Transcon Skycity Private Limited Vs. ICICI Bank (Bombay High Court)
A major relief was provided to two real estate companies (“Petitioners”), Transcon Skycity Private Limited (Writ Petition LD-VC No. 28 of 2020) and Transcon Iconica Private Limited (Writ Petition LD-VC No. 30 of 2020) by the Hon’ble Bombay High Court vide its order dated 11th April 2020 (matter heard by video conferencing), with regards to the correct interpretation of ‘Moratorium on Term Loans’ given under RBI Press Release ‘Statement on Developmental and Regulatory Policies’ dated 27th March 2020 (“Press Release”).
Facts:
The Petitioners had taken finance facilities from ICICI Bank (“Respondent”) to be repaid in instalments fixed by a contractual agreement. Until December 2019, little/no significant default was observed on the part of Petitioners. However, the Petitioners failed to service the debt instalments of initial two months of the year 2020. In fact, the amount of default occurred on 15th January 2020 and 15th February 2020 has still not been paid until now.
According to the prevailing RBI circulars and notifications, if payment due is not made and the accounts are not regularised within 90 days of the date of default, then the borrower’s account gets classified as Non-Performing Assets (“NPAs”), following other consequences of the same. However, before the completion of this default period of 90 days for the Petitioners, the nationwide lockdown was announced by the Government, due to the global outburst of Covid-19 Pandemic. Amidst the lockdown, RBI came up with various circulars and Press Release stating that there has to be a moratorium period commencing from 1st March 2020 extending upto 31st May 2020 with regards to the repayment of loans and classification of debts as NPAs.
Issue:
The Press Release clearly states that any loan instalment due after 1st March 2020 is entitled for complete moratorium. But what if the default is already existing even prior to the commencement of moratorium? Hence, question in the present case was, whether the moratorium period so announced is to be included or excluded in computation of the 90 days default period, for the amounts that fell due, prior to 1st March 2020 and remain unpaid till date.
Contentions:
