Neutral Citation No. - 2025:AHC:119809-DB Court No. - 3 Case :- WRIT - C No. - 19854 of 2025 Petitioner :- M/S Kashvi Designs Pvt. Ltd Respondent :- Bank Of India And 5 Others Counsel for Petitioner :- Anil Kumar Pandey,Arvind Srivastava Counsel for Respondent :- Ashok Kumar Singh,Prabodh Kumar Bajpai Hon'ble Shekhar B. Saraf,J. Hon'ble Praveen Kumar Giri,J. 1. Learned counsel appearing on behalf of the petitioner prays for quashing the impugned order dated 21.03.2025 passed by the respondent no.6. By the impugned order, respondent no.6 on account of over due bills has declared the petitioner to be a NPA due to non-deposit of over due amount. Learned counsel on behalf of the petitioner has relied on the master circular issued on 23rd May, 2020 wherein it is categorically stated at clause 1.1.5 as follows:- "1.1.5 'Running Account' Facility' (i) As stated earlier, pre-shipment credit to exporters is normally provided on lodgment of LCs or firm export orders. It is observed that the availability of raw materials is seasonal in some cases. In some other cases, the time taken for manufacture and shipment of goods is more that the delivery schedule as per export contracts. In many cases, the exporters have to procure raw material, manufacture the export product and keep the same ready for shipment, in anticipation of receipt of letters of credit/firm, export orders from the overseas buyers. Having regard to difficulties being faced by the exporters in availing of adequate pre- shipment credit in such cases, banks have been authoritized to extend Pre- shipment Credit 'Running Account' facility in respect of any commodity, without insisting on prior lodgement of letters of credit/firm export orders, depending on the bank's judgement regarding the need to extend such a facility and subject to the following conditions: (a) Banks may extend the 'Running Account' facility only to those exporters whose trace Zones/Export Processing Zones (EPZs) and Special Economic Zones (SEZs) (b) In all cases where Pre-shipment Credit 'Running Account' facility has been extended, letters of credit/fir, orders should be produced within a reasonable period of time to be decided by the banks. (c) Banks should mark off individual export bills, as and when they are received for negotiation/collection, against the earliest outstanding pre- shipment credit on 'First In First Out'(FIFO) basis. Needless to add that, while marking off the pre-shipment credit in the manner indicated above, banks should ensure that export credit available in respect of individual pre-shipment credit does not go beyond the period of sanction or 360 days can also be marked-off with proceeds of export documents against which no packing credit has been drawn by the exporter. (ii) If it is noticed that the exporter is found to be abusing the facility, the facility should be withdrawn forthwith. (iii) In cases where exporters have not complied with the terms and conditions, the advance will not be treated as export credit ab initio. (iv) Running account facility should not be granted to sub-suppliers." 2. Learned counsel on behalf of the petitioner further submits that initial request for credit facility was granted by the Reserve Bank of India to them on 2nd February, 2023, wherein annexures categorically has stated that the EPC facility shall be for a period of 180 days. He submits that when the said account was renewed on 10th May, 2024 the EPC facility did not contain the 180 days limit. He accordingly submits that as per the RBI circular, he had 360 days for making payment of the advances that were taken in the running account. He further submits that in the present case, the bank has acted in haste and followed the limit of 180 days, which is not applicable as per the terms and conditions of the credit facility given to him. 3. Upon a perusal of the documents annexed to the writ petition, counter affidavit and the rejoinder affidavit, it is clear that the petitioner was making due payment of the credit facility within a period of 360 days. In the present case, the bank has sought for the payment within 180 days giving an additional extension of 90 days. 4. However, we are of the view that the impugned order of declaring the petitioner as NPA is not as per the terms and conditions of the fresh renewal that was carried out on 10th May, 2024. Accordingly, the order of 21.03.2025 is quashed and set aside. However, we make it clear that the Rs.33 lacs i.e. lying in the EPC account of the petitioner may be deducted by the bank immediately. We also make it clear that the bank should issue a fresh review letter for credit facility along with clear terms and conditions. The petitioner shall obviously provide all the documents as required by the bank for the said renewal. 5. With the above directions, the writ petition is disposed of. Order Date :- 22.7.2025 Mini (Praveen Kumar Giri J.) (Shekhar B. Saraf, J.) Digitally signed by :- MINI KANAUJIYA High Court of Judicature at Allahabad Digitally signed by :- MINI KANAUJIYA High Court of Judicature at Allahabad