IMPORTANT POINT
Constitution of India – Article 32 – Disaster Management Act, 2005 – Sections 6 and 10(2)(1) – Charging of interest on loan amount during moratorium period in view of Corona lockdown – Respondents directed to ensure that all steps be taken to implement decision dated 23.10.2020 of Government of India, Ministry of Finance.

JUDGMENT

Ashok Bhushan, J.

By this writ petition filed under Article 32 of the Constitution, the petitioner has prayed for directions declaring the notification dated 27.03.2020 issued by Reserve Bank of India as ultra vires to the extent it charges interest on the loan amount during the moratorium period.

2. The petitioner's case and the pleadings in the writ petition briefly noted are:-

2.1 The petitioner has availed a home loan of amount of Rs.37,48,000/- from the ICICI Bank. After declaration of Coronavirus (COVID-19) as a pandemic by World Health Organisation, the National Disaster Management Authority exercising the jurisdiction under Section 6 of the Disaster Management Act, 2005 to take effective measures to prevent the spread of COVID-19 across the country and for mitigation of the threatening disastrous situation has issued notification dated 27.03.2020 directing the Ministry, Departments of Government of India, State Governments and the State authorities to take measures for ensuring social distancing so as to prevent the spread of COVID-19 in the country. Necessary guidelines were also issued under Section 10(2)(1) by the National Executive Committee.

2.2 The Reserve Bank of India on 27.03.2020 issued Statement of Development and Regulatory Policies where inter alia certain regulatory measures were announced to mitigate the burden of debt servicing brought about by disruptions on account of COVID-19 pandemic and to ensure the continuity of viable businesses. The notification dated 27.03.2020 was issued by the Reserve Bank of India for rescheduling of payments - Term Loans and Working Capital Facilities. Relevant part of the notification relevant for the present case is as follows:-

"(i) Rescheduling of Payments -Term Loans and Working Capital Facilities

2. In respect of all term loans (including agricultural term loans, retail and crop loans), all commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies) ("lending institutions") are permitted to grant a moratorium of three months on payment of all instalments 1 falling due between March 1, 2020 and May 31, 2020. The repayment schedule for such loans as also the residual tenor, will be shifted across the board by three months after the moratorium period. Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period."

2.3 The petitioner's case in the writ petition is that when all the means of livelihood have been curtailed by the Government of India by imposition of complete lockdown pan India, due to worldwide spread of COVID-19 pandemic, the petitioner has no way to continue to his work and earn livelihood. The petitioner's case is that imposition of interest during the moratorium period is ultra vires and shall defeat the purpose of permitting the moratorium of loans.

2.4 Referring to notification dated 27.03.2020, petitioner pleads that Reserve Bank of India has by the notification made it clear that interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period. Petitioner's case is that the above action of imposition of interest during the moratorium period is completely devastating and causes hindrance and obstruction in right to life guaranteed by Article 21 of the Constitution. Petitioner's case is that the additional interest burden for three months' moratorium period is also equally divided in all future EMIs, which is to increase the monthly bill of the customer.

2.5 The petitioner's case is that the notification qua payment of interest violates the principle of natural justice as the Government on one hand ceased the working of the individuals and on other hand asking to pay the loan interest during moratorium. The petitioner's case is that although the initial lockdown was for a period of three weeks but it was extended further. The R