Moratorium without interest waiver more detrimental: SC

Court seeks reply from finance ministry, RBI; next hearing on June 12

The government should not prioritise economics over health, the Supreme Court said on Thursday. The observation came a day after the Reserve Bank of India (RBI) filed an affidavit saying it was against a forced waiver of interest during the six-month moratorium period as it would affect the financial health of banks and jeopardise the interests of depositors.

The court observed that such a stand was “detrimental”, and sought a response from the finance ministry and the RBI. “While on one end you are granting moratorium, on the other nothing (no relief ) on interest. This is more detrimental in such challenging times,” it said.

The three-judge Bench, comprising Justices Ashok Bhushan, Sanjay Kishan Kaul, and M R Shah, set the next hearing in the matter for June 12.

In its observations, the Bench said there were two aspects under consideration — no interest payment on loans during the moratorium period and no interest to be charged on interest. The Bench also took exception to the coverage of the RBI’S reply in the media. “Is the RBI filing the reply first in media and then in court?" remarked Justice Bhushan. The Bench said it highly “deprecated” the practice and this should not be repeated. The Bench was hearing a plea challenging the levy of interest on loans during the moratorium period. The plea, filed by Agra resident Gajendra Sharma, had sought a direction to declare the portion of the RBI'S March 27 notification as something beyond its legal power or authority, to the extent that it charged interest on the loan amount during the moratorium period, which created hardships to the petitioner, being borrower, and created hindrance and obstruction in the ‘right to life’ guaranteed by Article 21 of the Constitution of India.