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The Supreme Court today sought a response from the Centre and the RBI with regard to levying of interest on the loan amount during the moratorium period.
The petitioner in the case has moved the Supreme Court in the capacity of a borrower aggrieved by the notification issued by the Reserve Bank of India (RBI) on March 27 wherein the Central Bank permitted all term loan to grant a moratorium of three months on payment of instalments.
The portion of the notification, which allows for charging of interest on the loan amount during the moratorium period,is what was sought to be challenged by the petitioner and the Bench of Justices Ashok Bhushan, Sanjay Kishan Kaul, and BR Gavai took up the matter for hearing today via video conferencing.
Solicitor General Tushar Mehta told the Court that he would take instructions on this issue. The Court will hear the matter next after two weeks. The Court said:
"The petitioner is permitted to serve a copy of this petition to the counsel for the Union of India... List after two weeks. In the meantime, learned Solicitor General may obtain instructions for respondents no.1 and 2. (Union of India and Reserve Bank of India)"
The petitioner in his plea submits that at a time when the lockdown is in effect, charging of interest on the loan despite the moratorium period is causing people "hindrance" and is obstetrical in the "right to life" guaranteed to the people under Article 21 of the Constitution of India.
It is argued that right to livelihood is pre-requisite to the rights guaranteed under Article 21 and all the means of livelihood stand curtailed in the present scenario owing to the nation-wide lockdown imposed for containing the spread of the COVID-19 virus.
The Supreme Court in its recent order passed on April 30 had asked the RBI to ensure that it's loan moratorium policy permitting exemption from paying EMIs and other loans during the COVID-19 lockdown period is implemented by the banks.
However, the Court had left the question of law open and had noted that the parties before the Court in that instant batch of petitions were not aggrieved parties.
Highlighting that he is an aggrieved party, the petitioner in the instant case submits that the notification is against the principles of natural justice given that on the one hand all the means of livelihood stand suspended for the time being and on the other, interests are being charged for the moratorium period which would lead to an increased bill for monthly payment of EMIs.
"The aforesaid notification qua payment of interest violates the principal of natural justice as the Government on one hand ceased the working of the individuals and on other hand asking to pay the loan interest during moratorium," the petitioner says in his plea.
On March 27, the RBI had permitted all lending institutions to allow a three-month moratorium on payment of all kinds of instalments, including those for credit cards and for all term loans outstanding between March 1, 2020 and May 31, 2020.
A similar three-month deferment for all working capital loans to help borrowers face Coronavirus-related economic hardships was also permitted.