Back
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
SUREPALLI NANDA, J.
Rashmit Gupta – Appellant
Versus
Union of India & others - Respondents
Writ Petition No.532 of 2023
Decided on : 29-11-2023
WRIT PETITION - BANKING - COVID-19 RELIEF - MORATORIUM - NPA - RBI CIRCULAR - ENFORCEMENT - MAINTAINABILITY - PUBLIC DUTY - ALTERNATE REMEDY - EXHAUSTION OF STATUTORY REMEDIES - REPRESENTATION TO AUTHORITIES - CONSIDERATION AND DECISION.
Fact of the Case:
Petitioner, a businessman, filed a writ petition seeking implementation of COVID-19 reliefs announced by the Government and RBI. He alleged that the moratorium circulars and ECLGS guidelines were not implemented in letter and spirit, resulting in his loan account being declared NPA. He sought directions to the respondents to adhere to the circulars and guidelines, grant ex gratia compensation for damages caused to his reputation and business, and cease illegal recovery actions.
Finding of the Court:
The court held that the writ petition was maintainable as it related to the enforcement of RBI circulars issued in public interest to protect the economy during the COVID-19 pandemic. The court observed that a right was created in the petitioner to avail the moratorium, which was not considered by the bank. The court also noted that the petitioner had not represented his grievance to the RBI or the bank even as on date.
Issues: 1. Whether the writ petition was maintainable against the bank, a private entity, for enforcement of RBI circulars issued in public interest. 2. Whether the petitioner had an alternate remedy by approaching the Debt Recovery Tribunal, and if so, whether the rule of exhaustion of statutory remedies applied. 3. Whether the petitioner's representation to the RBI and the bank was a necessary precondition for seeking relief under Article 226 of the Constitution.
Ratio Decidendi: 1. The court held that the writ petition was maintainable against the bank as the RBI circulars were issued in public interest and created a right in the petitioner to avail the moratorium. The court relied on judgments of the Supreme Court and High Courts holding that mandamus can be issued to enforce a public duty, even if it is not imposed by a statute, and that the form of the body concerned is not relevant but the nature of the duty imposed is. 2. The court held that the availability of an alternate remedy by approaching the Debt Recovery Tribunal did not divest the High Court of its powers under Article 226 in an appropriate case. The court noted that exceptions to the rule of alternate remedy arise where a fundamental right is violated, principles of natural justice are breached, the order or proceedings are wholly without jurisdiction, or the vires of a legislation is challenged. 3. The court held that the petitioner's representation to the RBI and the bank was not a necessary precondition for seeking relief under Article 226. The court observed that the petitioner had not represented his grievance to the authorities even as on date, but it was open to him to do so within a specified time. The court directed the authorities to consider the representation in accordance with law and principles of natural justice, taking into account relevant judgments of the Supreme Court and the High Court.
Final Decision: The court disposed of the writ petition without granting the relief sought by the petitioner. However, it directed the petitioner to submit a detailed representation to the RBI and the bank within two weeks, and directed the authorities to consider the representation and pass appropriate orders within two weeks thereafter, affording a reasonable opportunity of hearing to the petitioner.
ORDER :
Heard Mr.Md.Sharfuddin, learned Counsel for the petitioner, Mr.G.Praveen Kumar, learned Deputy Solicitor General of India, for Respondent No.1, Mr.K.Rathanga Pani Reddy, learned counsel for Respondent No.2 and learned Senior Counsel Mr.Prabhakar, appearing on behalf of Mr.P.Ramachandran, learned counsel for Respondent No.3.
2. This Writ Petition is filed praying to issue a Writ of Mandamus to direct the 2nd Respondent to initiate instructions and guidelines to 3rd Respondent to adhere to the notification dated 27.03.2020 RBI/2019-20/186 DOR. No. BP.BC.47/21.04.048/2019-20 and Circular dated 17.04.2020 and Circular dated 05.05.2021 and subsequently direct the 1st and 2nd Respondent to initiate instructions and guidelines for the implementation of the Emergency Credit Line Guarantee Scheme (ECLGS) Operational Guidelines updated as on October 06, 2022 and issue of Directions/guidelines to the 2nd Respondent to direct and cease the illegal activity of 3rd Respondent of realizing the default amounts from the secured assets through action etc. and to prevent the 3rd Respondent from persistently threatening the petitioner for the recovery of defaulted amounts and also direct the Respondent Nos. 2 and 3 to grant ex gratia Compensation of Rupees five Crore Amount to the petitioner for not implementing the Moratorium circulars dated 27.3.2020 and 17.4.2020, 5.5.2021 and ECLGS guidelines and Schemes in letter and Spirit and causing damage to the reputation and business of the petitioner by turning its Account NPA illegally.
3. The case of the Petitioner as per the averments made by the petitioner in the affidavit filed by the petitioner in support of the present Writ Petition in brief, are as follows:
a) The petitioner is a businessman and has filed this writ petition, seeking for the implementation of the COVID-19 reliefs announced by the Government and RBI. The restructuring facility announced by the RBI on 05.05.2021 is not implemented in its letter and Spirit. Earlier in 2020 this court intervened in implementation of the moratorium circular dated 27.03.2020 and issued directions for the implementation of the circular in its letter and spirit, and because of these directions the Citizens were relaxed from the Economic burden during COVID-19 in 2020. Thereafter, the RBI Circular dated 27.03.2020 providing moratorium to all commercial borrowers under the light of COVID-19 came as relief to such entities as it would have become a huge financial burden for the borrowers to pay the EMIs regularly in this period. However, that facility was denied to the petitioner.
b) Furthermore, the RBI Circular vide No. RBI/2019-20/186 DOR. No. BP. BC.47/21.04. 048/2019-20 of 27.03.2020 under the COVID-19 relief package which came as a relief for the business entities provided for the initiation of loan moratorium period wherein the customers of the financial institutions can defer the EMIs under the light of COVID-19 circumstances and therefore during such moratorium there will be no pressure on the borrowers to comply with the payment of the instalments. Further, notification dated 17.04.2020 was brought by the RBI which restricted to declare any account NPA as per the guidelines issued.
c) Subsequently, the 3rd respondent on 09.02.2021 declared the petitioner’s loan account as NPA without any prior information or justification. During the moratorium period no relief was provided by the 3rd Respondent rather during such window the account was declared NPA. Moratorium relief is applicable to all those commercial loans which were in default on 01.03.2020 and yet the petitioner’s loan account was declared NPA and this period of moratorium was taken into consideration for the computation of 90 days for declaration of NPA.
d) Moreover, the Notification in simple sense portrays the fact all those accounts which were granted as standard account on or before 29.02.2020, and such account’s cannot be converted into Non-Performing Assets further, in later stage
A writ petition is maintainable for enforcement of a public duty, even if it is not imposed by a statute, and the availability of an alternate remedy does not divest the High Court of its powers unde....
A writ petition is maintainable against a bank to enforce a public duty under RBI circulars, which create a right in the petitioner to avail the moratorium. However, the petitioner must exhaust her a....
A writ petition is maintainable against a private bank for the enforcement of RBI Circulars issued to protect and preserve the economy of the country on account of the Covid-19 Pandemic.
RBI notifications regarding moratorium are advisory and banks retain discretion on their implementation, thus petitioner's claim for extended moratorium was unfounded.
The court's discretionary jurisdiction under Article 226 is not absolute and should be exercised judiciously.
The classification of loan accounts as NPAs and the subsequent actions taken by the bank are not justiciable at the writ stage, and the petitioners should avail the remedy under Section 17 of the SAR....
The High Court must not entertain writ petitions regarding SARFAESI actions without the petitioner first pursuing statutory remedies before the Debts Recovery Tribunal as mandated under the SARFAESI ....
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
