Court upholds ICRA's right to publish ratings without issuer consent, emphasizing regulatory compliance and professional judgment.

The court upheld ICRA's right to publish downgraded ratings without issuer acceptance, citing SEBI CRA Regulations and RBI guidelines. It found ICRA's rating factors, including business risks and debt metrics, were reasonable and not arbitrary. Declining to grant a mandatory injunction, the court emphasized ICRA's professional judgment and the importance of continuous rating dissemination for stakeholder protection. The suit was dismissed, affirming ICRA's actions as valid and in line with regulatory requirements.

---

---

Issues:
1. Whether the defendant-ICRA has a right to publish the rating despite being objected to by the plaintiff/JPLRs.
2. What are the factors required to be considered by ICRA while deciding the rating and whether those factors have been considered by ICRA or the finding of ICRA is based on erroneous considerationsRs.
3. In case, the finding of ICRA is based on erroneous factors, whether this Court can grant a mandatory injunction against ICRA directing it to review its ratingsRs.

Issue No. (i): Right to Publish Rating Despite Objection:

The court analyzed the agreement between JPL and ICRA, SEBI CRA Regulations, and the Master Circular from RBI. It concluded that while the initial credit rating requires acceptance by the issuer (JPL) to be published, subsequent ratings under surveillance do not require such acceptance. The CRA Regulations mandate continuous monitoring and dissemination of ratings during the lifetime of the securities, regardless of the issuer's acceptance. The court emphasized that the purpose of this regulation is to protect the interests of the financial facility providers and other stakeholders. The court also noted that the confidentiality clauses cited by JPL do not apply to surveillance ratings. Therefore, ICRA was within its rights to publish the downgraded rating despite JPL's objections.

Issue No. (ii): Factors Considered by ICRA in Rating:

ICRA's rating methodology includes various business, industry, and financial risk drivers. The court noted that ICRA considered multiple factors such as JPL's elongated receivables cycle, modest debt-coverage metrics, elevated debt level, and exposure to power off-take and raw material availability. The court found that ICRA had balanced various competing factors and exercised its independent professional judgment. The court rejected JPL's contention that ICRA's decision was perverse or arbitrary, noting that the reasons for the downgrade, including the inability to secure incremental PPAs and the uncertain receivables from TANGEDCO, were plausible and relevant.

Issue No. (iii): Granting Mandatory Injunction:

The court held that it would not interfere with the expert opinion of a credit rating agency unless it was shown to be perverse, arbitrary, or mala fide. The court found that ICRA's opinion was based on a thorough analysis of relevant factors and was neither perverse nor arbitrary. Consequently, the court declined to grant a mandatory injunction directing ICRA to review its ratings or to remove the downgraded ratings from its records.

Conclusion:

The court dismissed the suit and applications, upholding ICRA's right to publish the downgraded ratings and finding that the factors considered by ICRA were relevant and appropriately balanced. The court emphasized the importance of continuous monitoring and dissemination of credit ratings to protect the interests of financial facility providers and other stakeholders.

---