New Delhi: The Supreme Court Tuesday issued notice on a petition demanding that interest on loans be waived for the period of the moratorium prescribed by the Reserve Bank of India (RBI).
As the country grapples with Covid-19, the RBI had prescribed a three-month moratorium on EMIs, which has now been extended for another three months. The moratorium exempts borrowers from paying their EMIs for a specific period of time, and is essentially a deferment of payment to provide relief to them, but interest liabilities will continue to accrue.
The bench comprising Justices Ashok Bhushan, Sanjay Kishan Kaul and M.R. Shah sent notices to the RBI and the central government, and agreed to hear the case next week.
On 8 May, the court had permitted Solicitor General Tushar Mehta time to seek instructions on the issue, and had asked the case to be listed after two weeks. It had permitted a copy of the petition to be served to the lawyers for the central government.
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‘Devastating, arbitrary, capricious’
The petition was filed by Agra resident Gajendra Sharma, through senior advocate Rajiv Dutta earlier this month.
Sharma’s petition informed the court that he had taken a home loan of around Rs 37 lakh from ICICI Bank, and that due to the lockdown, he has no income and so cannot pay the EMI.
He is challenging the RBI notification dated 27 March as violative of Article 21 of the Constitution, submitting: “In the present scenario, when all the means of livelihood has been curtailed by the government of India by imposition of complete lockdown pan India, due to worldwide outbreak of Covid-19 pandemic and the petitioner being a citizen of India has no way to continue his work and earn livelihood, imposition of interest during the moratorium will defeat the purpose of permitting moratorium on loans.”
Sharma asserts that no interest should be charged at all during the moratorium period, and called the RBI’s decision “devastating, wrong”.
He also called it “arbitrary and capricious”, which placed an “over burden upon borrowers” like him.
The petition explained: “The interest charged during moratorium period would be added up into the EMIs at the end of three-month forbearance, will raise in the monthly bill or have to pay this additional interest in one go or will be allowed to get it adjusted as an additional EMI.
“…the additional interest burden for three months moratorium period is also equally divided in all future EMIs, the monthly bill for customer will increase.”
Also read: This is what you need to do if you want to pay, or not pay, your loan EMI for 3 months