HC issues notice in plea seeking interest waiver on loans

J&K High Court on Thursday asked Union Home Ministry, Finance Ministry, RBI, J&K government and J&K Bank to respond to a plea seeking waiver of interest on loans for “moratorium” periods granted in the wake of Covid19, natural calamity and disturbances in J&K since 2014.

A bench of Justices Ali Muhammad Magrey and Rajnesh Oswal issued notice in a PIL to Ministry of Home Affairs GoI, Union Finance Ministry, RBI, J&K government and J&K Bank seeking their response by July 20.

   

Senior AAG, B A Dar accepted notice on behalf of J&K government, and advocate A Hanan appearing vice senior advocate Z A Shah on behalf of J&K Bank.

In their plea filed through senior advocate Jahangir Iqbal Ganai,  president of Restaurant and Cafe Association Kashmir Sheikh Feroz Ahmad and President, Industrial Revival and Development Forum, Kashmir Muhammad Muzamil Bacha seek  wavier of interest on loans.

The petitioners contend that they have filed the PIL for the benefit of persons belonging to J&K and Ladakh, who have availed loan facilities from different banks as in the face of lockdown announced by the government in the wake of COVID-19 they are not in a position to pay the due instalments as also the interest charged on the loan amounts.

“We seek waiving of interest on all term loans for the period relating to natural calamity, disturbances of 2016 and 2019 and that of the present COVID-19 pandemic, as well as for the period moratorium has been granted in terms of notification dated 27 March, 2020, circular dated 3 of January, 2020, circular dated 15th of December, 2016 and circular dated 24 of October, 2014,” the petitioners plead.

The petitioners contend that upon the announcement of the national lockdown, a notification was issued by RBI permitting all term loans to be granted a moratorium of three months on payment of all installments falling due between 1st of March, 2020 and 31st of March, 2020. “However, while granting a moratorium, it has been provided that ‘interest’ shall continue to accrue on the outstanding portion of the term loans during the moratorium period,” they plead.

The petitioners plead that it was not for the first time that businesses in J&K were closed. “In 2014, due to natural calamity (floods of September, 2014) the entire economy was crippled”.

This aspect of the matter, the petitioners say, was taken note of and a special rehabilitation/revival package for the persons affected by the natural calamity in the state was notified by the Jammu and Kashmir Bank Limited. Similarly, the petitioner plead, the rehabilitation packages were also notified by the Bank in 2016 vide circulars dated 15 December, 2016 and 3rd of January, 2020.

Pointing out that although the decision, on the part of the respondents to grant moratorium was appreciable, the petitioners plead that they by providing that the interest component shall continue to accrue on the outstanding portion of the term loans during the moratorium period, the very purpose of the scheme was rendered useless.

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