The Delhi High Court has dismissed two petitions filed by the State Bank of India (SBI), in which the bank sought the removal of critical remarks made by a Chief Metropolitan Magistrate (CMM) in a loan recovery case. The court strongly criticized SBI, calling the case an example of “luxury litigation.”
High Court’s Strong Remarks on SBI’s Plea
Justice Dharmesh Sharma, who heard the case, stated that SBI was challenging a minor order that did not cause any serious harm to its reputation. The court emphasized that the bank was wasting judicial resources on unnecessary litigation.
“This is a luxury litigation pursued by the petitioner bank, challenging an innocuous order of the learned CMM, which in no way causes it any irreparable loss of reputation or loss of face,” the court said in its order.
Background of the Case
The dispute relates to a loan taken by PP Jewellers Private Limited from SBI and its former subsidiaries. The company failed to make payments on time, and its account was classified as a Non-Performing Asset (NPA) on March 31, 2016.
In an attempt to recover the dues, SBI issued a demand notice under the SARFAESI Act on September 8, 2016. Later, the bank approved a One-Time Settlement (OTS) of ₹145 crore in January 2018. However, the settlement was canceled in March 2019 after PP Jewellers failed to comply, despite making partial payments of ₹29.60 crore.
In 2022, SBI filed an application under Section 14 of the SARFAESI Act, seeking possession of mortgaged properties. However, the CMM dismissed the application for non-prosecution on June 4, 2022. During this dismissal, the CMM made critical remarks about SBI’s handling of the case, questioning its diligence and raising concerns about possible collusion with the borrower.
Why SBI Challenged the Adverse Remarks
SBI later argued in the High Court that the adverse remarks by the CMM were harming its reputation and were being used against the bank in unrelated legal proceedings. SBI claimed that these remarks were obstructing the recovery of public funds and should be removed.
High Court’s Ruling
The High Court, after reviewing the case, concluded that the CMM’s remarks were made in the right context and did not exceed judicial authority. The court noted that the magistrate was concerned about public money being at stake and unnecessary delays in the recovery process.
The High Court also pointed out that SBI itself showed a lack of urgency in pursuing the recovery and in addressing the issues raised by the CMM. The court stated that judges cannot remain silent spectators when legal procedures are being misused, especially in cases involving large public funds.
Furthermore, the court dismissed an intervention plea from certain third parties who alleged collusion between SBI and PP Jewellers. The court noted that these intervenors had no direct link to the loan transaction.
Final Verdict
The Delhi High Court dismissed SBI’s petitions, calling them “ill-conceived” and filed with unnecessary delay. The court found that the bank had waited almost two years before filing the petition, which weakened its case.
“In summary, the present litigation is ill-conceived and palpably suffering from inordinate delay and barred by laches for having been filed after almost two years of arising of the cause of action,” the court stated.
Legal Representation
- SBI was represented by Advocates Ankur Mittal, Abhay Gupta, and Muskan Jain.
- PP Jewellers was represented by Advocates Sanjeev Bhandari, Ravi Data, and Rajesh Sharma.
- The intervenors were represented by Advocates Jyoti Taneja, Shantanu Sharma, Moksh Tyagi, and Reny Chauhan.
Conclusion
The Delhi High Court’s decision serves as a reminder that banks and financial institutions must focus on efficiently managing legal disputes instead of filing unnecessary cases. The ruling highlights the court’s firm stance against wasting judicial time on cases that do not involve serious legal harm.
