TaxTMI 
TaxTMI 
2016 (4) TMI 1351
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....te Bank of India, respondent no. 1 (hereafter the SBI). Owing to defaults committed by the SBI, Piyarelall suffered loss and damages whereby its business was permanently impaired. A civil suit was instituted by Piyarelall claiming diverse relief. As a retaliatory measure, the SBI issued a notice dated November 27, 2014 threatening to include the name of Piyarelall in the list of wilful defaulters as provided for by the Reserve Bank of India (hereafter the RBI) in a document captioned "Master Circular for Wilful Defaulters" (hereafter the master circular). The said notice purported to convey to Piyarelall that if it had any grievance against the decision of the SBI i.e. the proposal to include the names of Piyarelall, its directors and corporate guarantors in the list of wilful defaulters, it may send a representation or appeal in writing within a period of 15 days from date to the Grievance Redressal Committee of the SBI (hereafter the GRC) at the Corporate Centre, Mumbai. It was also informed that if it so desires, it may request for a personal hearing before the GRC. Piyarelall perceived that prior to determination and/or decision to include its name in the list of wilful default....
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....Almost after a year of disposal of the said writ petition, the Deputy General Manager of the SBI issued a notice dated February 16, 2016 reading as follows: "Madam/Dear Sir, PERSONAL HEARING BEFORE THE WILFUL DEFAULTER IDENTIFICATION COMMITTEE We refer to the notice dated 27.11.2014 issued to you. 2. Your submissions/representations submitted in response to the notice under reference will be examined by the appropriate committee in its meeting to be held on 03.03.2016 at 11 am at State Bank Of India, SAMG, Corporate Centre, Mumbai. You are hereby granted an opportunity for personal hearing to make your submissions before the committee. Accordingly you may remain present at the aforesaid venue or make your submissions through video conferencing arranged at Stressed Assets Management Branch-II, Jeevandeep Building, 1st Floor, 1, Middleton Street, Kolkata 700071 on 03.03.2016 at 11 am. 3. Please note that Lawyers/Chartered Accountants/Consultants who are not partners/Directors/Officers/Employees of the firm/Company will bot be allowed to represent your case before the Committee. 4. If you fail to avail the opportunity of personal h....
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....gned notice insofar as the same restricts the right of the petitioners to be represented by advocates/chartered accountants may be set aside and that the SBI be directed to fix a further date to enable the petitioners to present their version through their advocates/chartered accountants. 7. Per contra, Mr. Pramanick, learned advocate for the SBI and its officers contended that the master circular of the RBI does not envisage representation of any defaulting borrower to be represented by either an advocate or a chartered accountant. He referred to the decisions reported in (2008) 4 SCC 406 [Railway Protection Force v. K. Raghuram Babu], (2006) 11 SCC 645 [National Seeds Corporation Ltd. v. K. V. Rama Reddy] and (1999) 1 SCC 626 [Bharat Petroleum Corporation Ltd. v. Maharashtra General Kamgar Union] to submit that the petitioners in a proceeding before the GRC, or for that matter the Identification Committee, cannot claim any right to be represented by advocates/chartered accountants and that the SBI by issuing the impugned notice neither acted illegally or arbitrarily nor in a highhanded manner, as alleged. 8. It would appear from the rival contentions that a short issue aris....
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....ant that will be free to present its case over the course of hearing, is not, however, empowered to take down any evidence. 32. Hence, in ordinary cases, absence of an advocate for the hearing purpose is not likely to defeat the purpose of the hearing. In this case, we do not find any reason to say that the grounds stated by the appellant for permission to engage advocate to appear before the GRC for the hearing purpose have constituted a case that absence of the service of an advocate for the hearing purpose is likely to defeat the purpose of the hearing." 10. The aforesaid decision of the Hon'ble Division Bench is binding on this Bench. Although the decision was rendered in the context of appearance before the GRC of the UBI, the same applies with equal force to appearance before the Identification Committee constituted by the lender banks. Therefore, the petitioners can claim no right of representation by an advocate before the Identification Committee of the SBI. 11. The claim for representation by an advocate advanced on behalf of the petitioners could be rejected here and now, but since Mr. Mitra has referred to a decision of an Hon'ble Division Bench of the De....
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....tract the relevant discussion, reading as follows: " (P) We cannot also be unmindful of the fact that notwithstanding the bar contained in the , practicing advocates have continue to appear before the Labour/Industrial Court save for the fact that they appear not as advocates wearing black coats and robes but as agents of the employer. This Court cannot shut its eyes to the reality of life and we are of the view that the law may rather be in consonance with the practice than such what is practiced in breach. (Q) That takes us to Section 30 of the Advocates Act supra conferring in the advocates a right to practice. Chief Justice of India Justice T.S. Thakur speaking for the High Court of Karnataka in M/s. Kothari Industiral Corporation Limited v. The Coffee Board MANU/KA/0414/1999 held that the right of an advocate to practice before any Court or Tribunal, contained in Section 30 of the Advocates Act, necessarily means that a litigant before any such Court, Tribunal, Authority or person will have a right to engage and avail the services of an advocate. (T) However to invoke Section 30 supra, the GRC constituted under the Master Circular supra would have to....
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.... (HH) In our view, the GRC also satisfies the test of having been invested with the State's judicial power and having the trappings of a Court i.e the authority to determine whether the Bank's/FIs proposal to classify a borrower as a wilful defaulter is in accordance with the requirements of the Master Circular and if so satisfied, to declare the borrower as a wilful defaulter and which declaration vitally affects the rights and reputation of the person so declared. Not only does the Master Circular so provide but we have already noted above the dicta of the Supreme Court in Kulja Industries Limited supra holding that the hearing in this regard has to satisfy the requirement of fairness. (LL) We are therefore of the opinion that the GRC satisfies the tests prescribed to qualify as a Tribunal. (MM) Once the GRC is held to be a Tribunal within the meaning of Section 30 of the Advocates Act, the advocates would have a right to practice before it and axiomatically the borrower before such GRC will have a right to engage and avail the services of an advocate." 14. The observation in paragraph (P) (supra) could have been made based on consideration of what actu....
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....ly authorised to take evidence" in clause (ii) qualifies the word "person" only and not the word "tribunal", one may proceed to examine certain relevant aspects touched upon in Punjab National Bank (supra) and having a bearing on the issue at hand. 18. At the dawn of the Constitution, a Constitution Bench of the Supreme Court while examining whether an Industrial Tribunal functioning under the Industrial Disputes Act, 1947 was a 'tribunal' within the meaning of Article 136 of the Constitution, considered what is meant by a 'court'. In its decision reported in AIR 1950 SC 188 [Bharat Bank Ltd. v. Employees], the Bench ruled that before a person or persons can be said to constitute a 'court', it must be held that they derive their powers from the State and are exercising the judicial powers of the State. It was also held therein that the expression 'tribunal' as used in Article 136 does not mean the same thing as court but includes, within its ambit all adjudicating bodies, provided they are constituted by the State and are invested with judicial as distinguished from purely administrative or executive functions. 19. What constitutes the 'judicial power' of the State needs to b....
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....is really not possible or even expedient to attempt to describe exhaustively the features which are common to the tribunals and the Courts, and features which are distinct and separate. The basis and the fundamental feature which is common to both the Courts and the tribunals is that they discharge judicial functions and exercise judicial powers which inherently vest in a sovereign State. **** 25. It would thus be seen that in dealing with the question as to whether Respondent 2, while it exercises its appellate power under Rule 6(6), is a tribunal under Article 136(1), we must enquire whether Respondent 2 has been clothed with the State's inherent judicial power to deal with disputes between parties and determine them on the merits fairly and objectively. That is the test which has been consistently applied by this Court in considering the question about the status of any body or authority as a tribunal under Article 136(1). Before we proceed to apply this test to Respondent 2's status under Rule 6(6), we think it is necessary to advert to one aspect of the matter which sometimes creates some confusion. 26. We have referred to the three essential....
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....procedure which the State Government should follow in dealing with appeals under these two sub-rules, and there is no statutory provision conferring on the State Government any specific powers which are usually associated with the trial in courts and which are intended to help the court in reaching its decisions. The requirements of procedure which is followed in courts and the possession of subsidiary powers which are given to courts to try the cases before them, are described as trappings of the courts, and so, it may be conceded that these trappings are not shown to exist in the case of the State Government which hears appeals under Rule 6(5) and Rule 6(6). But as we have already stated, the consideration about the presence of all or some of the trappings of a court is really not decisive. The presence of some of the trappings may assist the determination of the question as to whether the power exercised by the authority which possesses the said trappings, is the judicial power of the State or not. The main and the basic test however, is whether the adjudicating power which a particular authority is empowered to exercise, has been conferred on it by a statute and can be describe....
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....so tribunals. In order to be a tribunal, it is essential that the power of adjudication must be derived from a statute or a statutory rule.***" (underlining for emphasis) 22. Even the view extracted supra makes it clear that to constitute a 'tribunal', albeit within the meaning of Article 136 of the Constitution, an outside authority must be vested with the judicial power of the State by a statute/statutory rule to examine a dispute between rival groups and to decide the rights of the parties. 23. While deciding Associated Cement Companies (supra), the Supreme Court referred to an earlier Constitution Bench decision reported in AIR 1964 SC 1140 [Indo- China Steam Navigation Co. Ltd. vs. Jasjit Singh, Additional Collector of Customs, Calcutta]. That was a case governed by the Sea Customs Act, 1878. An order was passed by the Collector of Customs confiscating the appellant's motor vessel under Section 167(12A) of the Act of 1878 and giving it option under Section 183 thereof to pay a fine of Rs. 25 lakhs in lieu of confiscation. It was contended that the order was passed on a misconception of Section 52A. An appeal was preferred before the Central Board of Revenue. The....
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....ed in (2005) 7 SCC 472 (Management Committee, Montfort Senior Secondary School v. Vijay Kumar) where meaning assigned to the words 'judicial', 'judicial power' and 'judicial authority' in certain foreign decisions and legal dictionaries were noticed while examining the question as to whether the Delhi High Court was justified in upholding the order of the Delhi School Tribunal constituted in terms of section 11 of the Delhi School Education Act, 1973 that rejected the plea of the appellant to refer the dispute between it and the respondent no.1, a dismissed teacher, to arbitration under the Arbitration and Conciliation Act, 1996. 26. The aforesaid decisions are authorities for the proposition that in India, the State i.e. either the Union or its component states, has an inherent judicial power. The courts of law and other bodies such as tribunals and other statutory authorities have been obliged to perform judicial functions, and powers are vested in this behalf by the State by a statute/statutory rule. In discharge of their functions, these courts, tribunals and other statutory authorities are considered to be the delegates of the State. Since the judicial power of the State fo....
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....not. The test formulated in Associated Cement Company (supra) has to be applied in such a situation. If vested with the State's judicial power, the tribunals and other statutory authorities could be regarded as 'tribunal' within the meaning of Article 227 as well as Article 136 of the Constitution; if not, they cannot be so regarded. 29. There can be no disagreement with the views expressed in Punjab National Bank (supra) in respect of two aspects, i.e. the GRC has no power to compel the attendance of a witness for adducing evidence, and that the master circular does not provide for representation by an advocate and hence clause (iii) of section 30 would have no application in a case of the present nature. However, taking a cue from the above decisions and applying the test formulated by the Supreme Court, there can hardly be two opinions that insofar as the present dispute is concerned, the GRC/Identification Committee of the SBI does not wear the hat of an adjudicator upon entrustment of judicial functions to it by the State by any legislation; on the contrary, it would proceed to discharge a purely administrative function as a part of its duty envisaged in the RBI's master ci....
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....nk, it considers the cause shown by the borrower and after hearing its version decides either in favour or against inclusion of the borrower's name in the list of willful defaulters. In the process the functions of the GRC/Identification Committee are not anything more than administrative or executive acts. 30. In view of this Bench's understanding of the law based on authoritative decisions of the Supreme Court, it is held that the GRC/Identification Committee of the lender bank has not been delegated judicial functions by the State and cannot be regarded as a 'tribunal' within the meaning of clause (ii) of section 30 of the Advocates Act. In terms of the master circular of the RBI, it is nothing more than an administrative authority and its decision to either identify or declare a defaulting borrower as a wilful borrower is effectively an administrative decision although in the process of giving such administrative decision, the GRC/Identification Committee may have to comply with principles of natural justice and give its decision in a fair manner supported with reasons. If only the master circular being the law relevant for the present purpose had entitled an advocate to pra....
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....f the organisation to which both the disciplinary authority and the delinquent employee belong. Obviously, it does not meet the test of justice being seen to be done. The employee may be a Group 'D' staff, not knowing how to defend himself. If the presenting officer is not a legally trained person and the rules/regulations governing such enquiry do not recognise the right of being assisted even by a co-employee, the poor employee has to fight it out alone against his mighty employer. If such a poor employee is not entitled to assistance, does a defaulting borrower in the absence of a right of representation being recognised in the master circular stand on a better footing? No, never! The High Courts are bound by the law laid down by the Supreme Court and the ingenuity on display in search of providing succour to parties who do not blink an eye-lid to ruin the nation's economy has to be eschewed. 35. Now, the other decisions cited by Mr. Mitra are taken up for consideration. 36. The decisions reported in AIR 1983 SC 109 [Board of trustees of the Port of Bombay v. Dilipkumar Raghavendranath Nadkarni], (1991) 2 SCC 283 [J.K. Aggarwal v. Haryana Seeds Development Corporation Ltd.....
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....arwal (supra) as well as the decision of the Madras High Court reported in (2005) 2 MLJ 119 [Chairman and Managing Director, Hindustan Teleprinters Ltd. v. M. Rajan Isaac], also cited by Mr. Mitra, has no application here. 39. In C. L. Subramaniam (supra), the Supreme Court held that the fact that the case against the appellant was being handled by a trained prosecutor was a good ground for allowing the appellant to engage a legal practitioner to defend him, lest the scales should be weighed against him; keeping in mind such circumstance and bearing in mind rule 15(5) of the Central Civil Services (Classification, Control and Appeal) Rules, 1957 and its contravention, the Court had proceeded to grant relief to the appellant. This Bench has failed to comprehend the materiality of this decision for deciding the issue that has emerged here. 40. The next decision that calls for consideration is the one reported in (2013) 4 WBLR (Cal) 919 [Santanu Ghosh and ors. v. State Bank of India and ors]. It appears on perusal thereof that a coordinate Bench of this Court proceeded to strike down the decision of the bank basically on the ground that the written representation of the petition....
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....ority would not be a quasi-judicial authority." However, having regard to the provisions of section 29-A, it was observed in paragraph 31 as follows: "31. From the aforesaid provisions, it is manifest that the Commission is required to consider the matter, to give opportunity to the representative of the political party and after making enquiry and further enquiry arrive at the decision whether to register a political party or not. In view of the requirement of law that the Commission is to give decision only after making an enquiry, wherein an opportunity of hearing is to be given to the representatives of the political party, we are of the view that the Election Commission under Section 29-A is required to act judicially and in that view of the matter the act of the Commission is quasi-judicial." 43. The observations made in the decision ought to be borne in mind while deciding whether a particular act is administrative in nature or quasi-judicial. Much would depend on the applicable law. Take the case of an application made by a person for a permit to operate stage carriage service or one made for a liquor licence. Can the applications be rejected on the mere ipse....