2020 (7) TMI 512 - HC - Indian Laws

Repayment of loan - Lease Rental Discounting Facility - mortgage of property - Non-performing asset - HELD THAT - In view of the specific stand taken by the first respondent that each individual bank have their own guidelines with respect to the moratorium period and that the said term it is governed by a contract, it would highly be inappropriate on the part of this Court to examine the terms of the contract, its effect and such other details, which have to be established only after evidence is let in. The petitioners will have to examine the agreement under which they had availed the loans and had taken recourse under the said agreement - In a Writ Petition filed under Article 226 of the Constitution of India, this Court cannot examine these disputed facts. It is an admitted fact that the loan share become Non Performing Assets as on date. There has been default in the repayment of the loan. Naturally, the second respondent has a right to initiate necessary proceedings. The proceedings are pending. It is for the Debt Recovery Tribunal to decide the issues. It is for the petitioners to raise those issues before the Debt Recovery Tribunal - In view of the categorical stand taken by the first respondent that they cannot examine the complaints in view of the fact that the relief revolves around the interpretation of the agreement between the petitioners and the second respondent, I am afraid, I am not able to issue any Mandamus to the first respondent to compel them to examine the representation and pass orders. Petition dismissed.

Issues Involved:
1. Legality of declaring loans as Non-Performing Assets (NPA).
2. Computation of the moratorium period.
3. Jurisdiction of the court under Article 226 of the Constitution of India.
4. Role and responsibilities of the Reserve Bank of India (RBI) in grievance redressal and regulatory oversight.

Issue-wise Detailed Analysis:

1. Legality of Declaring Loans as Non-Performing Assets (NPA):
The petitioners argued that the loans were wrongfully declared as NPAs before the end of the moratorium period. In W.P.No. 17128 of 2019, the petitioner contended that the term loan of ?27 crores was declared as an NPA on 03.05.2018, despite the first installment being due only in May 2018. Similar contentions were raised in W.P.No. 17134 of 2019 and W.P.No. 17136 of 2019, where the loans were declared as NPAs on 04.05.2018. The petitioners claimed that the accounts were manipulated and that the declarations were illegal.

2. Computation of the Moratorium Period:
The core issue revolved around whether the moratorium period should be computed from the date of sanction of the loan or from the date of disbursement of the last installment. The petitioners argued that the moratorium period should start from the latter, thus making the declaration of NPAs premature. The first respondent (RBI) clarified that there were no specific guidelines on this matter and that it was up to individual banks to set their policies. The Master Circular dated 01.07.2015 allowed banks to decide the moratorium period, and it was a contractual matter between the banks and borrowers.

3. Jurisdiction of the Court under Article 226 of the Constitution of India:
The court emphasized that it could not delve into disputed facts and contractual terms under a writ petition filed under Article 226. The issues raised by the petitioners, including the interpretation of the moratorium period and the declaration of NPAs, were matters to be resolved through evidence and contractual examination, which were beyond the scope of writ jurisdiction. The court noted that the appropriate forum for such disputes was the Debt Recovery Tribunal (DRT), where the proceedings were already pending.

4. Role and Responsibilities of the Reserve Bank of India (RBI) in Grievance Redressal and Regulatory Oversight:
The RBI's role in the matter was limited to regulatory oversight and not direct intervention in individual loan recovery processes. The RBI had addressed the complaints by taking up the matter with the second respondent and ensuring the return of title deeds. The RBI clarified that it does not intervene in the internal policies or commercial decisions of banks, including the classification of NPAs. The court cited previous judgments to reiterate that the RBI's directives are binding, but individual credit decisions are within the purview of the banks themselves.

Conclusion:
The court dismissed the writ petitions, stating that the issues raised were contractual and required detailed examination of evidence, which was not possible under writ jurisdiction. The petitioners were advised to pursue their remedies before the Debt Recovery Tribunal. The court also noted that the RBI had taken appropriate steps within its regulatory framework and that no mandamus could be issued to compel further action from the RBI. Consequently, the writ petitions and connected miscellaneous petitions were dismissed with no order as to costs.

← Previous Next →