SC to resume hearing on pleas seeking extension of Moratorium, waiver Interest on Interest

The Apex Court will continue tomorrow hearing on 2 pleas seeking an extension of the moratorium period on repayment of loans & to waive off the interest on interest on the loan amount in view of the Coronavirus pandemic.

Solicitor General Tushar Mehta, appearing for the Central Govt, will continue his submissions before a bench led by Justice Ashok Bhushan tomorrow as his arguments today remained inconclusive.

Mehta submitted that he does not think that the Reserve Bank of India's (RBI) Aug 6 circular is contested here in these petitions.

He said that "The issue before the Centre is that whether interest can be charged during the moratorium period or not. Writing off interest will weaken banks & economic conditions. We have different types of banks, & also we have Nonbank financial companies (NBFCs)".

One of the parties in the moratorium petitions case, an association named CREDAI, through senior lawyer A Sundaram, told the Court that it is really unfair to charge penal interest on borrowers & said this can lead to a possible increase of the non-performing assets (NPAs) in the future.

Senior lawyer Ranjit Kumar, appearing for Shopping Centres Association of India, told the bench that what they are facing today could be an effect of disaster added that mitigation measures are needed for relief & other parameters.

Kumar said that RBI cannot become the mouthpiece of banks.

"Our situation is really very bad, theatres, bars, food courts not being allowed, how will we earn & pay salaries, my lords, please consider this, & added that the relief should come sector-wise," he added further noting that all the parameters of economy show shrinkage & recession.

The RBI Governor said so in May, things still bad in September, Kumar said.

Senior lawyer Kapil Sibal, who appeared for borrowers & the Maharashtra chapter of the construction industry, submitted if the moratorium would not be extended, then many will be in default. He sought an extension of loan moratorium period & said that an expert committee should come with a sector-wise plan.

One of the petitioners in the case, lawyer Vishal Tiwari today argued that the moratorium period should be extended till Dec 31, keeping in view the COVID-19 pandemic & the current financial hardships the borrowers are facing.

Vishal Tiwari said that "No alternate relief like financial restructuring is going to end the financial hardships the borrowers faced at present. The financial restructuring is nothing, but a maze created for the borrowers".

Earlier, the Central Govt had submitted that the loan moratorium period may get extended by up to two years in view of the ongoing Coronavirus pandemic.

The Supreme Court was hearing 2 petitions filed Gajender Sharma & Advocate Vishal Tiwari, seeking directions to extend the moratorium period to help borrowers in deferring their EMI payment on term loans & directions for waiver of interest on the loan repayment during the moratorium. 

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