The court clarified that the Emergency Credit Line Guarantee Scheme is designed for viable borrowers impacted by COVID-19, not for those with pre-existing financial issues.

J U D G M E N T

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Dated this the 29th day of March, 2021 The petitioner, who is engaged in the business of cashew trade in Kollam, is before this Court seeking to quash Ext.P6 and to direct the 4th respondent-Bank Manager to enforce Ext.P1 Scheme in true letter and spirit and grant the benefit of the Scheme to the petitioner. 2. The petitioner states that he had availed a loan of ₹3.75 Crores from the 4th respondent. The business was running successfully until the spread of Covid-19 pandemic. The Government of India framed Ext.P1 Emergency Credit Line Guarantee Scheme (ECLGS) with the intention to provide 100% guarantee coverage for the guaranteed emergency credit line, which shall be a pre-approved sanction limit up to 20% of loan outstanding as on 29.02.2020.

3. During the period of lockdown, on 24.04.2020, the 4th respondent issued a letter to the petitioner advising the petitioner to route the sales proceeds through the Cash Credit Account with the Bank. Therefore, on 23.06.2020, the petitioner approached the 4th respondent- Bank requesting to extend the benefits of Ext.P1 Scheme to him. The 4th respondent, instead of extending the benefit of the Scheme to the petitioner, proceeded to suggest the petitioner to ensure full resumption of activity through the bank account. On 22.10.2020, the 4th respondent issued a letter to the petitioner rejecting the request made by the petitioner for the benefit under Ext.P1 ECLG Scheme.

4. The learned counsel for the petitioner would submit that Ext.P1 Scheme has been framed to protect and preserve the country from the ill effects of Covid-19 pandemic. The object and intention of the Scheme is to mitigate the burden of debt servicing brought about by disruptions on account of Covid-19 pandemic and to ensure continuity of viable business. The 4th respondent has very limited discretion in granting benefits under Ext.P1. The 4th respondent cannot be permitted to use its discretion independent of Ext.P1 Scheme. Ext.P6 communication is therefore liable to be quashed and the 4th respondent is compellable by appropriate writs of this Court to extend benefit under Ext.P1 Scheme to the petitioner.

5. The 4th respondent strongly opposed the writ petition filing a counter statement. The 4th respondent pointed out that the Cash Credit limit of the petitioner of ₹3.75 Crores sanctioned earlier, was restructured even before the lockdown period and an additional limit of ₹90 lakhs was also sanctioned to him on 19.02.2020. However, the 4th respondent found that no shipment was received for the additional limit of ₹90 lakhs sanctioned to the petitioner and no transactions have been taken place in the petitioner's account since the sanction of the additional amount of ₹90 lakhs.

6. However, on the receipt of his application for benefits under ECLG Scheme, the 4th respondent sought certain documents from the petitioner. To the said letter, the petitioner sent Ext.P4 reply admitting that there is no sales turnover from April, 2019 to September, 2020 and there were no business transactions. The ₹90 lakhs additional limit received by the petitioner could not be utilised as he could not import raw cashew.

7. The 4th respondent pointed out that the petitioner does not have any stock, stock in trade, purchase or sales and the petitioner was requested by the 4th respondent to resume activity and route sales proceeds through the Cash Credit Account with the 4th respondent. The petitioner failed to do so. Ext.P1 Scheme is available only to borrowers to tide over financial crisis during Covid-19 period and not for borrowers whose business have already suffered much before Covid-19. In the circumstances, the writ petition is devoid of merit and it is liable to be dismissed, contended the 4th respondent.

8. I have heard the learned counsel for the petitioner and the learned Standing Counsel appearing for the 4th respondent.

9. It is disclosed from the pleadings that the 4th respondent had sanctioned an addi