- Case
- AMIT PRABHAKAR KORE (SUSPENDED DIRECTOR OF SHAIL CLUBS AND RESORTS PVT. LTD.) v. SAVANNAH LIFESTYLE PVT. LTD. AND ORS (Bombay High Court, 11-03-2025)
- Law
- Banking Regulation Act, Code of Civil Procedure, Maharashtra Co-operative Societies Act.
Facts: Vasantdada Shetkari Sahakari Bank Ltd. (the Bank), under liquidation, sought the recall of an order dated 21 October 2022, which disposed of Writ Petition No. 11610 of 2022 based on Minutes of Order. The order effectively transferred the loan of Shaila Clubs to Savannah Lifestyle Private Limited, a non-eligible transferee under RBI guidelines. Amit Prabhakar Kore, a suspended director of Shaila Clubs, and Shaila Clubs also filed review petitions against the same order. The Bank had initiated recovery proceedings against Shaila Clubs, which were stalled by Savannah through various writ petitions and deposits. The Liquidator of the Bank had offered a One Time Settlement (OTS) to Savannah, who accepted but requested assignment of the loan instead of closure. The Bank later attempted to withdraw the OTS due to objections from Shaila Clubs, but Savannah refused to accept the returned amount.
Procedural Posture: The case involves an Interim Application by the Official Liquidator seeking recall of a previous order, along with two Review Petitions filed by Shaila Clubs and its suspended director, all challenging the same order. The High Court is deciding on the validity of the previous order and the maintainability of the current applications.
Issue: 1. Whether the order dated 21 October 2022, which effectively transferred the loan of Shaila Clubs to Savannah, is lawful, considering the RBI Directives on transfer of loan exposures and the fact that Savannah is not an eligible transferee? 2. Whether the compromise entered into between the Bank and Savannah can be considered lawful when it affects the rights and interests of Shaila Clubs, who were not signatory to the Minutes of Order? 3. Whether the Liquidator had the authority (locus standi) to file the Interim Application seeking recall of the order, considering the provisions of Section 109 of the Maharashtra Co-operative Societies Act regarding the termination of liquidation proceedings?
Holding: The High Court held that the order dated 21 October 2022 is unlawful and recalled it. The Court allowed the Interim Application for condonation of delay in filing the Review Petition and restored Writ Petition No. 11610 of 2022.
Reasoning: The Court reasoned that the transfer of Shaila Clubs' loan to Savannah violated the RBI Directives, which prohibit the transfer of stressed loans to ineligible transferees. Savannah, not being a recognized lender under Clause 3 of the RBI Directives, could not lawfully receive the loan assignment. The Court emphasized that the compromise affected the rights of Shaila Clubs, who were not party to the Minutes of Order. The Court also addressed the issue of delay, stating that mere delay, without acquiescence or estoppel, does not prevent the Court from exercising its inherent power to recall an unlawful order. The Court distinguished the judgments cited by Savannah regarding the Liquidator's authority, emphasizing that the core issue was the lawfulness of the compromise, which the Court found to be in violation of RBI Directives and detrimental to the interests of Shaila Clubs. The Court cited "Suleman Noormohamed (supra)" and "Ajay Ishwar Ghute (supra)" to support the position that a compromise must be lawful and that courts should be cautious in accepting Minutes of Order, especially when they affect the rights of non-signatory parties.
