Kerala High Court
Mylath Sandeep vs Reserve Bank Of India on 30 March, 2021
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE N.NAGARESH
TUESDAY, THE 30TH DAY OF MARCH 2021 / 9TH CHAITHRA, 1943
WP(C).No.24783 OF 2020(W)
PETITIONERS:
1 MYLATH SANDEEP,
AGED 49 YEARS,
S/O.NARAYANAN KUTTY,
PROPRIETOR, M/S.NANDANAM SANITARIES,
NEAR SOBHA CITY,
KUNNAMKULAM RD,
PUZHAKKAL P.O.,
TRISSUR -680003
2 DEPPA P.,
AGED 42 YEARS,
W/O.MYLATH SANDEEP,
RESIDING AT MYLATH HOUSE,
KANNAPURAM,
CHETTUPUZHA P.O.,
TRISSUR -680012
BY ADVS.
SRI.R.S.KALKURA
SRI.HARISH GOPINATH
SMT.ANJALI B CHANDRAN
RESPONDENTS:
1 RESERVE BANK OF INDIA,
REGIONAL OFFICE,
TRIVANDRUM,
BAKERY JUNCTION,
P.B.NO.6507,
THIRUVANANTHAPURAM -695 033,
REP. BY ITS REGIONAL DIRECTOR
W.P.(C) No.24783/2020 & 1615/2021
:2:
2 NATIONAL CREDIT GUARANTEE TRUSTEE COMPANY LTD
MINISTRY OF FINANCE,
GOVERNMENT OF INDIA,
HAVING ITS REGISTERED OFFICE
SWALAMBAN BHAVAN,
C11, G BLOCK,
BANDRA KURLA COMPLEX,
BANDRA E, MUMBAI-400051,
REP.BY ITS MANAGING DIRECTOR.
3 HERO FIN CROP LTD.,
CORPORATE OFFICE,
09 BASANT LOK BASANT VIHAR,
NEW DELHI-110057,
REP.BY ITS MANAGING DIRECTOR
4 HERO FIN CROP LTD.,
ERNAKULAM BRANCH,
4TH FLOOR, THE OFFICE,
JOS JUNCTION OPPOSITE BHIMA JEWELLERS,
M.G. ROAD, KOCHI-682016,
REP. BY ITS AREA SALES MANAGER-LAP
5 UNION OF INDIA,
REP.BY SECRETARY TO GOVERNMENT,
DEPARTMENT OF FINANCIAL SERVICES,
3RD FLOOR, JEEVANDEEP BUILDING,
SANSADMARG, NEW DELHI-110001
R2, R5 BY ADV. B.PRAMOD, CGC
R3-4 BY ADV. SRI.P.PAULOCHAN ANTONY
R2-5 BY SRI. P. VIJAYAKUMAR ASGI
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY
HEARD ON 30-03-2021, ALONG WITH WP(C).1615/2021(B), THE
COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
W.P.(C) No.24783/2020 & 1615/2021
:3:
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE N.NAGARESH
TUESDAY, THE 30TH DAY OF MARCH 2021 / 9TH CHAITHRA, 1943
WP(C).No.1615 OF 2021(B)
PETITIONERS:
1 MYLATH SANDEEP,
AGED 49 YEARS,
S/O. NARAYANAN KUTTY,
PROPRIETOR, M/S. NANDANAM SANITARIES,
NEAR SOBHA CITY, KUNNAMKULAM ROAD,
PUZHAKKAL P.O, TRISSUR-680 003
2 DEEPA P,
AGED 42 YEARS,
W/O. MYLATH SANDEEP,
RESIDING AT MYLATH HOUSE,
KANNAPURAM, CHETTUPUZHA P.O,
THRISSUR-680 012
BY ADV. SRI.R.S.KALKURA
RESPONDENTS:
1 RESERVE BANK OF INDIA,
REGIONAL OFFICE, TRIVANDRUM,
BAKERY JUNCTION, P.B. NO. 6507,
THIRUVANANTHAPURAM-695 033,
REPRESENTED BY ITS REGIONAL DIRECTOR.
2 NATIONAL CREDIT GUARANTEE
TRUSTEE COMPANY LTD,
MINISTRY OF FINANCE,
GOVERNMENT OF INDIA,
HAVING ITS REGISTERED OFFICE SWALAMBAN
BHAVAN, C11, G BLOCK,
BANDRA KURLA COMPLEX,
BANDRA E, MUMBAI-400 051,
REPRESENTED BY ITS MANAGING DIRECTOR.
W.P.(C) No.24783/2020 & 1615/2021
:4:
3 HERO FIN CROP LTD.,
CORPORATE OFFICE,
09 BASANT LOK BASANT VIHAR,
NEW DELHI-110 057,
REPRESENTED BY ITS MANAGING DIRECTOR.
4 HERO FIN CROP LTD,
ERNAKULAM BRANCH, 4TH FLOOR,
THE OFFICE, JOS JUNCTION,
OPPOSITE BHIMA JEWELLERS,
M.G. ROAD, KOCHI-682 016,
REPRESENTED BY ITS AREA SALES MANAGER -LAP
R2 BY SMT.MINI GOPINATH, CGC
R2 BY SRI.P. VIJAYAKUMAR, ASGI
R3-4 BY ADV. SRI.P.PAULOCHAN ANTONY
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY
HEARD ON 30-03-2021, ALONG WITH WP(C).24783/2020(W), THE
COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
W.P.(C) No.24783/2020 & 1615/2021
:5:
N. NAGARESH, J.
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W.P.(C) Nos.24783 of 2020 & 1615 of 2021
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Dated this the 30th day of March, 2021
JUDGMENT
~~~~~~~~~
The 1st petitioner in both these writ petitions is
carrying on business in sanitary tiles and allied goods. The
2nd petitioner is wife of the 1st petitioner. The business
conducted by the 1st petitioner under the name and style
M/s.Nandhanam Sanitaries is a Micro, Small and Medium
Enterprise. The petitioners have availed a mortgage loan of
₹4,50,00,000/- from respondents 3 and 4 in the year 2016.
2. In the light of the Covid-19 pandemic and its
devastating impact on business and economy, the
Government of India floated Ext.P3 Emergency Credit Line
Guarantee Scheme in the year 2020. The petitioners state
that they are eligible for a pre-approved sanction limit of up to
W.P.(C) No.24783/2020 & 1615/2021
20% of loan outstanding as on 29.02.2020, under the
Scheme. The petitioners applied for the benefit of Ext.P3
ECLG Scheme. However, respondents 3 and 4 did not
extend eligible financial assistance to the petitioners. Hence,
the petitioners have filed this writ petition seeking to declare
that they are entitled to the benefit conferred under the ECLG
Scheme and respondents 3 and 4 are bound to provide
financial assistance to the extend covered by the Scheme.
3. Respondents 3 and 4 issued Ext.P10
communication to the 1st petitioner stating that the additional
loans proposed to be provided by them are governed by the
operational guidelines on the ECLGS issued by the National
Credit Guarantee Trust Company Limited and the terms and
conditions may be modified, varied or supplemented by
respondents 3 and 4 from time to time in view of any
changes to the Scheme by NCGTC and respondents 3 and 4
shall not be held liable for the same. The said
communication is under challenge in W.P.(C) No.1615/2021.
4. The learned counsel for the petitioners argued that
W.P.(C) No.24783/2020 & 1615/2021
by not considering the application of the petitioners for
financial assistance under Ext.P3 Scheme, respondents 3
and 4 failed to discharge their obligation. The petitioners
have the eligibility for grant of benefits under Ext.P3.
Respondents 3 and 4 have no right to deny the benefit to the
petitioners.
5. The learned counsel for the petitioners further
argued that the benefit under Ext.P3 is a mandatory one and
money lending institutions cannot shirk from the
responsibility of granting the benefit under the Scheme,
especially to MSME borrowers like the petitioners.
Respondents 3 and 4 are bound to assess the income
streams of the petitioners and extended benefits.
6. Respondents 3 and 4 filed a statement and
contested the writ petition. Respondents 3 and 4 stated that
they have formulated a criteria for selection of eligible
borrowers covered under the ECLG Scheme, as per
Ext.R3(a). As per their criteria, in locations where operation
of a Company is closed, the borrowers are not eligible for the
W.P.(C) No.24783/2020 & 1615/2021
Scheme. The petitioners have already closed the operation
in Kerala in April, 2019.
7. The learned Standing Counsel for respondents 3
and 4 pointed out that the petitioners were consistent
defaulters since the year 2018 and respondents 3 and 4
have issued Ext.P5 notice to the petitioners recalling the loan
amount. Respondents 3 and 4 are bound to consider the
repaying track record of the borrowers while considering
applications under ECLGS. It is the discretion of
respondents 3 and 4.
8. I have heard the learned counsel for the
petitioners and learned Standing Counsel for respondents 3
and 4.
9. The statement filed by respondents 3 and 4
indicates that during the financial year 2018-'19 onwards, the
loan account of the 1st petitioner showed default in payment
of the monthly instalments as per the terms of the
agreement. Respondents 3 and 4 would state that the
cheques given for the repayment of the monthly instalments
W.P.(C) No.24783/2020 & 1615/2021
were continuously bounced from 2018 onwards and the
repayment track record of the 1st petitioner is worsening.
10. Ext.P5 would show that on 26.03.2020,
respondents 3 and 4 had recalled the loan amount of
₹3,81,41,862.62 from the 1st petitioner due to consistent
default. Thereafter, the 1st petitioner made Ext.P7 request for
benefit under ECLGS. Ext.P7 request made by the 1 st
petitioner, inter alia, states as follows:-
"As a part of the over all poor economic
scenario and the Covid-19 pandemic, the turnover
and cash flow has terribly go down and we are taking
all possible measures to recover from this situation.
In order to ensure mutual benefit, I would like to
request you to grant us the facility of ECLG Scheme
and the fund so obtained can be diverted to the
repayment of the EMI. This will enable us to make
the repayment of the EMI and once the scenario
becomes normal, everything can be regularised
also."
Therefore, it is evident that the 1 st petitioner had applied for
financial assistance under the Scheme not towards working
capital but to divert the funds for remittance of EMIs which
are already in arrears.
W.P.(C) No.24783/2020 & 1615/2021
11. In the afore circumstances, this Court is of the
considered opinion that the respondents were justified in not
entertaining the application of the petitioners for financial
assistance under the ECLG Scheme.
The writ petitions are therefore dismissed.
Sd/-
N. NAGARESH, JUDGE
aks/29.03.2021
W.P.(C) No.24783/2020 & 1615/2021
APPENDIX OF WP(C) 24783/2020
PETITIONERS' EXHIBITS:
EXHIBIT P1 TRUE COPY OF THE LETTER OF SANCTION
DATED 24.5.2016 ISSUED BY THE FOURTH
RESPONDENT TO THE PETITIONERS
EXHIBIT P2 THE TRUE COPY OF THE FINANCIAL
STATEMENT PERTAINING TO M/S.NANDANAM
SANITARIES AS ON 31.3.2017
EXHIBIT P3 THE TRUE COPY OF THE EMERGENCY CREDIT
LINE GUARANTEE SCHEME UPDATED AS ON
31.10.2020
EXHIBIT P4 TRUE COPY OF THE REGISTRATION
CERTIFICATE UNDER THE GST VALID FROM
21.9.2017 ISSUED ON 21.06.2018.
EXHIBIT P5 TRUE COPY OF THE NOTICE DATED 23.6.2020
ISSUED BY THE COUNSEL FOR RESPONDENTS 3
AND 4 TO THE PETITIONERS
EXHIBIT P6 TRUE COPY OF THE REPLY DATED 29.6.2020
ISSUED BY THE PETITIONERS' COUNSEL TO
THE RESPONDENTS 3 AND 4
EXHIBIT P7 TRUE COPY OF THE EMAIL DATED 1.10.2020
ISSUED BY THE PETITIONERS TO THE 3RD
RESPONDENT
EXHIBIT P8 TRUE COPY OF THE EMAIL DATED 7.11.2020
ISSUED BY THE PETITIONERS TO THE 3RD
RESPONDENT
EXHIBIT P9 TRUE COPY OF THE E-MAIL DATED
11/01/2021 ISSUED BY THE THIRD
RESPONDENT TO THE PETITIONER.
EXHIBIT P10 TRUE COPY OF THE E-MAIL DATED
17/03/2021 ISSUED BY THE DIRECTOR, MSME
TO THE PETITIONER AS WELL AS
RESPONDENTS 3 AND 4.
W.P.(C) No.24783/2020 & 1615/2021
RESPONDENTS' EXHIBITS:
EXHIBITS R3(A) TRUE COPY OF THE POLICY BULLETIN DATED
06.08.2020 BY THE RESPONDENT NO.3.
W.P.(C) No.24783/2020 & 1615/2021
APPENDIX OF WP(C) 1615/2021
PETITIONERS' EXHIBITS:
EXHIBIT P1 TRUE COPY OF THE LETTER OF SANCTION
DATED 24.5.2016 ISSUED BY THE FOURTH
RESPONDENT TO THE PETITIONERS.
EXHIBIT P2 THE TRUE COPY OF THE FINANCIAL
STATEMENT PERTAINING TO M/S. NANDANAM
SANITARIES AS ON 31.3.2017
EXHIBIT P3 THE TRUE COPY OF THE EMERGENCY CREDIT
LINE GUARANTEE SCHEME UPDATED AS ON
31.10.2020.
EXHIBIT P4 TRUE COPY OF THE REGISTRATION
CERTIFICATE UNDER THE GST VALID FROM
21.9.2017.
EXHIBIT P5 TRUE COPY OF THE NOTICE DATED 23.6.2020
ISSUED BY THE COUNSEL FOR RESPONDENTS 3
AND 4 TO THE PETITIONERS.
EXHIBIT P6 TRUE COPY OF THE REPLY DATED 29.6.2020
ISSUED BY THE PETITIONERS' COUNSEL TO
THE RESPONDENTS 3 AND 4.
EXHIBIT P7 TRUE COPY OF THE EMAIL DATED 1.10.2020
ISSUED BY THE PETITIONERS TO THE 3RD
RESPONDENT.
EXHIBIT P8 TRUE COPY OF THE EMAIL DATED 7.11.2020
ISSUED BY THE PETITIONERS TO THE 3RD
RESPONDENT.
EXHIBIT P9 TRUE COPY OF THE SCHEME DATED 6.8.2020
FORMULATED BY THE THIRD RESPONDENT
UNDER THE ECLGS SCHEME.
EXHIBIT P10 TRUE COPY OF THE E-MAIL DATED 11.1.2021
ISSUED BY THE THIRD RESPONDENT TO THE
PETITIONER.
W.P.(C) No.24783/2020 & 1615/2021
EXHIBIT P11 TRUE COPY OF THE STATEMENT FILED BY
RESPONDENTS 3 AND 4 IN W.P.C 24783 OF
2020.
EXHIBIT P12 TRUE COPY OF THE E-MAIL DATED 17.3.2021
ISSUED BY THE DIRECTOR, MSME TO THE
PETITIONER AS WELL AS RESPONDENTS 3 AND
SR
