2020 (12) TMI 1236

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....efits, including relief from downgrading, in respect of several borrowers across the board, to reduce financial stress. On the other hand, however, by another circular of even date, the RBI has specified that existing loans to NBFCs classified as 'standard' may be re-structured with a downgrade in the asset classification subject to certain conditions. It is argued by learned senior counsel appearing for the petitioner that these circulars were issued in view of the Pandemic situation, prevailing worldwide as well as in our country, for the benefit of borrowers. It is argued that the component entities comprising the petitioner and NBFCs in general comprise of more than 25% of the portion of the finance sector which acts as lenders....

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...., is not only violative of the basic principles enshrined in Article 14 of the Constitution of India but is manifestly arbitrary. The arbitrary exclusion of the NBFCs, further, has no nexus with the objective to reach out economic and financial benefits to the Pandemic-affected sections of the society. As such, it is argued that the matter ought to be heard on merits on the above points. Learned counsel appearing on behalf of the respondent authorities argues that the circulars themselves cannot be read in isolation, without taking into consideration several other beneficial packages which have been extended to the NBFCs, which will be disclosed in some detail once the respondents are permitted to use Affidavits-in-Opposition. It i....

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....y as borrowers, while imposing fetters on the NBFCs in their role as lenders. In the event the wings of the NBFCs are pruned in their capacity as borrowers, it would prima facie be a hindrance to their functioning as lenders. Moreover, the petitioner has made out a prima facie case of exclusion in the circular having no nexus with the objective of granting financial and economic benefits to the affected sections of society. Alhtough the argument regarding other benefits having been provided to NBFCs has to be taken in counter-balance with the apparent arbitrariness, the liquidity schemes which have been indicated to have been given to the NBFCs can only accrue long/middle-term benefits, having no direct impact on the immediate stri....