Maneesh Sasidharan vs Union of India and Others

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE N.NAGARESH** **THURSDAY, THE 10[TH] DAY OF MARCH 2022/19TH PHALGUNA, 1943** **WP(C) NO. 20251 OF 2021** **PETITIONER:** **MANEESH SASIDHARAN, AGED 41 YEARS S/O.P.N.SASIDHARAN NAIR, SALABHAM HOUSE, KADUNGAMANGALAM, THIRUVANKULAM, ERNAKULAM DISTRICT, PIN-682 305.** **BY ADVS. P.A.NOOR MUHAMED BOBBY K.PAUL S.GIFFARA P.A.ABHILASH BILAL NIAMATHULLA RUXANA.P.N** ## **RESPONDENTS:** - **1 UNION OF INDIA, REPRESENTED BY ITS SECRETARY, MINISTRY OF FINANCE, DEPARTMENT OF FINANCIAL SERVICES, 3RD FLOOR, JEEVAN DEEP BUILDING, SANSAD MARG, NEW DELHI, PIN-110 001.** - **2 THE REGIONAL DIRECTOR, RESERVE BANK OF INDIA, BAKERY JUNCTION, P.B.NO.6507, THIRUVANANTHAPURAM, PIN-695 033.** - **3 THE SENIOR MANAGER, OPERATIONS DEPARTMENT, CEPC, RESERVE BANK OF INDIA, BANERJI ROAD, ERNAKULAM, PIN-682 018.** - **4 THE CHEIF MANAGER, BANK OF BARODA, CHOTTANIKAKRA BRANCH, ERNAKULAM, PIN-682 312.** W.P.(C) No.20251/2021 : 2 : **5 THE DIRECTOR, MSME DEVELOPMENT INSTITUTE (MSMEDI), MINISTRY OF MSME, GOVERNMENT OF INDIA, KANJANY ROAD, AYYANTHOLE P.O., THRISSUR-680 003.** **BY ADVS. SHRI.S.MANU, ASG OF INDIA SRI.M.JAYAKRISHNAN NAGARAJ NARAYANAN SAIJO HASSAN BENOJ C AUGUSTIN RAFEEK. V.K. P.PARVATHY NAZRIN HALLAJ SHILPA M.RAJAN** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 10.03.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P.(C) No.20251/2021 : 3 : ## **N. NAGARESH, J.** ````````````````````````````````````````````````````````````` ## W.P.(C) No.20251 of 2021 ````````````````````````````````````````````````````````````` _Dated this the 10[th] day of March, 2022_ ## **J U D G M E N T** ~ ~ ~ ~ ~ ~ ~ ~ ~ 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 4[th] 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 W.P.(C) No.20251/2021 : 4 : 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 4[th] respondent to grant the relief admissible under Exts.P1 and P2. The 4[th] respondent rejected the request of the petitioner as per Ext.P3 stating that the petitioner had NPA accounts with W.P.(C) No.20251/2021 : 5 : other Banks/NBFCs/FCs as on 29.02.2020. The 4[th] respondent admits that the petitioner's accounts with the 4[th] respondent were not declared as NPAs as on the cut-off date. The petitioner contends that the reason advanced by the 4[th] 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 4[th] respondent requesting to provide him the relief measures extended under Exts.P1, P2 and P6. But, the Bank did not yield to the request. W.P.(C) No.20251/2021 : 6 : 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 4[th] respondent extended the benefits to the petitioner, these accounts would have been standard even now. The 4[th] respondent, however, issued Exts.P7 to P9 Notices dated 29.04.2021 invoking SARFAESI Act, 2002 declaring that the 4[th] respondent has classified the loan accounts of the petitioner as NPA on 29.01.2021. The action of the 4[th] 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 4[th] respondent has allowed benefits covered by Ext.P6 to other similarly situated persons and the petitioner alone is discriminated against. W.P.(C) No.20251/2021 : 7 : 7. Against the arbitrary action of the 4[th] respondent, the petitioner submitted Ext.P13 representation before the 3[rd] respondent-Reserve Bank of India. The Reserve Bank of India forwarded the complaint to the 4[th] respondent. The 4[th] respondent, as per Ext.P15, rejected the claim of the petitioner reiterating the same reason. Having no other efficacious alternate remedy to redress his grievances, the petitioner has approached this Court invoking Article 226 of the Constitution of India. 8. The 4[th] respondent contested the writ petition filing statement and counter affidavit. In the statement dated 29.10.2021, the 4[th] respondent stated that when flood disasters occurred in Kerala during 2018 and 2019, the State Level Banker's Committee (hereinafter "SLBC”) had issued two Circulars. The first Circular was issued on 21.08.2018 and the second Circular was issued on 03.09.2019, providing flood moratorium. The petitioner was granted the benefit of moratorium. The petitioner's commercial loan sanctioned for ₹3,00,00,000/- being a term loan, had to be repaid by way of W.P.(C) No.20251/2021 : 8 : equal monthly instalment (EMI) of ₹5.58 lakhs. 9. Though the petitioner's business was not anywhere in the flood affected regions and his business was not affected by the flood disaster of 2018 and 2019 in Kerala, the petitioner without any reason availed the flood moratorium benefits offered by the above two Circulars issued by the SLBC. The first flood moratorium was retrospectively sanctioned to the petitioner by the 4[th] respondent-Bank on 07.12.2018 for a period of 12 months with effect from 31.08.2018 to 30.08.2019. Thereafter, he again availed the second flood moratorium benefit which was granted by the Bank from 23.08.2019 to 22.08.2020. So, the petitioner was already enjoying the moratorium benefits from 31.08.2018 to 22.08.2020 i.e., for a period of nearly 2 years. But, he had stopped repayment of the aforesaid commercial loan by 29.06.2018. Thus, the last payment made by the petitioner in this loan account was ₹6,00,000/- on 29.06.2018. Thereafter, the petitioner has not made any payment in the loan account except of a small amount of W.P.(C) No.20251/2021 : 9 : ₹2,000/- paid on 07.05.2019 even though his business was running smoothly and he was getting income from the business. 10. As already stated, the petitioner was already enjoying the moratorium benefits pursuant to the flood moratorium Circulars from 31.08.2018 to 22.08.2020. So, the petitioner did not require the moratorium granted by the RBI in connection with Covid vide its first and second Circulars of 27.03.2020 and 23.05.2020. Thereafter, the ECLGS Circulars of the RBI provided for an Emergency Credit Scheme on fulfilling the conditions laid down by the Bank. The petitioner did not fulfill the conditions and the benefits of the Scheme could not be extended to the petitioner. Based on the criteria laid down in Ext.P1 Circular, the petitioner was a chronic defaulter with several other Banks with status of NPA as on 29.02.2020. His CIBIL score was also very poor. As on 29.02.2020, the petitioner was a defaulter and his loans were NPA or even worse with the various Banks and other financial institutions. Hence, the petitioner was not W.P.(C) No.20251/2021 : 10 : eligible for the relief measures under Ext.P1 or any of the Circulars read in it. 11. Further, in condition No.13 in Ext.P2, it was clearly stated that only those borrower accounts shall be eligible for resolution under the framework which were classified as standard but not in default for more than 30 days with any lending institution as on 01.03.2020. Thus, the eligibility provided in Ext.P2 is absence of default by the borrower with any lending institution and not only with the lending institution from where the benefit is sought. But, the petitioner's account with other lending institutions was NPA as early as on 29.02.2020 and hence the petitioner was not eligible for the Scheme. 12. I have heard the learned counsel for the petitioner and the learned Standing Counsel representing the 4[th] respondent. I have also heard the Central Government Counsel representing respondents 1 and 2. 13. The grievances of the petitioner are as regards non-restructuring of his loan accounts, denial of ECLGS 3.0 W.P.(C) No.20251/2021 : 11 : benefits and classification of his three accounts as NPA. 14. As far as the Emergency Credit Line Guarantee Scheme (ECLGS) Operational Guidelines under Ext.P1 are concerned, Clause 7 thereof clearly states that to be eligible under ECLGS 1.0, the borrower accounts should be less than or equal to 60 days past due as on 29.02.2020 in order to be eligible under the Scheme. They should not have been classified as SMA-2 or NPA by any of the lenders as on 29.02.2020. It is an admitted position that the petitioner's loan account with certain other financial institutions were classified as NPAs. Clause 7 of Ext.P1 stipulated that Days Past Due status as on 29.02.2020 should be checked across all lending institutions from the credit bureau and that all borrower accounts which had NPA or SMA-2 status as on 29.02.2020 shall not be eligible under ECLGS 1.0, ECLGS 2.0 and ECLGS 3.0. Admittedly, the petitioner's accounts with other financial institutions were declared as NPAs as on 29.02.2020. W.P.(C) No.20251/2021 : 12 : 15. The eligibility criteria for the ECLGS 1.0 and 2.0 Schemes is based on Days Past Dues status of the loans as on 29.02.2020 and the status is to be checked across all lending institutions from the Credit Bureau. It is from the Credit Bureaus that the respondents noticed that the petitioner is holding NPA accounts with other Financial Institutions. Any borrower who has NPA or SMA status as on 29.02.2020 will not be eligible under ECLGS 1.0 and ECLGS 2.0. 16. The learned counsel for the petitioner during hearing of the writ petition contended that the petitioner is claiming reliefs under ECLGS 3.0 only. It has to be noted that the petitioner’s accounts were classified as NPAs on 29.01.2021 even before ECLGS was introduced. As per Ext.R4(d) Circular dated 29.04.2021 of the respondents, for eligibility under Scheme 3.0, the borrower should not be NPA at the time of sanction/ disbursement. Furthermore, even as per ECLGS 3.0, notified on 01.04.2021, to avail the benefits thereunder, a borrower should not be SMA-2 or NPA with W.P.(C) No.20251/2021 : 13 : any lending institution as on 29.02.2020. This is discernible from Ext.R4(e) Circular issued by the Ministry of Finance, Government of India. The petitioner was therefore not eligible to the benefits under the ECLGS 3.0. 17. As regards restructuring of loan accounts, it is seen that the State Level Bankers Committee (SLBC) had announced Flood Relief measures during the year 2018 and a moratorium for a minimum period of one year, extendable up to 18 months was declared. The petitioner has availed first moratorium for a period of 12 months from 31.08.2018 to 30.08.2019 and second moratorium benefit from 31.08.2018 to 22.08.2020. Therefore, it is evident that the petitioner has already been enjoying a moratorium for two years, when the RBI provided for Covid-19 moratorium. Therefore, the petitioner cannot be heard to contend that he has been denied moratorium benefits by the Bank. 18. The petitioner has been enjoying the benefit of moratorium up to 22.08.2020. The petitioner has not made any remittances since 29.06.2018 till the end of moratorium W.P.(C) No.20251/2021 : 14 : period except payment of an amount of ₹2,000/- on 07.05.2019. Consequently, the accumulated amounts were taken into account and EMI recalculated. After the moratorium period also, the petitioner failed to remit EMIs promptly. Due to the failure of the petitioner to remit EMIs regularly, after a period of 3 months of non-payment, the petitioner’s accounts were classified as NPAs. But, due to the orders of the Hon’ble Apex Court, the NPA date was reckoned as 31.03.2021 only. 19. The learned counsel for the petitioner relied on the judgment of the Hon'ble Orissa High Court in W.P.(C) No.18293/2020 and argued that the intention of Central Government behind the ECLGS is infusion of money by different process, to see survival of Small Industrial Enterprises including MSMEs, and the conduct of the respondents is contrary to the intention of the Central Government. But, the facts of the petitioner's case herein would evidently establish that the petitioner did not satisfy the conditions laid down in the ECLGS, to become eligible for the W.P.(C) No.20251/2021 : 15 : benefits. 20. The learned counsel for the petitioner relied on the judgments of the Apex Court in _**State of Gujarat and another v. Ambica Mills Limited, Ahmedabad** [(1974) 4 SCC 656]_ and in Civil Appeal No.6994/2021 to contend that the classification which disentitled the petitioner from enjoying the benefits of fiscal policy decisions of the Central Government is bad as under inclusive and that the petitioner cannot be subjected to hostile discrimination. The petitioner claims benefit of a fiscal scheme introduced by the Central Government and the RBI. The Scheme itself is not under challenge in this writ petition. When the petitioner is claiming the benefit of a Scheme, necessarily, the petitioner has to satisfy the conditions prescribed by the Scheme. Evidently, the petitioner does not satisfy those conditions. The petitioner therefore cannot contend that the Scheme is under inclusive or that the petitioner is subjected to discrimination. 21. The petitioner’s accounts were declared as NPAs as per the norms prescribed by the RBI. The petitioner’s W.P.(C) No.20251/2021 : 16 : accounts were rendered NPA on 29.01.2021 though they were marked as such only on 31.03.2021, after the judgment of the Apex Court. This Court do not find any illegality or irregularity in the action of the respondents. The accounts of the petitioner were declared as NPA as per the norms of the RBI and considering the orders of the Apex Court. The petitioner is not eligible for ECLGS 3.0 benefits due to the fact that the petitioner had accounts classified as NPAs as on the date of considering the application of the petitioner for benefits. In the facts and circumstances of the case, this Court finds no reason to entertain the writ petition, which is devoid of any merit. The writ petition is therefore dismissed. Sd/- **N. NAGARESH, JUDGE** aks/07.03.2022 W.P.(C) No.20251/2021 : 17 : ## **APPENDIX OF WP(C) 20251/2021** ## **PETITIONER'S EXHIBITS** **Exhibit P1 TRUE COPY OF THE ECLGS OPERATIONAL GUIDELINES UPDATED ASS ON 07.06.2021 ISSUED BY NCGTC LTD. Exhibit P2 TRUE COPY OF RELEVANT PARTS OF THE RESOLUTION FRAMEWORK 1.0 DATED 06.08.2020 ISSUED BY THE RESERVE BANK OF INDIA. Exhibit P3 TRUE COPY OF THE COMMUNICATION DATED 16.11.2020 WHICH THE RESPONDENT NO.4 SENT TO THE PETITIONER BY WAY OF EMAIL.** **Exhibit P4 TRUE COPY OF THE LETTER DATED 24.12.2020 SENT BY THE RESPONDENT NO.4 TO THE PETITIONER. Exhibit P5 TRUE COPY OF THE ORDER DATE 03.09.2020 IN WPC NO.825/2020 AND CONNECTED CASES PASSED BY THE HON' BL'E SUPREME COURT OF INDIA. Exhibit P6 TRUE COPY OF RELEVANT PARTS OF THE NOTIFICATION DATED 05.05.2021 NAMELY RESOLUTION FRAMEWORK -2.0 ISSUED BY THE RESERVE BANK OF INDIA.** **Exhibit P7 TRUE COPY OF THE NOTICE DATED 29.04.2021 ISSUED BY THE RESPONDENT NO.4. Exhibit P8 TRUE COPY OF THE NOTICE DATED 29.04.2021 ISSUED BY THE RESPONDENT NO.4.** **Exhibit P9 TRUE COPY OF THE NOTICE DATED 29.04.2021 ISSUED BY THE RESPONDENT NO.4.** **Exhibit P10 TRUE COPY OF THE CIRCULAR DATED 03.09.2020 ISSUED BY THE BANKING DEPARTMENT OF THE RESPONDENT NO.4. Exhibit P11 TRUE COPY OF THE DOCUMENT STYLED AS POLICY FOR IMPLEMENTATION OF RESOLUTION FRAMEWORK 2.0 ISSUED BY THE BANK OF BARODA AND AS DOWNLOADED FROM THE WEBSITE OF THE SAID BANK.** W.P.(C) No.20251/2021 ## : 18 : |**Exhibit P12**|**TRUE COPY OF THE LETTER DATED**| |---|---| ||**01.10.2020 SENT BY THE RESPONDENT NO.4**| ||**TO A SIMILARLY SITUATED BORROWER**| ||**NAMELY MR.RAJESH.P.J.**| |**Exhibit P13**|**TRUE COPY OF THE REPRESENTATION DATED**| ||**27.08.2021 SUBMITTED BY THE PETITIONER**| ||**TO THE RESPONDENT NO.3.**| |**Exhibit P14**|**TRUE COPY OF THE COMMUNICATION DATED**| ||**31.08.2021 OF THE RESPONDENT NO.3 TO**| ||**THE RESPONDENT NO.4.**| |**Exhibit P15**|**TRUE COPY OF THE LETTER DATED**| ||**04.09.2021 OF THE RESPONDENT NO.4.**| |**Exhibit P16**|**TRUE COPY OF THE LETTER DATED**| ||**31.05.2021 ADDRESSED BY THE NCGTC LTD.**| |**Exhibit P17**|**TRUE COPY OF THE SAID FAQ ON ECLGS**| ||**UPDATED AS ON 1/10/2021 ISSUED BY THE**| ||**NCGTC LTD.**| |**Exhibit P18**|**TRUE COPY OF RELEVANT PARTS OF THE**| ||**"POLICY ON RESOLUTION FRAMEWORK FOR**| ||**COVID-19**<br>**RELATED**<br>**STRESS"**<br>**DATED**| ||**31/8/2020 OF THE INDIAN BANK.**| |**Exhibit P19**|**TRUE COPY OF THE FREQUENTLY ASKED**| ||**QUESTIONS "RESOLUTION FRAMEWORK FOR**| ||**LOANS/ADVANCES DUE TO COVID 19 RELATED**| ||**STRESS" ISSUED BY THE CANARA BANK.**| |**Exhibit P20**|**TRUE COPY OF THE FREQUENTLY ASKED**| ||**QUESTIONS**<br>**IN**<br>**RESPECT**<br>**OF**<br>**THE**| ||**"RESOLUTION FRAMEWORK FOR COVID 19**| ||**RELATED STRESS" ISSUED BY THE UCO**| ||**BANK.**| |**Exhibit P21**|**TRUE COPY OF AVAILABLE RELEVANT PARTS**| ||**OF THE SANCTION LETTER OF ECLGS 3.0**| ||**ISSUED LATER BY THE RESPONDENT NO.4 TO**| ||**MR.RAJESH PJ, WHO HAD BEEN DENIED**| ||**ECLGS 1.0 VIDE EXT. P12.**| |**Exhibit P22**|**TRUE COPY OF THE POSSESSION NOTICE**| ||**DATED 04-12-2021 AFFIXED BY THE**| ||**RESPONDENT NO.4.**| |**Exhibit P23**|**LIST SHOWING THE DETAILS OF MSME LOAN**| ||**ACCOUNTS FOR COMMERCIAL VEHICLES,**| ||**WHICH**<br>**WHERE**<br>**RESTRUCTURED**<br>**WITH**| ||**RESOLUTION FRAMEWORK 1, BY THE**| ||**RESPONDENT NO.4**| W.P.(C) No.20251/2021 ## : 19 : |**Exhibit P24**|**TRUE COPY OF THE EMAIL DATED 5TH**| |---|---| ||**FEBRUARY 2021 SENT TO THE RESPONDENT**| ||**NO.4 BY THE PETITIONER'S WIFE.**| |**Exhibit P25**|**TRUE COPY OF ANOTHER LETTER DATED**| ||**23/05/2020 WRITTEN BY THE SAME OFFICER**| ||**WHO WROTE EXT.R4(E).**| |**Exhibit P26**|**TRUE COPY OF THE LETTER DATED**| ||**17/08/2020 AND THE RECEIPT THERETO**| ||**DATED 18/08/2020 ISSUED BY THE MAGMA**| ||**FINCORP LTD., KOLKATA TO MR.SURESH**| ||**KUMAR, WHO IS MENTIONED ABOUTIN**| ||**EXT.P23.**| |**Exhibit P27**|**TRUE COPY OF SURESH KUMAR'S CIBIL**| ||**REPORT DATED 13/08/2020.**| |**Exhibit P28**|**TRUE COPY OF THE ACCOUNT STATEMENT**| ||**DATED 19/08/2020 MR.SURESHKUMAR IN**| ||**RESPECT OF GIVING HIM ECLGS 1 AND 3.**| |**Ext.A COPY OF NOTIFICATION DT 6.8.2020.**|| ## **RESPONDENT'S EXTS:** **R4(a) COPY OF SCREEN SHOT OF SYSTEM GENERATED ACCOUNT CLASSIFICATION R4(b) COPY OF CIRCULAR DT 7.4.2021 BY RBI R4(c) COPY OF CIRCULAR OF RBI DT 14.9.2020. R4(d) COPY OF CIRCULAR DT 29.4.2021 ALONG WITH ANNEXURE R4(e) COPY OF CIRCULAR NOTIFICATION DT 1.4.2021 BY NCGTC R4(f) COPY OF TRAIL EMAILS DT 27.7.2021 AND 3.8.2021.**