In a Public Interest Litigation filed by President, Restaurant and Cafe Association, Kashmir and President, Industrial Revival and Development Forum, Kashmirthe challenging notification dated 27.03.2020, Circular No.40-619 dated January 3, 2020, circular No.62-528 dated December 15, 2016 and circular bearing No.55-398 dated October 24, 2014, be declared as ultra vires the Constitution of India to the extent same directs charging of interest of loan amounts during the period of moratorium and also seeking waive of the interest component on the loan amounts for the period of moratorium was/ has been declared.
A Division Bench of J&K High Court Comprising Justice Ali Mohammad Magrey and Justice Rajnesh Oswal after hearing Sr. Adv Jahangir Iqbal Ganai with Adv Sheikh Umar Farooq for the petitioners issued notice to the rspondents returnable before the next date of hearing.
In the petition, it is contended that the same is being filed for the benefit of persons belonging to the Union Territory of Jammu and Kashmir and Union territory of Ladakh, who have availed loan facilities from different banks, but, on account of the prevailing lockdown announced by the Government in view of outbreak of COVID-19 pandemic, are not in a position to pay the due instalments, including the interest charged on the loan amounts. The petitioners are also seeking a direction in the name of the respondents for waiving of interest charged by the banks on the term loans during the period when moratorium was granted by the banks on account of special rehabilitation/ revival package for the persons affected by natural calamity-floods in the erstwhile State of Jammu and Kashmir; rehabilitation package to borrowers hit by the disturbances that occurred in the erstwhile State of Jammu and Kashmir in 2016 and 2019. It is pleaded that the relief sought for in the instant petition is for the benefit of the persons who have suffered on account of natural calamity, disturbances of 2016 and 2019 and of the present COVID-19 pandemic and are/ have not been in a position to strictly comply with the conditions of the term loan agreements. In essence, the petitioners are seeking 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 27th of March, 2020, circular No.40-619 dated 3rd of January, 2020, circular No.62-528 dated 15th of December, 2016 and circular dated 24th of October, 2014. It is also submitted that in the month of March, 2020, due to the outbreak of the COVIC-19 pandemic in almost the entire world, most parts of the country were affected and, in order to ensure that the spread of the pandemic is contained, a national lockdown was announced by the Government in the shape of Government order dated 24th of March, 2020, issued by the National Disaster Management Authority, in exercise of powers conferred under Section 6(2)(1) of the National Disaster Management Act, 2005, which lockdown, thereafter, stands extended by the Government, from time to time. It is further submitted that upon the announcement of the national lockdown, a notification was issued by respondent No.3, thereby permitting all term loans to be granted a moratorium of three months on payment of all instalments 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. The petition also brings to fore that with regard to the persons belonging to the Union Territory of Jammu and Kashmir and Union Territory of Ladakh, it was not for the first time that they had to close their businesses, but prior to that in the year 2014, due to natural calamity (floods of September, 2014) in the erstwhile State of Jammu and Kashmir, the entire economy was crippled. It is stated that this aspect of the matter was taken note of and a special rehabilitation/ revival package for the persons affected by the natural calamity in the erstwhile State of Jammu and Kashmir was notified by the Jammu and Kashmir Bank Limited. Similarly, it is pleaded that the rehabilitation packages were also notified by the Bank in the year 2016 vide circular No.62-528 dated 15th December, 2016 and that of circular No.40-619 dated 3rd of January, 2020. In this backdrop, the grouse of the petitioners, in, nutshell, is that although the decision, on the part of the respondents, to grant moratorium, as detailed out hereinabove, is appreciable, but, 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/ policy has been rendered useless.