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TMI Blog2023 (3) TMI 1533X X X X Extracts X X X X X X X X Extracts X X X X ..... al shown to this Court by the respondent does not persuade this Court to come to a different view in the present facts. Petition is accordingly allowed by directing the R3 Financial Institution to consider grant of benefit of the ECLGS to the petitioners in terms of the Resolution Framework/s circulated by the RBI and the Guidelines published by the NCGTC on 30.3.2022 with regard to the ECLGS. The eligibility of the petitioners shall be considered in accordance with the relevant ECLGS and the Resolution Framework which would apply to the petitioners case. The writ petition is disposed of. - THE HON BLE JUSTICE MOUSHUMI BHATTACHARYA For the Appellant : Mr. Mainak Bose, Adv., Mr. Rupak Ghosh, Adv. And Mrs. Sweta Gandhi, Adv. For the State : Mr. Prantik Garai, Adv. For the respondent Nos.3 and 4 : Mr. Debnath Ghosh, Adv. And Ms. Sudeshna Mazumdar, Adv. For the Respondent No. 5 : Ms. Sipra Chanda, Adv. Moushumi Bhattacharya, J. 1. The petitioners seek a direction on the respondent no. 3 Finance Company to grant the benefit of an Emergency Credit Line Guarantee Scheme (ECLGS) to the petitioners. The ECLGS was floated by the National Credit Guarantee Trustee Company Ltd. of the Ministr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Company (NBFC) up to 20% of their outstanding credits as on 29th February, 2020. The Scheme provided that eligible institutions, most specifically Member Lending Institutions (MLIs), would have to register themselves for seeking the guarantee cover under the said Scheme. The resolution framework issued by the Reserve Bank of India (RBI) on 6th August, 2020 with regard to the said Scheme specifically states that the resolution framework was necessary in the wake of the economic fallout caused by the Covid-19 pandemic and the resulting financial stress on borrowers across the board. The ECLGS read with the resolution framework/s published by the RBI binding all commercial banks makes it clear that the Scheme was floated in public interest to help small and medium scale business tide over the financial instability caused by the pandemic. 7. The Scheme issued on 23rd May, 2020 read with the Operational Guidelines updated as on 30th March, 2022 further makes it clear that the Scheme would be binding on all Banks and FIs as well as NBFCs. The respondent no. 3 FI is admittedly a Member Lending Institution under the Scheme and is consequently drawn within the obligations and duties inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remained standard / regular till August, 2020. This would appear from a notice issued by R3 under section 13(2) of the SARFAESI Act, 2002 which contains the specific statement that the petitioners loan account were to be classified as NPA on 15.12.2020 but in view of the moratorium period granted by the RBI, the same was not done. Respondent no. 3 classified the petitioners account on NPA as on 31.3.2021. The Ministry of Finance, Government of India introduced the ECLGS on 23.5.2020 for providing 100% guarantee coverage for additional working capital term loan for Banks and Financial Institutions as on 29.2.2020. All scheduled Banks and NBFCs which were in operation for at least 2 years as on 29.2.2020 were eligible as a Member Lending Institution (MLI) under the said Scheme. The Operational Guidelines updated as on 30.3.2022 outlines the components of the ECLGS with the extension from ECLGS 1.0 to ECLGS 4.0 and also provides for the eligibility criteria. 13. Learned counsel appearing for the petitioners submits that the petitioner no. 1 was eligible under the ECLGS 1.0 as well as 2.0 and 3.0 which were specifically extended to borrowers in the Hospitality sector. According to cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instalments falling due between 1.3.2020 31.8.2020 vide circulars dated 27.3.2020 and 23.5.2020 of the RBI. The respondent no. 3 has also referred to an interim order passed by the Supreme Court on 23.3.2021 in Writ Petition (C) No. 476 of 2020; Small Scale Industrial Manufacturers Association v. Union of India whereby the Supreme Court directed that the loan accounts which were not declared NPA till 31.8.2020 shall not be declared as NPA till further orders. The above notice makes it clear that the petitioner s loan account remained standard / regular as on 29.2.2020. The petitioner s loan account was classified as NPA only subsequently on 31.3.2021. 17. The date 29.2.2020 is significant since the Operational Guidelines updated as on 30.3.2022 by the National Credit Guarantee Trustee Company (NCGTC) (Ministry of Finance, Government of India) provides for the eligibility criteria under the Scheme and that every Member Lending Institution (MLI) was to provide 100% guarantee in respect of eligible credit facility extended by them to the borrowers whose accounts were standard as on 29.2.2020. This would appear from Guideline 4 of the updated Guidelines which defines an eligible borrow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner under section 13(2) of the SARFAESI Act. The notice reflects that the petitioners accounts were standard on 29.2.2020 which makes the petitioner eligible under the Scheme. The Scheme makes it clear that the only requirement for eligibility is that the borrowers account would have to be standard / regular as on 29.2.2020. 22. The document placed on behalf of the respondent FI reflects inter alia that any reference to the petitioners credit rating is irrelevant to the Scheme which would also be evident from the FAQs in relation to the Circular by the National Credit Guarantee Trustee Company. FAQ no. 85 specifically states that the Scheme is designed with specified eligibility criteria and 100% guarantee by the Government of India and that the coverage from NCGTC is not restricted by a borrower s credit rating or Bureau Score. Moreover, the opt-in facility referred to by the respondent is of 26.11.2020 which is also much earlier to the Guidelines issued by NCGTC on 30.3.2022 which has been relied on by the petitioners. 23. The above reasons make it clear that the respondent FI had a duty and an obligation to extend the benefit of the ECLGS to the petitioners at the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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