Authority: High Court of Karnataka at Bengaluru
Order Date: 25 June 2026
Case Overview
- Petitioner: Ganjam Nagappa and Son Private Limited, a company engaged in retailing luxury jewellery and stones, represented by authorised representative Mr. Ganjam Bimaji Umesh.
- Respondents: Reserve Bank of India (RBI) and five scheduled commercial banks – Deutsche Bank A.G., State Bank of India, Canara Bank, ICICI Bank Limited, Kotak Mahindra Bank Limited – together with the Union Ministry of Finance.
- Writ Petition No.: 18122 of 2025 (GM‑DRT), filed under Articles 226 and 227 of the Constitution, seeking (a) a mandamus directing respondents 3‑7 to comply with the RBI Prudential Framework dated 7 June 2019 and convene a 30‑day review meeting of all lenders for a joint resolution/settlement, (b) quashing of demand notices dated 2 May 2024 and 30 Nov 2022, (c) declaration that the classification of the petitioner’s debt as NPA by respondent 4 is illegal, (d) direction to RBI to consider the petitioner’s representation dated 19 April 2025, and (e) enforcement of the Emergency Credit Line Guarantee Scheme (ECLGS) for loan amounts of INR 3.75 cr, INR 7.38 cr and INR 1.99 cr.
- Loan History: Between 2016‑2021 the petitioner availed loans totalling INR 20 cr from Deutsche Bank (LAP I 1.60 cr, LAP II 4.90 cr, LAP III 5.95 cr, LAP IV 3.05 cr) and a working‑capital facility of INR 4.50 cr. Under the GECL facility, SBI disbursed INR 40.75 cr (sanctioned INR 7.38 cr), Canara Bank INR 11.14 cr (sanctioned INR 1.99 cr), ICICI Bank INR 5.26 cr, Kotak Mahindra Bank INR 14.04 cr, total disbursed INR 71.19 cr, total GECL sanctioned INR 9.37 cr.
- Background of Dispute: The petitioner claimed COVID‑19‑induced stress, sought restructuring, and alleged that lenders failed to convene a proper consortium meeting as required by the Prudential Framework. Deutsche Bank missed the December 28 2020 meeting; subsequent meetings in 2021‑2024 resulted in majority lender decisions to reject the petitioner’s resolution plan, while Deutsche Bank unilaterally invoked SARFAESI proceedings. Demand notices and show‑cause notices were issued by respondents 4‑7, and the petitioner alleged illegal classification of its accounts as NPA on various dates (e.g., SBI on 30 Apr 2024, Canara Bank on 30 Dec 2020, etc.).
- Representations: The petitioner filed representations with RBI on 19 April 2025 and 21 April 2025, and submitted an OTS proposal on 14 June 2025 for Rs 33.50 cr (later cited as Rs 30.91 cr, 50 % of outstanding debt). RBI’s objections argued that the inter‑creditor agreement (ICA) is mandatory only when a resolution plan is implemented and that the petitioner’s relief against RBI is not maintainable.
- Counsel Submissions: Senior counsel for the petitioner (Krishnendu Datta) relied on Section 35A of the Banking Regulation Act and cited Supreme Court judgments on the binding nature of RBI directions. Respondents’ counsel argued that the appropriate forum for NPA disputes is the Debt Recovery Tribunal, not the High Court, and that the petition is frivolous.
- Court’s Consideration: The Court examined the Prudential Framework provisions (paragraphs 9 and 10), the requirement of a majority (75 % by value and 60 % by number) for binding decisions, and the fact that Deutsche Bank’s non‑participation does not defeat the majority decision of the consortium.
Final Outcome
- The Court found no merit in the writ petition concerning the Prudential Framework; non‑participation of Deutsche Bank does not vitiate the resolution process.
- The petitioner was directed to approach the Debt Recovery Tribunal under Section 17 of the SARFAESI Act for any grievance against bank recovery actions.
- Any pending representations before RBI shall be considered within four weeks of receipt of the order.
- The writ petition is hereby disposed of and all interim applications are closed.
Topics: Court Order, Banking Regulation, Debt Resolution