The Supreme Court on Friday closed the matter of interest charged during six months of moratorium declared by the Reserve Bank of India (RBI) up to August end, in lieu of the Corona pandemic, as a sequel to the government pledging to bear the cost of the difference between compound and simple interest to ensure those taking loan are not burdened.
A 3-judge Bench of Justices Ashok Bhushan, R Subhash Reddy and M R Shah directed the Centre and its finance ministry to implement its decision dated October 23 "so that benefit as contemplated percolates to those for whom the financial benefits have been envisaged and extended."
There is, however, no word in the judgment on the pleadings of the power producers and others who were told in the last hearing to approach the RBI counsel and the Centre and the RBI told to respond.
In its 24-page judgment penned by Justice Bhushan, the Court narrated how one Gajendra Sharma of Agra knocked at the door of the top court over the banks still charging interest on the bank loans despite a moratorium declared by The Supreme Court in March. The petitioner had taken a home loan of Rs 37.48 lakh from the ICICI Bank.
Sharma's case was that when all the means of livelihood have been curtailed by the Government by imposing a complete lockdown pan India, he has no way to continue his work and earn livelihood. On the top of it, imposition of interest during the moratorium period is ultra vires as it defeats the purpose of permitting the moratorium of loans.
As the judgment notes, the petitioner's case was that the notification qua payment of interest violates the principle of natural justice as the government on one hand ceased the working of the individuals and on the other hand asking to pay the loan interest during moratorium.
At the last hearing on November 19, senior advocate Rajiv Dutta appearing for Gajendra Sharma to dispose of his writ petition in view of the government's affidavits to pay the interest part, expressing satisfaction on the measures taken by the government with respect to the borrowers. He told the court that the government's decision to forego interest on eight specified categories of loans paid up to Rs 2 crore has come as a great relief, the judgment noted.
Eight categories were: MSME, education loan, housing loan, consumer durable loan, credit card dues, automobile loans, personal loans to professionals and consumption loans. The court said the case of original petitioner Gajendra Sharma who had taken the housing loan is fully covered.