# In the matter of Shakuntla Education & Welfare Society Vs. Punjab & Sind Bank W.P.(C) 2959-2020

> HC judgment dated 2020-04-13. Citation: TCN-2020-HC-00033. The petitioner, Shakuntla Educational & Welfare Society, sought a direction from the High Court of…

- **Court:** HC
- **Order date:** 13 Apr 2020
- **Citation:** TCN-2020-HC-00033
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/high-courts-chandigarh-bench/shakuntla-education-welfare-society-vs-punjab-sind-bank-wp-426899b2

## Summary

### Background

The petitioner, Shakuntla Educational & Welfare Society, sought a direction from the High Court of Delhi to prevent Punjab & Sind Bank from declaring its loan accounts as Non-Performing Assets (NPA). The petitioner also requested a moratorium of three months on loan repayments, citing a Reserve Bank of India (RBI) circular issued in response to the COVID-19 pandemic. The petitioner, an educational institution, argued that it was unable to collect fees due to a directive from the Uttar Pradesh government prohibiting schools from coercing students to pay fees during the lockdown. The RBI was impleaded as a respondent to clarify the applicability of its circular.

## Facts

Shakuntla Educational & Welfare Society, the petitioner, is a charitable society running technical and higher education institutions. To establish these institutions, the petitioner availed six term loans from Punjab & Sind Bank, the respondent. Four of these loans were fully repaid under a restructured repayment plan. The petitioner was diligently repaying the remaining two term loans ('V' & 'VI') according to the restructured plan. However, before the March 2020 installments could be paid, the COVID-19 pandemic occurred. The RBI issued a circular on March 27, 2020, providing a three-month moratorium on term loans outstanding as of March 1, 2020. The petitioner sought a direction from the court to prevent the respondent from declaring its accounts as NPA,

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## Issues and analysis

### Issue 1: Whether the respondent bank can declare the petitioner's account as NPA given the RBI circular …

**Ratio:** The principle of maintaining status quo regarding the classification of accounts of

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**Reasoning:** The court reasoned that declaring the petitioner's accounts as NPA during the lockdown

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**Interpretation:** The RBI's circular was interpreted as aiming to provide relief to borrowers

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**Application:** The ratio was applied to the specific facts of the case, where the petitioner

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## Parties

- **Judges:** Rekha P…
- **Appellants:** SHAKUNTLA…
- **Respondents:** Punjab & Si…

## Timeline

- **2020-03-27 — RBI Circ…**: RBI issued a circular providing a moratorium of three months in respect of all term loans…
- **2020-04-06 — Order by Coordinate…**: Reliance placed on order dated 06.04.2020 passed by a Coordinate Bench of this Court in…

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