Allowed

Joy Kuriakose v. Axis Bank

Kerala HC22 Jan 2021WP(C)/18354/2020

Case brief

AI extract

What is this about?

A businessman challenged the bank's withholding of the balance amount of an Emergency Credit Line Guarantee Scheme loan. The court held deductions without borrower consent are impermissible under the scheme and directed the bank to release the balance amount after interest adjustment.

What did the court decide?

Directing the 1st respondent bank to make available to the petitioner the balance amount due to him under the Emergency Credit Line Guarantee Scheme after adjusting interest, if any.

Joy Kuriakose Vs Axis Bank — Banking and Recovery | Kerala HC (2021)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE N.NAGARESH

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FRIDAY, THE 22ND DAY OF JANUARY 2021/2ND MAGHA, 1942

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WP(C).No.18354 OF 2020(T)

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PETITIONER:

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JOY KURIAKOSE, AGED 52 YEARS, PROPRIETOR, MALANADU RUBBERS, R/AT.PYMPALLI HOUSE, KARINKUNNAM, IDUKKI-685586.

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BY ADVS. SRI.P.BABU KUMAR SRI.P.YADHU KUMAR SRI.VISHNU BABU

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RESPONDENTS:

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1 AXIS BANK, REP. BY BRANCH MANAGER, THODUPUZHA BRANCH, THODUPUZHA P.O., IDUKKI-685581.

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2 RESERVE BANK OF INDIA, REP. BY REGIONAL MANAGER, REGIONAL OFFICE, KALOOR, KOCHI-682018.

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3 UNION OF INDIA, REP. BY SECRETARY TO BANKING, CENTRAL SECRETARIAT, NEW DELHI-110001.

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ADDL. 4 THE NATIONAL CREDIT GUARANTEE TRUSTEE COMPANY LIMITED, G BLOCK BKC, BANDRA KURLA COMPLEX, BANDRA EAST, MUMBAI, MAHARASTRA-400 051

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IS SUO MOTU IMPLEADED AS PER ORDER DATED 11/12/2020 IN WP(C)No.18354/2020(T)

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WP(C) No.18354/2020

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R1 BY ADV. SRI.MADHU RADHAKRISHNAN, SC R3 BY ADV. SHRI.P.VIJAYAKUMAR, ASG OF INDIA SMT. SUMATHI DANDAPANI (SR) SC FOR RBI (B/O)

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 22.01.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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J U D G M E N T

~ ~ ~ ~ ~ ~ ~ ~ ~

Dated this the 22^nd day of January, 2021

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The petitioner, Proprietor of a business, is before this Court aggrieved by the action of the 1^st respondent-Bank withholding benefits of Emergency Credit Line Guarantee Scheme (ECLGS) to the petitioner. The petitioner seeks to command the 2^nd respondent to implement the Scheme by issuing necessary directions.

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The petitioner states that he is a businessman and holds an account with the 1^st respondent-Bank. In the month of April, the Reserve Bank of India announced a special Scheme to help the entrepreneurs who were affected by the lockdown declared by the Government. The Scheme is called Emergency Credit Line Guarantee Scheme (ECLGS) and the petitioner submits that he is entitled to ₹46 lakhs as loan under the Scheme. Though the Bank has sanctioned ₹46

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lakhs to the petitioner under the Scheme, the petitioner was permitted to utilise only an amount of ₹17.75 lakhs. The balance amount, which is more than ₹28 lakhs, has been appropriated by the Bank towards dues to them. The petitioner would submit that the ECLGS has been framed in view of the peculiar financial circumstance in the country and it is intended to provide working capital to entrepreneurs. The Bank has no authority to appropriate any amount from the working capital loan so provided, towards any dues to the Bank. Therefore, the 1^st respondent is bound to pay the petitioner the balance amount of about ₹28 lakhs.

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The learned Standing Counsel appearing for the 1^st respondent filed statement and additional statement and strongly resisted the contentions of the petitioner. The Standing Counsel submitted that whatever appropriation was made by the Bank, it was with the concurrence of the petitioner only. Had the Bank did not appropriate such amounts towards the dues of the petitioner, the petitioner would have been put to more grave situation and his account

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would have been turned into a NPA.

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The learned Standing Counsel further pointed out that the petitioner has already approached a Consumer Forum and obtained interim orders against his accounts being declared as NPA. After getting the interim order from the Consumer Forum restraining the 1^st respondent-Bank from declaring his accounts as NPA, the petitioner has approached this Court to get more money.

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As per the directions of this Court, the Assistant Solicitor General of India filed a statement on behalf of the additional 4^th respondent-National Credit Guarantee Trustee Company Limited. Paragraph 6 of the statement would make it clear that deduction from the ECLGS advances by the Money Lending Institutions is permissible under the Scheme only if the same is agreed between the borrower and the lender and not otherwise.

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Heard learned counsel for the petitioner, learned Standing Counsel for the 1^st respondent and learned ASGI representing the 3^rd respondent and the additional 4^th

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respondent.

In view of the statement filed on behalf of the additional 4^th respondent, which is the National Credit Guarantee Trustee Company Limited, it is evident that no amount can be deducted from the ECLGS loan advanced to entrepreneurs towards any dues of the Bank without concurrence of the entrepreneur concerned. The learned counsel for the 1^st respondent pointed out that as is evident from Ext.R1(a), which was issued as early on 09.07.2020, amounts were deducted from the ECLGS loan sanction as agreed by the petitioner. In the additional statement filed by the 1^st respondent also, the learned counsel asserted that the petitioner has not disputed the fact that deductions were made with his concurrence. In such circumstances, the petitioner is not entitled to any relief. The learned Standing Counsel for the 1^st respondent would further submit that in the event of a positive direction being given by this Court to disburse the entire amount of sanctioned ECLGS loan, the petitioner will be losing the benefits of credit made by the Bank which may

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ultimately cause more damage to the petitioner.

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It is to be noted that the Emergency Credit Line Guarantee Scheme has been framed to enable the entrepreneurs to survive the grave financial situation existing in the country. This Scheme is intended to make available cash flow to entrepreneurs so that they shall survive the financial emergency and take steps to sustain their business. In such circumstances, without expressed concurrence of the entrepreneurs, the Money Lending Institutions are not expected to make deductions from the ECLGS loan. In Ext.R1(a) letter issued by the 1^st respondent to the petitioner, the Bank has stated that it is as agreed by the petitioner that deductions are made. However, it is to be noted that Ext.R1(a) was issued on 09.07.2020 and the petitioner approached this Court with the grievance on 24.08.2020. Therefore, this Court is inclined to believe that the deductions were not made with the concurrence of the petitioner.

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In such circumstances, the writ petition is disposed of directing the 1^st respondent to make available to the

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petitioner the balance amount due to him under the Emergency Credit Line Guarantee Scheme, after adjusting interest, if any, that may be required to be done due to re-adjustment of accounts.

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Sd/- N. NAGARESH, JUDGE

aks/22.01.2021

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APPENDIX

PETITIONER'S EXHIBITS:

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EXHIBIT P1 TRUE COPY OF THE OPERATIONAL GUIDELINE OF THE EMERGENCY CREDIT LINE GUARANTEE SCHEME AND MORATORIUM.

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EXHIBIT P2 TRUE PHOTOCOPY OF THE COMPLAINT DATED 14.07.2020 FILED TO THE COMPLAINT CELL. EXHIBIT P3 TRUE COPY OF THE INTIMATION DATED 30.07.2020 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P4 TRUE PHOTOCOPY OF THE REPLY DATED 17.08.2020. EXHIBIT P5 TRUE PHOTOCOPY OF THE STATEMENT OF ACCOUNT. EXHIBIT P6 TRUE COPY OF THE LETTER DATED 16-112020 ISSUED FROM FEDERAL BANK, KARINKUNNAM BRANCH EXHIBIT P7 TRUE PHOTOCOPY OF THE LETTER DATED 1011-2020 ISSUED FROM STATE BANK OF INDIA, KARINKUNNAM BRANCH.

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RESPONDENTS' EXHIBITS:

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EXHIBIT R1(A) TRUE COPY OF THE LETTER DATED 9.7.2020 COMMUNICATING THE SANCTION OF THE ECLGS. EXHIBIT R1(B) TRUE COPY OF THE CIRCUAR ISSUED BY THE 2ND RESPONDENT DATED MARCH 27,2020 EXHIBIT R1(C) TRUE COPY OF THE SANCTION LETTER DATED 11.6.2019 (RENEWAL)ALONG WITH TERMS EXHIBIT R1(D) TRUE COPY OF THE BALANCE SHEET OF THE PETITIONER

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EXHIBIT R1(E) TRUE COPY OF THE LETTER DATED 16.1.2020 ISSUED TO THE INDIAN OVERSEAS BANK

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EXHIBIT R1(F) TRUE COPY OF THE LETTER DATED 16.1.2020 ISSUED BY THE 1ST RESPONDENT TO THE STATE BANK OF INDIA EXHIBIT R1(G) TRUE COPY OF THE LETTER DATED 16.1.2020 ISSUED BY THE 1ST RESPONDENT TO THE FEDERAL BANK LTD. EXHIBIT R1(H) A TRUE COPY OF THE ORDER PASSED BY TEH CDRF RESTRAINING DECLARATION OF NPA OF THE OD ACCOUNT OF THE PETITIONER AND FURTHER RESTRAINING ANY RECOVERY PROCEEDINGS.

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Joy Kuriakose v. Axis Bank

Case brief

What is this about?

What did the court decide?

Joy Kuriakose v. Axis Bank

Case brief

What is this about?

What did the court decide?

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