In a setback to the largest public sector lender SBI, the Supreme Court on Friday allowed defunct Kingfisher Airlines (KFA) to make a representation before the bank’s Grievance Redressal Committee through its lawyer in a R2,290 crore wilful default case.
SBI had challenged the Bombay High Court’s July 23 order that allowed the ailing airline to make a representation before the bank through its lawyer. “The HC despite holding that Kingfisher is not entitled to be represented by an advocate as a matter of right permitted the borrower/defaulter to be represented by a lawyer before a non-existent Grievance Redressal Committee,” it stated.
While Kingfisher is indebted to SBI for R2,290.44 crore as on May 31, 2015, the consortium of banks has to recover more than R6,963.21 crore, the petition stated. A bench headed by FMI Kalifulla while rejecting the SBI plea allayed the bank’s apprehensions by ordering that “the HC order will not be treated as a precedent.”
Attorney General Mukul Rohatgi, appearing for SBI, told the court that if the HC order will create problems if its 5,000 wilful defaulters queued up before the bank with their lawyers. “And what if the lawyers start taking one adjournment after another?” he asked. “If such precedent is set then the entire purpose of RBI Master circular on Willful Defaulter would be defeated as proceedings of the Identification Committee would become protracted affairs,” the AG said.
According to SBI, the HC decision failed to consider the RBI’s circular dated January 7 which had removed the concept of borrower or a defaulter making representation before the grievance redressal committee. The bank had served the grounded airlines a wilful defaulter notice in August 2014.
The facts and circumstances of the case did not necessiate an advocate to represent a defaulter as the role of the Committee is only to consider the explanation of Kingfisher and to find out the correct facts. Besides, the hearing before the penal doesnot does not require any legal issue or complexity which would necessitiate appointment of an advocate, Rohtagi argued.