At, High Court of Kerala
By, THE HONOURABLE MR. JUSTICE N. NAGARESH
For the Petitioner: C. Ajith Kumar, Advocate. For the Respondents: R1, Millu Dandapani, SC., R2-R3, Sunil Shanker, K. Arundhathi, R4, Denu Joseph, Bibin Babu, Advocates, P. Vijayakumar, ASGI.
1. The petitioner is before this Court seeking to reconsider the request made by the petitioner in Ext.P4 application and to direct respondents 2 and 3 to provide request letter to the 4th respondent for issuing 'No Objection Certificate' for lending of Emergency Credit Line Guarantee Scheme (ECLGS) for the proportionate 20% of credit facilities availed by the petitioner from the 4th respondent, as per Ext.P1 scheme. The petitioner has sought for a further direction to 2nd and 3rd respondents to extend Ext.P1 Emergency Credit Line Guarantee Scheme to the petitioner, by providing a pre-approved loan upto 20% of the loan outstanding as on 29.02.2020, with respect to the financial facilities enjoyed by the petitioner with the 4th respondent.2. The pleadings in the writ petition would show that the petitioner has applied for the benefit under Ext.P1 Emergency Credit Line Guarantee Scheme (ECLGS) from the 2nd respondent. The petitioner is a customer of the 2nd respondent-Bank. It is an admitted position that the 2nd respondent has already granted credit facility of 20% of the outstanding loan amount, to the petitioner in the light of Ext.P1 Scheme.3. The case of the petitioner is that the petitioner has credit facilities with the 4th respondent Financial Institution also and in the light of Ext.P1 Scheme, in case a borrower wishes to take from any particular lender an amount of more than the proportional 20% of the outstanding credit that the borrower has with that particular lender, a 'No Objection Certificate' would be required from such lender whose share of ECLGS loan is being proposed to be taken from the particular lender. What the petitioner seeks from the 2nd respondent is additional 20% loan amount under the ECLGS, in respect of the credit facility maintained by the petitioner with the 4th respondent Financial Institution.4. When the 2nd respondent did not positively respond to the said request, the petitioner filed WP(C) No. 27356/2020. This Court after hearing the parties, ordered that the petitioner would be free to approach the 4th respondent and directed the 4th respondent to consider the application for NOC which would be submitted by the petitioner. The 2nd respondent was directed to reconsider the request made by the petitioner in Ext.P7 application, taking note of Clause 15 of Ext.P2 Scheme. The 2nd respondent herein considered the request of the petitioner in compliance of the said Ext.P6 judgment of this Court.5. The 2nd respondent declined additional 20% financial aid. The 2nd respondent held that though Clause 13 of Ext.P1 Scheme provides 100% guarantee given by the 5th respondent-National Credit Guarantee Trustee Company Ltd. as per Clause 15 of the Scheme, in the event of invocation of guarantee by the Bank, only 75% will be paid upfront and the remaining 25% will be paid only on conclusion of recovery proceedings or decree getting time barred, which would naturally take years. Therefore, the Bank will have to make provision for the 25% till conclusion of the proceedings and it will be a hit to the balance sheet of the Bank. On this consideration, the 2nd respondent declined the request of the petitioner.6. The learned counsel for the petitioner submits that the 2nd respondent need not worry about any loss being caused due to an additional facility sought for because the repayment of the same is guaranteed by the 5th respondent- National Credit Guarantee Trustee Company Ltd. Therefore the 2nd respondent is not going to incur any financial liability whatsoever.7. The learned counsel for the petitioner argues that Ext.P1 Scheme has been framed by the authorities in order to extend genuine help to business concerns in the COVID 19 pandemic situation. The petitioner was bank's customer for the last so many years. Till 29.02.2020, the petitioner has not committed any default whatsoever in respect of repayment either to the 2nd respondent Bank or to the 4th respondent Financial Institution. As the credit dealings of the petitioner is beyond doubt, there is no reason whatsoever for the 2nd respondent to decline the request.8. The learned counsel for the petitioner submitted that the credit facility being a part of a Scheme provided by the National Credit Guarantee Trustee Company Ltd., the 2nd respondent has no discretion in these matters, in respect of the specific provisions contained in Ext.P1 Scheme. Ext.P7 communication of the 2nd respondent does not disclose exercise of that discretion in proper manner. As the petitioner is eligible and entitled to additional 20% credit facility from the 2nd respondent, the 2nd respondent is liable to pay the same to the petitioner.9. The learned Standing Counsel for the 1st respondent-RBI would submit that the 1st respondent is not at all a necessary party to the writ petition and has been dragged into the litigation without any reason.10. Heard the learned counsel for the petitioner, the learned Standing Counsel for the 1st respondent and the learned Standing Counsel appearing for respondents 2 and 3. I have also heard the learned ASGI appearing for the 5th respondent-National Credit Guarantee Trustee Company Ltd.11. The case of the petitioner is that the 2nd respondent is bound to provide additional credit facility to the extent of 20% in respect of the loan outstanding of the petitioner with the 4th respondent Financial Institution under Clause 15 of Ext.P11 Scheme. It is to be noted that the 2nd respondent has already extended credit facility to the tune of 20% in respect of the accounts maintained by the petitioner with them. The contention of the petitioner in the instant writ petition is that the 2nd respondent is responsible for providing additional credit facility in respect of the loan accounts maintained by the petitioner with the 4th respondent Financial Institution.12. This Court considered the said claim of the petitioner in WP(C) No. 27356/2020 filed by the petitioner. This Court in paragraph 11 of Ext.P6 judgment held that the 2nd respondent cannot be compelled to extend the benefit sought for by the petitioner. In paragraph 10 also, this Court held that for extension of said facility in respect of the 4th respondent, it would be necessary for the specific lender (the 2nd respondent) to agree to provide ECLGS facility on behalf of other lenders. In this case, the 2nd respondent has to agree for the same. The 2nd respondent obviously, has not agreed.13. The contention of the learned counsel for the petitioner is that when this Court directed the 2nd respondent to reconsider the issue, the 2nd respondent should have exercised its discretion in a just and proper manner and agreed for the same. The learned counsel for the petitioner further pointed out that this Court had directed that a decision shall be taken under Clause 15 of Ext.R2(a) Scheme.14. The petitioner seeks the benefit as provided under Clause 8 of Ext.P1 scheme. The relevant provisions in Ext.P1 are as follows:* “In case a borrower has existing limits with multiple lenders, GECL may be availed either through one lender or multiple lenders depending upon the agreement between the borrower and the MLI.* In case the borrower wishes to take from any lender an amount more the proportional 20% of the outstanding credit that the borrower has with that particular lender, a No Objection Certificate (NOC) would be required from such lenders whose share of ECLGS loan is being proposed to be taken from the specific lender. However, it would be necessary for the specific lender to agree to provide ECLGS facility on behalf of such of the lenders”.(underline supplied)The provision would make it clear that it would be necessary for the specific lender to agree to provide ECLGS facility on behalf of other lenders.15. The duty and discretion cast upon the 2nd respondent-Bank under Ext.P1 Scheme, is one to be exercised applying prudent business principles and commercial practices. The sai
Please Login To View The Full Judgment!
d duty and discretion cannot be equated with one exercised by State and its instrumentalities under Administrative law. The issue is purely within the realm of contract. In the case of the petitioner, the 2nd respondent considered the application and decided not to extend the additional facilities to the petitioner.16. The 2nd respondent has considered the risk the Bank will be put to if such additional facility is extended to the petitioner. This is a decision which the 2nd respondent is entitled to take on prudent business principles. This Court in exercise of the power under Article 226 of the Constitution cannot direct the unwilling 2nd respondent to extend such additional credit facilities to the petitioner in respect of the accounts maintained by him with the 4th respondent.In the circumstances, the writ petition is found devoid of merits and it is hence dismissed.