Remanded

Parthas Textiles v. the Icici Bank Ltd.

Kerala HC27 Nov 2020WP(C)/25181/2020

Case brief

AI extract

What is this about?

Petitioner sought direction to extend Emergency Credit Line Guarantee Scheme (ECLGS) benefits and a resolution plan for Covid-19 stress. Court directed the bank to verify the petitioner's combined loan outstanding, apply the latest RBI circular on loan limits, and decide on the ECLGS application and resolution plan claims.

What did the court decide?

Directed the 1st respondent (Bank) to verify the petitioner's combined loan outstanding and take a fresh decision on the ECLGS application considering the enhanced limits and CBDT circulars.

Parthas Textiles Vs the Icici Bank Ltd. — Banking and Recovery | Kerala HC (2020)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT

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THE HONOURABLE MR.JUSTICE N.NAGARESH

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

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WP(C).No.25181 OF 2020(W)

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PETITIONER:

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

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BY ADV. SRI.C.AJITH KUMAR

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RESPONDENTS:

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1 THE ICICI BANK LTD.,B.M. COMPLEX, EDAPPALLY, KOCHI 682 024, REPRESENTED BY ITS BRANCH MANAGER.

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2 NATIONAL CREDIT GUARATNEE TRUSTEE COMPANY LTD.,SWAVALAMBAN BHAVAN, C-II, G. BLOCK, BANDRA KURLA COMPLEX, BANDRA EAST, MUMBAI 400 051, REPRESENTED BY ITS COMPANY SECRETARY.

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3 THE RESERVE BANK OF INDIA, 21ST FLOOR, CENTRAL OFFICE BUILDING, SHAHID BHAGAT SINGH ROAD, MUMBAI 400 001, REPRESENTED BY ITS CHIEF GENERAL MANAGER.

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R1 BY ADV. SRI.LAL K.JOSEPH R1 BY ADV. SRI.A.A.ZIYAD RAHMAN R1 BY ADV. SHRI.CHACKO MATHEWS K. R1 BY ADV. SRI.SURESH SUKUMAR R1 BY ADV. SRI.ANZIL SALIM R3 BY ADV. SHRI.P.VIJAYAKUMAR, ASG OF INDIA

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

WP(C) No.25181/2020

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J U D G M E N T

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Dated this the 27^th day of November, 2020

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Aggrieved by the non-consideration of application for sanction of financial assistance under Ext.P1 Emergency Credit Line Guarantee Scheme envisaged by the 2^nd respondent, the petitioner is before this Court.

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The petitioner states that the 2^nd 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 entitled and eligible for the benefit under the Scheme.

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WP(C) No.25181/2020

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The petitioner therefore submitted Ext.P3

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

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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 for a resolution frame work for Covid-19 related stress and for implementation of a resolution plan by providing two years moratorium for the financial facilities enjoyed by the petitioner in the light of Exts.P4 and P5 Circulars.

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The 1^st respondent appeared in the writ petition and filed a statement. The 1^st respondent stated that as on 29.02.2020, the combined outstanding on all the 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

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WP(C) No.25181/2020

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benefit is extended without confirming the said limit, the 1^st respondent will be denied the benefit under the Scheme as a lending institution. Therefore, the 1^st respondent is not in a position to extend the benefit of Ext.P1 to the petitioner.

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The learned counsel for the petitioner stoutly denied the said statement made by the 1^st respondent. 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 1^st respondent is true and correct, still the petitioner will be entitled to get the benefit under Ext.P1 Scheme.

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

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Ext.P1 ECLGS has been framed to provide 100% guarantee coverage for the guaranteed emergency credit line, which shall be a pre-approved sanction limit of up to

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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.

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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 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.

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The objection of the 1^st 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 that as on 29.02.2020, the total loan outstanding of the petitioner is less than ₹50 Crores. Therefore, this factual aspect need re-verification by the 1^st respondent. Furthermore, the petitioner would contend that as per the Circular dated 26.11.2020 of the Chief Executive Officer of the 2^nd respondent, the upper limit for outstanding loans has

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been enhanced to ₹500 Crores. If it is so, that factor also has to be considered by the 1^st respondent.

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In the circumstances, the writ petition is disposed

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of directing the 1^st 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. The 1^st respondent shall also consider the claim of the petitioner for resolution frame work for Covid-19 related stress and for implementation of a resolution plan, in accordance with law and in accordance with the Rules and Scheme, if any, made by the 3^rd respondent in that behalf.

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Sd/- N. NAGARESH, JUDGE

aks/27.11.2020

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APPENDIX

PETITIONER'S EXHIBITS:

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EXHIBIT P1 TRUE COPY OF THE EMERGENCY CREDIT LINE GUARANTEE SCHEME (ECLGS) MODIFICATION IN OPERATIONAL GUIDELINES DATED 04/08/2020 OF THE 2ND RESPONDENT.

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EXHIBIT P2 TRUE COPY OF THE FREQUENTLY ASKED QUESTIONS ON EXT. P1 UPLOADED IN THE WEBSITE OF THE 2ND RESPONDENT. EXHIBIT P3 TRUE COPY OF THE LETTER DATED 12/10/2020 ISSUED BY PETITIONER TO THE 1ST RESPONDENT. EXHIBIT P4 TRUE COPY OF THE CIRCULAR NO. RBI/202021/16 DATED 06/08/2020 OF THE 3RD RESPONDENT.

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EXHIBIT P5 TRUE COPY OF THE CIRCULAR NO. RBI-202021/34 DATED 07/09/2020 OF THE 3RD RESPONDENT. EXHIBIT P6 TRUE COPY OF THE LETTER DATED 31/10/2020 ISSUED BY THE 2ND RESPONDENT.

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RESPONDENTS' EXHIBITS

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ANNEXURE R1(a) THE TRUE COPY OF THE LOAN ACCOUNT STATEMENT OF THE PETITIONER IN LOAN ACCOUNT NO.UPCOC00039788584 WITH THE 1ST RESPONDENT BANK.

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ANNEXURE R1(b) THE TRUE COPY OF THE REPAYMENT SCHEDULE OF THE PETITIONER IN LOAN ACCOUNT NO.UPCOC00039788584 WITH THE 1ST RESPONDENT BANK. ANNEXURE R1(c) THE TRUE COPY OF THE CIRCULAR OF THE 3RD RESPONDENT WITH NO.RBI/2019-20/186 DATED 27/03/2020

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ANNEXURE R1(d) THE TRUE COPY OF THE CIRCULAR NO. RBI/2019-20/244 DATED 23.05.2020. ANNEXURE R1(e) THE TRUE COPY OF THE RELEVANT PAGE OF THE PETITIONER SHOWING THE CREDIT SUMMARY AS PER CIBIL.

Parthas Textiles v. the Icici Bank Ltd.

Case brief

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Parthas Textiles v. the Icici Bank Ltd.

Case brief

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