SC on Loan Moratorium Highlights | Supreme Court tells Centre, RBI to respond to suggestions; case to be listed next week

>> The three judge bench comprising of Justices Ashok Bhushan, R Subhash Reddy & MR Shah is hearing the case.
>> The RBI had in March announced a moratorium on repayment of term deposits for three months, which was later extended till August 31. The move was intended to provide borrowers relief during the COVID-19 pandemic and expected to give them more time to clear payments of EMIs amid the economic fallout of the lockdown, without being classified as NPAs.
>> The RBI had on June 4 said lenders will lose Rs 2 lakh crore if interest is waived during the moratorium period. In its annual report, the central bank also said the moratorium on loan repayments could have an impact on the financial health of banks.
>> The SC had on September 3 instructed banks not to declare accounts as non-performing assets (NPAs) until further orders after the Centre on October 2 told the apex court that it would waive compound interest on the repayment of loans of up to Rs 2 crore, a move that would provide relief to individual and MSME borrowers.
>> The SC has previously said there is "no merit in charging interest on interest".
>> The bench on October 5 heard pleas seeking waiver of accruing interest during the six-month loan moratorium period. The apex court granted Centre and the Reserve Bank of India (RBI) time to file additional affidavits.
>> The Supreme Court on October 14 adjourned its hearing on a batch of petitions seeking interest waiver during the loan moratorium period to November 2, which was further pushed to November 3.
>> The Supreme Court has adjourned its hearing on a batch of petitions seeking interest waiver during the loan moratorium period to November 2. The apex court has directed the government to come back "with an appropriate action."
>> Case was postponed to November 3 for hearing when Judges assembled to hear the interest waiver case. However, Solicitor General Tushar Mehta was unavailable for hearing as he has to appear in the pleas challenging the construction of the new Grand Vista in Delhi. Case has been adjourned to November 5 to accommodate the Solicitor General.
>> After a brief hearing on November 5, the case was adjourned to November 18.
>> The matter was adjourned to November 19 (today).
>> Supreme Court on November 19 disposes petitions where petitioners are satisfied with compound interest waiver. It directs power producers and other petitioners to submit suggestions before RBI counsels. Apex court has also directed Centre and RBI to reply to suggestions put forth before the bench. It has also directed for the case to be listed next week.

> Supreme Court disposes petitions where petitioners are satisfied with compound interest waiver
> Directs power producers and other petitioners to submit suggestions before RBI counsels.
> Apex court has directed Centre and RBI to reply to suggestions put forth before the bench today
> Directs for the case to be listed next week.

Supreme Court disposes off petitions in which the petitioners are satisfied with compound interest waiver. (Live Law)

> SG Mehta: You have been the custodian of Fundamental rights. But Dr Singhvi gives a political point by saying Centre did not take any step without SC's intervention. This is not correct, we announced packages in March this year.
> SC Bench: Mr Singhvi appeared for power generation companies. He will submit his arguments to SG and RBI. He may do so by tomorrow. Mr Duttas plea is disposed off. IA in that plea be kept alive. List matter next week
> Senior Adv V Giri: all those persons have issues they need to send representation to RBI. So that we can come with responses.
> SG Mehta: Atleast ask parties to submit synopsis so that we are not caught by surprise. Dr Singhvi made submissions which we were not aware of.
> Supreme Court: all parties to file short submissions/suggestions to RBI and Centre before the hearing so that appropriate response be given. (Bar & Bench)

> Senior Adv Rajiv Dutta: All this has happened only with the interference of this Court
> SG: Let us not go into all of this
> SC Bench: We are disposing off Mr Duttas plea
> Dutta: first two affidavits of RBI needs to be dealt with
> Justice Bhushan: We are disposing off your petition. You have already said twice that you want to
> Senior Adv Huzefa Ahmadi: We had filed an IA in Mr Dutta plea. Please keep it open
> SC to Ahmadi: Okay we will hear you.
> SC to Adv Dutta: You will file no more written submissions. We are disposing off the plea. Everyone you want your case to end. Everytime we are hearing you are interrupting us. (Bar & Bench)

> Singhvi: Banks are not proceeding to recover loans but then want to recover guarantees. Your lordship is not permitting something but its not like you don't do it from left hand but do the same thing from the right hand. Please formally issue notice and ask them to respond.
>SC Bench: We have heard you.
>SG: they can make a representation why to issue notice. Dr Singhvi may have some point or not have, he can approach RBI rather than keeping the matter pending
>SC Bench: Let suggestion go to RBI. But we are not deciding anything now
>Singhvi: But a one week time should be given so that they reply. (Bar & Bench)

> SC bench asks Advocate Singhvi for remedies
> The circular of the RBI dated October 6 has created inadvertent exclusions, says Singhvi (Live Law)

Senior advocate Abhishek Manu Singhvi for Power Producers.
> These are extraordinary situations. Also I am not asking for specific reliefs like liquidity injections or specific fiscal reliefs. Really my focus is on tweaker 2-3 issues arising out of RBI circulars has led to discrimination by inadvertence or design
> Power Producers have been recognised to have huge arrears arising out of unpaid dues. It is even pre covid, the Parliamentary standing committee talks about how they don’t get paid institutionally
> NPA’s created for non-payment of my consumed power
> Dues for consumed power as an ailment recognised by Government. Dues are 1.22 crore (Live Law)

Dr Abhishek Manu Singhvi for power producers:
> Not even the transmission, but it is the generating companies which are suffering the most. Now there is a total debt of 1.2 lakh crore.
> A large part of the borrowings cannot be restructured due to certain exclusions. A large part of the borrowings by LIC. These loopholes needs to be rectified by RBI. I am seeking actual relief.
> Such a clarification under Article 14 has no nexus to objective sought to be achieved.
> Benefit of restructuring should be allowed at an opt in or opt out stage. Here centre says restructuring can only be initiated at the instance of the lender. Minor tweaks are required. RBI needs to revisit the circular and make these changes.(Bar & Bench)

Dr Abhishek Manu Singhvi: I am grateful that SC has considered that these are extra ordinary times.
> I am not seeking liquidity injunctions for specific relief. Minor tweaking can give a relief to a lot of segments. It is nothing for which court needs to give a mandamus. These are circulars which needs to be inclusionary.
> Singhvi appears for association for generating companies: we are a special and abused class. Even Pre covid parliamentary standing committee on March 7 this year talks about how power must be supplied under schemes even if restructuring takes place.
> In the Additional affidavit filed on October 9 it notes that power sector has a huge importance for the ones who have taken power from them. (Bar & Bench)

Justice MR Shah: But question is who uses your credit card?
SG: Among both of us, I’m the less miser and hence I use it
Justice Bhushan: People with credit cards should not be given this benefit, they are purchasing things using the card and they dont have a loan.
SG: This is not a case of no action. Even if the petitioners say that there can be a better option that too cannot be an opportunity for this Court to interfere under Article 32. Sector specific plan is perhaps not possible in this case under 32 (Bar & Bench)

> SG Mehta: We have taken a decision that those who have paid EMIs during moratorium cannot be punished. Availed moratorium or not availed, or partly availed - all are eligible.Banks havs to lodge claim to SBI for which a separate nodal agency is created, they’ll verify, take it from Government and then pay it
> I am a credit card holder and I received SMS for ex gratia credit, says SG Mehta to which SC reverts with: "But do you need it? People like you should not get the benefit" (Bar & Bench)

The Finance Ministry has through Solicitor-General Tushar Mehta told the apex court that it is the responsibility of banks to credit compound interest waiver for loans up to Rs 2 crore, "not for consumers to remind the banks of this scheme." (Bar & Bench)