TaxTMI 
TaxTMI 
2020 (11) TMI 56
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....ar. The petitioner's track record of repayment is claimed to be very good. Following Covid-19 pandemic outbreak, the Reserve Bank of India has announced moratorium for the period upto 31st May, 2020 vide Circular dated 27.03.2020. Pursuant thereto, the petitioner has also granted the benefit of moratorium to all the joint liability Self Help Groups, in order to enable them to tide over the economic fallout arising out of the pandemic disruption. 2. Securities and Exchange Board of India (SEBI) has also issued policy Circular dated 30.03.2020 setting out relaxation norms. According to the petitioner, the third respondent has downgraded the petitioner's rating disregarding the said Circular. Since this will have direct bearing on the capacity of the petitioner to raise loans from the banking institutions, this writ petition came to be filed. 3. The third respondent whose communication is under challenge has filed its counter affidavit contesting the very maintainability of this writ petition. The third respondent would point out that the writ petition has to be dismissed as infructuous. What has been questioned is only the e-mail communication. The rating has been subse....
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....agreement can resist the jurisdictional reach of this Court under Article 226 of the Constitution of India. The petitioner is based in Madurai. Substantial part of the cause of action arose within the territorial jurisdiction of this Court. This Court does have the territorial jurisdiction to deal with the issue. The learned Senior Counsel also seriously faulted the stand taken by the learned Standing counsel for the Reserve Bank of India as well as the Securities and Exchange Board of India before this Court. He took me through the contents of the Circular dated 27.03.2020 issued by the Reserve Bank of India and that of the Circular dated 30.03.2020 issued by the Securities and Exchange Board of India. According to the learned Senior Counsel, even a bare textual reading of these two circulars can lead to only one conclusion, namely, that the events that have taken place during the moratorium period cannot be factored into the rating process. The learned Senior Counsel placed reliance on quite a few case laws. 8. I carefully considered the rival contentions. The objection regarding territorial jurisdiction is liable to be rejected in view of Article 226 (2) of the Constitution o....
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....e notification no. RBI/2019-20/186, dated March 27, 2020) on loan servicing, working capital facilities etc. for three months, a need for temporary relaxations in compliance by CRAs is felt. Accordingly, it has been decided to grant relaxations from the requirements stipulated vide circulars as under: 2. Recognition of Default A. Currently, CRAs recognize default based on the guidance issued vide SEBI circular dated May 3, 2010 and November 1, 2016. B. In view of the nationwide lockdown and the three month moratorium/ deferment on payment permitted by RBI, a differentiation in treatment of default, on a case to case basis, needs to be made as to whether such default occurred solely due to the lockdown or loan moratorium. C. Accordingly, based on its assessment, if the CRA is of the view that the delay in payment of interest/principle has arisen solely due to the lockdown conditions creating temporary operational challenges in servicing debt, including due to procedural delays in approval of moratorium on loans by the lending institutions, CRAs may not consider the same as a default event and/or recognize default. Appropriate disclosures in this r....
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....is of the view that the restructuring by the lenders/ investors is solely due to COVID-19 related stress or under the aforementioned RBI framework, CRAs may not consider the same as a default event and/or recognize default. Appropriate disclosures in this regard shall be made in the Press Release. 4. The above relaxation is extended till December 31, 2020. 5. This circular is issued in exercise of the powers conferred by Section 11 (1) of Securities and Exchange Board of India Act, 1992 read with the provisions of Regulation 20 of SEBI (Credit Rating Agencies) Regulations, 1999, to protect the interest of investors in securities and to promote the development of, and to regulate, the securities market. Yours faithfully, Surabhi Gupta General Manager Tel No. 022-26449315 Email id: [email protected] " 11. The learned Senior Counsel for the petitioner took great pains to convince me that the impugned action of the third respondent is not in consonance with the policy announcements made by Reserve Bank of India and Securities and Exchange Board of India(SEBI) and called upon me to strike it down. He strongly asserted that the third respondent is a....
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....tedly invoked RBI's circular dated 27.03.2020, its standing counsel took the position that it is merely permissive in character and that it cannot be read otherwise. I repeatedly asked the learned Senior Counsel if the lending institutions have granted moratorium in favour of the petitioner. I record that a direct response to this question was not forthcoming. 16. Rating is an exercise that is carried out by financial analysts and professionals. Writ Court should not assume jurisdiction in matters which are better handled by experts. It is not as if the petitioner is without remedy. There is provision for in-house appeal. It is certainly not akin to appealing from caesar to caesar's wife. In any event, in view of clause 29(2)(c), the petitioner can definitely complain before SEBI against the impugned action of the third respondent. 17. Rating exercise is all about capturing the "as is condition" of the signified. Rating is expressed through signs and symbols to the world at large. Ironically the effect is far from symbolic. It is real. Semiotics is the academic discipline devoted to the study of symbols and signs and their meaning. Ferdinand d Saussure wrote that one ....