Am Distributors vs The Manager
2021 Latest Caselaw 3908 Ker

               IN THE HIGH COURT OF KERALA AT ERNAKULAM

                               PRESENT

                 THE HONOURABLE SMT. JUSTICE P.V.ASHA

    WEDNESDAY, THE 03RD DAY OF FEBRUARY 2021 / 14TH MAGHA,1942

                      WP(C).No.26505 OF 2020(K)


PETITIONER:

               AM DISTRIBUTORS
               37/3985 B, 50/2364C. THENKUDATH BUILDING,
               NEAR LULU MALL, EDAPPALLY POST, ERNAKULAM-682 024,
               REPRESENTED BY MANAGING PARTNER MR.MUHAMMED BASHEER.

               BY ADV. SMT.K.LATHA

RESPONDENTS:

      1        THE MANAGER, SOUTH INDIAN BANK LTD.
               BANERGY ROAD, ERNAKULAM-682 018.

      2        UNION OF INDIA,
               REPRESENTED BY SECRETARY TO DEPARTMENT OF REVENUE,
               MINISTRY OF FINANCE, ROOM NO.46, NORTH BLOCK, NEW
               DELHI-110 001.

      3        ADDL R3. MANAGING DIRECTOR
               CRIF HIGH MARK CREDIT INFORMATION SERVICES P
               LTD,FOFB-04,04,06 FOURTH FLOOR ART GUILD HOUSE
               PHOENIX MARKET CITY CTS NO.124/B 15 LBS MARG, KURLA
               WEST, MUMBAI,MAHARASHTRA 400070, INDIA(ADDL
               RESPONDENT NO. 3 IS IMPLEADED AS PER ORDER DATED
               11.01.2021 IN IA 1/2021.)

               R1 BY SRI.K.K.JOHN,SC,SOUTH INDIAN BANK
               R1 BY ADV. SRI.ASISH K.JOHN
               R2 BY ADV. P.R.AJITH KUMAR, CGC

     THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
03.02.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
 WP(C).No.26505 OF 2020(K)               2



                             JUDGMENT

Dated this the 3rd day of February 2021

The petitioner is a dealer who holds UDYAM MSME

registration certificate and GST registration. This writ

petition is filed aggrieved by the denial of the benefit of

Emergency Credit Line Guarantee Scheme (ECLGS)

introduced by the Reserve Bank of India, for which 100%

guarantee is provided by the National Credit Guarantee

Trustee Company (NCGTC) to Member Lending Institutions

(MLIs). Under this scheme an additional term loan facility is

made admissible to eligible MSMEs/Business Enterprises,

individual borrowers to the tune of 20% of the total

outstanding credit up to Rs.50 crore. The petitioner had

submitted an application before the 1st respondent bank.

2. It is stated that the petitioner is enjoying cash

credit facility from the 1st respondent Bank. It is stated that

it has various accounts with various private banks and

NBFCs and the substantial fund based loans are availed from

the respondent bank. It is having sanctioned limits of credit

facility to the tune of Rs.6.30 crores as on 29.2.2020. It is

also stated that the petitioner is having three business loans

with Bajaj Finserve Limited and none of these accounts are

classified as NPA or SMA-2 as on 29.2.2020. One of the

conditions for being an eligible borrower for availing the

benefit of the scheme is that the borrower accounts should

be classified as regular, SMA-0 or SMA-1 as on 29.2.2020

and shall not be NPA or SMA-2 as on 29.2.2020. Producing

the Bank statement Ext.P4 the petitioner claimed that it is

eligible to get the benefit under the ECLGS. But the

respondent-bank did not take any positive steps based on

the petitioner's application.

3. The respondent has filed a counter affidavit

stating that the petitioner does not come under the

definition of eligible borrower because under clause 1.0 of

Ext R2(b) scheme, the Borrower account should be less

than or equal to 60 days Past Due status as on 29.2.2020.

It is also stated that the individual MLIs have to verify across

all lending institutions from the credit bureau. On verification

of CRIF report of the petitioner, as on 29.2.2020 the

respondent bank found that petitioner was having DPD

above 60 days in a Corporate Vehicle Loan with some other

bank. Therefore, it is stated that the petitioner is therefore

not eligible under the scheme, in view of the said report

from the CRIF. It is stated that R1(c) letter was issued to

the petitioner informing the same.

4. The petitioner has filed a reply affidavit pointing

out that the alleged vehicle loan was not NPA. It is stated

that the account was already closed with the last EMI of

Rs.11,168/- on 4.11.2019. It is stated that a sum of

Rs.4,820/- which is shown as payable on 4.11.2019 is bank

charges and petitioner was not aware of the same as it was

making payment of monthly EMIs regularly to the Tata

Motors Finance Ltd. Producing Ext P6 accounts statement of

Tata Motors it is stated that the said sum of Rs.4820 was

was not due towards any loan account and it cannot be said

that, the said loan was DPD as on 29.02.2020 as alleged by

the respondent-bank. The petitioner points out that, on the

basis of the said report with respect to a meager sum of

Rs.4,820/- it cannot be denied the benefit of the Scheme.

The petitioner has also produced Exts.P8 and P10 accounts

statements from Dhanalakshmi Bank and Tata Motors

finance ltd to show that all those accounts were closed. The

petitioner relies on para 4 of Ext R1 (b) scheme and states

that the bank charges which remained as due unknowingly

cannot be said to be an amount in default and the petitioner

has not become ineligible for the benefit.

5. The petitioner also relied on the explanation

given to the eligible borrower which says that the exception

has been allowed for overdues of the borrower in respect of

their credit cards/savings account/current account provided

the said overdues did not exceed 1% of the loan account

(i.e. GECL amount) extended under the scheme and that

the overdue amount were regularized prior to assistance

being extended under the scheme. Petitioner also relies on

the answers on the FAQ given by the Reserve Bank and

states that in cases where the Credit Bureau commits

mistake in reporting data it is the duty of the MLI to satisfy

itself as to the eligibility of the borrower as per the scheme

guidelines.

6. At the same time the learned counsel appearing

for the bank also relies on R1(b) scheme itself and pointing

out clause 7 which deals with eligible borrowers, it is stated

that MLIs are expected to check with the credit bureau the

overall outstanding of the borrower to assess the eligibility

of the borrower. It also provides the borrower accounts

should be less than or equal to 60 days past due as on

29.02.2019 in order to be eligible under the scheme. It

further provides that all borrower accounts which had NPA or

SMA-2 status as on 29.2.2020 shall not be eligible under

ECLGS-1.0 and all borrower accounts which had NPA or

SMA-2 or SMA-1 status as on 29.2.2020 shall not be eligible

under ECLGS-2.0.

7. On consideration of the contentions raised by

Smt. K. Latha, the learned Counsel for the petitioner and

Sri. K.K.John, the learned Counsel appearing for the 1 st

respondent Bank, it is seen that the only objection raised as

against the eligibility of the petitioner is on the basis of the

credit report where a sum of Rs.4,820/- is shown as due in

its vehicle loan account as on 29.2.2020. At the same time

the petitioner has produced all the documents to show that

the said account in which the vehicle loan was availed was

already closed and even Rs. 4,820/-, which could be the

bank charges was also subsequently paid. The 'amount in

default" is defined as follows in in para 4 of the Ext R1(b)

scheme, as follows:

"Amount in Default : means the principal and interest amount outstanding in the account of the borrower in respect of term loan/working capital term loan facility/crystalised non-fund facility (including interest) as the case may be, as on the date of the account becoming NPA, or on the date of lodgment of claim application, whichever is lower, or on such other date as may be specified by Trustee Company for perferring any claim against the guarantee cover subject to a maximum of amount guaranteed."

Going by the aforesaid definition, it cannot be said that

the petitioner's account was in default or that any amount

was default in the account of petitioner, on the basis of the

entry, in the credit report. At any rate as per the answers

given in the FAQ it is the duty of the 1st respondent to

consider the case of petitioner on the basis of the documents

she has produced from which it can be seen that the alleged

sum of Rs.4280/- cannot be a defaulted amount and it was

only bank charges which would not make the petitioner an

ineligible borrower or out of the definition of eligible

borrower.

8. Even though, the Credit Bureau has been impleaded

as 3rd respondent in this writ petition and notice is seen to

have been served on them they have not entered

appearance. The petitioner has got every right to get the

data relating to her account reported correctly. In the

circumstance, I am of the view that the report of the 3 rd

respondent in respect of the vehicle loan account of the

petitioner could not have been made correctly. As the 3 rd

respondent has not appeared before this court, the

petitioner shall approach the 3rd respondent with the

requisite details from the Tata Motors to get the credit report

corrected. There shall be a direction to the 3 rd respondent to

take appropriate emergent steps to correct the entries in

respect of the petitioner's credit report on receipt of such

application from the petitioner, which shall be done within a

period of three weeks of receipt of such application from

petitioner.

In the meanwhile there shall also be a direction to

the 1st respondent-bank to reconsider the application of the

petitioner for the benefit of the ECLGS, taking note of the

definition of amount in default as well as 1% exception

admissible to treat her as an eligible borrower and to pass

appropriate orders within a period of three weeks.

Sd/-

P.V.ASHA

JUDGE ska

APPENDIX PETITIONER'S/S EXHIBITS:

EXHIBIT P1 THE TRUE COPY OF UDYAM MSME REGISTRATION CERTIFICATE OF THE PETITIONER.

EXHIBIT P2 THE TRUE COPY OF THE RELEVANT PORTION OF GECL UPDATED AS ON OCTOBER 31ST, 2020.

EXHIBIT P2 A THE TRUE COPY OF THE EXTENDED CREDIT LINE GUARANTEE SCHEMES MODIFICATION IN OPERATIONAL GUIDELINES LETTER NO.2718 DATED 4TH AUGUST 2020.

EXHIBIT P3 THE TRUE COPY OF THE SANCTION/RENEWAL OF CREDIT FACILITIES LETTER ISSUED BY THE FIRST RESPONDENT BANK TO THE PETITIONER.

EXHIBIT P4 THE TRUE COPY OF THE RELEVANT BANK STATEMENT OF THE PETITIONER.

EXHIBIT P5 THE TRUE COPY OF THE LETTER DATED 25.11.2020 SUBMITTED BY THE PETITIONER BEFORE THE RESPONDENT BANK.

EXHIBIT P6 THE TRUE COPY OF THE BANK STATEMENT ISSUED BY TATA MOTORS FINANCE LIMITED [FORMERLY KNOWN AS SHEBA PROPERTIES LTD) DATED 18.12.2020.

EXHIBIT P7 THE TRUE COPY OF THE LETTER DATED 4.12.2020, FILED BY THE PETITIONER BEFORE THE FIRST RESPONDENT BANK

EXHIBIT P8 THE TRUE COPY OF THE LETTER DATED 3.11.2020 ISSUED BY THE DHANALAKSHMI BANK TO THE PETITIONER

EXHIBIT P9 TRUE COPY OF THE NOTICE OF CONTRACT TERMINATION OF HIRE PURCHASED VEHICLE ISSUED BY TATA MOTORS FINANCE LIMITED

EXHIBIT P10 THE TRUE COPY OF THE LOAN SETTLEMENT LETTER DATED 18TH JUNE 2016 ISSUED BY THE PETITIONER TO TATA CAPITAL

EXHIBIT P11 THE TRUE COPY OF THE PETITIONER COMPANY'S CREDIT REPORT