Delhi HC provides interim relief to an account from being declared NPA by the Punjab & Sind Bank, in light of the moratorium allowed by the RBI by its circular issued on March 27

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The Delhi High Court has restrained the Punjab and Sind Bank from declaring an educational society, which defaulted in repaying loan instalments, as a Non-Performing Asset during the nationwide lockdown.

Prior Facts:

The Petitioner, Shakuntla Educational & Welfare Society, had moved the court seeking a direction to Punjab & Sindh Bank to not declare its pending loan accounts as a Non-Performing Assets (NPA).

The Petitioner had also sought a direction to the Bank for grant of the moratorium of three months to it in terms of the Circular issued by the Reserve Bank of India (RBI) on March 27.

Key Features:

  • The society has sought a reprieve of three weeks in paying loan instalment due to the lockdown, citing an RBI circular imposing a moratorium of three months in respect of all term loans. It said the institutes run by it were in Uttar Pradesh and the state government has issued a directive prohibiting it from coercing students to pay fees.
  • The society said it was engaged in the business of technology and higher education and had availed six-term loans from the bank to set up institutes. It said it had been making repayments but failed to pay the instalment payable on or before March 31.
  • It assured the court it will pay the instalments within a week from the date of withdrawal of the UP government directive.
  • The plea was opposed by Punjab and Sind bank, which said the default qua instalments had already fallen due on December 31, 2019, and the March 31, 2020, deadline was concerning the loan accounts turning into NPA.
  • It said since the instalment had become due before March 1, the moratorium envisaged by the RBI would not apply to the society and the regulatory policy did not provide for deferment of an account being classified as NPA due to the coronavirus pandemic.


Justice Rekha Palli, who heard the case through video, issued notices to Punjab and Sind Bank and the Reserve Bank of India, seeking their response on the petition filed by Shakuntla Educational and Welfare Society against being declared its account an NPA.

Before listing the matter for May 4, the court told the society it will have to pay the pending instalments within one week of the UP government withdrawing its order asking educational institutes to not pressure parents to pay fees during the lockdown.

The court directed the bank to not declare the society’s account NPA till May 4.

The judge said that “Any classification of the petitioner’s accounts as NPA would certainly amount to altering the position as existing on March 1, 2020, and, therefore, grave and irreparable loss will be caused to the petitioner, in case, its accounts are declared as NPA, only on account of its failure to pay the instalments, which were admittedly payable on or before March 31, 2020”.

Edited by J. Madonna Jephi

Approved & Published – Sakshi Raje


Case of Shakuntla Educational & Welfare Society versus Punjab & Sind Bank, W.P. (C) 2959/2020, decided by High Court of Delhi on April 13, 2020.

Vaibhav Goyal
Vaibhav Goyal is a 3rd year BA.LLB (H) student of UILS, Panjab University, Chandigarh, India. He also basically belongs to the “City Beautiful-Chandigarh”. He had interned and have work experience at various Central and State Government bodies of India including the National Human Rights Commission, New Delhi; the Central Information Commission, New Delhi; U.T. Legal Services Authority, Chandigarh, etc. His research projects includes the study on the Right to Emergency Services (PSHRC), Resettlement of Migrant People (NHRC), Implications of RTI in Financial Institutions (CIC), etc. His publications involve articles in different fields of law like administrative, jurisprudence, etc. on online journals including the Juscholars Blog, Burnished Law Journal, etc. His research paper on Prison Reform was published in the Panjab University Journal and his paper was selected in category of best abstract on the topic of Naxalism: A State of Lawlessness and Arbitrariness. He had scored well in various competitions of law consisting of Quiz, Essay Writing, Lecture, Declamation, etc. He had also participated in various conferences including the World Law Forum Conference on Strategic Lawsuits on Public Participation held in New Delhi on Oct 20, 2018 and the National Law Conclave 2020 held at Vigyan Bhawan, New Delhi on Jan 11, 2020.