Conversion of Standard Accounts To NPAs In The Absence Of Business Violates Art 19(1)(g) : Stakeholders Seek Loan Moratorium Extension

The Supreme Court continued the hearing in the pleas pertaining to extension of loan moratorium along with petitions by specific sectors.

A bench of Justices Ashok Bhushan, BR Gavai & MR Shah stated that it shall hear Solicitor General Tushar Mehta Thursday.

On Wednesday, various sectors made submissions before the Supreme Court.

Senior Advocate Kapil Sibal appearing for CREDAI HR informed Court that the conversion of standard accounts to NPA's w.e.f. September 1 in absence of business rolling in was violative of Article 19(1)(g) of the Constitution.

"State of the economy states that there will be havoc by December 10, RBI is saying that the borrower & lender will decide among themselves. Their (Union) position today is that your lordships have no jurisdiction to go into this," said Sibal.

"Union has not applied its mind to the data which it has access to. It has jurisdiction to deal with banks. Entry No. 36 of List I, Entry 38 of List 1 and Entry 46 of list 1 gives exclusive jurisdiction, read with Art. 246 of the Constitution," Sibal argued.

He further stated that the classification of the sectors which are prosperous like "nobody's business", IT, Pharma, Mobile Phones, Digital Platforms did not seek moratorium & that only 30% of the borrowers have.

"This 30% is distressed. How has the Govt. balanced the two? Complete violation of Article 14," said the Senior Counsel.

Advocate Abhimanyu Bhandari made submissions for Shopping Centre's Association of India said that,

"My issue is that unlike other manufacturing entities, I was completely shut down. No one was allowed to come to malls and I was completely shut down. This is why I had sought to be concerned as most affected party".

Advocate Vishal Tiwari sought the extension of moratorium to March 31, 2021.

The Supreme Court on Friday, had directed the government to ensure that all steps be taken to implement its decision to forego interest on eight specified categories of loans paid upto Rs two crore in view of the coronavirus pandemic.

The bench had then disposed  writ petitions which sought for waiver of interest during the loan moratorium period allowed by the Reserve Bank of Indian from March 1 to August 31.

Complete updates from the hearing may be read here.