The Supreme Court while passing the verdict on loan moratorium said that judicial review is not possible on economic policy matters.
The court said the complete waiver of interest during the loan moratorium cannot be granted. The verdict on the moratorium was passed by a bench comprising Justices DY Chandrachud, MR Shah and Sanjiv Khanna.
The Apex Court said that judicial review is not possible on economic policy matters. It is not for the court to decide what should be the nature of financial reliefs. “However, the Supreme Court observes that there is no rationale in the Centre's policy to limit the benefit of waiver of interest on interest only to specific loan categories.
The Centre had earlier submitted before the court that if a waiver of interest for all the loans and advances in all categories of borrowers for the six-month moratorium period was considered, then the amount lost will be in tune of more than Rs 6 lakh crore. This move will hurt the lenders in such a way that they will not be able to survive.
In today's verdict, the apex court directed that there shall be no interest on interest or penal interest on any amount during the loan moratorium from any borrower, and the interest so collected should be adjusted.
This verdict is in response to multiple pleas by various trade associations, including from real estate and power sectors, seeking extension of loan moratorium and other reliefs in view of the COVID-19 pandemic. The court added it cannot issue directions to provide relief to particular sectors over and above the sectors identified by the Government.