The Supreme Court on Tuesday ordered the complete waiver of compound interest of all borrowers for the six month loan moratorium period which was announced last year amid COVID-19 pandemic. The amount already charged shall be credited or adjusted.
The court also refused an extension of the moratorium period granted by the Reserve Bank of India (RBI) on account of the coronavirus pandemic.
Last year, the central government had decided to allow waiver of interest on interest in eight specified loan categories for loan up to Rs 2 crore.
A Bench of Justice DY Chandrachud, Justice MR Shah and Justice Sanjiv Khanna held that the court cannot strike down a policy decision taken by the State Government merely because it feels that another policy decision would have been fairer or wiser or more scientific or logical. The court can interfere only if the policy decision is patently arbitrary, discriminatory or mala fide.
The bench further stated:
“it is not the function of the Court to amend and lay down some other directions. The function of the court is not to advise in matters relating to financial and economic policies for which bodies like RBI are fully competent. The court can only strike down some or entire directions issued by the RBI in case the court is satisfied that the directions were wholly unreasonable or in violative of any provisions of the Constitution or any statute. It would be hazardous and risky for the courts to tread an unknown path and should leave such task to the expert bodies. This Court has repeatedly said that matters of economic policy ought to be left to the government.”
The Supreme Court rejected extension of the period for invocation of resolution mechanism and sector wise reliefs provided by RBI.