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Top court turns down plea for moratorium on loans during Covid-19 crisis
A similar issue was dealt with by the top court last year in a petition filed by Agra resident Gajendra Sharma. He had sought waiver of interest during moratorium period announced by RBI extending from March to August last year.
Judges are not experts who deal with financial matters, observed the Supreme Court on Friday as it refused to entertain a petition demanding moratorium on loan repayment similar to an exercise conducted by the Court last year during the first wave of the Covid-19 pandemic.
Leaving the decision to be taken by the Centre and the Reserve Bank of India (RBI), a bench of Justices Ashok Bhushan and MR Shah said, “In financial matters and matters with financial implications we are not experts.” The Court was hearing a petition filed by advocate Vishal Tiwari who sought remedial measures to redress and overcome the financial stress and hardship faced by small borrowers across the country.
Referring to the second wave of the Covid-19 pandemic, Tiwari informed the Court that more people lost jobs during the present wave of the pandemic and the accompanying lockdown affecting middle class families. The bench referred to a circular issued by the RBI on May 5 that spoke about Resolution of Covid-19 stress for Micro, Small and Medium Enterprises (MSME).
Tiwari said that the circular did not sufficiently address the hardships of small borrowers. The bench said, “The financial relief and other measures are in the domain of the government and essentially related to policy matters.” The judges observed, “We can’t be telling them when the government is already spending on procuring vaccines, to deal with migrant labourers.”
A similar issue was dealt with by the top court last year in a petition filed by Agra resident Gajendra Sharma. He had sought waiver of interest during moratorium period announced by RBI extending from March to August last year. It was on the Court’s insistence that the Centre and RBI considered the plight of small borrowers and decided to waive compound interest on interest, referred to as “interest on interest”. This was provided to personal borrowers and MSMEs who took loans or had credit card dues upto ₹2 crore.
But in the present case, the bench noted, “All the issues which are raised are policy matters and it is for the Union of India and the Reserve Bank of India to consider and take appropriate decision.” Tiwari appealed to the Court to restrain any eviction or auction by banks on account of non-repayment of loan instalments. The bench refused saying, “No general order can be passed against auction or eviction.”
