ANVARDEEN.K Vs. UNION OF INDIA

JUDGEMENT

(1.) The proprietor of a Micro, Small and Medium Enterprise (MSME) running tissue culture lab and nursery, has filed this Writ Petition aggrieved by the rejection of its request for a loan under Ext.P5 scheme, by the respondent Bank as per Ext.P10 letter.

(2.) The Central Government floated a Credit Guarantee Scheme for Subordinate Debt (CGSSD) in order to provide guarantee coverage for CGSSD to provide subdebt support for restructuring of MSMEs. 90% guarantee coverage would come from scheme/trust and remaining 10% from the concerned promoters. The aim of the scheme is to provide personal loan through banks to the promoters of stressed MSMEs for infusion as equity/quasi equity in the business eligible for restructuring, as per RBI guidelines for restructuring of stressed MSMEs. The credit product for which guarantee is provided under the scheme is named CGSSD. For the purpose of the scheme, a credit guarantee fund trust is set up by the Government of India and SIDBI for Micro and small enterprises for the purpose of guaranteeing credit facility extended by the member lending institutions to the eligible borrowers. Distressed assets fund is defined as a fund of Rs.4,000/- crore created by the Government of India for providing guarantee coverage to the loans given/extended to the promoters of the eligible MSME under the scheme.

(3.) As per Ext.P6 letter dt.9.7.2020, the petitioner had requested the Manager of IOB branch at Palakkad the 4th respondent, to grant a sum of Rs.15 lakhs including the financial credit guarantee when the firm continued to operate. It was stated in this letter that the company was unable to function after the lock down and that stock culture was decayed and contaminated. It was stated that funds are required for further operation of the company.