SATPAL AND ANR. versus BANK OF INDIA AND ORS. on 17 January 2020

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[2020] 5 S.C.R. 34

SUPREME COURT REPORTS

[2020] 5 S.C.R.

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SATPAL AND ANR.

v.

BANK OF INDIA AND ORS.

(Civil Appeal No. 367 of 2020)

B

JANUARY 17, 2020

[DR. DHANANJAYA Y CHANDRACHUD ANDHRISHIKESH ROY, JJ.]

Debt Relief – Debt Relief Scheme for agriculturists – TheCappellants-farmers took a loan from the first respondent forpurchasing a tractor – Appellants sought a waiver of loan underthe notified schemes – However, their claim was denied – TheDistrict Forum held that appellants fell in the category of smallfarmers and amount was waived – However, the NationalDCommission denied complete waiver of loan – On appeal, held:The National Commission came to the contrary conclusion on thesole ground that the land of the appellants was situated in thedistrict which was not included in Annexure-I u/cl. 6 of the scheme– However, the appellants had made claim u/cl.5 and not u/cl.6 –Therefore, the finding of the National Commission was erroneousE– Further, explanation 2 to the definition of the marginal farmer,small farmer and other farmer provided that the largest landholding in the pool shall be the basis for the classification of allfarmers – u/cl. 3.6 of the scheme, a ‘small farmer’ meant a farmercultivating agricultural land of more than 1 hectare and upto 2hectares (5 acres) – In the instant case, both the farmers had aFholding of 38 Kanals eleven marlas each – The District Forum hadcarefully evaluated this aspect and came to the conclusion that thelargest of the landholdings of the two appellants was 4 acres 6kanals and eleven marlas and hence both the appellants fell in thecategory of small farmers – The findings was in terms of theGprovisions and was correct – Thus, the judgment of the NationalCommission set aside and the order of the District Forum whichwas confirmed in appeal by the State restored.

The appellants-farmers took a loan from the firstrespondent in 2008 for purchasing a tractor. The loan remainedHoutstanding. Thereafter, an Agricultural Debt Waiver and Debt Relief schemes were notified. The farmers were categorised intothree categories: (1) marginal farmer; (ii) small farmers and (iii)other farmers. The appellants claimed that they were ‘smallfarmers’ and sought a waiver of loan u/cl.5 of the scheme. Bankdeclined to accede to the claim for waiver. The appellants fileda complaint before the District Consumer Disputes RedressalForum. The District Forum held that the appellants were in thecategory of small farmers and the entire outstanding loan amountwas waived. The State Commission agreed with the view of theDistrict Forum. However, the National Commission came to acontrary conclusion and denied complete a waiver of loan.

Allowing the appeal, the Court

HELD: 1. For the purpose of the present case, Clause 3.6of the scheme which defines the expression ‘small farmer’ isrelevant. A small farmer is a farmer cultivating agricultural landof more than 1 hectare and upto 2 hectares (5 acres). Theexpression ‘other farmer’ covers those farmer whose holdingis in excess of five acres. Where a borrowing is by more thanone farmer all of whom have pooled their land, explanation 2provides that the largest landholding in the pool shall be thebasis for the classification of all farmers in that pool as marginal,small or other farmers. This explanation indicates that whereboth the appellants have pooled their landholding for the purposeof loan, the largest landholding amongst them would be takeninto consideration for classifying them in the appropriatecategory. The District Forum carefully evaluated this aspect andcame to the conclusion that the largest of the landholdings ofthe two appellants was four acres six kanals and eleven marlasand, hence both the appellants would fall in the category of ‘smallfarmer’ and not in the category of ‘other farmer’. This finding isin terms of the provisions and is correct. The State Commissionhas also entered a similar finding. [Para 15] [41-G-H; 42-A-C]

2. The appellants claimed a debt waiver on the ground thatthey were small farmers. The entire eligible amount was liableto be waived in terms of Clause 5. The National Commissionproceeded on the basis that the Scheme was applicable only tocertain districts in the State of Haryana and since Faridabad is AB

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Anot a district listed in Annexure-I, the appellants were notentitled to any relief. This finding is erroneous. The reliefprovided in Clause 6 is in the form of a one time settlementwhere a farmer is given a rebate of twenty- five per cent of theloan amount. However, under the proviso, in the case of revenueBdistricts listed in Annexure-I, the OTS rebate is to be twenty-five per cent of the eligible amount of Rs.20,000, whichever ishigher. The issue as to whether the landholding of the claimantfalls in one of the listed districts of Annexure-I, is relevant forthe purpose of Clause 6 of the Scheme. The appellants did notmake any claim under Clause 6. Their claim was under clauseC5. The National Commission was in error in holding theappellants to be ineligible on the basis that the district ofFaridabad has not been listed in Annexure-I. [Para 18] [42-F-H; 43-A-C]

3. That leaves the Court with the submission of theDrespondent based on explanation 3 to the definitions. Explanation3 applies to a farmer who has obtained investment credit forallied activities. Clause 3.1 contains a definition of directagricultural loans and covers short term production loans andinvestment loans provided directly to farmers for agriculturalEpurposes. Clause 3.3(a) brings within the purview of aninvestment loan, investment credit for direct agriculturalactivities including the purchase of a tractor. The loan which wasextended to the appellants was for the purchase of a tractor. Itwas a loan for allied activities and hence, explanation 3 has noapplication. [Para 19][43-B-E]FCIVIL APPELLATE JURISDICTION : Civil Appeal No. 367of 2020.

From the Judgment and Order dated 05.08.2015 of the NationalConsumer Disputes Redressal Commission at New Delhi in RevisionGPetition No. 583 of 2013.

Deepak Thukral, Vikas Gupta, Shree Pal Singh, Advs. for theAppellants.

A. N. Arora, Ms. Madhumita Bhattacharjee, Advs. for theHRespondents.

The Judgment of the Court was delivered by DR. DHANANJAYA Y CHANDRACHUD, J.

1. Leave granted.

2. The Union government conceived of a Debt Relief Schemefor agriculturists in the Budget of 2008. Eleven budgets later and despitethe travails of a decade and more spent in pursuing justice, two farmershave moved this Court. Their plea is simple : that the rights which thelaw recognizes have been thus far an illusion. They pursue a hope thatthe promises of policy would be secured.

3. This appeal arises from a judgment of the National ConsumerDisputes Redressal Commission[1] dated 5 August 2015 in a revisionarising out of an order of the State Consumer Disputes RedressalCommission[2], Haryana.

4. The appellants are brothers. They took a loan of Rupees threelacs from the first respondent in 2008 for purchasing a tractor for theiragricultural land. The loan remained outstanding after some installmentswere paid.

5. In the Union Budget of 2008-2009, an Agricultural DebtWaiver and Debt Relief Scheme were notified. Guidelines were issuedby the Ministry of Finance on 18 June 2009. Farmers were categorisedinto three categories: (i) marginal farmers; (ii) small farmers; and (iii)other farmers. The appellants claim to fall under the definition of ‘smallfarmers’. They claimed a waiver of the loan under clause 5 of theScheme. The Bank of India which had sanctioned the loan declined toaccede to the claim for waiver. The appellants instituted a complaintbefore the District Consumer Disputes Redressal Forum[3], Faridabad.In response to the complaint, the first respondent filed a writtenstatement submitting that the appellants are not small farmers and sincetheir joint holding is more than five acres, they fall within the categoryof ‘other farmers’ and were hence entitled only to a waiver of twenty-five per cent of the loan amount.

6. The District Forum allowed the complaint by coming to aconclusion that each of the two appellants had a holding of thirty-eightkanals eleven marlas which was less than the stipulated limit of fiveacres. The District Forum held that the largest holding in the pool, where 1 NCDRC2 SCDRC

3 District Forum

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Aa loan has been jointly applied for, would have to be taken into reckoning.Hence applying that test, both the appellants were held to fall in thecategory of small farmers. The District Forum observed thus:

“Both the complainants are separately owners of their respectiveholding measuring 38 kanals 11 marla each which is less than 5Bacre each. The entire mortgaged land of the complainants cannotbe made the basis for determining the classification of thecomplainants whether they fall in the category of small farmersor other farmers. The size of largest holding in the pool is to bemade the basis for classification of farmer. Since the largestCholding in the pool of one of the complainants was 38 kanal 11marlas i.e. 4 acre 6 kanal 11 marla, both the complainants willfall in category of “small farmers” and not in the category of“other farmers”. This being the position the entire “eligibleamount” i.e. outstanding loan amount of the complainants shallbe waived as per clause 5 of the Scheme and not only 25% asDallowed by the respondents.”

7. In an appeal by the Bank, the SCDRC, agreed with the viewof the District Forum in the following terms:

“Admittedly, complainants had availed loan of Rs.3,00,000/- forEpurchase of tractor from the appellants-opposite parties aftermortgaging their agricultural land measuring 38 kanal 11 marlaeach totaling 77 kanal 22 marla. The complainants wrote severalletters to the appellants-opposite parties for giving them benefitof scheme and waive of entire outstanding loan amount but theyFwere allowed only 25% benefit of the outstanding loan on theground that they jointly had mortgaged their land which was morethan 5 acres for obtaining a tractor loan of Rs.3,00,000/- and so,they were not entitled for entire waiver of the loan amount. Thecomplainant were holding their separate land measuring 38 kanals11 marla each which is less than 5 acres each. Since, the largestGholding in the pool of one of the complainants was 38 kanal 11marlas i.e. 4 acre 6 kanal 11 marla, both the complainants fell inthe category of “Small Farmers” and not in the category of“Other Farmers”. Thus, the complainants were eligible for entirewaiver of outstanding loan amount as per clause 5 of the SchemeHinstead of 25%.”

8. In a revision filed by the Bank against the order of the StateCommission, the National Commission, however, came to a contraryconclusion on the sole ground that the land of the appellants is situatedin the district of Faridabad which is not included in Annexure-I of theScheme. The National Commission held that the debt waiver policy wasnot applicable to the appellants and the denial of a complete waiver ofthe loan cannot be termed as deficiency in service. This finding hasbeen assailed on behalf of the appellants in appeal.

9. It has been urged on behalf of the appellants by Mr DeepakThukral, learned Counsel that under clause 5 of the Scheme, the entireeligible amount is liable to be waived in the case of small and marginalfarmers. Counsel submitted that in the case of ‘other farmers’, clause6 provides for debt relief and it was the proviso to that clause whichcontains a reference to Annexure-I. Under the proviso to clause 6, afacility would be given of an OTS rebate of twenty-five per cent ofthe ‘eligible amount’ or Rs 20,000, whichever is higher, subject to thecondition that the farmer paying the balance is a resident of one of therevenue districts listed in Annexure-I. Learned Counsel submitted thatthe claim of the appellants was not under clause 6, but under clause 5,which is not governed by the Annexure-I. Learned Counsel submittedthat the entitlement of the appellants having been established underclause 5 before both the District Forum and the State Commission, theview which has been taken by the National Commission, is palpablyerroneous. Learned Counsel has stated that the appellants have notentered into any OTS settlement with the first respondent.

10. Ms Madhumita Bhattacharjee, learned Counsel appearing onbehalf of the first respondent submitted that the case of the appellantshas been processed on the basis that they are ‘other farmers’ withinthe meaning of clause 3.7 of the Scheme. In particular, learned Counselrelies on explanation 3 which provides for the manner in which a caseinvolving investment credit for allied activities would be processed. Inother words, it was urged that apart from the consideration that weighedwith the National Commission, the appellants would not be entitled tothe benefit of a complete waiver in terms of the Scheme.

11. Clause 3 of the Scheme contains definitions. The expression‘direct agricultural loans’ is defined in clause 3.1 as follows:

“3.1‘Direct Agricultural Loans’ means Short Term ProductionLoans and Investment Loans provided directly to farmers for AB

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Aagricultural purposes. This would also include such loans provideddirectly to groups of individual farmers (for example Self HelpGroups and Joint Liability Groups), provided banks maintaindisaggregated data of the loan extended to each farmer belongingto that group.”

B12. The expression ‘investment loan’ is defined in clause 3.3 asfollows:

“3.3 ‘Investment Loan’ means

(a) Investment credit for direct agricultural activitiesCextended for meeting outlays relating to the replacementand maintenance of wasting assets and for capitalinvestment designed to increase the output from theland, e.g. deepening of wells, sinking of new wells,installation of pump sets, purchase of tractor / pair ofbullocks, land development and term loan for traditionalDand non-traditional plantations and horticulture; and (b) investment credit for allied activities extended foracquiring assets in respect of activities allied toagriculture e.g. dairy, poultry farming, goatery, sheeprearing, piggery, fisheries, bee-keeping, green houses andEbiogas.”

13. The definitions of marginal farmer, small farmer and otherfarmer contained in clauses 3.5, 3.6 and 3.7 read as follows:

“3.5 ‘Marginal Farmer’ means a farmer cultivating (as ownerFor tenant or share cropper) agricultural land up to 1 hectare (2.5acres).

3.6 ‘Small Farmer’ means a farmer cultivating (as owner ortenant or share cropper) agricultural land of more than 1 hectareand up to 2 hectares (5 acres).G3.7 ‘Other Farmer’ means a farmer cultivating (as owner ortenant or share cropper) agricultural land or more than 2 hectares(more than 5 acres).”

14. The explanations to the above definitions are significant forHthe present purposes and are therefore extracted below:

SATPAL AND ANR. v. BANK OF INDIA AND ORS.[DR. DHANANJAYA Y CHANDRACHUD, J.]

“Explanation:

1. The classification of eligible farmers as per the abovelandholding criteria under the Scheme would be basedon the total extent of land owned by the farmer eithersingly or as joint holder (in the case of an owner-farmer)or the total extent of land cultivated by the farmer (astenant or share cropper), at the time of sanction of theloan, irrespective of any subsequent changes inownership or possession.

2. In the case of borrowing by more than one farmer bypooling their landholdings, the size of the largestlandholding in the pool shall be the basis for the purposeof classification of all farmers in that pool as ‘marginalfarmer’ or ‘small farmer’ or ‘other farmer’.

3. In the case of a farmer who has obtained investmentcredit for allied activities where the principal loan amountdoes not exceed Rs.50,000, he would be classified as“small and marginal farmer” and, where the principalamount exceeds Rs.50,000, he would be classified as‘other farmer’, irrespective in both cases of the size ofthe land holding, if any.

4. Direct agricutlral loan taken under a Kisan Credit Cardwould also be covered under this Scheme subject tothese Guidelines.

5. A short-term production loan and an investment loantaken by a farmer shall be counted as two distinct loansand the Scheme will apply to the two loans separately.Likewise, in the case of a farmer who has taken twoinvestment loans for two separate purposes, the twoloans shall be counted as two distinct loans and theScheme will apply to the two loans separately.”

15. For the purpose of the present case, clause 3.6, which definesthe expression ‘small farmer’ is relevant. A small farmer is a farmercultivating agricultural land of more than 1 hectare and up to 2 hectares(5 acres). The expression ‘other farmer’ covers those farmers whoseholding is in excess of five acres. Where a borrowing is by more thanone farmer all of whom have pooled their land, explanation 2 provides A

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Athat the largest landholding in the pool shall be the basis for theclassification of all farmers in that pool as marginal, small or otherfarmers. This explanation indicates that where both the appellants havepooled their landholding for the purpose of loan, the largest landholdingamongst them would be taken into consideration for classifying themin the appropriate category. The District Forum carefully evaluatedBthis aspect and came to the conclusion that the largest of thelandholdings of the two appellants was four acres six kanals and elevenmarlas and, hence both the appellants would fall in the category of‘small farmer’ and not in the category of ‘other farmer’. This findingis in terms of the provisions which we have referred to above and isCcorrect. The State Commission has also entered a similar finding.16. Clause 5 of the Scheme provides for a debt waiver in thefollowing terms:

“5. Debt Waiver

D5.1 In the case of a small or marginal farmer, the entire ‘eligibleamount’ shall be waived.”

17. Clause 6 provides for debt relief as follows:

“6. Debt Relief

6.1 In the case of ‘other farmers’, there will be a one timeEsettlement (OTS) Scheme under which the farmer will be givena rebate of 25 per cent of the ‘eligible amount’ subject to thecondition that the farmer pays the balance of 75 per cent of the‘eligible amount’.

Provided that in the case of revenue districts listed in Annex-I,F‘other farmers’ will be given OTS rebate of 25 per cent of the‘eligible amount’ or Rs.20,000, whichever is higher, subject tothe condition that the farmer pays the balance of the ‘eligibleamount’.”

18. The appellants claimed a debt waiver on the ground that theyGwere small farmers. The entire eligible amount was liable to be waivedin terms of clause 5. The National Commission proceeded on the basisthat the Scheme was applicable only to certain districts in the State ofHaryana and since Faridabad is not a district listed in Annexure-I, theappellants were not entitled to any relief. This finding is erroneous. TheHrelief provided in clause 6 is in the form of a one time settlement where SATPAL AND ANR. v. BANK OF INDIA AND ORS.[DR. DHANANJAYA Y CHANDRACHUD, J.]

a farmer is given a rebate of twenty-five per cent of the loan amount.However, under the proviso, in the case of revenue districts listed inAnnexure-I, the OTS rebate is to be twenty-five per cent of the eligibleamount or Rs 20, 000, whichever is higher. The issue as to whetherthe landholding of the claimant falls in one of the listed districts ofAnnexure-I, is relevant for the purpose of clause 6 of the Scheme. Theappellants did not make any claim under clause 6. Their claim was underclause 5. The National Commission was in error in holding the appellantsto be ineligible on the basis that the district of Faridabad has not beenlisted in Annexure-I.

19. That leaves the Court with the submission of the learnedcounsel appearing on behalf of the respondent based on explanation 3to the definitions. Explanation 3 applies to a farmer who has obtainedinvestment credit for allied activities. Clause 3.1 contains a definitionof direct agricultural loans and covers short term production loans andinvestment loans provided directly to farmers for agricultural purposes.Clause 3.3(a) brings within the purview of an investment loan,investment credit for direct agricultural activities including the purchaseof a tractor. The loan which was extended to the appellants was forthe purchase of a tractor. It was a loan for allied activities and hence,explanation 3 has no application.

20. For the above reasons, we hold and conclude that there wasno valid basis for the National Commission to reverse the concurrentfindings which were arrived at by the District Forum and the StateCommission. The District Forum allowed the complaint by directingthe respondents to waive the loan amount, together with the interestoutstanding in the name of the complainants against the tractor loan.

21. We allow the appeal by setting aside the judgment of theNational Commission. We restore the order of the District Forum whichwas confirmed in appeal by the State Commission. The appellants shallbe entitled to costs quantified at Rs. 50,000.

Ankit Gyan

Appeal allowed.

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