India’s economy is booming after the second COVID wave, said the Supreme Court on September 3 as it refused to entertain a batch of pleas seeking contempt action against the governor of the Reserve Bank of India (RBI) and senior officials of other banks for declaring the loan accounts as non-performing assets (NPA). The top court said contempt is between court and contemner and it is not inclined to initiate contempt action against senior officials of banks.

In our considered view, we are not inclined to exercise our contempt jurisdiction, since it is not in the interest of justice, said a Bench of Justices D.Y. Chandrachud, Vikram Nath and Hima Kohli. The Bench said petitioners are at liberty to seek remedy under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act), 2002.

Advocate Vishal Tiwari, appearing in a batch of petitions said despite the top court's order of September 3, 2020 the accounts which were not declared as NPAs till August 31, 2020 shall not be declared NPAs till further orders. At the outset, the Bench said, “Economy is booming in the country after the second COVID wave. That's what we have read in newspapers. Since the second wave, when these orders were passed, a lot of development has taken place. We are not going to haul up the RBI for this. Contempt is between court and the contemner.”

Tiwari said the RBI has itself issued a notice in March last year after the nationwide lockdown granting moratorium from paying the instalment for loan. Several traders have moved the top court against declaration of their account as NPA by the banks and seeking contempt action against the senior officials of the banks.

One of the pleas filed by Ajay Hotel and Restaurants through its proprietor has contended that it was availing various credit facilities by way of financial assistance against various assets creating security interest in favour of the State Bank of India (SBI) and timely payment of the instalments of the loan were made and its account was not turned NPA till August 31, 2020. That on May 18, 2021 the State Bank of India (R-3) issued a demand notice under Section 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 to the petitioner demanding the amount as on May 18, 2021 inclusive of interest, the plea said.

It added that the bank had unilaterally classified the petitioner as NPA on November 30, 2020 under provisions of the SARFAESI Act and no show cause notice was given. The plea said that despite the express order of the top court on September 3, 2020, the banks continued to proceed under provisions of the SARFAESI Act. The respondents (bank) deliberately flouted the order dated September 3, 2020 which has caused a big loss to the petitioner.

The stay order was passed during the pandemic to benefit stressed borrowers so that they did not suffer in the financial crisis brought on by COVID-19, the plea said. The plea sought issuance of contempt notice to the alleged contemnors for having wilfully violated the order/directions dated September 3, 2020.

(Edited by : Shoma Bhattacharjee)