The RBI's circular provided broad guidelines, and the discretion to grant moratorium rested with lending institutions. Judicial interference in economic policy decisions was limited.

JUDGMENT

1. This is an intra Court appeal filed under Section 4 of the Karnataka High Court Act, 1961, challenging the order dated 8.7.2020 passed in W.P.No.6775/2020.

2. Briefly stated the facts of the case are that, respondent No.1 herein had availed the term loan facilities from respondent Nos.5 to 7. Respondent No.1 herein claiming to be the owner and operator of Five Star Hotel and Technology Park had approached the writ Court by filing W.P.No.6775/2020 being aggrieved by the rejection of its request for grant of moratorium by lending institutions, namely respondent Nos.5 to 7 inter alia seeking for a direction amongst others to the appellant to enforce the Regulatory Covid 19 Package dated 27.03.2020 announced by the Reserve Bank of India (RBI) in letter and spirit, further seeking certain consequential reliefs.

3. The learned Single Judge, after hearing the learned counsel appearing for the parties accepting the appellant's contention that Covid 19 package gave the discretion to lending institutions insofar as to grant or not grant a moratorium, proceeded to issue directions to the appellant to monitor the implementation of Covid 19 package including verification of whether there are board approved policies framed by each lender; the banks to submit the board approved policies for approval to the appellant; the appellant to approve such policies, to verify if such board approved policies contain objective criteria; the appellant to set up a proper and effective grievance redressal forum for any aggrieved borrower to approach on account of improper or non-implementation of the policy and/or circular, etc.

4. Aggrieved by the aforesaid directions, the appellant is before this Court.

5. Sri.R.V.S.Naik, learned Senior Counsel appearing for the appellant submits that the writ appeal is confined only to the direction issued by the writ Court in paragraph 26 (i) pursuant to the observations made in paragraphs 23.5 and 25.4 of the order impugned. Learned Senior Counsel submitted that the said observations/directions are contrary to the finding of the Hon'ble Apex Court rendered in Small Scale Industrial Manufacturers Association (Registered) v. Union off India and others, reported in (2021) 8 SCC 511. Learned Senior Counsel further argued that RBI can frame guidelines which serve as broad indicators for lending institutions which have the authority and discretion to make free independent assessments and decisions based on the requirements of the borrowers and the interest of its depositors. In that direction, the Circular dated March 27, 2020 was issued. The learned Single Judge erred in coming to a conclusion that a right had been created in favour of respondent No. 1 as a borrower to avail a moratorium in view of the said circular. The relief now extended by the learned Single Judge was not which was sought nor contemplated by the parties to the proceedings. The learned Single Judge committed an error in exceeding the jurisdiction, in issuing the direction to the appellant herein as per paragraphs 26(i) read with 23.5 and 25.4.

6. Learned counsel appearing for respondent No. 1 fairly submits that no such relief was sought by the original petitioner inasmuch as the direction now issued by the learned Single Judge to the appellant. He further submits that he has no objection to set aside the said observations/directions in the light of the judgment of the Hon'ble Apex Court in Small Scale Industrial Manufacturers Association (Registered), referred to supra.

7. Learned counsel appearing for the State Government and Union of India also support the arguments advanced by the learned counsel appearing for the appellant.

8. We have carefully considered the rival submissions of the learned counsel appearing for the parties and perused the material on record.

9. At this juncture, it is apt to refer to the judgment of the Hon'ble Apex Court in the case of Small Scale Industrial Manufacturers Association (Registered), referred to supra and the re