Allowed

Parthas Textiles v. the Reserve Bank of India

Kerala HC27 Nov 2020WP(C)/24878/2020

Case brief

AI extract

What is this about?

The petitioner challenging non-sanction of a loan under the ECLGS scheme sought direction to the respondent bank to verify loan outstanding and grant benefits considering recently issued circulars enhancing the limit.

What did the court decide?

Directed the 2nd respondent to verify the combined outstanding loan amount and take a fresh decision on the petitioner's application considering the circular dated 26.11.2020.

Parthas Textiles Vs the Reserve Bank of India — Banking and Recovery | Kerala HC (2020)

¶1

IN THE HIGH COURT OF KERALA AT ERNAKULAM

¶2

PRESENT

¶3

THE HONOURABLE MR.JUSTICE N.NAGARESH

¶4

FRIDAY,THE 27TH DAY OF NOVEMBER 2020/6TH AGRAHAYANA,1942

¶5

WP(C).No.24878 OF 2020(H)

¶6

PETITIONER:

¶7

PARTHAS TEXTILES,P.B.NO.1774, M.G.ROAD, JOSE JUNCTION, ERNAKULAM-682 016, REPRESENTED BY ITS MANAGING PARTNER, PRAVEEN RAJ RAJENDRAN.

¶8

BY ADV. SRI.C.AJITH KUMAR

¶9

RESPONDENTS:

¶10

1 THE RESERVE BANK OF INDIA, 21ST FLOOR, CENTRAL OFFICE BUILDING, SHAHID BHAGAT SINGH ROAD, MUMBAI-400 001.

¶11

2 IDFC FIRST BANK LTD.,GROUND FLOOR, VANKARATH TOWERs, N.H.BYE-PASS SIGNAL JUNCTION, PALARIVATTOM, KOCHI-682 024.

¶12

3 NATIONAL CREDIT GUARANTEE TRUSTEE COMPANY LTD.,G-BLOCK, BKC BANDRA EAST, MUMBAI, MAHARASHTRA-450 051.

¶13

R2 BY ADV. SRI.P.SATHISAN R2 BY ADV. SMT.KRISHNA.G.NATH R2 BY ADV. SMT.DONA AUGUSTINE R1 BY SRI.P.VIJAYAKUMAR, ASGI

¶14

THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 27.11.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C) No.24878/2020

: 2 :

J U D G M E N T

~ ~ ~ ~ ~ ~ ~ ~ ~

Dated this the 27^th day of November, 2020

¶20

Aggrieved by the non-consideration of application for sanction of financial assistance under Ext.P1 Emergency Credit Line Guarantee Scheme envisaged by the 3^rd respondent, the petitioner is before this Court.

¶21

The petitioner states that the 3^rd respondent has formulated the Emergency Credit Line Guarantee Scheme (ECLGS) to provide 100% guarantee coverage for the Guarantee Emergency Credit Line to eligible borrowers, in the form of a pre-approved sanction limit of up to 20% of loan outstanding, as on 29.02.2020, to eligible borrowers. The petitioner states that the petitioner is squarely covered under Ext.P1 Scheme and fulfills various parameters contained therein. The petitioner is eligible and entitled for the benefit under the Scheme.

¶22

WP(C) No.24878/2020

¶23

: 3 :

¶24

The petitioner therefore submitted Ext.P3

¶25

application to the 1^st respondent seeking financial assistance under the ECLGS. However, the petitioner's application is not being considered.

¶26

The petitioner therefore seeks to direct the 2^nd respondent to extend ECLGS benefits to the petitioner in terms of Ext.P1 and to disburse the eligible loan amount to the petitioner. The petitioner further seeks to command the 2^nd respondent that the petitioner is entitled and eligible for a pre-approved loan up to 20% of the loan outstanding as on 29.02.2020, in view of Ext.P1.

¶27

The 2^nd respondent appeared in the writ petition and filed a statement. The 2^nd respondent stated that as on 29.02.2020, the combined outstanding on all the Money Lending Institutions (MLIs) of the petitioner was more than ₹50 Crores as per the Credit Information Bureau (India) Limited. The petitioner is therefore not entitled to the benefit under the Scheme. If the benefit is extended without confirming the said limit, the 2^nd respondent will be denied

¶28

WP(C) No.24878/2020

¶29

: 4 :

¶30

the benefit under the Scheme as a lending institution. Therefore, the 2^nd respondent is not in a position to extend the benefit of Ext.P1 to the petitioner.

¶31

The learned counsel for the petitioner stoutly denied the said statement made by the 2^nd respondent. In the affidavit dated 24.11.2020 filed on behalf of the petitioner, it has been specifically stated that the total loan outstanding of the petitioner as on 29.02.2020 is ₹44,63,57,410/-, which is less than ₹50 Crores. Therefore, the non-consideration of the petitioner's application is illegal.

¶32

The learned counsel for the petitioner further submitted that the Chief Executive Officer of the 3^rd respondent has issued a Circular No.3116/NCGTC/ECLGS dated 26.11.2020, whereby the upper limit of outstanding loans has been enhanced from ₹50 Crores to ₹500 Crores. The learned counsel for the petitioner urged that even if the statemet filed by the 2^nd respondent is true and correct, still the petitioner will be entitled to get the benefit under Ext.P1 Scheme.

¶33

WP(C) No.24878/2020

¶34

: 5 :

¶35

Heard learned counsel for the petitioner and learned Standing Counsel appearing for the respondents.

¶36

Ext.P1 ECLGS has been framed to provide 100%

¶37

guarantee coverage for the guaranteed emergency credit line, which shall be a pre-approved sanction limit of up to 20% of loan outstanding as on 29.02.2020. Under the Scheme, the eligible borrowers are to be extended additional working capital term loan facility from all member lending institutions.

¶38

As per Ext.P1 Scheme, all borrower accounts pertaining to business enterprises/MSMEs/loans to individuals for business purposes with combined outstanding loans across all Money Lending Institutions (MLIs) of up to ₹50 Crores as on 29.02.2020, and annual turnover of up to ₹250 Crores for the financial year 2019-20 are eligible for the Scheme.

¶39

The objection of the 2^nd respondent is that the combined loan outstanding of the petitioner is more than ₹50 Crores. The petitioner, on the other hand, would contend

¶40

WP(C) No.24878/2020

¶41

: 6 :

¶42

that as on 29.02.2020, the total loan outstanding of the petitioner will be only ₹44,63,57,410/-. Therefore, this factual aspect need re-verification by the 2^nd respondent. Furthermore, the petitioner would contend that as per the Circular dated 26.11.2020 of the Chief Executive Officer of the 3^rd respondent, the upper limit for outstanding loans has been enhanced to ₹500 Crores. If it is so, that factor also has to be considered by the 2^nd respondent.

¶43

In the circumstances, the writ petition is disposed of directing the 2^nd respondent to verify the combined outstanding loan amount of the petitioner and take a decision afresh on Ext.P3 application made by the petitioner, taking into consideration the Circular dated 26.11.2020 of the 3^rd respondent also, expeditiously.

¶44

Sd/- N. NAGARESH, JUDGE

¶45

aks/27.11.2020

¶46

APPENDIX

¶47

PETITIONER'S EXHIBITS:

¶48

EXHIBIT P1 TRUE COPY OF THE EMERGENCY CREDIT LINE GUARANTEE SCHEME (ECLGS)-MODIFICATION IN OPERATIONAL GUIDELINES DATED 04.08.2020 OF THE 3RD RESPONDENT. EXHIBIT P2 TRUE COPY OF THE FREQUENTLY ASKED QUESTIONS ON EXT.P1 GUIDELINES UPLOADED IN THE WEBSITE OF THE 3RD RESPONDENT. EXHIBIT P3 TRUE PHOTOCOPY OF THE REQUEST LETTER DATED 12.10.2020 SUBMITTED BY THE PETITIONER TO THE 2ND RESPONDENT. EXHIBIT P4 TRUE COPY OF THE CIRCULAR DATED 06.08.2020 OF THE 1ST RESPONDENT. EXHIBIT P5 TRUE COPY OF THE CIRCULAR DATED 07.09.2020 OF THE 1ST RESPONDENT. EXHIBIT P6 TRUE COPY OF THE LETTER DATED 31.10.2020 ISSUED BY THE 3RD RESPONDENT. EXHIBIT P7 TRUE COPY OF THE SANCTION DATED 28.09.2020 OF THE SOUTH INDIA BANK LTD. TO THE PETITIONER.

Parthas Textiles v. the Reserve Bank of India

Case brief

What is this about?

What did the court decide?

Parthas Textiles v. the Reserve Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

E.M.Paulose Vs Kerala Water Authority

Alice Thomas @ Alice, Vs Managing Director, Ksrtc

Karthiyani Vs Kerala Water Authority

K.R.Baiju Vs the General Manager

Parthas Textiles Vs the Icici Bank Ltd.

Parthas Textiles Vs Hdb Financial Services Ltd.