Delhi HC directs SIDBI to not raise any demand on Indiabulls until RBI clarification on applicability of March 27 Circular on NBFCs

The Delhi High Court has directed SIDBI to not raise any demand on Indiabulls Commercial Credit Ltd in connection with a loan extended to it, until the RBI clarifies if non-banking financial companies would be covered under the ambit of the March 27 Circular for the benefit of borrowers in view of the COVID-19 slowdown. (Indiabulls Commercial Credit Ltd vs SIDBI & Anr).The order was passed by a single Judge Bench of Justice Rekha Palli. .SIDBI had disbursed a sum of Rs. 575 crores to Indiabulls pursuant to a loan agreement for an amount not exceeding Rs 750 crores..The loan instalment of Rs 31,94,79,453 for the month of March was duly paid by Indiabulls on March 9, 2020..Indiabulls stated that in the meantime, due to the onset of the pandemic of COVID 19, the Reserve Bank of India extended a temporary relief to the borrowers all across the country and issued a circular on March 20, 2020. .As per the Circular, RBI had given liberty to all banks to allow moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, 2020. .It was Indiabulls' grievance that in spite of the Circular, SIDBI raised the demand towards the instalment payable in April on April 3. .When Indiabulls made a request to SIDBI for grant of moratorium for a period of three months, it was informed that clarifications from RBI as to whether the circular was applicable to NBFCs was awaited. .SIDBI thus asked Indiabulls to make the payment for the month of April. .Aggrieved by the demand, Indiabulls moved the High Court. .SIDBI informed the Court that while necessary clarification from RBI was awaited, it has already received the payment from Indiabulls, as demanded towards the instalment due in April, 2020..It was further submitted that in any event, even if the demand from the next month was raised in due course, the petitioner would not be treated as a defaulter untill a clarification is obtained from RBI. .After considering the submissions of the parties, the Court opined that nothing survived for adjudication in the case and the same was accordingly disposed of as infructuous. .It nonetheless clarified, "the respondent no.1 (SIDBI) will not raise any further demand on the petitioner (Indiabulls) towards the due instalments against the petitioner till it obtains a clarification from the respondent no.2 (RBI). In case the respondent no.1 receives a clarification from the respondent no.2 that the circular dated 27.03.2020 is not applicable to the petitioner and therefore makes a demand towards further instalments.".The Court added that Indiabulls would be at liberty to assail such future demand in accordance with law..Indiabulls was represented by Senior Advocate Rajiv Nayar with Advocates Rishi Agarwala, Karan Luthra, Ankit Banati..SIDBI was represented by Advocate Sanjiv Sagar.