WRIT PETITION LD-VC NO. 28 OF 2020
Transcon Skycity Pvt Ltd & Others
ICICI Bank & Others
WRIT PETITION LD-VC NO.30 OF 2020
Transcon Iconica Pvt Ltd & Others
ICICI Bank & Others
In the above-mentioned cases the Petitioners are Transcon Skycity Pvt Ltd, Transcon Iconica Pvt Ltd and Others where as the respondent in both cases are ICICI Bank and Others.
The above case was heard in the pandemic of covid-19 by single bench judge Hon’ble Justice G.S Patel via video conferencing due to the urgency made out on praecipe.
The case is that petitioner had some finance facilities from ICICI Bank. This were to be repaid in installments. This was fixed through contractual agreement. There was little or no significant default till 2019, all debts were paid everything was clear till December 2019.
The petitioners agree that the amount under repayment schedule due on 15 January 2020 and again on 15 February 2020 were not paid. They accept that those two default did occur and have not been paid until now.
According to RBI circulars and notification is that if payment is not made and the accounts are not regularized within 90 days of the date of default than the borrower’s account get classified as NPA(Non Performing Asset) and other consequences follow.
The 90-day period in respect of 15th January 2020 default would take us to 15 April 2020 for the 15 February 2020 the default would take us to 15th may 2020.
In the meantime this global pandemic of corona virus or Covid-19 occurred and an national lockdown was implemented.
In the meantime RBI has issued various circular and press note saying that there is to be a moratorium in regard to the repayments and classification as NPAs.,
This directive from the RBI will be applied to amount due after the date of lockdown.
The RBI document itself would prima facie indicate that this moratorium operates with effect from 1st March 2020, and goes up to 31st May 2020
The question in front of the court is whether the moratorium period is excluded in the computation of 90 day period for amount that fell due prior to 1st March 2020 and which remain unpaid or in default. To put it even more precisely, if there was a default that triggered the beginning of the countdown of the 90 day NPA declaration period, would this countdown timer stop on 1st March 2020 and resume only after the end of the lockdown/moratorium period ?
The grievance of the petitioners is that ICICI bank has not responded to the petitioners request for extending the moratorium. Hence, this petition was filed.
The various laws which were relied on this case were Article 226, Article 12 of Constitution of India, Employer-Employee relationship, Contractual Relationship section 35B(1)(b).
Case Laws Referred To-
- Chanda Deepak Kochhar v/s. ICICI Bank Ltd 2020 SCC Online Bom 374.
- M/s. Ruchi Soya Industries Ltd. & Ors. v/s. IDFC Bank Ltd. & Ors. [(2017) SCC Online Bom. 4252].
- Andi Mukta Sadguru Shree Muktajee Vandas Swami Survarna Jayanti Mahotsav Smarak Trust and Ors. v/s. V.R Rudani and Ors. [(1989) 2 SCC 691]
- Raj Soni v/s. Air Officer Incharge Admn. & Ors. [(1990) 3 SCC 261]
- Marwari Balika Vidyalaya v/s. Asha Srivastava & Ors. [(2019) SCC OnLine SC 408]
- Firozali Abdul Karim Jivani v/s. Union of India & Ors. [(1992) Mh.L.J.WP 1538/89 dtd. 15/16-10-1992(Bom.)]
- Coram A.K Menon Judge in commercial Suit No. LD-VC-7 of 2020, along with IA No. LD-VC-7(IA) of 2020
- Anant Raj Ltd. v/s. Yes Bank Ltd. In W.P(C) urgent No.5/2020
Arguments by both parties-
The argument made by petitioners are as follows-
- The moratorium period must be excluded even for the computation of any balance days of the NPA declaration 90 day period.
- They relied upon certain decisions of the Supreme Court and High Court in support which are mentioned above.
- They seek to leave to move an amendment.
- They narrated the adverse effect of the global pandemic and the impact this had on the construction industry.
- They gave reference to the Reserve Bank of India statement of development and regulatory policies 27th March 2020.
The argument made by respondent are as follows-
- They argued that a broad based declaration of finding return by a court could have all manner of unintended consequences in respect of other borrowers and that the court should be slow in extending any such relief by an ad interim order that may be construed to apply across the board.
- They also relied heavily on the Decision of Supreme Court and High Court in support which are mentioned above.
- They point out that the framing of some of the prayers is questionable.
- They argued that there should be no ambiguity about the extension of the moratorium period to the petitioners.
The order given by the court are as follows –
The period of the moratorium during which there is a lockdown will not be reckoned by ICICI Bank for the purpose of computation of 90 day NPA declaration period therefore the period of 1st March 2020 until 31st May 2020 during which there is a lockdown will stand excluded from the 90 days NPA declaration computation until the lockdown is lifted, if the lockdown is lifted before 31st May 2020 then the protection available to the petitioners will cease on the date of lifting of the lockdown and 90 day period will start from that earlier lifting of the lockdown ending date.
If the lock down is lifted before 31st May 2020 the petitioners will have 15 days after the ending of the lockdown in which in which to regularize the first installment on 15 January 2020 and further three weeks thereafter to regularize payment under second installment on 15 February 2020.
Is the lockdown extends beyond 31st May 2020 then these days will be differed accordingly, irrespective of whether the moratorium itself is extended on 31st May 2020.
The above-mentioned order does not account any partial or staggered lifting of the lockdown, but only a complete lifting.
The relief to the petitioners is co-terminus with the lockdown period.