Case Law Details
Governor, RBI Vs Velankani Information Systems Limited (Karnataka High Court)
Briefly stated the facts of the case are that, respondent No.1 herein had availed the term loan facilities from respondent Nos.5 to 7. Respondent No.1 herein claiming to be the owner and operator of Five Star Hotel and Technology Park had approached the writ Court by filing W.P.No.6775/2020 being aggrieved by the rejection of its request for grant of moratorium by lending institutions, namely respondent Nos.5 to 7 inter alia seeking for a direction amongst others to the appellant to enforce the Regulatory Covid 19 Package dated 27.03.2020 announced by the Reserve Bank of India (RBI) in letter and spirit, further seeking certain consequential reliefs.
RBI and/or the Union of India can provide for broad guidelines while recommending to give the reliefs. It has further held that whether more relief should be offered by the Union of India/RBI/Bankers/lenders, would not come within the judicial scope of the Courts to issue such directions. The economic policy decisions even announced to mitigate the impact of Covid 19 pandemic cannot come within the realm of judicial review. Merely for the reason that some of the reliefs are not suiting the desires of the borrowers, he same cannot be said to be arbitrary/or violative of Article 14 of the Constitution of India
RBI can issue only broad guidelines for mitigating the Covid 19 crisis as done in the Circular dated 27.3.2020. Based on paragraphs 23.5 and 25.4, the direction issued to the appellant to enforce the recovery package as per paragraph 26(i) of the impugned order cannot be approved. More particularly, no such relief was sought by the petitioner/respondent No.1 and some discretion is necessary for lending institutions to take decisions which are essentially commercial decisions based on financial considerations.
RBI Circular dated 27.3.2020 itself being a guideline, cannot be construed as a mandatory requirement, creating a right in favour of respondent No.1 to avail moratorium, which certainly has to be decided from case to case considering the terms and conditions of different types of loans/advances extended by the lending institutions. Hence, paragraphs 23.5, 25.4 and 26(i) of the order dated 08.07.2020 passed in W.P.No.6775/2020 call for interference and deserve to be set aside.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
