ORIENTAL BANK OF COMMERCE versus SUNDER LAL JAIN & ANR.

Citation: [2008] 1 S.C.R. 213 · Decided: 08-01-2008 · Supreme Court of India · Bench: G.P. MATHUR · Disposal: Case Allowed

Judgment (excerpt)

[2008] 1 S.C.R. 213 
ORIENTAL BANK OF COMMERCE 
A 
V. 
SUNDER LAL JAIN & ANR. 
(C.A. No. 82 of 2008) 
JANUARY 8, 2008 
B 
(G.P. MATHUR AND AFTAB ALAM, JJ.) 
Banking I Banks: 
'1 
Non-performing Assets (NPA) - Declaration of in terms 
of Reserve Bank of India's guidelines - Bank granting credit c 
facility to respondent-customer who defaulted in repayment 
of amount - Recovery petition - Allowed by Debt Recovery 
Tribunal - Respondent filing writ petition for direction to Bank 
to apply RBI guidelines for reconciliation and settling accounts 
and to declare their account as NPA from a specified date -
D 
Allowed by High Court directing the Bank to recover the 
amount by quarterly instalments over a period of two years -
A 
On appeal, Held: Statement by counsel of the Bank that his 
client would consider suggestions given by other side for 
considering his account as NPA from the specified date would E 
not amount to consent by the Bank - Thus, there was no 
consent given by bank to declare the amount as NPA from 
the specified date - Moreover, revised guidelines issued by 
RBI will be applicable to NPAs classified as sub-standard -
However, account of respondent-customer was performing. F 
.A 
·~ 
account during the period -
Under the circumstances, 
respondent's account cannot be declared as NPA from 
specified date - Hence RBI guidelines inapplicable-
Recovery of Debt Due to Banks and Financial Institutions Act, 
1993- S.20. 
G 
Writ of Mandamus - Issuance of- Held: High Court erred 
')( 
in issuing a writ of mandamus directing the appellant-bank to 
declare respondent's account as NPA from specified date 
since for issuance of the writ there must be a legal right and 
213 
H 
214 
SUPREME COURT REPORTS 
[2008] 1 S.C.R. 
.A respondent failed to show existence of such right - Writ 
Jurisdiction of High Court. 
Execution Proceedings - Staying of - Held: Order/ 
Decree passed by Debt Recovery Tribunal having not been 
B 
challenged, attained finality - Therefore, execution of the 
decree could not be stayed. 
Words & Phrases: 
'Afan-performing assets' -
Meaning of in terms of 
.,, 
' 
guidelines issued by Reserve Bank of India. 
c 
Respondents were sanctioned credit facility for 
Rs.20 lakhs by the appellant-Bank. They defaulted in 
repayment of the amount and their account was declared 
as Non Performing Assets (NPA) on 31.3.2001. The Bank 
D filed a petition against the respondents before the Debt 
Recovery Tribunal (ORT). The petition was allowed by 
ORT by passing a decree in favour of the Bank for recovery 
of Rs.20,27,862/- along with interest. The Bank initiated 
-,.,, 
execution proceedings for recovery of the amount and 
recovery certificates were issued to respondents. The 
E respondents did not file any appeal challenging the order/ 
decree passed by the ORT. Instead, the respondents filed 
writ petitions before Delhi High Court praying to issue a 
direction to the Bank, to declare their account as NPA from 
31.3.2000 and apply RBI Guidelines for reconciliation and 
F settling their accounts. The petitions were allowed by the 
., 
A 
High Court. Hence the present appeal. 
Appellant-Bank contended that it had filed a suit for 
recovery of the amount and the same had been decreed 
and thereafter a recovery certificate had also been issued 
G in the execution proceedings initiated by it; that 
respondents did not file any appeal to challenge the 
decree passed by the ORT and, therefore, the same 
attained finality; and that the writ petition filed by the 
respondents to declare their account as NPA from 
H 31.3.2000 and to apply the RBI guidelines to their case 
ORIENTAL BANK OF COMMERCE v. 
215 
SUNDER LAL JAIN & ANR. 
was not at all maintainable and the order passed by the A 
rf 
High Court is clearly erroneous in law. 
Respondents submitted that the order had been 
passed on consent of the parties and, therefore, it is not 
open to the appellant to challenge the same. 
B 
.Allowing the appeal, the Court 
HELD: 1. The order of the High Court mentions that 
f 
t 
the Bank has agreed to consider the suggestions/request 
made by the respondents. It only means that the bank will c 
examine and consider. "Consider" means - to look at 
closely and carefully; to think or deliberate on; to take 
. 
. 
into account. There was thus no consent on the part of 
the appellant bank to declare the account in question as 
Non Performing Account from 31st March, 2000. A 
statement by a counsel for a party that his client will 

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