SC unlikely to grant another moratorium
The Supreme Court on Monday indicated that it would not be able to grant relief in terms of an interest-free loan moratorium for another period of six months or till the Covid-19 situation improves. The apex court observed that this is a policy decision and the court cannot decide to pass such directions. The court said that a representation can be allowed to be made to the Reserve Bank of India (RBI). The court will hear the matter again on June 11.
In the light of the Covid second wave and the consequent lockdowns, a plea has been filed afresh by Advocate Vishal Tiwari before the Supreme Court this month seeking directions for relief to borrowers in the form of a fresh loan moratorium on term loans. Tiwari urged the court to direct that no bank or financial institution would take action for auction in respect of any property of any citizen or party or any corporate for a period of six months for non-payment of loans.
The petition stated that the central government and its concerned ministries along with the Reserve Bank of India (RBI) have failed to bring in any sound relief in this present situation for stressed sectors and individuals for whom sustenance and existence have become difficult.
A bench of Justices Ashok Bhushan and M. R. Shah made an observation while waiting for the video connection of Advocate Tiwari to be established.
Justice Bhushan asked Justice Shah, "Have you seen the prayers, brother?"
To this, Justice Shah said, "Yes. We cannot grant it. A representation can be allowed to be made to the RBI."
The court then deferred the hearing to June 11.
In a statement, Harsh Vardhan Patodia, president, Confederation of Real Estate Developers Association of India (Credai), appreciated the Supreme Court’s stance.
“We appreciate the view of Hon’ble Supreme Court for guiding the matter of extension of loan moratorium for a period of six months this year to the Reserve Bank of India. In line with the representation made to the apex court, we feel due relief for borrowers is an absolute necessity considering the prolonged impact of the second wave of the pandemic, and consequent financial stress borne by individuals and businesses due to loss of employment and business opportunities. With the real estate sector being more severely impacted in 2021 as compared to 2020, as the apex industry body, Credai has already made separate representations to RBI and the Government of India on the matter.”
The petition said, “No such monetary relief and packages has been declared by the sovereign in this stressed time and people are under tremendous pressure to maintain the EMIs and are always under the threat of accounts being declared NPA. With no salary, revenue for individuals it has turned out to be a hopeless situation for individuals. The RBI on 6-5-2021 has issued a circular for resolution plan 2.0, which cannot be said to be adequate relief to all in the present circumstances...”