The bench pronounced the verdict in the case of Small Scale Industrial Manufacturers Association vs Union of India the judgment for which was reserved on December 17, 2020.
Supreme Court. (Photo: iStock)
Any amount collected during the moratorium period by banks as interest on interest or compound interest should either be refunded or adjusted against the next EMIs payable by the borrowers, the Supreme Court said on Tuesday.
The verdict was pronounced by a bench comprising Justices DY Chandrachud, MR Shah and Sanjiv Khanna. The top court said it could not understand the rationale behind waiving interest on interest on loans up to Rs 2 crore and why this limit has been set by the government, has not been explained.
The bench pronounced the verdict in the case of Small Scale Industrial Manufacturers Association vs Union of India the judgment for which was reserved on December 17, 2020.
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The top court said it would not get into the matters of trades and commerce and emphasized that judges are not experts on financial matters.
“Not for us to decide if public policy could have been better,” noted the top court. However, the court also rejected the petitioners’ prayer seeking extension of the 6-month loan moratorium period granted by the RBI in the backdrop of Covid-19 pandemic.
The top court stressed that the government cannot be directed to ask banks to waive off interest on loans during the period of lockdown.
“Economic and fiscal policies are not amenable to judicial review and merely because a sector is not satisfied with a policy decision,” observed the SC.
(With IANS inputs)
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