Breaking: Supreme Court To Pronounce Judgment On Pleas Seeking Loan Moratorium Extension Tomorrow

The Supreme Court will pronounce its judgment tomorrow on a batch of petitions which seek the extension of the 6 month loan moratorium period granted by the Reserve Bank of India.

The Court had reserved the Judgment on December 17 last year after hearing petitioners, Centre, RBI and intervenors. A bench comprising Justices DY Chandrachud, MR Shah and Sanjiv Khanna will be pronouncing the verdict.

The petitioners seek the extension of the 6-month period moratorium on loan recoveries, which was announced by the Reserve Bank on account of the COVID-19 pandemic.

Reserve Bank of India issued a Notification dated 27.03.2020 to permit banks and financial institutions to grant a moratorium of 03 months on payments of all instalments of term loans falling due between March 1st 2020 and May 31st, 2020. This period was later extended by another 3 months till August 31, 2020.

The petitioners had initially sought extension of the moratorium up to December 31. One of the Petitioners, Advocate Vishal Tiwari, later sought extension upto March 31, 2021, stating that the current situation demands and necessitates the same.

On November 19, the Centre had urged the Court to not intervene and provide further relief to borrowers under Article 32 as the Government was already "on top of it".

Solicitor General Tushar Mehta told the Court that many relief packages and schemes had been worked out with technical experts and the intervention of the Court in fiscal policy issues was uncalled for.

On November 28, 2020, a bench led by Justice Ashok Bhushan had disposed of another set of pleas which sought for the waiver of interest during the 6 month loan moratorium period. The bench, also comprising Justices R Subhash Reddy and MR Shah, directed the Centre to implement the decision taken by the Centre to forego interest for 8 specified categories up to Rs 2 crores.

The categories in which the Centre and the RBI agreed to waive compound interest during the loan moratorium period are :

(i) MSME loans up to Rs. 2 crore

(ii) Education loans up to Rs. 2 crore

(iii) Housing loans up to Rs. 2 crore

(iv) Consumer durable loans up to Rs. 2 crore

(v) Credit card dues up to Rs. 2 crore

(vi) Automobile loans up to Rs. 2 crore

(vii) Personal loans to professionals up to Rs. 2 crore

(viii) Consumption loans up to Rs. 2 crore