As per agreement terms Kolkata court did not have jurisdiction to try suit, SC.
As per agreement terms Kolkata court did not have jurisdiction to try suit, SC.
Uniworth availed credit facilities from ICICI Bank. On non payment, bank assigned their claim in favor of ARCIL. ACRIL contracted with EXCEL for sale of properties. On breach, EXCEL filed suit of specific performance. ACRIL filed application for lack of jurisdiction for revocation of leave granted. HC admitted it. On appeal HC held, agreement clear that intention of parties was to restrict limitation to courts of Mumbai only & not kolkata.-000168
1. The petitioner filed writ petition praying to declare that the Guidelines bearing No. RBI/2014-15/74 DBOD No. BP.BC.9/21.04.2014-15 dated 1-7-2014 purportedly issued by the Reserve Bank of India, by which the Petitioner's Firm account had been classified as NPA or likely to be classified so, and there upon the Respondent-Bank could invoke section 6, 13 or 14 and thereby assign, alienate, transfer or take possession of the properties of the petitioner/his firm, which the respondent bank falsely claimed to be a secured asset at its hands, was ultra vires, unconstitutional, and void, so also that any proceedings or action in terms of section 6, 13 or 14.
2. It was contended by the petitioner that the source of power for issuance of the guidelines dated 1-7-2014 was not referred. The petitioner was aggrieved by the fact that the guidelines, referred to by him, had the power of classifying the petitioner's loan asset as 'Non-Performing Asset' (in the NPA).
3. The petitioner's contention was that since, the source of power was not declared, it was per se bad in law and, therefore, all actions which flow therefrom were also without authority of law.
HC held as under:
4. Perusal of definition of NPA u/s 2(1)(o) itself would show that the Act defines an NPA as an asset or an account of the borrower, which is classified by a bank or a financial institution, as a 'sub-standard', 'doubtful' or 'loss asset'.
5. As to how an asset has to be classified, is to be provided in the asset classification guidelines issued by any authority or body constituted or appointed by law for the time being in force to administer or regulate any bank or financial institution. In all other cases, the Reserve Bank of India (the RBI) has been given the power of classification.
6. The RBI had provided for guidelines for declaring assets as NPAs, and those, guidelines were known as : 'RBIs prudential norms on income recognition, asset classification and provisioning-pertaining to advances', which were issued via a circular dated 30-8-2001.
7. From time to time, the RBI has updated these guidelines. The guideline, referred to by the petitioner, is the one such guideline.
8. The central issue raised in the petition which is the source of power is clearly discernible on reading of section 35A of the Banking Regulation Act, 1949. Under that section, the RBI is empowered to issue directions from time to time.
9. Having regard to the aforesaid, there is no merit in the writ petition. The same is dismissed.
10. It is well-settled that even if the source of power is not mentioned in a document that by itself will not render the document bereft of legal force. There is no doubt that power exists, with the Reserve Bank of India to issue, such like, guidelines for asset classification.
Case Reference-Excel Dealcomm (P.) Ltd. v. Asset Reconstruction Company (India) Ltd
SUPREME COURT OF INDIA
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