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W.P.(C) 1812/2022 & CM APPL. 5230/2022
Date of Decision: 22.02.2023 IN THE MATTER OF:
MOHINDER WADHWA
PROPRIETOR OF VMW ENTERPRISES AT: PLOT NO-8, GODWON, POCKET-8, SECTOR B-4, NARELA, NORTH WEST DELHI, DELHI, 110040 ..... PETITIONER
Through: Mr.Mohinder Wadhwa, Mr.Ricky Chopra and Mr.Birendra Singh, Advocates.
JUDGMENT
1. RESERVE BANK Of INDIA AT: 6, SANSAD MARG, NEW DEHI-110001, INDIA …. RESPONDENT NO.1
2. HDFC BANK LIMITED AT: HDFC BANK HOUSE SENAPATI BAPAT MARG LOWER PAREL (W), MUMBAI-400013 ALSO AT: A-32,33,34, NORTH EX MALL, SECTOR-, ROHINI, DELHI-110085.... RESPONDENT NO. 2 Through: Mr.Bheem Jain, Advocate for R-2. CORAM: HON'BLE MR.
JUSTICE PURUSHAINDRA KUMAR KAURAV
JUDGMENT
PURUSHAINDRA KUMAR KAURAV, J. (ORAL)
1. The petitioner in the instant petition prayed for the following reliefs. "In view of the facts and circumstances of the present case, it is most respectfully prayed that this Hon’ble Court may be pleased to:
1. Issue appropriate writ, order or direction, in the nature of Mandamus, directing the Respondent no.2 Bank fairly/duly consider restructuring proposal/representation dated 17.01.2022 of the Petitioner in terms of RBI circulars and resolution framework for Covid-19 related stress, and restructuring of advances for MSMEs.
2. Issue appropriate writ, order or direction, in the nature of mandamus directing the Respondent no.2 Bank to allow the petitioner to retire or reduce the outstanding loan amount by way of sale of the properties mortgaged against the loan facility availed by the petitioner from the Respondent no. 2 Bank.
3. Issue appropriate writ, order or direction, in the nature of mandamus directing the Respondent No.1 (RBI) to implement the circulars and notifications dated 06.08.2020 and 05.05.2021 in its true spirit and essence by ways such as issuing clarifications/directions for banks such as respondent No. 2 in this regard.
4. Pass any other order which this Hon’ble Court deem fit in the interest of Justice."
2. Learned counsel appearing on behalf of the petitioner states that in the year 2017-2018, the petitioner availed some credit facilities from respondent no.2-Bank. According to him, the petitioner has dutifully serviced all loans availed from the respondent and is regularly paying the instalments. He submits that in March 2020 on account of Covid-19 Pandemic, the entire sector was adversely affected which required appropriate remedial measures and therefore, the RBI issued various circulars. According to him, respondent no.2-Bank also extended benefit with respect to the Guaranteed Emergency Credit Line (GECL) and a Funded Interest Term Loan (FITL) facility by way of a “ Memorandum Recording Past Transactions of Creation of Mortgage by Delivery of Title Deeds. ”
3. The petitioner with a view to take the advantage of the circulars also availed the benefit of FITL facility. He states that because of certain reasons even the benefit under the FITL facility could not be completely availed by the petitioner and, therefore, he applied for restructuring of the entire loan facility. The representation in that respect was made to the respondent no.2-Bank on 17.01.2022. He therefore, states that under the facts of the present case, the petitioner is entitled for the relief as prayed for.
4. Learned counsel appearing on behalf of the respondent no.2-Bank has opposed the prayer and while referring to his counter affidavit, he states that the petition is not maintainable against the respondent no.2- Bank as the respondent no.2-Bank is not discharging any public duty and, it functions as a commercial venture.
5. According to respondent no.2-Bank, the petitioner in order to avail the loan facility, has mortgaged various properties by creating equitable mortgage by deposit of the original title deeds thereto. The details of the properties have been mentioned in paragraph no.3 of the reply. It is also stated that the application submitted by the petitioner dated 17.01.2022, does not require any consideration as the petitioner had already availed the benefit of FITL, which was sanctioned vide letter dated 12.04.2021. He therefore, states that according to the applicable RBI circular, once the borrower avails the benefit of FITL, restructuring is not permissible. He further states that in terms of communication dated 25.01.2022, the prayer of the petitioner has been rejected by the respondent no.2-Bank, therefore, no mandamus can be issued against the respondent no.2-Bank.
6. I have heard learned counsel appearing on behalf of the parties and perused the record.
7. If the communication dated 25.01.2022, is perused, the same indicates that respondent no.2-Bank had communicated that as per RBI guidelines, restructuring of loan can be done only once which was in the case of the petitioner, already done when FITL was sanctioned, which was agreed by the petitioner himself. According to the said communication, the request for the second restructuring cannot be taken forward. Various other reasons have been assigned therein. For the sake of clarity, the communication dated 25.01.2022, is reproduced as under:-
examined if there will not by any single overdue in the account/TL accounts.
5. Please note that the in the following accounts i.e. VMW Enterprises and its group account Sagar Containers, irregularity have been observed and overdue amounts are there, and if these accounts will not be regularised then same will be classified as NPA by next month."
8. The question that arises for consideration is whether a writ court in exercise of power under Article 226 of the Constitution of India can direct a private bank to accept a restructuring proposal in a particular manner.
9. I am of the considered opinion that the same cannot be allowed to be done as the banks or the financial institutions will have to take an appropriate decision depending upon their commercial interest, terms and conditions of the loan document in each case and the applicable rules, regulations and circulars applicable in that regard. In a particular case, if the NBFCs or bank is not accepting the proposal for restructuring of the loan, a writ court should not exercise its jurisdiction to issue a writ of mandamus or to direct the bank to accept it in a particular manner.
10. The Hon'ble Supreme Court in its recent decision in the case of Phoenix ARC (P) Ltd. v. Vishwa Bharati Vidya Mandir[1], has held that during the course of a commercial transaction and under the contract, the bank ARC lend the money to the borrower and, therefore, the said activity of the bank/ARC cannot be said to be as performing a public function which is normally to be expected to be performed by the State authorities. It is thus seen that when the request of the petitioner has already been rejected by the respondent, this court does not find any justification to substitute its own opinion in place of the opinion of the bank.
11. So far as the prayer with respect to directions to RBI is concerned, the same also cannot be accepted as the RBI is to function in accordance with the statutory mechanism provided under the applicable enactments. It is up to the RBI to decide whether any particular direction is required to be issued depending upon the facts and situation therein. In absence of any vested right in favour of the petitioner, no particular direction deserves to be issued to the RBI to act in a particular manner. In view thereto, this court does not find any justification to entertain the present petition.
12. Accordingly, the instant petition along with pending application is dismissed.
PURUSHAINDRA KUMAR KAURAV, J FEBRUARY 22, 2023