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#SupremeCourt’s Justice Ashok Bhushan led bench to shortly hear plea(s) seeking waiver of loan interest during moratorium in view of the pandemic situation.

@RBI
#loans #moratorium #banks #interestwaiver

Bench has assembled.

Yesterday, when the plea(s) came up for hearing, the bench adjourned the matter to today in order to go through the affidavit filed on behalf of the Centre for its stand on interest on loans during moratorium.

Senior Advocate Rajiv Dutta is making submissions.
He is taking the bench through the sequence of events since the RBI Notification for moratorium came into effect.
#loans #moratoriumextension #interestwaiver

“We are going through a hell of a time, while country was locked up. They (Govt.) came out to help us.
We thought we are secure when they waived our EMI’s but they ended us charging us with compound interest - a kind of double whammy on us!” - Dutta

#interestwaiver

Dutta: Governments have been pumping citizens with money in UK & USA and here we are being penalised? On top of that, RBI is saying they want to make profits? When circular was issued, it was carte blanche. What is meant by one-size does not fit all?
#interestwaiver

Dutta: Solicitor General has tried his best to navigate through this with the RBI & Centre but what has come out of this?
If time was given to citizens to stand up on their feet why are we being treated like defaulters?

Dutta: Govt. has done enough “padding” to banks. But the RBI is now saying that banks are commercial entities. The crux of the RBI’s stand is that one-size does not fit all! Was a circular put forth to this effect?
#interestwaiver

Dutta: Only people who have got advantage during this time are those supplying essential commodities. Where is the plausible logic in saying that if they can discharge their liabilities why cant you?

Dutta: First respite was given to the citizens and now interest on interest is being charged? Respite is being handed over, the SG says - of course you have to help your people.

Dutta: The DMA under which the lockdown was imposed, section 13 becomes pertinent.
The section stipulates a power to grant relief under it.

Dutta: Charging interest on interest is absolutely prima facie void.

Senior Advocate Sundaram appears for Real estates association of India:
The problem I am facing today is with respect to leaving everything at the discretion of banks.

#realestate #interestwaiver #loan #moratorium #moratoriumextension

Sundaram: Even if interest is going to be paid, at least reduce the interest to the rate at which the banks give depositors interest, otherwise we’re all going to become NPA’s.
Under DMA, even the RBI has left it to banks on the haircut on interest.
#interestwaiver #realestate

Sundaram: “Lending institutions shall frame its own Viable resolution plan for eligible borrowers,” their affidavit says.
#realestate #interestwaiver #loan #moratorium #moratoriumextension

Sundaram: There is a contradiction here, they also say RBI shall constitute committee which shall recommend financial parameters. But they say that only loans by “big borrowers” shall be decided by them.
#realestate #interestwaiver #loan #moratorium #moratoriumextension

Sundaram: There is so much “grey” in the RBI’s affidavit.

#realestate #interestwaiver #loan #moratorium #moratoriumextension

Sundaram: I am only saying that the RBI does have the power to regulate this. The interest can be turned into a term loan. We are a very specific industry (Real Estate). I can only give suggestions.
#realestate #interestwaiver #loan #moratorium #moratoriumextension

Sundaram: Everything is left without guidelines, to the individual banks. The whole aim is for all of us to survive. Thats all I can appeal to your lordships.
#realestate #interestwaiver #loan #moratorium #moratoriumextension

Senior Advocate Vishwanathan for CREDAI Maharashtra & Association of Power Producers: Relief prayed is to the tune of Levy of interest for the period of moratorium should be proportionate that the banks have to pay to depositors and charges basis the doctrine of proportionality.

Vishwanathan: I will make submissions to to the tune of Union being obliged to act because of extraordinary situation under DMA and how Your Lordships are empowered to act. This is not an ordinary situation of banking transaction. World has never seen this before.

Vishwanathan telling the court that Power Producers Association is most stressed sector. Extraordinary situation which has operated as a Force Majeure.
#LoanCharge #LoanMoratorium #interestwaiver #interestfreeeconomy

Vishwanathan: This calls for adopting "Doctrine of Proportionality while balancing Force Majeure" for both parties.
#LoanCharge #LoanMoratorium #interestwaiver #interestfreeeconomy #ForceMajeure

Vishwanathan: Your lordships should direct them (banks) to forego their profits because this is an extraordinary situation. Covid is ever-increasing, power sector has been effected heavily.
#LoanCharge #LoanMoratorium #interestwaiver #interestfreeeconomy #ForceMajeure

Vishwanathan: 15-20 per cent reduction in demand, customers not taking Power.

Justice Bhushan asks Vishwanathan how he suggests the Proportionality doctrine should apply.

#LoanCharge #LoanMoratorium #interestwaiver #interestfreeeconomy #ForceMajeure

Vishwanathan: Banks and sector need to sit together and profits need to be foregone. Otherwise, the ripple effect of the economy will be insurmountable.
#LoanCharge #LoanMoratorium #interestwaiver #interestfreeeconomy #ForceMajeure

Vishwanathan: DMA has overriding powers over all statutes.
They are bound by the Disaster Management Act to sit down and decide the plan of action. What they did was mechanical.
#LoanCharge #interestwaiver #LoanMoratorium

Vishwanathan calls the effort of the RBI and eye-wash.
“No heed paid to the doctrine of proportionality during this extraordinary situation,” he adds.

#LoanCharge #interestwaiver #LoanMoratorium

*an eye-wash

Vishwanathan: Duties not been discharged by them and your lordships have to effectuate this as a Constitutional Court.

#LoanCharge #interestwaiver #LoanMoratorium

Vishwanathan: RBI circular an attempt to hoodwink borrowers and the top court.

#LoanCharge #interestwaiver #LoanMoratorium

Vishwanathan: Hardships faced by power sector during this period many.
This is an Article 21 issue. We also have employees. Human rights infringed upon.

#LoanCharge #interestwaiver #LoanMoratorium

Justice Bhushan asks Vishwanathan to submit a note stipulating his arguments.

Vishwanathan adds that @RBI made a statement about the object of the Moratorium which was a precursor to the Circular which was to restore normalcy during covid.

#interestwaiver #LoanMoratorium

Vishwanathan says that the object of the Moratorium period effectuated by @RBI was easing hardships, not make the consequences graver.

#LoanCharge #interestwaiver #LoanMoratorium

Senior Advocate Ranjit Kumar: I want to start with the Governors ( @RBI )statement where assessment of the Economy have been made.

#LoanCharge #interestwaiver #LoanMoratorium

Kumar reads the statement of the RBI Governor
“It is when the horizon is the darkest and human reason is beaten down to the ground that faith shines brightest and comes to our rescue."
@RBI @DasShaktikanta
#LoanMoratorium #interest #interestwaiver

The statement of the RBI is in May, we are now in September..”The combined impact of demand compression and supply disruption will depress economic activity in the first half of the year. Assuming that economic activity gets restored in a phased manner”
@DasShaktikanta @RBI

Kumar says that he is reading out statements made by the Governor in order to bring forth the state of the economy.

#loans #interest #interestwaiver
@DasShaktikanta @RBI

Sr. Adv. Ranjit Kumar is appearing for Shopping Centres Association.

“Moratorium expired on August 31 so all accounts have been declared NPA ipso facto - this is something that the Court must take note of”
#interest #interestwaiver #LoanMoratorium

Kumar now taking the bench through the definition of “Disaster” as stipulated under the Disaster Management Act.
“70-80000 cases everyday. Mitigation measures pertinent to reduce the impact of such a disaster”

#interest #interestwaiver #LoanMoratorium

Kumar highlights provisions of the Disaster Management Act including sections 13, 16 & 18.
He is justifying how statute provides for action to mitigate the effects of a “Disaster”, which in this case, he says, is the ongoing pandemic.
#interest #interestwaiver #LoanMoratorium

Justice Bhushan: No dearth of power with the RBI. No one is denying that.

Kumar: We were totally closed. We are shopping centres. We were asked to pay our employees, we kept on paying them. Footfalls in shopping centres next to zero.
#interest #interestwaiver #LoanMoratorium

Kumar: Pharma, FMCG, internet companies did very well but industries such as ours did very badly. We are entitled to relief.

Kumar concludes.
#interest #interestwaiver #LoanMoratorium

Senior Advocate Ravindra Shrivastava now making submissions.
He says that he adopts Senior Advocate Rajiv Dutta’s submissions.

#interest #interestwaiver #LoanMoratorium

Shrivastava: Proceedings since the last few times have brought us back to the @RBI.
“Very occasion for a Moratorium came because there was a Disaster. This is a Disaster specific issue. Not a flood which will last for a few days”
#interest #interestwaiver #LoanMoratorium

Shrivastava says that Covid is a continuing disaster. Effects manifold and ongoing, he adds.

#interest #interestwaiver #LoanMoratorium

Shrivastava says that neither the RBI nor the Centre acted within the statutory provisions stipulated under the DMA and funds were not released for sectorial relief.

#interest #interestwaiver #LoanMoratorium

Justice Bhushan says that this is not in question.

Shrivastava says that the NDMA & GOI are authoritative powers under the DMA & to put forth the @RBI To act is a dereliction of duty at the hands of the GOI.

Shrivastava: No one (GOI & NDMA) worked within the framework of the Disaster Management Act. It is the jurisdiction of the GOI to formulate a framework. Right authority is the central govt, this is a policy issue.

#LoanCharge #loanmoratorium #interest #interestwaiver

Solicitor General Tushar Mehta seeks to be excused from the hearing. He says that a ceremonial bench of the CJI with Justice Mishra has assembled at 12.30 PM & he seeks to appear there.

Justice Arun Mishra retires today.

Senior Advocate Sanjay Hegde now appears for Jewellers Association.

#LoanCharge #loanmoratorium #interest #interestwaiver

Hegde says that he seeks Extension of moratorium for a reasonable time and the effects of which can be used as a relief by borrowers. I am obliged to repay my debts, time granted is on the basis of an overwhelming disaster.
#LoanMoratorium #interest #interestwaiver

Adv. Bhandari: Recommend relief in repayment of loans for persons affected by disaster. I am an intervenor for the Pune Hotel Association. My sector has seen absolutely no economic activity. Every sector cannot be painted with the same paintbrush.
#loanmoratorium #interestwaiver

Bench has risen and will continue hearing arguments at 2 PM.

Bench assembles.

The bench asks Senior Advocate Kapil Sibal to commence arguments.

@KapilSibal

Sibal: Section 13 of DMA, 2005 contemplates relief in repayment of loans sector-wise. NDMA has to exercise this power which is presided over by the PM & 9 nominees.

#LoanMoratorium #interestwaiver #interest

Sibal: When disaster occurs, entire authority goes into action. Under section 6, there are powers given to the NDMA.

#LoanMoratorium #interestwaiver #interest

Sibal: Clearly, there is no application of mind here by the NDMA.
Yesterday GOI released data on how the Pandemic has affected the economy. The construction sector has been damaged most with a negative growth of 50.3%.

#LoanMoratorium #interestwaiver #interest

Sibal: When moratorium was first effectuated, many accounts were entitled to moratorium. Today, its not being extended to many, even though now the situation is much worst.

#LoanMoratorium #interestwaiver #interest #Realestate

Sibal says that the economy was suffering pre-March.
"My Lord can imagine what the situation is as of today," he adds.

#EconomicCrisis #economy #indiangdp #LoanMoratorium #interestwaiver #interest