www.courtkutchehry.com YOUTUBE VIDEOS- THE-BRIEF RBI MORATORIUM CONUNDRUM (PART 1 & 2)
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TOPIC
The-Brief RBI Moratorium Conundrum (Part 1 & 2)
This video is about
The-Brief RBI Moratorium Conundrum COVID-19 REGULATORY PACKAGE What is the view
of the Courts with respect to the declaration of Moratorium by the RBI:
The Courts have had
the opportunity to examine the following legal issues:
Can an account be
declared as NPA during the period of Moratorium?
Should the
borrowers get a waiver of interest during the period of Moratorium?
The Hon’ble High
Court of Delhi:
The first question
was dealt with by the Hon’ble High Court of Delhi in the matter of: Anant Raj Limited Vs. Yes Bank
Limited, (2020) 04 DEL CK 0022 (WPC (Urgent) 5/2020)
Anant had defaulted
in payment of instalments for January and February 2020;
Yes Bank vide mails
dated 25.03.2020 and 27.03.2020 proposed to declare the account of Anant Raj as
Non-Performing Asset.
Anant Raj
approached the Hon’ble High Court seeking a restraining order against Yes Bank
from declaring its account as NPA.
The Hon’ble High
Court of Delhi upon hearing the parties observed that the that the
classification of the account of as an NPA on 31.03.2020 could not have been done
by Yes Bank in view of the RBI Circular.
The second question
pertaining to accrual of interest during moratorium period is being addressed
by the Hon’ble Supreme Court of India in the following two matters:
Gajendra Sharma Vs. Union Of India & Anr., (2020) 09 SC CK 0011
CREDAI –Maharashtra Chambers of Housing Industry & Anr. Vs. Union of India & Anr.
Challenge:
Both the writ
petitions seek to challenge the circular of the Reserve Bank of India to the
extent that the, “interest shall accrue during the moratorium”. Grounds of
challenge: That even though the moratorium has been declared and no EMI is
payable yet interest charged during moratorium period would be added up to the
EMIs at the end of three-month forbearance interest will have to be paid either
at one go or as an additional EMI on one hand the borrowers are unable to work
while on the other they are being charged interest even though moratorium has
been declared and there is no work.
As of now there are
no major development in the matters, however, we share with you certain
arguments addressed for far in the matters:
Sr. Counsel for Mr.
Ganjendra Sharma has so far raised the following contentions:
purpose of
imposition of moratorium during lockdown was to alleviate the problems faced by
common people, but the same is defeated on account of subsistence of interest;
the RBI notification to the extent it imposes interest during moratorium is
capricious and arbitrary.
Sr. Counsel for
CREDAI has raised the following arguments: various countries have passed
legislations granting moratorium even vis-à-vis interest; charging of interest
during moratorium would result in winding up of the real estate sector; the
charging of interest during moratorium defeats the very purpose of the
circular; Stand of the RBI and the Ministry of Finance complete waiver of
interest would affect the financial health of the banks; waiver of interest
wouold amount to Rs. 2.01 lakh crore worth of losses i.e. 1% of the GDP of the
country;
There are 133 lakh
crore rupees in deposits with banks and interest has to be paid on them and the
waiver will have a cascading effect.
Observations by the
Hon’ble Supreme Court thus far:
no merit in charging
interest on interest during the moratorium period;
once the moratorium
is fixed, then it should serve the desired purpose. We will keep you updated.
Please stay tuned for this series on SC vs. RBI in the Moratorium Condundrum.
Presented by The Brief The-Brief Legal News by Sanam Siddiqui & Dheeraj
Gupta Peritia Law Chambers s.siddiqui@peritia.in dheeraj@peritia.in
TheBriefLegalNews@gmail.com PeritiaLaw@gmail.com Dheeraj & Sanam The Brief
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