IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 4817-4851 OF 2002

Jammu Rural Bank       .... Appellant(s)

Versus

Mohd. Din & Ors.             .... Respondent(s)

WITH

CIVIL APPEAL NOS. 4852-4854 OF 2002

AND

CIVIL APPEAL NO.               OF 2008 (Arising out of S.L.P. (C) No. 4901 of 2006)

J U D G M E N T  

P. Sathasivam, J.

1) Civil  Appeal  Nos.  4817-4851 of 2002, by special  leave,

are  directed  against  the  final  judgment  and  order  dated

3.11.2000 passed by the High Court of Jammu and Kashmir

at Jammu in CSA Nos. 30, 44, 56, 50, 46, 72, 74, 47, 55, 51,

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71, 66, 45, 78, 61, 73, 49, 63, 62, 76, 53, 69, 64, 68, 57, 41,

67,  65,  43,  42,  58,  54,  52,  48  and 40  of  1999   and Civil

Appeal Nos. 4852-4854 of 2002 are directed against CSA Nos.

34, 35 and 77 of 1999.   

2) The facts in Civil  Appeal  Nos.  4817-4851 of  2002 and

Civil Appeal Nos. 4852-4854 of 2002 are as follows:

The  respondents,  in  these  appeals,  borrowed  loans

ranging from Rs.3000/- to 10,000/- in most of the cases and

in some cases it ranges from Rs.10,000/- to Rs.20,000/- from

the Jammu Rural Bank and Jammu & Kashmir Bank Ltd. for

different  purposes.   The  loans  remained  unpaid  and  as  a

result, Banks filed suits against the respondents herein before

sub-Judge,  Rajouri.   On 26.5.1997,  Debt  Relief  Scheme for

the  borrowers  in  the  State  of  Jammu  and  Kashmir  was

introduced by the Government of India, Ministry of Finance,

vide No. F.11(08)/96-CP for waiver of eligible loans taken from

banks, financial institutions etc. by the borrowers up to and

inclusive  of  Rs.50,000/-  as on 30.6.1996 for their  business

activity, for example, tourism, transport, small scale industry,

trade sector, hotel, houseboat business, retail trade etc.  The

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said  scheme  provides  for  reimbursement  of  the  amount

waived off by the banks, financial institutions etc. disbursed

till  30th of  June,  1996,  by  the  Department  of  Jammu  and

Kashmir  Affairs,  Government  of  India.  On  29.5.1997,  letter

No.FD-VII-CS/  Package/96  (Ann.P-2  in  S.L.P.4852-4854  of

2002) was sent by the Director, Public Sector Undertakings,

Finance Department, Government of Jammu & Kashmir to the

Chairman, Jammu & Kashmir Bank for implementation of the

said Relief Scheme.  On 24.3.1999, on the basis of the Debt

Relief  Scheme  introduced  by  the  Government  of  India  and

followed  by  the  State  of  Jammu  &  Kashmir,  sub-Judge,

Rajouri,  while taking  suo motu notice of the aforementioned

relief scheme held that the loans advanced to the respondents

was for the purpose of establishing the dairy units as well as

rearing  of  sheep  and  buffalos  and  the  same  could  be

presumed  to  be  a  trade  and  by  applying  the  said  relief

scheme,  dismissed  all  the  suits.   Aggrieved  by  the  said

judgment, the Banks filed the first appeals before the District

Judge, Rajouri and the same were also dismissed.  Against the

said judgment, the Banks filed second appeal before the High

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Court of Jammu and Kashmir at Jammu.   

3) By a common judgment dated 3.11.2000, the High Court

after finding that the Debt Relief Scheme announced by the

Government of India was applicable to the loans borrowed by

the respondents, dismissed all the second appeals filed by the

Banks.  Questioning the said order, the Banks have filed Civil

Appeal Nos. 4817-4851 of 2002 and Civil Appeal Nos. 4852-

4854 of 2002.   

4) Leave granted in S.L.P.(C) No. 4901 of 2006.   

5) In this appeal,  when the Jammu & Kashmir Bank filed

execution  petition  before  the  District  Judge  against  a

borrower,  the District  Judge,  taking note  of  the  Debt  Relief

Scheme applied the said Scheme and dismissed the execution

petition by order dated 4.4.2002.  Challenging the said order,

the Jammu & Kashmir Bank Ltd. filed Civil Revision Petition

No.  77  of  2002  before  the  High  Court  and  the  same  was

dismissed  on  20.5.2003.  Being  aggrieved  by  the  said

judgment,  the appellant-Bank filed  Review Petition (C) No. 8

of 2005 before  the High Court  contending that agricultural

matters  are  not  included  within the  Debt  Relief  Scheme  as

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communicated by the Reserve Bank of India.  The High Court

dismissed the same by an order dated 16.9.2005.  Against the

abovementioned orders in civil revision petition and the review

petition respectively, the appellant-Bank has filed this appeal.

6) Since  one  and only  issue  in  all  these  cases  relates  to

applicability of Debt Relief Scheme of the Government of India,

we dispose of the same by the following common order.

7) Heard Mr. Raju Ramachandran, learned senior counsel

appearing for the appellant-Banks.   

8) Prior to 1996, the respondents borrowed loans from the

appellant-Banks.  The said loans were advanced to them to

purchase sheep and buffalos, establish dairy units or for hob

cultivation.  Except few, most of the loans advanced was below

Rs.10,000/-.   Since  the  loanees  did  not  repay  the  loan

amount, the Banks filed regular suits in sub-Court, Rajouri.

During the pendency of these suits, considering the continued

militancy  and  other  difficulties,  the  Government  of  India

framed  a  Scheme  giving  relief  to  the  borrowers  from  the

Banks, Financial Institutions etc.    In all these cases, we have

to decide,  

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(i) Whether  the  loans  obtained  by  the  respondents  for

purchasing of  sheep and buffalos,  establishing dairy

units etc. were covered by the Scheme; and  

(ii) In  the  absence  of  specific  plea  by  the  respondents-

loanees whether the Court is justified in granting relief

in terms of the Scheme.   

In order to find out the answer for the above points, it is

useful to refer the communication of the Government of India,

Ministry  of  Finance,  Department  of  Economic  Affairs

addressed to all the Banks of the Jammu & Kashmir Region.

The said communication (Annexure P-1) reads as under:

“No. F.11(08)/96-CP Government of India Ministry of Finance

Department of Economic Affairs (Banking Division)

                 Jeevan Deep Building, Sansad Marg,        New Delhi, the 26th May, 1997

The Chairman, IDBI/ICICI/IFCI

The Chairman/Managing Director, (All Scheduled Commercial Banks)

The Jammu & Kashmir Bank Ltd. Srinagar

Subject : - Debt Relief Scheme for the Borrowers          In the State of Jammu & Kashmir

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Dear Sir,

I  am directed to say that it has been decided to extend relief  by  way  of  write  off  of  eligible  loans  taken  from banks/financial institutions up to and inclusive of Rs.50,000/- as principal, together with outstanding interest, in the case of borrowers in the State of Jammu & Kashmir only who suffered on account of militancy in the State.  Accordingly,  a Scheme known as “Debt Relief Scheme for the Borrowers in the State of Jammu & Kashmir” has been prepared and a copy thereof is enclosed  for  your  information  and  necessary  action.   The Scheme will come into force with immediate effect.

2. The contents of the Scheme are self explanatory.

In  case  there  are  any  points  that  require  clarification, suitable  references  may  be  made  to  this  Division immediately.   It  may  please  be  noted  that  no  application from the eligible borrowers is necessary for providing relief under  the  Scheme.   You  are  advised  to  implement  the Scheme  immediately  by  issuing  suitable  administrative instructions to your Branches/Offices.

3. It may be clarified here that under this Scheme only commercial loans/credit limits up to and inclusive of Rs.50,000/- as principal granted by Banks/Financial Institutions to the borrowers in the State of Jammu & Kashmir for their business activity viz., tourism, transport,  small  scale  industry,  trade  sector,  hotel,  house boat, business,  retail  trade,  etc.,  are  eligible  for  relief.   However, loans/credit  limits  granted  against  banks’  own deposits  or  any other  deposit,  National  Savings  Certificates,  Government Securities,  Shares and Debentures,  Mutual  Funds, LIC policies, etc. and/or loans for purchase of any consumer durables etc. will not be eligible for any relief under the Scheme.

4. Under  the  Scheme,  the  borrower  is  required  to  be  advised  in writing  by  the  bank/financial  institution  concerned  about  the extent of relief provided in each account.  A proforma in which the borrower  may be advised is  enclosed with the Scheme for  your information and necessary action.

5. In  terms  of  paragraph  5  of  the  Scheme,  banks/financial institutions  are  required  to  submit  a  detailed  claim  statement sector-wise/borrower-wise as per proforma ‘A’  enclosed with the Scheme.  The claim statement should be signed by an officer not

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below the rank of General Manager in case of Jammu & Kashmir State  Financial  Corporation/Jammu  *  Kashmir  Bank  Ltd.  and Chief State Level Officer i.e. Regional/Zonal/Divisional Manager in respect of other banks/financial institutions.  The claims on the prescribed proforma may be lodged by banks/financial institutions to  the  Director(Finance),  State  Department  of  Finance, Government of Jammu & Kashmir, Civil Secretariat, Srinagar.  The last  date for  submissions of  the claim shall  be 30th September, 1997.

6. Necessary  steps  for  speedy  implementation  of  the  Scheme  may please be initiated at  your  and the relief  under the Scheme be provided expeditiously.

   Yours faithfully.    

        Sd/-    (G.R. Summan)

    Deputy Secretary to the Government of  India”

The  appellant-Banks  have  also  placed  the  Scheme  called

“Debt Relief Scheme for the borrowers in the State of Jammu

&  Kashmir”.   The  perusal  of  the  communication  of  the

Government  of  India,  Ministry  of  Finance  as  well  as  the

Scheme shows that the main purpose of the Scheme was to

give relief to the militancy hit borrowers of the State of Jammu

&  Kashmir.   As  per  the  Scheme,  loans  which  have  been

sanctioned for business activities, namely, tourism, transport,

small scale industry, trade sector, hotel, house boat business,

retail  trade  etc.  and  which  were  existing  in  the  books  of

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accounts  as  on  30.6.1996  have  been  waived  off  with

immediate effect.  For applicability of the said Scheme, three

conditions have to be fulfilled:

(i) The  loan  should  be  existing  as  on  30.6.1996  in  the

books of accounts.

(ii) It should not exceed Rs.50,000/-.

(iii) The  loan  should  have  been  advanced  for  any  of  the

purposes referred above.

If  these three conditions are fulfilled, the loan is deemed to

have been waived off.  Though the respondent-defendants did

not contest the suit by filing written statements, it is not in

dispute that those loans were kept pending and shown in the

books of accounts of the Banks as on 30.6.1996.  It is also

not  in  dispute  that  the  amount  borrowed  has  exceeded

Rs.50,000/-.  In fact, most of the loan amounts were below

Rs.10,000/-.  However, the strong objection of the appellant-

Banks before  the Courts  below as  well  as  in  this  Court  is

regarding  the  purpose  of  the  loan  i.e.  the  Scheme  was

intended  to give  relief  to  the traders  for  business  activities

and herein the respondents borrowed loans for purchase of

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sheep  and buffalos,  establishing  dairy units  etc.  which are

alike to agriculture and are not eligible to avail of the Debt

Relief Scheme.  Clause 2(d) of the Debt Relief Scheme speaks

about  the  “Eligible  Loans”.   The  following  sub-clauses  of

clauses 2(d) are relevant:

“2(d)(i)  Fresh  loans/credit  limits  upto   and  inclusive  of Rs.50,000/-  as  principal  granted  by  banks/financial institutions and disbursed upto and outstanding as on the effective date i.e.  30th June, 1996 to the borrowers in the State of Jammu & Kashmir for the purpose of their business activity for example tourism, transport, small scale industry, trade sector, hotel, house-boat business, retail trade, etc.

(ii) Short  term  loans/credit  limits  which  were  converted  into term loans upto and inclusive of Rs.50,000/- granted to the borrowers in the State of Jammu & Kashmir as the short term loans, credit limits became  irregular as a result of loss of stocks/assets due to militancy in the State.

(iii) Eligible  loans  mentioned  at  i)  and  ii)  above  should  be outstanding  in  books  of  accounts  of  banks/financial institutions as on the effective date i.e. 30th June, 1996.  In other words, the accounts which already stand closed on or before 30th June, 1996 would not qualify for any relief under the Scheme.”

9) It is true that the Scheme applies to the borrowers in the

State of Jammu & Kashmir who borrowed loan amount for the

purpose of their business activities.  As rightly observed by the

Courts  below,  business  activities  have  not  been  specifically

defined.  On the other hand, sub-clause(i) of clause 2(d) refers

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certain examples viz., tourism, transport, small scale industry,

trade sector, hotel, house-boat business, retail trade, etc.   

10) Mr.  Raju  Ramachandran,  learned  senior  counsel,

appearing for the Banks, argued that the loan, advanced for

such purposes, namely, purchase of sheep and buffalos, and

running of dairy unit etc. being agriculture loan, does not fall

within  the  purview  of  the  Scheme  as  such  loan  cannot  be

waived off under the Scheme.  The very same submission was

pressed into service before the sub-Court, Rajouri as well as

before the District Court.  Though purchase of buffalos and

sheep related to agriculture and allied activities, it cannot be

denied that from the buffalos,  the borrower can establish a

dairy unit and earn from the said business.  As rightly pointed

out by the Courts below, in view of  clause 2(d)(i),  the word

“etc.”  in  the  definition  of  “Eligible  Loans”  connotes  that

besides  the  activities  cited  as  example  for  business  activity

there  are  other business  activities  which could  be  included

under the Scheme.  The said liberal interpretation cannot be

ruled out particularly, the Debt Relief Scheme was introduced

mainly as a relief to the borrowers (emphasis supplied) in the

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militant dominated State during the relevant time.  In the light

of  the  intention  of  the  Government,  object  of  the  Scheme,

namely, to help the borrowers who were indebted and unable

to  repay,  we  are  unable  to  accept  the  stand  taken  by  the

appellant-Banks and concur with the liberal interpretation of

the Courts below.

11) Learned  senior  counsel  further  contended  that  in  the

absence  of specific  plea in the form of written statement or

counter affidavit, the Court should not have given such relief

applying the Scheme.  As observed earlier, it is true that all

the  respondents  were  served  by  publication  in  the  daily

newspapers.  We have already referred to the fact that in most

of the cases amount borrowed was less than Rs.10,000/-, that

may be one of the reasons, the respondents failed to contest

the  suit.   In  those  circumstances  when the  Government  of

India  itself  with  the  assistance  of  the  State  of  Jammu  &

Kashmir brought a Scheme called “Debt Relief Scheme” and

the same was available on the date when all the suits were

pending, considering the special circumstances, we are of the

view that the course adopted by the Courts below cannot be

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faulted  with.   Though  such  recourse  is  alien  to  the  civil

proceedings, in view of the peculiar facts and circumstances

as  noted  in  the  loan waiver  scheme  and the  other  reasons

mentioned in the paragraphs supra which were noted by the

Courts below, we are not inclined to interfere in these appeals.

12) Regarding the order dated 28.9.2000 passed by the High

Court in Civil Revision No. 165 of 1999, it is true that while

considering the civil  revision petition filed against the order

passed by the executing Court, the High Court relying on the

provisions  in  the  Hand  Book  of  instructions  issued  by  the

Reserve  Bank  of  India  that  the  activities  i.e.,  dairying  and

rearing  of  sheep  are  allied  to  agriculture  and,  therefore,

excluded  from  the  scheme,  quashed  the  order  of  the  trial

Court  and  directed  the  executing  Court  to  restore  to  its

original number and proceed with the matter in accordance

with law.  Learned senior counsel, by pointing out the above

said order of the very same High Court,  submitted that the

said order passed in the civil revision petition is in consonance

with the Scheme and prayed for similar order in all the other

appeals.  For the reasons stated in the earlier paragraphs with

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regard to the Civil Appeals 4817-4851/2002 and Civil Appeal

Nos.  4852-4854 of  2002,  we are  not  inclined to accept  the

same.  In view of the peculiar position as explained by both

the Courts below and considering the fact that the amounts

involved are less than Rs.10,000/- in most of the cases and

those  loans  were  advanced  prior  to  1996  during  the

prevalence of militancy in the State of Jammu & Kashmir, we

are not inclined to interfere with any of the reliefs granted by

the Courts below.

13) In  the  light  of  the  above  discussion,  we  conclude  the

above-mentioned questions as under:

In the Debt Relief Scheme issued by the Government of

India,  the  very  definition  of  ‘business  activity’  has  nowhere

been  defined  exhaustively  but  only  a  few  examples  are

mentioned which can be extended up to a number of other

activities  which  have  not  explicitly  mentioned  for  the  term

‘etc.’ which has been used in the Scheme.  Following the very

reason  for  introduction  of  the  said  Scheme  i.e.  to  offer

financial help to the poor and indebted borrowers of militancy

hit  Jammu & Kashmir,  the  courts  below  rightly  concluded

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that  the  agricultural  and  allied  business  activities  viz.,  the

types  of  trade/business  which are  substantially  or  partially

depending  on  agriculture  and/or  agricultural  produce  as  a

business  activity  under  the  said  Scheme.   Further,  the

Reserve Bank of India Guidelines cannot be strictly followed

as it has not been mentioned to be followed in the Scheme

and,  therefore,  we  should  not  interpret  the  term  ‘business

activity’  under the strict rule of interpretation.  Accordingly,

we approve the conclusion and the ultimate decision of courts

below granting relief to the respondents.  Though the  course

adopted by the  sub-judge, Rajouri or the District Judge were

not acceptable, in view of our conclusion on the merits of the

orders passed, the dismissal of execution petitions should not

be set aside only due to procedural irregularities.     

14) Apart from these aspects, it is pertinent to mention that

sub-clause (a) of Section 3 of the Notification makes it clear

that  the  amount  waived  off  will  be  reimbursed  to  the

concerned  Bank/Financial  Institution by the  Department  of

Jammu  &  Kashmir  Affairs,  Government  of  India  on

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recommendation of the Committee to be set up at the State

Level.   Even after  the  orders  passed  by the  sub-Court  and

thereafter by the District Court, the Banks could have availed

the benefit of reimbursement as provided under clause 3(a) of

the  Scheme.   Unfortunately,  the appellant-Banks instead of

availing the same, agitated the matter up to the level of this

Court by spending more money for recovery of petty amounts

from the small  borrowers.   The  appellant-Banks are  free  to

approach  the  Department  of  Jammu  &  Kashmir  Affairs,

Government  of  India  who  brought  the  Debt  Relief  Scheme,

under  clause  3(a)  for  reimbursement,  if  the  same  is

permissible, at this juncture for which we express no opinion.  

15) Considering  all  these  peculiar  aspects,  particularly,

indebtedness and inability to repay the loan amount by the

borrowers due to continuous militant activities in the State of

Jammu  &  Kashmir  particularly,  at  the  relevant  time,  the

amounts borrowed which were less than Rs. 10,000/- in most

of the cases, liberal interpretation of the Courts below in the

light of the various clauses in the Scheme itself and also of the

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fact that sub-clause (a) of Section 3 of the scheme provides

reimbursement of waived loan amounts, we are not inclined to

interfere with the orders of the Courts below.  Consequently,

all the appeals fail and are, accordingly, dismissed.  No costs.

                  ..…………………………………J.

                                 (P. SATHASIVAM)    

...…….…….……………………J.    (AFTAB ALAM)

NEW DELHI;                               AUGUST 29, 2008.   

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