Plea in Supreme Court seeks directions for Loan Moratorium extension under restructuring scheme & temporary cease on declaration of NPA's

  • Shruti Kakkar
  • 02:30 PM, 10 May 2021

Read Time: 11 minutes

To redress & overcome the financial stress & hardship faced by the borrowers of the country during the Second wave of COVID19 and Lockdown, a plea has been filed in Supreme Court seeking directions in the form of fresh loan moratorium, extension of time period under the restructuring scheme and temporary cease on the declaration of NPA by the financial banks.

The CORONAVIRUS is the Engine and lockdown is a Wagon attached to it. Where the Virus goes, lockdown follows it. Both are disastrous, the Virus affects the health system and lockdown effects in several ways. The difference is that the latter is adopted to bring down the Virus. The CORONA virus has proved disaster and to contain it the Measure of LOCKDOWN is adopted. The Citizens have Stood together to fight with this deadly virus and for this they have Sacrificed their Bread, their Earning, their hunger, their economy, business, jobs and even the future of their Children. But during this it is required that the government should take every possible measure to keep the living of the citizens Comfortable and easy. Their financial burden should be decreased and Citizens shall not lose their Dignity. Financial policies are made by the government but in the present time above financial policies the question is of Survival. And the population of our Nation shall survive with dignity and without any Stress.”, the plea states.

It has been argued that the emergence of CoVID 19 pandemic in India has brought serious repercussions in the form of unemployment, failed businesses and unengaged practise of professionals which has questioned upon the sustenance of the individuals.

An Advocate of Supreme Court of India, Mr Vishal Tiwari has preferred the present plea stating that various people have lost jobs during this situation of biological emergency and various professionals and independent litigators have gone through real financial hardship to sustain in this due course of time. 

The petitioner has averred that due to the lockdown scenario in the country because of the COVID- 19, it has become a real struggling issue to pay off the monthly loan instalments of the banks taken for different purposes due to no salary, revenue for the individuals, defaults in paying the EMIs of the banks witnessed show the fact that the capability and the ability of the individuals to pay such has reduced as there is no constant and secured income of the legal professionals and independent litigators due to the closure of the businesses.

The second wave of COVID-19 which primarily has occurred in the year 2021 has shaken the country from within wherein the health care system as well as the economy has seen destruction. Research and development along with the opinion of scientists has proved the fact that the second wave of the COVID-19 has been immensely threatening and is more dreadful than the first wave. To restrict such transmission, maximum of the states of this country has put lockdown with severe restrictions and allowance only to essential shops as to confine people to their home only. States like Maharashtra, Madhya Pradesh, Rajasthan, Karnataka, West Bengal and Delhi are under strict lockdown so as to restrict such transmission.”- excerpt from the plea.

The petitioner has placed reliance on various circulars issued by the RBI during the first CoVID wave pertaining to loan moratorium to further aver that the Central Government & its concerned ministries along with the Reserve Bank of India has failed to bring in any Sound relief in this present situation for all those stressed sectors and individuals for whom sustenance and existence has been a question. 

Further to this, the petitioner has averred that the sovereign has not declared any such monetary relief & packages in this stressed time & people are under tremendous pressure to maintain the EMIs and is always under the threat of accounts being declared NPA. In this context, the circular issued by the RBI on 6-5- 2021 related to resolution plan 2.0, cannot be said to provide adequate relief to all in the present circumstances being arbitrary, unfair and just an eyewash. 

In light of the above, the petitioner has also prayed for issuance of directions to permit the lending institutions to grant interest free moratorium period for term loan and defer the payment of loan installments for a period of six months or till Situation from COVID 19 Normalizes. Further the petitioner has also sought for issuance of directions to declare Resolution Framework 2.0 – Resolution of Covid-19 related stress of Micro, Small and Medium Enterprises (MSMEs) dated 5-5-2021 as arbitrary & modification of Resolution framework 2.0 in its given clause No.ii, iii, iv by counting the account as Standard asset as on 31-3-2020 and the total aggregate exposure of all lending institutions to the borrower exceeding 25 Crore shall be covered. The plea has also sought for directing Bank or Financial Institution to not take action for auction in respect of any property of any citizen or person or party or any Body corporate for a period of Six months & for not declaring any account as Non-performing Asset for a period of Six months.