In the case of Anant Raj Limited v Yes Bank, Anant Raj Limited, the petitioner, approached the Delhi High Court to seek direction to Yes Bank not to take coercive/ adverse steps and not declare the account of the petitioner as a Non- Performing Asset (NPA). The petitioner had availed a bank loan from the respondent bank during the period 2010- 2015 of Rs. 815 Crores which the petitioner bank had paid in full, leading to an extension of further loan facilities to the petitioner between 2016- 2018 by the respondent bank.
As per the petitioner, it had availed loan facilities to the tune of Rs. 1570 crores out of which, petitioner has repaid about Rs. 1056 crores apart from interest running into hundreds of crores.
The petitioner approached the High Court as it is not able to repay the instalment due to the outbreak of COVID-19 and spread of the same across the globe, which has adversely affected the economic condition of the real estate industry.
Taking into consideration the urgency of the matter, the High Court of Delhi conducted the hearing through video conferencing.
Submissions by Anant Raj Limited
The counsel for the petitioner submitted that the COVID-19 Regulatory Package of RBI has allowed rescheduling of payment in term loan and working capital facilities, which covers the instalments falling due between 1st March 2020 to 31st May 2020. Hence, the account of the petitioner cannot be declared NPA for non-payment of instalment during the given period. The counsel for the petitioner further contended that the several guidelines and advisories are brought into place by the RBI to give benefits to the borrowers to ease the financial crisis.
Submissions by Yes Bank
The counsel for the Respondent stated the only after the January instalment remained outstanding, did the respondent bank classified Anand Raj as Special Mention Account (SMA) 1, and after a further delay of 60 days, was the account classified as SMA-2. It was further stated that the NPA declaration was sought only after the payment was not made for 90 days as per the RBI’s income recognition and asset classification guidelines. It was argued by the counsel that the petitioner cannot claim the protection under the RBI’s COVID-19 package and relief measures as the petitioner was under default before 1st March 2020 and the relief measures are meant to protect those who default the payment after 1st March till 31st May 2020.
Court’s Observation
The court opined that the Regulatory Package and the Statement on Development and Regulatory Policies imply that the intention of the RBI while declaring these measures was to maintain status quo as on 1st March 2020 concerning all the instalments payment which had to be made post-March 1 2020, till May 31, 2020. The court further observed that any account classified as SMA-2 shall not be further declared as an NPA in cases of non-payment of instalment during the moratorium period. Taking into consideration the above situation, the court ordered,
“Prima facie, I am of the view that the classification of the account of the petitioner as an NPA on 31.03.2020 could not have been done by the respondent. Accordingly, status quo ante is restored qua the classification of the account of the petitioner and the account classification as it stood on 01.03.2020 shall stand restored.”
The court further directed the petitioner to pay the instalment which fell due as on 1st January 2020, along with the interest accrued thereon till the date of payment, on or before the 25th April 2020, irrespective of the position of the lockdown.
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