The Delhi HC has restrained the Punjab and Sindh Bank from declaring a loan account of Shakuntla Educational & Welfare Society as a Non-Performing Asset (NPA) in the case of Shakuntala Welfare & Educational Society vs Punjab & Sindh Bank. The order was passed by a single judge bench of Justice Rekha Palli.
The Petitioner which is a charitable society engaged in the business of technical and higher educationhad filed a plea to restrict Punjab and Sindh bank from declaring its pending loan accounts as a Non-Performing Assets (NPA). It also sought that the court directed the bank to grant a moratorium of three months to the petitioner in consonance with the circular issued by Reserve Bank of India (RBI) in this regard on March 27.
The petitioner who had taken a six-term loan from the bank for setting up an educational institution had claimed that it had made all its repayments diligently and had only failed to pay the installment payable on or before 31st March. The petitioner had also informed the court that as the institutes run by the petitioner were situated in Uttar Pradesh and the state government had issued directives prohibiting the Petitioner from collecting fees from the students it was not in a position to pay the instalment.
The Bank on the other hand argued that the default qua instalments was due on 31st December, 2019 and the March 31 deadline was only with respect to the loan accounts turning into NPA and as the instalment was already due before 1st March the RBI could not be made applicable in the present case.
The court observed that even though the fact cannot be ignored that had the petitioner defaulted in making payment on or before March 31, 2020 the bank could have declared its account as NPA, but in the case at hand as the countrywide lockdown continues a prima facie case has been made out for restraining the Bank from doing so.
It stated,
“Any classification of the petitioner’s accounts as NPA would certainly amount to altering the position as existing on 01.03.2020 and, therefore, grave and irreparable loss will be caused to the petitioner, in case, its accounts are declared as NPA, only on account of its failure to pay the instalments, which were admittedly payable on or before 31.03.2020.”
While adjourning the case till May 4 the court held that if the directives issued by the state government of Uttar Pradesh is withdrawn before the next date, the Petitioner would be liable to pay the instalments within one week from the date of the said withdrawal.
The Advocates for the case were:
The Petitioner was represented by Advocates Saket Sikri, Gautam Khazanchi, Aayushi Sharma.
The Bank was represented by Advocate Suruchi Aggarwal.
