain Cashew Manufacturing Units, have approached this Court by filing this writ petition praying that the respondent - banks be directed not to take further action against them under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act ('the SARFAESI Act' for brevity) until the State of Kerala, the Reserve Bank of India and the State Level Bankers' Committee issue necessary directions for rehabilitating the cashew industries. 2. I notice that this writ petition was filed at the time when the consultative process for this purpose was being undertaken by the competent Authorities but it is now admitted before me that subsequently, the Government issued an order bearing G.O. (Rt)No.1279/2018/ID dated 14.11.2018; as per which, it had constituted a Committee (hereinafter referred to as 'the Committee') consisting of the Convener of the State Level Banker's Committee; the Assistant General Manager of the Reserve Bank of India; Deputy Secretary, Industries Department and the representatives of the Bank concerned, to assess the financial viability of the various Cashew Processing Units, which are facing crisis, so as to revive them. WP(C).No. 24646 of 2017 6 3. I notice from the pleadings on record that the aforementioned Government Order was subsequently modified by another one, namely, G.O.(Rt)No.1319/2018/ID dated 29.11.2018; wherein, the composition of the Committee was partially modified, removing the Assistant General Manager of the Reserve Bank of India therefrom. However, in all other aspects, the Committee continues to be in the manner as ordered in the earlier Government Order. 4. The petitioners assert that their respective Units are all entitled to the benefits under the afore Government Orders and they, therefore, pray that they be given an opportunity to approach the Committee with their applications for revival. 5. I am aware that, by a separate judgment, I had disposed of a batch of cases, namely W .P .(C) No.13397/2017 and connected matters, wherein similar reliefs had been sought for, taking note of the submissions made before me by the learned Additional Advocate General that the aforementioned Government Orders, though had expired on 28.02.2019, can be extended as a special case for the petitioners therein because the said writ petitions had been pending when those orders have been issued. WP(C).No. 24646 of 2017 7 6. I see that the situation of the petitioners herein are no different and that this writ petition has been pending from the year 2017 before this Court. I am, therefore, certain that the petitioners herein are also entitled to the same benefits as was granted in the case of the petitioners in W .P .(C) No.13397/2017 and connected matters. 7. Noticing the afore stand of the learned Additional Advocate General, I passed the following directions in the said judgment: “4. On hearing the learned counsel appearing for the petitioners as afore, I asked the learned Additional Advocate General, Shri. Ranjith Thamban, assisted by Smt.Amminikutty, the learned Senior Government Pleader appearing for the official respondents, as to whether the period for making applications under the afore mentioned Government Orders, which have now concededly expired on 28/02/2019, can be extended as a special case for the petitioners herein, since these writ petitions have been pending before this Court for the last more than two years. The learned Additional Advocate General, Shri. Ranjith Thamban, very fairly conceded that since these writ petitions have been pending, the Government is, by way of a final latitude to the petitioners herein, willing to extend the period under the Government Orders until 20/03/2019, within which time, they can all make fresh applications, if they are so desirous before the Government Nominee in the Committee, namely, the Deputy Secretary, Industries Department, along with their latest Balance Sheet, Stock Statement, Income Tax Returns, Know Your Customer (KYC) details and such other relevant documents, so that the Committee can be re- constituted for one last time with the representatives of the respective Banks, leading to opposite decisions being taken by it within a short period of time. 5. After the learned Additional Advocate General made the afore submissions, certain counsel appearing for the petitioners pointed out that apart WP(C).No. 24646 of 2017 8 from Banks, the Kerala Financial Corporation and certain Asset Recovery Companies are also involved in some of these cases and they prayed that they also be asked to appear before the Committee and take part in the resultant process, because the benefits are being offered by the Government to all the Cashew Industries irrespective of the nature of the lender. 6. In response to the above, the learned Additional Advocate General submitted that the nature of the lender is not relevant because the Government is offering certain benefits to the borrowers with an intent to revive the Cashew Industry; and therefore, that both the Kerala Financial Corporation and the Asset Recovery Company must also participate in the process under the orders of this Court.” As indicated above, I am certain that the benefits of the afore judgment should apply to the petitioners herein also and I, therefore, order this writ petition and direct the petitioners to prefer their applications for revival, under the afore mentioned Government Orders, directly to the Deputy Secretary, Industries Department, which is the Government nominee in the Committee, along with their latest Balance Sheet, Stock Statement, Income Tax Returns, Know Your Customer (KYC) details and such other relevant documents, not later than 20/03/2019, so that the said Authority can then convene the Committee including the representatives of the respective Banks, Kerala Financial Corporation and the Asset Recovery Company at the earliest time frames. I also permit the representatives of the respective Banks, Kerala Financial Corporation and the Asset Recovery Company to place all their inputs, including adverse reports or materials WP(C).No. 24646 of 2017 9 against the petitioners before the Committee, so that these can also be taken note of while a final decision is taken. I order that the Committee be constituted at the earliest, without any avoidable delay and a decision taken on the petitioners' application, as expeditiously as is possible, but not later than one month from the date on which, the petitioners make their respective applications. Needless to say, until such time as the Committee takes a final decision in these matters, action for recovery now being pursued by the respective Banks, Kerala Financial Corporation and the Asset Recovery Company against the petitioners shall stand deferred. I make it clear that I have not considered the merits of any of the other contentions of the petitioners or the rival parties in this judgment and I leave all of them open to be pursued appropriately in future, if it becomes so warranted. After I dictated this judgment, the learned Standing Counsel appearing for the tenth respondent submitted that the 19th petitioner in this case has already approached this Court by filing W .P .(C)No.5128/2019 and that he had obtained certain directions from the aforementioned Committee. The learned counsel for the petitioners, however, submits that the directions in the said WP(C).No. 24646 of 2017 10 judgment were with respect to some other Unit of the said petitioner, but not in relation to the cashew factories mentioned in this writ petition. This is recorded. Sd/- DEVAN RAMACHANDRAN stu JUDGE WP(C).No. 24646 of 2017 11 APPENDIX PETITIONER'S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE DETAILS OF BUSINESS CONCERNS, EXPOSURE TO BANKS AND AMOUNTS REPAID TO THE BANKS BY THE PETITIONERS. EXHIBIT P2 TRUE COPY OF THE REPORT MADE BY THE ASSISTANT GENERAL MANAGER, NABARD. EXHIBIT P3 TRUE COPY OF THE MASTER CIRCULAR DBOD.NO.DIR.BC.16/13.03.00/2014-15 DATED JULY 1, 2014 UNDER COVER OF LETTER DATED 01.07.2015 ISSUED BY THE RBI. EXHIBIT P4 TRUE COPY OF THE MINUTES OF ONE OF SUCH MEETING HELD ON 05.12.2016 UNDER THE AUSPICE OF THE HON'BLE CHIEF MINISTER OF KERALA. EXHIBIT P5 TRUE COPY OF THE MINUTES OF THE 34TH MEETING OF THE EMPOWERED COMMITTEE ON MSWE SECTOR HELD ON 29.06.2016. EXHIBIT P6 TRUE COPY OF THE RECOMMENDATIONS OF THE SUBCOMMITTEE SEND TO THE 2ND RESPONDENT UNDER COVER LETTER OF A LETTER DATED 30.08.2016 BY THE 3RD RESPONDENT. EXHIBIT P7 TRUE COPY OF THE MINUTES OF THE MEETING HELD ON 28.04.2017. EXHIBIT P8 TRUE COPY OF THE G.O.(RT)NO.31/2017/IND DATED 09.05.2017. EXHIBIT P9 TRUE COPY OF THE PAPER REPORT WHICH APPEARED ON 20.07.2017 IN MALAYALA MANORAMA. EXHIBIT P10 TRUE COPY OF NOTICE ISSUED BY THE ADVOCATE COMMISSIONER TO THE 4TH PETITIONER. EXHIBIT P10(A) TRUE COPY OF NOTICE ISSUED BY THE ADVOCATE COMMISSIONER TO THE 3RD PETITIONER. EXHIBIT P10(B) TRUE COPY OF SECTION 13(2) NOTICE ISSUED BY THE 17TH RESPONDENTS TO THE 13TH PETITIONER. EXHIBIT P10(C) TRUE COPY OF NOTICE ISSUED BY THE ADVOCATE COMMISSIONER TO THE 7TH PETITIONER. EXHIBIT P11 NOTICE ISSUED BY THE ADVOCATE COMMISSIONER TO THE 11TH PETITIONER. WP(C).No. 24646 of 2017 12 EXHIBIT P12 NOTICE DATED 4.10.2017 ISSUED BY THE ADVOCATE COMMISSIONER TO THE SIXTH PTITIONER EXHIBIT P13 NOTICE DATED 3.10.2017 ISSUED BY THE ADVOCATE COMMISSIONER TO THE SIXTH PETITIONER EXHIBIT P14 TRUE COPY OF THE GOVERNMENT ORDER GO(Rt)96/2017/ID DATED 4.10.2017 EXHIBIT P15 TRUE COPY OF THE CERTIFICATE OF INCORPORATION OF KERALA CASHEW BOARD LIMITED EXHIBIT P16 TRUE COPY OF THE REPORT ON THE REVIVAL AND REHABILITATION OF THE SICK CASHEW INDUSTRIES IN KOLLAM SUBMITTED BY THE KOLLAM CASHEW GLOBAL PART LLP EXHIBIT P17 TRUE COPY OF THE MINUTES OF THE BANKERS LEVEL MEETING DATED 6.12.2017 UNDER COVER OF LETTER DATED 12.12.2017 ISSUED BY TH INDUSTRIES DEPARTMENT EXHIBIT P18 TRUE COPY OF THE PAPER REPORT REGARDING THE DECISIONS TAKEN IN THE MEETING ON 13.12.2017 PUBLISHED IN THE HINDU DAILY ON 14.12.2017 EXHIBIT P19 TRUE COPY OF THE ORDER DATED 6.12.2017 IN CMP 6896/17 IN MC 386/17 OF THE HON'BLE CHIEF JUDICIAL MAGISTRATE, KOLLAM RESPONDENTS' EXHIBITS: ANNEXURE R2(a) TRUE COPY OF THE GO(MS)NO.96/2017/ID DATED 4.10.2017 ANNEXUYRE R2(b) TRUE COPY OF THE GOVERNMENT ORDER G.O.(Rt)NO.1057/2017/ID DATED 21.07.2017 ANNEXURE R2(c) TRUE COPY OF MINUTES OF THE MEETING HELD ON 16.08.2017 ANNEXURE R5(a) TRUE COPY OF THE REPRESENTATION DATED 19.9.2017 SUBMITTED BY THE 7TH RESPONDENT BEFORE THE HON'BLE CHIEF MINISTER AND INTURN FORWARDED TO SLBC ANNEXURE R5(b) TRUE COPY OF LETTER DATED 28.09.2017 ADDRESSED TO THE 7TH PETITIONER ANNEXURE R5(c) TRUE COPY OF THE REPRESENTATION DATED 16.10.2017 ADDRESSED TO THE RESPONDENTG EXHIBIT R18A TRUE COPY OF THE NOTICE ISSUED BY ADVOCATE COMMISSIONER UNDER SECTION 18 OF THE SARFAESI ACT TO THE 4TH PETITIONER. EXHIBIT R18B TRUE COPY OF THE NOTICE ISSUED BY ADVOCATE COMMISSIONER UNDER SECTION 18 OF THE SARFAESI ACT TO THE 5TH PETITIONER. EXHIBIT R24A TRUE COPY OF THE NOTICE ISSUED UNDER SECTION 13(2) OF THE SARFAESI ACT BY THE AUTHORIZED OFFICER, IDBI BANK. WP(C).No. 24646 of 2017 13 EXHIBIT R24B TRUE COPY OF THE MASTER CIRCULAR FIDD.MSME & NFS.BC.NO.21/06.02.31/2015-16 DATED MARCH, 17, 2016 ISSUED BY THE RBI. EXHIBIT R12A THE TRUE COPY OF THE REPORT DATED 8.6.2017 FILED BY THE ADVOCATE COMMISSIONER. /TRUE COPY/ P.S. TO JUDGE "