Thomas George vs Union of India

IN THE HIGH COURT OF KERALA AT ERNAKULAM

PRESENT THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS THURSDAY, THE 30TH DAY OF SEPTEMBER 2021 / 8TH ASWINA, 1943 WP(C) NO. 11840 OF 2021 PETITIONER: THOMAS GEORGE AGED 59 YEARS, S/O. GEORGE K. JOSEPH, KARUVELIL PUTHENPURAYIL HOUSE, MRA 80 A, TC 10/948-8, MANNAMOOLA, PEROORKADA, THIRUVANANTHAPURAM-695005. BY ADV SERGI JOSEPH THOMAS RESPONDENTS: 1 UNION OF INDIA REPRESENTED BY THE SECRETARY, FINANCE DEPARTMENT, GOVERNMENT OF INDIA, NORTH BLOCK, NEW DELHI-110001. 2 THE GOVERNOR, RESERVE BANK OF INDIA 6 SANSAD MARG, NEW DELHI-110001. 3 THE REGIONAL DIRECTOR FOR KERALA, RESERVE BANK OF INDIA BAKERY JUNCTION, P.B.NO.6507, THIRUVANANTHAPURAM-695033. 4 THE MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER, FEDERAL BANK LTD. W.P.(C) No.11840/21 -:2:- FEDERAL TOWERS, PB NO.103, ALWAYE, PIN-683101. 5 THE ASSISTANT VICE PRESIDENT & BRANCH HEAD (AUTHORISED OFFICER), FEDERAL BANK LTD. NANTHENCODE BRANCH, THIRUVANANTHAPURAM-695033. BY ADVS. SRI.RAJAGOPALAN.A., CGC R4 & R5 BY ADV.SUNIL SHANKER, SC ADV.VIDYA GANGADHARAN SRI.P.VIJAYAKUMAR, ASGI THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 22.09.2021, THE COURT ON 30.9.2021 DELIVERED THE FOLLOWING: W.P.(C) No.11840/21 -:3:-

BECHU KURIAN THOMAS, J.

----------------------------------------- W.P.(C) No.11840 of 2021 ---------------------------------------- Dated this the 30th day of September, 2021

JUDGMENT

Though the petitioner has claimed numerous reliefs, the primary relief sought is for the grant of benefit under Ext.P1 circular dated 6.8.2020 issued by the Reserve Bank of India ('the RBI' for short). The said circular provides for a “Resolution frame work for Covid-19 related stressed Assets”. Petitioner claims that he is entitled to be granted the moratorium facilities introduced by the RBI through Ext.P1 circular and for rescheduling the stressed loans, which the petitioner has with the respondent bank.

2. Petitioner claims to have availed financial assistance from

the Federal Bank to the tune of Rs.72,00,000/-. He claims that though he was repaying the monthly instalments without any default till February, 2020, due to Covid-19 pandemic and the consequent collapse of economy, petitioner's business fell into troubled waters and thereafter the default in repayment occurred. According to the W.P.(C) No.11840/21 -:4:- petitioner, even though he had repaid more than Rs.72,00,000/- into the loan account, it shows a further sum of Rs.56,00,000/- as outstanding, indicating exorbitant charges and other charges made by the bank.

3. While so, the RBI taking note of Covid-19 pandemic

situation, brought in a relief for the stressed loan accounts through Ext.P1 circular as per which a resolution frame work addressing the concerns of borrowed defaulters was created. It laid down the conditions for the resolution frame work, as per which petitioner was entitled to be granted the moratorium and rescheduling of the stressed loan account.

4. Noticing the validity of the benefit of Ext.P1 circular,

petitioner applied to the bank within time. Even though bank had approved the request for rescheduling it, subsequently failed to provide the facility offered through Ext.P1, for no fault of the petitioner. According to the petitioner, the bank has now, ignoring the repeated request of the petitioner to grant the facility for rescheduling the loan account, proceeded with a notice for sale of the property, as is evident from Ext.P9, after resorting to the procedure for enforcement of security interest under the W.P.(C) No.11840/21 -:5:- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ('the Act' for short). He thus seeks to quash the sale notice apart from getting a declaration that the petitioner is entitled for all the benefits under Ext.P1 circular and to have rescheduling /restructuring of the loan account in terms of the said circular.

5. A statement has been filed on behalf of respondents 4 and

5, contending that the writ petition is not maintainable and that the petitioner can resort to remedies available before Debts Recovery Tribunal against the measures initiated for enforcement of the security interest. It was further pleaded that, pursuant to the petitioner's request, the bank had in fact approved restructuring of petitioner's loan account based upon Ext.P1 circular and even intimated the petitioner about the said approval. However, instead of agreeing to the approval for restructuring of the loan account and executing necessary documents, petitioner contradicted and countered the offer of approval by stating that petitioner is not agreeable to the interest proposed under the rescheduling of loan as well as the processing charges in his reply letter, thereby indicating a counter offer. Petitioner, as a borrower, cannot dictate terms to the W.P.(C) No.11840/21 -:6:- creditor and even cannot control the terms of rescheduling the approval for reconstructing the loan account and according to the respondent bank, petitioner therefore failed in accepting the terms and conditions offered by the bank for restructuring the loan and on the other hand proposed a counter offer, which was not accepted by the bank.

6. I have heard Adv.Sergi Joseph Thomas, learned counsel

for the petitioner, Adv.P.Vijayakumar, learned Assistant Solicitor General of India for the 1st respondent and Adv.Sunil Shankar, learned Standing Counsel for respondents 4 & 5.

7. Though elaborate arguments were addressed by the

learned counsel, the issue lies in a very narrow compass. Is the petitioner entitled for grant of restructuring/rescheduling of the loan as contemplated under Ext.P1? Clause 8, 9 and 10 of Ext.P1 which relates to rescheduling of loan are extracted below: “8. Resolution under this framework may be invoked not later than December 31, 2020 and must be implemented within 90 days from the date of invocation. However, the lending institutions should strive for early invocation.

9. The resolution plans may inter alia include rescheduling of

payments, conversion of any interest accrued, or to be accrued, into another credit facility, or, granting of moratorium, based on an assessment of income streams of the borrower; subject to a maximum of two years. Correspondingly, the overall tenor of the loan may also get W.P.(C) No.11840/21 -:7:- modified commensurately. The moratorium period, if granted, shall come into force immediately upon implementation of the resolution plan.

10. The resolution plan shall be deemed to be implemented only if all of the following conditions are met:

a. all related documentation, including execution of necessary agreements between lending institutions and borrower and collaterals provided, if any, are completed by the lenders concerned in consonance with the resolution plan being implemented; b. the changes in the terms of conditions of the loans get duly reflected in the books of the lending institutions; and, c. borrower is not in default with the lending institution as per the revised terms.”

8. It is admitted that petitioner had applied for the benefit of

Ext.P1 circular within the period stipulated and as is seen from the statement of respondent bank, it had intimated the petitioner about the approval of restructuring the proposal on 15.12.2021. By e-mail dated 13.01.2021, the bank had requested the petitioner to execute the loan documentation to complete the restructuring process and to implement the same. However, petitioner, through Ext.P3 response dated 15.01.2021, requested to reduce the interest chargeable and insisted that other charges like processing fee, documentation fee etc., were not liable to be charged. It was also requested to send revised copy of the agreements incorporating the above referred W.P.(C) No.11840/21 -:8:- counter offer of the petitioner. Ext.P4 e-mail from the bank, pursuant to Ext.P3 response from the petitioner, shows that the bank indicated that they cannot vary the interest rates or other charges, but shall try for reversal of processing fee after rescheduling the loan. Consequent to the aforesaid e-mail by the respondent bank, though the petitioner, by another e-mail dated 27.01.2021, agreed to execute documents, he still insisted on reducing the interest rate from the proposed 11.50% to the barest minimum.

9. In fact, what can be understood from the communications

between the petitioner and the bank through Ext.P2, Ext.P3 Ext.P4 and Ext.P6 is that petitioner continued to make counter-offers in relation to the interest rates offered by the bank for restructuring the loan account. Each time the bank intimated the refusal to vary the interest rates, petitioner countered it. It is significant to note that as per clause 8, 9 and 10 of Ext.P1 referred to above, the rescheduling has to be implemented within 90 days from the date of invocation and becomes complete only when all related documentations are executed. Unfortunate to the petitioner, after Ext.P6, no steps or any communication were initiated either from the petitioner or from the bank thereby indicating that the petitioner was not agreeable to the W.P.(C) No.11840/21 -:9:- offer for rescheduling or restructuring the loan in the manner proposed by the respondent bank.

10. After Ext.P7 notice was issued on 05.04.2021 under

section 13(2) of the Act, petitioner took a volte face and stated that the petitioner is ready to execute the documents as per the banks terms and conditions. The period for invocation of the resolution plan had by then expired. Petitioner's refusal to abide by the terms for restructuring of the loan has caused the petitioner to lose out the benefits of Ext.P1.

11. In such a view of the matter, there is no merit in the

contentions canvassed by the learned counsel for the petitioner. This Court finds that the petitioner is not entitled for rescheduling of the loan on the facts of the case. The writ petition lacks merit and is therefore dismissed. Sd/- BECHU KURIAN THOMAS JUDGE vps W.P.(C) No.11840/21 -:10:- APPENDIX OF WP(C) 11840/2021 PETITIONER'S/S' EXHIBITS EXHIBIT P1 TRUE COPY OF THE CIRCULAR NO.RBI/2020- DATED 6.8.2020 OF THE RESERVE BANK OF INDIA. EXHIBIT P2 TRUE COPY OF THE EMAIL DATED 13.1.2021 SENT BY THE 5TH RESPONDENT.

EXHIBIT P3               TRUE COPY OF THE LETTER/MAIL DATED
                         15.1.2021   ADDRESSED TO  THE  5TH
EXHIBIT P4               TRUE COPY OF THE EMAIL DATED 16.1.2021

SENT BY THE 5TH RESPONDENT. EXHIBIT P5 TRUE COPY OF THE LETTER DATED 21.1.2021 ISSUED BY THE FEDERAL BANK, LCRD/THIRUVANANTHAPURAM DIVISION. EXHIBIT P6 TRUE COPY OF THE LETTER DATED 27.1.2021 SENT BY THE PETITIONER TO THE 5TH EXHIBIT P7 TRUE COPY OF THE NOTICE NO.TVMLCRD/NPA2333/NDE/3233/2021-22, DATED 5.4.2021 ISSUED UNDER SECTION 13(2) OF THE SARFAESI ACT 2002 BY THE 5TH RESPONDENT. EXHIBIT P8 TRUE COPY OF THE REPLY DATED 4.5.2021 SENT BY THE PETITIONER TO THE 5TH EXHIBIT P9 TRUE COPY OF THE LETTER NO. TVMLCRD/NPA/NDE-2333/3533/2021-22 DATED 17.5.2021 ISSUED BY THE 5TH RESPONDENT.

EXHIBIT P10              TRUE COPY OF THE REPRESENTATION DATED
                         26.5.2021   SUBMITTED BEFORE THE  1ST
W.P.(C) No.11840/21             -:11:-

EXHIBIT P11           TRUE COPY OF THE REPRESENTATION DATED
                      26.5.2021   SUBMITTED BEFORE THE  2ND
EXHIBIT P12           TRUE COPY OF THE REPRESENTATION DATED
                      26.5.2021   SUBMITTED BEFORE THE  3RD
EXHIBIT P13           TRUE COPY OF THE REPRESENTATION DATED
                      26.5.2021   SUBMITTED BEFORE THE  4TH
EXHIBIT P14           TRUE COPY OF THE APPLICATION DATED

BEFORE THE 5TH RESPONDENT REQUESTING TO RESCHEDULE THE LOAN ACCOUNT EXHIBIT P15 TRUE COPY OF THE COVID 19 RESOLUTION REQUEST FORM DATED 4/12/2020 SUBMITTED BY THE PETITIONER BEFORE THE 5TH RESPONDENT REQUESTING TO RESCHEDULE THE LOAN ACCOUNT EXHIBIT P16 TRUE COPY OF THE POSTAL COVER EXHIBIT P17 TRUE COPY OF THE LETTER DATED 3/7/2021 SENT BY THE PETITIONER RESPONDENT'S/S' EXHIBITS ANNEXURE R4(b) TRUE COPY OF THE REPLY OF 5TH RESPONDENT BANK