The Supreme Court today issued notice to the Centre and RBI in plea regarding the levying of interest on loan during stipulated moratorium period, which has now been extended to August 31, 2020.
A Bench comprising of Justices Ashok Bhushan, SK Kaul and MR Shah have granted a week’s time to the Centre and RBI to respond to the plea filed by a borrower who is aggrieved by RBI’s March 27 Notificationas it allows charging interest on loans during the moratorium period.
Senior Advocate Rajiv Dutta appearing for the petitioner apprised the Court that the moratorium, which was initially for 3 months, has now been extended to 6 months. Seeking relief for now, Dutta urged that the final accounting regarding the amount of interest to be paid by him be calculated after the matter is decided in Court.
The petitioner highlighting moratorium prayed,
“When your Lordships decide this matter, the accounting could be done. Today please give me some relief. Do not penalise me today. Please do not add my interest and start charging compound interest, which essentially amounts to penalising me.”
Dutta also informed the Court that replies were being filed without any formal notice being issued. Taking note of which the Bench issued formal notice.
On March 27, the RBI had ordered a 3-month moratorium on the payment of all kind of instalments including EMIs, credit cards, outstanding term loans etc, for the period between March 1, 2020 and May 31, 2020. This had recently been extended to August 31, 2020.
The petitioner moved the Apex Court contending that the purpose of imposing moratorium during lockdown was to alleviate the problems faced by common people, but the same was being defeated by subsistence of interest, which he averred as antithetical to Article 21 of the Constitution.
Enunciating the RBI notification as outright “capriciousness” and “arbitrariness”, the petitioner adds that it is violative of principles of natural justice as it imposes a burden on borrowers like the Petitioner.