Nazir Ahmad Sofi vs Chairman J&K Bank Limited And Others

Sanjeev Kumar, J

This appeal by the appellant is directed against an order passed by Principal District Judge, Anantnag (the trial court) on 19.11.2018 in an application filed for grant of temporary injunction in a suit for declaration and injunction titled Nazir Ahmed Sofi versus Chairman J&K Bank Limited and others.

With a view to appreciate the grounds of challenge projected by the appellant to assail the impugned order, it would be necessary to briefly notice few facts.

The appellant (plaintiff before the trial court) approached the respondent bank in the year 2010 for sanction of loan in the shape of cash credit facility in his favour. The respondent bank after verifying the assets of the business and other properties of the appellant sanctioned a cash credit facility to the tune of Rs.16.00 lakh and the same was secured by a mortgage and hypothecation deed as also third party guarantee. The respondents 5 and 6 stood as guarantors of the appellant with respect to the cash credit facility (loan) granted in his favour.

It is the case of the appellant that his account was running in a smooth and proper manner and to the satisfaction of the respondent bank and because of this reason the respondent bank even enhanced his cash credit limit to Rs.25.00 lakh in the year 2014. To the enhanced limit also, respondents 5 and 6 stood as guarantors.

The petitioner claims that in September 2014 his brick kiln, which was financed by the bank, got severely damaged in floods. The insurance company i.e. Bajaj Allianz General Insurance Company Limited, which had insured the brick kiln also failed to settle his claim. He further submits that while he was battling adversity, there was another flood in 2015 which yet again caused extensive damage to his unit. To be precise, the appellant has tried to make out a case for not paying the monthly installments of the loan as per schedule. He submits that the respondent bank, instead of declaring his account as non-performing asset (NPA), proceeded against respondents 5 and 6, the guarantors, and deducted amount of instalment from their personal accounts. He claims that had the respondent bank followed the circular guidelines issued by Reserve Bank of India and declared his account as NPA in the year 2014 itself, he would have been entitled to one time settlement and interest remission. This is, precisely, the pith and substance of the grievance projected in the suit by the appellant.

The trial court initially by way of an ad interim order directed the respondent bank not to deduct the loan instalments from the accounts of the guarantors and also not to freeze their accounts. The matter was contested by the respondent bank and the trial court after considering the stand of the bank and hearing both the sides, vacated the interim order by passing the impugned order.

The impugned order has been assailed by the appellant primarily on the grounds which he urged before the trial court and have been elaborately considered in the impugned order. The short grievance as I understood from the arguments of the learned counsel for the appellant as also from the perusal of the record appears to be that on the default of the appellant to pay the loan installments in time, the respondent bank should not have proceeded against the guarantors and rather his account should have been declared as NPA. The appellant seeks declaration of his account as NPA in order to seek the benefit of one time settlement and interest remission in terms of some circular guidelines issued by the RBI.

The trial court has elaborately dealt with the submissions of the appellant and has very correctly held that the liability of the guarantors in case of loan is joint and several and it is always in the discretion of the lender to proceed against all or any of them. As is seen, the guarantors are persons of means and, therefore, the bank committed no illegality in deducting the amount of instalment from their salary accounts. Since the bank was able to recover the instalments from the guarantors, there was no occasion for declaring the account of the appellant as NPA.

The appellant has not been able to demonstrate convincingly that either under some statutory provision or even under the guidelines issued by RBI, the appellant, as a matter of right, was entitled to have his account declared as NPA. It is trite that no one can claim benefit of his own wrong. I am aware that under the aegis of RBI, there are schemes floated from time to time providing an opportunity to the defaulters of the banks to go for one time settlement and in that eventuality certain remission in the rate of interest too is granted. But this benefit is envisaged only for those who have genuinely not been able to pay their debts and the banks have failed to recover the amounts. Such schemes, however, cannot be claimed by the persons by deliberately going in default and then claiming declaration of their loan account as NPA, only to avail of the benefit of one time settlement and interest remission. The trial court has very well appreciated the cardinal principles of grant of interim injunction and has not found a prima facie case in favour of the appellant.

While concurring with the view taken by the trial court, I find no merit in this appeal, same is accordingly dismissed.