Delhi High Court
Rgv Infratech Pvt Ltd & Anr. vs Indian Bank Erstwhile Allahabad ... on 12 November, 2021
$~4 (2021 Cause List)
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision:- 12th November, 2021
+ W.P.(C) 9504/2021 & CM APPL. 29472/2021
RGV INFRATECH PVT LTD & ANR ..... Petitioners
Through: Mr. S.L. Gupta & Mr. Aditya
Vikram, Advocates.
versus
INDIAN BANK ERSTWHILE
ALLAHABAD BANK & ORS ..... Respondents
Through: Mr. Sajan Kr. Singh &
Mr.Subodh Kr. Singh,
Advocates for R-1 & 2.
Ms. Monika Arora, CGSC for
UOI.
CORAM:
HON'BLE MR. JUSTICE PRATEEK JALAN
JUDGMENT
PRATEEK JALAN, J. (Oral)
The proceedings in the matter have been conducted through
video conferencing.
1. The principal claim of the petitioner in the present writ petition
is for restructuring of the loans of the petitioner no. 1 by the respondent
Nos. 1 and 2- Indian Bank ["Bank"] in terms of a Circular issued by the
Reserve Bank of India ["RBI"] dated 11.02.2020.
2. The credit facilities were originally taken by the petitioner No.1
in the year 2017. The petitioner No.1 is in the category of Micro, Small
and Medium Enterprise ["MSME"] industry and is, therefore, covered
by two circulars issued by the RBI dated 01.01.2019 and 11.02.2020.
Signature Not Verified
Digitally Signed By:SHITU
NAGPAL
Signing Date:15.11.2021
3. The petitioner No.1 applied for restructuring of the account by a
communication dated 16.02.2020. Correspondence thereafter took
place between the Bank and the petitioner no. 1 which, according to the
petitioners, was in furtherance of the proposals for restructuring.
Ultimately, by a communication dated 19.02.2021, the Bank informed
the petitioner that its account had turned into a Non Performing Asset
["NPA"] on 28.01.2020, and could not be restructured. It was recorded
therein as per the RBI guidelines for MSME accounts, restructuring was
permitted for accounts which were in standard category as on
01.03.2020. The petitioner no. 1 responded to this communication on
27.02.2021, following which the Bank informed it of the total overdue
amounts in its accounts by a communication dated 03.03.2021. The
relief of restructuring was however denied.
4. In these circumstances, the petitioners have approached the Court
for the following reliefs:-
"a. to the Respondents No. 1 & 2 to restructure the
Loans of the Petitioner No.1 as per the circular
instructions of RBI dated 11.02.2020, to grant the Covid
relief and to sanction the Loan of RS. 75 Lakhs under the
CGTMSE scheme of the National Credit Guarantee
Trust Company Ltd. Of the Govt. of India;
b. to the Respondent No. 1 of not initiating or
continuing any coercive action against the Petitioner
Company;
c. to the Respondent No. 1 for providing the 'value
dating' effect of the amount kept by the Bank in the Fixed
Deposits;
d. to direct the Respondent No. 3 to initiate penal and
monetary action against the Respondents No. 1 & 2 for
intentionally skipping the instructions and guidelines of
Signature Not Verified
Digitally Signed By:SHITU
NAGPAL
Signing Date:15.11.2021
the Respondent No. 3 for restructuring the Loan accounts
of the MSME."
5. Notice in the writ petition was issued on 03.09.2021. Directions
were given for completion of pleadings, and the following order was
passed:-
"4. Learned counsel for the petitioners submits that
the relief in the present petition is not intended to impede
the action taken by the Bank under the Securitisation and
Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 ["the SARFAESI Act"], in
respect of which the petitioners have already
approached the Debts Recovery Tribunal ["DRT"]
under Section 17 of the said Act. It is made clear that the
proceedings under the SARFAESI Act may proceed in
accordance with law, notwithstanding the pendency of
the present petition. This Court expresses no view on the
merits of the action taken by the Bank under the
SARFAESI Act or the proceedings instituted by the
petitioners against the same. That is a matter for the
DRT to consider, which is already in seisin of the
proceedings.
5. List on 12.11.2021.
6. In the meanwhile, if the petitioners wishes to make
a proposal for settlement to the Bank, they may do so,
which the Bank will consider in its own discretion."
6. During the course of hearing, I am informed that the petitioner
has filed LPA No. 368/2021 against the aforesaid order, insofar as this
Court had declined interim relief. Although the Division Bench has
issued notice in the LPA, which is next listed for hearing on 22.11.2021,
no interim directions have been issued. A copy of the order of the
Division Bench dated 11.10.2021 has been shared on screen during the
video conference hearing. Learned counsel for the parties are ad idem
Signature Not Verified
Digitally Signed By:SHITU
NAGPAL
Signing Date:15.11.2021
that there is no impediment to this Court hearing the present writ
petition.
7. I have heard Mr. S.L. Gupta, learned counsel for the petitioner,
and Mr. Subodh Kr. Singh and Mr. Sajan Kr. Singh, learned counsel for
the respondent Nos. 1 and 2- Indian Bank ["Bank"].
8. Mr. Gupta submits that the circular dated 01.01.2019 provided
for a one time restructuring of MSME accounts. He draws my attention
to the following clauses of the said circular:-
"1. Please refer to the circulars
DBR.No.BP.BC.100/21.04.048/2017-18 dated February
07, 2018 and DBR.No.BP.BC.108/21.04.048/2017-18
dated June 6, 2018. In this regard, with a view to
facilitate meaningful restructuring of MSME accounts
{MSME as defined in the Micro, Small and Medium
Enterprises Development (MSMED) Act, 2006} that
have become stressed, it has been decided to permit a
one-time restructuring of existing loans to MSMEs
classified as 'standard' without a downgrade in the asset
classification, subject to the following conditions:
xxxx xxxx xxxx
ii. The borrower's account is in default but is a 'standard
asset' as on January 1, 2019 and continues to be
classified as a 'standard asset' till the date of
implementation of the restructuring.
xxxx xxxx xxxx
3. It is clarified that accounts classified as NPA can be
restructured; however, the extant asset classification
norms governing restructuring of NPAs will continue to
apply."
9. The further circular dated 11.02.2020, provided for an extension
of one time restructuring under the circular dated 01.01.2019. The
Signature Not Verified
Digitally Signed By:SHITU
NAGPAL
Signing Date:15.11.2021
conditions stipulated therein included inter alia the following:-
"ii. The borrower's account was in default but was a
'standard asset' as on January 1, 2020 and continues to be
classified as a 'standard asset' till the date of
implementation of the restructuring."
10. It is undisputed that the petitioner's account was, in fact, declared
as NPA by the Bank on 28.01.2020. Mr. Gupta's contention, however,
is that the RBI circular dated 11.02.2020 clearly contemplated
restructuring of accounts which were standard assets as on January 01,
2020. He submits that the petitioner's account having been classified as
an NPA only on 28.01.2020, the petitioner was entitled to the benefit of
the said circular.
11. Mr. Gupta has also drawn my attention to the statement of
account which shows that an amount of ₹52,500/- was debited from the
petitioner's Cash Credit Account on 27.01.2020 on account of
processing fee. According to Mr. Gupta, this processing fee was in
respect of an earlier application for restructuring which was made by
the petitioner.
12. Having heard learned counsel for the parties, I am of the view
that the relief sought by the petitioners cannot be granted in these
proceedings. The circular of the RBI dated 11.02.2020 in Clause (ii)
contains two conditions:-
a) the account should be a standard asset as on January 01, 2020,
and
b) it must be continued to be classified as a standard asset until
the date of the implementation of the restructuring.
Signature Not Verified
Digitally Signed By:SHITU
NAGPAL
Signing Date:15.11.2021
13. In the present case, the petitioner's application for restructuring
under this circular was made only on 16.02.2020, by which time its
account had already been declared as NPA. It thus could not qualify
under the second limb of clause (ii) of the circular dated 11.02.2020.
14. Mr. Gupta submits that the circular dated 01.01.2019 contained a
specific clause (Clause 3) permitting restructuring of NPA accounts. He
submits that the later circular being an extension thereof, this clause
must also apply be read into it. I notice that both circulars clearly specify
the eligibility conditions, including the dates on which the accounts
must be standard, and that they must be standard until implementation
of the restructuring. Clause 3 of the circular dated 01.01.2019 refers to
the asset classification norms governing restructuring of NPAs. The
interpretation placed by Mr. Gupta would virtually negate the second
limb of clause 1(ii) of the circulars dated 01.01.2019 and 11.02.2020.
Suffice it to say that the entitlement of the petitioner to restructuring
under the asset classification norms pertaining to NPAs is not the
subject matter of the present petition.
15. Mr. Gupta next submits that the declaration of the account of the
petitioner no. 1 as NPA itself was in error. I do not find any prayer of
this nature in the writ petition. Mr. Gupta submits that this is because
those contentions have been taken by the petitioner in pending
proceedings before the Debts Recovery Tribunal under Section 17 of
the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 ["the SARFAESI Act"]. As
recorded in the order dated 03.09.2021, the scope of the present
proceedings was not intended to cover the proceedings under the
Signature Not Verified
Digitally Signed By:SHITU
NAGPAL
Signing Date:15.11.2021
SARFAESI Act, or the merits of the petitioner's case challenging those
proceedings. The petitioner's case on that account is, therefore, also
beyond the scope of the present proceedings.
16. For the reasons aforesaid, I do not find force in the petitioners'
submission regarding its eligibility for restructuring in terms of the RBI
circular dated 11.02.2020.
17. However, as far as clause 3 of the circular dated 01.01.2019 is
concerned, Mr. Gupta submits that the Bank may be directed to consider
the restructuring of the petitioner's NPA account in terms of the extant
asset classification norms governing restructuring of NPAs. As stated
above, such relief is beyond the scope of the present petition. However,
if the petitioner makes such an application, it may be considered, if the
petitioner no. 1 is otherwise eligible for the said relief in accordance
with law. This Court has not made any observations with regard thereto.
18. The writ petition, alongwith the pending application, is
accordingly dismissed, with the above observations.
PRATEEK JALAN, J.
NOVEMBER 12, 2021/'pv'
Signature Not Verified
Digitally Signed By:SHITU
NAGPAL
Signing Date:15.11.2021
