The top court asked the Centre to bring the decision on record and circulate the affidavit to the parties in a batch of pleas challenging interest on deferred instalments.
The Centre informed the Supreme Court on Monday that a decision is likely in 2-3 days over charging of interest by banks on instalments which were deferred during the moratorium period in view of the COVID-19 pandemic. The top court asked the Centre to bring the decision on record and circulate the affidavit to the parties in a batch of pleas challenging interest on deferred instalments.
The Centre informed the top court that the matter has received very serious consideration and the decision making process is at advanced stage. A bench headed by Justice Ashok Bhushan said that it would hear the batch of pleas filed by various industries, trade associations and individuals on October 5.
”Mr Tushar Mehta, learned Solicitor General, submits that the issues are under active consideration of the Government of India and only after decision is taken, an affidavit along with decision can be filed. “He further submits that the affidavit will be sent by October 1, through email to appearing counsel. List on October 5, 2020,” said the bench also comprising Justices R Subhash Reddy and M R Shah. Mehta, appearing for the Centre said the government is looking into several economic issues.
The bench asked Mehta if he will be able to circulate his affidavit in advance to the parties concerned to which he agreed. ”We will fix the matter for Monday (October 5). Whatever is your policy, whatever you have, you circulate it. We will take it up on Monday. We don’t want any further adjournment,” the bench said. It said that Mehta shall endeavour to circulate the affidavit among the parties by Thursday so that the matter is heard on October 5.
”The decision taken by the government should be brought on record along with an affidavit,” the bench said. Senior advocate Rajiv Dutta, appearing for the main petitioner Gajendra Sharma, said this is a very important matter and banks are acting as if it is a very normal issue.
Mehta requested him to wait for 2-3 days so that the government can take a final call. ”I assure you that it is under consideration and it is at a very advanced stage”. On September 10, the top court had extended its interim order that no account is to be declared a non performing asset (NPA) or bad loan till further orders after the Centre said an expert panel has been set up to look into the issue of interest being charged by banks on instalments deferred during the moratorium period due to COVID-19 pandemic.
The government at ‘highest level’ is considering all the issues raised before the court in the petitions and a decision would be taken within two weeks, the Centre had informed the apex court. The top court had directed that decisions taken by the Centre, the RBI and different banks be placed on record for consideration.
”As noted above, on the next date of hearing, the specific instructions with regard to charging of compound interest and credit rating/downgrading during moratorium period shall be obtained, so that appropriate order be issued on the next date of hearing,” the bench had said.
The Centre had sought two weeks’ time to file an appropriate affidavit bringing on record the relevant decisions and directions of the government as well as the Reserve Bank of India (RBI). It had said that everything has to be considered holistically and the government is considering all the sectors, for which an expert panel has been constituted.
The top court had asked the Centre that concrete decisions should be taken with clarity. On September 3, in a relief to stressed borrowers who are facing hardship due to the impact of pandemic, the top court had said that accounts which were not declared as non-performing assets till August 31 this year, shall not be declared NPA till further orders.
The pleas in the apex court have raised issues pertaining to validity of RBI’s March 27 circular which allowed lending institutions to grant moratorium on payment of instalments of term loans falling due between March 1, 2020 and May 31 this year due to the pandemic. Later, the period of moratorium was extended till August 31.
The Centre had recently told the court that waiver of interest on deferred EMIs during moratorium period would be against ‘the basic canons of finance’ and unfair to those who repaid loans as per schedule. RBI has however come out with a scheme which provides for extension of moratorium for two years to certain stressed borrowers, the Centre had informed the top court.