Will not haul up RBI for declaring loans as NPAs, says Apex Court – The Hindu BusinessLine

Clipped from: https://www.thehindubusinessline.com/money-and-banking/will-not-haul-up-rbi-for-declaring-loans-as-npas-says-apex-court/article36279830.ece?homepage=true

We are not inclined to exercise our contempt jurisdiction since it is not in the interest of justice: SC Bench

“Economy is booming in the country after the second Covid wave,” said the Supreme Court on Friday as it refused to entertain a batch of pleas seeking contempt action against the Governor of Reserve Bank of India and senior officials of other banks for declaring loan accounts as Non-Performing Assets (NPA).

“In our considered view, we are not inclined to exercise our contempt jurisdiction, since it is not in the interest of justice,” said a bench of Justices DY Chandrachud, Vikram Nath and Hima Kohli.

The bench said that petitioners are at liberty to seek remedy under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Sarfaesi Act), 2002.

Advocate Vishal Tiwari, appearing in a batch of petitions said that despite the top court’s order of September 3, 2020 that the accounts which were not declared NPA till August 31, 2020 shall not be declared NPA till further orders, banks unilaterally declared the accounts as NPA under the Act.

‘Not going to haul up RBI’

At the outset, the bench said, “Economy is booming in the country after the second Covid wave. That’s what we have read in newspapers. Since the second wave, when these orders were passed, a lot of development has taken place. We are not going to haul up the RBI for this. Contempt is between court and the contemnor”.

Tiwari said that RBI has itself issued a notice in March, last year after the nationwide lockdown granting moratorium from paying the instalment for loan.

‘Several petitions’

Several traders have moved the top court against declaration of their account as NPA by the banks and seeking contempt action against the senior officials of the banks. One of the pleas, filed by Ajay Hotel and Restaurants through its proprietor has contended that it was availing various credit facilities by way of financial assistance against various assets creating security interest in favour of the State Bank of India and timely payment of the instalments of the loan were made and its Account was not turned NPA till August 31, 2020.

“That on May 18, 2021 the State Bank of India (R-3) issued a demand notice under section 13 (2) of the Sarfaesi Act, 2002 to the petitioner demanding the Amount…as on May 18, 2021 inclusive of interest”, the plea said.

It added that the bank had unilaterally classified the petitioner as NPA on November 30, 2020 and no show cause notice was given. The plea said that despite the express order of the top court on September 3, 2020, the banks continued to proceed under provisions of the Act.

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