JSA successfully defends a listed NBFC – PTC India Financial Services Ltd. before the Hon’ble Supreme Court of India in a batch of connected Special Leave Petitions, upholding lenders’ right to enforce terms of the loan facility extended to borrowers.

JSA has successfully advised and represented PTC India Financial Services Ltd. (“PFS”) before the Hon’ble Supreme Court of India in a batch of connected Special Leave Petitions filed by certain wind power companies from the State of Andhra Pradesh. These wind power companies (“Borrowers”) had availed credit facilities from PFS (and few other lenders) and had defaulted in their repayment obligations. To explain their defaults, the Borrowers took a plea that there are certain payment disputes between them and Discoms; that they should not be declared as Non-Performing Assets (“NPAs”) owing to such disputes; and that their defaults are justified. The decision of the Hon’ble Supreme Court of India upholds the lenders’ right to declare the defaulting borrowers/accounts as NPAs and to recover outstanding dues from such NPAs, irrespective of any disputes which such borrowers may have with third parties.

In 2019, the Petitioners (i.e., Borrowers) had filed a writ petition before the Hon’ble High Court of Andhra Pradesh (“High Court”) seeking, inter alia, payments under Power Purchase Agreements (“PPAs”) executed between them and Andhra Pradesh Power Distribution Company (“APSPDCL”).

In the said writ petition, interim orders were passed by a Ld. Single Judge restricting the lenders (of such power projects) from declaring the loan accounts of the Borrowers as NPAs. Additionally, the lenders were restrained from taking any coercive action against the Borrowers (collectively, “Interim Orders”).

Subsequently, at the behest of the lenders, the Interim Orders were successfully challenged and vacated by the Ld. Single Judge by an Order dated 2 July 2025. This Order vacating the Interim Orders was also upheld by an Hon’ble Division Bench of the High Court by a final Judgment and Order dated 11 July 2025 (“DB Order”). In doing so, the Hon’ble Division Bench permitted the lenders, being third parties to the PPAs, to recover their respective dues from the Borrowers. The Hon’ble Division Bench held that the lenders’ right to recover outstanding dues cannot be curtailed or made conditional upon recoveries from APSPDCL. Feeling aggrieved, the Borrowers challenged the DB Order before the Hon’ble Supreme Court of India in the present batch of Special Leave Petitions.

After a detailed hearing and upon review of the entire material on record, the Hon’ble Supreme Court of India refused to interfere with the DB Order. While affirming the DB Order, the Hon’ble Supreme Court of India has underscored the fundamental principle that the lenders cannot be made to suffer at the hands of the Borrowers – on account of disputes that such Borrowers may have with third parties. In effect, the Hon’ble Supreme Court of India has upheld the lenders’ right to recover outstanding dues from accounts declared as NPAs, which, cannot be curtailed or made conditional upon recoveries from third parties.

Our Disputes Team comprised Lead Partner – Sidharth Sethi, Partner – Shreya Sircar, Associate – Deepank Anand, and Junior Associate – Riya Singh. JSA Team had also represented PFS before the Hon’ble High Court of Andhra Pradesh (both Single Judge and Division Bench).