Party politics not above fundamental rights: Kerala HC stays loan recovery from Wayanad victims even as Centre refuses waiver

The Kerala High Court on Wednesday ordered a stay on the recovery of loans from victims of the 2024 Wayanad landslides [In Re: Prevention and Management of Natural Disasters in Kerala].

A Division Bench of Justice AK Jayasankaran Nambiar and Justice Jobin Sebastian passed the order staying the loan recovery proceedings despite the Central government refusing to allow waiver of loans.

while hearing the suo motu case initiated to address the rehabilitation of Wayanad landslide victims.

It impleaded 12 major banks including the State Bank of India, Bank of Baroda, Canara Bank, Punjab National Bank, Indian Bank, Federal Bank and Kerala Gramin Bank, as additional respondents and directed them to file counter affidavits indicating whether they were willing to partially or fully waive loans.

The Bench added that the banks could seek to modify the Court's stay order after providing proper justification for continuing the loan recovery proceedings.

"Fairness in state action being one of the cardinal features of the rule of law that is recognised as a basic feature of the Constitution, we cannot presently permit the banks and financial institutions concerned to ride rough shod over the fundamental rights of the landslide victims at a time when they are struggling to restore normalcy in their lives," the Court said.

The Court's observation came after the Central government submitted an affidavit stating that there was no provision for loan waivers as per the Reserve Bank of India’s Master Directions on Relief Measures by Banks in Areas Affected by Natural Calamities (2018).

The affidavit also stated that public sector banks were independent commercial entities, accountable to their shareholders and the Central government could not interfere in their commercial decisions,

The Court, however, rejected this stance, citing Article 73 of the Constitution which empowered the Central government to intervene in extraordinary situations such as natural disasters, particularly when the lives and dignity of the citizens were at stake.

It further remarked that despite having declared the Wayanad landslide as a 'severe' disaster under the Disaster Management Act, 2005, the Central government was unwilling to provide financial relief to the victims in the form of loan waivers, even though similar aid had been extended elsewhere.

While the Court refrained from issuing directions to the Central government, highlighting the principle of separation of powers, it slammed the Union government for its disproportionate treatment and reminded them of Part III of the Constitution which imposed a duty upon the 'state' including the legislative, executive and the judiciary, to protect the fundamental rights of the citizen.

"The federal principle envisaged under the Constitution does not allow for a differential treatment being meted out by the Union Government to citizens in any particular state. Party politics cannot negate the constitutional guarantee of protection of the fundamental rights of the people in a democratic republic. In the instant case, what is at stake is the fundamental right of the landslide victims of Wayanad to a life with dignity," the Bench said.

Accordingly, the Court directed stay on all recovery actions initiated by the banks against the landslide victims, pending the disposal of the petition.

The matter has been posted after two weeks for further hearing.

Advocate General Gopalakrishna Kurup appeared for the State of Kerala.

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