Gujarat High Court
M/S Posco Poggenamp Electrical ... vs Uco Bank on 14 September, 2023
Bench: Vaibhavi D. Nanavati
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C/SCA/5217/2022 ORDER DATED: 14/09/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 5217 of 2022
With
CIVIL APPLICATION (FOR FIXING DATE OF HEARING) NO. 1 of 2023
In R/SPECIAL CIVIL APPLICATION NO. 5217 of 2022
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M/S POSCO POGGENAMP ELECTRICAL STEEL PRIVATE LIMITED
Versus
UCO BANK
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Appearance:
MR. ANSHIN DESAI, SR. ADVOCATE WITH NATASHA SUTARIA(7907) for
the Petitioner(s) No. 1
ARJUN R SHETH(7589) for the Respondent(s) No. 1
MR RAJU K KOTHARI(2789) for the Respondent(s) No. 2
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CORAM:HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
Date : 14/09/2023
ORAL ORDER
1. The brief facts leading to the filing of the present petition read thus:
1.1 The Petitioner herein is a private limited Company duly registered
under the relevant provisions of Companies Act, 1956, incorporated on
23.12.2010 and is engaged in the manufacturing of CRGO/CRNGO
Laminations, which are used as core of high-value Transformers and
Rectifiers.
1.2. The Petitioner, for carrying out business, approached Respondent for
credit facilities for the first time in the year 2013. Vide Sanction letter
dated 20.03.2013, term loan total amounting to Rs 15.71 Crores including
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fresh term loan of Rs 1.40 Crores and working capital fund based limit of
Rs 15 Cr, was sanctioned in favour of the Petitioner.
1.3 The Petitioner approached Respondent No 2 bank for credit
facilities for the first time in 2013 wherein, vide sanction letter dated
29.10.2013, Respondent No. 2 bank granted credit facilities to the tune of
Rs 12.30 Cr, including 5 Crore Cash Credit limit.
1.4 The account of the Petitioner was a standard account with regular
operations and the conduct of business in the account of the petitioner
was fair, transparent and regular till 29.02.2020. There was no amount
whatsoever that was due or overdrawn in relation to the account of the
Petitioner.
1.5 In June, 2020, the Petitioner approached Respondent Banks
through letter dated 13.06.2020, requesting working capital term loan
under the "Emergency Credit Line Guarantee Scheme" (for short
"ECLGS"), the Petitioner being an MSME, to regain and restart
operations after being adversely affected by the lockdown and COVID-19
Pandemic. The said application is duly produced at Annexure-E.
1.6 The petitioner duly filled the requisite form and vide email dated
15.06.2020, sent the same to the respondent Bank.
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1.7 Due to the unexpected delay in release of the facilities under
ECLGS, vide email dated 25.06.2020, the petitioner requested
Respondent No. 1 Bank to sanction ad-hoc limit for cash credit for Rs.10
cr in light of the order received for supplying of transformer laminations
to the tune of Rs 40 cr.
1.8 The Petitioner vide emails dated 11.07.2020.06.08.2020 and
26.08.2020 again requested Respondent No 1 bank to sanction the loan as
requested for at the earliest in light of the urgent funds required to carry
out supply of the order received.
1.9 The Respondent No. 1 bank, vide email dated 14.09.2020, notified
certain observations pertaining to the pending legal dispute against the
promoter company i.e. Poggenamp Nagarsheth Powertronics Pvt. Ltd.
and requested for clarifications on the same. The Petitioner submitted
reply on the queries vide email communication dated 16.09.2020. The
petitioner reiterated its request vide emails dated 29.09.2020 and
30.09.2020 requesting Respondent banks to sanction the loan.
1.10 The Respondent No 2 bank vide email dated 19.10.2020 denied
extending facilities under ECLGS to the Petitioner company, citing
irrelevant reasons. The said email communication dated 19.10.2020 is
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duly produced at Annexure-K. The Respondent No 1 bank, vide email
dated 22.02.2021, raised certain queries with respect to the account of the
petitioner and it is the case of the petitioner that the petitioner was
threatened that in the event that the petitioner failed to furnish requisite
clarifications and documents, the same would result in declaration of the
account of the Petitioner as Non-Performing Asset (NPA) by the end of
FY 2020-21.
1.11 The Petitioner responded to the bank vide letter dated 26.02.2021.
The account of the Petitioner was declared as NPA from 31.03.2021 and
the same was notified to the Petitioner through email dated 04.05.2021 by
the Respondent bank.
1.12 The Consortium of Banks, comprising of the Respondent Banks, in
its meeting held on 26.05.2021, decided that the Petitioner would submit
a restructuring proposal on or before 31.08.2021. The Petitioner duly
submitted Debt Restructuring Proposal on 05.08.2021 and further on
26.08.2021 to Respondent Banks. The petitioner received demand notice
dated 10.06.2021 under Section 13(2) of the Securitization and Asset
Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 (for short "SARFAESI Act") from Respondent No. 1 Bank
demanding payment of Rs 11,39,60,3366.40. The Petitioner submitted a
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reply to the said notice was furnished on 14.08.2021 stating that the
facilities, as per the sanction letter, were not granted and the declaration
of the account of the Petitioner as an NPA is in contravention of the
guidelines issued by the Reserve Bank of India.
1.13 The Respondent No.1 Bank, vide email dated 14.09.2021 informed
about the deficiencies in the Information Memorandum of the
Restructuring Proposal as sought for by the Head Officer of Respondent
bank and requested to provide clarifications on the same. The Petitioner,
vide email dated 27.09.2021, duly furnished reply to all the queries that
were raised by the Respondent No.1 bank.
1.14 It is the case of the Petitioner that despite resolving all queries and
reasons raised by the Respondent Banks since the request for sanctioning
of ECLGS was made, the facilities were not been granted to the Petitioner
Company.
1.15 The Petitioner vide email dated 01.02.2022 again requested
Respondent No. 1 bank to grant credit facilities under the ECLGS 4.0.
The Respondent No. 1 bank denied sanctioning of the same on the ground
that the account of the Petitioner company is an NPA, vide email dated
05.02.2022. In view of the aforesaid communication dated 5.2.2022 the
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petitioner herein is constrained to approach this Court by filing the
present petition invoking Article 226 of the Constitution of India and has
prayed for the following reliefs:
"11. The Petitioner prays that this Hon'ble Court be pleased to
grant interim relief as follows:
a. Release the entire limits under ECLGS vide directive circulars
from NCGTC-Ministry of Finance.
b. Pending final adjudication and disposal of the present petition,
direct the Respondent banks to release and grant the credit
facilities pertaining to last tranche i.e. 10% under the ECGLS
Scheme 4.0 that the petitioner is rightfully entitled for and whose
validity is only until 31.03.2022.
c. Pending final adjudication and disposal of the present petition,
direct the Respondent banks not to take any further coercive action
in connection with the account of the petitioner for recovery under
the application provisions of SARFAESI Act or any other
provisions.
d. Such other and further reliefs, as this Hon'ble Court may deem
fit and proper in the nature and circumstances of the case.
12. The Petitioner, therefore, prays that this Hon'ble Court be
pleased to issue a writ of mandamus or a writ in mandamus or a
writ of certiorari or a writ in the nature of certiorari or any other
appropriate writ, direction or order and be pleased to:
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a. Direct the Respondent Bank to release the entire credit facility
upto i.e. 40% from March 2020 to February 2022.
b. Grant such other and further reliefs, as this Hon'ble Court may
deem fit and proper in the nature and circumstances of the case in
the interest of justice.
2. Heard Mr. Anshin Desai, the learned Senior Counsel with learned
advocate Ms. Natasha Sutaria, the learned advocate appearing for the
petitioner, Mr. Arjun Sheth, the learned advocate appearing for the
respondent No.1 and Mr. Raju Kothari, the learned advocate appearing
for respondent No.2.
3. Mr. Anshin Desai, the learned Senior Counsel appearing for the
petitioner submitted that the respondent authority erred in not extending
the benefit of ECLGS to the Petitioner herein having applied for the
benefit of the said Scheme, on 13.6.2020.
3.1 Mr. Desai, the learned Senior Counsel submitted that the
Government of India, through the Ministry of Finance, introduced
"Emergency Credit Line Guarantee Scheme" (for short "ECLGS") on
23.5.2020, as a special scheme, in view of the COVID-19 crisis, to
provide 100% guarantee coverage to banks and NBFCs which amounts to
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approximately 3-4 times the loan amounts sanctioned, in order to enable
them to extend emergency credit facilities to business enterprises/MSMEs
in view of COVID-19 Pandemic to meet their additional term
loan/working capital requirements.
3.2 Mr. Desai, the learned Senior Counsel placed reliance on the
Circular DOR.BP.BC.NO.76/21.06.201/2019-20 dated 21.06.2020,
wherein the Reserve Bank of India clarified that "Please refer to circular
Ref no. 2842/NCGTC/ECLGS dated May 23, 2020, issued by National
Credit Guarantee Trustee Company (for short "NCGTC") in respect of
the captioned scheme announced by the Government of India to extend a
guaranteed emergency credit line to MSME borrowers. As credit facilities
extended under the scheme guaranteed by NCGTC are backed by an
unconditional and irrevocable guarantee provided by the Government of
India, it has been decided that Member Lending Institutions shall assign
zero percent risk weight on the credit facilities extended under this
scheme to the extent of guarantee coverage."
3.3 Mr. Desai, the learned Senior Counsel submitted that the petitioner
being an MSME, is rightfully entitled to the ECGLS Scheme 1.0 and 4.0
that was propagated by the Government of India through Ministry of
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Finance in light of the Covid-19 Pandemic. It was submitted that non-
grant of facilities under ECLGS, the Petitioner resulted in heavy losses in
the business of the petitioner. The orders that were undertaken by the
petitioner to have been fulfilled, pursuant to receipt of facilities under
ECLGS, were also cancelled due to the liquidity crunch. It was submitted
that the around 100 employees of the petitioner is suffering from
tremendous liquidity crunch, initially in light of the COVID-19 pandemic
and afterwards due to non-grant of requisite credit facilities by the
Respondent Banks.It was submitted that the business of the Petitioner
falls under the category of stressed sectors as per the KV Kamath
Committee Report dated 07.09.2020. It was submitted that though the
ECLGS is one such mechanism to provide support MSMEs, Non-
Banking Finance Companies, agriculture, sectors allied to agriculture,
contractors, street vendors, State Governments, relief in provident fund
contribution, extension of subsidy on home loans etc, however, the
benefit of the Scheme has not bee provided to the petitioner by the
respondent authority despite being eligible for the same. It was submitted
that the account of the petitioner was that of the standard asset as on
29.02.2020 and thus the Respondent No.1 bank is entitled to give 100%
guarantee coverage for the GECL assistance of loan under the ECGLS
Scheme as per the circular dated 23.05.2020. It was submitted that in the
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event the Respondent Banks would have approved and fully disbursed the
amounts the Petitioner was entitled to under the ECLGS, the account of
the Petitioner would have continued to remain a regular and standard
account till date i.e the date of filing of the petition. There would be no
requirement to declare the account of the Petitioner as a special mention
account much less it being declared as an NPA. It was submitted that the
actions of the Respondents are beyond the provisions, directions,
guidelines and circulars issued by the statutory force of law in India and
therefore, Petitioner herein is entitled to invoke the jurisdiction of this
Hon'ble Court under Article 226 of the Constitution of India.
3.4 At the outset, Mr. Desai the learned Senior Counsel appearing for
the petition submitted that the petitioner could noT avail the benefit of
ECLGS in view of the delay caused at the instance of the respondent
authority in considering the application filed by the petitioner herein
seeking benefit of the said Scheme by an application dated 13.6.2020
(Annexure "E") and that the scheme came to be floated on 23.5.2020 and
as per the requirement, to be eligible to avail the benefit of the said
scheme, the petitioner had standard operating loan account and, therefore,
the respondent authority ought not to have denied the crediti facilities of
the said Scheme.
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4. Mr. Desai, the learned Senior Counsel placed reliance on the
following cases:
(A) Rights of party on the basis of ECLGS Scheme:
(i) Nagraj Steel Scrap & Ors. v. Union of India and Ors
MANU/MH/2649/2021
(ii) Anup Kumar Daruka v. HDFC Limited and Ors,
MANU/PH/0759/2022
(iii) Gajendra Sharma v. Union of India,
(2021) 1 SCC 210;
(iv) Future Technologies v. The Chief Manager, Punjab
National Bank,
MANU/OR/0425/2020
(B) Rights will have to be determined when petition was filed:
(i) Vineet Kumar v. Mangal Sain Wadhera,
1984 3 SC 352;
(C) Beneficial Statute/ Circular is always retrospective in nature.
(i) Commissioner of Central Excise, Bangalore v. Mysore
Electricals Industries Ltd., (2006) 12 SCC 448;
(D) No bar of alternative remedy against the present petitioner.
(i) Secretary Cannanore Muslim Educational Assoc
BNHNN, Kanpur v. State of Kerala, 2010 (5) SCALE 184.
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5. Heard Mr. Arjun Sheth, the learned advocate appearing for the
respondent No.1. Mr. Sheth, the learned advocate submitted that the
present petition is filed at a belated stage only to scuttled from the
SARFAESI action already initiated by the respondent No. 1 bank. At the
outset, it was submitted that the prayers in the petition seek relief with
respect to the action undertaken by the respondent banks under the
SARFAESI Act. It was submitted that the petitioner herein be relegated
to avail statutory remedy under the SARFAESI Act and this Court may
not, on the aforesaid ground alone, entertain the present petition. It was
submitted that the petitioner herein has no vested right to obtain facility
from the Bank. To grant facility is the discretion of the bank and the bank
is required to apply prudent banking judgment.
5.1 Mr. Arjun Sheth, the learned advocate appearing for the respondent
No.1 bank, on merits, submitted that the respondent No.1 bank initiated
SARFAESI action i.e. Section 13(2) notice came to be issued to the
petitioner on 10.6.202, Section 13(4) symbolic possession notice came to
be issued on 10.1.2022 under the SARFAESI Act. The present petition
has been filed after a gap of 17 months and in view therefore, the
petitioner suffered from delay and laches and is malafide in nature.
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5.2 Placing reliance on the communication between the petitioner and
respondent No.1 bank, it was submitted that the petitioner herein was in
constant communication with the respondent banks and vide
communication/ email dated 19.10.2020, the petitioner was denied
extending facility under the ECLGS by stating relevant reasons by the
respondent Banks.
5.3 It was submitted that respondent No.1 vide email dated 14.9.2020
(Page-87 of the petition) raised grave concerns with the petitioner
company with regards to legal dispute with the two promoters of the
petitioner (having combined shareholding of 77% in the petitioner
company) being on Poggenamp Nagarsheth Powertronics Private Limited
(holding 51% of the petitioner company) and one Posco India Pune
Processing Centre Pvt. Ltd. (holding 26% in the petitioner) being in legal
battle and that Posco India Pune Processing Centre Pvt. Ltd had initiated
insolvency proceedings against Poggenamp Nagarsheth Powertronics
Private Limited. It was submitted that the promoter company of the
petitioner having name Poggenamp Nagarsheth Powertronics Private
Limited (holding 51% of the petitioner) had also become NPA.
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5.4 It was submitted that the promoters of the petitioner company had
very poor credit score, the respondent No.1 has not granted credit
facilities though the ECLGS to the petitioner company. Reliance was
placed on CIBIL report of Gauttam Nipinbhai Nagarsheth.
6.5 Reliance was placed on the credit score report dated 26.11.2019 of
the petitioner company wherein delinquencies were reported on the
petitioner company in the last 24 months. It was submitted that
respondent No.1 duly perused the credit-worthiness of the petitioner
company and on account of the promoter company being admitted into
the CIRP process, there was a possibility of change in the share-holding
and management structure of the petitioner company at the relevant point
of time. There was complete uncertainty on the aspect of who will retain
control of the petitioner company and, therefore, it became a very risky
proposition on granting additional credit facilities to the petitioner
company.
5.6 Reliance was placed on the Scheme itself as it envisages the
particular MLI's to evaluate the credit proposals by using their banking
judgment. It was submitted that on account of the petitioner company
having being declared as NPA, admitted into the insolvency process, poor
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credit score of the promoter group who also held 26% shareholding in
the present petitioner company and in order to not create any further
exposure, the respondent No.1 deem it fit to use its discretion under the
said Scheme to deny granting ECLGS facilities to the petitioner
company.
5.7 It was submitted that bankers are commercial entities and that since
the customer profile, organizational structure and spread of each lending
institution is widely different from others, each lending institution is best
placed to assess the requirements of its customers and therefore such
discretion was left to the lending institutions concerned. It was submitted
that any borrowing arrangement is a commercial contract between the
lender and the borrower and therefore, the RBI and / or the Union of
India can provide broad guidelines whilst only recommending to provide
the reliefs. It was submitted that in the case of the petitioner company, the
petitioners had significant financial stress which had potential
implications on the long terms viability of the petitioner company.
5.8 Placing reliance on the aforesaid submission, it was submitted that
the respondent No.1 had duly considered the representations made by the
petitioner to be considered eligible for ECLGS and after considering the
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credit worthiness of the petitioner and also that of the promoter group, it
was deemed that any ad-hoc limit to be granted would be against the
interests of the bank and its internal guidelines.
5.9 Placing reliance on the aforesaid, it was submitted that the
respondent No.1 has duly considered the risk that it will face if such
additional credit facility would be granted to the petitioner company and
therefore, the respondent No.1 is entitled to take such a decision based on
prudent business principles, qua which decisions this Court would not be
exercising jurisdiction under Article 226 of the Constitution of India.
5.10 Mr. Arjun Sheth, the learned advocate submitted that the petitioner
vide email dated 16.9.2020 (at page-91 of the petition) had given certain
explanations, however, the same were not found to be satisfactory by the
respondent No.1.
5.11 Mr. Sheth, the learned advocate submitted that the credit
department of respondent No.1 vide letter dated 30.9.2020 had intimated
the local branch at Gandhinagar that due to the insolvency proceedings
which could then result in the impact on management control of the
petitioner, the competent authority was then not inclined to consider the
proposal for granting of the scheme in question, the same is attached at
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Annexure "K", which issued by the credit department of the respondent
No.1 to the local branch at Gandhinagar. Mr. Sheth submitted that the
petitioner was declared NPA by communication dated 31.3.2021.
6.12 Reliance was placed on the order passed in SCA No.7558 of 2008
dated 19.11.2019.
6. Heard Mr. Raju Kothari, the learned advocate appearing for the
respondent No.2. Mr. Kothari at the outset submitted that respondent
No.2 is a private bank and no writ would lie against the respondent No.2.
The Respondent No.2 cannot be construed as State under the Article 12
of the Constitution of India and the writ would not be maintainable
against respondent No.2 as it is a private bank. Mr. Kothari, the learned
advocate supported the contentions and submissions advanced by Mr.
Arjun Sheth, the learned advocate appearing for the respondent No.2. Mr.
Kothari, the learned advocate appearing for the respondent No.2
submitted that as back as on 19.10.2020 (Annexure K) informed the
petitioner that the petitioner was not eligible to be considered for the
benefit of ECLGS. It was lastly submitted that the Scheme is not in
existence and in view thereof in absence of the Scheme, not being in
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existence, the reliefs, as prayed, even otherwise are such, it cannot be
granted.
6.1 Reliance was placed on the order passed in SCA No. 15813 of
2019 dated 28.11.2019
6.2 Mr. Arjun Sheth, the learned advocate appearing for the respondent
No.1 Bank, placing reliance on the aforesaid submissions, submitted that
the present petition being devoid of merits be dismissed and also
emphasized on the fact that the Scheme in question is not in force.
ANALYSIS
7. The petitioner herein being a private limited company, duly
incorporated on 23.12.2010 under the provisions of the Companies Act
and is engaged in the manufacturing of CRGO/CRNGO Laminations,
which are used as core of high-value Transformers and Rectifiers.
7.1 The account of the Petitioner was a standard account with regular
operations and the conduct of business in the account of the petitioner
was fair, transparent and regular till 29.02.2020.
7.2 The Government of India through the Ministry of Finance
introduced on 23.05.2020 a scheme in the name of "Emergency Credit
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Line Guarantee Scheme" (hereinafter referred to as ECLGS) as a special
scheme in view of the COVID-19 crisis to provide 100% irrevocable and
unconditional guarantee to all financial institutions in order to enable
them to extend emergency credit facilities to business enterprises/MSMEs
like the Petitioner in view of COVID-19 Pandemic and to meet their
additional working capital requirements to overcome the pandemic
situation and to keep the business sailing. The Circulars dated 23.5.2020
and 21.6.2020 are duly produced at Annexure "D".
7.3 The petitioner herein approached the respondent banks, by letter
dated 13.6.2020 to avail the benefits of the aforesaid Scheme. The
petitioner entered into various communications with respondent authority
for sanctioning the benefit of the said Scheme. By communication dated
19.10.2020, the respondent No.2 bank declined to extend facilities under
the said Scheme to the petitioner. The said communication dated
19.10.2020 is duly produced at Annexure "K" at Page-322.
7.4 The petitioner and the respondent No.1 bank were in continuous
communication by various emails. The last correspondence in relation to
the scheme in question is of September, 2020 which is duly produced at
Page-96. The main bone of contention raised by Mr. Anshin Desai, the
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learned Senior Counsel was with regard to the delay caused by the
respondent bank and the delay which was caused in considering
sanctioning of the facilities, with regard to said Scheme in question, at the
end of the respondent banks and in view thereof, prayers as prayed for by
the petitioner be allowed for the reasons that had the respondent banks
acted within time, the petitioner could have availed the facilities of
ECLGS.
7.5 The respondent No.1 placed the application dated 15.6.2020
preferred by the petitioner herein before the higher authority.
8. The following communications emerge between the parties:
(1) The respondent No.1 vide email dated 14.9.2020 (page-87 of
the petition) raised grave concerns with the petitioner company
with regards to legal dispute with the two promoters of the
petitioner (having combined shareholding of 77% in the petitioner)
one Poggenamp Nagarsheth Powertronics Private Limited (holding
51% of the petitioner) and one Posco India Pune Processing Centre
pvt. Ltd. holding 26% in the petitioner) being in legal battle and
that Posco India Pune Processing Centre Pvt. Ltd. had initiated
insolvency proceedings against Poggenamp Nagarsheth
Powertronics Private Limited. The said details of promoters of the
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petitioner company is duly produced at page-121 of the present
petition.
(2) The promoter Company of the petitioner i.e. Poggenamp
Nagarsheth Powertronics, holding 51% of the petitioner, had also
become NPA. (Para-34, page-183)
(3) The petitioner vide email dated 16.9.2020 (at page-91 of the
petition) had given certain explanations, however, the same was
not found satisfactory by the respondent No.1.(Para-35)
(4) The credit department of respondent No.1 vide letter dated
30.09.2020, had intimated the local branch at Gandhinagar that due
to insolvency proceedings which could then result in the impact on
management control of the petitioner, the competent authority was
then not inclined to consider the proposal for granting of the
scheme in question. (Annexure "K")
(5) Dispute between two promoters of the petitioner was evident
from insolvency admission order dated 22.1.2020 passed by the
NCLT at Annexure "L".
(6) Poggenamp Nagarsheth Powertronics Private Limited
(holding 51% of the petitioner) and the petitioner company having
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similar Directors, being members of Nagarsheth Family, who also
have 23% share-holding in the petitioner company.
(7) The petitioner company was suffering from loses and was in
poor financial position, as is evident from the financial statements
of the petitioner as of 31.3.2021 and 31.3.2020, at Annexure "O"
(8) Considering the fact that the promoters of the Company had
very poor credit score, the respondent No.1 had not granted credit
facility of ECLGS to the petitioner company. (para-40, page-184)
(9) The credit score of the petitioner company dated 26.11.2019
is duly produced at Annexure "P" and the CIBIL report of Gauttam
Nipinbhai Nagarsheth is duly produced at Annexure "Q".
(10) On perusal of the credit score dated 26.11.2019 of the
petitioner company, delinquencies have been reported on the
petitioner company since then.
(11) Credit score of the promoter of the petitioner company
records the following reasons for giving poor credit score: (Para-42
page-185)
i. PRESENCE OF DELINQUENCY AS OF RECENT
UPDATE.
ii. PRESENCE OF SEVERE DELINQUENCY.
iii. PRESENCE OF DELINQUENCY.
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iv. HIGH BALANCE BUILD-UP ON NON-MORTGAGE
LOANS.
v. PAYMENT MADE IN PROPORTION TO TOTAL
BALANCE OUTSTANDING IS LOW.
(12) Considering the credit-worthiness of the petitioner company
and on account of the promoter company being admitted into the
CIRP process, there was a possibility of change in the share-
holding and management structure of the petitioner company at the
relevant point of time.
(13) There was complete uncertainty on the aspect of who will
retain control of the petitioner company and, therefore, it became a
very risky proposition on granting additional credit facilities to the
petitioner company.
(14) The Scheme ECLGS itself envisages the particular MLI's to
evaluate the credit proposals by using their banking judgment.
(15) On account of the petitioner company having being declared
as NPA, admitted into the insolvency process, poor credit score of
the promoter group who also held 26% shareholding in the present
petitioner company and in order to not create any further
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exposure, the respondent No.1 deem it fit to use its discretion
under the said Scheme to deny granting ECLGS facilities to the
petitioner company.
9. From the aforesaid, the proposition laid by the learned Senior
Counsel Mr. Anshin Desai that ECLGS is a beneficial Scheme, which
requires to be applied retrospectively in accordance with the ratio laid
down by the Hon'ble Apex Court in CIT v. Vatika Township, reported in
(2015) 1 SCC 1, in the opinion of this Court, while the Scheme is a
beneficial Scheme, respondent No.1 bank has taken due efforts to
consider the eligibility of the petitioner company's entitlement for the
ECLGS and denied the benefit of the said Scheme by communication
dated 5.2.2022. In the meantime, the petitioner company came to be duly
classified as Non-Performing Asset (NPA) on 31.3.2021. The aforesaid
proposition would be of no avail to the petitioner herein.
10. By e-mail dated 1.2.2022, the Petitioner vide email dated
01.02.2022 again requested Respondent No. 1 bank to grant credit
facilities under the ECLGS 4.0., but the same came to be denied by the
Respondent No. 1 bank vide email dated 05.02.2022. (page-170-171)
NEUTRAL CITATION
C/SCA/5217/2022 ORDER DATED: 14/09/2023
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11. On the aforesaid grounds, considering the facts of the present case,
the contention raised by Mr. Anshin Desai, the learned Senior Counsel
appearing for the petitioner that there is a delay on the part of the
respondent banks, does not weigh with this Court.
12. On a pertinent query raised by this Court with regard to whether
the said Scheme is in vogue, it was answered by Mr. Anshin Desai, the
learned Senior Counsel appearing for the petitioner that the said Scheme
is not in force.
13. Considering the aforesaid, this Court is not inclined to exercise its
extra-ordinary jurisdiction under Article 226 of the Constitution of India,
in view of the following:
(i) The petitioner herein was informed by the respondent No. 2
AXIS Bank as back as on 19.10.2020 that the benefit of the said
Scheme could not be granted to the petitioner;
(ii) The respondent bank was in constant communication vide
emails and such communications, as has been considered above,
and the petitioner was informed on 5.2.2022 by the respondent
No.1 with regard to denial of the benefit of the ECLGS.
NEUTRAL CITATION
C/SCA/5217/2022 ORDER DATED: 14/09/2023
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(iii) The present petition is held to be not maintainable qua
respondent No.2 being a private bank and the same issue, as held
by in AIR 2003 SC 4325.
(iv) Civil Application No.1 of 2023 seeking preponement of date
of hearing of the present Special Civil Application and/ or to
direction to the respondent banks to extend the facilities is
unadjudicated.
(v) The Scheme itself is not in force;
(vi) Considering the ratio as laid down and that the Scheme is
not in force, the prayers, as prayed for, qua the action initiated
against the petitioner herein under SARFAESI Act, it is open for
the petitioner to avail statutory remedy challenging any action
undertaken by the respondent banks under the SARFAESI Act, in
accordance with law.
For the foregoing, the petition fails and the same is dismissed.
Since the main matter is already listed on board, the Civil
Application stands disposed of.
(VAIBHAVI D. NANAVATI,J)
SAJ GEORGE
