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New Delhi, June 4, 2020
After the Reserve Bank of India said the waiver of interest charges on EMIs during moratorium will lead to loss of 1 per cent of the GDP, the Supreme Court on Thursday asked the Finance Ministry to reply whether the interest could be waived or it will continue during the moratorium period.
A bench of Justices Ashok Bhushan, Sanjay Kishan Kaul and M. R. Shah said these are not normal times, and it is a serious issue as, on the one hand, moratorium is granted and then, interest is charged on loans during this period. "There are two issues in this (matter). No interest during moratorium period and no interest on interest," said Justice Bhushan.
Solicitor General Tushar Mehta, representing the Centre, said he would consult the Finance Ministry and file a response to both the questions. The top court allowed Mehta to file a reply on or before June 12.
The observation from the bench came on a petition by Gajendra Sharma, in which he sought a direction to declare the portion of RBI's March 27 notification as ultra vires to the extent it charges interest on the loan amount during the moratorium period.
Sharma's counsel, senior advocate Rajeev Dutta, told the court the Centre is looking at the profitability of the banks and cited the recent order by the top court on the middle seat row in Air India matter, where the non-scheduled flights are to bring stranded Indians from abroad. Justice Bhushan said the court is well aware, and the economic aspect is not greater than the health of the people.
Sharma, a resident of Agra, contended that he is already facing financial hardship during the lockdown and obstruction in "right to life" guaranteed by Article 21 of the Constitution. Dutta argued that the RBI's position on the matter means that only banks should continue to earn profits, while the entire country struggles during COVID-19 pandemic, and told the court he would file a rejoinder on the RBI's reply.
Mehta said that he would consult the Finance Ministry on this issue, and then respond on the issue with both the Finance Ministry's and the RBI's response.
At the beginning of the matter, the bench expressed discontent that RBI's reply was leaked to the media before the matter came before the court. "Is RBI filing the reply first in the media and then in court?" said the court.
Dutta contended this is a method to sensationalize the matter. The bench said this should not repeat.