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2022 Supreme(Online)(KER) 49581
HIGH COURT OF KERALA
N. NAGARESH, J
MANEESH SASIDHARAN – Appellant
Versus
UNION OF INDIA – Respondent
WP(C) NO. 20251 OF 2021
For the Appellants/Petitioners: P.A.NOOR MUHAMED, BOBBY K.PAUL, S.GIFFARA, P.A.ABHILASH, BILAL NIAMATHULLA, RUXANA.P.N
For the Respondents: SHRI.S.MANU, ASG OF INDIA, SRI.M.JAYAKRISHNAN, NAGARAJAN, SAIJO HASSAN, BENOJ C AUGUSTIN, RAFEEK.V.K., P.PARVATHY, NAZRIN HALLAJ, SHILPA M. RAJAN
Eligibility for financial relief under ECLGS requires borrowers to maintain non-NPA status with all lenders as of specified dates. Non-compliance results in disqualification from relief measures.
Headnote:(A) The Armed Forces Special Powers Act, 1958 - Section 3 - The petitioner is engaged in the business of interstate passenger transport under the MSME category, aggrieved by denial of relief under government schemes due to current status of loan accounts classified as NPA. (Para 1-20)
(B) Legal Principles - The court held that the classification of loans for eligibility in relief measures and the applicability of previous benefits cannot be contested when eligibility conditions are not met. (Para 16)
Facts of the case:
The petitioner held several loan accounts with the bank and sought benefits under schemes for relief, but was denied on grounds of previous NPA classification with other institutions.
Findings of Court:
Eligibility for relief under the ECLGS framework requires accounts to be standard as of certain cut-off dates - any prior NPA status disqualifies the borrower.
Issues: The main issues involved eligibility for relief under ECLGS schemes based on the borrower's account status with all lending institutions.
Ratio Decidendi: The court concluded that for ECLGS benefit eligibility, scrutiny of accounts across all lenders is essential, reinforcing that failure to maintain standard account status disqualifies the borrower from the relief.
Result: The writ petition is dismissed.
| Table of Content |
|---|
| 1. petitioner's business operations and loan status. (Para 1 , 2 , 4) |
| 2. details of relief measures and eligibility criteria. (Para 3 , 5 , 12) |
| 3. conclusion on classification of loans and eligibility. (Para 10 , 18 , 21) |
JUDGMENT
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The petitioner, who is engaged in the business of travel and tourism and runs interstate passenger transport services, falling under the category of Micro, Small and Medium Enterprises, is aggrieved by the denial of relief measures provided under Exts.P1, P2 and P6.
2. The petitioner states that he is in the business of interstate passenger transport and has been banking with the 4th respondent-Bank of Baroda for the last 12 years. He had 11 loan accounts which were opened for purchasing commercial vehicles. Those loans were closed before due dates, much in advance. The petitioner at present holds three loan accounts, the loans being taken after pledging his sole residential property consisting of 6.39 Ares of land and a residential building thereon owned by his mother. The petitioner states that the advent of Covid-19 pandemic shattered his business.
3. To give relief to the business Enterprises falling under MSME category during the pandemic times, the Government of India, through Reserve Bank of India and National Credit Guarantee Trustee Company Limited, introduced Ext.P1-ECLGS Operational Guidelines. The Reserve Bank of India issued Ext.P2 Resolution Framework dated 06.08.2020. The three loan accounts of the petitioner will fall under SMA-0 as on 01.03.2020 and therefore is eligible for restructuring under Ext.P2. The three accounts of the petitioner were not classified as NPA as on 01.03.2020, the cut-off date prescribed in Ext.P2.
4. The petitioner requested the 4th respondent to grant the relief admissible under Exts.P1 and P2. The 4th respondent rejected the request of the petitioner as per Ext.P3 stating that the petitioner had NPA accounts with other Banks/NBFCs/FCs as on 29.02.2020. The 4th respondent admits that the petitioner's accounts with the 4th respondent were not declared as NPAs as on the cut-off date. The petitioner contends that the reason advanced by the 4th respondent for denial of benefits under Exts.P1 and P2 is highly arbitrary and unsustainable.
5. The petitioner further argued that by Ext.P5 interim order dated 03.09.2020 in WP(C) No.825/2020, the Hon'ble Apex Court directed that the accounts which were not declared as NPA till 31.08.2020 shall not be declared as NPA till further orders. Subsequently, the Reserve Bank of India issued Ext.P6 Resolution Framework dated 05.05.2021 wherein the eligibility condition to get relief measures thereunder was that the borrower's account is classified as standard by the lending institution as on 31.03.2021. The petitioner again approached the 4th respondent requesting to provide him the relief measures extended under Exts.P1, P2 and P6. But, the Bank did not yield to the request.
6. The petitioner argued that his car loan accounts were standard as on 30.03.2021 and his housing loan accounts were standard up to 30.12.2020. Had the 4th respondent extended the benefits to the petitioner, these accounts would have been standard even now. The 4th respondent, however, issued Exts.P7 to P9 Notices dated 29.04.2021 invoking SARFAESI Act, 2002 declaring that the 4th respondent has classified the loan accounts of the petitioner as NPA on 29.01.2021. The action of the 4th respondent in declaring the accounts of the petitioner as NPA is highly illegal and arbitrary, contended the petitioner. The petitioner stated that even as per Ext.P10 Circular dated 03.09.2020 issued by the Bank of Baroda, there is no condition that for granting relief measures under Ext.P2, the accounts with other Banks also should be standard. The petitioner alleged that the 4th respondent has allowed benefits covered by Ext.P6 to other similarly situated persons and the petitioner alone is discriminated against.
7. Against the arbitrary action of th
