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Monday, September 21, 2020

Supreme Court to Centre: Clear stand on interest waiver during moratorium

The SC had earlier said there was "no merit in charging interest on interest" for deferred payment of loan installments during the moratorium period.

By: Express News Service | New Delhi | Updated: August 27, 2020 2:13:55 am
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The Supreme Court on Wednesday asked the Centre to make “very clear” its stand on whether additional interest will charged on the existing interest for deferred payment of loan instalments, allowed by the RBI in wake of the lockdown.

“Please don’t hide behind the RBI,” the bench headed by Justice Ashok Bhushan said.

The bench, also comprising Justices R Subhash Reddy and M R Shah, expressed its displeasure at the Centre not filing an affidavit stating its stand and gave Solicitor General Tushar Mehta one more week to submit it.

“That will be as good as shelving the issue. You will have to make your stand very clear,” Justice Bhushan said when Mehta submitted that the RBI had decided on August 6 that it has to be considered sector-wise.

Justice Bhushan observed what is being complained of occurred due the lockdown and told Mehta, “You have to tell us your stand on the Disaster Manag-ement Act and whether interest on interest will be accounted for.”

“This happened because you locked down the entire country,” the court told the Centre while referring to the difficulties in loan repayments. Justice Shah told the S-G that is not the time to think about only business.

Appearing for the petitioner – Agra resident Gajendra Sharma – advocate Rajiv Dutta said he had reviewed an affidavit filed by the State Bank of India, but the Centre was yet to file any. He said the SBI or RBI had also not answered the aspect that arose in the context of the Disaster Management Act.

Mehta said there cannot be a one-size-fits-all solution.

The court will hear the matter again on September 1.

The plea urged the court to declare the portion of RBI’s March 27 notification “as ultra vires to the extent it charges interest on the loan amount during the moratorium period, which create hardship to the petitioner being borrower and creates hindrance and obstruction in ‘right to life’ guaranteed by Article 21 of the Constitution of India”.

The SC had earlier said there was “no merit in charging interest on interest” for deferred payment of loan installments during the moratorium period.

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