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2020 (7) TMI 262
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....FC Bank as per communications dated 06.04.2020 and 08.04.2020, the decision of Respondent No.6 as per communication dated 28.04.2020, the decision of Respondent No.7 as per communication dated 24.04.2020 and 22.02.2020, 1.3. a direction to Respondent Nos.5, 6 and 7 to grant moratorium as regards payment of all term loan instalments falling due. 1.4. consequently to restrain Respondent Nos.5 to 7 from recovering loan repayment instalments/EMI due in respect of Loan Account Nos.009LN18173530003 and 009LN18173530002 of Respondent No.5, Loan Account Nos.14377600006908 and 14377600006916 of RespondentNo.6 and Loan Account Nos.80001471 and 80001472 of Respondent No.7 in any manner; 1.5. to direct Respondent No.5 to reverse the recovery of EMI of Rs. 3,45,47,459.96 effected for March and April 2020 and Respondent No.6 to reverse the recovery of EMI of Rs. 2,29,48,565/- effected for March and April 2020 1.6. To direct the Respondents to transfer forthwith as and when received, all the credits corresponding to loan repayment instalments/EMIs for March, April and May 2020 into Escrow account Nos.5750000106944 and 57500000286555 (maintained with HDFC Bank Limited), to the Petition....
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....e Petitionerare standard account, there is no default on the part of the Petitioner in the repayment of any amount due to any of Respondent Nos.5 to 7. 2.4. At this stage, due to the unfortunate spread of Novel Corona Virus - 19 ("N-Covid-19"), the Government of India invoked the Disaster Management Act, 2005 ("DMA", for short) by its order dated 24.03.2020. Directions were issued to all the Ministries, Departments of Government of India/State, Union Government and State/Union Territory authorities to take effective measures so as to prevent the spread of N-Covid 19. 2.5. On the very same day, the Secretary, Ministry of Home Affairs, Government of India also issued guidelines under the provisions of DMA as regards the measures to be taken for containment of N-Covid 19 in the country which included a direction for the closure of all commercial and private establishments, suspension of transportation, etc. 2.6. Thereafter from time to time, the Government of India as also the various State Governments have been, under the DMA, issuing directions as regards maintaining of social distancing, closure or restrictive operation of private and public enterprises/establishments etc.....
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....alling due between March 1st, 2020 and May 31st, 2020. The repayment schedule for such loans as also the residual tenor will be shifted across the Board by three months after the moratorium period. Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period." 2.10. Para 4 relating to Easing of Working Capital Financing is reproduced hereinbelow: "4. In respect of working capital facilities sanctioned in the form of CC/OD to borrowers facing stress on account of the economic fallout of the pandemic, lending institutions may recalculate the 'drawing power' by reducing the margins and/or by reassessing the working capital cycle. This relief shall be available in respect of all such changes effected up to May 31st, 2020 and shall be contingent on the lending institutions satisfying themselves that the same is necessitated on account of the economic fallout from COVID-19. Further, accounts provided relief under these instructions shall be subject to subsequent supervisory review with regard to their justifiability on account of the economic fallout from COVID-19." 2.11. The manner and methodology of the moratorium being exte....
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.... 14: Will all these measures of RBI be treated as "restructuring"? What about eh provisions applicable? ANSWER: The measures stipulated by RBI under the March 27th, 2020 Circular on COVID-19 Regulatory package will not be treated as "restructuring" and hence will not result in assets classification downgrade. Accordingly, the enhanced provisions for Restructured Accounts will not apply." 2.13. The said answers by the Indian Bank Association to the frequently asked questions were also accompanied by the answers by some of the Banks to those and some other frequently asked questions, which are web-hosted on the web site of the respective banks. Some of the answers are extracted hereunder: 2.14. HDFC - 5thRespondent "RBI Covid-19 Regulatory Package: EMI Moratorium These are unprecedented times and it is a time that we need to be together to fight this COVID-19 crisis. In line with the RBI guidelines and to show our solidarity in standing with you, HDFC Bank is offering its customers EMI moratorium and credit card outstanding moratorium as a relief measure. 1. What is the EMI moratorium provided for loans under COVID 19- regulatory package? The prevailing ....
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.... of the interest accrued during the moratorium period. g) If any customer, whose account was standard as at the end of February 29th 2020, requests for reversal of installment/ EMI deducted, if any, after March 1st 2020, the same will be refunded within a reasonable time. h) Installments, for the purpose of moratorium will include the following payments falling due from 01st March 2020 to May 31st 2020. * Principal and/or interest components * Bullet repayments * Equated Monthly installments. i) Asset classification of term loans which are granted relief as above shall be determined on the basis of revised due dates and the revised payment schedule. 2.16. Aditya Birla Finance - 7thRespondent FAQs: 1. Is the Moratorium applicable for all loans? ABFL would be extending moratorium to all its customers as per the latest advice by the Reserve bank of India. Only NPA customers will not be extended the benefit of Moratorium. 2. Does it mean that my EMI for the next 3 months is waived off? Will I get an interest waiver for 3 months of moratorium? The RBI advisory does not mandate an interest waiver and is only a def....
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.... to the Respondent No.7 - Aditya Birla Finance Limited went without a response. 2.20. Respondent No. 5 post rejection of the moratorium application made by the Petitioner, debited the amounts due to it from and out of the Escrow Account maintained with the Respondent No.5 by the Petitioner wherein the lease rental amount were being deposited by the concerned tenants. This was also followed up with similar debiting by Respondent No.6, debiting being made for the EMIs payable for the months March and April, 2020. 2.21. The Petitioner once again approached all the three lenders that is Respondent Nos.5 to 7 on April 17th 2020 requesting them to extend a moratorium for a period of three months and in the meanwhile also filed a complaint under the Banking Ombudsman Scheme, 2006 with regards to the refusal of Respondent Nos.5 to 7 to extend the benefit of a moratorium to the Petitioner. 2.22. On April 24th 2020, Respondent No.7 informed the Petitioner that the loan of the Respondent No.7 was secured by way of a pari passu charge and though a request had been made by the Petitioner to all three lenders, Respondent Nos.5 and 6 had been unilaterally appropriating the dues from the ....
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....e with the Circular permitting the lending institutions to grant a moratorium for a period of three months for payment of all instalments falling due between 01.03.2020 and 31.05.2020. 7.2. Towards which, the lending institutions were required to frame Board Approved Policies for providing the reliefs mentioned in the Regulatory Package to all eligible borrowers and disclose the same in the public domain. 7.3. The RBI has contended that since the customer profile, organisation structure and spread of each lending institution is widely different from others, each lending institution is best placed to assess the requirement of its customers. Therefore, the discretion regarding deciding the eligibility of customers and the manner in which customers are to be onboarded for availing the benefit including the manner of recovery of interest accrued during the moratorium period was left to the lending institution concerned. 7.4. Though the RBI has also contended that matter relating to fiscal and financial matters of the State should be left for implementation to the necessary statutory and expert bodies, it has also contended that it is for the Respondent Nos.5 to 7 to defend the....
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.... said decision and states that it is not required to provide any moratorium. While stating so, Respondent No.6 has conditioned such refusal by stating that it would be willing to provide the moratorium to the Petitioner provided all the other lenders grant such moratorium to the Petitioner. 10. Respondent No.7 though has not filed its objections to the petition has filed a vacate stay application as also an affidavit in response to the statement of objections filed by Respondent No.5 wherein it is contended by Respondent No.7 that 10.1. Respondent No.7 is ready and willing to grant a moratorium to the Petitioner as per the Circular issued by the RBI. 10.2. However, the lending facility being a multi-Bank arrangement with common securities like cash flows, Respondent No.7 cannot be individually expected to extend a moratorium to the Petitioner in the absence of Respondent Nos.5 and 6 extending such moratorium more so when all three of them enjoyed a pari-passu charge on all the assets including the cash flow of the Petitioner. 10.3. Respondent Nos.5 and 6 cannot unilaterally appropriate the funds from the Escrow Accounts where the lease rentals are being deposited; Respo....
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....in the public domain the said Policy containing objective criteria for the methodology of considering the extension of a moratorium to an eligible borrower. Despite which Respondents no. 5 to 7 have not complied with the requirement of the RBI. Therefore, the rejection by Respondent No.5 and the subsequent rejection by Respondent Nos.6 and 7 of the request for a moratorium is not sustainable and is opposed to the letter and spirit of the Circular dated 27.03.2020. 11.5. Referring to the contents of the Circular as also answers to the frequently asked questions published by Indian Bank Association as also that published by the Respondent Nos.5 to 7 on their respective websites, he contends that the Policy is applicable to all borrowers, there is no discretion vested with any of the Banks to reject any application filed by a borrower. The eligibility is decided only on the basis of the account being standard as on March 1st, 2020, that is to say, there is no default in repayment of the loan as on that date and once this condition is satisfied it was, but required, for the Banks, to extend the benefit of a moratorium to the Petitioner. 11.6. The entire methodology of decision ma....
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....of Respondent No.4 - RBI. 13. Learned AGA appearing for the State Government also supports the contention of Sri. M B Nargund, Additional Solicitor General and submitted that the State Government has nothing to do with the disputes between the Petitioner and Respondent Nos.4 to 7. 14. Sri.R.V.S.Naik, learned Senior Counsel on behalf of Shri T Suryanarayana Rao, learned Counsel for Respondent No.4 reiterating the contents of the statement of the objection filed, submitted that: 14.1. Respondent Nos.5 to 7 in terms of Para 8 of the Circular dated 27.03.2020 were required to formulate a board approved Policy lying down objective criteria for the assessment of loan application received by the Bank and thereafter it is for the Banks to justify as to why an application by any of the borrower was rejected. 14.2. The RBI has issued a Circular believing that the Banks would implement the said Circular in its true letter and spirit so as to keep the economy running, it is for the Banks to objectively assess each and every case while granting or refusing to grant a moratorium in such manner that the economy continues to be running and the borrower continues to be in operation. ....
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....e Petitioner will not arise. 15.4. The Petitioner has enough and more revenues coming into its Bank account to enable the servicing of the LRD account, and as such, there is no requirement for the extension of a moratorium to the Petitioner. 15.5. The RBI has left the discretion to the Bank to consider the extension of a moratorium or otherwise taking into consideration the facts of each case, more particularly, taking into account the customer profile, organisation structure and spread of each Banking institution which is peculiar to each Bank and the discretion exercised by a Bank in relation to the fiscal nature of transaction ought not to be interfered with by this Court. 15.6. Apart from the interest of a borrower like the Petitioner, the interest of the Bank also would have to be considered since the Respondent No.5-Bank has more than 70,000 employees who are also to be paid their salaries. If more or all borrowers were to avail of a moratorium, there would not be any cash flows to the Bank, thereby, coming in the way of the Bank making payments to its employees as also interest payments to the depositors with the Bank. It is in this background that he submits that w....
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....s and profits. Since time immemorial, such activities have been carried on by individuals generally. It is a private affair of the company though the case of nationalised banks stands on a different footing. There may well be companies, in which majority of the share capital may be contributed out of the State funds and in that view of the matter there may be more participation or dominant participation of the State in managing the affairs of the company. But in the present case we are concerned with a banking company which has its own resources to raise its funds without any contribution or shareholding by the State. It has its own Board of Directors elected by its shareholders. It works like any other private company in the banking business having no monopoly status at al. Any company carrying on banking business with a capital of five lakhs will become a scheduled bank. All the same, banking activity as a whole carried on by various banks undoubtedly has an impact and effect on the economy of the country in general. Money of the shareholders and the depositors is with such companies, carrying on banking activity. The banks finance the borrowers on any given rate of interest at a....
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....lied with by all concerned including the private companies. For example, there are certain legislation like the Industrial Disputes Act, the Minimum Wages Act, the Factories Act or for maintaining proper environment, say the Air (Prevention and Control of Pollution) Act, 981 or the Water (Prevention and Control and Pollution) Act, 1974 etc. or statutes of the like nature which fasten certain duties and responsibilities statutorily upon such private bodies which they are bound to comply with. If they violate such a statutory provision a writ would certainly be issued for compliance with the service of its employee in violation of the provisions contained under the Industrial Disputes Act, in innumerable cases the High Court interfered and has issued the writ to the private bodies and the companies in that regard. But the difficulty in issuing a writ may arise where there may not be any non-compliance with or violation of any statutory provision by the private body. In that event a writ may not be issued at all. Other remedies, as may be available, may have to be resorted to. 29. There are a number of such companies carrying on the profession of banking. There is nothing whi....
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.... or duty of public character though it would be so for acquiring authority. 33. For the discussion held above, in our view, a private company carrying on banking business as a scheduled bank, cannot be termed as an institution or company carrying on any statutory or public duty. A private body or a person may be amenable to writ jurisdiction only where it may become necessary to compel such body or association to enforce any statutory obligations or such obligations of public nature casting positive obligation upon it. We don't find such conditions are fulfilled in respect of a private company carrying on a commercial activity of banking. Merely regulatory provisions to ensure such activity carried on by private bodies work within a discipline, do not confer any such status upon the company nor puts any such obligation upon it which may be enforced through issue of a writ under Article 226 of the Constitution. Present is a case of disciplinary action being taken against its employee by the appellant Bank. Respondent's service with the Bank stands terminated. The action of the Bank was challenged by the Respondent by filing a writ petition under Article 226 of the Constitut....
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....blic function. They are purely private in nature. 14.As no public duty or public function is involved, in regard to selection of persons by the appellant to its clerical cadre, and as the appellant is not a 'State' under Article 12 of the Constitution, the only inescapable conclusion is that the writ petitions filed by the private Respondents are not maintainable against the appellant bank. ... emphasis supplied by me 3. The Prestige Monte Carlo Apartment Owners Association and others Vs. The Reserve Bank of India, Mumbai and Others reported in ILR 2015 KAR 3333 (Paras 10 and 13) 10. A writ petition under Article 226 of the Constitution of India may be maintainable against (i) the State (Govt.); (ii) Authority; (iii) a statutory body; (iv) an instrumentality or agency of the State; (v) a company which is financed and owned by the State; (vi) a private body run substantially on State funding; (vii) a private body discharging public duty or positive obligation of public nature (viii) a person or a body under liability to discharge any function under any Statute, to compel it to perform such a statutory function. 13. It is thus clear that t....
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.... for Respondent No. 6 more-or-less adopts the submission made by Sri.Udaya Holla learned Senior Counsel and submitted that 16.1. The loan issued by the Respondent No.6 is an LRD loan. Therefore, Respondent No.6 also should be permitted to appropriate the amounts coming into the Escrow account towards the discharge of the dues by the Petitioner to the Respondent No.6. 16.2. The Circular dated 27.03.2020 only permits Banks like the Respondent No.6 to extend the moratorium. It is not a direction issued by the RBI to the Bank to extend a moratorium. 16.3. The extension post such permission by RBI, is therefore at the discretion of Respondent No.6 - Bank and the Petitioner cannot claim the same as a matter of right. 17. Sri.DhyanChinnappa, learned Senior Counsel appearing on behalf of Sri.Rawley Muddappa learned Counsel for Respondent No.7 submitted that 17.1. The loan extended by the Respondent No.7 to the Petitioner is a part of a down selling mechanism of the loan which was initially advanced by Respondent No.5 - HDFC Bank to the Petitioner. The said loan has been sold by Respondent No.5 to Respondent No.7 promising and holding out that Respondent No.7 would hold a par....
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....t by Respondent No.5 to the RBI; such nonrevertal does not amount to acceptance by the RBI of such Board approved Policy. Any dispute continues to be between the Petitioner and Respondent Nos.5 to 7, and non-revertal by RBI cannot be made a ground by Respondent Nos.5 to 7 to reject the application of the Petitioner. 19. Sri.Basavaprabhu Patil, Learned Senior Counsel in reply, submitted that 19.1. This Court has the necessary jurisdiction to entertain a Writ Petition against the private Banks like Respondent Nos.5 to 7 in connection thereto, he relies upon the decision of the Apex Court in the case of ANDI MUKTA SADGURU SHREE MUKTAJEE VANDAS SWAMI SUVARNA JAYANTI MAHOTSAV SMARAK TRUST AND OTHERS VS. V.R.RUDANI AND OTHERS reported in (1989) 2 SCC 691 wherein at Para 22, it has been held as under:- "22. Here again we may point out that mandamus cannot be denied on the ground that the duty to be enforced is not imposed by the statute. Commenting on the development of this law, Professor De Smith states: "To be enforceable by mandamus a public duty does not necessarily have to be one imposed by statute. It may be sufficient for the duty to have been imposed by charter, co....
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.... form of the body concerned is not very much relevant. What is relevant is the nature of the duty imposed on the body. The duty must be judged in the light of positive obligation owed by the person or authority to the affected party. No matter by what means the duty is imposed, if a positive obligation exists mandamus cannot be denied. 22. Here again we may point out that mandamus cannot be denied on the ground that the duty to be enforced is not imposed by the statute. Commenting on the development of this law, Professor de Smith states: "To be enforceable by mandamus a public duty does not necessarily have to be one imposed by statute. It may be sufficient for the duty to have been imposed by charter, common law, custom or even contract." We share this view. The judicial control over the fast expanding maze of bodies affecting the rights of the people should not be put into watertight compartment. It should remain flexible to meet the requirements of variable circumstances. Mandamus is a very wide remedy which must be easily available "to reach injustice wherever it is found". Technicalities should not come in the way of granting that relief under Article 226. We, theref....
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....ends that a structured loan like LRD is also covered under Guideline-1 to the Board approved Policy produced by the Respondent No.5. 19.9. There being no dispute as regards the Petitioner's account is a standard account as on March 1st, 2020, all the due amounts having been paid thereof, he submits that the Petitioner became automatically eligible for availing a moratorium. Availing a moratorium is in the discretion of the Petitioner inasmuch as the Petitioner would continue to make payment of interest amounts even during the moratorium period. Only the payment of the principal amount is deferred for the moratorium period, the Petitioner is not seeking for any waiver of loan or reduction in the loan amount but only a deferment in payment schedule which would not in any manner adversely affect the Bankers like Respondent Nos.5 to 7 and therefore, the contentions taken up by Respondent Nos.5 and 6 ought not to have come in the way of considering and approving the request of moratorium by the Petitioner. 20. In view of the above contentions in the pleading and submissions made, the points that would arise for consideration of this Court are: 20.1. Whether a Writ of mandamus c....
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....ions relied upon by Sri. Udaya Holla indicates that the decision in Federal Bank Ltd vs. Sagar Thomas and others relates toa dispute raised by an employee relating to a disciplinary enquiry initiated against such employee. The decision in Karnataka Bank Limited vs. Smt. Rekha Rao relates to recruitment to the clerical cadre of the Bank. The decisionin Prestige Monte Carlo Apartment Owners Association and others Vs. The Reserve Bank of India, Mumbai and Others related to a dispute between two rival associations of an apartment complex as to who will operate the bank account. In United Spirits Limited and Another vs. IDBI Bank Limited and Another the Petitioner therein had sought for a writ of mandamus directing the Respondent to appropriate certain sums laying in the bank account of the Petitioner, release of pledged security and issuance of No Due Certificate etc., It is in those circumstances that the aforesaid Courts have held that writ petition would not be maintainable. 21.4. At para 33 of the Federal Bank's case, supra the Court held as under: 33. ....... A private body or a person may be amenable to writ jurisdiction only where it may become necessary to compel su....
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.... a positive obligation upon Respondents 5 to 7. 21.9. In terms of Section 3 of the Reserve Bank of India Act, 1934, ("RBI Act" for short) a bank to be called Reserve Bank of India is to be constituted for the purposes of taking over the management of the currency from the erstwhile Central Bank and for carrying on the business of banking in accordance with the provisions of the RBI Act. 21.10. On the constitution of the said Bank, the Central Banking functions as defined under Section 20 has to be discharged by the RBI viz., to accept monies for account of the Central Government, to make payments of the amounts standing to the credit of its account carrying out the exchange, remittance and other banking function viz., 21.10.1. Regulating of the issuance of the bank notes. 21.10.2. Keeping the reserves with a view of securing monetary stability of the country and of in the country. 21.10.3. Operating the currency and credit system to the advantage of the country. 21.11. This is discharged by RBI by managing: 21.11.1. Currency. 21.11.2. Money supply. 21.11.3. Interest rates. 21.12. The RBI is granted a monopoly in terms of formulating and implementing mo....
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..... (1) If the Bank is satisfied that for the purpose of enabling it to regulate the credit system of the country to its advantage it is necessary so to do; it may- (a) require financial institutions either generally or any group of financial institutions or financial institution in particular, to furnish to the Bank in such form, at such intervals and within such time, such statements, information or particulars relating to the business of such financial institutions or institution, as may be specified by the Bank by general or special order. (b) give to such institutions either generally or to any such institution in particular, directions relating to the conduct of business by them or by it as financial institutions or institution. (2) Without prejudice to the generality of the power vested in the Bank under clause (a) of subsection (1), the statements, information or particulars to be furnished by a financial institution may relate to all or any of the following matters, namely, the paid-up capital, reserves or other liabilities, the investments whether in Government securities or otherwise, the persons to whom, and the purposes and periods for....
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....ositive obligation upon Respondents 5 to 7 to implement the same. In terms of the RBI Circular, a right is created in the Petitioner as a borrower from the Bank to avail a moratorium which has been rejected by Respondent No. 5 and consequently by Respondent 6 and 7, which according to the Petitioner is a violation by them of the said Circular. 21.19. Hence, a writ petition would be maintainable against the Respondents in the present facts and circumstances for the enforcement of the public duty under the Circular dated 27.03.2020. 22. Is the Circular issued by the RBI dated 27.03.2020 mandatory, directory or discretionary? 23. Whether the grant of a moratorium is at the discretion of the Bank or as a corollary would it be a right to be exercised by the borrower? 23.1. Both the above points being connected to each other are considered together. 23.2. Simultaneous with the invocation of the DMA apprehending the impact thereof on the economy of the country, the RBI with alacrity had issued the Circular dated 27.03.2020. The aim, object and intention of the said Circular being to mitigate the burden of debt servicing brought about by disruptions on account of Covid-19 pa....
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....ng institutions may recalculate the 'drawing power' by reducing the margins and/or by reassessing the working capital cycle. This relief shall be available in respect of all such changes effected up to May 31st, 2020 and shall be contingent on the lending institutions satisfying themselves that the same is necessitated on account of the economic fallout from COVID-19. Further, accounts provided relief under these instructions shall be subject to subsequent supervisory review with regard to their justifiability on account of the economic fallout from COVID-19." "8. Lending institutions shall frame Board approved policies for providing the above mentioned reliefs to all eligible borrowers, inter alia, including the objective criteria for considering reliefs under paragraph 4 above and disclosed in public domain." ... emphasis supplied by me 23.5. A perusal of Para 2 of the Circular indicates that permission is granted to the banks concerned to grant moratorium of three months as regards the payment of all instalments falling due between March 1st 2020 and May 31st 2020. Thus, the permission is one which is accorded to a bank or lending institution to permit a mor....
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.... or any other retail credit facilities prior to March 1st 2020 are eligible. Customers having overdues prior to March 1st 2020 may also opt for the moratorium, and their requests shall be considered by the Bank based on its merits. All Agri Loans (Kisan Gold Card) and Microfinance customers under the Bank's Sustainable Livelihood Initiative are also eligible. All Corporate as well as SME customers are also eligible. Our Relationship Managers will get in touch with you or you can contact them to get further details." 23.13. In answer to question Nos.3 and 5, it is stated as under:- "3. What will happen if I choose the EMI Moratorium? If you choose EMI moratorium, * Bank will not ask for any EMI Payment 31st 2020. * Interest will continue to accrue on the principal outstanding for the period of the moratorium at the contracted rate of the loan. o The loan tenure will get extended by the corresponding period for which the moratorium has been availed. o For example, if the EMI for the month of March 2020 has been paid and moratorium for April and May 2020 has been availed, then the loan tenure will be e....
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.... Moratorium shall be applicable for the installments and interest payments falling due between 01st march 2020 and May 31st 2020. d) Interest shall continue to accrue on the outstanding balance of term loans during the moratorium period at the contracted rate. e) If a customer opts for moratorium, repayment schedule for the account shall be shifted / tenor will be increased. f) The revised installment / EMI to be remitted by the customer after moratorium shall be inclusive of the interest accrued during the moratorium period. g) If any customer, whose account was standard as at the end of February 29th 2020, requests for reversal of installment/ EMI deducted, if any, after March 1st 2020, the same will be refunded within a reasonable time. h) Installments, for the purpose of moratorium will include the following payments falling due from March 1st 2020 to May 31st 2020. * Principal and/or interest components * Bullet repayments * Equated Monthly installments. i) Asset classification of term loans which are granted relief as above shall be determined on the basis of revised due dates and the revised pay....
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....discretion of the borrower more so when the borrower would be required to make payment of additional interest, during the said moratorium period. There being no waiver of interest and or the principal amount by the mere grant of a moratorium. 23.18. Thus, though the Circular issued by the RBI dated 27.03.2020 is discretionary in so far as the power to grant or not a moratorium by a bank, it is mandatory for the Bankto ensure the continuity of viable businesses, in that, the non-grant of a moratorium should not result in adversely affecting the survival and continuity of a viable business. The understanding of the banks by reference to their respective answers to the FAQ's is also in line with the above. All borrowers are eligible to seek for a moratorium, if a borrower were to seek for grant of a moratorium on the ground that continuity of its business would be affected and establish the same, the borrower would as a matter of right be entitled for the grant of moratorium so that such continuity is not adversely affected. 24. Can a request made by a borrower be rejected by a lender on the ground that the loan of the lender is structured and therefore, the lender can recover t....
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....d in the next board meeting. We seek approval for providing relief to the borrowers of the Bank to ease financial stress caused by COVID-19 disruptions. ... emphasis supplied by me 24.3. It is contended that because the Petitioner's loan is a structured one and there are uninterrupted flows of cash on account of the lease rentals being paid by the tenants of the Technology Park, and not deferred by the payer, a borrower like the Petitioner would not be entitled for a moratorium. 24.4. It has also been contended on behalf of Respondent No.5 that the Board approved Policy of Respondent No.5 had been sent to RBI which is not objected to by RBI, therefore, it amounts to acceptance of such Policy by RBI, as such, the action taken by Respondent No.5 in terms of the said Policy is deemed to have the blessings of RBI and the Petitioner cannot agitate any grievance against the said Board Approved Policy before this Court. This contention is devoid of merit, in that as contended by Sri.R.V.S.Naik, learned Senior Counsel it is not required for the RBI to revert on the Policy of each and every Bank. The RBI has laid down a broad framework/broad Policy which is required to be implem....
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....iate the amounts deposited by the tenants towards lease amount. 24.8. Though there are certain cash flows from the Tech Park business, which would satisfy the repayment of the LRD loan, however, it is also a fact that the hotel business, has virtually come to a stand-still and there is no income arising therefrom. In this background, when payments are not being made by the Petitioner to Respondent No.7 and further payments cannot also be made on account of the payment received by the Petitioner from the Tech Park being appropriated by Respondent Nos.5 and 6 it is but natural that the loan of the Petitioner from Respondent No.7 would automatically become an NPA as per the policies laid down by RBI itself. 24.9. Respondent No.7 having purchased the loan advanced by Respondent No.5 to the Petitioner and being a part of the down selling mechanism was admittedly promised to have a pari-pasu charge overall assets of the Petitioner including all cash flows made either of the Tech Park or of the hotel. This charge, of course, can only be exercised on default in payment of loans by the Petitioner. Admittedly, there is no payment made to Respondent No. 7 from April till date, and there....
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....om the structured loan in favour of HDFC Bank. The said Policy reads as if there is only one loan and there is only one lender in respect of such structured loan. 25.2. The Policy relating to a consortium or multiple bank lending only contemplates that a Bank in the consortium ought to extend the moratorium on terms similar to those offered by HDFC. This would presuppose a situation where Respondent No.5-HDFC has approved and formulated the terms for grant of a moratorium and the other Banks in the consortium have failed to agree to such terms. 25.3. In the present case, the situation is reverse, in that Respondent Nos.6 and 7 have agreed to extend a moratorium to the Petitioner, however it is on account of refusal on part of Respondent No.5 to grant a moratorium that they have not been able to extend a moratorium to the Petitioner. Thus, even this particular Policy of Respondent No.5 would not be of any assistance to Respondent No.5. 25.4. The contention of Sri.Udaya Holla, learned Senior Counsel that Respondent No.5-Bank would also have to balance the interest of its employees and other account holders and therefore, grant of a moratorium would adversely affect the payme....
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....d by stating that Respondent No.5 is only taking away the eggs already laid and not taking any action against the goose viz., the Petitioner herein. However, the impact of it is what is to be considered in the sense that once all the eggs are taken away by Respondents No.5 and 6, the default as regards the loan to Respondent No.7 would automatically result in the classification of the loan account of the Petitioner with Respondent No. 7 as an NPA, thus in effect killing of the golden goose. Thus, the cause and effect of such action by Respondent No.7 being attributable to Respondents No.5 and 6, they cannot take up such a technical ground in this regard. Respondents 5 to 7 are required to ensure the survival and continuance of the Petitioner and its business. Thus, I'am of the considered opinion that one Bank cannot deny the extension of a moratorium, when another or others are willing to extend the benefit of a moratorium. 26. Can a direction be issued to Respondents 1 &4 to enforce the Circular dated 27.03.2020 issued by the RBI? 26.1. Mr M BNargund, learned Additional Solicitor General of India, appearing for Respondent 1 and 2, has submitted that RBI is an autonomous and ....
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....acceptable since the dispute arises out of the implementation or not of a Circular issued by the RBI. RBI is therefore directed to monitor the implementation of the Circular, including verification of whether there are Board-approved policies formulated by each of the lenders, direct all the banks to submit the Board-approved policies for approval to the RBI, to approve such board-approved policy, verify if such a board-approved policy contains objective criteria, set up a proper and effective grievance redressal forum for any aggrieved borrower to approach on account of the improper or non-implementation of the Policy and/or Circular etc., 27. In the above circumstances, I pass the following: ORDER i) A mandamus shall ensue to Respondents No.4 directing Respondent No. 4 - RBI to enforce the recovery package as contained in Circular dated 27.03.2020 issued by it and as detailed in para 26.4 above. ii) The communication dated 06.04.2020 and 08.04.2020, Annexures-L and N issued by Respondent No. 5, communication dated 28.04.2020 Annexures-Xof Respondent No.6 and communications dated 24.04.2020 and 22.05.2020 Annexures-U and Annexures-Vof Respondent No. 7 are hereby quashe....