2 firms get stay on bank moves

Non-bank lenders Reliance Home Finance and Reliance Commercial Finance have obtained interim stays against Punjab National Bank (PNB) and Bank of Baroda (BoB) from classifying the two companies as fraud accounts.

The Delhi high court passed the orders on 11 and 14 August. While the 11 August order pertains to PNB's classification of the two companies as fraud, the 14 August rulings are in cases against Bank of Baroda. According to copies of the orders seen by Mint, the primary grouse of the two companies is that they were not given a hearing before the banks decided to proceed with the classification.

"Respondent No. 1 (PNB) will maintain status quo as of today (11 Aug) regarding the impugned order till the next date of hearing," the court said. However, it clarified that PNB is free to issue a showcause notice to the petitioners, give a hearing through video conferencing, and then pass an order as per the law.

It is also clarified that respondent number one (PNB) is free to take any step/ investigation/ file any complaint/ proceedings against petitioner number one (both the companies) as per law independent of the aforesaid order declaring the account of petitioner number one as a fraud account," it said.

Both Reliance Home Finance and Reliance Commercial Finance are petitioner one in their cases against PNB.

In the case against BoB, the high court said that "placing of the petitioner in the category of fraud shall be kept in abeyance till the next date. The respondent bank shall not take any steps prejudicial to the interest of the petitioners."

Emailed queries to the Reliance Group, BoB and PNB remained unanswered.

In their petition against PNB, both non-bank lenders said that although the consortium of lenders met on 6 June, no notice was sent to them and even the minutes of the meeting were not provided. "On 28 July 2020, petitioner number one, it is stated, was shocked to learn from the queries raised by the media that respondent number one (PNB) has classified the account of petitioner number one as a fraud. It appears that respondent number one had informed the other banks of such classification," said the high court order.