- 1 - HC-KAR NC: 2025:KHC:44521 WP NO.21374 OF 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 05TH DAY OF NOVEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE E.S. INDIRESH WRIT PETITION NO.21374 OF 2023 (GM-RES) BETWEEN: ECONOMIC TRANSPORT ORGANISATION LIMITED REP. BY AUTHORISED SIGNATORY , MR. SRIVARDHAN ARYA, NO.70/1, SESHA TOWER, MISSION ROAD, BENGALURU - 560 027. …PETITIONER (BY SMT. CHITHRA NIRMALA P., ADVOCATE) AND: 1. DEUTSCHE BANK RAHEJA TOWERS, NO.26-27, M.G. ROAD, BENGALURU - 560 001. 2. RESERVE BANK OF INDIA CENTRAL OFFICE BUILDING, SHAHID BHAGAT SINGH ROAD, MUMBAI, MAHARASHTRA - 400 023. …RESPONDENTS (BY SRI. MANOJ K., ADVOCATE FOR SRI. MAHABALESHWAR CHITRIGEMATH, ADVOCATE FOR R1; SRI. PRADEEP S. SAWKAR, ADVOCATE FOR R2) Digitally signed by ARUNKUMAR M S Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:44521 WP NO.21374 OF 2023 THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE APPLICATION OF PENAL INTEREST IN THE LOAN ACCOUNT NO.300028066700019 BY THE RESPONDENT NO.1- DEUTSCHE BANK AG VIDE ANNEXURE-X; DIRECT THE RESPONDENT NO.2-RESERVE BANK OF INDIA TO ISSUE GUIDELINES ON APPLICATION OF PENAL INTEREST TO THE LOAN ACCOUNT DURING THE PANDEMIC PERIOD OF 15TH MARCH, 2020 TO 28TH FEBRUARY, 2022; AND ETC. THIS PETITION COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE E.S. INDIRESH ORAL ORDER In this writ petition, the petitioner is challenging the imposition of Penal Interest in the Loan Account of the petitioner by the respondent No.1-Bank. 2. Heard Smt. Chithra Nirmala P., learned counsel appearing for the petitioner; Sri. Manoj K, learned counsel on behalf of Sri. Mahabaleshwar Chitrigemath, appearing for the respondent No.1; and Sri. Pradeep S. Sawkar, learned counsel appearing for the respondent No.2. 3. Smt. Chitra Nirmala P., learned counsel appearing for the petitioner submits that the respondent No.1-Bank cannot impose the penal interest in the Loan Account of the petitioner since, the respondent No.2-Reserve Bank of India - 3 - HC-KAR NC: 2025:KHC:44521 WP NO.21374 OF 2023 had waived off the penal interest during the period of COVID- 19 Pandemic. Learned counsel appearing for the petitioner, referring to the Circular dated 06th August, 2020 (Annexure-L) issued by the respondent No.2, argued that the Reserve Bank of India had issued guidelines as well as the direction to the Financial Institutions, Non-Banking Financial Institutions and Commercial Banks for not to impose the penal interest and despite the same, the respondent No.1-Bank had imposed the penal interest, which is contrary to the guidelines issued by the Reserve Bank of India. Accordingly, she sought for interference of this Court. 4. Per contra, Sri. Manoj K., learned counsel appearing for the respondent No.1 produced the Circular dated 23rd May, 2020 and submitted that the Reserve Bank of India issued the guidelines and extended the moratorium for three months from June-2020 to August-2020 on payment of all installments in respect of term loans (including agricultural term loans, retail and crop loans). He further contended that, as the petitioner herein was defaulted and the account of the petitioner became Non-Performing Asset on 15th March, 2021, which is the post - 4 - HC-KAR NC: 2025:KHC:44521 WP NO.21374 OF 2023 Pandemic-2019 period, the writ petition deserves to be dismissed. 5. Having heard the learned counsel appearing for the parties, it is not in dispute that the petitioner had availed loan from the respondent No.1-Bank. Perusal the Circular dated 06th August, 2020 (Annexure-L) would indicate that the Reserve Bank of India issued Framework for COVID-19 related Stress, in which guidelines have been issued to the respective Banks with regard to difficulties faced by the borrowers for payment of EMIs. On careful examination of the Circular dated 06th August, 2020 (Annexure-L), the same would indicate that, nothing has been stated about the waving of penal interest by the Banks. On perusal of the letter dated 21st March, 2021 (Annexure-Q), the same would indicate that the Account of the petitioner with the respondent No.1-Bank was held to be Non- Performing Asset on 15th March, 2021 and the said aspect was in accordance with the guidelines issued by the Reserve Bank of India. It is also forthcoming from the Circular dated 23rd May, 2020 produced by the learned counsel appearing for the respondent No.1 that, nothing has been stated in respect of waiving off of the penal interest. In that view of the matter, as - 5 - HC-KAR NC: 2025:KHC:44521 WP NO.21374 OF 2023 the petitioner had borrowed money from the respondent No.1- Bank on account of the contractual obligation and as there is no circular produced by the petitioner with regard to waiving off of the penal Interest, I am of the view that no interference be called for in this writ petition, since the respondent No.1-Bank had already initiated the proceedings under Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Accordingly, writ petition is dismissed. SD/- (E.S. INDIRESH) JUDGE ARK List No.: 1 Sl No.: 12