A gaggle of big and small businessmen launched an attack on the government and the banking regulator on Wednesday for allowing banks to rip them off by charging interest and a penal levy on the loans that were covered by a six-month moratorium that ended two days ago.
Power producers, realtors, retailers, small shopkeepers and jewellery makers joined forces to challenge the warped principle under which banks were permitted to tack on interest on loans covered by a moratorium that was designed to help them cope with the pangs of the pandemic that had ravaged their businesses over the past few months.
The government and the regulator have refused to grant a waiver on interest and the penal interest levy while allowing the borrowers to defer their repayments, prompting outrage over the fact that banks were fattening themselves on a stream of income that defeated the very purpose for which the moratorium had been granted in the first place.
The petitioners appeared before the Supreme Court to buttress the argument of a UP-based shopkeeper Gajendra Sharma who has filed a public interest litigation seeking a blanket waiver on the levy of interest during the moratorium period that extended from March 1 to August 31.
Most of them have also challenged the move of the banks to charge interest on accumulated principal and interest during the moratorium period.
At the inconclusive arguments, the counsel appearing for different sectors told a bench headed by Justice Ashok Bhushan that in view of the unprecedented pandemic and lockdown announced by the government in March many of the industries and business houses have virtually no income and it was the duty of the government to give necessary reliefs in the form of interest waiver and loan rescheduling to mitigate their hardships.
Senior counsel K.V. Viswanathan appearing for real estate lobby group Credai said the Centre having declared a Janata curfew since March this year ought to be directed to give the necessary relief to the real estate sector, one of the worst affected during the present crisis.
Quoting Section 13 of the Disaster Management Act, Vishwanathan said the Union government had a duty to provide the necessary succour to different sectors in times of national disaster such as the present pandemic.
The provisions contained in the 2005 Act is “…is not merely giving discretionary power but it is a power coupled with duty…Your Lordships may direct them to discharge their duty under the DM Act.”
The senior counsel was also representing the Association of Power Producers along with the Credai Maharashtra branch. He said the power and real estate sector represented by him “form the nerve centre of the economy”.
Senior advocate Ranjit Kumar representing the Shopping Centres Association of India submitted that shopping centres across the country were one of the worst affected during the present crisis.
Senior advocate Sanjay Hegde on behalf of Coimbatore Jewellery Manufacturers Association (CJMA) sought extension of the moratorium period which ended on August 31 for a further “reasonable time and the effects of which can be used as a relief by borrowers. I am obliged to repay my debts, time granted is on the basis of an overwhelming disaster,” Hegde said.
Senior advocate Kapil Sibal appearing for some construction companies said the power under the DM Act has to be exercised by the National Disaster Management Authority which is assisted by an advisory council and headed by the PM to provide the necessary loan and interest reliefs to the different
sectors. “It’s not one person but an entire body that has to act for disaster management when a disaster occurs,” he said.
Advocate Ashish Virmani appearing for some textile mills association said there is no reason why MSMEs should be excluded.
Solicitor General Tushar Mehta appearing for Centre said there were some options available to revive the economy. One was to write off interest. Second was a more holistic option in which the first step would be to ease the burden of repayment of loans
The hearing will continue on Thursday.
