The Supreme Court on Wednesday sought the Centre’s reply and make its stand clear on giving moratorium on charging interest on loans as well as interest-on-interest during moratorium period declared during the Coronavirus pandemic.
During a hearing against financial institutions levying interest on loans while the temporary suspension period was on, the top court pulled up the Centre for not taking a stand on waiver of interest on interest during the loan moratorium period.
The apex court observed that it appears the Centre is hiding behind the Reserve Bank of India’s decision on this issue, especially when it has ample powers under Disaster Management Act, where it can take a decision by stopping the banks from charging interest on deferred EMIs and waive interest on interest for a moratorium period.
A bench comprising Justices Ashok Bhushan, R Subhash Reddy and MR Shah told the Centre that it cannot be interested only in business and not care about the sufferings of people.
It said the problem has been created by the lockdown imposed by the Central government. “This is also not the time to consider business. The plight of people has to be considered,” the Supreme Court observed.
“This happened because you locked down the entire country. You have to tell us your stand on two things: disaster management act and if the interest on interest will be accounted for,” the bench said.
The petitioner’s counsel informed the top court that the moratorium ends on August 31, and on September 1, his client will be in default.
When the top court asked about the government’s stand, Solicitor General Tushar Mehta said, “There cannot be a solution which is one-size fits all.”
Mehta contended before the bench that the decision was taken on August 6 and that this issue has to be decided as per different sectors.
The Solicitor General further informed the top court that the Centre is working in association with the RBI to ease out the difficulties for people who have availed loans.
The top court has granted one-week time to Solicitor General Tushar Mehta to file an affidavit clarifying Centre’s stand and posted the matter for further hearing on September 1.
The observation from the top court came on petitions filed by Gajendra Sharma and others against the financial institutions levying interest on loans during the moratorium period.