IN THE SUPREME COURT OF INDIA
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CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 4817-4851 OF 2002
Jammu Rural Bank …. Appellant(s)
Versus
Mohd. Din & Ors. …. Respondent(s)
WITH
CIVIL APPEAL NOS. 4852-4854 OF 2002
AND
CIVIL APPEAL NO. OF 2008
(Arising out of S.L.P. (C) No. 4901 of 2006)
JUDGMENT
P. Sathasivam, J.
1) Civil Appeal Nos. 4817-4851 of 2002, by special leave,
are directed against the final judgment and order dated
3.11.2000 passed by the High Court of Jammu and Kashmir
at Jammu in CSA Nos. 30, 44, 56, 50, 46, 72, 74, 47, 55, 51,
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71, 66, 45, 78, 61, 73, 49, 63, 62, 76, 53, 69, 64, 68, 57, 41,
67, 65, 43, 42, 58, 54, 52, 48 and 40 of 1999 and Civil
Appeal Nos. 4852-4854 of 2002 are directed against CSA Nos.
34, 35 and 77 of 1999.
2) The facts in Civil Appeal Nos. 4817-4851 of 2002 and
Civil Appeal Nos. 4852-4854 of 2002 are as follows:
The respondents, in these appeals, borrowed loans
ranging from Rs.3000/- to 10,000/- in most of the cases and
in some cases it ranges from Rs.10,000/- to Rs.20,000/- from
the Jammu Rural Bank and Jammu & Kashmir Bank Ltd. for
different purposes. The loans remained unpaid and as a
result, Banks filed suits against the respondents herein before
sub-Judge, Rajouri. On 26.5.1997, Debt Relief Scheme for
the borrowers in the State of Jammu and Kashmir was
introduced by the Government of India, Ministry of Finance,
vide No. F.11(08)/96-CP for waiver of eligible loans taken from
banks, financial institutions etc. by the borrowers up to and
inclusive of Rs.50,000/- as on 30.6.1996 for their business
activity, for example, tourism, transport, small scale industry,
trade sector, hotel, houseboat business, retail trade etc. The
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said scheme provides for reimbursement of the amount
waived off by the banks, financial institutions etc. disbursed
till 30th of June, 1996, by the Department of Jammu and
Kashmir Affairs, Government of India. On 29.5.1997, letter
No.FD-VII-CS/ Package/96 (Ann.P-2 in S.L.P.4852-4854 of
2002) was sent by the Director, Public Sector Undertakings,
Finance Department, Government of Jammu & Kashmir to the
Chairman, Jammu & Kashmir Bank for implementation of the
said Relief Scheme. On 24.3.1999, on the basis of the Debt
Relief Scheme introduced by the Government of India and
followed by the State of Jammu & Kashmir, sub-Judge,
Rajouri, while taking suo motu notice of the aforementioned
relief scheme held that the loans advanced to the respondents
was for the purpose of establishing the dairy units as well as
rearing of sheep and buffalos and the same could be
presumed to be a trade and by applying the said relief
scheme, dismissed all the suits. Aggrieved by the said
judgment, the Banks filed the first appeals before the District
Judge, Rajouri and the same were also dismissed. Against the
said judgment, the Banks filed second appeal before the High
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Court of Jammu and Kashmir at Jammu.
3) By a common judgment dated 3.11.2000, the High Court
after finding that the Debt Relief Scheme announced by the
Government of India was applicable to the loans borrowed by
the respondents, dismissed all the second appeals filed by the
Banks. Questioning the said order, the Banks have filed Civil
Appeal Nos. 4817-4851 of 2002 and Civil Appeal Nos. 4852-
4854 of 2002.
4) Leave granted in S.L.P.(C) No. 4901 of 2006.
5) In this appeal, when the Jammu & Kashmir Bank filed
execution petition before the District Judge against a
borrower, the District Judge, taking note of the Debt Relief
Scheme applied the said Scheme and dismissed the execution
petition by order dated 4.4.2002. Challenging the said order,
the Jammu & Kashmir Bank Ltd. filed Civil Revision Petition
No. 77 of 2002 before the High Court and the same was
dismissed on 20.5.2003. Being aggrieved by the said
judgment, the appellant-Bank filed Review Petition (C) No. 8
of 2005 before the High Court contending that agricultural
matters are not included within the Debt Relief Scheme as
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communicated by the Reserve Bank of India. The High Court
dismissed the same by an order dated 16.9.2005. Against the
abovementioned orders in civil revision petition and the review
petition respectively, the appellant-Bank has filed this appeal.
6) Since one and only issue in all these cases relates to
applicability of Debt Relief Scheme of the Government of India,
we dispose of the same by the following common order.
7) Heard Mr. Raju Ramachandran, learned senior counsel
appearing for the appellant-Banks.
8) Prior to 1996, the respondents borrowed loans from the
appellant-Banks. The said loans were advanced to them to
purchase sheep and buffalos, establish dairy units or for hob
cultivation. Except few, most of the loans advanced was below
Rs.10,000/-. Since the loanees did not repay the loan
amount, the Banks filed regular suits in sub-Court, Rajouri.
During the pendency of these suits, considering the continued
militancy and other difficulties, the Government of India
framed a Scheme giving relief to the borrowers from the
Banks, Financial Institutions etc. In all these cases, we have
to decide,
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(i) Whether the loans obtained by the respondents for
purchasing of sheep and buffalos, establishing dairy
units etc. were covered by the Scheme; and
(ii) In the absence of specific plea by the respondents-
loanees whether the Court is justified in granting relief
in terms of the Scheme.
In order to find out the answer for the above points, it is
useful to refer the communication of the Government of India,
Ministry of Finance, Department of Economic Affairs
addressed to all the Banks of the Jammu & Kashmir Region.
The said communication (Annexure P-1) reads as under:
“No. F.11(08)/96-CP
Government of India
Ministry of Finance
Department of Economic Affairs
(Banking Division)
Jeevan Deep Building, Sansad Marg,
New Delhi, the 26th May, 1997
The Chairman,
IDBI/ICICI/IFCI
The Chairman/Managing Director,
(All Scheduled Commercial Banks)
The Jammu & Kashmir Bank Ltd.
Srinagar
Subject : – Debt Relief Scheme for the Borrowers
In the State of Jammu & Kashmir
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Dear Sir,
I am directed to say that it has been decided to extend
relief by way of write off of eligible loans taken from
banks/financial institutions up to and inclusive of Rs.50,000/-
as principal, together with outstanding interest, in the case of
borrowers in the State of Jammu & Kashmir only who suffered
on account of militancy in the State. Accordingly, a Scheme
known as “Debt Relief Scheme for the Borrowers in the State of
Jammu & Kashmir” has been prepared and a copy thereof is
enclosed for your information and necessary action. The
Scheme will come into force with immediate effect.
2. The contents of the Scheme are self explanatory.
In case there are any points that require clarification,
suitable references may be made to this Division
immediately. It may please be noted that no application
from the eligible borrowers is necessary for providing relief
under the Scheme. You are advised to implement the
Scheme immediately by issuing suitable administrative
instructions to your Branches/Offices.
3. It may be clarified here that under this Scheme only commercial
loans/credit limits up to and inclusive of Rs.50,000/- as principal
granted by Banks/Financial Institutions to the borrowers in the
State of Jammu & Kashmir for their business activity viz., tourism,
transport, small scale industry, trade sector, hotel, house boat,
business, retail trade, etc., are eligible for relief. However,
loans/credit limits granted against banks’ own deposits or any
other deposit, National Savings Certificates, Government
Securities, Shares and Debentures, Mutual Funds, LIC policies,
etc. and/or loans for purchase of any consumer durables etc. will
not be eligible for any relief under the Scheme.
4. Under the Scheme, the borrower is required to be advised in
writing by the bank/financial institution concerned about the
extent of relief provided in each account. A proforma in which the
borrower may be advised is enclosed with the Scheme for your
information and necessary action.
5. In terms of paragraph 5 of the Scheme, banks/financial
institutions are required to submit a detailed claim statement
sector-wise/borrower-wise as per proforma `A’ enclosed with the
Scheme. The claim statement should be signed by an officer not
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below the rank of General Manager in case of Jammu & Kashmir
State Financial Corporation/Jammu * Kashmir Bank Ltd. and
Chief State Level Officer i.e. Regional/Zonal/Divisional Manager in
respect of other banks/financial institutions. The claims on the
prescribed proforma may be lodged by banks/financial institutions
to the Director(Finance), State Department of Finance,
Government of Jammu & Kashmir, Civil Secretariat, Srinagar. The
last date for submissions of the claim shall be 30th September,
1997.
6. Necessary steps for speedy implementation of the Scheme may
please be initiated at your and the relief under the Scheme be
provided expeditiously.
Yours faithfully.
Sd/-
(G.R. Summan)
Deputy Secretary to the Government of India”
The appellant-Banks have also placed the Scheme called
“Debt Relief Scheme for the borrowers in the State of Jammu
& Kashmir”. The perusal of the communication of the
Government of India, Ministry of Finance as well as the
Scheme shows that the main purpose of the Scheme was to
give relief to the militancy hit borrowers of the State of Jammu
& Kashmir. As per the Scheme, loans which have been
sanctioned for business activities, namely, tourism, transport,
small scale industry, trade sector, hotel, house boat business,
retail trade etc. and which were existing in the books of
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accounts as on 30.6.1996 have been waived off with
immediate effect. For applicability of the said Scheme, three
conditions have to be fulfilled:
(i) The loan should be existing as on 30.6.1996 in the
books of accounts.
(ii) It should not exceed Rs.50,000/-.
(iii) The loan should have been advanced for any of the
purposes referred above.
If these three conditions are fulfilled, the loan is deemed to
have been waived off. Though the respondent-defendants did
not contest the suit by filing written statements, it is not in
dispute that those loans were kept pending and shown in the
books of accounts of the Banks as on 30.6.1996. It is also
not in dispute that the amount borrowed has exceeded
Rs.50,000/-. In fact, most of the loan amounts were below
Rs.10,000/-. However, the strong objection of the appellant-
Banks before the Courts below as well as in this Court is
regarding the purpose of the loan i.e. the Scheme was
intended to give relief to the traders for business activities
and herein the respondents borrowed loans for purchase of
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sheep and buffalos, establishing dairy units etc. which are
alike to agriculture 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 sub-clauses 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 Rs.50,000/- granted to the
borrowers in the State of Jammu & 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 on 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
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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, and
running of dairy unit etc. being agriculture loan, does not fall
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 activities, it cannot be
denied that from the buffalos, the borrower can establish a
dairy unit and earn 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 Scheme was introduced
mainly as a relief to the borrowers (emphasis supplied) in the
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militant dominated State during the relevant 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
India itself with the assistance of the State of Jammu &
Kashmir brought a Scheme called “Debt Relief Scheme” and
the same was available on the date when all the suits were
pending, considering the special circumstances, we are of the
view that the course adopted by the Courts below cannot be
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faulted with. Though such recourse is alien to the civil
proceedings, in view of the peculiar facts and circumstances
as noted in the loan waiver scheme and the other reasons
mentioned in the paragraphs supra which were noted by the
Courts below, we are not inclined to interfere in these appeals.
12) Regarding the order dated 28.9.2000 passed by the High
Court in Civil Revision No. 165 of 1999, it is true that while
considering the civil revision petition filed against the order
passed by the executing Court, the High Court relying on the
provisions 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, therefore,
excluded from the scheme, quashed the order of the trial
Court and directed the executing Court to restore to its
original number and proceed with the matter in accordance
with law. Learned senior counsel, by pointing out the above
said order of the very same High Court, submitted that the
said order passed in the civil revision petition is in consonance
with the Scheme and prayed for similar order in all the other
appeals. For the reasons stated in the earlier paragraphs with
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regard to the Civil Appeals 4817-4851/2002 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
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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 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
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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
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,
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 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 interpretation of the Courts below in the
light of the various clauses in the Scheme itself and also of the
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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.
…………………………………..J.
(P. SATHASIVAM)
…………………………………..J.
(AFTAB ALAM)
NEW DELHI;
AUGUST 29, 2008.
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