MADURAI: Observing that litigations against the actions of credit-rating agencies are not maintainable before a High Court under writ jurisdiction, the Madurai Bench of Madras High Court dismissed a petition filed by a public trust, seeking to quash a communication sent by a credit-rating agency that the organisation's credit rating has been downgraded during lockdown.
Justice GR Swaminathan rejected the contentions of the petitioner's counsel that the credit-rating agencies are amenable to writ jurisdiction of the court as they discharge public functions.
The judge observed that credit rating, by which a debtor's ability to repay debt is analysed and credit-risk associated with lending to the said debtor is projected, is part of normal corporate functions. "Merely because they have implications on the general public and lending institutions tend to go by them, credit-rating agencies cannot be considered as discharging public function or public duty," he added.
Moreover, rating is an exercise that is carried out by financial analysts and professionals and writ court should not assume jurisdiction in matters which are better handled by experts, he opined.
He also went on to observe that credit-rating indicates the fiscal health of the person or the institution concerned and it is not right to expect that rating should not reflect the actual state of affairs as "any remedial treatment (measures) must be preceded by correct diagnosis (rating)".
He dismissed the petition as non-maintainable without going into the merits of the case, thereby offering the petitioner a chance to go for an in-house appeal.