Extension of emergency credit line guarantee: Supreme Court directs Bus & Car Operators Confederation Of India to make representation before Ministry of Finance
The Supreme Court recently directed the Bus And Car Operators Confederation Of India To Make Representation to The Ministry Of Finance For Extension Of Emergency Credit Line Guarantee Scheme 3.0 (“ECLGS”) and Resolution Framework 2.0 to accounts on an independent basis and to extend the Resolution Framework 2.0 beyond the discriminatory threshold of Rs 50 crores.
Bench of Justice Navin Sinha and Justice R Subhash Reddy further directed the Ministry of Finance to decide the representation within six weeks by a speaking order.
The plea was preferred by the Bus and Car Operators Confederation of India and was argued by Senior Advocate Siddhartha Dave.
Drawn by Advocate(s) Manoj V George and KM Vignesh Ram and filed through Advocate Shilpa Liza George the plea stated that irrespective of Finance Ministry rolled out the ECLGS 3.0 and Resolution Framework 2.0 Schemes with an intention of reviving businesses hit by the Covid, however the benefits of the Schemes could not be availed by the borrowers, because one of their accounts was NPA and for reason that their accounts were not Standard as on the specified date which defeated the very purpose of the ECLGS 3.0 & Resolution Framework 2.0 Schemes whose object was to revive the businesses.
It was argued that the Resolution Framework 2.0 which prescribed a threshold limit of Rupees Fifty Crores, was arbitrarily discriminating against businesses above the said limit by not extending any restructuring facilities to the business over and above Rs.50 crores.
“Transport industry has come to a grinding halt again in view of the 2nd wave of coronavirus, as a result of which most of the States in the nation have restricted entry from other neighboring States, due to which inter-state transport and tourism had been hit hard. Many States have imposed lockdowns and curfews across its territories, due to which even internal movement has been stalled. Most of the private sectors have resumed work from home options due to the Government’s advisory on the same; schools and other educational institutions have also started to again function through the virtual medium; entire tourism sector has been hit due to the compelling pandemic restrictions imposed from time to time,” plea said.
ECLGS 3.0, grants a credit facility in order to enable businesses to meet their operational liabilities and restart their business which have been adversely affected due to the pandemic. The ECLGS 3.0 provides a credit loan facility of 40% to the borrowers, with the intention of reviving their businesses.
The petitioners averred that all borrowers were unable to avail the facility due to the reason that one out of their several accounts was not ‘standard’, which led to NPA of all other accounts.
They further averred that one of the eligibility conditions prescribed under ECLGS 3.0, is that the borrower should not be declared an NPA as on 29/02/2020.
“Date fixed for 29.02.2020 itself is different for the transport sector as initial international travel restrictions and signs of Corona surfaced in January 2020 causing a dent to the travel industry,” plea said.
The Association in its plea further averred that prescribing a threshold limit of Rs.50 Crores and extending restructuring benefits only to businesses within the threshold limit of Rs.50 Crores, was arbitrary and violative Article 14 of the Constitution, as businesses beyond the threshold limit of Rs.50 Crores formed a part of the sector at large, and aided in major contribution to the economic breakthrough, apart from fiscal contributions, and were thus entitled for restructuring facilities under the Resolution Framework 2.0.
The petitioner in their plea had also sought for directions from this Hon’ble Court to National Authority National Disaster Management Authority to recommend the possibility of redefining the period of 90 days for determining NPA, Overdue and Out of order assets during the period of lock down, however the Court refused to grant the same.
Case Title: Bus And Car Operators Confederation Of India (Boci) Versus Union Of India And Ors.| W.P.(C) No. 714/2021