Kerala High Court
Muhammed Finosar T.V vs Micro Units Development & Refinance ... on 26 May, 2022
Author: Shaji P. Chaly
Bench: S.Manikumar, Shaji P.Chaly
W. A. No. 441 of 2022 -1-
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR
&
THE HONOURABLE MR. JUSTICE SHAJI P.CHALY
THURSDAY, THE 26TH DAY OF MAY 2022 / 5TH JYAISHTA, 1944
WA NO. 441 OF 2022
AGAINST THE JUDGMENT IN WP(C) 30487/2021 OF HIGH COURT OF
KERALA
APPELLANT/S:
MUHAMMED FINOSAR T.V.,
AGED 32 YEARS
AGED 32 YEARS,S/O.(LATE)SALLEM T.V.,HOUSE
NO.2076,CHULLIKADU PARAMBU,CHAKKUMKADAVU,NEAR TO
URBAN PUBLIC HEALTH CENTRE,PANNIYANKARA (POST),
KOZHIKODE DISTRICT,PIN-673 003.
BY ADVS JESWIN P.VARGHESE
V. H. JASMINE
REETHU JACOB
RESPONDENT/S:
1 MICRO UNITS DEVELOPMENT & REFINANCE AGENCY LTD.
(MUDRA LTD.),
MSME DEVELOPMENT CENTRE,C-11,G-BLOCK,BANDRA KURIA
COMPLEX,BANDRA EAST (POST),MUMBAI-51,PIN-400
051.REPRESENTED BY ITS MANAGING DIRECTOR.
2 THE SECRETARY,
MINISTRY OF MICRO,SMALL AND MEDIUM
ENTERPRISES,UDYOG BHAVAN,RAFI MARG,NEW DELHI-
11,PIN-110011.
3 THE BRANCH MANAGER,
PUNJAB NATIONAL BANK.KOZHIKODE LINK ROAD
BRANCH,NEW TO RAILWAY STATION,LINK ROAD,
KOZHIKODE,PIN-673 002.
4 THE BRANCH MANAGER,
HDFC BANK,NADAKKAVU BRANCH,SIMAX TOWER,KANNUR
ROAD,WEST NADAKKAVU,VANDIPETTA,
NADAKKAVU (POST),KOZHIKODE,PIN-673 011.
W. A. No. 441 of 2022 -2-
5 THE MANAGING DIRECTOR,
TRANS UNION CIBIL LIMITED,ONE WORLD CENTRE,TOWER
2A,19TH FLOOR,SENAPATI BAPAT ROAD,
ELPHINSTONE ROAD,MUMBAI-13,PIN-400 013.
BY ADVS.
SRI.JAYASANKAR V,NAIR,CENTRAL GOVERNMENT COUNSEL
(B/O)
C.AJITH KUMAR
K. P. SUDHIR
M. PREMCHAND
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON
26.05.2022, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
W. A. No. 441 of 2022 -3-
JUDGMENT
Shaji P. Chaly, J.
The writ petitioner has filed the instant appeal challenging the judgment of the learned Single Judge in W. P. (C) No. 30487 of 2021 dated 18.02.2022 whereby the following reliefs sought for by the appellant was declined by the writ court:-
"(i) A writ of mandamus or any other appropriate writ or order directing 3rd respondent to sanction and disburse Mudra Loan for petitioner's micro enterprise described in Ext. P4 to P6;
(ii) A writ of mandamus or any other appropriate writ or order directing 3rd respondent to consider Ext. P5 application submitted by writ petitioner and take a decision thereon, strictly adhering to Ext. P1 and P2 published by 1 st respondent and Ext.
P3 Master Directions published by the Reserve Bank of India, ignoring his credit score;
(iii) A writ of mandamus or any other appropriate writ or order directing respondents 4 and 5 to place on record discharge of petitioner's hire purchase liability and to refresh his credit score, within a time frame as fixed by this Hon'ble Court."
2. Brief material facts for the disposal of the appeal are as follows:-
W. A. No. 441 of 2022 -4-
3. Appellant is an auto rickshaw driver and according to him, he used to take auto rickshaw on rent and ply in rural areas of Kozhikode District. Since the State Government recently granted thousand CNG/LPG/Electric auto rickshaw permits in Kozhikode city, appellant thought of purchasing a CNG auto rickshaw and applied for 'MUDRA' loan launched by the Micro Units Development & Refinance Agency Ltd. (MUDRA Ltd.), Mumbai, the 1st respondent, evident from Exts. P1 and P2.
4. According to the appellant, in accordance with Exts. P1 and P2, the Reserve Bank of India has published Ext. P3 Master Directions in order to process applications of the applicants who applies for loan under MUDRA scheme, however according to the appellant, the 3rd respondent, namely the Branch Manager, Punjab National Bank, Kozhikode Link Road Branch, Kozhikode, declined to entertain Ext. P5 application stating that appellant's credit track record is not satisfactory, since there is a liability towards the 4 th respondent Bank namely HDFC Bank, Nadakkavu Branch, Kozhikode.
5. The case projected by the appellant is that the liability towards the 4th respondent Bank was cleared on 23.11.2017 evident W. A. No. 441 of 2022 -5- from Ext. P7 account statement issued by the 4 th respondent Bank, however it is stated that the 4th respondent Bank has not communicated discharge of liability to the 5 th respondent, namely the Managing Director, Trans Union CIBIL Limited, Mumbai, and therefore the CIBIL score still remains unsatisfactory.
6. Therefore it is contented that the impugned orders of the respondents are illegal and arbitrary which ought to have been interfered with by the writ court and granted the reliefs sought for by the appellants.
7. The 4th respondent Bank - HDFC Bank Ltd. has filed a counter affidavit basically contenting that the appellant was a chronic defaulter in repayment of the monthly installments, however later the appellant approached the Bank requesting for settlement of dues.
8. Accordingly the request of the appellant was accepted by the Bank and the transaction was settled by waiving an amount of Rs. 22,555/- and accordingly, the appellant has paid a total amount of Rs. 61,000/- towards one time settlement on 23.11.2017.
9. According to the 4th respondent, a settlement letter was issued W. A. No. 441 of 2022 -6- to the appellant wherein it was specifically informed that under the Credit Information Companies (Regulation) Act, 2005, information of loan repayment would be shared with Credit Information Bureau of India Ltd., the 5th respondent, or any other credit rating agency / regulatory body; that the Bank has categorically apprised the appellant that if the loan dues are paid off in settlement plan / compromise, the status of the borrower shall be displayed as 'settled' in the records of credit rating agency, which may act as hindrance in case of any credit assistance sought for by the borrower in future ; and that alternatively, if the liability is paid in full, then the status in the records of the credit rating agency will indicate the same, and the appellant was advised to choose the appropriate option.
10. However the appellant opted for settling the issue taking advantage of the waiver and the matter was settled accepting the payment made by the appellant.
11. Therefore it is submitted by the 4 th respondent Bank that if the appellant is particular about upgradation of his CIBIL score, he has to pay an amount of Rs. 22,555/- with interest from 23.11.2017, which was waived by the respondent Bank on the said date. W. A. No. 441 of 2022 -7-
12. The learned Single Judge, after considering the rival submissions and taking into account the fact that the CIBIL score of the appellant due to the waiver of a previous loan did not satisfy the eligibility of the appellant to secure the benefits of the loan scheme under MUDRA held that the rejection of the application of the appellant by the 3rd respondent Bank cannot be said to be bad or illegal.
13. We have heard learned counsel for the appellant Sri. Jeswin P. Varghese, Sri. Jaishankar V. Nair, learned Central Government Counsel for respondents 1 and 2, Sri. K. P. Sudhir for the 3 rd respondent Bank and Sri. M. Premchand for the 4 th respondent Bank and perused the pleadings and material on record.
14. The sole question emerges for consideration is whether any interference is required to the judgment of the learned Single Judge.
15. The deliberations made above and perusal of the material on record make it clear that, it is an admitted fact that an earlier loan transaction of the appellant with the 4 th respondent HDFC Bank ended up in one time settlement by waiving off an amount of Rs. 22,555/-. W. A. No. 441 of 2022 -8-
16. Apparently the issue with respect to the CIBIL score is regulated by the Credit Information Companies (Regulation) Act, 2005 whereby a credit information is defined under Section 2(d) as follows:-
"(d) "credit information" means any information relating to-
(i) the amounts and the nature of loans of advances, amounts outstanding under credit cards and other credit facilities granted or to be granted, by a credit institution to any borrower;
(ii) the nature of security taken or proposed to be taken by a credit institution from any borrower for credit facilities granted or proposed to be granted to him;
(iii) the guarantee furnished or any other non-fund based facility granted or proposed to be granted by a credit institution for any of its borrowers;
(iv) the credit - worthiness of any borrower of a credit institution."
17. The credit information company is defined under Section 2(e) to mean a company formed and registered under the Companies Act, 1956 which has been granted a certificate of registration under sub section (2) of Section 5.
W. A. No. 441 of 2022 -9-
18. Credit institution is defined under Section 2(f), which reads thus:-
(f) "credit institution" means a banking company and includes--
(i) a corresponding new bank, the State Bank of India, a subsidiary bank, a co-operative bank, the National Bank and regional rural bank;
(ii) a non-banking financial company as defined under clause (f) of section 45-I of the Reserve Bank of India Act, 1934;
(iii) a public financial institution referred to in section 4A of the Companies Act, 1956;
(iv) the financial corporation established by a State under section 3 of the State Financial Corporation Act, 1951;
(v) the housing finance institution referred to in clause (d) of section 2 of the National Housing Bank Act, 1987;
(vi) the companies engaged in the business of credit cards and other similar cards and companies dealing with distribution of credit in any other manner;
(vii) any other institution which the Reserve Bank may specify, from time to time, for the purposes of this clause."
19. Credit scoring is defined under Section 2(g) to mean a system which enables a credit institution to assess the creditworthiness and capacity of a borrower to repay his loan and advances and discharge his other obligation in respect of credit facility availed or to be availed by him.
W. A. No. 441 of 2022 -10-
20. On a conjoint reading of the afore deliberated provisions of Act 2005, it is clear that the CIBIL score can be analyzed in accordance with the statutory scheme prepared under Act 2005.
21. Therefore when the appellant has availed the benefit of a one time scheme by waiving a portion of the loan amount, the 5th respondent is entitled to calculate the CIBIL score taking into account the waiver granted by the 4th respondent Bank in one time settlement availed by the appellant. In our considered opinion the Act 2005 is a scheme by itself in order to tackle the situations arising out of loan transactions like the one at hand and with the aim and objective of safeguarding public money being siphoned out by ineligible persons and defaulters of previous loans from banking and other financial companies.
22. That apart Section 17 of Act 2015 dealing with collection and furnishing of credit information entitles a member to seek credit information as it may deem necessary in accordance with the provisions of the Act.
23. Sub section (2) thereto makes it imperative that every credit institution which is a member of the credit information company and W. A. No. 441 of 2022 -11- every credit information company which is a member of other credit information company shall on receipt of notice under sub section (1) of Section 17 provide credit information to the credit information company of which it is a member within such period as may be specified in the notice.
24. Of course the credit information so given by the member credit company shall not be disclosed to any person other than its specified user.
25. Therefore it can be seen that it is an undisputed fact that the CIBIL score of the appellant was not enthusiastic enough thus to qualify the appellant for securing a loan under the MUDRA loan scheme. In that view of the matter it cannot be said that the action of the 3rd respondent bank declining to entertain the loan application of the appellant is in any manner bad, illegal or arbitrary enabling the appellant to have successfully invoked the writ jurisdiction under article 226 of the Constitution of India.
Thus, analysing the impugned judgment, we are of the considered and clear opinion that it was taking into account the intrinsic factual aspects involved in the case and the framework of law W. A. No. 441 of 2022 -12- applicable as discussed above, the learned Single Judge has arrived at the findings and conclusions so as to decline reliefs to the appellant; and therefore we have no hesitation to hold that the appellant has not made out any case of jurisdictional error or other legal infirmities justifying us to interfere with the judgment of the learned Single Judge in an intra court appeal filed under Section 5 of the Kerala High Court Act.
Needless to say, appeal fails. Accordingly it is dismissed.
Sd/-
S. MANIKUMAR CHIEF JUSTICE Sd/-
SHAJI P. CHALY JUDGE Eb ///TRUE COPY/// P. A. TO JUDGE