Paragraph numbers below are the court’s original numbering, recovered from the source text.
15. 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 same is a matter for decision exclusively within the province of the Central Government. Such matters do not ordinarily attract the power of judicial review. Merely because some class/sector may not be agreeable and/or satisfied with such packages/policy decisions, the courts, in exercise of the power of judicial review, do not ordinarily interfere with the policy decisions, unless such policy could be faulted on the ground of mala fide, arbitrariness, unfairness etc.
16. 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.
17. 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.
18. Legality of the policy, and not the wisdom or soundness of the policy, is the subject of judicial review. The scope of judicial review of the governmental policy is now well defined. The courts do not and cannot act as an appellate authority examining the correctness, stability and appropriateness of a policy, nor are the courts advisers to the executives on matters of policy which the executives are entitled to formulate.
19. Government has to decide its own priorities and relief to the different sectors. It cannot be disputed that pandemic affected the entire country and barring few of the sectors. However, at the same time, the Government is required to take various measures in different fields/sectors like public health, employment, providing food and shelter to the common people/migrants, transportation of migrants etc. and therefore, as such, the government has announced various financial packages/reliefs. Even the government also suffered due to lockdown, due to unprecedented covid-19 pandemic and also even lost the revenue in the form of GST. Still, the Government seems to have come out with various reliefs/ packages. Government has its own financial constraints. Therefore, as such, no writ of mandamus can be issued directing the Government/ RBI to announce/declare particular relief packages and/or to declare a particular policy, more particularly when many complex issues will arise in the field of economy and what will be the overall effect on the economy of the country for which the courts do not have any expertise and which shall be left to the Government and the RBI to announce the relief packages/economic policy in the form of reliefs on the basis SMALL SCALE INDUSTRIAL MANUFACTURES ASSOCIATION (REGD.) v. UNION OF INDIA [M. R. SHAH, J.] of the advice of the experts. Therefore, no writ of mandamus can be issued.
20. No State or country can have unlimited resources to spend on any of its projects. That is why it only announces the financial reliefs/ packages to the extent it is feasible. The court would not interfere with any opinion formed by the Government if it is based on the relevant facts and circumstances or based on expert advice. It is not normally within the domain of any court to weigh the pros and cons of the policy or to scrutinize it and test the degree of its beneficial or equitable disposition for the purpose of varying, modifying or annulling it, based on howsoever sound and good reasoning, only where it is arbitrary and violative of any Constitutional, statutory or any other provisions of law. When Government forms its policy, it is based on a number of circumstances on facts, law including constraints based on its resources. It is also based on expert opinion. It would be dangerous if court is asked to test the utility, beneficial effect of the policy or its appraisal based on facts set out on affidavits.
21. No right could be absolute in a welfare State. Man is a social animal. He cannot live without the cooperation of a large number of persons. Every article one uses is the contribution of many. Hence every individual right has to give way to the right of the public at large. Not every fundamental right under Part III of the Constitution is absolute and it is to be within permissible reasonable restriction. This principal equally applies when there is any constraint on the health budget on account of financial stringencies. It is the cardinal principle that it is not within the legitimate domain of the court to determine whether a particular policy decision can be served better by adopting any policy different from what has been laid down and to strike down as unreasonable merely on the ground that the policy enunciated does not meet with the approval of the court in regard to its efficaciousness for implementation of the object and purpose of such policy decision.
22. With the limited scope of judicial review on the policy decisions affecting the economy and/or it might have financial implications on the economy of the country, the reliefs and submissions stated hereinabove are required to be considered. Whether there shall be a waiver of interest during the moratorium period or whether there shall be sector-wise relief packages and/or RBI should have issued directions which are sector specific and addressing such sector specific issues and/or whether the moratorium period should be extended beyond 31.08.2020 or the last date for invocation of the resolution mechanism, namely, 31.12.2020 provided in the 6.8.2020 circular should be extended are all in the realm of the policy decisions. Not only that, if such reliefs are granted, it would seriously affect the banking sectors and it would have far reaching financial implications on the economy of the country.
23. Now so far as the relief sought of waiver of interest during the moratorium period is concerned, it is required to be noted that the bankers/lenders have to pay the interest to the depositors and their liability to pay the interest on the deposits continue even during the moratorium period. There shall be administrative expenses also required to be borne by the bankers/lenders. Continue payment of interest to depositors is not only one of the most essential banking activities but it shall be a huge responsibility owed by the banks to crores and crores of small depositors, pensioners etc. surviving on the interest from their deposits. There may be several welfare funds schemes, category specific and sector specific which might be surviving and are implemented on the strength of the interest generated from their deposits. All such welfare funds would depend on the income generated from their deposits for the survival of their members. Therefore, to grant such a relief of total waiver of interest during the moratorium period would have a far-reaching financial implication in the economy of the country as well as the lenders/banks. Therefore, when a conscious decision has been taken not to waive the interest during the moratorium period and a policy decision has been taken to give relief to the borrowers by deferring the payment of installments and so many other reliefs are offered by the RBI and thereafter by the bankers independently considering the Report submitted by Kamath Committee consisting of experts, the interference of the court is not called for.
24. Now so far as the submission on behalf of the petitioners that the RBI should have issued directions which are sector specific and addressing such sector specific issues is concerned, at the outset, it is required to be noted that as such the Committee headed by Shri K.V. Kamath had gone into such sector specific issues and gave its recommendations. The recommendations of the Kamath Committee have been substantially accepted by the RBI in its circular dated 7.9.2020 SMALL SCALE INDUSTRIAL MANUFACTURES ASSOCIATION (REGD.) v. UNION OF INDIA [M. R. SHAH, J.] which provides for separate threshold for 26 sectors including power, real estate and construction. Even otherwise, it is required to be noted that every sector might have suffered differently and therefore it will not be possible to provide sector specific/sector-wise reliefs. The petitioners cannot pray for sector specific relief by either waiver of interest or restructuring by way of present proceedings under Article 32 of the Constitution of India and the question of such financial stress management measures requires examination and consideration of several financial parameters and its impact.
25. Now so far as the submission on behalf of the petitioners that as per the notifications/circulars/reliefs offered by the RBI and/or Finance Department of the Union of India ultimately it is left to the bankers and it should not have been left to the bankers and the Government/RBI must intervene and provide further reliefs is concerned, at the outset, it is required to be noted that as such the bankers are commercial entities and since the customer profile, organizational structure and spread of each lending institution is widely different from others, each lending institution is best placed to assess the requirements of its customers and therefore, the discretion was left to the lending institutions concerned. Any borrowing arrangement is a commercial contract between the lender and the borrower. RBI and/or the Union of India can provide for broad guidelines while recommending to give the reliefs.
26. Now so far as the submission on behalf of the petitioners that the relief packages which are offered by the UOI/RBI/Bankers/Lenders are not sufficient and some better and/or more reliefs should be offered is concerned, it is not within the judicial scope of the courts to issue such directions. No mandamus can be issued to grant some more reliefs/ packages. As observed hereinabove, the court cannot interfere with the economic policy decisions on the ground that either they are not sufficient or efficacious and/or some more reliefs should have been granted. The Government might have their own priorities and the Government has to spend in various fields and in the present case like health, medicine, providing food etc. Even as per the case of the Union of India and so stated in the counter filed on behalf of the Union of India and the RBI, so many policies have been announced to mitigate the impact of Covid- 19 pandemic, which are referred to hereinabove. As can be seen that as such the Central Government has already given various reliefs and by providing various reliefs, they have already expanded huge financial burden. It is required to be noted that pandemic has caused stress to large and small businesses and the individuals who have lost jobs and livelihoods. By and large, everybody has suffered due to lockdown due to Covid-19 pandemic. Even the Government has also suffered due to non-recovery of GST. From the counter filed on behalf of the Central Government, it appears that the Government has announced and offered ‘Garib Kalyan Package’ and ‘Aatma Nirbhar Package’. The ‘Garib Kalyan Package’ was for Rs.1.70 lakh crores, involving free food grains, pulses, gas cylinders and cash payment to women, poor senior citizens and farmers. It is reported that more than 42 crore poor people received financial assistance of Rs. 65,454 crores under the said package. The Government has also come out with ‘Aatma Nirbhar Package’ which was for Rs. 20 lakh crores, involving support to MSMEs, Non-Banking Finance Companies, agriculture, sectors allied to agriculture, contractors, street vendors, State Governments, relief in provident fund contribution, extension of subsidy on home loans etc. Therefore, it cannot be said that the Central Government and/or the RBI have not done anything and/or have not offered any reliefs whatsoever. While offering the financial relief packages, the financial constraint and/or financial burden on the government is also required to be considered and borne in mind, which can be considered by the experts and the government and the courts have not expertise to assess the financial burden. From the various steps/measures/policy decisions/packages declared by the Union of India/RBI and the bankers, it cannot be said that the UOI and/or the RBI have not at all addressed the issues related to the impact of Covid-19 on the borrowers. As such, none of the petitioners have specifically challenged the various circulars/policy decisions taken by the UOI/RBI. From the submissions made by the learned counsel appearing for the respective parties, it appears that the borrowers want something more than the reliefs announced. Merely, since the reliefs announced by the UOI/RBI ither may not be suiting the desires of the borrowers, the reliefs/policy decisions related to Covid-19 cannot be said to be arbitrary and/or violative of Article 14 of the Constitution of India. It cannot be said that any of the fundamental rights guaranteed under the Constitution are infringed and/or violated. Economic decisions are required to be taken keeping the larger economic scenario in mind. SMALL SCALE INDUSTRIAL MANUFACTURES ASSOCIATION (REGD.) v. UNION OF INDIA [M. R. SHAH, J.]
27. Similarly, the relief sought that the moratorium period should be extended and/or the last date for invocation of the resolution mechanism namely 31.12.2020 provided under the 06.08.2020 circular should be extended are all in the realm of policy decisions. Even otherwise, almost five months were available to eligible borrowers when circular dated 6.8.2020 was notified providing for a separate resolution mechanism for Covid-19 related stressed assets. Therefore, sufficient time was given to invoke the resolution mechanism. Therefore, the petitioners shall not be entitled to any reliefs, namely, (i) total waiver of interest during the moratorium period; (ii) to extend the period of moratorium; (iii) to extend the period for invocation of the resolution mechanism, namely 31.12.2020 provided under the 6.8.2020 circular; (iv) that there shall be sector-wise reliefs provided by the RBI; and (v) that the Central Government/RBI must provide for some further reliefs over and above the relief packages already offered which, as observed hereinabove, can be said to be in the realm of the economic policy decisions and for the reasons stated hereinabove and as observed hereinabove granting of any such reliefs would have a far-reaching financial implication on the economy of the country. It appears, whatever best can be offered has been offered for the different fields and to the common people as well as those persons who are affected due to Covid- 10 pandemic. However, the relief/prayer not to charge the penal interest/ interest on interest/compound interest during the moratorium period is concerned, it stands on different footing which shall be dealt with hereinbelow.
28. Now so far as the submission of Shri Sibbal, learned Senior Advocate that there is no “National Plan” drawn up for the disaster management due to Covid-19 pandemic and that NDMA has not performed its duty under the DMA 2005 is concerned, to appreciate the above, the relevant provisions of DMA 2005 are required to be referred to and considered. Section 3 of the Act provides for establishment of National Disaster Management Authority which shall consist of the Prime Minister of India, who shall be the Chairperson of the National Disaster Management Authority and other members not exceeding nine, to be nominated by the Chairperson of the National Authority. Powers and functions of the National Authority are provided under Section 6, which reads as under: “6. Powers and functions of National Authority.—(1) Subject to the provisions of this Act, the National Authority shall have the responsibility for laying down the policies, plans and guidelines for disaster management for ensuring timely and effective response to disaster. (2) Without prejudice to generality of the provisions contained in sub-section (1), the National Authority may — (a) lay down policies on disaster management; (b) approve the National Plan; (c) approve plans prepared by the Ministries or Departments of the Government of India in accordance with the National Plan; (d) lay down guidelines to be followed by the State Authorities in drawing up the State Plan; (e) lay down guidelines to be followed by the different Ministries or Departments of the Government of India for the purpose of integrating the measures for prevention of disaster or the mitigation of its effects in their development plans and projects; (f) coordinate the enforcement and implementation of the policy and plan for disaster management; (g) recommend provision of funds for the purpose of mitigation; (h) provide such support to other countries affected by major disasters as may be determined by the Central Government; (i) take such other measures for the prevention of disaster, or the mitigation, or preparedness and capacity building for dealing with the threatening disaster situation or disaster as it may consider necessary; (j) lay down broad policies and guidelines for the functioning of the National Institute of Disaster Management. SMALL SCALE INDUSTRIAL MANUFACTURES ASSOCIATION (REGD.) v. UNION OF INDIA [M. R. SHAH, J.] (3) The Chairperson of the National Authority shall, in the case of emergency, have power to exercise all or any of the powers of the National Authority but exercise of such powers shall be subject to ex post facto ratification by the National Authority.” Section 7 provides for constitution of Advisory Committee by National Authority, which shall consist of experts in the field of disaster management and having practical experience of disaster management at the national, State or district level to make recommendations on different aspects of disaster management. Then comes constitution of National Executive Committee as per section 8 of the Act, to assist the National Authority in the performance of its functions under the Act. The National Executive Committee shall consist of the Secretary to the Government of India, in charge of the Ministry or Department of the Central Government having administrative control of the disaster management, who shall be the Chairperson, ex officio, and the Secretaries to the Government of India in the Ministries or Departments having administrative control of the agriculture, atomic etc., as mentioned in Section 8(2)(b) of the Act. As per Section 9 of the Act, the National Executive Committee, as and when it considers necessary, constitute one or more sub-committees for the efficient discharge of its functions. The powers and functions of the National Executive Committee are as per Section 10 of the Act, and more particularly (a) to act as the coordinating and monitoring body for disaster management…. (b) coordinate and monitor the implementation of the National policy; (c) monitor the implementation of the National Plan and the plans prepared by the Ministries or Departments of the Government of India; (d) monitor the implementation of the guidelines laid down by the National Authority for integrating of measures for prevention of disasters and mitigation by the Ministries or Departments in their development plans and projects; (e) monitor, coordinate and give directions regarding the mitigation and preparedness measures to be taken by different Ministries or Departments and agencies of the Government; (f) lay down guidelines for, or give directions to, the concerned Ministries or Departments of the Government of India, the State Governments and the State Authorities regarding measures to be taken by them in response to any threatening disaster situation or disaster; (g) advise, assist and coordinate the activities of the Ministries or Departments….engaged in disaster management. Section 11 of the Act provides for preparation/drawing up a Plan called the “National Plan” for disaster management for the whole of the country. The National Plan shall include- (a) measures to be taken for the prevention of disasters, or the mitigation of their effects; (b) measures to be taken for the integration of mitigation measures in the development plans; (c) measures to be taken for preparedness and capacity building to effectively respond to any threatening disaster situations or disaster; (d) roles and responsibilities of different Ministries or Departments of the Government of India in respect of measures specified in clauses (a), (b) and (c). Section 12 of the Act provides for issuance of guidelines by the National Authority for minimum standards of relief. Section 13 of the Act provides for relief in repayment of loan etc., which shall be dealt with hereinbelow at an appropriate stage. Section 14 of the Act provides for establishment of State Disaster Management Authority. Similar provisions like National Disaster Management Authority are made with respect to State Disaster Management Authority. Section 33 provides for State Disaster Management Plan. Similar provisions are made with respect to District Disaster Management Authority and the District Plan. Section 35 of the Act provides for measures to be taken by the Central Government for disaster management. Section 35 reads as under: “35. Central Government to take measures.—(1) Subject to the provisions of this Act, the Central Government shall take all such measures as it deems necessary or expedient for the purpose of disaster management. (2) In particular and without prejudice to the generality of the provisions of sub-section (1), the measures which the Central Government may take under that sub-section include measures with respect to all or any of the following matters, namely:— (a) coordination of actions of the Ministries or Departments of the Government of India, State Governments, National Authority, State Authorities, governmental and non-governmental organizations in relation to disaster management; SMALL SCALE INDUSTRIAL MANUFACTURES ASSOCIATION (REGD.) v. UNION OF INDIA [M. R. SHAH, J.] (b) ensure the integration of measures for prevention of disasters and mitigation by Ministries or Departments of the Government of India into their development plans and projects; (c) ensure appropriate allocation of funds for prevention of disaster, mitigation, capacity-building and preparedness by the Ministries or Departments of the Government of India; (d) ensure that the Ministries or Departments of the Government of India take necessary measures for preparedness to promptly and effectively respond to any threatening disaster situation or disaster; (e) cooperation and assistance to State Governments, as requested by them or otherwise deemed appropriate by it; (f) deployment of naval, military and air forces, other armed forces of the Union or any other civilian personnel as may be required for the purposes of this Act; (g) coordination with the United Nations agencies, international organizations and governments of foreign countries for the purposes of this Act; (h) establish institutions for research, training, and developmental programmes in the field of disaster management; (i) such other matters as it deems necessary or expedient for the purpose of securing effective implementation of the provisions of this Act. (3) The Central Government may extend such support to other countries affected by major disaster as it may deem appropriate.” Section 36 of the Act provides for responsibilities of the Ministries or Departments of the Government of India, which reads as under: “36. Responsibilities of Ministries or Departments of Government of India.—It shall be the responsibility of every Ministry or Department of the Government of India to— (a) take measures necessary for prevention of disasters, mitigation, preparedness and capacity-building in accordance with the guidelines laid down by the National Authority; (b) integrate into its development plans and projects, the measures for prevention or mitigation of disasters in accordance with the guidelines laid down by the National Authority; (c) respond effectively and promptly to any threatening disaster situation or disaster in accordance with the guidelines of the National Authority or the directions of the National Executive Committee in this behalf; (d) review the enactments administered by it, its policies, rules and regulations, with a view to incorporate therein the provisions necessary for prevention of disasters, mitigation or preparedness; (e) allocate funds for measures for prevention of disaster, mitigation, capacity-building and preparedness; (f) provide assistance to the National Authority and State Governments for— (i) drawing up mitigation, preparedness and response plans, capacity-building, data collection and identification and training of personnel in relation to disaster management; (ii) carrying out rescue and relief operations in the affected area; (iii) assessing the damage from any disaster; (iv) carrying out rehabilitation and reconstruction; (g) make available its resources to the National Executive Committee or a State Executive Committee for the purposes of responding promptly and effectively to any threatening disaster situation or disaster, including measures for— (i) providing emergency communication in a vulnerable or affected area; (ii) transporting personnel and relief goods to and from the affected area; (iii) providing evacuation, rescue, temporary shelter or other immediate relief; (iv) setting up temporary bridges, jetties and landing places; SMALL SCALE INDUSTRIAL MANUFACTURES ASSOCIATION (REGD.) v. UNION OF INDIA [M. R. SHAH, J.] (v) providing, drinking water, essential provisions, healthcare, and services in an affected area; (h) take such other actions as it may consider necessary for disaster management.” Section 37 of the Act provides for preparation of the Disaster Management Plans of Ministries or Departments of Government of India. Section 38 provides for measures to be taken by the State Government.
29. From the aforesaid, it can be said that the DMA 2005 is a complete code in itself and different functions and responsibilities by different authorities to be performed at different levels are provided. As per Sections 35 and 36 of the Act, it shall be the responsibility of the Ministry or the Department of the Government of India to take measures necessary for prevention of disaster, mitigation, preparedness and capacity-building which shall include to allocate funds for measures for preparation of disaster, mitigation, capacity-building and preparedness. Therefore, on conjoint reading of the relevant provisions of the DMA 2005, which are referred to hereinabove, it cannot be said that the functions of all the Ministries are to be discharged by the NDMA which should take decision qua the area in each Ministry. It also cannot be said that the functions of the Ministries will stand transferred to the NDMA and will have to be discharged by the NDMA either directly or indirectly for the purpose of disaster management. Various Ministries under the Central Government have to take various relief measures within their respective spheres for remedying the effects of the disaster. From the pleadings, it is borne out that in fact there is already a National Disaster Management Plan prepared even prior to the Covid-19 pandemic. Under the National Plan, there is a National Disaster Management Institutional Mechanism, which is reproduced hereinabove. The said plan also envisages nodal ministries for management of different disasters. For example, if the disaster is due to drought, Ministry of Agriculture and Farmers Welfare would be the nodal agency; if the disaster is due to floods, Ministry of Housing and Urban Affairs would be the nodal agency and if the disaster is due to “biological emergencies”, the Ministry of Health and Welfare would be the nodal agency. The disaster due to Covid-19 pandemic would fall under disaster due to “biological emergencies”. However, it appears that Covid-19 pandemic disaster is of such a nature that it could not be confined to one nodal ministry and whatever measures/reliefs are required to be taken/given are provided by every Ministry in each and every day needed. Therefore, various reliefs/packages are provided by different Ministries, such as, Ministry of Railways, Ministry of Finance, Ministry of Health and Family Welfare etc. It also appears that even considering the very nature of the pandemic which would have PAN-India impact, empowered groups were constituted by the National Disaster Management Authority. Therefore, when there is already in existence a National Plan, which might have been prepared even prior to the Covid-19 pandemic, it cannot be said that there is no National Plan by the NDMA at all. National Plan would be for a long term and even with respect to disaster to happen in future. For every disaster, there shall not be a new National Plan. National Plan would be comprehensive in nature which is already there in existence. Therefore, the submission of Shri Sibbal, learned Senior Advocate that there is no National Plan at all and therefore the NDMA has failed to perform its duty cannot be accepted.
30. Now so far as the submission on behalf of the learned counsel for the respective petitioners that the NDMA has failed to perform its duty cast under Section 13 of the Act is concerned, at the outset, it is required to be noted that the word used in Section 13 is “may” and not “shall”. As per the settled proposition of law, while interpreting a particular provision, the language used is to be read as it is. On a fair reading of Section 13, it appears that the legislature has deliberately used the word “may”. This “may” is used after considering the object and purpose of the Act as a whole as well as the role to be placed by the Central Government through different ministries, role to be placed by the State Government, role to be played by the District Authority at the district level. In the present case, the Ministry of Finance and the RBI have already come out with different packages/reliefs in repayment of loans or grant of fresh loans to the persons affected by disaster. 30.1 Even the Central Government through Ministry of Finance and the RBI has taken various steps for granting reliefs to the disaster affected borrowers. The Central Government has announced the ‘Garib Kalyan Package’ for Rs.2.00 lakh crores, involving free food grains, pulses, gas cylinders and cash payment to women, poor senior citizens and farmers; ‘Aatma Nirbhar Package’ for various sectors like power sector, real estate sector, MSME sector. The Central Government also promulgated Emergency Credit-Linked Guarantee Scheme of Rs. 3 lakh SMALL SCALE INDUSTRIAL MANUFACTURES ASSOCIATION (REGD.) v. UNION OF INDIA [M. R. SHAH, J.] crores providing additional credit at lower rate of interest, with 100% Government Guarantee and no fresh collateral. The scheme has been extended with higher financial limits to 27 Covid-19 impacted sectors including restaurant and hotel sectors. The Central Government has also granted Rs. 20,000 crores Subordinate Debt with partial credit guarantee for over two lakhs stressed MSME units including from hospitality sector. The Central Government has also granted Rs. 50,000 crores Fund of Funds for providing growth equity to MSMEs. The Central Government has also come out with a new definition of MSMEs for improving turnover caps for better access of schemes/benefits. There are other reliefs also announced by the Central Government. The Central Government has also declared the moratorium from March to August, 2020. The proceedings under the IBC are also suspended during the moratorium period. 30.2 As per the provisions of the DMA 2005, the responsibilities and functions of the discharge of functions by the NDMA would be confined to Section 6 of the Act. However, on-ground disaster management and relief measures shall have to be undertaken by the Central Ministries and the State Government Ministries depending upon the need of the disaster and only in a case where the NDMA is satisfied that the reliefs which are already announced are not sufficient and/or no steps are taken at all with respect to the reliefs mentioned in Section 13, the National Authority may recommend the reliefs in repayment of loans etc. Therefore, it cannot be said that the National Authority has failed to perform its duty as cast under Section 13 of the Act. 30.3 At this stage, it is required to be noted and so stated in the affidavit dated 31.08.2020 filed on behalf of the Union of India that NDMA also took cognizance of the issues being dealt with by the RBI and sent its “views and recommendations” given by O.M. dated 28.08.2020 and the NDMA also opined that RBI may consider granting further reliefs, as deemed appropriate, after considering and taking into account the financial relief packages issued by the Ministry of Finance, as well as, other relief measures that have already been issued/declared by the RBI itself. The “views and recommendations” of the NDMA were communicated to the RBI vide letter dated 31.08.2020. Therefore, it cannot be said that the NDMA has not stepped into at all. It is to be noted that even as per Section 13 of the Act, the National Authority “may” and “recommend” relief in repayment of loans or grant of fresh loans to the persons affected by disaster on such concessional terms as may be appropriate. Thereafter, as per the “views and recommendations” of the NDMA, RBI has come out with Resolution framework and on the basis of the same the lenders/bankers after getting the approval of their Board of Directors have come out with the policies. Thus, from the above, it cannot be said that NDMA has failed to perform its duty cast under Section 13 of the Act. From the above, it also cannot be said that there is no National Plan in existence at all.
31. Now so far as the charging of penal interest/interest on interest/ compound interest during the moratorium period is concerned, it stands absolutely on a different footing. At this stage, it is required to be noted that in fact the Central Government has come out with a policy decision subsequently by which it is decided not to charge the interest on interest on the loans up to Rs. 2 crores. However, such relief is restricted to the following categories: (i) MSME loans up to Rs.2 crore (ii) Education loans up to Rs.2 crore (iii) Housing loans up to Rs.2 crore (iv) Consumer durable loans up to Rs.2 crore (v) Credit card dues up to Rs.2 crore (vi) Auto loans up to Rs.2 crore (vii) Personal loans to professionals up to Rs. 2 crore (viii) Consumption loans up to Rs.2 crore There is no justification shown to restrict the relief of not charging interest on interest with respect to the loans up to Rs. 2 crores only and that too restricted to the aforesaid categories. What are the basis to restrict it to Rs. 2 crores are not forthcoming. Therefore, as such, there is no rational to restrict such relief with respect to loans up to Rs. 2 crores only. Even otherwise, it is required to be noted that the scheme dated 23.10.2020 granting relief/benefit of waiver of compound interest/ interest on interest contains eligibility criteria and it provides that any borrower whose aggregate of all facilities with lending institution is more than Rs. 2 crores (sanctioned limit or outstanding amount) will not be eligible for ex-gratia payment under the said scheme. Therefore, if the total exposure of the loan at the grant of the sanction is more than Rs. 2 SMALL SCALE INDUSTRIAL MANUFACTURES ASSOCIATION (REGD.) v. UNION OF INDIA [M. R. SHAH, J.] crores, the borrower will be ineligible irrespective of the actual outstanding. For Example, if the borrower has been sanctioned a loan of Rs. 5 crores and has availed of the same, even though he might have repaid substantially bringing down the principal amount of less than Rs. 2 crores as on 29.02.2020, but because of the sanction of the loan amount of more than Rs. 2 crores, he will be ineligible. It also further provides that the outstanding amount should not be exceeded to Rs. 2 crores and for this purpose aggregate of all facilities with the lending institution will be reckoned. Therefore, if a borrower, for example, MSME Category has availed and has outstanding of business loan of Rs. 1.99 crores and also has dues of its credit card of Rs. 1.10 lakhs, thereby making the aggregate to Rs. 2.10 crores, it stands ineligible. Therefore, the aforesaid conditions would be arbitrary and discriminatory. 31.1 Even otherwise, it is required to be noted that compound interest/interest on interest shall be chargeable on deliberate/willful default by the borrower to pay the installments due and payable. Therefore, it is in the nature of a penal interest. By notification dated 27.03.2020, the Government has provided the deferment of the installments due and payable during the moratorium period. Once the payment of installment is deferred as per circular dated 27.03.2020, non-payment of the installment during the moratorium period cannot be said to be willful and therefore there is no justification to charge the interest on interest/ compound interest/penal interest for the period during the moratorium. Therefore, we are of the opinion that there shall not be any charge of interest on interest/compound interest/penal interest for the period during the moratorium from any of the borrowers and whatever the amount is recovered by way of interest on interest/compound interest/penal interest for the period during the moratorium, the same shall be refunded and to be adjusted/given credit in the next instalment of the loan account.
32. In view of the above and for the reasons stated hereinabove, the present petitions seeking reliefs, namely, (i) total waiver of interest during the moratorium period; (ii) to extend the period of moratorium; (iii) to extend the period for invocation of the resolution mechanism, namely 31.12.2020 provided under the 6.8.2020 circular; (iv)that there shall be sector-wise reliefs provided by the RBI; and (v)that the Central Government/RBI must provide for some further reliefs over and above the relief packages already offered stand dismissed. Connected IAs stand disposed of. SMALL SCALE INDUSTRIAL MANUFACTURES ASSOCIATION (REGD.) v. UNION OF INDIA [M. R. SHAH, J.] However, it is directed that there shall not be any charge of interest on interest/compound interest/penal interest for the period during the moratorium and any amount already recovered under the same head, namely, interest on interest/penal interest/compound interest shall be refunded to the concerned borrowers and to be given credit/adjusted in the next instalment of the loan account. All these petitions are partly allowed to the aforesaid extent only and as observed for the reliefs, the petitions are dismissed. Interim relief granted earlier not to declare the accounts of respective borrowers as NPA stands vacated. However, there shall be no order as to costs. Writ Petition (Civil) No. 955 of 2020 Writ Petition (Civil) No. 955 of 2020 stands disposed of in terms of the statement made by Shri V. Giri, learned Senior Advocate appearing on behalf of the RBI that Circular dated 27.03.2020 shall be applicable to all banks, non-banking financial companies, housing finance companies and other financial institutions compulsorily and mandatorily. Divya Pandey Writ Petitions partly allowed.