BackDelhi HC passes interim order of no coercive action against Eastman Auto & Power
The High court has restrained Bank of Baroda, Bank of India, Punjab National Bank, Union Bank of India and SBI Global Factors Limited from taking any coercive action against it till the next date of hearing
PremiumThe Delhi High court has passed an interim order of no coercive action against Eastman Auto and Power Limited which shall include declassification of it, for the default committed by it in the Reverse Factoring Facility subject to the conditions stipulated by the court through its further orders.
The High court has restrained Bank of Baroda, Bank of India, Punjab National Bank, Union Bank of India and SBI Global Factors Limited from taking any coercive action against it till the next date of hearing.
Justice Navin Chawla observed that prima facie the notifications dated 27 March and 17 April 2020 issued by Reserve Bank of India (RBI) was to provide financial relief to the parties who have availed the term loans and working capital facilities.
While referring to another order of its court where it had observed that the intention of the RBI appears to be to maintain status quo as on 1 March 2020 with regard to the financial facilities that have been granted to various parties and have fallen due.
It is the case of Eastman Auto & Power Limited that it had availed electronic bill discounting facility known as Reverse Factoring Facility through the Trade Receivable Discounting Systems(TReDS) from the above mentioned banks.
The petitioner represented by advocate Manmeet had submitted that for the facility so availed, it had made full payment till 31 March. However, due to the restrictions declared because of the COVID-19 pandemic, the petitioner has not been able to make payment for servicing of such facility for the period beyond it.
The court however said that the respondents would be free to consider the representation of the petitioner for further extension of the facility, remaining uninfluenced by any observation of this court in the present order.
Bank of Baroda and Union Bank of India opposed on the ground that the facility availed by the petitioner would not be covered by the notifications/office orders dated 27 March and 17 April issued by RBI.
Their counsels submitted that such facility is intended to provide working capital to the MSME(s) who have made supplies to the petitioner and raised invoices on the petitioner. Such facility is not intended for the benefit of the petitioner. They further submitted that any default in the timely payment by the petitioner would in fact make the petitioner liable for the penal consequences
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