The Supreme Court is hearing the batch of petitions seeking relief in the form of extension of the RBI's Loan moratorium period beyond six months or waiver of interest on interest, in view of the COVID-19 pandemic.
Senior Advocate VV Giri resumes submissions for RBI
Giri: There is a writ petition which challenges the August 6 circular. That too not the circular but only a clause. We have already dealt with the eligibility clause to say who can be a borrower.
Giri: not a single instance where the lender has been completely apathetic.
Senior Advocate Harish Salve argues for Indian Banks Association: I am addressing on the construction of Disaster Management Act. DM Act creates an architecture for governmental action in matters of disasters, both prevention and mitigation. It is inclusive and exclusive
Salve: Fundamental duty of good governance is not encapsulated by this law. This law does not create a architecture for readjustment for private rights.
Salve: If there has to be restructuring then it has to be through restitution. If you argue frustration be ready for the logical consequence.
Salve: What is resolution by banks? It started with a concern expressed outside court when NPAs of banks reached threatening proportions. At that point the bankruptcy code was brought in. Whether within that law or outside, banks would always take steps to rectify NPA loans?
Salve: Resolution has to be a restructuring of a debt. Normally for a private bank norms are laid by them. SBI has a majority shareholding from the government but it's a listed company.
Salve: This Court has an application from CREDAI. Have they placed any materials on which one can identify how wobbly was their house before the pandemic? Nothing
Salve on CREDAI application: This is some thing which goes way beyond seeking relief in a disaster. There is an economic sentiment which is created by such an event. How far can DM act be stretched because of a pandemic?
Salve: People are spending less money and it can be for many reason. Disaster relief cannot lie here but when roads are broken or house is swept away.
Justice Reddy: What should government do in case of a disaster like this?
Salve: Government has to appeal to each sector. Not the ones here. Laborers have lost jobs, social security needs to be given. As a govt of a welfare state ones have to be attended who lost their earning members
Salve: For loss of business, it should be seen how businesses should be revived. Like here in England, furlough has been granted. Government has to address each sector, tenants and landlords have suffered. Who will balance it?
Salve: When PM Narendra Modi declared the overall package, what did he mean.. when it's said a few trillion will be spent as package then it's on sectors. It's a tricky situation for every government.
Justice MR Shah: When there is a specific provision under Section 13, then what? That's okay, sector's have to be considered.
Salve: I will deal with it.. kind of submissions it was realised that Section 13 does not get them off the hook
SG Tushar Mehta: Government has stated for good reasons it's not possible for us under Section 13
Salve: There are three elements of Section 13. It says measures on repayment of loans or grant of fresh loans to the one affected by disaster
Salve: There are terrible earthquakes in Gujarat..it was a disaster of severe magnitude. There must have been people transacting with businesses in Gujarat. Now people in Gujarat were affected and lost business and homes. There are employees to take care and others dependent
Salve: There is a serious allegation of violating Article 14. It was stated government package should be struck down as it was some sectors. Purity of economic law cannot be a ground to strike down such packages.
Salve: People are not paying taxes as they don't have income or money to pay for taxes. So government revenues shrink. When you speak of people affected by disaster, it must be ones directly affected by disaster and not those who are Tier 2 and tier 3.
Justice Shah: Please see Section 23 again. What can be the reliefs contemplated under Section 13? There are various reliefs which are contemplated
Salve: You may give relief by elevating burden of interest or say don't charge interest or waive off interest. There can be a moratorium for repayments. Then there can be restructuring...each of this falls within the rubric of relief. They have considered each of this.
Salve: Despite moratorium, large number of borrowers did not a avail of it. Moratorium helps borrowers but affects the banks adversely.
Salve: There will be bankruptcy all over. But where is the misdirection in the steps followed by us?
Salve: There is nothing in the Disaster Management Act which informs the court or the system that there can be an adjustment by executive will. Home delivery business has done better than ever. Netflix has become a 10 billion dollar company. Home decor has done well
Salve: However you win some and lose some. By executive fiat you cannot make the winning one pay to the one who is losing.
Salve: It is undeniable that because of number of times Supreme Court has heard the matter things have progressed. But how far can we go?
Salve: I submit this matter must now be closed. Your directions have been followed. People who have no hope of restructuring are benefitting from your 'don't declare NPA' order.
Senior Advocate Mukul Rohatgi appears for SBI: Small depositors are faceless in these proceedings. It is not a case of borrowers versus bank. They are the backbone of this financial system.
Rohatgi: There was waiver and only deferment of installment.
Rohatgi: Banks have to give interest to these depositors. How can we leave them?
Rohatgi: We are at the end of pandemic. Patients are reducing now..
