The Centre is "hiding behind the RBI", the Supreme Court said on Wednesday and asked it to reply within a week on the issue of interest being charged on instalments which have been deferred under the central bank's scheme during the moratorium period amid COVID-19 lockdown.
"This happened because you locked down the entire country," the apex court told the Centre while referring to the difficulties in loan repayments.
The court had earlier asked the Centre and the Reserve Bank of India (RBI) to review the move to charge interest on EMIs during the moratorium period introduced under the scheme due to the COVID-19 pandemic.
"The Centre has not made its stand clear till now. Ample powers are available with the Centre under the Disaster Management Act. You have to make the Centre's position clear," a bench headed by Justice Ashok Bhushan said in a hearing conducted through video conferencing.
"Centre is hiding behind the RBI," said the bench which also comprised Justices R Subhash Reddy and M R Shah.
"My Lordships may not say that. We are working in coordination with RBI," Solicitor General Tushar Mehta said and sought a week's time for filing response in the case.
The bench said: "You have to tell us your stand on two things" -- that is the role of the Centre under the Disaster Management Act and whether the "interest on interest" will be accounted for.
Mehta argued that there cannot be a common solution for all the problems.
Senior advocate Kapil Sibal, appearing for one of the intervenors, said that the loan moratorium scheme is ending on August 31 and it should be extended.
"I am only saying that till these pleas are decided, the extension should not end," Sibal said.
The apex court has now posted the matter for hearing on September 1.
The top court had earlier said there was "no merit in charging interest on interest" for deferred loan payment installments during the moratorium period announced in wake of the COVID-19 pandemic.
The bench was hearing a plea filed by Agra resident Gajendra Sharma, who has sought a direction to declare the portion of the 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".
Sharma has also sought a direction to the government and the RBI to provide relief in repayment of loan by not charging interest during the moratorium period.
On June 4, the top court had sought the Finance Ministry's reply on the waiver of interest on loans during the moratorium period after the RBI said it would not be prudent to go for a forced waiver of interest risking financial viability of the banks.
The top court had said there were two aspects under consideration in this matter - no interest payment on loans during the moratorium period and no interest to be charged on interest.
It said these were challenging times and it was a serious issue as on one hand, moratorium was granted and on the other, interest was charged on loans.