Jammu Rural Bank Vs.
Mohd. Din & Ors.  INSC 1459 (29 August 2008)
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)
P. Sathasivam, J.
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, 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.
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 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 Court of Jammu and
Kashmir at Jammu.
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.
granted in S.L.P.(C) No. 4901 of 2006.
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 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.
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
Mr. Raju Ramachandran, learned senior counsel appearing for the
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, 5 (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.
communication (Annexure P-1) reads as under:
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 6
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 7 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.
(G.R. Summan) Deputy Secretary to the Government of India"
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 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
(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 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:
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 certain
examples viz., tourism, transport, small scale industry, trade sector, hotel,
house-boat business, retail trade, etc.
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 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.
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 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.
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 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.
the light of the above discussion, we conclude the above-mentioned questions as
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 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
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 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.
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 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.