TaxTMI 
TaxTMI 
TaxTMI 
2020 (7) TMI 262
X X X X Extracts X X X X
X X X X Extracts X X X X
....0 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 Petitioner's current account No.57500000131681 (maintained wi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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., These directions being required to be followed by one and all inc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r 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 extended is in terms of Para 8 which comes under the heading Other Conditions. It is extracted ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r 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 situation may pose a huge challenge for people at large. As a measure of solidarity, RBI has permitted all Indian Banks / Indian Financial Institutions to offer it's cust....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 deferment of the payment. Hence, interest will be accrued at the contractual rate of the loan for the principal amount outstanding before the moratorium scheme being availed. The interest accrued during the period will be added to the principal outstanding and leading to an increase in E....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ease 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 rents received from the Technology Park without sharing any portion of the cash flow with Respondent No.7 and therefore, informed the Petitioner that they could consider the request of the Petitioner for moratorium along with other lenders provided Respondent No.5 shares the cash flow in the escrow account pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tory 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 their actions/decisions and demonstrate how and why the Petitioner did not qualify for the benefit of moratorium as per their Board Approved Policy. 7.5. It is further contended that RBI has issued a Policy and thereafter, it is for the Banks to implement it. 7.6. The RBI has also made it clear that the Banks would have to look at t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he 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; Respondent No.7 is also entitled to a share out of the money received by the Petitioner from and out of its business. 11. Sri. BasavaprabhuS. Patil, learned Senior Counsel appearing for Ms.Smitha Singh learned Counsel for the Petitioner reiterating the contentions taken up in the petition above also submitted that 11.1. The present situation is a unique and pecu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rium 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 making by all the three Banks is contrary to the letter and spirit of the Policy of the RBI and is fallacious in that Respondent No.5 having access to the funds of the Petitioner is appropriating the same towards the loan amount due to it as also facilitating such appropriation on the part of Respondent No.6. However, on account of Respondent No.7 being unable to appropriate....
X X X X Extracts X X X X
X X X X Extracts X X X X
....espondent 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. 14.3. He further submits that the dispute is purely between the Petitioner and Respondent Nos.5 to 7 and it is for them to sort out the dispute among themselves without involving the RBI. 15. Sri.Udaya Holla, learned Senior Counsel appearing on behalf of Shri H N Vasudevan, the learned Counsel for Respondent No.5 - HDFC Bank reiterating the contents of the statement of objections submitted tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....articularly, 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 when there are enough and more funds which are available with the Petitioner which could be appropriated towards servicing of the LRD loans, the same ought to be permitted, and no moratorium could be extended in the present case to the Petitioner. 15.7. The Policy which has been approved by the Bank has also been submitted to the RBI and the RBI not having objected to the contents of the said Policy is deeme....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 particular time. They advance loans as against securities. Therefore, it is obviously necessary to have regulatory check over such activities in the interest of the company itself, the shareholders, the depositors as well as to maintain the proper financial equilibrium of the national economy. The banking companies have not been set up for the purposes of building the economy of the State; on the other hand such private companies have bee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....te 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 which can be said to be close to the governmental functions. It is an old profession in one form or the other carried on by individuals or by a group of them. Losses incurred in the business are theirs as well as the profits. Any business or commercial activity, maybe banking, manufacturing units or related to any other kind of business generating resources, employment, production and resulting in circulation of money are no doubt, such which do have impac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....igations 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 Constitution of India. The Respondent is not trying to enforce any statutory duty on the part of the Bank. That being the position, the appeal deserves to be allowed. 34. In the result, the appeal is allowed and the judgment and order passed by the High Court is set aside and the writ petition is held to be to maintainable. There will, however, be no order as to costs. ... emphasis supplied by me 2. Karnataka Bank Limited vs. Smt. Rekha Rao in Writ Appeal No. 8541 of 19....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 the writ petition against the second Respondent is not maintainable. The decision relied on by the Learned Counsel for Petitioners in Civil Appeal No.4235/2014 and other connected matters disposed of on 22.1.2015 has no application to the facts of this case. ... emphasis supplied by me 4. United Spirits Limited and Another vs.IDBI Bank Limited and Another in Writ Petition No.49864-865/2013 DD: 27/6/2016 (Paras 1, 8, 23, 24, 25) 1.xxxxxIn these writ petitions under Article 226 and 227 of the Constitution of India, Petitioners inter alia seek a writ of certior....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 pari-passu charge with Respondent Nos.5 and 6 insofar as all assets and cash flows of the Petitioner are concerned. 17.2. There is no distinction between the cash flow relating to the Tech Park business and that of the hotel business. The charge is created on the entire cash flows. 17.3. The appropriation on a monthly basis is only as a matter of convenience where a particular Bank account and particular payments were identified for the purposes of repayment of the facility availed of by the Petitioner. 17.4. Since Respondent Nos.5 and 6 have appropriated the monies from the Escrow account towards the amounts....
X X X X Extracts X X X X
X X X X Extracts X X X X
....HREE 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, 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, therefore, reject the contention urged for the appellants on the maintainability of the writ petition." 19.2. He has also relied on the decision of the Hon'ble Apex Cou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r 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, therefore, reject the contention urged for the appellants on the maintainability of the writ petition." The aforesaid observations have been repeated and reiterated in numerous judgments of this Court including the judgment in Unni Krishnan and Zee Telefilms Ltd.(supra), brought to our notice by the learned counsel for the Appellant Mr.Parikh." 19.3. The RBI cannot take an hands off approach, it is for the RBI to see to it that the Circular issued by the RBI is implemented in its true letter and spirit. The Union of India and State Governments cannot also wash off their hands since it is Union of India and the state governments who are responsible for the lockdown and there....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction 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 can be issued against a private bank to implement the Circular issued by the RBI dated 27.03.2020? 20.2. Is the Circular issued by the RBI dated 27.03.2020 mandatory, directory or discretionary? 20.3. 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? 20.4. 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 the amounts due on the making of such structured loan like an Escrow account? 20.5. Where multiple banks are involved in a loan transaction, can one Bank deny the extension of moratorium, when anothe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt 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 such body or association to enforce any statutory obligations or such obligations of public nature casting positive obligation upon it. ....... Present is a case of disciplinary action being taken against its employee by the appellant Bank ...... The Respondent is not trying to enforce any statutory duty on the part of the Bank. That being the position, the appeal deserves to be allowed. 21.5. At para 11 of the Karnataka Bank's case supra it was observed as under: 11. 'A Public duty' is one in the discharge of which the public i.e. the community at large is interested, as affecting their legal rights and liabilities. Of course, 'public' or 'community' does not necessarily or always mean all the citizens of the Country or the State....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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 monetary Policy and its framework in India as can be ascertained from the preamble to the Act. The power of the Bank is to determine Policy and issue direction as stipulated in Section 45JA of the Act, which reads as under: "45JA. Power of Bank to determine Policy and issue directions. (1) If the Bank is satisfied that, in the public interest or to regulate the financial system of the country to its advantage or to prevent the affairs of any non-banking financial company being conducted in a manner detrimental to the interest of the depositors or in a manner prejudicial to the interest of the non-banking financial company, it is necessary or expedient so to do, it may determine the Policy and give directions to all or any of the non-banking financial companies rel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nk 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 which, finance is provided and the terms and conditions, including the rates of interest, on which it is provided. (3) In issuing directions to any financial institution under clause (b) of subsection (1), the Bank shall have due regard to the conditions in which, and the objects for which, the institution has been established, its statutory responsibilities, if any, and the effect the business of such financial institution is likely to have on trends in the money and capital markets." ... emphasis supplied by me 21.14. From the above, it is seen that it is the obligation and duty of the RBI to regulate the financial institutions, its business as also the credit system of the country, by exercising the powers vested with it under the Act. 21.15. Subsequent to the invocation of the DMA apprehending the adverse impact thereof on th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....taneous 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 pandemic and to ensure the continuity of a viable business. 23.3. The Statement on Development and Regulatory Policies ("Policy" for short) which form the basis for issuance of Circular is hereunder reproduced: "This Statement sets out various developmental and regulatory policies that directly address the stress in financial conditions caused by COVID-19. They consist of: (i) expanding liquidity in the system size ably to ensure that financial markets and institutions are able to function normally in the face of COVID related dislocations; (ii) reinforcing monetary transmission so that bank credit flows on easier terms are sustained to those who have been affected by the pandemic; (iii) easing financial stress caused by COVI19 disruptions by relaxing repayment pressures and improving access to working capital; and (iv) improving the functioning of markets in v....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 moratorium, this on account of the fact that without RBI permitting the same, a bank of its own accord is prohibited from granting any moratorium to a borrower. 23.6. The discretion to grant such a moratorium is that of the bank on the basis of a Board approved Policy containing objective criteria made available in the public domain. 23.7. The consequence of such grant of moratorium is covered by the second part of the said Para 2 states "The repayment schedule for such loans as also the residual tenor, will be shifted across the board by three months after the moratorium period." This would indicate as if that on the grant of a moratorium, as a matter of course, the repayment schedule of the loan would be shifted. 23.8. The Circular more particularly Para 2,4 and 8 would have to be read along with the statement of development and regulated Policy released by the RBI on 27.03.2020, which inter alia addresses the stress in the financial conditio....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 extended by 2 months. 5. Why was my account debited when the RBI has announced a moratorium? Opting for the Moratorium is entirely the customers choice. We understand that all our customers may not opt for the Moratorium given that there is an additional levy of interest payable under the terms of the Moratorium. If you wish to opt for the Moratorium, we would be happy to refund the EMI debited and register your Loan account under the Moratorium process. NOTE: Customers who have applied for EMI Moratorium on or before April 12th and if their EMI for April 2020 has already been deducted, they will get an EMI refund by April 17th 2020. Cheque bounce charges on EMI payment will be waived. If any charge is levied on account of cheque bounce, it will be refunded." ... emphasis supplied by me 23.14. The above answers would indicate that all corporate, as well as SME customers, are eligible for a moratorium and it is for the customer to choose whether to avail a moratorium that is to say that the offer for a moratorium having been mad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt schedule." ... emphasis supplied by me 23.16. FAQs of Respondent No.7 - Aditya Birla Finance Limited are as under: 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 deferment of the payment. Hence, interest will be accrued at the contractual rate of the loan for the principal amount outstanding before the moratorium scheme being availed. The interest accrued during the period will be added to the principal outstanding and leading to an increase in EMI/Tenor, at the sole discretion of ABFL. 3. If I have availed my loan in March, can I still avail moratorium? Yes you are eligible for moratorium for the instalments payable in April and May 2020. 4. How do I avail the Moratorium benefit? All ABFL customers may send SMS ABFLOPT to 567679 from their registered mobile numbers and avail moratorium fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d Senior Counsel appearing for Respondent No.5 - HDFC Bank has contended that the refusal of the request made by the Petitioner is in accordance with the Board Approved Policy of Respondent No.5. 24.2. Reliance is placed on the paragraph of the board approved Policy found under the heading "Wholesale Banking (Corporate Banking, ECG, Capital Markets & CTG) & SME (BBG, EEG, SAB, CTG WC & Inventory WC)" which is extracted hereinbelow. * RMs will engage with each borrower and offer an option of moratorium& deferment of instalments & interest. Customers seeking moratorium should communicate their intent by email/written request. * For customers who are opting for the moratorium/deferment and where the March dues are pending the moratorium will be applied on March dues which are unpaid till March 31st. * Refund/reversal of March dues paid by corporates/firms opting for the moratorium will be examined case-by-case. * Customers wishing to switch - opt in / Opt out during the 3 months period will be examined case-by-case. * Structured loans where loan servicing is form cash flows released by regulatory authority, government bodies, or any other uninterrupted flows, etc., will not....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to establish that the action taken by it is in accordance and compliance of the Circular and Policy. 24.5. Unfortunately, the RBI Circular does not deal in detail with the mode and methodology of consideration and grant of a moratorium by a lending institution. RBI ought to have envisaged this and laid down a methodology to be followed by all lenders rather than leaving the discretion to each lender, which would result in discriminatory and/or contradictory policies/practices being adopted by each lender at its whims and fancies, justifying such policies/practices on the basis of a so-called board approved Policy. In the present case, the Board Approved policy of all three banks do not have any objective criteria contained in them, the wording of the Board Approved policy is vague, there bing no manner of ascertaining if the actions of Respondents 5 to 7, more particularly Respondent No. 5 is or is not in accordance with the board approved policy. 24.6. Hence, there being no alternative efficacious remedy for the Petitioner, this Court would have to be guided by the aims and objectives of the Policy and Circular in order to ascertain whether the actions on the part of Respondent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....7 is going to be automatically classified as an 'NPA' and Respondent No.7 would be constrained to in terms of the applicable policies initiate such action as may be required for the purposes of recovery of the loan amount. This would necessarily entail the invocation of charge by Respondent No.7, which would also include the cash flows arising out of the rentals from the Tech Park. Thus, in essence, the refusal by Respondent No.5 to extend a moratorium to the Petitioner only on the ground that there are funds coming into the account of the Petitioner which Respondent No.5 can appropriate is only a mirage. In that by doing so, Respondent No.7 would not receive any monies, Respondent No.7 would exercise its rights over the said rental amounts which are sought to be appropriated by Respondent No.5. On such an event occurring, all three lenders viz., Respondent Nos.5 to 7 would not be receiving any money. More importantly once the Petitioner's account is declared NPA, Petitioner would have to repay the entire amount due, which it is admittedly not in a position to do do, the entire business of the Petitioner is more than likely to come to a stand-still which would militate against the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uld be an easy methodology of rejectingany and all request/s for a moratorium and as such would militate against the objective of the Policy and Circular dated 27.03.2020. The interest of Respondent No.5 is safeguarded by the creation of a charge on the assets and receivables of the Petitioner. By way of grant of a moratorium what happens is only a deferment of payment of the amounts due for a period as indicated by the RBI. The same does not in any manner reduce the liability of the Petitioner and/or reduce the receivables on the part of the lending Institutions. 25.5. The contention of Sri.Basavaprabhu Patil, learned Senior Counsel that Respondent No.5 is acting like Shylock also deserves consideration. In that though in the said famous play Shylock was seeking to enforce his rights in terms of the agreement entered into with Antonio to receive a pound of flesh closest to the heart of Antonio, it was never contemplated that by doing so, the life of Antonio would be lost. 25.6. In the present case, though Respondent No.5 would be entitled to enforce the LRD agreement and appropriate the amounts due from the ESCROW Account, the same would end up in classification of the loan acco....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ission is in consonance with the RBI Act, the RBI being vested with several obligations and duties in respect of the banking as also economic requirements of the country, is always required to be independent and autonomous. Most of the policies formulated, guidelines as also circulars issued by the RBI have long term impact, being predicated both on macro as also microeconomic factors. This would equally apply to Respondent No.3 - State Government, hence no direction can be issued to the state government for the very same reasons. 26.2. The present situation is on account of aspects beyond the control of the petitioner namely initiation of lockdown, social distancing, reduction in number of people working in an establishment, etc., though necessary, have had an adverse impact on the Petitioner's business. 26.3. There is no default on the part of the Petitioner by itself till 1.3.2020. The RBI cannot in the circumstances contend that the discretion is left to the lender to either grant or refuse the grant of a moratorium and in the same breath contend that it is for the Bank to establish as to why the Petitioner did not qualify for the benefit of Moratorium - without stating as to....