The restructuring of MSME loans under RBI guidelines is contingent on the account being classified as standard; NPAs are ineligible for restructuring according to the defined RBI conditions.

JUDGMENT

Prateek Jalan, J. (Oral)

The proceedings in the matter have been conducted through video conferencing.

1. The principal claim of the petitioner in the present writ petition is for restructuring of the loans of the petitioner no. 1 by the respondent Nos. 1 and 2-Indian Bank ["Bank"] in terms of a Circular issued by the Reserve Bank of India ["RBI"] dated 11.02.2020.

2. The credit facilities were originally taken by the petitioner No.1 in the year 2017. The petitioner No.1 is in the category of Micro, Small and Medium Enterprise ["MSME"] industry and is, therefore, covered by two circulars issued by the RBI dated 01.01.2019 and 11.02.2020.

3. The petitioner No.1 applied for restructuring of the account by a communication dated 16.02.2020. Correspondence thereafter took place between the Bank and the petitioner no. 1 which, according to the petitioners, was in furtherance of the proposals for restructuring. Ultimately, by a communication dated 19.02.2021, the Bank informed the petitioner that its account had turned into a Non Performing Asset ["NPA"] on 28.01.2020, and could not be restructured. It was recorded therein as per the RBI guidelines for MSME accounts, restructuring was permitted for accounts which were in standard category as on 01.03.2020. The petitioner no. 1 responded to this communication on 27.02.2021, following which the Bank informed it of the total overdue amounts in its accounts by a communication dated 03.03.2021. The relief of restructuring was however denied.

4. In these circumstances, the petitioners have approached the Court for the following reliefs:

"a. To the Respondents No. 1 & 2 to restructure the Loans of the Petitioner No.1 as per the circular instructions of RBI dated 11.02.2020, to grant the Covid relief and to sanction the Loan of RS. 75 Lakhs under the CGTMSE scheme of the National Credit Guarantee Trust Company Ltd. Of the Govt. of India;

b. To the Respondent No. 1 of not initiating or continuing any coercive action against the Petitioner Company;

c. To the Respondent No. 1 for providing the 'value dating' effect of the amount kept by the Bank in the Fixed Deposits;

d. To direct the Respondent No. 3 to initiate penal and monetary action against the Respondents No. 1 & 2 for intentionally skipping the instructions and guidelines of the Respondent No. 3 for restructuring the Loan accounts of the MSME."

5. Notice in the writ petition was issued on 03.09.2021. Directions were given for completion of pleadings, and the following order was passed:

"4. Learned counsel for the petitioners submits that the relief in the present petition is not intended to impede the action taken by the Bank under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ["the SARFAESI Act"], in respect of which the petitioners have already approached the Debts Recovery Tribunal ["DRT"] under Section 17 of the said Act. It is made clear that the proceedings under the SARFAESI Act may proceed in accordance with law, notwithstanding the pendency of the present petition. This Court expresses no view on the merits of the action taken by the Bank under the SARFAESI Act or the proceedings instituted by the petitioners against the same. That is a matter for the DRT to consider, which is already in seisin of the proceedings.

5. List on 12.11.2021.

6. In the meanwhile, if the petitioners wishes to make a proposal for settlement to the Bank, they may do so, which the Bank will consider in its own discretion."

6. During the course of hearing, I am informed th