Page 23 - Banking Finance September 2020

LEGAL UPDATE

LEGAL

CASES
CASES
CASES
CASES
CASES

Kerala HC allows bank to SC: Backwardness can't munity are not exceptional circum-
stances for providing reservations in
return FDs in EMIs justify 50% cap breach excess of 50%."
Debtors moving the court for an The Supreme Court has said that social, "We are of the prima facie opinion that
equated monthly instalment (EMI) op- educational and economic backward- the high court committed an error in
tion to pay off loans declared as ness or inadequate representation of treating the above factors as circum-
nonperforming assets is common. But a community in public services cannot stances which are extraordinary, war-
now, a bank has sought EMI facility to be a ground to grant it reservation in ranting relaxation of the strict rule of
return fixed deposits, and the Kerala breach of the 50% ceiling fixed by the 50%," the bench said while disagree-
court. A bench of Justices L Nageswara
high court has allowed it. ing with the HC order which had up-
Rao, Hemant Gupta and S Ravindra
The Pattanakkad Service Cooperative held the validity of the Socially and
Bhat said relaxation of the "strict rule
Bank near Cherthala was responding of 50% can be made in certain extraor- Educationally Backward Classes Act
to a petition filed by an investor, Dr dinary situations". under which reservation for the
Divya Prakash of Pattanakkad, ques- Maratha community was granted in
The bench stayed operation of the jobs and educational institutions.
tioning the bank's refusal to return the
Maharashtra law to grant reservation
fixed deposits she made in 2013. The bench said implementation of the
to Marathas holding that the govern- law during pendency of the case would
Admitting the veracity of fixed deposit ment prima facie failed to make a case cause "irreparable loss" to the candi-
receipts produced by the petitioner and to justify its decision. The judgment dates belonging to the open category
liability, the bank's counsel sought the underscores the primacy of the quota as it would be difficult to cancel the
court's permission to repay the amount ceiling the SC laid down in the Indra admissions made in educational institu-
in 10 EMIs citing financial constraints. Sawhney case and will serve to consti- tions and appointments made to public
The court directed the bank to repay tute a high threshold for governments posts at a later stage if the law is de-
the amount covered under eight fixed seeking to provide reservation in clared invalid and unconstitutional.
deposit receipts in 10 EMIs from Octo- breach of it.
ber 10. The bench said, "The social, educa- Centre to SC: Moratorium
Petitioner's counsel advocate B tional and economic backwardness of on loan repayment can be
Pramod said the bank was in financial a community, existence of quantifiable
trouble, allegedly due to mismanage- data relating to inadequacy of repre- extended by 2 years
ment, and a few other customers had sentation of the community in public The Centre informed the Supreme
also approached the high court to get services and deprivation of the benefits Court that moratorium on repayment
back their deposits. flowing from reservations to the com- of loans allowed during the Covid-19

BANKING FINANCE | SEPTEMBER | 2020 | 23