On Tuesday, Delhi high court passed an interim order restraining coercive action against mortgage lender IndiaBulls Housing Finance Limited (IHFL) for not paying the dues to its creditors. Citing the Reserve Bank of India’s (RBI) 27 March circular, Senior advocate Rajiv Nayar appearing for IHFL through a hearing via videoconferencing said that it has become impossible for the company to effect recoveries of debts, owed to it by various institutions due to the regulatory measures announced by the central government, consequent to disruption on account of the covid-19 and to ensure the continuity of viable businesses.
The RBI circular relied upon by the company gave liberty to all banks and financial institution to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding between 1 March and 31 May, subject to the borrower making such a request.
‘The repayment schedule for such loans as also the residual tenor, will be shifted across the board by three months after the moratorium period. Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period,’ the circular added. Nayar sought an ad-interim direction from the court preventing any coercive action being taken against IHFL for not being able to pay the outstanding dues amid covid-19 outbreak. Disputing the applicability of the aforesaid circular, Senior Advocate Neeraj Malhotra appearing for Securities and Exchange Board of India said that it does not affect companies liabilities arising from non- convertible debentures.
The court however passed the ad-interim order owing to the peculiar facts of this case and the present lockdown, till the next date of hearing. The court will now hear the matter on 19 May.
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