A 3-Judge Bench of the Supreme Court on Wednesday marked their strong disapproval on the charging of interest on loans and interest on interest during the Moratorium period declared for COVID. The Bench comprising Justice Ashok Bhushan, R Subhash Reddy, and M.R. Shah was hearing a plea filed by an Agra Resident, Gajendra Sharma, who sought a direction to declare a portion of the notification issued by the RBI on March 27 as ultra vires. The plea advanced that the impugned notification which charges interest on the loan amount even during the moratorium period declared for COVID-19, by inducing hardship to the petitioner in his capacity as a borrower and creates hindrance and obstruction in the ‘Right to life’ guaranteed under Article 21 of the Indian Constitution. The petitioner also sought relief in repayment of the loan from the RBI and the Government, by not charging interest during the moratorium period.
The Court came down heavily on the Centre for failing to take a stand in the matter. The Bench demanded clarification from the Solicitor General, Tushar Mehta on the Centre’s stand on the Disaster Management Act, and whether additional interest on existing interest should be accrued. The SG recounted that a common solution for all the problems is not possible. He submitted that the Centre is working in close coordination with the RBI to ease the burden on the borrowers. The three months moratorium period declared by the RBI after being extended, now stands to expire on August 31.
The Bench granted time to the government so that response can be filed for which the SG requested a week. The case has been posted for hearing on September 1.
Lakshmi Raj C