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TMI Blog2024 (2) TMI 1504X X X X Extracts X X X X X X X X Extracts X X X X ..... borrowers and the lenders unless it runs contrary to any statutory provision either under the SARFAESI Act or Circulars issued by the Reserve Bank of India which are held to have statutory force - there are no statutory aberration in the case at hand qua Master Circulars issued by the Reserve Bank of India. If there is no statutory aberration, the plea would be reduced to a dispute between the petitioner, a private entity and respondents 4 to 6, a private entity and respondent No.7 another private entity. This Court would not sit as a supervisor to banking activities between the lender and the borrower except in cases where the dispute between the banker and the lender would touch upon violation of any statutory provision. No such violation though projected with all vehemence is found in the case at hand - any of the prayers sought by the petitioner declined to be granted. Conclusion - The transfer of stressed assets does not require NPA classification and that banking decisions are generally not subject to judicial review unless statutory violations are evident. Petition dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent No.7 - Omkara Assets Reconstruction Private Limited for their aforesaid acts being in contravention to the various laws of the land and the Law/ Guidelines/Norms/Policies promulgated by the respondent No.2 - Reserve Bank of India. 2. Heard Sri Ajesh Kumar S, learned counsel appearing for the petitioner, Smt. Anasuya Devi K.S., learned Central Government Counsel appearing for respondent No.1, Sri Prashant N. Hegde, learned counsel appearing for respondent No.3, Sri Pramod Nair, learned senior counsel appearing for respondents 4 to 6, Sri Udaya Holla, learned senior counsel appearing for respondent No.7 and Sri Bhairav Kuttaiah, learned counsel appearing for respondent No.8. 3. Facts, in brief adumbrated are as follows:- The petitioner claims to be in the hospitality business and owns land and building at No. 24/1, Kasturba Road and its Marriott Hotels India Private Limited operates a 5-Star Hotel known as JW Marriott. Respondent No.5 - Piramal Enterprises Limited sanctions a loan of ₹450/- crores to the petitioner in addition to a revolving credit facility of ₹50 crores for the purpose of repayment of its existing dues to Yes Bank and general corporate purposes. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Limited. After reassignment of loan in favour of the 7th respondent, respondents 4 to 6 - Piramal continued to be corresponding with the petitioner in respect of loan account. On 15-02-2023 the 7th respondent issued a notice to recall the main facility loan as well as the loans granted under the ECLGS Scheme and also cautioned that if the petitioner would not repay the entire outstanding sums it would result in legal proceedings. On 20-02-2023, the 7th respondent causes a legal notice seeking to invoke the corporate and personal guarantee in respect of the loans and in terms of the recall notices so issued. It is then, the petitioner has knocked at the doors of this Court in the subject petition seeking stalling of the recall notice and questioning the assignment of loan in favour of the 7th respondent by respondents 4 to 6. 6. The learned counsel Sri S. Ajesh Kumar appearing for the petitioner would vehemently contend that reassignment of loan is contrary to law. Law, he would mean that it is contrary to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest At, 2002 (' the Act' for short) as also the Master Circulars issued by the Reserv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h respondent. He would also seek dismissal of the petition. Counsels on both sides have relied on several judgments which would bear consideration qua their relevance in the course of the order. 9. I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the material on record. 10. The afore-narrated facts are not in dispute; they are all a matter of record. The dispute is undoubtedly between the petitioner, a private entity and respondents 4 to 6 who are even a private Company. A writ, in the normal course would not even be maintainable to consider the grievances of the petitioner as projected before this Court qua the agreements entered into between private entities. What merits consideration is, the projection of the action being contrary to the statute i.e., SARFAESI Act, 2002 and the Master Circulars issued by the Reserve Bank of India which the Apex Court has held them to have a statutory force. Therefore, the limited scrutiny at the hands of this Court would be whether they are in tune with the Act and the Circulars. Barring this, no other submission with regard to various grievances, as submitted by the petitioner, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 01-04-2023. Clause 2 thereof deals with non-performing assets and reads as follows: "2. DEFINITIONS 2.1 Non-performing Assets 2.1.1 An asset, including a leased asset, becomes non- performing when it ceases to generate income for the bank 2.1.2 A non-performing asset (NPA) is a loan or an advance where; i. interest and/ or instalment of principal remains overdue for a period of more than 90 days in respect of a term loan, ii. the account remains 'out of order' as indicated at paragraph 2.2 below, in respect of an Overdraft/Cash Credit (OD/CC). iii. the bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted, iv. the instalment of principal or interest thereon remains overdue for two crop seasons for short duration crops, v. the instalment of principal or interest thereon remains overdue for one crop season for long duration crops, vi. the amount of liquidity facility remains outstanding for more than 90 days, in respect of a securitisation transaction undertaken in terms of the Reserve Bank of India (Securitisation of Standard Assets) Directions, 2021 as amended from time to time. vii. in respect of derivativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar/ ad hoc credit limits have not been reviewed/ renewed within 180 days from the due date/ date of ad hoc sanction will be treated as NPA." Clause 4.2.18 which deals with transfer of loan exposures reads as follows: "4.2.18 Transfer of Loan Exposures The asset classification and provisioning requirements in respect of transactions involving transfer of loans shall be as per the Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021." In the circular issued on 03-04-2023 with regard to Asset Reconstruction Companies, what is a standard asset is defined. It reads as follows: "(xiii) "Standard asset" means an asset, which is not an NPA;" A standard asset is an asset which is not a non-performing asset. Clause 8 of the circular dated 01-04-2023 deals with the frame work for resolution of stressed assets. It reads as follows: "PART B1-Framework for Resolution of Stressed Assets 8. Early identification and reporting of stress 8.1 Lenders shall recognise incipient stress in loan accounts, immediately on default, by classifying such assets as special mention accounts (SMA) as per the following categories. SMA Sub-categories Basis for classification - Principa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese that are required to be noticed in the case at hand. No securitization process is taken up against the petitioner under the Act. Therefore, the actions will have to be judged only in terms of Master Circulars supra. The Master Circulars issued by the Reserve Bank of India from 2019 to 2023 would indicate that for transfer of an asset to an asset reconstruction company an account need not be declared to be a non-performing asset. If the account becomes stressed that would suffice. The account of the petitioner getting stressed is not in dispute as the clauses of the Circulars of the Reserve Bank of India so quoted hereinabove insofar as they deal with the frame work for resolution of stressed assets permits early identification and reporting of stress. The classification is, if interest payment falls overdue between 1 to 30 days it is declared as zero stress, if it goes beyond 30 days up to 60 days it becomes a special mention account category-1 and if it goes beyond 60 days up to 90 days, it becomes a special mention account cagegory-2. 13. It is not in dispute that petitioner's account with Piramal Enterprises Limited was not regular. The service amounts from the scheme GECL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agor(s) in the contract or in the assets. None of the clauses of the impugned deed of assignment transfers any obligations of the assignor towards the assignee." The Apex Court holds that what the assignor Bank has done is transferring its right under a contract and its own asset to another Bank without in any manner affecting the right of the borrower. Therefore, that matter should not have been a subject matter of judicial review before the High Court. 14. Yet another submission is made that the petitioner was not put on notice of such transfer of asset in favour of 7th respondent and that is in violation of principles of natural justice. This is again is unacceptable as the petitioner was notified on 27-12-2022 that the assets would be transferred to the 7th respondent. The petitioner was made aware of such transfer and the silence of the petitioner was in vindication of such transfer from respondents 4 to 6 in favour of respondent No.7. The submission that the petitioner was not even made aware of this is contrary to the record, as the document appended to the statement of objections clearly indicates knowledge of the petitioner of such transfer. Whether reassignment could be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct or Circulars issued by the Reserve Bank of India which are held to have statutory force. I do not find any statutory aberration in the case at hand qua Master Circulars issued by the Reserve Bank of India. If there is no statutory aberration, the plea would be reduced to a dispute between the petitioner, a private entity and respondents 4 to 6, a private entity and respondent No.7 another private entity. Disputes between private parties for enforcement of a private agreement would not get the audience of this Court under Article 226 of the Constitution of India. It is also submitted across the bar that the petitioner has projected these very submissions that are being projected before this Court in the proceedings instituted by the respondents before the NCLT invoking the Code. Therefore, it is for the NCLT to consider the plea of the petitioner. I do not find any warrant to interfere in the case at hand. 16. It would become germane to notice the judgment of a coordinate Bench in the case of M/S NITESH RESIDENCY HOTELS PRIVATE LIMITED v. UNION OF INDIA W.P.No.2004 of 2022 decided on 8-08-2022 in answer to two submissions - one all the respondents not being a State under Article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken by it cannot be interfered. (iv) It is not for the Court or a third party to substitute it's decision howsoever prudent or business like it may be, for the decision of the Bank; in commercial matters, the Courts do not risk their judgments for the judgments of the bodies to which that task is assigned; a Public Sector Bank or a Financial Institution cannot wait indefinitely to recover its dues; the fairness required of the Bank cannot be carried to the extent of disabling it from recovering what is due; in matters of loan transactions, fairness cannot be a one-way street; both the Bank & the borrower have to be equally fair to each other ..." As observed by the co-ordinate Bench, banking business is better left to bankers. This Court would not sit as a supervisor to banking activities between the lender and the borrower except in cases where the dispute between the banker and the lender would touch upon violation of any statutory provision. No such violation though projected with all vehemence is found in the case at hand. Therefore, I decline to grant any of the prayers sought by the petitioner noticed supra. It is for the petitioner to avail all such remedies as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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