The apex court bench headed by Justice Ashok Bhushan also directed the Centre and RBI to submit their reply on the relief sought by the power producer companies
The Supreme Court on Thursday asked all parties, including power producers, to file their submissions and suggestions on the loan relief plea before the central government and the Reserve Bank of India (RBI) within three days. The court took on record the submission of Senior Advocate Rajiv Dutta for petitioner, to dispose of his plea in view of Centre’s decision to waive off “interest on interest" during the loan moratorium period. The court took on record the submission and observed that it shall pass the order on disposal on the next date.
The SC passed the order while hearing the batch of petitions seeking directions on issues concerning the six-month loan moratorium period announced amidst covid-19 pandemic.
The apex court bench headed by Justice Ashok Bhushan also directed the Centre and RBI to submit their reply on the relief sought by the power producer companies.
Justices R.S. Reddy and M.R. Shah heard the arguments at length before adjourning the case to next week for a detailed hearing.
Beginning the arguments for the day, Solicitor General Tushar Mehta, representing the Centre, referred to the Centre’s affidavit filed on 9 October and apprised the bench about the numerous measures that have been taken by the finance ministry and RBI. He mentioned about the ₹20 lakh crore Aatm Nirbhar package, ₹90,000 crore liquidity infusion into the stressed power distribution companies, relief given to the real estate sector and ₹3 lakh crore package for MSMEs.
He referred to Kamath committee’s report highlighting separate mechanism for restructuring the big and small loans by lending institutions.
Mehta asserted that the banks have been given “complete elasticity" to formulate resolutions plans and even the payment plans have been allowed to be rescheduled. “Granting moratorium based on the income stream of borrower."
“We have taken a decision that those who have paid EMIs during moratorium cannot be punished. Availed moratorium or not availed, or partly availed - all are eligible," submitted Mehta. He added, “banks have to lodge claim to SBI for which a separate nodal agency is created, they’ll verify, take it from Government and then pay it."
Senior Advocate Abhishek Manu Singhvi, representing the power producer companies, contended that there are various issues with the RBI circular which although has intended to give relief but has significant exclusion.
Singhvi sought directions for allowing of restricting of loans from LIC, alternate investment funds, FPIs and foreign private banks as power producer borrow majorly from them. He said, even before covid lockdowns were announced, the Parliamentary panel on 7 March had backed loan restructuring for us. "A large number of our lenders are not allowed to restructure our loans. FPIs, LIC are not allowed to fund us, which should be allowed. These loopholes need to be rectified by the RBI….We have a total debt of 1.2 lakh crores." Singhvi said.
He contended that the benefit of restructuring should be allowed to borrowers wherein they could opt-in or opt-out of restructuring. Presently, the restructuring as per Centre can only be initiated at the discretion of the lender.
The court refused Singhvi’s plea to issue notice but asked him to submit his list of requests for relief sought, to RBI so it can submit its reply.
The Centre in its affidavit filed in October had informed the apex court that the government has decided to waive the 'interest on interest' compounded during the six-month moratorium period allowed by the RBI. However, the compounding of interest would be waived for MSME (Micro, Small and Medium Enterprises) loans and personal loans up to ₹2 crores. The categories include loan of MSME, education, housing, consumer durable, credit card, auto consumption and professional loans to professionals all up to ₹2 crores only.
The central bank had on 22 May extended its moratorium on term loans till 31 August amid the nationwide lockdown due to covid-19. In March, the central bank had allowed a three-month moratorium on paying EMIs and on all term loans due between 1 March and 31 May.