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Gajendra Sharma v. Union of India

Writ Petition (Civil) · 2020 INSC 662Decided 27 Nov 2020
Writ Petition (Civil) No. 825 of 2020
Justice Ashok Bhushan · Justice R. Subhash Reddy · Justice M.R. Shah

Background

The petitioner, a home-loan borrower, filed a writ petition under Article 32 challenging the RBI's March 2020 COVID-19 moratorium notification to the extent it allowed interest to keep accruing on loans during the three-month (later extended to six-month) moratorium period, arguing this defeated the relief's purpose and violated his right to life under Article 21. Over the course of the hearing, the Union of India and RBI filed several affidavits detailing relief measures taken, culminating in an October 2020 Government of India scheme approved by the Union Cabinet to pay, as an ex-gratia amount, the difference between compound and simple interest for the moratorium period (1 March to 31 August 2020), for several categories of loans, including housing loans, up to Rs. 2 crore.

Decision Breakdown

The Court noted that the petitioner's own senior counsel expressed satisfaction with the government's October 2020 scheme, since it covered housing loans like the petitioner's. Given the scheme had already been approved by the Union Cabinet and operational guidelines issued, with ex-gratia payments reportedly already being disbursed to crores of borrower accounts, the Court held it unnecessary to go further and declare the original notification itself ultra vires. It disposed of the writ petition with a direction to the respondents to ensure the October 2020 scheme is actually implemented so that its intended beneficiaries receive the promised relief.

Lesson Learnt

The Court did not strike down interest charges during the loan moratorium outright; instead, borrowers affected by the COVID-19 moratorium (for loans up to Rs. 2 crore in specified categories like housing, education, and MSME loans) were directed to receive relief through the government's specific "interest-on-interest" waiver scheme, so affected borrowers should check their eligibility under that scheme rather than assume moratorium interest was cancelled altogether.

Official source (sci.gov.in)View Judgment (PDF)

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