Case Law Details
Ravis Exports Vs Union of India (Kerala High Court)
Facts- The first petitioner, had availed a credit facility of Rs.14.50 crores from the 4th respondent for the purpose of its cashew processing business. Petitioners 2 to 4 mortgaged several valuable properties for availing the said credit facility and thus became the guarantors to the credit facility availed by the 1st.
According to the petitioners, cashew industries in the State of Kerala are facing severe crisis and the 1st petitioner also fell into dire straits due to which it defaulted in repayment of the loan. The floods that inundated the State in the year 2018 also contributed to the default, resulting finally in the account of the 1st petitioner being declared as non-performing. Steps were therefore initiated by the bank under the SARFAESI Act’).
While the Committee appointed by the Government was considering the measures to revive the cashew industry, the 4th respondent issued a notice to the petitioners requiring them to show cause reasons as to why they should not be declared as wilful defaulters. Five instances were specified in the show cause notice dated 21.12.2018 as grounds of default and granted an opportunity to the petitioners to submit their explanation. The first petitioner submitted a detailed explanation on 16.07.2019 controverting the various grounds raised in the show cause notice and asserted that petitioners are not wilful defaulters and also requested for consideration of the proposal for revival including the grant of an additional credit limit to enable them to comply with the packing credit obligation and to regularise the loan account.
According to the 4th respondent, petitioners were declared as wilful defaulters by scrupulously following the guidelines issued by the Reserve Bank of India in the Master Circular and that the decisions were taken after approaching the issue with a lenient view and in due compliance with the principles of natural justice. It was also stated that issuing the Lookout Circular (LOC) was a procedural formality on declaration of persons as wilful defaulters and that the same was in tune with the orders issued by the Ministry of Foreign Affairs.
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