J U D G M E N T

SATISH CHANDRA SHARMA, C.J.

1. The Petitioner before this Court has filed this present Petition in public interest under Article 226 of the Constitution of India stating that he holds a Bachelor of Technology Degree and is working as Freelancer in digital marketing.

2. The Petitioner has prayed for issuance of an appropriate writ or direction directing the Respondents to regulate and control working of online digital lenders doing the business of lending through Mobile Applications or any other platform, as well as restraining them from charging exorbitant interest on loan from borrowers, to restrain the lenders from harassing the borrowers and to save the borrowers from recovery agents and to fix the maximum interest of rate chargeable by online digital lenders.

3. A prayer has also been made to set up Grievance Redressal Mechanism for borrowers in every State/ Union of India.

4. The Petitioner, as stated by him, is working as a Freelancer in Digital Marketing, and his contention is that online lending platforms are offering loan to the needy people through online applications (Apps). It has been stated that there are 300 instant personal loan Apps in Play-Store, and loan to the tune of Rs. 1,500/- to 30,000/- for about 7 to 15 days is granted by such online lenders, and they deduct almost 35 to 45 per cent of loan money as platform fees/ service charges/ processing fees and transfer the remaining to the borrower‟s account. The Petitioner has further stated that the digital lending companies are charging exorbitant interest rate and other charges, and he has given details of various Apps which are charging interest at exorbitant rate.

5. The Petitioner has given an example of Cash Super App (Cashtrain) and he is stating that the lender is charging Rs. 1,190/- as interest for 7 days in respect of loan of 17,000/- for 7 days, processing fee of Rs. 4250/- and GST of Rs. 765/-, and for a Rs. 17,000/-, borrower is ultimately getting Rs.11,985/- in hand, and repayment amount is Rs. 18,190/-. Thus the total charges in respect of 17,000/- for 7 days is Rs. 6205/- i.e. 36.50% charges for 7 days or 1903% charges for a year.

6. The Petitioner has given examples of other Apps also and his contention is that in respect of other Applications also interest at exorbitant rate is being charged, and the lenders are harassing borrowers.

7. The Petitioner has stated that one particular company is having maximum lending Apps, and there is no control of Government of India over such foreign companies who are squeezing out the hard earned money of Indian Citizens.

8. The Petitioner has further stated that on Google Play Store, there are about 2,000 Apps and they give loan to borrowers for small amounts ( Rs. 500/- to Rs. 50,000/-). The Petitioner has raised a grievance that the maximum interest rate has not been fixed by Reserve Bank of India (RBI), State Governments or by the Government of India, and some of the Online Loan Companies are functioning as Non-Banking Finance Companies (NBFCs) regulated by RBI. However, the RBI has not fixed any CAP/

Ceiling in respect of rate of interest.

9. The Petitioner has further stated that the Kerala Government in 1958 has passed the Kerala Money Lenders Act and the Statute provides that no money lender shall charge interest on any loan at the rate exceeding 2% above the maximum rate of interest charged by commercial banks on loans granted by them.

10. It has been further stated that State of Uttar Pradesh in 1976 has again passed a similar statute i.e. Uttar Pradesh Regulation of Money-Lending Act, 1976.

11. The Petitioner has also given a reference to the Kerala Prohibition of Charging Exorbitant Interest Act, 2012 and the Maharashtra Money-Lending Regulation Act, 2014, and his contention is that in some of the States in respect of money lending, the rate of interest has been prescribed under the statute.

12. The Petitioner has further stated that the RBI on its website has clarified that a Non-Banking F