[COVID-19] Delhi HC allows HDFC Bank to deduct instalment amount demanded during 90-day moratorium from Indiabulls' existing FDR

While hearing a petition by Indiabulls Housing Fianance Ltd to restrain HDFC Bank from recovering any loan amount during the moratorium period imposed by RBI, the Delhi High Court has allowed HDFC Bank to deduct a loan instalment amount of Rs 90 crores from Indiabulls' Fixed Deposit which it held as security. (Indiabulls Housing Finance Ltd vs HDFC Bank).The Court has, however, clarified that HDFC Bank would not insist on replenishment of the amount till the next date..The interim order was passed by a Single Judge Bench of justice Rekha Palli..Indiabulls had availed a term loan of Rs 540 crores from HDFC Bank pursuant to a term loan agreement in November 2017. .The Court was informed that in view of COVID-19 pandemic, the Reserve Bank of India (RBI) had granted a 90-day moratorium to all borrowers in respect of all term loans. .It was Indiabulls' grievance that in contravention of this Circular, HDFC raised a demand of Rs 90 crores during this period. .Indiabulls thus moved the High Court, inter alia, seeking a direction to HDFC Bank to comply with the RBI Circular and consequently, to restrain HDFC Bank fom recovering, in any manner, whatsoever, any amounts during the moratorium period imposed by RBI..Following the submssions made by Indiabulls, the Court issued notice to the HDFC and RBI and sought their response. .HDFC opposed the grant of any interim relief and submitted that the Petitioner had selectively filed documents before the Court. .It was contended that Indiabulls had not given any justification for approaching the Court at such a belated stage when the payment was due on May 2 and the request to grant any moratorium was rejected on April 7 itself..HDFC Bank further submitted that in any event, once an offer was made by Indiabulls to deduct the due instalments from the existing FDR of Rs 174,75,00,000, which the Bank held as security, no interim relief with regards to the payment of instalment could be granted..Without prejudice to its rights and contentions, HDFC thus offered that it would deduct the instalment amount from the FDR available, instead of demanding it from the petitioner till the next date..In response to the plea, RBI clarified that the Circular was discretionary in nature and enabled the lender to objectively decide as to whether the moratorium ought to be granted to a particular borrower or not..The RBI counsel, however, sought time to seeks instructions on whether the Circular was applicable to Non-Banking Financial Corporations like Indiabulls..After hearing the parties, the Court opined that it did find merit in HDFC’s submission that Indiabulls had approached this Court at a belated stage. .It nonetheless proceeded to order,“..in view of the time being granted to learned counsel for the respondent no.2 (RBI) to obtain instructions as to whether the circular per se would be applicable to the petitioner and also to enable respondent no.1 (HDFC Bank) to place all relevant documents on record, it would be in the interest of justice that till the next date, while the respondent No.1 will be free to deduct the due amount of Rs.90,00,00,000/- crores from the aforesaid existing FDR of the petitioner, it will not insist on replenishment of the said amount till the next date.”.The matter would be heard next on May 6..Senior Advocate Rajiv Nayar with Advocates Ankit Banati, Karan Luthra..HDFC Bank was represented by Senior Advocate NK Kaul with Advocate Aman Raj Gandhi..RBI was represented by Advocate Ramesh Babu..Read the Order: