HE Supreme Court Tuesday ruled that there would be no charge of interest on interest, compound interest or penal interest for the period during the pandemic moratorium from March 31, 2020 to August 31, 2020 and any amount already recovered under the same head will be refunded to the concerned borrower and credited or adjusted in the next instalment of the loan payment.
“There is no justification shown to restrict the relief of not charging interest on interest with respect to the loans up to Rs. 2 crores only and that too restricted to the aforesaid categories. What is the basis to restrict it to Rs.2 crores are not forthcoming,” a bench of Justices Ashok Bhushan, MR Shah and Subhash Reddy said.
The bench, however, declined to extend the period of the moratorium and turned down a plea seeking sectorwise relief by the RBI.
“Whatever best can be offered had been offered for the different fields and to the common people as well as those persons who are affected due to the Covid19 pandemic,” the bench said.
Referring to various relief packages announced by the Centre, such as ‘Garib Kalyan Package’ and ‘Aatma Nirbhar Package’, the court opined it could not be said that the Centre and RBI had not addressed the issues related to the impact of Covid19 on borrowers.
It added just because the reliefs announced by the government and the RBI may not be what the borrowers want, the reliefs/policy decisions related to Covid19 cannot be said to be arbitrary or violative of Article 14 of the Constitution or that any fundamental right had been infringed or violated.
Economic decisions are required to be taken keeping the larger economic scenario in mind, the court said.
It also lifted the interim order not to declare the accounts of respective borrowers as NPA.
The top court was ruling on a batch of petitions filed by small industries, individuals and business associations challenging the decision of the Centre and RBI to charge interest during the moratorium period and restrict the waiver of interest on interest to eight categories of borrowers who had availed loans of less than Rs. 2 crore.
Read the Judgement