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Judgment
Jayant Patel, J.—In all the matters, as the common question arises for consideration, they are being considered by this common order.
The learned Counsel appearing for both the sides are heard for final disposal of the matter, hence Rule.
All the petitioners are claiming status of the agriculturist as entitled to the benefit of the scheme floated by Government of India known as Agricultural Debt Waiver and Debt Relief Scheme, 2008 (hereinafter referred to as ''the Scheme''). It appears that earlier the Bank did not take any action on proposal for consideration of the cases of the petitioners in the scheme, therefore, some of the petitioners had preferred Special Civil Application No. 10192/2008 and allied matters seeking directions to the Bank for consideration of the case for extending the benefit under the Scheme and this Court vide judgment dated 15.09.2008, in the said group, had issued following directions in para 12 of the said judgment, which reads as under:
(a) The debts shown in the respective suits, which are subject matter of the concerned petitions, can be said as covered by the Agricultural Debt Waiver and Debt Relief Scheme 2008.
(b) Consequently, obligation as per the scheme would stand created upon the petitioners to deposit the requisite amount and upon the respondent No. 3 Bank to forward the proposal as per the Scheme through nodal banks/agencies.
(c) The respondent No. 3 Bank, within one week, shall intimate to the petitioners concerned, the requisite amount, if any, to be deposited for claiming the benefits under the Scheme.
(d) If the concerned petitioners comply with the formalities as required under the Scheme, including the requisite amount to be deposited, the proposal shall be forwarded as per the Scheme by respondent No. 3 Bank to the concerned authorities/nodal banks, who shall consider the matter in accordance with law.
(e) It is clarified that in the event the debts waiver or the debts relief is not made admissible by the competent authority in respect to the debts of the concerned petitioners, it would be open to the concerned petitioners to challenge the decision in accordance with law and the respondent No. 3 Bank shall also be at liberty to take action in accordance with law for recovery of the outstanding amount, which is the subject matter of the suits, if otherwise not prohibited by any forum known to law.
It appears that thereafter the applications for modification was preferred by those petitioners being MCA No. 715/2009 in SCA No. 11062/2008 and allied matters and this Court in the said applications, issued directions in para 6 of order dated 23.06.2009 as under:
Hence, it is directed that the respondent No. 3 Bank shall intimate to the concerned applicant the full details of the amount payable on -
Date of the Scheme
The amount to be set of as per the Scheme, if ultimately approved by the Nodal Agency and the Government.
The remaining amount, if any, to be paid.
While communicating the same, the respondent No. 3 Bank shall take into consideration the judgment and the order dated 15.09.2008 passed by this Court in SCA No. 10192/2008 and allied matters.
Such communication shall be made preferably within a period of 15 days from the receipt of the order. Until such communication is made to the concerned applicants by the opponent No. 3 Bank, there shall not be any further recovery. Further, after the communication, the rights of the parties shall stand governed in accordance with law.
It appears that thereafter as per the petitioners herein, in certain cases communication was effected whereas in certain cases, there was no further communication but as per the petitioner, the Bank insisted for further recovery of the outstanding amount and at that stage the petitioners have approached this Court seeking appropriate writ to direct the respondents to extend the benefits to the petitioners under the Scheme for the various amounts which are mentioned in the respective petitions.
It appears that the Bank did forward the proposal in majority of the cases. The matter was also examined by Reserve Bank of India which is the Nodal Agency. However, as per RBI, on account of certain clarifications issued by Central Government, the benefits which are claimed by the concerned petitioners are denied and it has been submitted that as per RBI, the benefits are available to the majority of the petitioners under Clause 3.3(b) of the Scheme which provides for the relief of 25% of the outstanding debt and not to the fullest extent as contended by the petitioners.
The contention raised by RBI to the entitlement of the Scheme will have to be considered separately as stated hereinafter. However, it would be profitable to extract the Scheme itself for consideration of the matter. The relevant extract of the Scheme of 2008 provides as under:
Agricultural Debt Waiver and Debt Relief Scheme, 2008
Introduction
1.1. The Finance Minister, in his Budget Speech for 2008-2009, announced a Debt Waiver and Debt Relief Scheme for farmers.
1.2. Guidelines for implementation of the Scheme are given below:
Scope
2.1 The Scheme will cover direct agricultural loans extended to ''marginal and small farmers'' and ''other farmers'' by Scheduled Commercial Banks, Regional Rural Banks, Cooperative Credit Institutions (including Urban Cooperative Banks) and Local Area Banks (hereinafter referred to compendiously as ''lending institutions'') as indicated in the Guidelines.
2.2 The Scheme shall come into force with immediate effect.
Definitions
3.1 ''Direct Agricultural Loans'' means Short Term Production Loans and Investment Loans provided directly to farmers for agricultural purposes. This would also include such loans provided directly to groups of individual farmers (for example Self Help Groups and Joint Liability Groups), provided banks maintain disaggregated data of the loan extended to each farmer belonging to that group.
3.2 ''Short Term Production Loan'' means a loan given in connection with the raising of crops which is to be repaid within 18 months. It will include working capital loan, not exceeding Rs. 1 lakh, for traditional and non-traditional plantations and horticulture.
3.3 ''Investment Loan'' means
(a) Investment credit for direct agricultural activities extended for meeting outlays relating to the replacement and maintenance of wasting assets and for capital investment designed to increase the output from the land, e.g. deepening of wells, sinking of new wells, installation of pump sets, purchase of tractor/pair of bullocks, land development and term loan for traditional and non-traditional plantations and horticulture; and
(b) investment credit for allied activities extended for acquiring assets in respect of activities allied to agriculture e.g. dairy, poultry farming, goatery, sheep rearing, piggery, fisheries, bee-keeping, green houses and biogas.
3.4 ''Cooperative Credit Institution'' means a cooperative society that
i) provides short-term crop loans to farmers and is eligible for interest subvention from the Central Government; or
ii) carries on banking activities regulated or supervised by RBI or NABARD; or
iii) is part of the Short-Term Cooperative Credit Structure or Long-Term Cooperative Credit Structure in a State or Union Territory.
3.5 ''Marginal Farmer'' means a farmer cultivating (as owner or tenant or share cropper) agricultural land up to 1 hectare (2.5 acres).
3.6 ''Small Farmer'' means a farmer cultivating (as owner or tenant or share cropper) agricultural land of more than 1 hectare and up to 2 hectares (5 acres).
3.7 ''Other Farmer'' means a farmer cultivating (as owner or tenant or share cropper) agricultural land of more than 2 hectares (more than 5 acres).
Explanation:
The classification of eligible farmers as per the above landholding criteria under the Scheme would be based on the total extent of land owned by the farmer either singly or as joint holder (in the case of an owner-farmer) or the total extent of land cultivated by the farmer (as tenant or share cropper), at the time of sanction of the loan, irrespective of any subsequent changes in ownership or possession.
In the case of borrowing by more than one farmer by pooling their landholdings, the size of the largest landholding in the pool shall be the basis for the purpose of classification of all farmers in that pool as ''marginal farmer'' or ''small farmer'' or ''other farmer''.
In the case of a farmer who has obtained investment credit for allied activities where the principal loan amount does not exceed Rs. 50,000, he would be classified as ''small and marginal farmer'' and, where the principal amount exceeds Rs. 50,000, he would be classified as ''other farmer'', irrespective in both cases of the size of the landholding, if any.
Direct agricultural loan taken under a Kisan Credit Card would also be covered under this Scheme subject to these Guidelines.
A short-term production loan and an investment loan taken by a farmer shall be counted as two distinct loans and the Scheme will apply to the two loans separately. Likewise, in the case of a farmer who has taken two investment loans for two separate purposes, the two loans shall be counted as two distinct loans and the Scheme will apply to the two loans separately.
Eligible amount
4.1 The amount eligible for debt waiver or debt relief, as the case may be (hereinafter referred to as the ''eligible amount''), shall comprise of:
(a) in the case of a short-term production loan, the amount of such loan (together with applicable interest);
(i) disbursed up to March 31, 2007 and overdue as on December 31, 2007 and remaining unpaid until February 29, 2008;
ii) restructured and rescheduled by banks in 2004 and in 2006 through special packages announced by the Central Government, whether overdue or not; and
iii) restructured and rescheduled in the normal course up to March 31, 2007 as per applicable RBI guidelines on account of natural calamities, whether overdue or not.
(b) in the case of an investment loan, the installments of such loan that are over due (together with applicable interest on such installments) if the loan was:
(i) disbursed up to March 31, 2007 and overdue as on December 31, 2007 and remaining unpaid until February 29, 2008;
(ii) restructured and rescheduled by banks in 2004 and in 2006 through the special packages announced by the Central Government; and
(iii)restructured and rescheduled in the normal course up to March 31, 2007 as per the applicable RBI guidelines on account of natural calamities.
Explanation: In the case of an investment loan disbursed up to March 31, 2007 and classified as non-performing asset or suit filed account, only the installments that were overdue as on December 31, 2007 shall be eligible amount.
4.2 The following loans shall not be included in the eligible amount:
(a) advances against pledge or hypothecation of agricultural produce other than standing crop; and
(b) agricultural finance to corporates, partnership firms, societies other than cooperative credit institutions (referred to in para 3, 4), and any similar institution.
4.3 Nothing contained in this Scheme shall apply to any loan disbursed by a lending institution prior to March 31, 1997.
Debt Waiver
5.1 In the case of a small or marginal farmer, the entire ''eligible amount'' shall be waived.
Debt Relief
6.1 In the case of ''other farmers'', there will be a one time settlement (OTS) Scheme under which the farmer will be given a rebate of 25 per cent of the ''eligible amount'' subject to the condition that the farmer pays the balance of 75 per cent of the ''eligible amount'';
Provided that in the case of revenue districts listed in Annex-I, ''other farmers'' will be given OTS rebate of 25 per cent of the ''eligible amount'' or Rs. 20,000, whichever is higher, subject to the condition that the farmer pays the balance of the ''eligible amount''.
It would also be profitable to extract certain observations of this Court after having considered the Scheme in the decision dated 15.09.2008 in Special Civil Application No. 10192/2008, the relevant of which reads as under:
6.It appears that in the Scheme, the definition provides for direct agricultural loan, short term production loan and investment loan. The same reads as under:
Definitions
3.1 ''Direct Agricultural Loans'' means short Term Production Loans and Investment Loans provided directly to farmers for agricultural purposes. This would also include such loans provided directly to groups of individual farmers (for example Self Help Groups and Joint Liability Groups) provided banks maintain disaggregated data of the loan extended to each farmer belonging to that group.
3.2 ''Short Term Production Loan'' means a loan given in connection with the raising of crops which is to be repaid within 18 months. It will include working capital loan, not exceeding Rs. 1 lakh, for traditional and non-traditional plantations and horticulture.
3.3 ''Investment Loan'' means
(a) Investment credit for direct agricultural activities extended for meeting outlays relating to the replacement and maintenance of wasting assets and for capital investment designed to increase the output from the land, e.g. deepening of wells, sinking of new wells, installation of pump sets, purchase of tractor/pair of bullocks, land development and term loan for traditional and non-traditional plantation and horticulture;
(b) Investment credit for allied activities extended for acquiring assets in respect of activities allied to agriculture e.g. Dairy, poultry farming, goatery, sheep rearing, piggery, fisheries, beekeeping, green houses and biogas.
The aforesaid shows that practically all categories of loans given to the persons, who are in the agricultural activities are included. It also specifically provides for the investment credit for meeting outlays relating to the replacement and maintenance of wasting assets and for capital investment designed to increase the output from the land (e.g. Deepening of wells, sinking of new wells, installation of pump sets, purchase of tractor/pair of bullocks, land development and term loan for traditional and non-traditional plantation and horticulture and Investment credit for allied activities). The loans for acquiring assets in respect of activities allied to agriculture e.g. Dairy, poultry farming, goatery, sheep rearing, piggery, fisheries, beekeeping, green houses and biogas etc., are also included. The aforesaid definition practically covers various types of agricultural loans being given by the banks to the agriculturists.
If the averment made in the respective suit filed by the bank, which is produced in the respective petitions are considered, the learned Counsel for the respondent No. 3 Bank is not in a position to dispute that fact that in all the suits respondent No. 3 Bank had mentioned as loan for agricultural purposes. Therefore, the Bank now cannot contend that the loan was for the purpose other than the agriculture.
Apart from the above, as per the Scheme, when any debt is outstanding on the cut-off date, it would be required for the concerned agriculturists to deposit the requisite amount as per the scheme and it would be required for the concerned Bank to forward the proposal as per the scheme for debt waiver to the extent available in the scheme. No prejudice will be caused to respondent No. 3 Bank if the willingness is shown on the part of the petitioners concerned to deposit the requisite amount and the Bank forwards the proposal for waiver of the admissible debts as per the scheme. In the event the nodal agency of the final agency thereafter finds that the requisite amount for debt waiver is available, respondent No. 3 Bank is to receive the amount and for remaining amount the recovery in accordance with law read with the scheme can be undertaken. In any case, if ultimately the proposal is not accepted, then in that case also respondent No. 3 Bank can take the action in accordance with law for recovery of the amount. Therefore, in either case, no prejudice is to be caused to the respondent No. 3 Bank. Hence, the resistance shown on behalf of respondent No. 3 Bank cannot be countenanced.
Apart from the above, it deserves to be recorded that the scheme is floated by Government of India by way of extending the debt waiver and debt relief benefits to all the agriculturists, who are covered by the scheme. It does apply to the Cooperative Banks, rural or urban who have extended the loans as well as to urban coop. banks, who have also extended loans to concerned agriculturists. The perusal of the inbuilt mechanism of the scheme puts an obligation upon the concerned Cooperative Banks or the Urban Banks, as the case may be, to act upon the scheme in the matter of recovery of the debts against the agriculturists, if such exists on the cut-off date of 29.2.2008. The proposal is required to be forwarded through the nodal agency and not only that but a mechanism is also provided for monitoring the scheme as per the Clause 14 of the Scheme. Therefore, it does not lie in the mouth of the respondent No. 3 Bank, which is a Cooperative Bank and it is also covered under the Scheme, to contend that no obligation arises on it for which a mandamus may not be issued by this Court. The Scheme creates an obligation upon all concerned banks to submit the proposal through the nodal agency and the recovery proceedings are also to be undertaken accordingly. It simultaneously creates an obligation upon the concerned agriculturists also to deposit the requisite amount as per the Scheme for entitlement under the Scheme. Therefore, considering the peculiar facts and circumstances that the scheme is for all the agriculturists of the country and there is an obligation created upon the banks as well as the concerned agriculturists, it would not be a case to decline the writ to the petitioners on the ground that the respondent No. 3 Bank is a Cooperative Bank and not a ''State'' within the meaning of Article 12 of the Constitution of India. As such for the implementation of the Scheme, respondent No. 3 Bank being a Cooperative Bank, a public duty can also be said as created upon the Bank for giving effect to the Scheme floated by the Government of India, which is for the benefits of the agriculturists concerned of the area, who are members of the Bank as well as for the recovery to be made from the funds of the Government of India as per the scheme. Therefore, the contention raised by the learned Counsel for respondent No. 3 cannot be accepted. (Emphasis supplied)
In order to further examine the controversy, Clause 3 of the Scheme and more particularly, 3.1, 3.2 and 3.3 would assume importance so as to maintain or negative the contention of the Reserve Bank of India on the aspects of interpretation of the Scheme. Para 3.1 includes direct agricultural loan comprising of two categories. One is Short Term Production Loan and another is the Investment Loan. Para 3.2 of the Scheme defines Short Term Production Loan as a loan given in connection with the raising of the crop and such loan is to be repaid within 18 months and the upper limit is provided up to Rs. 1 lakh. The pertinent aspect is that such loans are to include the loans given for all traditional and non-traditional plantations and horticulture. Para 3.3 of the Scheme defines the Investment Loan out of which Clause (a) provides loans given for direct agricultural activities to meet with the outlays relating to (1)replacement and/or maintenance of wasting assets and (2) for capital investment designed to increase the output of the land. For e.g. deepening of well, sinking of new well, installation of pump sets, purchase of tractor/pair of bullocks, land development and (3) the term loan for traditional and non-traditional plantation and horticulture. Therefore, such loans have to be other than Short Term Loan, a Medium or Long Term Loan. The purpose of the loan could be the replacement and maintenance of wasting of the assets. Therefore, if the loan is given for preservation and for better utilization of th agricultural land for agricultural purposes, such loans, would stand included. In the same manner, if the loans are given to increase the output from the agricultural land, such are also included. If the Term Loan is given for traditional and non-traditional plantation and horticulture then such loans are also included. The examples given for capital investment designed to increase the output from the land, can be read as inclusive and not exhaustive. Further, it appears that the Term Loan given for traditional and non-traditional plantation and horticulture is at par with the other Production Loan but the only difference is that as per para 3.2 of the Scheme, it has to be Short Term loan for a period of 18 months and not exceeding Rs. 1 lakh whereas no such limit has been provided for the investment loan as per Para 3.3(a). The other category of investment loan are provided under para 3.3(b) being Investment Credit for allied activities extended for acquiring assets for the activities allied to the agricultural like dairy, poultry, farming, goatery, sheep rearing, piggery, fisheries, beekeeping, green houses and biogas. Therefore, investment loans are broadly classified into two separate categories (1) For the activities pertaining to the agriculture directly and (2) for activities allied to the agricultural activities.
The definition of marginal and small Farmers and other farmers are self explanatory and the separation of each category is based on the holding of the farmer concerned of the agricultural land at the relevant point of time which can be verified after examination of the concerned revenue record for such purpose.
Therefore, it appears that when any proposal is received by the concerned agency or the authority, if any doubt is created about the category of the farmers or the applicant concerned, the agency or the authority may insist for the certified copy of the revenue record for the holding of the agricultural land and if based on such record, one is holding agricultural land up to 2.5 acres, he would be marginal farmer and if he is holding the agricultural land more than 2.5 acres but up to 5 acres then, he would fall in the category of small farmers and if he is holding the agricultural land exceeding 5 acres then in that case, he would fall in the category of other farmers. The aforesaid aspects will be required to be considered by the concerned agency or the authority while categorizing the eligibility of the farmer for availing the benefit.
It may also be recorded that the explanation to para 3 shown vide Clause No. 3 that in case of a farmer who has obtained the investment credit for allied activities, which falls in the category of para 3.3(b) then in that case, if the loan amount does not exceed Rs. 50,000, he is to be treated as small and marginal farmer and if the loan exceeds Rs. 50,000, he would be classified as other farmers irrespective of the size of land holding. To say in other words, the classification as small and marginal farmers and other farmers is to be considered on the basis of the amount of the loan, if the case is to be examined for investment loan which falls in the category of para 3(b) for activities allied to the agriculture and the holding of the agricultural land in such cases by the farmer concerned, would be irrelevant. But one aspect is apparent that such benefit are available to the farmers only and not to a person who is not a farmer. Therefore, conjoint reading of Clause 3.3(b) with explanation 3 shows that the condition precedent for availing the benefit even for the loan of activities allied to agriculture is that, the person concerned must be a farmer. To say in other words, he or she must be holding agricultural land, may be of any size as per the revenue record because the language used is ''a farmer''.
In view of the aforesaid observations, the contention raised by the RBI for declining the benefit and/or for reducing the benefit of the Scheme deserves to be considered. The contentions raised on behalf of RBI can broadly be classified as under:
(1) If the Long Term Loan is given for agricultural cultivation, it would fall under para 3.3(b) of the Scheme and not under para 3.3(a) or para 3.2.
(2) If the loans are given for development of the agricultural land then in that case, such would not fall under para 3.3(a) or para 3.2 but may fall under para 3.3(b).
(3) The loans which are given for fencing of the agricultural land cannot be considered for the benefit of the Scheme.
(4) The loans given for activities allied to agriculture like dairy can be considered only if, they are by the agriculturist and not by any sole proprietary concern or partnership firm or any other institution. The loan taken by the partnership firm and/or any other institution or sole proprietary concern, would not be covered in this Scheme.
(5) If money of the loan is utilized for repayment of the earlier agricultural loan then also, such loans would not be covered under the Scheme.
(6) If the money of the loan is utilized for any other purpose than the purpose for which loan is granted, such loan would not be covered under the Scheme.
(7) If any criminal case is pending against the loanee then also such loan cases would not be covered under this Scheme.
(8) If the loan is given for purchasing of the agricultural land, the same would not be included in this Scheme.
(9) If the loan is already repaid prior to the relevant date for considering the outstanding amount and even if new loan is taken, by the same farmer, immediately after few days, such loan would also not fall in the category for extending the benefit of the Scheme.
(10) The loans given for construction of houses or repairing of the houses would not be included in the category of the loans for extending the benefits under the Scheme.
It may be recorded that RBI as well as Bank has made all the contentions on the basis of circular issued by the Central Government.
There is no substance in the first contention raised on behalf of RBI that the term loan given for agricultural cultivation would fall under para 3.3(b) and not under para 3.3(a) or para 3.2 of the Scheme and the reason obvious is that for agricultural loan, if it is short term, the same would fall under para 3.2 whereas if it is a long term or a medium term loan, it would fall under para 3.3(a). The language used in all such type of loans for a directly connected agricultural activities including the loans taken for traditional and non-traditional plantations and horticulture are included in the category of para 3.3(a). Therefore, if the loan is taken for the agricultural crop or for any type of plantation or horticulture but is a short term loan, it would fall under Clause 3.2 of the Scheme whereas if it is a long term loan or the mid term loan, it would fall under para 3.3(a). The loan taken for activities allied to agriculture are included in the category of para 3.3(b). Therefore, the said contentions raised on behalf of RBI deserves to be rejected. It is observed that if the term loan is taken for agricultural cultivations, it would stand included in the word traditional and non-traditional plantation and horticulture, the same would fall under the para 3.3(a) of the Scheme and not under para 3.3(b) of the Scheme.
The second contention raised for the loan given for development of the agricultural land, also deserves to rejected, more or less for the same reasoning, because so far as the loans taken for meeting with the requirement to the replacement and maintenance of the wasting of assets or any capital investment to increase the output of the land are included in para 3.3(a) of the Scheme. If any agriculturist has taken loan for development of the agricultural land for the purpose which results into increase of the output or the maintenance of the agricultural land or avoiding wastage of the agricultural land, all such activities are included and such loans taken for such purpose would fall under para 3.3(d) of the Scheme and not under para 3.3(b) of the Scheme as sought to be contended on behalf of RBI.
The third contention raised on behalf of RBI is that if the loan is given for fencing of the agricultural land, it cannot be considered for extending the benefit of the Scheme. It appears that maintenance and avoiding wastage of the agricultural land is one of the purpose which is included under para 3.3(b) of the Scheme. Further, fencing or protection of the agricultural land is directly related to increase of the input also and the reason being that if the land is without any protection of fencing or otherwise, the crop may be spoiled or may be wasted due to entry of the cattles of the nearby area or otherwise. Therefore, if the loan is granted for fencing of the agricultural land, such a loan would stand included in para 3.3(a) of the Scheme. Hence, the contention that the benefits are not available to such loan as per the Scheme, cannot be accepted.
The next contention raised is pertaining to the activities allied to the agriculture and inclusion or exclusion of such loans taken by any sole proprietary concern or partnership firm or any other institution. There is considerable force in the contention raised on behalf of RBI. If such contention is examined with the object of the Scheme, the object of the Scheme is essentially to extend the benefit to the farmer or the agriculturist. Such benefits are available under individual capacity as the farmers and the Scheme is not meant for extending the benefits to any business venture undertaken by any farmer or a group of farmers or anybody or institutions may be comprising of the farmers. Therefore, if any farmer has taken loan in his individual capacity for his activities allied to agriculture like dairy etc., he would be entitled to claim the benefit under the Scheme as per para 3.3(b) of the Scheme. However, if such farmer, by way of a business venture titling as a business concern, may be a sole proprietary concern or may be a partnership firm, have taken loan for doing business of dairy or other activities allied to the agriculture, the benefit of Scheme would not be available. If such benefits are extended, it may frustrate the very object of the Scheme for extending benefits to the farmers in their individual capacity and not to the business venture of such farmers. Therefore, the said contention deserves to be accepted.
The learned Counsel for the petitioner did contend that if the agriculturist or a farmer himself is doing the business as a sole proprietary concern, there will not be any legal distinction between the farmer and his sole proprietary concern and he also contended that if all farmers have joined together or by way of a partnership firm, legally their status would continue as that of the farmer coupled with the same circumstances in both the aforesaid cases, that they have also continued with their agricultural activities, therefore, there is no reason for denying the benefit to such a sole proprietary concern and or the partnership firm. He also contended that HUF is also like partnership firm therefore, if the benefit as per the circular of the Central Government is to be extended to the HUF, there is no reason why such benefit should not be extended to the partnership firm or a sole proprietary concern. He contended that there is nothing in the Scheme controlling or restricting benefit and it is only by way of a clarification of the Central Government such has been included, therefore, RBI has raised such contention. He submitted that the sole proprietary concern. He partnership firms of such type should be permitted to claim benefit.
As observed earlier, there is basic distinction between a farmer taking loan in his individual capacity as a farmer for activities allied to the agriculture and as a farmer taking loan by way of business venture for undertaking activities allied to the agriculture. Such will equally apply to the group of the farmers who undertake by way of a business venture by forming partnership firm for doing business of activities allied to agriculture. Further, if the question of law is to be considered qua third party, there may not be any distinction between sole proprietary concern or between the individual partners and the partnership firm but the matter cannot be examined and decided on the basis of the principles as sought to be canvassed but deserves to be examined keeping in view the object behind the Scheme. Therefore, the interpretation has to be, by applying the principles of purposive interpretation. Further, there is basic difference between sole proprietary concern or partnership firm and the HUF. HUF is not being formed but they exist on account of the family of each person if the properties are inherited from forefathers. Therefore, if the agricultural land is held jointly or there is already the HUF, it would stand on a different footing than by voluntary action of forming the partnership firm by some of the farmers or by voluntary action of any farmer undertaking a business venture as a sole proprietary concern. The purpose is not to exclude the HUF if it has taken loan for activities allied to agriculture and the reason being that if the land is held jointly by the HUF, and the loan is applied, for activities allied to agriculture, such loan would be sanctioned and available to HUF only and in those cases HUF will be more or less at par with the individual farmers. There is no element of volition in the formation of HUF whereas such element of volition would exist in case of the partnership firm, when a partnership firm is formed by the farmers. Therefore, keeping in view the aforesaid aspects and more particularly that in case of the business venture of the farmer or farmers as a sole proprietary or as a partnership firm, it is clarified by the Central Government and rightly contended by RBI that such benefit would not be available.
The contention was raised by the learned Counsel for the petitioner that in some of the cases, the partnership firm itself comprises of the family members or two family members, therefore, it should be treated at par with HUF. I am afraid, if such contention can be accepted and the reason obvious is that as observed earlier, the element of volition would be lacking in the HUF whereas such would exist in the partnership firm. Therefore, if the family members themselves are in HUF, there is no requirement to form a partnership firm nor different status can be claimed but if some of the members of the HUF are to be excluded and the remaining members are to form the partnership firm may be with some other members of the same family or with the members of the other family, then such would stand on a different footing and would be a business venture of such partnership firm, which would not be covered under this Scheme for claiming the benefit hence, the said contention cannot be countenanced.
Much has been argued on the aspect of utilization of the loan for repayment of the earlier agricultural loan or utilization of loan for the purpose other than the purpose for which the loan was granted. Such cases may also include the criminal cases which are pending against the loanee, therefore, it was contended on behalf of the RBI that all such cases deserves to be excluded for extending the benefit of the Scheme.
Normally it is true that if the loan is given for the activities of the agriculture or for activities allied to the agriculture, it would be required to be used for such purpose but at the same time if such agriculturist or the farmer has taken a loan at the earlier point of time and has not repaid fully or some amount is outstanding or that he is a guarantor to any loan transaction where the principal borrower is declared defaulter, then in those cases, such farmer may be declined the loan by the Bank. It may be that in such cases, the Bank may put the farmers on condition to repay the earlier outstanding loan and only thereafter the loans may be available or by making use of a portion of the money, the earlier outstanding loan may be repaid or otherwise. Therefore, keeping in view the said aspects, if the matter is considered objectively, it deserves to be held that the amount of loan should have been substantially utilized for the purpose for which the loan has been granted. But if the amount has been substantially utilized for repayment of the loan which was earlier taken, then it may stand excluded for claiming the benefit. Therefore, it appears that by balancing of both the situations, if the loan amount is used up to 25% for repayment of the earlier loan and 75% of the loan amount is used for the purpose for which the loan was granted, such loan transactions should be considered as eligible for claiming the benefit and any amount of loan utilized exceeding 25% for the repayment of the loan, would disentitle such loanee for claiming the benefit of the Scheme. It will be for the concerned agency or the Officer of the Bank including RBI to examine and verify the said aspects by examining the bank account of such loanee and the transfer entries, if any, for utilization of loan money for repayment of the loan or not. If the amount is not transferred for repayment of the loan, in absence of any other authenticated reliable material and not on a mere ipse dixit of the Bank, it is to be considered as used for the purpose for which the loan is granted. It is clarified that such observations would apply for the cases to be considered for the benefit of the Scheme and it may not apply to other proceedings, if any, initiated by the Bank against the loanee for default of the payment or otherwise.
If there is diversion of the fund of loan for the purpose other than the purpose for which the loan is granted, then in that case, such would disentitle the loanee to claim the benefit of the Scheme and the reason obvious is that the loan has been given for the agricultural purpose and the activities allied to the agriculture. If the fund is used for a different purpose, then in that case, such loans would not be governed under the Scheme for claiming benefit. Such aspects will have to be examined by the Nodal agency on the authenticated and reliable material and shall not be on the ipse dixit of any Officer of the Bank who has granted loan.
It is also a fact that criminal cases have been filed by cooperative banks against certain loanee/s, if promise to pay the loan is not honoured by the loanee or the guarantor. In such cases, it is only on account of the financial inability of the farmer concerned, the loan is not paid, such should not result into a disqualification to the farmers for claiming the benefit but if the criminal case is filed for concoction of any document in the transaction of loan or for diversion of the fund for the purpose other than for which the loan was granted or for siphoning of the funds by utilizing the fund for extraneous purpose, then in all such cases there would be valid grounds for denying the benefit to the loanee/s under the Scheme. It will be for the Bank and the nodal agency to examine the criminal complaint and the investigation, if any, made by the police and the papers of the chargesheet, if any, and to find out as to whether the criminal case is for only not honouring the promise to repay the loan or is for other offences also and thereafter to further process the proposal for extending the benefit of the Scheme or otherwise accordingly.
Mr. Trivedi, learned Counsel appearing for the petitioner contended that merely because the criminal case is filed or the charge-sheet is filed by the police, should not result into deprivation of benefit under the Scheme as if the convicted by the Criminal Court. He submitted that it may happen that ultimately in the criminal case, the accused farmer, may be acquitted also, but he would not be in a position to claim the benefit thereafter and it may create irreversible situation, therefore, mere filing of the complaint or mere filing of the charge-sheet may not be considered as a valid ground for dis-entitling the farmer to claim the benefit.
The conviction may not be there before the Criminal Court for various reasons and merely because one is acquitted by the Criminal Court, same cannot be concluded with all rights as per the Civil law. Also the rights under Civil law may be required to be considered differently and the reason being that standard of the proof and the requirement in criminal cases are different than under the Civil laws. However, in civil cases, the statement made before the Police Officer can be considered as the corroborative piece of evidence and if the opportunity of cross-examination is given, such evidence may assume importance. Therefore, if as per the bank, the fund has been diverted or that any documents are concocted and the police has also investigated and has found prima facie case for constitution of offences by filing charge-sheet, in my view, should be sufficient ground to dis-entitle the loanee to take the benefit of the Scheme. If such offenders-farmers are extended the benefit of the Scheme, it would frustrate the very object of the Scheme and would also be against the larger public interest. Therefore, the said contention cannot be accepted.
Mr. Trivedi further contended that even if the criminal cases are filed, in respective Lavad Suits filed against the farmer by the Bank, there is no allegation that the fund was diverted or there were any concocted documents etc., therefore, he submitted that the pendency of the criminal case or filing of the charge-sheet by the police deserves to be ignored for the purpose of claiming the benefit.
I am afraid, such contention can be accepted, if the Court has to exercise the powers under Article 226 of the Constitution by extra-ordinary discretionary writs. Such powers are not available to those persons who have indulged themselves into illegal activities and have procured the benefit therefrom. It may be that the criminal Court is yet to try the matter but the fact that chargesheet is filed by the police, prima facie would show the commission of offence and such would be, in my view, sufficient ground to decline the exercise of discretion in favour of such persons. Therefore, the said contention cannot be accepted.
There is considerable force in the contention raised by RBI that if the loan is given for purchasing the agricultural land, the same would not be included in the Scheme. Mr. Trivedi, learned Counsel for the petitioner contended that if the farmer is doing agricultural activity over the said agricultural land by purchasing out of the loan amount, it would be an agricultural activity, therefore, it should be treated as having included under the Scheme.
The purpose of the Scheme or the language used in para 3.3(a), if considered with the purpose and object of the Scheme, would not include acquiring of the assets of the agricultural land by the farmer. It is only for replacement and maintenance of the wasting of the assets. Therefore, if such a lenient interpretation is given to Clause 3.3(a) so as to include the object of acquiring of the new agricultural land also, it would frustrate the very object of extending the benefit to the farmers who are economically poor in comparison to the agriculturist holding huge parcels of the land. The benefit is extended in the Scheme to grant a solace and more particularly to economically backward class of farmers and such benefits are not available to the farmers who either indulge into purchasing of new agricultural lands or who are having huge parcels of agricultural lands. The benefit is essentially to be extended to the small and marginal farmers. It is true that other farmers are also included but such is to be considered keeping in view the definition of Investment Loan as provided under para 3.3(a) which is essentially for replacement and maintenance of the wasting of assets and any capital investment for increasing the output of the land and it cannot be read in absolute for the loan given to acquire agricultural land by any farmer. Hence, contention raised on behalf of RBI deserves to be maintained and the contention raised on behalf of the petitioner cannot be accepted.
The next contention raised on behalf Bank that if the loan is already paid prior to the cut-off date, then such would not fall in the category of eligible loans for extending benefit, is also having substance. The reason obvious is that whenever any Scheme is floated, may be beneficial Scheme, it is to be interpreted and to be applied taking into consideration the cut-off date. If one has already paid up the loan, then naturally such loan cannot be said as outstanding on the relevant date so as to claim the benefit of the claim. Whether such loanee has subsequently taken the loan or not, in my view, would be a irrelevant aspect for considering the entitlement of the Scheme. Therefore, the contention of Ms. Parikh, learned Counsel for the petitioner in the concerned petition does not deserve to be accepted. Hence, the said contention is rejected.
The last contention raised for consideration of the cases of the loan for construction of houses or repairing of the houses, if examined, it appears that such would fall outside the scope of the loan governed by para 3.3(a). The reason being that construction of houses or repairing of the houses cannot be said as for replacement or maintenance of wasting of assets nor can be termed as a capital investment designed to increase the output from the agricultural land. As such, if the loan is given for construction of houses, may be that such house may exist in the farm, it would be an absolute capital investment and such type of cases are not falling in the category of para 3.3(a). I am inclined to take view more particularly keeping in mind the definition of laon and the object of the Scheme.
In view of the aforesaid observations and discussions, it will be for the Bank as well as the Reserve Bank of India as a nodal agency to re-examine the record of the proposal of the respective petitioners and to finalize the same in light of the findings recorded by this Court herein above and on the basis of the material as may be available with the Bank or the nodal agency, as the case may be. The aforesaid exercise may be completed as early as possible preferably within a period of six weeks from the receipt of the order of this Court. It will be open to the Bank as well as RBI to consider all pending proposals in light of the observations made and to finalize the cases unless any valid reason existing with the Bank or RBI to make departure therefrom on the basis of any authentic record.
It is clarified that until the decision is taken and communicated to the party concern, status-quo qua the recovery as existing today, shall be maintained.
Petitions are disposed of accordingly. No order as to cost. Rule is made absolute to the aforesaid extent. Direct service is permitted.