2025:BHC-OS:75-DB IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION (L) NO. 8980 OF 2024

1. Jindal Cocoa LLP

2. Vijay Jindal

3. Jayshree Vijay Jindal …Petitioners Versus

1. Reserve Bank of India

2. Union of India

3. Banking Ombudsman

4. HDFC Bank Limited …Respondents Mr. V. Sridharan, Senior Advocate, a/w Gopal Machiraju, Krusha Maheshwari, Ruchi Wagaralkar, i/b Sriram Sridharan, Advocates for Petitioners.

Mr. Y.R. Mishra, a/w Upendra Lokegaonkar, Shailendra Y.

Mishra, Advocates for Respondent No.2-UoI.

Mr. Prasad Shenoy, a/w Parag Sharma, Aditi Pathak, Vijay Salokhe, Kirti Ojha, Megha More, Ankit Upadhyay, i/b BLAC &

Co., Advocates for Respondent No.3.

Mr. Mustafa Doctor, Senior Counsel, a/w Gaurav Mehta, Chaitanya Mehta, Amir Ali Shaikh, Tanjul Sharma, i/b Dhruve Liladhar & Co., Advocates for Respondent No.4.

Digitally signed by ASHWINI ASHWINI JANARDAN JANARDANVALLAKATI VALLAKATIDate:

2025.01.03

18:47:25 +0530 Page 1 of 65 CORAM : B.P. COLABAWALLA &

SOMASEKHAR SUNDARESAN, JJ. Reserved on : October 22, 2024 Pronounced on: January 3, 2025 JUDGEMENT: (Per, Somasekhar Sundaresan J.)

1. Rule. Rule is made returnable forthwith. Respondents waive service. By consent, heard finally.

Introduction:

2. This Petition essentially challenges the interpretation of the Reserve Bank of India’s Master Circular on Rupee/Foreign Currency Export Credit & Customer Service to Exporters, dated July 1, 2015 (“Master Circular”) by the Banking Ombudsman (Respondent No.3) appointed by the Reserve Bank of India (Respondent No.1, “RBI”). The Banking Ombudsman dismissed the Petitioners’ grievance against the very same interpretation that had been taken by HDFC Bank Limited (Respondent No.4, “HDFC Bank”).

3. Jindal Cocoa LLP (“Borrower”), is a limited liability partnership engaged in the business of exporting cocoa and cocoa Page 2 of 65 products. HDFC Bank had extended Indian Rupee-denominated pre- shipment credit by way of a running account facility under the Master Circular to the Borrower. The Borrower, along with its two partners Mr. Vijay Jindal and Ms. Jayshree Vijay Jindal, are collectively the Petitioners.

Regulatory Context and Background:

4. Under the Master Circular, banks extend credit to their clients who are exporters, at a special interest rate applicable to export credit, which is lower than the standard interest rates applicable to normal borrowings by clients. The export credit availed of by the Borrower was eligible for the benefit of further concessional interest due to a subvention provided by the Government of India, under an Interest Equalization Scheme notified by the Ministry of Commerce and Industry, Government of India (Respondent No. 2) vide Trade Notice dated December 8, 2015 (“Subvention Scheme”). The Government of India would bear the value of the further discount on the interest rate, through a mechanism put in place by the RBI to administer it. The RBI had issued a circular dated December 4, 2015 (“RBI Circular on Subvention”) on the subject, with detailed operational modalities.

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5. The maximum tenure of any export credit under the Master Circular was stipulated at 360 days. On May 23, 2020, owing to the outbreak of the Covid-19 pandemic, the RBI extended the maximum permissible tenure of export credit from one year to 15 months i.e. a further 90 days was allowed, which would lead to the permissible period expanding from 360 days to 450 days. At the time of the original sanction of the advances, and at disbursement, differing tenures had been envisaged between the parties, but the period of the credit was extended to the maximum permissible limit under the Master Circular. For all purposes of adjudicating this Petition, the maximum period applicable under the Master Circular is 450 days (instead of 360 days)

and inter-changeable references are made.

6. At the heart of the dispute is the interpretation of one paragraph and its implication for the entire Master Circular. It is placed in the sec