Court dismisses writ petition against credit rating agency, rules it not a "State" under Article 12. Jurisdiction upheld.

The court dismissed the writ petition as not maintainable against the private credit rating agency, holding it does not qualify as a "State" under Article 12. The court rejected the objection on territorial jurisdiction as part of the cause of action arose within its limits. It found that the RBI and SEBI circulars did not mandate disregarding the actual financial condition during the rating process. Emphasizing the contractual nature of the relationship, the court highlighted the availability of alternative remedies for the petitioner and closed all connected miscellaneous petitions.

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Issues Involved:
1. Maintainability of the writ petition against a private credit rating agency.
2. Territorial jurisdiction of the court.
3. Interpretation and application of RBI and SEBI circulars regarding moratorium and rating relaxation.
4. Nature of the relationship between the petitioner and the credit rating agency.
5. Availability of alternative remedies for the petitioner.

Detailed Analysis:

1. Maintainability of the Writ Petition:
The third respondent contested the maintainability of the writ petition, arguing that it is a private entity and not a "State" under Article 12 of the Constitution of India. The court held that the third respondent, being a credit rating agency, performs normal corporate functions and is not discharging public functions or duties. Therefore, it cannot be considered a "State" within the meaning of Article 12, and the writ petition is not maintainable against it.

2. Territorial Jurisdiction:
The court addressed the objection regarding territorial jurisdiction, referencing Article 226(2) of the Constitution of India, which allows the High Court to exercise jurisdiction if part of the cause of action arises within its territorial limits. Since part of the cause of action arose within the jurisdiction of this court, the objection on territorial jurisdiction was rejected.

3. Interpretation and Application of RBI and SEBI Circulars:
The petitioner argued that the third respondent downgraded its rating in violation of the RBI and SEBI circulars issued during the COVID-19 pandemic, which provided for a moratorium and relaxation in recognizing defaults. The court examined the circulars and noted that the RBI circular dated 27.03.2020 allowed a moratorium on loan repayments, and the SEBI circular dated 30.03.2020 provided temporary relaxations for credit rating agencies. However, the court found that the petitioner's interpretation of these circulars was incorrect and that the circulars did not mandate disregarding the actual financial condition during the rating process.

4. Nature of the Relationship:
The court noted that the relationship between the petitioner and the third respondent is contractual, governed by a rating agreement. Disputes arising from such agreements are typically resolved through contractual remedies rather than writ proceedings. The court emphasized that rating is an expert-driven process and should not be interfered with by the writ court.

5. Availability of Alternative Remedies:
The court highlighted that the petitioner has effective alternative remedies available, including the provision for an in-house appeal and the option to file a complaint with SEBI against the third respondent. Given these alternatives, the court found that the writ petition was not the appropriate forum for resolving the dispute.

Conclusion:
The court dismissed the writ petition as not maintainable, emphasizing that the third respondent is a private entity not discharging public functions, and that the petitioner has alternative remedies available. The court did not delve into the merits of the case, leaving the petitioner free to pursue other legal avenues. Consequently, all connected miscellaneous petitions were also closed.

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