Full Judgment
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR & THE HONOURABLE MR. JUSTICE SHAJI P.CHALY THURSDAY, THE 11TH DAY OF FEBRUARY 2021 / 22ND MAGHA,1942 WA.No.312 OF 2021 AGAINST THE JUDGMENT IN WP(C) 22084/2020(I) OF HIGH COURT OF KERALA APPELLANT/PETITIONER: ANVARDEEN K. AGED 44 YEARS S/O.KAMARUDEEN, PROPRIETOR, GREEN VALLEY BIO TECH, TISSUE CULTURE LAB AND NURSERY, PYARI MANZIL, ERATTUPOTTA, POTHAMPADAM, MUTHALAMADA POST, CHITTUR TALUK, PALAKKAD DISTRICT - 678 507. BY ADVS. SRI.SAJAN VARGHEESE K. SRI.LIJU. M.P SRI.JOPHY POTHEN KANDANKARY RESPONDENTS/RESPONDENTS & NON-PARTY:
1 UNION OF INDIA MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES, UDYOG BHAVAN, NEW DELHI - 110 001, REPRESENTED BY THE SECRETARY. 2 THE SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA, IV FLOOR, ATMARAM HOUSE, TOLSTOY MARG, NEW DELHI - 110 001. 3 THE INDIAN OVERSEAS BANK REGIONAL OFFICE, VETTUKATTIL BUILDINGS, V FLOOR, JOSE JUNCTION, MG ROAD, ERNAKULAM - 682 016 REPRESENTED BY THE MANAGER. 4 INDIAN OVERSEAS BANK GB ROAD, PALAKKAD - 678 001, REPRESENTED BY THE SENIOR MANAGER. 5 CREDIT GUARANTEE FUND TRUST FOR MICRO AND SMALL ENTERPRISES (CGTMSE)
WA.No.312 OF 2021 2 7TH FLOOR, SIDBI, SWAVALAMBAN BHAVAN, C-11, G-BLOCK, BKC (BANDRA KURLA COMPLEX), BANDRA EAST, MUMBAI - 400 051, REP. BY THE CHIEF EXECUTIVE OFFICER. SRI.P.VIJAYAKUMAR ASG FOR R1, SRI. SUNIL SHANKER, STANDING COUNSEL FOR R3 AND R4 THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 11.02.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WA.No.312 OF 2021 3
JUDGMENT
Dated this the 11th day of February 2021
SHAJI P.CHALY,J.
This writ appeal is filed by the petitioner in the writ petition, challenging the judgment of the learned Single Judge in W.P.(C) No.22084/2020 dated 24.11.2020, whereby the learned Single Judge dismissed the writ petition holding that appellant cannot have any right to insist for any direction to the bank to allow his request or to the benefit of the scheme to him when the competent authorities have found that he is not eligible for the scheme. It is thus challenging the legality and correctness of the judgment, this appeal is preferred.
2. Brief material facts for the disposal of the writ appeal are as follows;
appellant is the proprietor of a Micro, Small & Medium Enterprise by name Green Valley Bio Tech, which is situated in Muthalamada Village, Palakkad District. It is a tissue culture lab and nursery, which was started in the year 2014 and it is engaged in developing tissue culture. According to the appellant, the unit has got good turnover, however, it requires utmost care and caution on a day to day basis at every stage of the tissue culture operations, failing which, the plant would be infected by bacteria and fungus and the entire
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process and the premises is conducted in an air conditioned and hygienic atmosphere. Anyhow due to the lock down imposed by the Government of India on 23rd March, 2020 on account of COVID - 19 pandemic, it could be re- opened during the first week of June, 2020. According to the appellant, by that time the entire tissue culture was lost. The issue relates to the four loans availed by the appellant from the Indian Overseas Bank, Ernakulam, 3 rd respondent, in connection with the said business activity. The case of the appellant is that the calamity of 2018 and 2019 and the COVID-19 has put the appellant in various difficulties and disadvantaged position and therefore, the repayment was defaulted. Therefore, according to the appellant, appellant was entitled to the scheme launched by the Government of India viz., “Distressed Assets Fund-Subordinate Debt for Stressed MSMEs” and the credit product for which guarantee would be provided under the scheme was named as “Credit Guarantee Scheme for Subordinate Debt” (CGSSD), evident from Exhibit P7. It is the submission of the appellant that the ultimate aim of the said scheme is to tender financial assistance to stressed MSMEs and therefore, the appellant is entitled to get the benefit of the scheme and with that the bank was approached, evident from Exhibit P6 letter dated 9.7.2020 for further financial assistance.
3. On the basis of financial assistance sought for by the appellant Exhibit WA.No.312 OF 2021 5
P7 communication dated 28.7.2020 was issued by the bank directing the appellant to produce certain documents for its perusal and according to the appellant, all documents were made available to the bank. Though the appellant issued a reminder, no action was initiated and ultimately as per Exhibit P10 communication, the request made by the appellant was rejected holding that the appellant shall concentrate in improving the business and also make timely repayment of the loans already existing. Anyhow thereafter the appellant has submitted Exhibit.P11 representation but no action was initiated, which persuaded the appellant to approach this Court by filing the writ petition.
4. The paramount contention advanced in the appeal is that the respondent bank has failed to interpret the provisions of the scheme in the manner required so as to extend the benefit of the scheme to the needy in the
stressed circumstances. However, the bank was of the opinion that the appellant's unit was not a stressed one and accordingly the benefit was denied. Anyhow the learned Single Judge has gone through the scheme extensively and found that the appellant is not entitled to get the benefit of the scheme and therefore, the bank was not at fault in rejecting the claim raised by the appellant on the basis of the scheme launched to meet with the adverse circumstances.
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5. We have heard learned counsel for appellant Sri.Sajan Varghese,
learned counsel for the respondent bank Sri.Sunil Shankar, counsel representing Assistant Solicitor General of India Sri.P.Vijayakumar and perused the pleadings and materials on record.
6. The sole question emerges for consideration is whether any manner
of interference is warranted to the judgment of the learned Single Judge ? We have gone through Exhibit P5 scheme launched by the Government of India to extend the Credit Guarantee for Subordinate Debt (CGSSD) for the Micro, Small & Medium Enterprises. On a reading of Exhibit P5 it is clear that the purpose of the scheme was to provide guarantee in respect of credit facilities extended by eligible and registered scheduled commercial banks to borrowers in Micro, Small & Medium Enterprises. The purpose of the scheme was to provide guarantee coverage for the CGSSD and to provide Sub-Debt support in respect of restructuring of MSMEs. Clause 5(v) of the scheme deals with eligible borrower to mean that, the promoters of MSME units which are stressed viz., SMA-2 and NPA accounts as on 30.4.2020 and can become commercially viable as per the assessment of the lending institutions. Further the scheme is applicable for those MSMEs whose accounts have been standard as on 31.3.2018 and have been in regular operations either as a standard accounts ir as NPA accounts during the financial year 2018-2019 and financial
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year 2019-2020. However, it was made clear that fraud accounts and wilful defaulters will not be considered under the proposed scheme and in case where recovery proceedings are underway and banks assess that with the facilities provided under the scheme the account would be viable, the banks shall withdraw the recovery proceedings before going ahead with restructuring
etc. In fact the request made by the appellant was declined as per Exhibit P10 communication dated 17.9.2020, which reads thus:
“ Indian Overseas Ban G.B.Road, Palakkad 678 001 To Shri Anvardeen K Proprietor:M/s.Green Valley Biotech Muthamamada, Palakkad 678 507 Sir, Please refer to your request for sanctioning of credit facility under Subordinate Debt Scheme. In this regard, we wish to advice that there is no apparent stress on your account based on the audited financials as on 31.03.2019 and 31.03.2020 with the firm making consistent profits, adequate cash flows and solvency and liquidity ratios at acceptable levels.
Being so, we advice you to please concentrate on improving your business and turnover in cash credit account and also make timely and prompt repayament of loans. In this connection, we request your attention to our reminders for clearing the overdue portion which we observe as follows, WA.No.312 OF 2021 8 Credit facility/sanctioned limit Balance outstanding Overdue/Irregularity CC-PUB 006802000001786 1500000 No operation in the account Term Loan 551400001 463962 Overdue 63801/- Term Loan 006803603000002 1544210 Overdue 164234/- Subhagruha HL 1815019 Overdue 130238/- 006803351300007 Yours faithfully, Sd/- Senior Manager 17.09.2020 ”
7. In sum and substance the bank relied upon clause 8.1 of the scheme
and found that the unit of the appellant is not a stressed one and therefore, not eligible to get the benefit of the scheme. Anyhow the learned Single Judge has appreciated the circumstances taking into account the fact situations put forth by the appellant and elaborately appreciating the scheme, evident from Exhibit P5 and found that appellant is not an eligible person in accordance with the scheme consequent to the reasons assigned thereunder. It was accordingly found that the bank was not liable to extend assistance to the appellant on the basis of Exhibit P5 scheme and it was accordingly that the writ petition was dismissed.
8. We have evaluated the rival submissions made across the Bar and gone through Exhibit P5 scheme extensively and found that the appellant is not entitled to get the benefit of the scheme since the unit of the appellant WA.No.312 OF 2021 9
was not a stressed one. In fact the appellant has not produced any documents either before the writ court or this Court to establish otherwise than what is stated in Exhibit P10 letter issued by the bank. It is also clear that the bank had filed a statement before the learned Single Judge explaining the circumstances under which the bank happened to issue Exhibit P10 letter.
9. Taking into account all the above aspects, we are of the considered
opinion that the appellant has not made out any case justifying interference in an intra court appeal filed under section 5 of the Kerala High Court Act there being no jurisdictional error or other legal infirmities. Resultantly writ appeal fails, accordingly it is dismissed. Sd/- S.MANIKUMAR CHIEF JUSTICE Sd/- SHAJI P.CHALY smv JUDGE