The Supreme Court on Tuesday waived interest on interest on loans for borrowers who availed of Reserve Bank of India's (RBI) loan moratorium scheme extended from March 1 to August 31 in view of the COVID-19 pandemic.
The three-judge bench led by Justice Ashok Bhushan gave partial relief to borrowers and further held that any amount collected as compound interest shall either be refunded to the borrowers or adjusted with the next instalment of the loan account.
"Interim relief granted earlier not to declare the accounts of respective borrowers as NPA stands vacated," the judgment read. The top court dismissed pleas that sought (i) total waiver of interest during the moratorium period; (ii) extension of the moratorium period; (iii) extension of the period for invocation of the resolution mechanism; (iv) sectorwise reliefs provided by the RBI; and (v) provision by the Centre or the RBI additional relief over and above those already granted.
The Supreme Court's decision came on a batch of pleas that sought effective and remedial measures to redress the financial strain faced by the industrial sector, particularly MSMEs due to the pandemic brought on by the coronavirus.
The RBI on March 27, 2020, had announced a loan moratorium scheme granting temporary relief to borrowers on instalments loans between March 1, 2020, and May 31, 2020, in light of measures taken due to the Covid19 pandemic that resulted in a downturn of economic activities.
In providing partial relief, the Supreme Court relied on past judgments to observe that it could not interfere with the Centre's economic policies.
"What is best in the national economy and in what manner and to what extent the financial reliefs/packages be formulated, offered and implemented is ultimately to be decided by the Government and RBI on the aid and advise of the experts," the verdict authored by Justice MR Shah read. The court does "not ordinarily interfere with policy" merely because some class/sector may not be agreeable and/or satisfied with such packages/policy decisions, the judgment further read.
"There are matters regarding which Judges and the Lawyers of the courts can hardly be expected to have much knowledge by reasons of their training and expertise. Economic and fiscal regulatory measures are a field where Judges should encroach upon very warily as Judges are not experts in these matters," Justice Shah observed.
"The correctness of the reasons which prompted the government in decision taking one course of action instead of another is not a matter of concern in judicial review and the court is not the appropriate forum for such investigation. The policy decision must be left to the government as it alone can adopt which policy should be adopted after considering of the points from different angles. In assessing the propriety of the decision of the Government the court cannot interfere even if a second view is possible from that of the government," he added.