Case Note & Summary
The dispute arose from the Emergency Credit Line Guarantee Scheme introduced by the Government of India through the Ministry of Finance. The petitioners, two business entities through their proprietor/director, filed a writ petition before the Nagpur Bench of the Bombay High Court after the respondent bank failed to decide their loan application under the scheme. The respondents included the Union of India through the Ministry of Finance, the National Credit Guarantee Trustee Company Ltd., the Union of India through the Ministry of Micro, Small and Medium Enterprises, IndusInd Bank Ltd., and the Ministry of Social Justice and Employment. Factually, the Government of India through the Ministry of Finance, Department of Financial Services, issued a communication dated 23.05.2020 introducing the Emergency Credit Line Guarantee Scheme. The scheme offered 100% guarantee coverage for repayment of additional working capital term loans for banks and financial institutions, and additional term loans for NBFCs, up to 20% of entire outstanding credit up to Rs.5 crore as on February 29, 2020, subject to the account being less than or equal to 60 days past due. The petitioners desired to avail of this guarantee coverage and made an application to IndusInd Bank on 06.08.2020. Despite reminders, the bank only acknowledged the pendency of the application and took no decision. The core legal issue was whether the court should direct the respondents to ensure the implementation of the scheme and require the bank to decide the pending application. The petitioners argued that the Ministry of Finance introduced the scheme for public benefit and that the Supreme Court in Gajendra Sharma v. Union of India held that the Ministry must ensure benefits percolate to intended beneficiaries. The Assistant Solicitor General sought time to obtain instructions, but the court found no need as the law was clear. The court observed that there was no dispute that the scheme was introduced by the Ministry of Finance. It noted that the scheme was meant to give relief to creditors through repayment guarantees and to borrowers as a reserve, keeping the economic system healthy and vibrant, and was therefore in public interest. Relying on Gajendra Sharma, the court held that the Ministry introducing such a scheme must ensure its implementation in right spirit and to logical end. The court directed that the petition be treated as a representation to respondent No.1, which was to take appropriate action and decision thereon within four weeks from receipt of the order, in light of Gajendra Sharma and the spirit of the scheme. The petition was partly allowed accordingly, rule made absolute, no costs.
Headnote
A) Administrative Law - Public Interest Scheme Implementation - Duty of Ministry to Percolate Benefits - Constitution of India, 1950, Article 226 - Government of India through Ministry of Finance introduced Emergency Credit Line Guarantee Scheme providing 100% guarantee for additional working capital term loans up to 20% of outstanding credit for eligible accounts. Petitioner applied to IndusInd Bank, whose application remained pending. Court held the Ministry must ensure scheme implemented in right spirit and directed treating petition as representation to respondent No.1 to decide within four weeks. Held that public interest scheme requires proper implementation. (Paras 3-11) B) Banking and Finance - Emergency Credit Line Guarantee Scheme - Scope and Eligibility - Not mentioned - The scheme applied to Scheduled Commercial Banks, Financial Institutions and NBFCs for additional working capital term loans and term loans up to Rs.5 crore for accounts not more than 60 days past due as on February 29, 2020. Court did not determine petitioner's eligibility but emphasized scheme's purpose to keep economic system healthy and vibrant. Held that Ministry must ensure implementation in right spirit. (Paras 3-8) C) Writ Jurisdiction - Representation and Direction - Relief Mechanism - Constitution of India, 1950, Article 226 - Since bank had not decided application, the Court partly allowed the petition, treated it as representation to respondent No.1 and directed decision within four weeks in light of Gajendra Sharma v. Union of India. Held that prayer granted partly, no costs. (Paras 10-11)
Issue of Consideration
Whether the inaction of respondent No.4 bank in deciding the petitioner's application under the Emergency Credit Line Guarantee Scheme warranted judicial direction, and whether the Union Ministry of Finance should be directed to ensure scheme implementation by treating the petition as representation.
Final Decision
Petition partly allowed; directed to be treated as representation to respondent No.1, which shall decide within four weeks from receipt of order in light of Gajendra Sharma and spirit of ECLGS; rule accordingly; no costs.
Law Points
- Emergency Credit Line Guarantee Scheme provides 100% guarantee for repayment of additional working capital term loans up to 20% of outstanding credit up to Rs.5 crore for accounts not more than 60 days past due as on 29.02.2020
- Ministry introducing scheme must ensure implementation in right spirit and logical end
- benefits must percolate to intended beneficiaries
- writ petition can be treated as representation for decision within four weeks
