Bombay HC Directs Co-operative Banks To Disburse Loans To Farmers Without Insisting On Payment of Interest, Refund Interest Already Collected [Read Order]

Division bench of Justice SV Gangapurwala and Justice SD Kulkarni at Aurangabad were hearing a PIL filed by one RTI activist Kishor Tangade wherein he sought disbursement of loans as per government order dated January 17, 2020 which was issued directing District Central Co-operative (DCC) banks not to charge interest from October 1, 2019, till the actual benefit is given to the persons who are entitled for the benefit under the scheme namely, `Mahatma Jotirao Phule Shetkari Debt Waiver Scheme, 2019'.

Previously, while hearing the present case, another bench headed by Justice Gangapurwala had directed the said bank to disburse crop loans to farmers immediately without insisting on payment of interest which has been waived off by the government.

Appearing on behalf of the petitioner, Advocate SB Talekar argued that the beneficial scheme sanctioning the crop loan waiver was introduced by the Government considering the economic condition of the agriculturist in the State of Maharashtra. All the agriculturists availing the benefit of crop loan from April 1, 2015 to March 31, 2019 are entitled to the benefit of the crop loan waiver to the extent of Rs.2 lakh.

Under the Government Resolution dated January 17, 2020, it is also directed by the State Government that from October 1, 2019 till the actual benefit of the loan waiver scheme is given, the Bank shall not levy interest. However, the Banks are not disbursing the loans on the ground that agriculturists have not paid interest from October 1, 2019 onwards. The same is not consonance with the Government Resolution dated January 17, 2020. The Government Resolution dated 17.01.2020 granting waiver of interest is issued under Section 79(A) of the Maharashtra Co-operative Societies Act, 1960, the same has a binding force upon the Co-operative Banks, Talekar contended.

Adv Talekar further argued that the respondent bank is not giving loans to the agriculturist who are entitled for the benefit of the loan waiver scheme under the Government Resolution dated December 27, 2019 on the ground that they have not paid interest since October 1, 2019, so also respondent no.6-Bank is demanding No Dues Certificate, if the loan is outstanding to be payable to other Banks.

Relying upon the master circular issued by RBI, Adv Talekar submitted that the Bank cannot demand No Dues Certificate, it only has to ask for No Objection Certificate. A large number of agriculturists have been deprived of the benefit of loan during the kharif season because of the adamant attitude and policy of respondent no.6- Bank, Talekar said.

However, the Court's previous order of July 9 has not been implemented by respondent no.6-Bank and therefore the bank has committed contempt of an order of this Court. Action deserves to be taken against them, Talekar concluded.

On the other hand, Senior Advocate RS Deshmukh appeared on behalf of the respondent no.6 Bank and submitted that the bank has started refunding the amount to the extent of Rs.5 crores recovered by it towards the interest on these loans.

He further informed the bench that he has instructed the respondent no.6-Bank not to insist for No Dues Certificate, but to ask for No Objection Certificate and necessary clarification is also issued to that effect under circular dated June 5, 2020.

Chronic defaulters are not entitled for the benefit of the loan waiver scheme. The Bank has already taken steps for disbursing the kharif crop loan to all eligible beneficiaries without insisting for payment of interest. The persons given benefits of the loan waiver scheme are increased from 89,937 to 98,820. Out of the beneficiaries, 26659 are such agriculturists who are not beneficiaries of the said scheme, 55184 agriculturists have actually been extended by the benefit of the loan waiver scheme and 20143 agriculturists are still remaining. They have not yet approached the Bank through the respective societies and if they approach in near future, the Bank undertakes to disburse loan as per the said scheme without insisting for interest, Sr Adv Deshmukh said.

According to Adv Talekar, 26,659 agriculturists have illegally been denied the benefit, basically on the ground that they have not produced No Dues Certificate. Those agriculturists who have died and sold the lands are hardly about 3000, rest 23,000 agriculturists are being deprived of their rights to get the loan, Talekar said.

After examining submissions on behalf of all parties, the bench explained the need for such a loan waiver scheme-

"The State of Maharashtra has promulgated Mahatma Jyotirao Fule Shetkari Debt Waiver Scheme 2019 to ameliorate the precarious economic condition of 1,53,00,000 agriculturists in the State of Maharashtra. The State noticed that since 2015-2016 to 2018-2019 continuously drought like situation was prevailing throughout the State and in some places witnessed unseasonal rains. Due to drought like situation for four continuous years and unseasonal rains the agriculturist faced losses. The State Government in fitness of things took a conscious decision to grant loan waiver to the extent of Rs.2,00,000 to the agriculturists having obtained short term crop loan from 01.05.2015 to 31.03.2019 under the Government Resolution dated 27.12.2019."

Court also noted that the three government resolutions dated December 27, 2019, January 17, 2020 and May 22, 2020 indicate the government was conscious of the fact that agriculturists are in precarious economic condition.

Court observed-

"The year 2020 is a tumultuous year. The entire country is affected by the pandemic of Covid-19. Fortunately, this year the State witnessed timely rains and it is necessary that the agriculturists get financial assistance for the kharif sowing season."

The bench further noted that the respondent bank should not have insisted on a No Dues Certificate as it is not in consonance with the master circular of the Reserve Bank of India dated July 1, 2009. Sr Adv RS Deshmukh accepted the same and stated that he had advised his client not to insist on a No Dues Certificate from the eligible beneficiaries while sanctioning short term crop loan for kharif season 2020.

The bench observed-

"We had already passed an interim order directing the bank not to insist for payment interest from 01.10.2019 from the beneficiaries. It has been clarified that about Rs.5 crores are collected by the Banks towards payment of interest and the same is being refunded. If the Bank has recovered the amount towards the interest, the same shall be returned to the persons/parties from whom they have recovered the amount of interest. The disbursement of the amount of interest recovered shall be made by the Banks immediately."

Finally, the Court said-

"We hope and trust that Banks would be alive to the problems of the agriculturists.

The respondent no.6-Bank shall extend the benefits of crop loan to the agriculturists for Kharif Season 2020 in accordance with the mandate of the Government Resolutions dated 27.12.2019, 17.01.2020 and 22.05.2020 immediately."