SMALL SCALE INDUSTRIAL MANUFACTURES ASSOCIATION (REGD.) vs. UNION OF INDIA

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL ORIGINAL JURISDICTION WRIT PETITION (C) NO. 476 OF 2020 Small Scale Industrial Manufactures Association (Regd.) …Petitioner Versus Union of India and others …Respondents WITH WRIT PETITION(C) NO. 542 OF 2020 WRIT PETITION(C) NO. 945 OF 2020 WRIT PETITION(C) NO. 937 OF 2020 WRIT PETITION(C) NO. 1024 OF 2020 WRIT PETITION(C) NO. 1025 OF 2020 WRIT PETITION(C) NO. 1006 OF 2020 WRIT PETITION(C) NO. 959 OF 2020 WRIT PETITION(C) NO. 955 OF 2020 WRIT PETITION(C) NO. 506 OF 2020 WRIT PETITION(C) DIARY NO. 12389 OF 2020 WRIT PETITION(C) NO. 568 OF 2020 WRIT PETITION(C) NO. 606 OF 2020 WRIT PETITION(C) NO. 608 OF 2020 WRIT PETITION(C) NO. 711 OF 2020 WRIT PETITION(C) NO. 785 OF 2020 WRIT PETITION(C) NO. 802 OF 2020 WRIT PETITION(C) NO. 829 OF 2020 WRIT PETITION(C) NO. 826 OF 2020 WRIT PETITION(C) NO. 964 OF 2020 WRIT PETITION(C) NO. 1029 OF 2020 WRIT PETITION(C) NO. 1157 OF 2020 WRIT PETITION(C) NO. 1132 OF 2020 WRIT PETITION(C) NO. 1178 OF 2020 WRIT PETITION(C) NO. 1190 OF 2020 Signature Not Verified Digitally signed by Sanjay Kumar Date: 2021.03.23 12:42:37 IST Reason: 1 J U D G M E N T M.R. SHAH, J. 1. Writ   Petition   (Civil)   No.   476   of   2020   has   been   preferred under Article 32 of the Constitution of India by the Small Scale Industrial Manufactures Association, Haryana for an appropriate writ, direction or order directing the Union of India and others to take   effective   and   remedial   measures   to   redress   the   financial strain faced by the industrial sector, particularly MSMEs due to the Corona Virus Pandemic.  It appears that the writ petitioner is not satisfied with the steps taken by the RBI vide notification dated   27.03.2020.     According   to   the   petitioner,   the   Covid­19 Regulatory Package notified by the RBI vide notification dated 27.03.2020 insofar as the terms loans, working capital facilities and restructuring of Stressed Account is inadequate, ineffective and does not offer any substantial relief, aid or assistance to the industries particularly MSMEs.  According to the petitioner, the above­mentioned   Regulatory   Package   will   not   in   any   manner salvage the MSMEs and help them recover from financial losses 2 that   have   been   caused   due   to   the   unforeseen   circumstances. With the above broad grievances, it is prayed as under: (a) issue writ/writs including a writ of mandamus or any other writ or direction in the nature thereof, directing the respondents to permit the lending institutions not to recover   interest   component   from   the   industries particularly MSMEs on Term Loans and Working Capital Facilities   availed   by   them   for   three   months   from 01.03.2020 to 31.05.2020; (b) issue writ/writs including a writ of mandamus or any other writ or direction in the nature thereof, directing the   respondents   to   permit   the   lending   institutions   to grant interest free moratorium period for Term Loan and not recovery of interest on Working Capital Facilities for three months from 01.03.2020 to 31.05.2020; (c) issue writ/writs including a writ of mandamus or any other writ or direction in the nature thereof, directing the   respondents   to   allow   restructuring   of   Stressed Accounts; (d) issue writ/writs including a writ of mandamus or any other writ or direction in the nature thereof, directing the respondents to extend the date for depositing GST th th from 20   of every month to 30   of every month for a period of six months; (e) issue writ/writs including a writ of mandamus or any other writ or direction in the nature thereof, directing the respondents to refund the pending GST amounts and utilise pending GST amounts for payment of Government expenses for the MSMEs industries. 1a. Writ Petition (Civil) No.542 of 2020 under Article 32 of the Constitution   of   India   has   been   preferred   by   the   petitioners   – CREDAI   –   Maharashtra   Chambers   of   Housing   Industry   and 3 another which has been filed for and on behalf of the real estate sector challenging notification dated 27.03.2020 issued by the RBI with a prayer that the same may be declared as  ultra vires  to the extent it charges  interest on  the  loan  amount during  the moratorium period (which has been declared between March 1, 2020 till August 31, 2020).  Therefore, the main grievance in this writ  petition  is   to  continue   not  to  charge   the   interest  on  the outstanding   portion   of   the   term   loans   during   the   moratorium period. 1b. By way of Writ Petition (Civil) No. 945 of 2020 preferred under Article 32 of the Constitution of India, the petitioner, a practising Advocate, has prayed for an appropriate writ, direction or   order   directing   the   Union   of   India   –   Ministry   of   Finance, Ministry of Home Affairs and the RBI to extend the moratorium st period till 31   December, 2020, which was lastly extended vide notification dated 23.05.2020. 1c. Writ   Petition   (Civil)   No.   937   of   2020   has   been   preferred under  Article  32  of   the   Constitution  of  India  by  the  Contract Carriage   Operators   Association   to   quash   notification   dated 27.03.2020   issued   by   the   RBI   to  the   extent  charging   interest during the moratorium period.  It is also prayed to direct the RBI 4 to   extend   the   period   of   moratorium   by   another   six   months, without   any   interest  being   levied   on   the   loans   availed   by  the members of the petitioner organisation. 1d. Writ Petition (Civil) No. 1024 of 2020 has been preferred under Article 32 of the Constitution of India by the petitioner – Confederation   of   Real   Estate   Developers   Association   of   India (CREDAI), for and on behalf of the private real estate developers in Chhattisgarh, also challenging notification dated 27.03.2020 issued by the RBI to the extent charging interest on the loan amount during the moratorium period.  It is also prayed  for an appropriate writ, direction or order directing the respondents – Union of India to take adequate measures of reliefs to the disaster affected persons in accordance with letter and spirit of Disaster Management Act, 2005, more particularly Sections 12 and 13 of the said Act, more particularly to the reliefs with respect to waiver of   loan   and/or   interest   on   all   kind   of   loans   availed   by   the borrowers/disaster affected persons through a well informed and formulated policy.  1e. Writ Petition (Civil) No. 1025 of 2020 under Article 32 of the Constitution   of   India   has   been   preferred   by   the   Chhattisgarh Sponge   Iron   Manufacturers   Association,   also   challenging 5 notification dated 27.03.2020 issued by the RBI, which has been further extended vide notification dated 23.05.2020 to the extent it charges interest on the loan amount during the moratorium period.  It is also prayed to direct the Union of India and others to take   steps/grant   reliefs   to   the   disaster   affected   persons   in accordance with letter and spirit of Disaster Management Act, 2005, more particularly in terms of Sections 12 and 13 of the said Act. 1f. Writ Petition (Civil) No. 1006 of 2020 has been preferred under Article 32 of the Constitution of India by an individual M/s Supertech   Limited   for   an   appropriate   writ,   direction   or   order directing the RBI and the National Housing Bank to instruct all the   banks/financial   institutions/non­banking   financial companies   to   restructure   all   loan   accounts   availed   by   the petitioner on its projects and to calculate the repayment @ 8% simple   interest   from   the   date   of   disbursement   till   its   final repayment in the light of paragraphs 28 to 30 of the decision of this Court dated 10.06.2020 passed in Writ Petition (Civil) No. 940 of 2017 (Amrapali group matter) and to protect the interest of the home buyers. 6 1g. Writ Petition (Civil) No. 959 of 2020 under Article 32 of the Constitution of India has been preferred by Federation of Self­ Financing Technical Institutions and others for an appropriate writ, direction or order directing the Union of India – Ministry of Finance, RBI and others to provide such financial relief to its members freezing all financial liabilities of financial institutions of the   petitioners   –   banks   and   financial   institutions.     It   is   also prayed for waiver of the penal interest charged for a period of one year or until such time as it takes for the pandemic to abate.  It is also further prayed to direct the Union of India – Ministry of Finance and the RBI to direct the financial institutions to grant additional   credit   facility   of   Rs.   2   crores   to   each   member institutions of the petitioners without interest to meet salary cost and other overheads during the Covid­19 pandemic.   It is also further prayed to direct to the financial institutions to reschedule the loan instalments for one academic year without any charge of interest over the interest for the unpaid period.  1h. Writ Petition (Civil) No. 955 of 2020 under Article 32 of the Constitution of India has been preferred by the CREDAI – HR for and on behalf of the real estate sector for an appropriate writ directing the respondents – Union of India, RBI and others to 7 provide such financial relief to its members, freezing all financial liabilities   of   such   members   towards   banks   and   financial institutions.  It is also further prayed to direct the RBI to apply Circular dated 27.03.2020 to all banks, non­banking financial companies,   housing   finance   companies   and   other   financial institutions compulsorily and mandatorily to all loan accounts without any discrimination or classification. 1i. Writ Petition (Civil) No. 506 of 2020 under Article 32 of the Constitution of India has been preferred by one private limited company challenging notification dated 27.03.2020 issued by the RBI to the extent charging interest on the loan amount during the moratorium period. 1j. Writ Petition (Civil) Diary No. 12389 of 2020 under Article 32 of the Constitution of India has been preferred by the Shopping Centres   Association   of   India   (SCAI)   for   and   on   behalf   of   its members   who   are   engaging   in   Malls   and   Shopping   Centres challenging notification dated 27.03.2020 issued by the RBI to the   extent   charging   interest   on   the   loan   amount   during   the moratorium period.   It is also prayed to extend the moratorium period beyond August, 2020.  An application has also been filed 8 for exemption from paying court fee and notarized affidavits.  The said prayer is allowed in terms of clause 3 of the application. 1k. Writ Petition (Civil) No. 568 of 2020 under Article 32 of the Constitution  of   India  has  been  preferred  by   CREDAI  –  MCHI, Mumbai for and on behalf of its members – real estate developers for an appropriate writ, direction or order for waiver of interest in respect of its instalments due as on March, 2020 until end of fourth quarter of financial year 2020­2021.   It is also further prayed   to   direct   the   RBI   and   financial   institutions   to   make available additional source of finance in the nature of grant of additional loans, working capital facilities, guaranteed emergency credit line and construction finance etc. 1l. Writ Petition (Civil) No. 606 of 2020 under Article 32 of the Constitution of India has been preferred by an individual also challenging notification dated 27.03.2020 issued by the RBI as ultra vires   to the extent it charges interest on the loan amount during   the   moratorium   period.     It   is   prayed   to   direct   the respondents to provide relief in repayment of loan by not charging interest during the moratorium period declared by notification dated   27.03.2020,   further   extended   by   notification   dated 23.05.2020. 9 1m. Writ Petition (Civil) No. 608 of 2020 under Article 32 of the Constitution of India has been preferred by the Association of Power   Producers   and   others   for   and   on   behalf   of   the   private power developers in India, owning power plants in the country for an appropriate writ, direction or order directing the RBI to issue directions to lending institutions not to charge interest on interest accrued during the moratorium period in terms of notification dated 27.03.2020.  It is also prayed to direct the RBI to extend moratorium on interest and principal for an additional period of six months ending on 31.03.2021 without treating any member of the petitioner no.1 as defaulter.  It is also further prayed to direct the RBI to de­link interest rates issued by lending institutions from credit rating till such time that the stress on the power sector caused due to the Covid­19 pandemic is eased.  It is also further prayed to direct the RBI to provide a special dispensation to the lenders to allow extension of the Scheduled Commercial Operation Date of projects under construction, due to delays in completion of under­construction projects on account of Covid­19 and the lockdown, by another one year while maintaining the “standard” asset categorisation.  It is also further prayed to direct the respondents to include Non­Convertible Debentures as part of 10 the relief granted by the RBI in its notification dated 27.03.2020, as   well   as,   any   other   Covid­19   related   relief   which   may   be granted. 1n. Writ Petition (Civil) No. 711 of 2020 under Article 32 of the Constitution of India has been preferred by Coimbatore Jewellery Manufacturers Association for and on behalf of its members to declare that part of notification dated 27.03.2020 issued by the RBI, as extended by notification dated 23.05.2020, as  ultra vires to the extent it charges interest on the loan amount during the moratorium period.  It is also prayed to direct the Union of India and the RBI to provide relief in repayment of loan by not charging interest during the moratorium period declared by notification dated   27.03.2020,   further   extended   by   notification   dated 23.05.2020.  It is also further prayed to extend the moratorium period on payment of instalments/interest by a further period of 18 months, in exercise of powers under Section 21 read with Section 35A of the Banking Regulation Act, 1949. 1o. Writ Petition (Civil) No. 785 of 2020 under Article 32 of the Constitution of India has been preferred by CREDAI Tamil Nadu praying for waiver of interest/penal interest for a period of one year or until such time as it takes for the pandemic to abate.  It is 11 also prayed to direct the respondents to provide such financial relief to  the  members  of  the  association including  freezing  all financial liabilities of such members towards banks and financial institutions   from   whom   the   members   of   the   petitioner’s association have taken loans, for a further period of six months. It is also further prayed to direct the respondents to provide such financial relief including one­time restructuring for all accounts of real estate projects which were standard as on 31.12.2019. 1p. Writ Petition (Civil) No. 802 of 2020 under Article 32 of the Constitution   of   India   has   been   preferred   by   the   Textile   and Knitwear   Association  challenging   notifications   dated   27.3.2020 and 23.05.2020 issued by the RBI as   ultra vires   to the extent charging   interest   on   the   loan   amount   during   the   moratorium period.  It is also prayed to direct banks and financial institutions not   to   charge   the   interest   on   the   due   payments   towards principal/interest for a period of three years. 1q. Writ Petition (Civil) No. 829 of 2020 under Article 32 of the Constitution of India has been preferred by the Northern India Textile   Mills   Association   also   challenging   notifications   dated 27.03.2020 and 23.05.2020 to the extent charging interest during the moratorium period. 12 1r. Writ Petition (Civil) No. 826 of 2020 under Article 32 of the Constitution of   India  has  been  preferred  by  the   Federation of Industrial and Commercial Organization (FICO) also challenging notification dated 27.03.2020 to the extent charging interest on the loan amount during the moratorium period.  It is also prayed to   direct   the   respondent   –   RBI   to   direct   banks   and   financial institutions to make all due payments towards principal/interest in   a   three­year   period   after   expiry   of   the   forbearance   period, without charging any interest on the same. 1s. Writ Petition (Civil) No. 964 of 2020 under Article 32 of the Constitution of India has been preferred by Chattisgarh Laghu and  Sahayak   Udyog   Sangh  for   and   on  behalf   of   its   members declaring the portion of notification dated 27.03.2020 issued by the RBI, as extended by notification dated 23.05.2020, charging the interest and also interest on interest (penal interest) during the moratorium period as ultra vires. 1t. Writ Petition (Civil) No. 1029 of 2020 under Article 32 of the Constitution   of   India   has   been   preferred   by   an   individual challenging notifications dated 27.03.2020 and 23.05.2020 to the extent   charging   interest   on   the   loan   amount   during   the moratorium period. 13 1u. Writ Petition (Civil) No. 1157 of 2020 under Article 32 of the Constitution   of   India   has   been   preferred   by   the   Chhattisgarh Udyog   Mahasangh   also   challenging   notifications   dated 27.03.2020   and   23.05.2020   to   the   extent   charging interest/interest on interest (penal interest) on the loan amount during the moratorium period.   It is also prayed to direct the Union of India to take adequate and effective measures of reliefs to the disaster affected persons in accordance with letter and spirit of Disaster Management Act, 2005, more particularly in terms of Sections 12 and 13 of the said Act, and such reliefs including inter alia suitable waiver of loan and/or interest on all kind of loans availed by the borrowers/disaster affected persons through a well informed and formulated policy. 1v. Writ Petition (Civil) Nos. 1132 of 2020 and 1178 of 2020 under Article 32 of the Constitution of India have been preferred by Chhattisgarh Hotel and Restaurant Association and Raipur Automobile Dealers Association (RADA) respectively for the same reliefs as have been prayed in Writ Petition (C) No. 1157 of 2020. 1w. Writ Petition (Civil) No. 1190 of 2020 under Article 32 of the Constitution   of   India   has   been   preferred   by   a   private   limited company – Fabworth Promoters Private Limited for an appropriate 14 writ, direction or order directing the Union of India – Ministry of Finance and RBI and others challenging the RBI Circular dated August 06, 2020 to the extent mentioned in 10A and 10B.  It is also  prayed   to   direct  not   to  charge   any   additional  interest  or additional   charges   of   any   nature   by   the   lending   institutions, including but not limited to, towards grant of additional finance while   approving   a   resolution   plan   under   the   RBI   Covid­19 Resolution Framework dated August 06, 2020.  It is also further prayed for an appropriate writ, order directing the respondents to formulate a relief package/policy to make effective provisions for the hospitality sector including but not limited to make available additional source of finance in the nature of grant of additional loans, working capital facilities, guaranteed emergency credit line etc., without payment of any additional interest on the existing contractual rates of interest or additional charges of any nature. It is also further prayed to direct the respondents to formulate a relief   package/policy   making   it   mandatory   for   all   lending institutions to pass on the benefit of reduction of repo rates by RBI to all loans and facilities granted by all lending institutions. 2. Considering   the   reliefs   sought   in   the   respective   writ petitions,   referred   to   hereinabove,   the   reliefs   sought   by   the 15 respective petitioners in their respective petitions can be broadly bifurcated   into   four   parts,   namely,   (1)   waiver   of   compound interest/interest on interest during the moratorium period; (2) waiver   of   total   interest   during   the   moratorium   period;   (3) extension of moratorium period; and (4) there shall be sector­wise economic packages/reliefs. Submissions on behalf of the respective Petitioners 3. Shri   Ravindra   Shrivastava,   learned   Senior   Advocate appearing on behalf of the respective petitioners in Writ Petition (C)   Nos.   964/2020,   1024/2020,   1025/2020,   1132/2020, 1157/2020 and 1178/2020 has made the following submissions: i) that this Court ought not to limit the scope for relief and directions only qua waiver of compound interest which is limited to a highly restricted segment of the class of borrowers.   It is submitted that shorn of technicalities of pleadings and specific prayers, this Court must take cognizance in public interest of the severity and the magnitude of the disaster and mould the relief accordingly to extend an effective measure of relief to an utterly distressed class of people affected by the pandemic of Covid­19; 16 ii) that   Covid­19   pandemic   is   a   disaster   in   itself   of   an unprecedented   history.   It   undoubtedly   requires   disaster management; iii) that the “disaster management” must be and can only be addressed   under   the   statutory   regime   of   law   enacted   by   the Parliament.   The question of executive response will come into play   only   after   the   special   law   on   the   aspect   of   “disaster management” has run its full course.  There is no way that the issues arising out of the disaster of Covid­19 can be addressed without   travelling   the   course   of   path   under   the   Disaster Management   Act,   2005   (hereinafter   referred   to   as   the   “DMA 2005”); iv) that the Statement of Objects and Reasons of DMA 2005 specifically states that the DMA 2005 has been enacted to provide for   requisite   institutional   mechanisms   for   drawing   up   and monitoring   the   implementation   of   the   disaster   management plans, ensuring measures by various wings of Government for prevention and mitigating effects of disasters and for undertaking a   holistic,   coordinated   and   prompt   response   to   any   disaster situation.  It is submitted that the preamble of the Act states that 17 it is an Act to provide for the effective management of disasters and for matters connected therewith or incidental thereto; v) that by reason of the very provision of Section 72 of the Act which accords to it overriding effect, DMA 2005 is a special law and is a complete code in itself; vi) that the aspects of “disaster management” which inter alia includes   grant   of   relief   and   concessions   to   the   distressed community of borrowers affected by the disaster, has not at all been considered, addressed and much less sought to be remedied under the statutory framework.  Whatever little has been seen is only executive  response.   The  conspectus  of  the   provisions   of DMA 2005 simply imposes legal and statutory duty on statutory authorities   who   have   to   perform   the   legal   obligation   in   the interest   of   the   distressed   community   of   people   suffering   the disaster and its impact.   It is submitted that in the matter of grant   of   reliefs   and   concessions   and   adopting   measures   for minimising the pains and agony of the disaster, the statutory authorities have not risen at all to their task and legal duty; vii) it is submitted that Covid­19 pandemic is a “disaster” within the meaning of Section 2(d) of the Act.  It is submitted that not only disaster but it is a “disaster of severe magnitude” within the 18 contemplation of Section 13 of the Act.  Any disaster inflicted on mankind   within   the   territory   of   India,   requires   “disaster management” to be carried out by several tier of authorities as are established under the Act; the National Disaster Management Authority   being   the   foremost,   seemingly   omnipotent   and omnipresent.  It is submitted that the “disaster management” is defined in Section 2(e) of the Act; viii) that   the   “disaster   management”   is   a   continuous   and integrated   process   of   planning,   organising,   coordinating implementing measures which are necessary and expedient for “…Mitigation or reduction of risk of any disaster or its severity or consequences…”.     That   the   issues   which   arises   squarely   fall within   the   meaning   and   amplitude   of   “disaster   management” which is statutorily mandated under Section 2(e) of the Act; ix) that the word “mitigation” has been defined in Section 2(i) and the word “resources” has been defined in Section 2(p) of the DMA 2005; x) that in the present case the steps for disaster management have not been undertaken by the statutory authorities under the Act,   which   makes   out   a   plain   and   simple   case   of   issue   of 19 mandamus   to   put   the   statutory   authorities   in   action   for performing their duties under the law; xi) that while Section 11 mandates duty to draw up a plan for disaster management for the whole country, at least this Court has not been informed of any such national plan; xii) that Section 12 of the Act imposes a mandatory duty on the National   Authority   to   recommend   guidelines   for   the   minimum standards of relief to be provided to ‘persons affected by disaster’ which   includes   inter   alia   the   reliefs   mentioned   in   three   sub­ clauses in Section 12 of the Act.   The width and scope of the Section is widest and admits of no limitations.   The expression minimum standards of relief to ‘persons affected by disaster’ are all such reliefs which are necessary and required for sustenance and survival of meaningful living existence of the ‘people affected by disaster’.  This will include within its fold monetary relief and concessions, apart from other measures; xiii) that the Union of India has filed various affidavits but none of   them   places   on   record   any   recommendation   of   National Authority for guidelines for providing minimum standards of relief for ‘persons affected by disaster’ in discharge of legal duty under the Act; 20 xiv) that   Section   13   of   the   Act   is   more   specific   and   directly pertinent to the issues which have been raised in these petitions. The Parliament is cognizant of the fact that an occurrence of disaster of severe magnitude can inevitably seriously impair the ability and capacity of the borrowers for repayment of loans and further the ‘persons affected by disaster’ may require for living existence grant of fresh loans.  Being aware of such a contingency which   is   most   likely   to   occur   in   cases   of   disaster   of   severe magnitude, the National Authority has been enjoined upon with legal duty to “recommend relief” – in repayment of loans or grant of fresh loans to persons affected.   It is submitted that what would be form of relief in the payment of loan or grant of fresh loans   on   concessional   terms,   is   the   exclusive   domain   and authority of the National Authority.  It is submitted that the relief envisaged under Section 13 of the Act has to be meaningful and substantive; it has to be based on rational consideration and not a pittance.  A legal and faithful discharge of duty cast upon the National Authority would require the Authority in minimum to undertake an empirical study of the severity of the magnitude and in proportion the requirement of the number and class of people and the exact nature of relief to be extended which is 21 possible only after collection of relevant data and undertaking a study by experts; xv) that   Section   13   which   casts   duty   upon   the   National Authority to recommend relief in the matter of repayment of loans and/or grant of fresh loans on concessional terms does not make any   differentiation   among   the   class   of   ‘persons   affected   by disaster’.   The   class   of   persons   affected   by   disaster   is   one integrated   class   as   the   Covid­19   pandemic   has   affected   every single individual person, the difference may be of degree.  Section 13 intends to provide relief in the matter of repayment of loans etc. to all the persons affected by the disaster and does not admit of any classification.  While this much is the minimum scheme of law, the National Authority has not made any recommendation with regard to relief in the repayment of loans and/or for grant of fresh loans to persons affected by disaster on such concessional terms as may be appropriate.  There has been a complete inaction on the part of the National Authority in performing the legal duty. It   is   submitted   that   any   recommendations   of   the   National Authority   under   Section   13   of   the   DMA   2005   have   not   been brought to the notice of this Court; 22 xvi) that some of the measures which are suggested to have been taken   are   only   executive   measures   and   are   dehors   of   the provisions   of   Sections   12   and   13   of   the   DMA   2005.     Those measures cannot be read in substitution of the requirements of Sections 12 and 13.   The only and exclusive authority to make recommendations either under Section 12 or 13 of the Act is only the National Authority.  It is submitted that in view of the clear provision   of   the   Act   entrusting   the   duty   of   making recommendations   for   extending   reliefs   for   persons   affected   by disaster is on the National Authority. The case on behalf of the UOI so stated in paragraph 29 of affidavit dated 31.08.2020 that as the reliefs/measures in financial sector were being examined and supervised by the Ministry of Finance, the NDMA did not step in as, by its very nature,   it may not have expertise in dealing with the complex policy decisions effecting the financial stability of the nation in general and that of banking sector in particular, is not only incorrect, unacceptable but rather uncharitable to the highest body of NDMA. It is submitted that therefore the NDMA has not stepped in despite   the   clear   mandate   under   Section   13   of   the   Act.   It   is submitted that the entire executive government both, at the level 23 of Centre and the State are under the command of the National Authority and bound to act in aid of the National Authority in discharging its duties.  It is submitted that the National Authority is not an expert body is unacceptable.   It is submitted that the National Authority has all the powers to seek assistance from other bodies for performing its legal duties.  The task of Disaster Management also includes capacity building and augmentation of resources which the National Authority can work on.   Lack of resources in terms of funds is neither an answer nor an excuse for not performing its duties and obligations under the DMA to provide relief to the persons affected by disaster; xvii) that   the   Ministry   of   Finance   and   the   RBI   do   have   an important role to play but their role is and can only be to aid and assist the National Authority in formulation of the measures of relief.     The   actual   decision   and   based   thereon   the recommendations to various stakeholders including the lending institutions is solely the jurisdiction and authority of the National Authority, which jurisdiction and power can neither be delegated nor   abdicated.     The   measures   formulated   by   the   Ministry   of Finance and RBI have to have the approval and sanction of the 24 National Authority which alone has the authority to make their recommendations; xviii) that even the government in discharge of executive functions and providing  administrative   response   have  to  act  as  “ parens patriae ”   which   doctrine   is   embedded   in   the   preamble   of   the Constitution.  It is submitted that the government in democracy or any other government has to act only and only for the welfare of the people.  In support of his submission, reliance is placed on the decision of this Court in the case of  Charan Lal Sahu v. Union of India, (1990) 1 SCC 613  (paragraph 35). It is submitted that therefore when the doctrine of   parens patriae   gets   attracted,   the   lack   of   resources   or   financial considerations resulting in denial of relief to the needy persons affected by disaster is no answer and cannot be pressed into service.  It is submitted that the government is simply bound to arrange its coffers in such a manner that the relief cannot be denied.  Reliance is placed upon the decision of this Court in the case of  Union Carbide Corporation Limited v. Union of India, (1991) 4 SCC 584; 25 xix) that the bogey of financial burden and stress on the banks to  drive  them  unviable   is   raised   without   any   basis   on   record much less based on empirical study and collection of relevant data which is the basic requirement particularly of rule of law. On the duty of undertaking empirical study based on collection of relevant and quantifiable data, reliance is placed on the decision of this Court in the case of   Kailash Chand Sharma v. State of and the decision of the Constitution Rajasthan, (2002) 6 SCC 562;  Bench judgment   in  the   case   of   M.  Nagaraj  v. Union  of  India, (2006) 8 SCC 212 (paragraphs 44 to 46); xx) that while it is the case of the petitioners that there are no recommendations issued by the NDMA in terms of Section 13 of the   DMA   2005,   the   cryptic   correspondence   annexed   with   the affidavit   of   the   Union   of   India   dated   31.08.2020   shows   that certain views and recommendations have been expressed by the NDMA vide O.M. dated 28.08.2020.  While referring to para 5 of the said affidavit, it is submitted that thus, on the showing of the Union   of   India   itself,   whatever   is   the   nature   of   views   and recommendations of the NDMA, it is clear and categorical of one thing that the measures adopted by the RBI and the Government of India, the Ministry of Finance before the NDMA have not found 26 to be adequate and satisfactory.  It is clearly stated by the NDMA that the borrowers may require further relief from the banking sector and that the RBI may consider granting further relief to the borrowers; xxi) that   while   the   Ministry   of   Finance   vide   its   letter   dated 31.08.2020 seems to have communicated to the RBI the aforesaid views   and   recommendations   of   NDMA   regarding   relief   and repayment of loans by borrowers affected by Covid­19 pandemic, there  is   nothing   on   record   to   show   any   further   consideration much less any grant of further relief by the RBI, pursuant to the views and recommendations of the NDMA; xxii) Now so far as the waiver of compound interest by way of Ex­ Gratia Scheme vide memo dated 23.10.2020 is concerned, it is vehemently submitted that the very use of the word “ex­gratia” is inappropriate   and   indicates   complete   lack   of   empathy   and   a misdirected approach of the Union of India.   What the persons affected   by   the   disaster   are   entitled   to   at   the   hands   of   the statutory   authority   and   also   the   welfare   Government   towards disaster   management   and   within   its   contemplation   extension reliefs and  concessions,  is  misconceived  as  matters  of  bounty and/or charity described as ex­gratia.   The distressed class of 27 persons   affected   by   the   disaster   are   entitled   to   reliefs   and concessions as a matter of right because that flows from the legal and statutory duty imposed by the statutory law of Parliament – DMA 2005 and the supreme law of the land, i.e., the Constitution of India.  It is submitted that it is because of this approach of a gratis underlying the scheme that both the statutory authorities and Union of India have miserably failed to address the issue in right perspective and grant relief and concessions to the persons affected   by   the   disaster   in   an   effective,   meaningful   and substantial manner; xxiii) that   even   the   Scheme   dated   23.10.2020   contains   the eligibility criteria as under: “4. Eligibility criteria under the scheme (1)  Borrowers in the following segments/classes of loans, who have loan accounts having sanctioned limits and outstanding  amount of not exceeding   Rs.2   crore   [aggregate   of   all   facilities   with   lending institutions] as on 29.02.2020, shall be eligible under the Scheme: (i) MSME loans (ii) Education loans (iii) Housing loans (iv) Consumer durable loans (v) Credit card dues (vi) Automobile loans (vii) Personal loans to professionals (viii) Consumption loans Any borrower whose aggregate of all facilities with lending institutions is more than Rs.2 Crore (sanctioned limits or outstanding amount) will not be eligible for ex­gratia payment under this scheme. 28

It is submitted that a perusal of the aforesaid will show that the relief and concession which was announced in the affidavit of the Union of India dated 02.10.2020 has been further restricted making it wholly arbitrary and eyewash.  It is submitted that the following restrictions are obvious from paragraph 4: i. That it is applicable to the borrowers in the 7 class/segments; ii. It is applicable to the borrowers who have loan accounts having sanction limits and outstanding amount of not exceeding 2 crores; iii. The aggregate of all facilities with lending institutions should not exceed 2 crores as on 29.02.2020; iv. That the account should be standard as on 29.02.2020 i.e. the loan should not be a non performing asset as on that date. 29 It is submitted that the eligibility criteria enshrined in para 4   of   the   scheme   has   stark   contrast   with   affidavit   dated 02.10.2020.   It is submitted that the Ministry of Finance has added more and drastic conditions reducing it to an illusion of reliefs and concessions.  The arbitrary and irrational criteria is so striking that the scheme is virtually nugatory.  In the first place, para 18 of the affidavit dated 02.10.2020 as well as para 4 of the scheme, both make it evident that if the total exposure of the loan at the grant of sanction is more than Rs. 2 crores, the borrower will   be   ineligible   irrespective   of   the   actual   outstanding.     For example, if the borrower has been sanctioned a loan of Rs. 5 crores and has availed of the same, even though he might have repaid substantially bringing down the principal amount to less than Rs. 2 crores as on 29.02.2020 but because of the sanction of the loan amount of more than Rs. 2 crores, he stands ineligible. It is submitted that more remarkable is the condition that the outstanding amount should not exceed Rs. 2 crores and for which purpose the aggregate of all facilities with the lending institutions will be reckoned.   It means that hypothetically a borrower, for example   MSME   category,   has   availed   and   has   outstanding   of business loan of Rs. 1.99 crores and also has a due on his credit 30 card of Rs.1.10 lakh thereby making the aggregate to Rs.2.10 crores, he stands ineligible.  This cannot be justified by any logic; xxiv) that   even   the   categorisation   of   borrowers   limited   to   8 categories only is not based on collection of any data and any empirical study in an objective manner, much less a study of the severity of the magnitude and effect of the pandemic disaster on the borrowers, the classification on the borrowers limited to 8 categories has no nexus with the object sought to be achieved.  It is submitted that it cannot be suggested nor can it be accepted logically that the borrowers outside 8 categories are not or would not be affected by the severity of the disaster, i.e, the pandemic and   make   them   the   class   of   persons   affected   by   the   disaster entitling to a similar treatment on parity.   On what basis the categorisation   limited   to   8   categories   has   been   made   is   not discernible nor can be comprehended; xxv) that   affidavit   dated   02.10.2020   shows   that   there   is   a classification between ‘small borrowers’ and ‘big borrowers’.  It is submitted   that   this   classification   is   wholly   arbitrary.     It   is submitted that in the process of this classification a sizable and much bigger class of ‘middle class borrowers’ has been completely excluded and no treatment has been accorded to the class of 31 borrowers   situated   between   the   small   and   big   classes.     It   is submitted that this classification therefore is clearly unrealistic and unscientific.  It is submitted that neither any study has been done nor the classification has been made on any rational basis which has nexus with the ground reality; xxvi) that the classification of borrowers is both discriminatory and   arbitrary   and   thereby   in   violation   of   Article   14   of   the Constitution.     It   is   submitted   that   the   classification   is   solely irrational,   unreal,   unscientific   and   highly   subjective,   thereby suffering from the vice of arbitrariness violating Article 14 of the Constitution; xxvii) that  the   classification   has   no   nexus   at  all  with   the object   sought   to   be   achieved   whereas   the   object   is   clear, statutory, constitutional and  singular, i.e., extending  reliefs to ameliorate   the   distress   and   miseries   of   the   distress   class   of persons which are severely hit by the disaster of pandemic and do constitute a sizable and significant class of persons affected by the disaster requiring disaster management; xxviii) that  the   impugned  classification   is  based   on  whims and caprice of the executive rather than an objective and real consideration.   No material is available on record to show the 32 basis of the classification.   The Union of India cannot seek to clothe   a   decision   which   is   so   evidently   discriminatory   and arbitrary under the protective shield of policy decision inasmuch as any policy can neither be arbitrary nor discriminatory.   In support   of   his   submissions,   Shri   Ravindra   Shrivastava   has heavily relied upon the decisions of this Court in the cases of Rattan Arya v. State of T.N. (1986) 3 SCC 385; State of W.B. v. Anwar Ali Sarkar 1952 SCR 284: AIR 1952 SC 75 (paras 83 & 84); and D.S. Nakara v. Union of India, (1983) 1 SCC 305 (paras 13 & 14); xxix) that even within the class of classified eligible borrowers, the arbitrariness is writ large because categories and the borrowers of each categories are inherently dissimilar but are sought to be painted with one brush.  They are made to wear the shoes of one size to fit in all.   The borrowers in 8 categories compared with each other unequal.   For example, a business loan to MSME category is considered at par with home loan and educational loan.  The conditions of the loans and interests are bound to be different   so   much   so   the   credit   card   holders   and   consumer durable   loans   and   automobile   loans   are   inherently   dissimilar, also the personal loans to professional and the MSME loans are 33 different in content.  It is submitted that thus unequals are being treated as equals which itself is a case of classic discrimination. Reliance is placed on the decision of this Court in the case of Roop   Chandra   Adlakha   v.   Delhi   Development   Authority,   1989 Supp. (1) SCC 116 (paras 19 & 20); xxx) that even charging interest on interest/compound interest can be said to be in the form of penal interest.  It is submitted that   the   penal   interest  can   be   charged   only   in   case   of   wilful default.  It is submitted that in view of the effect of pandemic due to Covid­19 and even otherwise defer the payment of loan during the moratorium period as per circular dated 27.3.2020, it cannot be said that there is any wilful default which warrants interest on interest/penal interest/compound interest.   It is submitted that there   shall   not   be   any   interest   on   interest/penal interest/compound   interest   charged   for   and   during   the moratorium period; xxxi) that even otherwise limiting relief and concessions to the victims   of   disaster   to   waiver   of   compound   interest   alone   is arbitrary,   insufficient,   irrational   and   discriminatory.     It   is submitted that the  so­called waiver of  compound  interest  can only be one of the measures but ought not to be allowed to be the 34 end of the road by closure of the case as has been sought by the Union  of   India.   Only   a  proper   and   objective   study   will  reveal whether relief more than the waiver of compound interest is the dire need of the persons affected by the disaster.  Sections 12 and 13 of the DMA 2005 envisage reliefs in terms of more than what is sought to be done under the pretence of ex­gratia scheme.  It is submitted   that   even   a   judicial   notice   can   be   taken   that   the severity of the impact and consequences of the disaster upon the common   class   of   people,   such   as   employees,   businessmen, farmers,   workers,   industrialists,   professionals   etc.   are   beyond description.   To a significant class of people, the impact of the disaster   has   threatened   their   very   survival   and   meaningful existence of life and liberty.  It is submitted that therefore it is a complete misconception of the Union of India that relief of waiver of compound interest is sufficient to provide redress within the meaning of Sections 12 and 13 of the DMA 2005.  It is submitted that the measures of reliefs were required to be laid down sector and group wise classified on the basis of common denominating factors, which have not been done;   xxxii) Now   so   far   as   the   measures   proposed   by   RBI   vide circular dated 6.8.2020 is concerned, it is vehemently submitted 35 that   the   same   cannot   be   said   to   be   a   relief   of   ‘disaster management’ which otherwise is arbitrary and discriminatory.  It is submitted  that the  RBI   Circular   dated  6.8.2020  is  a  sheet anchor of case of both the Union of India and the RBI.   This circular seeks to provide for the resolution framework for Covid­ 19 based on the “Prudential Framework for Resolution of Stressed Assets Directions 2019” dated 7.6.2019.  It is submitted that on the   face   of   it   the   resolution   framework   only   adopts   and incorporates the circular dated 2.6.2019, which is prior to onset of pandemic disaster; xxxiii) that the RBI is not the authority though it may have supportive   role   to   play   to   take   a   decision   in   regard   to   the measures of relief and concession to the disaster affected persons arising out of the task of disaster management under DMA 2005. It   is   submitted   that   the   circular   is   not   a   substitute   for   the decision of the NDMA under Sections 12 and 13 of the DMA 2005; xxxiv) that though the resolution framework mentions Covid­ 19   but   is   not   tailor   made   suited   to   the   extraordinary   and unprecedented impact, consequences and distress caused to the persons   affected   by   the   disaster   of   pandemic   Covid­19.     The 36 resolution   framework   for   the   stressed   assets   governed   by   the prudential framework cannot be ipso facto applied for grant of reliefs and concessions to the disaster affected persons under the task   of   disaster   management.     The   prudential   norms   have nothing to do with the peculiarities of impact and consequences of the disaster such as Covid­19 the management of which has entailed   into   repeated   nationwide   lockdown   unprecedented   in history and its continuous cascading impact and consequences hitting   across   the   life   and   liberties,   business,   industries   and environment.     Importation   of   prudential   norms   designed   for resolution framework for stressed assets for lessor conditions of economic   distress   is   only   whimsical   and   irrational.     It   is submitted that it is, as such, dereliction of duty; xxxv) that the resolution framework as per 6.8.2020 has itself been held to be inadequate by none other than the NDMA as is evident from the views and recommendations of NDMA contained in the OM dated 28.08.2020.   Having taken cognizance of RBI Circular   dated   6.8.2020   the   NDMA   has   observed   that   the borrowers   require   further   relief   from   the   banking   system   and exalted the RBI to grant further relief.  Such inadequate measure 37 of   so­called   resolution   framework   in   the   RBI   circular   dated 6.8.2020 ought not be accepted by this Court; xxxvi) that the resolution framework in RBI circular is highly bank centric and leans not only heavily but only in favour of the banks and lending institutions rather than walking extra mile for the   distress   class   of   persons   and   borrowers.     The   resolution framework by virtue of the conditions of eligibility in paragraph 2 thereof is  per se  discriminatory and arbitrary.  MSME borrowers whose aggregate exposure to lending institutions collectively is Rs. 25 crores or less on 1.3.2020 are not eligible for resolution framework.  This classification is solely arbitrary and is based on no   intelligible   differentia   having   nexus   with   the   object.     It   is submitted   that  the   resolution  framework   is   applicable   only   to those borrowers who are having distress on account of Covid­19 but   in   what   manner   such   factor   would   be   determined   is   not provided   for,   leaving   therefore,   the   benefit   of   the   resolution framework   to   subjective   satisfactory   and   arbitrariness   of   the banks,   it   has   been   left   to   the   unguided,   ultimate   and   final discretion of the banks to lay down their individual policies and framework   creating   gross   inequality   and   introducing   total subjectivity; 38 xxxvii) It is further submitted by Shri Ravindra Shrivastava, learned   Senior   Advocate   appearing   on   behalf   of   some   of   the petitioners that the trigger for filing these petitions and the Court taking the cognizance thereof are conditions of exceeding distress, financial   and   otherwise   which   seriously   impinge   upon   the fundamental rights of Article 14, 19 and 21 of the Constitution in their full ramifications. It is submitted that the occasion for this Court is an extraordinary human tragedy of unparallel origin and precedence and therefore requiring extraordinary statutory legal and constitutional response by the statutory authorities and the Government of India.  It is submitted that the issues are far more important to be asked to be closed on the basis of few affidavits and   circulars   which   fall   far   short   from   the   requirements   of constitutional   and   statutory   duties.     It   is   submitted   that   the statutory   authorities   must   act   without   any   more   delay,   the Government of India being the   parens patriae   has to act in a meaningful manner and meaning of the doctrine as the father of the citizens of the republic and therefore the ultimate custodian and guardian of their welfare.  It is submitted that the role of the parens   patriae   by   the   Government   of   India   has   not   been 39 discharged as per the doctrine which has been explained by the Constitution Bench in  Charan Lal Sahu (supra) ; xxxviii) that the very nature of the issues involved in this case and of which cognizance is required to be taken are such that there   is   an   eminent   need   in   public   interest   of   continuous monitoring of the statutory and executive action by this Court and further issuance of continuous directions and mandamus to all the authorities concerned.   It is submitted that neither the magnitude and severity of the disaster which has continuous and cascading  effect  and   considering   the   very   concept of   “disaster management”  under   the   Act  as   an  integrated  and   continuous process,   the   relief   and   measures   adopted   or   required   to   be adopted cannot be a sort of one­time grant or package.   It is submitted that with the evolution of situation there is a strong public interest and  need  for   this  Court  to  keep  exercising  its constitutional jurisdiction under Article 32 of the Constitution so that the authorities do not fail, they remain active and vigilant and   enormous   class   of   victims   of   the   disaster   do  not   remain crying   for   the   redressal   of   the   grievances.     In   support   of   his submission, heavy reliance is placed on the decision of this Court 40 in the case of   T.N. Godavarman Thirumulkpad v. Union of India (1997) 2 SCC 267.       4. Dr.   Abhishek   Manu   Singhvi,   learned   Senior   Advocate appearing on behalf of the power sector has further submitted in addition   to   what   is   submitted   by   Shri   Ravindra   Shrivastava, learned Senior Advocate that during the lock down due to Covid­ 19 pandemic, power sector is badly affected.  It is submitted that therefore there shall be a special package of relief for the power sector.   It is submitted that therefore not enabling/considering the impact of lockdown due to pandemic, vis­à­vis power sector and not providing special package for the power sector, unequals are   treated   equally.     It   is   submitted   that   therefore   the NDMA/UOI/RBI   must   devise   suitable   and   appropriate   sector specific measures essentially for the continued operation of the power generation sector. 4.1 It is submitted that the RBI Circular relating to Covid­19 relief   packages   viz.   impugned   RBI   notifications,   RBI   Circulars dated 6.8.2020, 7.9.2020 have left the option of providing relief to the discretion of lenders instead of making it mandatory.   It is submitted that as per the aforesaid notifications, the lenders are permitted to grant a moratorium of three months on payment of 41 all instalments for repayment of term loans and working capital facilities   falling   due   during   the   moratorium   period.     It   is submitted that as per paragraphs 14 and 15 of Part B of circular dated 6.8.2020, the decision to provide relief has been left to the discretion of the lenders; as per paragraph 18 of circular dated 06.08.2020, the resolution process has to be invoked by not less than 75% of lenders by value and not less than 60% of lenders by number.   It is further submitted that paragraph 7 of circular dated 7.9.2020 provides a window to the lenders to vary from the provisions of the circular dated 6.8.2020. 4.2 It is further submitted that in order to ensure that relief is granted   to   borrowers   impacted   by   the   spread   of   Covid­19 pandemic   and   the   subsequent   national   lockdown,   the   above­ mentioned circulars ought to be binding on all lenders who would otherwise   qualify   as   “financial  creditors”  under   the   Insolvency and Bankruptcy Code, 2016. 4.3 It is further submitted that by leaving the application of the said   RBI   circulars   to   the   discretion   of   the   individual   lenders, borrowers, who are under severe financial stress on account of Covid­19, are denied appropriate relief as lenders tend to focus on their own statutory and internal compliances and interests.  It is 42 submitted that the purpose of providing a relief framework for the borrowers   affected   by   the   Covid­19   pandemic   stands   defeated since   lenders   are   incentivised   to   recover   their   costs.     It   is submitted that in such a scenario, the RBI ought to have made it mandatory for all lenders to provide relief under the impugned RBI   notifications,   Circulars   dated   6.8.2020   and   7.9.2020 available at the option of the borrowers and not at the discretion of the lenders in order to provide relief to borrowers impacted by the outbreak of Covid­19. 5. Shri   Kapil   Sibbal,   learned   Senior   Advocate   appearing   on behalf of CREDAI – Real Estate Sector has vehemently submitted that Real Estate Sector is also badly and severely affected due to nationwide   lock   down.     It   is   submitted   that   the   measures undertaken by the UOI/RBI are arbitrary, discriminatory, illusory and inadequate and does not offer any reliefs to the Real Estate Sector, when Real Estate Sector because of its importance and contribution   towards   country’s   economy   requires   special consideration. 5.1 It is further submitted that the Union of India/NDMA have failed to perform their statutory duty cast under Sections 12 and 13 of the DMA 2005.  It is submitted that while providing reliefs, 43 no data is collected with respect to impact on individual sectors. It is submitted that even as required under the DMA 2005, there is  no   national   plan   prepared   while   considering   the   disaster  – Covid­19 pandemic. 5.2 It is further submitted that even the terms of reference of Kamath Committee are ex­facie contrary to the aim and object of policies framed by the RBI/UOI, which was primarily to mitigate and alleviate the debt burden of the borrowers.  It is submitted that the Kamath Committee Report,  (i) proceeds on the basis that businesses which were shut down due to Government action [i.e. National Lockdown] and defaulters. (ii) The Terms of Reference of Kamath Committee are only aligned for interest of the lending institutions and not for continuous viability of businesses as seen from the chart annexed. (iii) The stringent conditions so imposed are difficult to comply and will turn all businesses into NPA. (iv) Restructuring plan is required to be approved by December 2020 although the Real Estate sector has barely commenced functioning due   to   COVID   –   19   restrictions   i.e.   the   “force   majeure’   even continues and no proposal is possible. (v) The ratios of borrowing limits / net asset value which were never there   in   the   original   loan   agreements   are   imposed   under   the Restructuring Policy. (vi) Moratorium Policy expired on 31.08.2020 and due to the inability of   the   businesses   in   the   real   estate   sector   to   make   payments during the months of September, October and November 2020, their credit rating has already been downgraded to Grade “D” and as NPAs.  Therefore, they do not qualify for restructuring.  (vii) Being a restructured loan, banks will have to make additional 10% integral provisioning  for  such lending and as a result of credit rating downgrading, the banks will have to charge few percentage basis points for all such loans. 44 5.3 It is further submitted that the banks are the beneficiaries of the policies framed by the RBI, who have profiteered at the peril of   borrowers   who   are   unable   to   withstand   the   effects   of   the disaster.   It is submitted that the real estate sector is seeing a continuous decline in sales, investments, leasing and pricing in 2021 owing   to  the   effect  of   Covid­19  pandemic.   Shri  Sibbal, learned   Senior   Advocate   has   further   submitted   that   if   the st moratorium period is not extended till 31  March, 2021 and if the reliefs as sought for in the writ petition are not granted, then majority   of   all   accounts   will   be   qualified   as   NPA   as   per   RBI Prudential norms on Income Recognition; asset classification and provisioning pertaining to advances; virtually no accounts would qualify for restructuring under the Restructuring Policy, since it is   made   applicable   only   to   those   accounts   which   are   not   in default for more than 30 days as on 01.03.2020 and credit rating of members of the CREDAI will be downgraded and permanently impaired,   resulting   in   the   witnesses   of   the   members   of   the association becoming commercially unviable.  It is submitted that real estate sector is one of the most affected sectors on account of the   lockdown   and   the   ongoing   pandemic.     The   precarious situation has adversely affected not only over 1400 members of 45 CREDAI – MCHI but also the 270 ancillary industries dependent on the real estate industry.  If the sector suffers such irreparable loss,   all   the   allied   industries   would   also   be   severely   affected. Therefore, it is prayed in para 8 to grant the following reliefs: 8.1The Moratorium Policy be made mandatory and extended by the st Respondent   No.2   from   01.09.2020   until   31   March,   2021   or complete normalcy is achieved, whichever is earlier. 8.2All  borrowers in the real estate sector  must  be  granted  the benefit of interest waiver (including interest on interest), as the case   may   be,   till   complete   normalcy   is   achieved   or   till   the Resolution   Plan   under   Restructuring   Policy   is   approved   [if invoked], whichever is earlier. 8.3Restructuring Policy dated 07.08.2020 and 07.09.2020 to be simplified, broad based and implemented across board without any classification so that the true object of bailing out the borrowers under stress [precipitated by the national disaster / pandemic / force   majeure   event]   and   supporting   the   revival   of   the   Indian economy / its GDP through its focal sector i.e. real estate can be seamlessly achieved. 8.4All   accounts   which   have   not   been   declared   as   NPA   as   on 01.03.2020 are to be made eligible for restructuring without any further provisioning of 10% by banks. 6. The   other   learned   Advocates   appearing   for   the   other respective   petitioners,   such   as,   Textile   Association,   Healthcare Sector,   Hotelier   Association,   Shopping   Centres   and   Malls, Travellers   and   other   industries   have   by   and   large   made   the submissions which are narrated hereinabove and therefore they are not repeated again here. Reply on behalf of the Union of India 46 7. All   these   petitions   are   opposed   by   Shri   Tushar   Mehta, learned  Solicitor   General  of   India,   appearing   for   the   Union  of India, Shri Harish Salve, learned Senior Advocate appearing on behalf of the Indian Bank Association, Shri V. Giri, learned Senior Advocate appearing on behalf of the RBI and Shri Mukul Rohatgi, learned Senior Advocate appearing on behalf of the SBI. 7.1 Shri Tushar Mehta, learned Solicitor General has taken us to various affidavits/additional affidavits filed on behalf of the Union of India.  He has also taken us to the various provisions of the   DMA   2005,   which   shall   be   referred   to   and   dealt   with hereinbelow: Shri Tushar Mehta, learned Solicitor General has submitted that it is a fact and nobody can dispute that the pandemic has caused   stress   to   large   and   small   business   and   to   individual borrowers who have lost their jobs and livelihoods.   That they need relief which will help them to get back on their feet.   It is submitted that however different segments/sectors have suffered differently.   It is submitted that to mitigate the burden of debt servicing brought about the disruptions in the market conditions on account of Covid­19 pandemic, RBI came out with a circular dated 27.03.2020 which permitted lending institutions to grant a 47 moratorium on payment of all instalments of term loams falling due between 1.3.2020 and 31.5.2020, which came to be extended till   31.08.2020.     It   is   submitted   that   one   of   the   grievances pertains   to   grant   of   waiver   from   paying   interest   which   has accrued   during   the   moratorium   period   while   making   the repayment of loan after the moratorium is over.  It is submitted that   one   other   grievance   is   waiver   from   paying   interest   on interest/compound   interest   accrued   during   the   moratorium period.     It   is   submitted   that   the   Central   Government   is   fully conscious of the difficulties faced by the various sectors and the stakeholders of various sectors within the purview of the Ministry of Finance and other Ministries. 7.2 It is submitted that the Finance Ministry, after the outbreak of the COVID­19 pandemic globally, has taken several measures of   relief   dealing   with   the   potential   problems   faced   by   several sectors and in several spheres of all financial worlds.  All these measures were taken as a responsible and measured response to mitigate   the   problems   faced   by   the   sudden   outbreak   of   the pandemic and keeping in mind­ (i)  The financial stability of the economy; 48 (ii)  The additional unforeseen and unexpected financial burden imposed on the   exchequer   to   provide   relief   packages   to   citizens   at   large,   adversely affected due to the pandemic; (iii)  The very nature of the pandemic whose duration remains uncertain; (iv)  The difference in implications of the reliefs granted for various sectors; and (iv) The fact that the resources of any country would not be unlimited. It is further submitted that the Central Government has also taken a number of measures to mitigate financial suffering, which include,  inter alia , the following: ­ (i)    3% subvention on interest rate payable on  Agriculture loans: prompt   repayment   has   been   made   admissible   despite   availing moratorium. (ii)   :   Subvention   on   interest   rate   under   Pradhan Housing   loans Mantri Awas Yojna has been extended by one more year up to 31.03.2021. (iii)    2% subvention on interest rate Small business borrowers:   has   been   introduced   for   small   business   loans   under   Pradhan Mantri Mudra Yojana. (iv)   Credit­linked   subsidy   of Micro   Food   Processing   Units:   Rs.10,000 crore has been introduced for 2 lakh food­processing micro­enterprises. (v)   Micro, Small and Medium Enterprises (MSMEs):   Emergency credit line of up to Rs.3 lakh crore, backed by 100% guarantee from   the   Government,   at   capped   rate   of   interest   has   been launched. (vi)       Financing   for   stressed   MSMEs   has   been Stressed   MSMs: enabled through launch of a subordinate debt scheme. (viii) Non­Banking Finance Companies (NBFCs) :  Partial Credit Guarantee   Scheme   of   Rs.45,000   crore   and   Special   Liquidity Facility   of   Rs.30,000   crore   have   been   launched   for   liquidity   to NBFCs. 49 7.3 It is further submitted that the Ministry of Finance was fully alive to the problems of the borrowers which obviously cannot be a   homogenous   class,   but   by   its   very   nature,   has   various categories of borrowing, namely, corporate loans, MSME loans and personal loans etc.   It is submitted that these three broad categories may have several sub­categories within it, having their own   peculiar   problems/difficulties   and,   therefore,   needing peculiar remedies and solutions.  It is submitted that because of the   very   nature   of   the   problems   faced   by   various   kinds   and categories of stakeholders and the wide­ranging difference in the problems faced by several sub­sections of those categories, it was consciously considered that it would not have been possible for the Ministry to provide for a “one size fits all” approach and it would   be   advisable   that   steps   be   taken   for   grant   of relief/solutions   for   the   problems   arising   during   the   pandemic through the regulator of the banking sector, viz., the RBI. 7.4 It is submitted that it was for this reason that the Ministry of Finance took the initiative and started interaction with RBI in this behalf, requesting the RBI to provide for various measures of relief to the borrowers.  The Finance Ministry and RBI remained 50 in  touch  and   considering   the   very   nature   of   the   reliefs   to   be considered   and   provided,   RBI   took   the   decision   requiring   all banks to take various measures for relief. It   is   submitted   that   while   taking   such   financial   policy decisions having implications on the stability of the economy, the decisions   are   required   to   be   taken   keeping   in   mind   several administrative   and   financial   considerations/exigencies,   duly keeping in mind the following complex issues that are required to be considered: (i)   That there are a variety of borrows as stated above, namely corporate   borrowers   (including   large   industry   and   large enterprises),   Micro,   Small   and   Medium   Enterprise   (MSME) borrowers, and retail/personal borrowers which include, inter alia, borrowers for housing loans, education loans, vehicle loans, etc. (ii)   That there are several categories of banks and other lending institutions   that   are   required   to   be   kept   in   view   while   taking financial   and   economic   decisions   that   are   very   sensitive   for financial stability of the country.   These may include scheduled commercial banks (which include,  inter alia , Regional Rural Banks, small finance banks, local area banks, nationalized banks, etc.), Urban   Co­operative   Banks   (UCBs),   State   Co­operative   Banks (StCBs)   and   District   Central   Co­operative   Banks   (DCCBs)   that cater   to   rural   credit   in   the   country,   Non­Banking   Financial Companies (NBFCs), Housing Finance Companies (HFCs), all India financial institutions, etc. (iii)     That   the   structuring   of   the   loan   in   each   category   of bank/lending institution and each category of borrower would be different not only in terms of the rate of interest and in terms of duration of the lending facility but also in several other distinct aspects. 51 (iv)  In any banking sector when financial assistance is rendered by way of loans, a balance has to be maintained with the interest of crores   of   depositors,   most   of   whom   are   merely   depositors   and surviving on the interest they receive on their deposits.   On an approximate basis, there are over 197 crore deposit accounts in the country   in   commercial   banks   alone,   in   which   depositors   have deposited their money and are earning interest.   7.5 It is further submitted that to mitigate the burden of debt servicing brought about by disruptions on account of Covid­19 pandemic,   the   circulars   issued   by   RBI   permitted   lending institutions to …. (a) to grant a moratorium on payment of all instalments, including interest, of terms loans falling due between 1.3.2020 and  31.8.2020;  and (b)  defer recovery  of interest on working capital loans for the period from 1.3.2020 to 31.8.2020. It is submitted that under the aforesaid circulars a moratorium on payment of both, principal and interest was by its very nature a   temporary   standstill   arrangement   which   gives   relief   to   the borrowers   in   the   two   ways,   namely,   (i)   the   account   does   not become   NPA   despite   non­payment   of   dues;   and   (ii)   Credit Information Companies shall ensure that the moratorium does not adversely impact the credit history of the borrowers. It is submitted that while the standstill applicable to bank loans results in the bank not getting its funds back during the 52 period of moratorium, the bank continues to incur cost on bank’s deposits and borrowings.  It is submitted that since a moratorium offers certain advantages to borrowers, there are costs associated with obtaining the benefit of a moratorium. 7.6 It is submitted that immediately upon the serious effects of Covid­19   being   felt   in   the   country,   the   Ministry   of   Finance addressed a letter to the RBI dated 1.4.2020 which was after moratorium   declared   by   the   RBI.     Vide   the   said   letter,   the Ministry of Finance requested the RBI to do something more than the moratorium. 7.7 It is submitted that any moratorium is transient by its very nature and has to end one day.   It is submitted that thus, the best interest of the economic health of the country, as well as that of the respective borrowers would be best served by paving the way for a more durable long­term solution of debt restructuring. It is submitted that the revival of the stressed borrowers is contingent upon debt  restructuring  of  their  loans/dues  rather than hinge on extending the moratorium.  It is submitted that the RBI has come out with two circulars dated 6.8.2020, facilitating revival of real sector activities and mitigating the impact on the ultimate borrowers by enabling lenders to grant concessions to 53 borrowers   for   Covid­19   related   stress   in  personal,   MSME   and corporate loans.  It is submitted that this would enable lenders to implement   individual   resolution   plans   in   respect   of   the   loans having stress on account of Covid­19 pandemic.  It is submitted that   the   said   approach   would   also   enable   continuance   of classification   of   such  loans   as   standard,   i.e.,   without   treating them as NPA. 7.8. It is submitted that the RBI Circulars dated 6.8.2020 take care of all categories of lending institutions and all categories of borrowings as aforesaid, while leaving the nature and the kind of the relief to be given to the lending institution since each category of   lending   institution   would   have   its   own   bank/institution   – specific financial scenario in terms of the nature of advance, the nature of borrowers, rate of interest etc. That   Circular   dated   6.8.2020   takes   care   of   the   MSME Sector, personal loans and corporate loans, keeping in mind the overall financial stability of the economy, economic stability of banking   sector   and   interest   of   the   depositors   in   mind.     It   is submitted   that   considering   the   fact   that   the   time   limit   for continuance of the present economic issues is uncertain, as a policy   it   is   undesirable   to   either   give   any   “one   size   fit   all” 54 solutions, nor would it be desirable to provide for a static relief formula.  Such reliefs are given depending upon the availability of resources and without compromising the financial stability of the banking sector, and are always subject to changes keeping in mind the evolving dynamic situation at various stages. 7.9 It   is   submitted   that   with   the   framework   under   the   RBI Circulars dated 6.8.2020, banks are fully empowered to resolve Covid­19   related   stress   and   customise   relief   to   individual borrowers through grant of various concessions in terms of:­ i) alteration in the rate of interest and haircut on amount payable as interest; (ii) extension of the residual tenor of the loan, with or without moratorium, by up to two years; (iii)  waiving penal interest and charges; (iv) rescheduling repayment; (v)   converting   accumulated   interest   into   a   fresh   loan   with   a deferred payment schedule; and  (vi) sanction of additional loan. 7.10 It   is   submitted   that   so   far   as   the   question   of   waiver   of compound   interest/interest  on   interest  is   concerned,   the   said issues are required to be examined in the context of the larger financial constraints faced by the country in particular and the world in general.  It is submitted that as a part of effective fiscal 55 planning, which is being done at a stage where nobody is aware as to the time till when the present situation may continue, with either more or less gravity, a delicate balancing act is required by Government   in   dealing   with   the   financial   impacts   of   the pandemic.  It has to conserve financial resources for a long and uncertain battle on the public health front, which has its own huge   financial   implications.     Businesses   need   to   survive. Lending   institutions   too   must   survive   and   promises   made   to depositors have to be honoured.  Jobs and livelihoods need to be safeguarded and every attempt is to be made to bring back the economic  growth.     Therefore,   use   of   public  resources   for   any category   of   stakeholders   must   be   carefully   calibrated. Unintended consequences can arise and financial stability itself could   be   imperilled,   if   due   consideration   is   not   given   to   all relevant aspects.  7.11 It   is   submitted   that   right   from   the   initial   entry   of   the pandemic   in   our   country,   which   started   facing   its   effects [including   the   financial   impact],   the   Central   Government   has proactively taken steps either itself or through RBI, which already had their financial impact, which was/is required to be kept into 56 consideration while taking further decisions either while granting moratorium which, in fact, is deferment [and not waiver] as well as   while   taking   the   present   decision   regarding   relief   in compounding   of   interest.     The   following   steps   taken   by   the Central   Government   have   their   own   financial   impacts   which would require the Central Government to rationalise any kind of waiver at this stage as going any further than what is stipulated hereunder may be detrimental to the overall economic scenario, and the economy and the nation or the banking sector may not be able to take the financial constraints resulting therefrom. 7.12 It is submitted that as such the Central Government has already given various reliefs and by providing various reliefs there already exists substantial financial burden.  It is submitted that having realised that the pandemic has caused stress to large and small businesses and to individual borrowers who have lost jobs and livelihoods and they need relief which will help them get back on   their   feet,   it   has   necessitated   multi­pronged   relief.     It   is submitted   that   the   Central   Government   has   announced   the following reliefs, (1) Garib Kalyan Package; and (2) Aatma Nirbhar Package. 57 It   is   submitted   that   the   Garib   Kalyan   Package   was   for Rs.1.70  lakh   crore   involving   free   food   grains,   pulses   and   gas cylinders and cash payment to women, poor senior citizens and farmers.     More   than   42   crore   poor   people   received   financial assistance   of   Rs.   65,454   crores   under   the   package.     It   is submitted that the Aatma Nirbhar Package was for Rs. 20 lakh crores,   involving   support   to   MSMEs,   Non­Banking   Finance Companies, agriculture, sectors allied to agriculture, contractors, street   vendors,   State   Governments,   relief   in   provident   fund contribution, extension of subsidy on home loans etc. 7.13 It is submitted that so far as the question of interest on interest is  concerned,  what is  “moratorium” is  required  to be considered.     It   is   submitted   that   the   word   “moratorium”   is categorically defined by the RBI, while issuing various circulars. The relevant circulars of RBI show that “moratorium” was never intended to be “waiver of interest”, but “deferment of interest”.  In other words, if a borrower takes benefit of the moratorium, his liability to make payment of contractual interest (both normal interest and interest on interest) gets deferred for a period of three months and subsequently three months thereafter.   It is 58 submitted   that   this   decision   was   taken   keeping   the   larger economic scenario in mind, more particularly the burden which would otherwise fall upon the banks which will have to perforce pass it on the depositors and/or upon the Government which will have its own detrimental impact on other welfare measures.  It is submitted that after a very careful and major consideration of several   fiscal   and   financial   criteria,   its   inevitable   effects   and keeping the uncertainty of the existing situation in mind, the payment of interest and interest on interest was merely deferred and was never waived. It is submitted that even the borrowers have understood the difference between the waiver in the interest on loan and the deferment of payment of instalments for that loan and, therefore, a majority of the borrowers have, in fact, not taken the benefit of the moratorium, which is nothing but deferment of payment of instalments. 7.14 Now   so   far   as   the   waiver   of   interest   is   concerned,   it   is submitted   that   if   the   Government   were   to   consider   waiver   of interest   on   all   the   loans   and   advances   to   all   classes   and categories of borrowers corresponding to the six­month period for 59 which the moratorium was made available under the relevant RBI circulars, the estimated amount is more than Rs. 6 lakh crores. It is submitted that if the banks were to bear this burden, it would necessarily wipe out a substantial and a major part of their net worth, rendering most of the banks unviable and raising a   very   serious   question   mark   over   their   very   survival.     It   is submitted that this was one of the main reasons why waiver of interest   was   not   even   contemplated   and   only   payment   of instalments was deferred.  7.15 It is submitted that even otherwise the lending activity of any   bank   is   always   enabled   by   the   deposits   that depositors/customers   hold   in   the   lending   banks.     Such depositors   are   much   more   in   number   than   the   number   of borrowers.  It is submitted that it is estimated that in the Indian Banking   system   for   every   ‘loan   account’   there   are   about   8.5 ‘deposit accounts’.  The banks can pay interest to depositors only because borrowers pay interest to the bank.  This transaction of depositors/banks/borrowers is inevitably a part of a chain that can   never   be   permitted   to   be   broken.     It   is   submitted   that therefore the contractual interest on all outstanding advances 60 will have to be charged even during the period of deferment and if this compounding interest is not received from the borrowers for any   particular   period,   a   commensurate   denial   of   interest   to customers holding deposits is inevitable and unimaginable and would obviously be unacceptable considering the categories of depositors. 7.16 It   is   submitted   that   waiving   compound   interest/waiving interest would result in very substantial and significant financial burden.  There are several categories of banks, like Private Sector Banks, Small Finance Banks, Regional Rural Banks, Cooperative Banks, NBFCs etc.  The classes and categories of borrowers also varies throughout the nation, and these can be broadly classified as big borrowers and small borrowers.  It is submitted that it is impossible for banks to bear the burden resulting from waiver of compound   interest/interest   without   passing   on   the   financial impact to the depositors or affecting their net worth adversely, which would not be in the larger national economic interest. It is submitted that the Government bearing this burden would have an impact on several other pressing commitments being   faced   by   the   nation,   including   meeting   direct   costs 61 associated with pandemic management, addressing basic needs of the common man and mitigating the common man’s problems arising out of loss of livelihood. 7.17 It   is   submitted   that   in   view   of   the   aforesaid   cumulative circumstances,   after   careful   consideration   and   weighing   all possible   options,   the   Central   Government   has   decided   to continue the tradition of handholding the small borrowers and, therefore, now the Government has granted the relief of waiver of compound interest during the moratorium period, limited to the most vulnerable categories of borrowers.  It is submitted that this category   of   borrowers,   in   whose   case,   the   compounding   of interest will be waived, would be MSME loans and personal loans up to Rs. 2 crores of the following categories: (i) MSME loans up to Rs.2 crore (ii) Education loans up to Rs.2 crore (iii) Housing loans up to Rs.2 crore (iv) Consumer durable loans up to Rs.2 crore (v) Credit card dues up to Rs.2 crore (vi) Auto loans up to Rs.2 crore (vii) Personal loans to professionals up to Rs. 2 crore (viii) Consumption loans up to Rs.2 crore 62 It is submitted that the aforesaid decision has been taken, after   examining   the   possible   fiscal   scenario   in   case   of   a complete/partial waiver and after gathering the material details for reaching the decision­making process, and while keeping in mind   the   interest   of   particular   class   of   borrowers   during   the unprecedented period the country is facing. 7.18 It   is   further   submitted   that   the   resolution   framework announced by the RBI provides that loan accounts which slip into   NPA   between   invocation   and   implementation   may   be upgraded as standard on the date of implementation itself.  It is further submitted that so far as the apprehension that credit rating   agencies   may   record   a   downgrade   to   NPA   for   defaults during   the   moratorium,   it   is   submitted   that   Securities   and Exchange Board of India (SEBI) has already issued a Circular on 30.03.2020 providing for relaxation from recognition of default due to the moratorium.  On 31.08.2020, it has further specified that in cases of restructuring, the same may not be considered a default by rating agencies. 7.19 It   is   further   submitted   that   to   give   further   relief, Government   has   already   suspended   the   operation   from 63 25.03.2020   of   Sections   7,   9   and   10   of   the   Insolvency   and Bankruptcy Code, 2016 to protect corporate borrowers impacted by the Covid­19 crises.   It is submitted that even the Kamath Committee   set   up   by   the   RBI   has   recommended   financial parameters for debt restructuring of 26 sectors affected by Covid­ 19. It is submitted therefore that whatever best could be done by the Government of India, the same has been done.      7.20 Now so far as the issues raised by a number of petitioners and interveners seeking Sector­specific Reliefs, it is submitted that the various measures taken by the Government and the RBI, referred to hereinabove, include not only reliefs applicable across the   board   but   also   reliefs   for   the   specific   sectors.     The petitioners/interveners cannot pray for sector­specific relief by either   waiver   or   restructuring   by   way   of   present   proceedings under Article 32 of the Constitution of India as the question of such financial stress management measures require examination and consideration of several financial parameters and its impact and are not suited for being judicially decided or be subjected to judicial review. 64 It   is   submitted   that   even   otherwise,   the   Aatma   Nirbhar Package offers sector­specific reliefs for the power sector, real estate   sector,   MSME   sector.     It   is   submitted   that   more   than Rs.90,800   crore   liquidity   injection   for   power   distribution companies   has   been   sanctioned,   substantially   enabling   power distribution companies to pay their outstanding dues to power producers and transmission companies.  It is submitted that the Government   advisory   has   been   issued   for   extension   of registration and completion dates of real estate projects under RERA by treating Covid­19 as an event of   force majeure .   It is submitted   that   Credit­linked   Subsidy   Scheme   for   Housing (Pradhan Mantri Awas Yojana) has been extended by one year, providing subsidy for purchase of residential real estate.   It is submitted that so far as relief to MSME Sector is concerned, an Emergency Credit line up to Rs. 3 lakh crores, backed by 100% Government Guarantee, has been launched to enable MSMEs to get back to regular operations.  It is submitted that Rs.1.87 lakh crore has already been sanctioned with Credit Guarantee Scheme for Subordinate Debt has been launched to help stressed and NPA MSME units.  It is submitted that 2% subvention on interest rate is being given for small business loans.   65 7.21 It is further submitted that with regard to reliefs sought by various   petitioners/applicants   in   terms   of   extension   of moratorium, applicability of the resolution framework, fixation of interest rate, transmission of rate cuts, delinking of interest rate from credit rating of the borrower and moratorium on repayment of non­credit instruments that the setting of interest rates and other   norms   for   restructuring   which   includes   moratorium involves evaluating projections of cash flows and viability.  This, in turn, requires expertise, technical knowledge of financing, and experience in dealing with the subject.   Therefore, eligibility of proposals,   benchmarks   for   viability,   assessment   of reasonableness   of   assumptions   and   finally   acceptance   and monitoring   of   resolution   plans   are   matters   best   dealt   with between the borrowers and the lending institutions concerned. 7.22 It is submitted that the Central Government and all stake holders have discharged their responsibility in the best possible manner   under   the   circumstances   which,   by   themselves,   are unprecedented   circumstances.     It   is   submitted   that   all   the decisions   taken   by   the   Central   Government,   the   RBI   as   a regulator and the lending institutions are taken keeping in mind 66 the severe financial stress globally as well as nationally and while ensuring   that   the   sources   are   utilized   so   that   the   national economy and the economy of the banking sector can withstand the   present   financial   situation,   the   duration   of   which   is unknown. 7.23 Now so far as the submission that the National Plan, as required to be prepared under Section 11 of the DMA 2005 has not been prepared and that the NDMA has failed to perform its duty cast under Sections 12 & 13 of the DMA 2005 is concerned, Shri Mehta, learned Solicitor General has submitted as under: (i) that the DMA 2005 contemplates a “National Plan” under section 2(l) of the Act.  Such plan is to be prepared under Section 11 of the DMA 2005.  That the NDMA has, in fact, prepared an exhaustive and comprehensive “National Disaster Management Plan” which takes care of several disaster known to humanity, like cyclone and wind, floods, urban flood, earthquake, tsunami, landslides, snow avalanche, draught, cold waves, thunderstorm, lightening etc. cloud burst and hailstorm, glacier lake outbreak flood,   heat   wave,   chemical   (industrial)   disaster,   nuclear   and 67 radiological   emergencies,   biological   and   public   health emergencies, fire hazard and forest fire hazard; (ii) that   the   present   disaster   can   fall   under   “biological   and public health  emergencies”  under  clause  7.15  of   the  National Disaster   Management   Plan.     That   there   are   certain   disasters which are and have been globally known to be unknown to the humanity as a race.  It is submitted that what the entire world is facing in the Covid­19 is, one such unforeseen disaster termed as “global catastrophe”.  It is submitted that the National Plan which is made in November, 2019, envisages such rarest of the rare “global catastrophe risk events”.  It is submitted that by its very nature, such a global catastrophe cannot be either predicted or prevented   nor   can   any   straightjacket   procedure   for   its management be laid down.  Each country will have to respond to such global catastrophe in the best possible manner under the circumstances in the spheres of public health, finance etc.  The present situation falls in the category of “global catastrophe risk” as stipulated in clause 2.8 of the National Disaster Management Plan. 68 7.23.1 It   is   submitted   that   in   light   of   the   aforesaid,   the responses and the reliefs measures taken by the nodal Ministries are required to be considered.   It is submitted that it was not possible to lay down any straight­jacket methodology of dealing with such disaster and each country in the world is responding to the challenges in the best possible manner with rationalised utilization of resources. 7.23.2 It   is   submitted   that   in   the   context   of   the unprecedented position, the scheme of DMA 2005 is required to be examined.   After referring to the Statement of Objects and Reasons of the DMA 2005, it is submitted by Shri Mehta, learned Solicitor General that the Statement of Objects and Reasons as well as  the   scheme  of   the   Act,  the   Act  envisages  a statutory mechanism to deal with the disaster.  It is submitted that so far as   the   National   Disaster   Management   Authority   (NDMA)   is concerned, it is established under Section 3 of the Act with the Hon’ble Prime Minister of India as its Chairperson with other members to be nominated by the Hon’ble Prime Minister and discharges the powers and functions enumerated under Section 6 of the Act.  It is submitted that the NDMA is an administrative 69 body having limited function stipulated in Section 6 of the Act.  It is not envisaged  to be  a “Super  Government” which becomes repository   of   all   functions   and   powers   of   the   Ministries   and Departments of the Government.   It is submitted that it is not that once a disaster as defined under Section 2(d) of the Act takes place, the functions of all Central Government Ministries stand vested in the NDMA and each and every measure shall be taken either   only   by   the   NDMA   and   not   by   the   respective Ministries/Departments or at least vetted or ratified by NDMA. 7.23.3 After referring to Sections 2 (a), (b), (c), (d), (e), (i), (m), (n), (o) and (p) and Section 6 of the Act, it is submitted by Shri Mehta that the disaster management under the Act by NDMA is restricted   to   Section   6   of   the   Act,   while   the   nodal   ministries under the National Plan take the steps.  It is submitted that the NDMA itself would not start taking mitigating or relief measures unless and so long as the Central Government (acting through various   Ministries/Departments)   fails   to   do   so.   Referring   to Sections 35 and 36 of DMA 2005, it is submitted that it is for the respective ministries or departments of the Government of India 70 which take steps for giving relief measures as a part of disaster management. 7.23.4 It   is   submitted   that   the   NDMA   is   alert   and   is functioning   much   prior   to   the   outbreak   of   pandemic   in   our country through Advisory Committee under Section 7, National Executive Committee under Section 8 and sub­Committees under Section 9 of the Act.  It is submitted that under the National Plan which is a statutory plan prepared under the Act, an institutional framework is provided which is as under: 71 It is submitted that therefore the National Disaster Management Plan also envisages nodal ministries for management of different disasters.   It is submitted that National Plan prepared by the NDMA itself envisages that each category of disaster will be dealt with by a nodal ministry. 7.23.5 It is submitted that Covid­19 was a disaster of such a nature   that   it   could   not   be   confined   to   one   nodal   ministry. 72 Whatever measures/reliefs were required to be taken/given were provided by every ministry in each and every way needed.  It is submitted that the Ministry of Railways provided free rails for transport   of   migrants,   Ministry   of   Health   and   Family   Welfare dealt with the substantial part of disaster management namely taking care of public health and hospital infrastructure, Ministry of Agriculture & Farmer Welfare provided for various reliefs in the agriculture sector, Ministry of Housing and Urban Affairs issued separate relief measures for real estate sector etc. Similarly, Ministry of Finance, whose role otherwise was to finance   the   measures   undertaken   by   other   Ministries   also undertook several reliefs in terms of financial package and either directly or through RBI relief ensures for stressed accounts. 7.23.6 It is submitted that considering the very nature of the pandemic   which   was   not   confined   to   any   specific   geographic location but at PAN­India impact having adversely affecting the various fields of human life, the disaster management authority consisted “Empowered Groups” under Section 10(2)(h) and (i) for comprehensive action and integrated response. The same was published by the Chairperson of National Executive Committee 73 constituted under Section 8 of the Act.   One of the empowered groups was “economic and welfare measure”.  It is submitted that the said empowered group functions as a limb of NDMA as the same   is   constituted   under   the   Act   by   the   Chairman   of   the National Executive Committee. 7.23.7 It is submitted that the petitioners are under some misconception   that   the   functions   of   all   ministries   are   to   be discharged by the NDMA and the NDMA should take a decision for the area in each ministry.  It is submitted that so far as the economic   impact   of   the   present   disaster   is   concerned,   it   is essentially the function of the Ministry of Finance and RBI to take measures under Section 36 of the Act and the question of NDMA stepping into will not arise. 7.24 Now so far as the reliance placed by the petitioners upon Section 13 of the Act is concerned, it is submitted that in Section 13 the word used is “ .  It is submitted that the word “ may”   may” used   in   Section   13   shall   have   to   be   read   as   an   enabling discretionary provision and not mandatory.  The legislature has in its wisdom and foresight refrained from using the word “shall”. It   is   submitted   that   the   interpretation   of   the   word   “ may”   as 74 “shall” will lead to consequences which are never intended by the legislature.  It will also lead to disastrous consequences. 7.24.1 It is submitted that the provision of Section 13 is an enabling provision in which in any given set of facts the NDMA can  “recommend”  relief in repayment of loans or grant of fresh loans.  If the word “may” be used as “shall”, the only consequence it may have is a mandate of law to grant relief in repayment of loan or grant of fresh loan despite [and without looking into an over financial and economic impact on the national economy]  en bloc.   The meaning of the word “shall” would mean NDMA giving financial relief only in one sector namely banking sector [as the contingencies mentioned in Section 13 are relatable to Banking Sector] even at the cost of destroying the economy of the nation, destroying the stability of the banking sector and even at the cost of   “disaster   management”   in   other   areas   [like   public   health, medical infrastructure etc.] other than banking sectors. 7.24.2 Section 13 may perhaps be used in case of localized disasters   like   Bhopal   Gas   tragedy   or   earthquake   in   Gujarat. However, when a national disaster takes place, the disaster is to be   managed   through   several   ministries.     Food   Ministry   will 75 distribute   food   which   would   involve   expenditure,   agricultural ministry will give boost to the agricultural sector by various relief measures,   Health   Ministry   will   take   charge   of   treatment   and public health issues, Home Ministry will implement measures for prevention of spread and other ministries will have to do same in their respective spheres. 7.24.3 Use of the word “may” and “shall” would mean the entire economy of the country shall have to be divested and used in and through banking sector leaving all other areas untouched and even at the cost of national economy and the stability of the banking sector.  It is submitted that this could never have been the intention of the legislature. In support of above, Shri Mehta, learned Solicitor General has relied upon the decisions of this Court in the cases of  Pradip Kumar Maity v. Chinmoy Kumar Bhunia (2013) 11 SCC 122 (para 6); Chinnamarkathian v. Ayyavoo (1982) 1 SCC 159 (paras 24 to 26); Official Liquidator v. Dharti Dhan (P) Ltd. (1977) 2 SCC 166 (paras 7 to 10); Bachahan Devi v. Nagar Nigam, Gorakhpur (2008) 12 SCC 372 (para 18); Delhi Administration v. Umrao Singh (2012) 76 1 SCC 194 (para 13); and Union of India v. Kumho Petrochemicals Co. Ltd. (2017) 8 SCC 307 (paras 34 &35). 7.24.4 It is further submitted that the NDMA has not done anything is otherwise also factually incorrect.   It is submitted that it is uncharitable and unfair to the unprecedented effort made by the NDMA and various ministries including the Ministry of Finance.  It is submitted that in view of the hearing which took place before this Court earlier, the NDMA also took cognizance of the issues being dealt with by the RBI and sent its “views and recommendations” vide OM dated 28.08.2020 and opined that in view of the same the RBI may consider granting further reliefs as deemed appropriate after considering and taking into account the financial relief packages issued by the Ministry of Finance, as well as, other relief measures that have already been issued and declared   by   RBI   itself.     It   is   submitted   that   “views   and recommendations”   of   NDMA   were   communicated   to   RBI   vide letter dated 31.08.2020. 7.24.5 It is submitted that the “views and recommendations” of the NDMA deal with broad financial policy decisions having economic   implications   and   other   implications   in   the   banking 77 sector.     Therefore,   the   Ministry   of   Finance,   vide   letter   dated 31.08.2020, forwarded the “views and recommendations” of the NDMA   to   RBI   requesting   it   to   consider   the   “views   and recommendations”   of   NDMA   regarding   relief   in   repayment   of loans   by   borrowers   affected   by   Covid­19,   so   that   RBI   may consider   the   same   while   charting   further   course   of   action depending upon, inter alia, the aforesaid parameters. 7.24.6 It   is   submitted   that   therefore   in   light   of   the   RBI Circulars dated 27.3.2020, 23.5.2020 and 6.8.2020, read with the “views and recommendations” of the NDMA regarding relief in repayment of loans by borrowers affected by Covid­19 expressed vide   OM   dated   29.08.2020   and   also   in   light   of   the   various measures taken by the Central Government, appropriate reliefs and concessions for repayment of loans by the borrowers affected by   Covid­19   have   already   been   granted.     The   RBI   framework under the circulars dated 6.8.2020 also adequately addresses the various concerns expressed by the respective petitioners.    7.25 It is submitted by Shri Mehta, learned Solicitor General that the   packages/reliefs   offered   by   the   Central Government/RBI/Lenders are in the realm of policy decisions.  It 78 is   submitted   that   a   conscious   decision   has   been   taken   after considering every pros and cons and considering various factors and the priorities in the larger public interest and the economy of the country.   It is submitted that as observed and held by this Court in the case of  Arun Kumar Agrawal v. Union of India (2013) 7   SCC   1   that   the   matters   relating   to   economic   issues,   have always an element of trial and error and so long as a trial and error is bona fide and with best intentions, such decisions cannot be questioned as arbitrary, capricious or illegal.  It is submitted that in the aforesaid decision in paragraph 43, this Court has considered   the   decision   of   the   Supreme   Court   of   the   United States in the case of  Metropolis Theatre Co. v. Chicago , which took the view that the problems of Government are practical ones and may   justify,   if   they   do   not   require,   rough   accommodation, illogical, if may be, and unscientific. Mere errors of Government are not subject to our judicial review.   It is only its palpably arbitrary exercises which can be declared void.  Shri Mehta has heavily relied upon paragraphs 41 to 49 of the aforesaid decision, in which this Court considered various earlier decisions. 79 7.25.1 Relying upon the decision of this Court in the case of Peerless General Finance and Investment Co. Ltd. v. RBI, (1992) 2 SCC 343 , it is  submitted that  as observed by this  Court the function of the Court is to see that lawful authority is not abused but   not   to   appropriate   to   itself   the   task   entrusted   to   that authority.     It   is   further   observed   that   the   Courts   are   not   to interfere with economic policy which is the function of experts.  It is not the function of the courts to sit in judgment over matters of economic policy  and  it must  necessarily  be  left  to the  expert bodies.     It   is   submitted   that   it   is   further   observed   that   the functions of the Court are not to advise in matters relating to financial and economic policies for which bodies like RBI are fully competent.  It is further observed that the Court can only strike down some or entire directions issued by the RBI in case the Court is satisfied that the directions were wholly unreasonable or violative of any provisions of the Constitution or any statute.  He has   relied   upon   paragraphs   31,   37   and   38   of   the   aforesaid decision. 7.25.2 It is further submitted that in the case of  Federation of it Railway Officers Association v. Union of India (2003) 4 SCC 289,  80 is   observed   that   on   matters   affecting   policy   and   requiring technical expertise the court would leave the matter for decision of those who are qualified to address the issues. 7.25.3 It is further submitted that in the case of   Dhampur Sugar (Kashipur) Ltd. v. State of Uttaranchal, (2007) 8 SCC 418 , it is observed by this Court that it is well established that courts are ill­equipped to deal with the policy matters.   It is further observed   that   in   complex   social,   economic   and   commercial matters, decisions have to be taken by governmental authorities keeping in view several factors and it is not possible for courts to consider   competing   claims   and   conflicting   interests   and   to conclude which way the balance tilts.  It is submitted that it is further   observed   that   the   court   cannot   strike   down   a   policy decision taken by the Government merely because it feels that another policy decision would have been fairer or wiser or more scientific or logical.   The court can interfere only if the policy decision is patently arbitrary, discriminatory or mala fide. 7.25.4 On   exercise   of   judicial   review,   Shri   Mehta,   learned Solicitor General has relied upon the following decisions of this Court,   Arun   Kumar   Agrawal   (supra);   State   of   M.P.   v.   Nandlal 81 Jaiswal, (1986) 4 SCC   566 ; BALCO Employees’ Union (Regd.) v. Union of India, (2002) 2 SCC 333; Peerless General Finance and Investment Co. Ltd. (supra); Dalmia Cement (Bharat) Ltd. v. Union of India (1996) 10 SCC 104; Villianur Iyarkkai Padukappu Maiyam v., Union of India (2009) 7 SCC 561; Narmada Bachao Andolan v. Union of India, (2000) 10 SCC 664; and R.K. Garg v. Union of India (1981) 4 SCC 675 . Reply on behalf of the Reserve Bank of India 8. Shri V. Giri, learned Senior Advocate appearing on behalf of the Reserve Bank of India has made the following submissions: i) that   the   RBI   has   been   constituted   by   the   provisions   of Section 3 of the Reserve Bank of India Act, 1934 (for short, ‘RBI Act’).     It   has   been   vested   with   the   responsibility   of superintendence   and   control   of   the   banking   business   in   the country   under   the   provisions   of   the   Banking   Regulation   Act, 1949 (for short, ‘BR Act’).  That in view of the various provisions of the BR Act and the RBI Act, the RBI is obliged to see that the 82 banking business is carried on by banks, prudently and adhering to sound principles of banking.  That the BR Act has conferred upon the RBI the powers to issue directions under Section 35A to the banking companies generally or to any banking company in particular, in public interest or in the interest of the Banking Policy or to prevent the affairs of the banking company being conducted   in   a   manner   detrimental   to   the   interest   of   its depositors or in a manner prejudicial to the banking company. Furthermore,   under   Section   21   of   the   BR   Act,   the   RBI   is conferred with specific powers to determine the policy in relation to advances to be followed by the banking companies; ii) that the Legislature has conferred various powers on RBI empowering it to determine the banking policies to be followed by the banking companies.  That the RBI being the regulator of the banking sector, took cognizance of the probable stress caused in the   financial   situation   and   conditions   of   the   citizens   of   this country   –   the   consequent   stress   upon   the   economy   due   to outbreak   of   Covid­19   pandemic   and   issued   a   statement   on Development and Regulatory Policies dated 27.03.2020 with the following objective and purpose: 83 i) Expanding  liquidity  in the  system  sizeably  to  ensure that   financial   markets   and   institutions   are   able   to function   normally   on   the   face   of   COVID­19   related dislocations; ii) Reinforcing monetary transmission so that bank credit flows on easier terms are sustained to those who have been affected by the pandemic; iii) Easing financial stress caused by COVID­19 disruptions by relaxing repayment pressures and improving access to working capital; and iv) Improving the functioning of markets in view of the high volatility experienced with the onset and spread of the pandemic. iii) that with a view to ease the financial stress by relaxing “repayment pressures”, the said Statement on Development and Regulatory Policy provided for moratorium on term loans.  That following   the   aforesaid   Statement   on   Development   and Regulatory   Policies,   a   circular   was   issued   titled   ‘Covid­19   – Regulatory Package dated 27.03.2020’, thereby providing detailed instructions qua the regulatory measures issued by way of the said Statement.  That it provided for rescheduling of payments – term loans and working capital facilities.  That the circular dated 27.03.2020 came to be further modified by the RBI vide Circulars dated   17.4.2020   titled   ‘Covid­19   Regulatory   Package   –   Asset Classification and  Provisioning’ and 23.5.2020 titled ‘Covid­19 Regulatory Package’ whereby the moratorium period came to be 84 extended   by   another   three   months,   i.e.,   from   1.6.2020   to 31.8.2020 on payment of all instalments in respect of term loans; iv) that the aforesaid policies/circulars were issued with the objective of mitigating the burden of debt servicing brought about by disruptions on account of Covid­19 pandemic and to ensure the continuity of viable business.  It is submitted that therefore, the   regulatory   package   is,   in   its   essence,   in   the   nature   of   a moratorium/deferment and cannot be construed to be a waiver. It   is   submitted   that,   however,   in   order   to   ameliorate   the difficulties   faced   by   borrowers   in   repaying   the   accumulated interest   for   the   moratorium/deferment   period,   it   was   further provided   in   the   circular   dated   23.5.2020   that   in   respect   of working   capital   facilities,   lending   institutions   may,   at   their discretion, convert the accumulated interest for the deferment period up to 31.08.2020, into a funded interest term loan which shall be repayable not later than 31.03.2021.  Further, in respect of term loans, it has been provided that the repayment schedule for such loans, including interest as well as principal, as also the residual tenor, will be shifted across the board; 85 v) that the lending institutions are required to frame Board approved policies for providing the reliefs pursuant to circulars issued by the RBI from time to time to all eligible borrowers and disclosed   in   public   domain.   Since   the   customer   profile, organizational structure and spread of each lending institution is widely   different   from   others,   each   lending   institution   is   best placed to assess the requirements of its customers.   Therefore, the discretion was left to the lending institutions concerned; vi) that the banks are commercial entities that intermediate between the depositors and the borrowers and are expected to run on viable commercial considerations.  That the banks being custodians of depositors’ money, their actions need to be guided primarily   by   the   protection   of   depositors’   interests.     Any borrowing   arrangement   is   a   commercial   contract   between   the lender and the borrower and the interest rates reflect the same. That   the   interest   on   advances   forms   an   important   source   of income for banks and after meeting the cost of funds, the banks also   need   to   sustain   reasonable   interest   margins   for   viable operations; 86 vii) that otherwise the RBI being cognizant of the enormity of the   challenges   faced   in   the   wake   of   Covid­19   has   already announced several measures to mitigate the immediate impact on the real sector as well as financial sector, namely, Circulars dated 27.3.2020, 17.4.2020 and 23.5.2020.  It is submitted that the aforesaid circulars/policies were announced with the primary objective of enabling all key constituents in the economy, most importantly  the  borrowers,  to  cope with the  economic fallout. The overriding objective was to prevent financial markets from freezing   up;   ensure   normal   functioning   of   financial intermediaries;   ease   the   stress   faced   by   households   and businesses;   and   keep   the   life   blood   of   finance   flowing.     It  is submitted   that   many   measures/policy   decisions   have   been announced by the RBI to mitigate the impact of Covid­19, which are as under:  

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1 The purpose of this measure relating to reverse repo rate is to make it relatively unattractive for banks to passively deposit funds with the Reserve Bank and instead, to use these funds for on-lending to productive sectors of the economy. 88

2 This measure was announced as financial markets worldwide were facing intense selling pressures on extreme risk aversion due to the spread of COVID-19 infections. 3 This reduction in the CRR released primary liquidity of about Rs,1,37,000 crore uniformly across the banking system in proportion to liabilities of constituents rather than in relation to holdings of excess SLR. 89

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4 This comprised Rs.25,000/- crore to NABARD for refinancing regional rural banks (RRBs), cooperative banks and micro finance institutions (MFIs); Rs.15,000/- crore to SIDBI for on-lending/refinancing; and Rs.10,000/- crore to NHB for supporting housing finance companies (HFCs). Advances under this facility were provided at the RBI’s policy repo rate. 93

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8.1 Now so far as the prayers for waiver of interest/interest on interest   during   the   moratorium   period   is   concerned,   it   is 96 submitted   that   any   waiver   of   interest   on   interest/compound interest will entail significant economic costs which cannot be absorbed by the banks without serious debt of their financials, which in turn will have huge implications for the depositors and the broader financial stability.  It is submitted that, in fact, the government has come out with the “ex­gratia scheme” and the government has to bear the cost of the ‘interest on interest’ for MSME   loans   and   personal   loans   up   to   Rs.   2   crores.     It   is submitted that therefore waiver of interest and/or interest on interest/compound interest shall not be in the larger country’s economy and the bankers. 8.2 Now so far as the prayer for extension of moratorium beyond 31.08.2020 is concerned, it is submitted that the moratorium was permitted as a part of immediate regulatory response, aimed at providing   temporary   reprieve   to   borrowers   affected   by   the pandemic,   while   attempting   to   preserve   the   resilience   of   the financial system.  It entails significant costs to the lenders and a balance needs to be maintained in the overall consideration.   A long moratorium exceeding six months can also impact credit behaviour of borrowers and increase the risks of delinquencies 97 post resumption of scheduled payments.  It may result in vitiating the overall credit discipline which will have a debilitating impact on the process of credit creation in the economy.  It will be the small   borrowers   which   may   end   up   bearing   the   brunt   of   the impact as their access to formal lending channels is critically dependent   on   the   credit   culture.     It   is   submitted   that   mere continuation of temporary moratorium would not even be in the interest   of   borrowers.     It  may   not   be   sufficient   in   addressing deeper cash flow problems of the borrowers and in fact exacerbate the repayment pressures for the borrowers.   Therefore, a more durable  solution  was  needed  to  rebalance  the  debt burden of viable borrowers, both businesses as well as individuals, relative to their cash flow generation abilities.  It is submitted that with this consideration in mind the Reserve Bank has announced the Resolution   Framework   for   Covid19­related   Stress   (“Resolution Framework”) on August 6, 2020, which enabled the lenders to implement a resolution plan in respect of personal loans as well as   other   exposures   affected   due   to   Covid19,   subject   to   the prescribed   conditions,   without   asset   classification   downgrade. The framework,  inter alia , permits extension of the moratorium by a maximum of two years. 98 8.3 It is submitted that the Resolution Framework issued by the Reserve Bank on August 6, 2020 is aimed at facilitating revival of real sector activities and mitigating the impact on the ultimate borrowers, which are under financial stress caused by economic fallout on account of Covid­19 pandemic.  It is submitted that in terms of the Resolution Framework, only those borrower accounts shall be eligible for resolution which were classified as standard, but   not   in   default   for   more   than   30   days   with   any   lending institution as on March 1, 2020. 8.4 It is submitted that the resolution plans implemented under framework may   rescheduling of payments, conversion of inter alia any interest accrued, or to be accrued, into another credit facility, or, granting of moratorium, based on an assessment of income streams   of   the   borrower   for   two   years.     The   reliefs   for   each borrower can be tailored by banks to meet the specific problem being faced by each borrower depending on need rather than have a broad­brush approach in dealing with the issue. 8.5 It is submitted that in terms of resolution framework, the RBI   had   constituted   an   Expert   Committee   under   Shri   K.V. Kamath   to   recommend   to   the   RBI   the   required   financial parameters, along with the sector specific benchmark ranges for 99 such parameters, to be factored into each resolution plan. That terms of the reference of the Kamath Committee read as under: “(a) To identify suitable financial parameters that should be factored into the assumptions underlying RP finalized by   the   lending   institutions   under   the   Resolution Framework.     The   parameters   shall   cover   aspects related to leverage, liquidity, debt serviceability, etc. (b) To recommend sector­specific ranges for such financial parameters that will serve as boundary conditions for the RP [Resolution Plan]. (c) To   make   any   other   recommendations   relating   to financial or non­financial conditions to be considered for   the   RP,   within   the   contours   of   the   framework announced by the Reserve Bank of India. (d) To undertake the process validations of RP submitted in respect of borrowers where the aggregate exposure of the lending institutions at the time of invocation of the   resolution   process   is   Rs.1500   crore   and   above. The process validation shall entail verification of the RP   in   terms   of   their   adherence   to   the   conditions prescribed in the Resolution, without interfering with the commercial judgement exercised by the lenders.” It   is   submitted   that   the   Committee   has   undertaken   an exhaustive task and has given its report dated 4.9.2020.   The recommendations of the Kamath Committee have been broadly accepted by RBI vide circular dated 7.9.2020.   It is submitted that   the   Kamath   Committee   found   variable   impact   of   the pandemic across several sectors, with varying degrees of severity and   varying   nature   of   problems.     It   is   submitted   that   the 100 Committee found that it is neither possible nor desirable to arrive at   any   one   particular   formula,   whether   sector­specific   or otherwise,   to   deal   with   the   stress   situation   arising   from   the unprecedented pandemic.  It is submitted that the resolution of such   stressed   accounts   shall   have   to   be   made   only   by   and between   the   borrowers   and   the   lending   institutions.     It   is submitted   that   the   Kamath   Committee   while   identifying   26 sectors, laid down parameters that are to be guidance for the lending   institutions   while   undertaking   the   process   of restructuring/resolution. 8.5.1 It   is   submitted   that   Kamath   Committee   based resolution plans are applicable only to big borrowers having big and   specific   problems   requiring   resolution/restructuring,   and such resolution can be done only after evaluating projections of cash flows and viability, which requires banking expertise and knowledge of the finance sector and which can be done only by the lending institutions on a case­by­case basis. 8.5.2 It is submitted that so far as the borrowers which are not big borrowers, their accounts are eligible to be restructured by the respective lending institutions as per RBI circular dated 6.8.2020.  It is submitted that the banks are fully empowered to 101 resolve Covid­19 related stress and customize reliefs to individual borrowers through grant of various concessions/reliefs, inter alia, in terms of   i) alteration in the rate of interest and haircut on amount payable as interest; (ii) extension of the residual tenor of the loan, with or without moratorium, by up to two years; (iii)  waiving penal interest and charges; (iv) rescheduling repayment; (v)   converting   accumulated   interest   into   a   fresh   loan   with   a deferred payment schedule; and  (vi) sanction of additional loan. 8.5.3 It   is   submitted   that   those   accounts   which   are   not covered   by   Kamath   Committee   recommendations   were   not supposed to wait for their restructuring for Kamath Committee Report to come out as the said restructuring is not linked to the parameters to be fixed by the said report.  It is submitted that, as such,   the   RBI   resolution   framework   offers   significant   and appropriate higher relief to borrowers in the 26 sectors identified as Covid­19 impacted. 9. It is further submitted that the circulars issued by the RBI are policy decisions taken by the RBI in exercise of the statutory powers conferred on the bank under the provisions of the BR Act 102 and RBI Act.  It is submitted that the policy decisions taken by the RBI and as expressed in various circulars issued by the RBI in the wake of Covid­19 pandemic, being economic policy matters, are not amenable to judicial review except when a constitutional infraction or violation of fundamental rights are made out. 9.1 It is submitted that the concessions that have been offered across the board by the RBI are offered with the objective to offset the pervasive impact that the Covid­19 pandemic has had on the country.   The circulars granting moratorium for a period of six months   on   repayment   of   instalments   on   all   term   loans   and deferment   of   interest   on   working   capital   facilities;   facility   for resolution of Covid­19 related stressed assets are all measures taken   with   the   objective   of   enabling   sustainable   recovery   and facilitating credit flow to the economy, while ensuring financial stability. 9.2 It is further submitted that as the circulars issued by the RBI are under Covid­19 package and the resolution framework issued   by   the   RBI   on   6.8.2020   are   the   policy   decisions,   the judicial   interference   by   this   Court   is   not   warranted.     It   is submitted that every regulatory forbearance has its trade­offs in terms of adverse incentives and unintended consequences.  It is 103 submitted that the RBI has exercised its expert wisdom in issuing binding guidelines to lending institutions on how to differentiate the   risks   arising   from   borrowers   with   pre­existing   financial difficulties from those which were performing well but had been impacted   by   the   pandemic.     RBI   has   taken   a   balanced   view, taking into account the interest of the depositors, borrowers, real sector   entities   and   banks.   Financial   stability   and   economic growth of the country were also kept in mind while arriving at its policy decisions by the RBI. 9.3 It is submitted that this Court in a number of decisions have held that the courts are not to interfere with the economic policy which is the function of experts.   It is not the function of the courts to sit in judgment over matters of economic policy and it must necessarily be left to the expert bodies.  It is submitted that even in such matters even experts can seriously and doubtlessly differ.   Courts cannot be expected to decide them without even the aid of experts.   In support of his submission, Shri V. Giri, learned Senior Advocate has relied upon the following decisions, Peerless General Finance and Investment Co. Ltd. (supra); Shri Sitaram Sugar Co. Ltd. V. Union of India (1990) 3 SCC 223; Prag 104 Ice & Oil Mills v. Union of India AIR 1978 SC 1296; and P.T.R. Exports (Madras) P. Ltd. V. Union of India (1996) 5 SCC 268. 9.4 Making the above submissions and relying upon the above decisions, it is vehemently submitted  by Shri V. Giri, learned Senior Advocate appearing on behalf of the RBI that the reliefs sought by the respective petitioners, namely, waiver of interest on interest/compound   interest   and   waiver   of   interest   during   the moratorium period; moratorium to be permitted for all accounts instead of  being at the  discretion of the  lenders; extension of moratorium beyond 31.08.2020; packages/reliefs shall be sector­ wise’   discretion   to   come   under   the   resolution   framework   of 6.8.2020 circulars should lie with the borrowers and not with the lenders, the   respective  petitioners  are  not entitled  to  the  said reliefs. 9.5 Now so far as the prayer in one of the petitions sought in Writ Petition (Civil) No. 955 of 2020 directing the RBI to apply circular   dated   27.3.2020   to   all   banks,   non­banking   financial companies,   housing   finance   companies   and   other   financial institutions compulsorily and mandatorily, it is submitted that the   circular   dated   27.3.2020   shall   be   applicable   to   all   loan accounts of all banks, non­banking financial companies, housing 105 finance   companies   and   other   financial   institutions,   subject   to fulfilling the eligibility criteria. Submissions   made   by   Shri   Harish   Salve,   learned   Senior Advocate 10. Shri  Harish Salve,   learned   Senior   Advocate  appearing  on behalf   of   the   Indian   Banks   Association,   while   opposing   the present   petitions,   has   vehemently   submitted   that   the   judicial review of the policy decisions, more particularly in the field of economy, would be on very narrow grounds.  It is submitted that the government packages cannot be set aside on the ground of violation of Article 14 of the Constitution of India.  It is true that it is the duty of the government to bring back the economy on track.  It is submitted that however therefore when a conscious decision   has   been   taken   by   the   NDMA/UOI   through   various ministries,   RBI   and   the   lenders,   there   may   be   various options/reliefs which may be available, however ultimately, it is for   the   policy   maker   to   take   appropriate   decisions/frame appropriate   policies   after   having   the   expert   opinion.     It   is submitted that once a conscious decision of various reliefs has 106 been   taken,   unless   it   is   arbitrary   and   merely   because   some sectors are not agreeable, it cannot be set aside.  It is submitted that while announcing various packages/reliefs, each and every aspect has been considered from all angle. 10.1 It is submitted that the resolution regarding restructuring of debts is to be considered by the lenders and not by the borrowers. He has also relied upon  catena of  decisions of  this  Court on judicial review of the policy decisions, relied upon by Shri Tushar Mehta, learned Solicitor General, referred to hereinabove. 10.2 It is submitted that, as such, various reliefs/measures have been announced by the RBI.  The RBI announced a moratorium on the repayment of term loans, initially for a period of three months and further extended by another three months, which came to an end on 31.08.2020. The avowed object of allowing such a moratorium was  to  ease  the  financial  stress that was being faced by borrowers “by relaxing repayment pressures and improving   access   to   working   capital”.     Such   measures   would benefit those whose business was otherwise sound but became victims of the economic meltdown caused by the pandemic.   In the case of individual borrowers having personal accounts, an entirely different approach was called for and this was finally 107 addressed by the government in the package announced by it.  It is submitted that on 6.8.2020 the RBI announced “Resolution Framework for Covid­19 related stress” thereby permitting banks to restructure loans of eligible borrowers.  This was meticulously complied with by the banks by putting in place Board approved policies to grant relief to the borrowers. 10.3 It is submitted that the RBI constituted a Committee, known as   Kamath   Committee   and   Kamath   Committee   made   its recommendations.     It   is   submitted   that   Kamath   Committee recommendations were the next step on addressing the economic problems being faced by businesses in India.  It is submitted that in a number of cases the accounts had become irregular although not   declared   as   NPA   during   this   period   and   therefore   it   has become necessary to restructure these loans.  It is submitted that there   cannot   be   a   single   formula   applied   to   all   loans   and   to different   sectors.     The   Kamath   Committee   therefore   evolved norms which relaxed the existing norms on which restructuring of loans were to be affected. It is submitted that for the purposes of restructuring alone, the fundamental premise was that the business is viable and capable of servicing its debt obligations upon restructuring.  It is 108 for   this   purpose   that   different   norms   were   prescribed   for assessing the inherent financial strength of a business. It is submitted that all the directions of the RBI have been fully complied with by the banks in letter and spirit and relief has been granted to the borrowers. 10.4 It is   further  submitted  that the  Central  Government  has announced various schemes/packages and the same have been implemented by the banks and have duly granted relief to all the eligible borrowers in terms of the said schemes/packages. 10.5 Now so far as the reliance placed upon Section 13 of the DMA 2005 is concerned, it is vehemently submitted by Shri Salve, learned   Senior   Advocate   that   in   section   13   the   word   used   is “may”.   It is submitted that the Government has to balance each sector   and   Section   13   of   the   Act   uses   the   words   “persons affected”.     It   is   submitted   that   different   persons/sectors   have impact  differently   and   therefore   keeping   in   mind   the   different impact   on   different   persons/sectors,   the   Central   Government through its various ministries, RBI and the banks have provided different packages/reliefs. 10.6 It is submitted that, as such, as pointed out by Shri Mehta, learned Solicitor General, a conscious decision has been taken by 109 the NDMA.  It is submitted that under the DMA, prevention and mitigation shall be within the statutory framework. It is submitted that the architecture of the DMA 2005 is clearly   a   structure   of   enabling   powers   to   be   exercised concurrently with the executive powers of the Government and other   statutory   powers   available   to   the   Governments   at   the Union, State and District levels.   It is submitted that therefore there is no question of there being a power coupled with a duty – overall duties of each of the statutory functionaries are set out in the various provisions and enabling provisions are made to give relief as may become necessary. It is submitted that there may be a pandemic or a natural disaster which may not have that degree of economic fallout.  It is submitted that to suggest that the moment there is a disaster, there is a duty cast upon the NDMA to afford relief from payment of interest would lead to absurd consequences. It is submitted that there is no power conferred under the Act   by   which   the   amount   due   by   a  private   entity   to   another private entity can be written off or restructured.  The relief under Section   13   can   be   granted   where   interest   is   payable   to   the 110 Government or by reimbursing the interest payable to a private entity. 10.7 Now so far as the relief sought of waiver of interest, it is submitted   that   IBA   has   203   member   banks   including   public sector   banks,   private   sector   banks,   foreign   banks   and   other banks including co­operative banks and regional rural banks.  It is submitted that even on the occurrence of other calamities like cyclone,   earthquake,   drought   or   flood,   banks   do   not   waive interest but provide necessary relief packages to the borrowers.  A waiver   can   only   be   granted   by   the   Government   out   of   the exchequer.   It cannot come out of a system from banks, where credit created out of the depositor’s funds alone.  Any waiver will create a shortfall and a mismatch between the Bank’s assets and liabilities. It is submitted that the banks have to keep up with their interest   payment   obligations   to   the   depositors   who   are   paid compound interest with quarterly rests on FDRs.  The waiver of interest obligations would impair the financial structure of the banks and unleash a greater economic danger than what has been caused by the pandemic. 111 It is submitted that the resolution framework put in place by the RBI on 6.8.2020 sets out sectoral parameters and thereby recognizes   the   difference   between   the   different   sectors   for restructuring of loans. 10.8 It is submitted therefore that the policy decisions taken by the respective banks/lenders considering the recommendations made by the Kamath Committee and as per the policies/packages offered by the government may take care of the interest of the different sectors for restructuring of loans and the same are in the larger interest of the economy of the country. It is therefore prayed to dismiss all these petitions. 11. Shri Mukul Rohatgi, learned Senior Advocate appearing on behalf   of   the   State   Bank   of   India   has   pointed   out   the resolution/policy   dated   1.9.2020   approved   by   the   Board   of Directors   of   the   State   Bank   of   India   has   been   framed   after considering the recommendations of the Kamath Committee.  He has   also   reiterated   on   judicial   review   of   the   economic   policy decisions; adverse effect on the banking system if the prayer of waiver of interest/penal interest is accepted and on interpretation of various provisions of DMA 2005. 112 12. Having heard learned counsel appearing on behalf of the respective   petitioners   and   the   reliefs   sought   in   the   respective petitions, the reliefs/submissions on behalf of the petitioners can be summarized as under: i) a complete waiver of interest or interest on interest during the moratorium period; ii) there shall be sector­wise relief packages to be offered by the Union of India and/or the RBI and/or the Lenders; iii) moratorium to be permitted for all accounts instead of being at the discretion of the Lenders; iv) extension of moratorium beyond 31.08.2020; v) whatever   the   relief   packages   are   offered   by   the   Central Government and/or the RBI and/or the Lenders are not sufficient looking to the impact due to Covid­19 Pandemic and during the lockdown period due to Covid­19 Pandemic; vi) the last date for invocation of the resolution mechanism, namely, 31.12.2020 provided under the 6.8.2020 circular should be extended. 13. While considering the aforesaid submissions/reliefs sought, the scope of judicial review on the policy decisions in the field of economy   and/or   economic   policy   decisions   and/or   the   policy 113 decisions having financial implications which affects the economy of the country are required to be considered. 14. In catena of decisions and time and again this Court has considered the limited scope of judicial review in economic policy matters.   From various decisions of this Court, this Court has consistently observed and held as under: i) The Court will not debate academic matters or concern itself with intricacies of trade and commerce; ii) It is neither within the domain of the courts nor the scope of judicial   review   to   embark   upon   an   enquiry   as   to   whether   a particular public policy is wise or whether better public policy can be evolved.  Nor are the courts inclined to strike down a policy at the behest of a petitioner merely because it has been urged that a different policy would have been fairer or wiser or more scientific or more logical.  Wisdom and advisability of economic policy are ordinarily not amenable to judicial review; iii) Economic and fiscal regulatory measures are a field where Judges   should   encroach   upon   very   warily   as   Judges   are   not experts in these matters. 14.1 In  R.K. Garg (supra) , it has been observed and held that laws relating   to   economic   activities   should   be   viewed   with   greater 114 latitude   than   laws   touching   civil   rights   such   as   freedom   of speech, religion etc.   It is further observed that the legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrinaire or strait­jacket formula and this particularly true in case of legislation dealing with economic matters. 14.2 In the case of  Arun Kumar Agrawal (supra) , this Court had an   occasion   to   consider   the   following   observations   made   the Supreme Court of the United States in the case of   Metropolis Theatre Co. v. Chicago, 57 L Ed 730: 228 US 61 (1913): “…The problems of Government are practical ones and may justify, if they do not require, rough accommodation, illogical,   if   may   be,   and   unscientific.     But   even   such criticism should not be hastily expressed.   What is the best is not always discernible; the wisdom of any choice may   be   disputed   or   condemned.     Mere   errors   of Government are not subject to our judicial review.  It is only   its   palpably   arbitrary   exercises   which   can   be declared void…” 14.3 This   Court   in   the   case   of   Nandlal   Jaiswal   (supra)   has observed that the Government, as laid down in   Permian Basin Area Rate Cases, 20 L Ed (2d) 312 , is entitled to make pragmatic adjustments   which   may   be   called   for   by   particular circumstances.  The court cannot strike down a policy decision taken   by   the   State   Government   merely   because   it   feels   that 115 another policy decision would have been fairer or wiser or more scientific or logical. The court can interfere only if the policy decision is patently arbitrary, discriminatory or mala fide. 14.4 In the case of  BALCO Employees’ Union (Regd.) (supra), t his Court has observed that Wisdom and advisability of economic policies are ordinarily not amenable to judicial review unless it can be demonstrated that the policy is contrary to any statutory provision or the Constitution.  In other words, it is not for the courts to consider relative merits of different economic policies and consider whether a wiser or better one can be evolved.   It is further observed that in the case of a policy decision on economic matters, the courts should be very circumspect in conducting   an   enquiry   or   investigation   and   must   be   more reluctant to impugn the judgment of the experts who may have arrived at a conclusion unless the court is satisfied that there is illegality in the decision itself. 14.5        In the case of  Peerless General Finance and Investment Co. Ltd. (supra),   it is observed and held by this Court that the function   of   the   Court   is   to   see   that   lawful   authority   is   not abused but not to appropriate to itself the task entrusted to that authority.  It is further observed that a public body invested with 116 statutory   powers   must   take   care   not   to   exceed   or   abuse   its power.  It must keep within the limits of the authority committed to it.   It must act in good faith and it must act reasonably. Courts are not to interfere with economic policy which is the function of experts.  It is not the function of the courts to sit in judgment   over   matters   of   economic   policy   and   it   must necessarily be left to the expert bodies.   In such matters even experts can seriously and doubtlessly differ.  Courts cannot be expected to decide them without even the aid of experts. It is further observed that it is not the function of the Court to amend and lay down some other directions.  The function of the court is not to advise in matters relating to financial and economic policies for which bodies like RBI are fully competent. The court can only strike down some or entire directions issued by the RBI in case the court is satisfied that the directions were wholly   unreasonable   or   in   violative   of   any   provisions   of   the Constitution or any statute.  It would be hazardous and risky for the courts to tread an unknown path and should leave such task to   the   expert   bodies.     This   Court   has   repeatedly   said   that matters of economic policy ought to be left to the government. 117 14.6 In the case of   Narmada Bachao Andolan (supra), in paras 229 & 233,  it is observed and held as under: “229. It   is   now   well   settled   that   the   courts,   in   the exercise of their jurisdiction, will not transgress into the field   of   policy   decision.   Whether   to   have   an infrastructural  project  or   not  and   what  is   the   type   of project to be undertaken and how it has to be executed, are part of policy­making process and the courts are ill­ equipped   to   adjudicate   on   a   policy   decision   so undertaken. The court, no doubt, has a duty to see that in the undertaking of a decision, no law is violated and people’s fundamental rights are not transgressed upon except to the extent permissible under the Constitution. 233. At   the   same   time,   in   exercise   of   its   enormous power   the   court   should   not   be   called   upon   to   or undertake governmental duties or functions. The courts cannot run the Government nor can the administration indulge in abuse or non­use of power and get away with it.   The   essence   of   judicial   review   is   a   constitutional fundamental. The role of the higher judiciary under the Constitution casts on it a great obligation as the sentinel to defend the values of the Constitution and the rights of Indians.     The   courts   must,   therefore,   act   within   their judicial permissible limitations to uphold the rule of law and harness their power in public interest.  It is precisely for this reason that it has been consistently held by this Court that in matters of policy the court will not interfere. When there is a valid law requiring the Government to act in a particular manner the court ought not to, without striking down the law, give any direction which is not in accordance with law.  In other words, the court itself is not above the law.” 14.7 In  Prag Ice & Oil Mills (supra) , this Court observed as under: “We do not think that it is the function of the Court to set in judgment over such matters of economic policy as must necessarily be left to the government of the day to 118 decide.     Many   of   them   are   matters   of   prediction   of ultimate results on which even experts can seriously err and   doubtlessly   differ.   Courts   can   certainly   not   be expected   to   decide   them   without   even   the   aid   of experts.” 14.8 In   P.T.R   Exports   (Madras)   P.   Ltd.   (supra) ,   this   Court observed as under: “In matters of economic policy, it is settled law that the Court   gives   a   large   leeway   to   the   executive   and   the legislature­Government   would   take   diverse   factors   for formulating the policy in the overall larger interest of the economy of the country­The Court therefore would prefer to allow free play to the Government to evolve fiscal policy in the public interest and to act upon the same.” 15. What is best in the national economy and in what manner and to what extent the financial reliefs/packages be formulated, offered   and   implemented   is   ultimately   to   be   decided   by   the Government and RBI on the aid and advise of the experts.  The same is a matter for decision exclusively within the province of the Central Government.  Such matters do not ordinarily attract the power of judicial review.  Merely because some class/sector may   not   be   agreeable   and/or   satisfied   with   such packages/policy decisions, the courts, in exercise of the power of judicial   review,   do   not   ordinarily   interfere   with   the   policy 119 decisions, unless such policy could be faulted on the ground of mala fide, arbitrariness, unfairness etc. 16. There are matters regarding which Judges and the Lawyers of the courts can hardly be expected to have much knowledge by reasons of their training and expertise.   Economic and fiscal regulatory measures are a field where Judges should encroach upon very warily as Judges are not experts in these matters. 17. The   correctness   of   the   reasons   which   prompted   the government in decision taking one course of action instead of another is not a matter of concern in judicial review and the court is not the appropriate forum for such investigation. The policy decision must be left to the government as it alone can adopt which policy should be adopted after considering of the points from different angles.   In assessing the propriety of the decision of the Government the court cannot interfere even if a second view is possible from that of the government. 18. Legality of the policy, and not the wisdom or soundness of the policy, is the subject of judicial review.  The scope of judicial review   of   the   governmental   policy   is   now   well   defined.     The courts   do   not   and   cannot   act   as   an   appellate   authority examining the correctness, stability and appropriateness of a 120 policy, nor are the courts advisers to the executives on matters of policy which the executives are entitled to formulate. 19. Government has to decide its own priorities and relief to the   different   sectors.     It   cannot   be   disputed   that   pandemic affected   the   entire   country   and   barring   few   of   the   sectors. However, at the same time, the Government is required to take various measures in different fields/sectors like public health, employment,   providing   food   and   shelter   to   the   common people/migrants, transportation of migrants etc. and therefore, as   such,   the   government   has   announced   various   financial packages/reliefs.     Even   the   government   also   suffered   due   to lockdown, due to unprecedented covid­19 pandemic and also even lost the revenue in the form of GST.  Still, the Government seems   to   have   come   out   with   various   reliefs/packages. Government has  its own financial constraints.   Therefore, as such,   no   writ   of   mandamus   can   be   issued   directing   the Government/RBI to announce/declare particular relief packages and/or to declare a particular policy, more particularly when many complex issues will arise in the field of economy and what will be the overall effect on the economy of the country for which the courts do not have any expertise and which shall be left to 121 the   Government   and   the   RBI   to   announce   the   relief packages/economic policy in the form of reliefs on the basis of the advice of the experts.  Therefore, no writ of mandamus can be issued. 20. No State or country can have unlimited resources to spend on   any   of   its   projects.     That   is   why   it   only   announces   the financial reliefs/packages to the extent it is feasible.  The court would not interfere with any opinion formed by the Government if it is based on the relevant facts and circumstances or based on expert advice.  It is not normally within the domain of any court to weigh the pros and cons of the policy or to scrutinize it and test the degree of its beneficial or equitable disposition for the purpose   of   varying,   modifying   or   annulling   it,   based   on howsoever sound and good reasoning, only where it is arbitrary and   violative   of   any   Constitutional,   statutory   or   any   other provisions of law.  When Government forms its policy, it is based on   a   number   of   circumstances   on   facts,   law   including constraints based on its resources.   It is also based on expert opinion.   It would be dangerous if court is asked to test the utility, beneficial effect of the policy or its appraisal based on facts set out on affidavits. 122 21. No right could be absolute in a welfare State.   Man is a social animal.  He cannot live without the cooperation of a large number of persons.  Every article one uses is the contribution of many.  Hence every individual right has to give way to the right of the public at large.  Not every fundamental right under Part III of the Constitution is absolute and it is to be within permissible reasonable restriction.  This principal equally applies when there is any constraint on the health budget on account of financial stringencies. It is the cardinal principle that it is not within the legitimate domain   of   the   court   to   determine   whether   a   particular   policy decision can be served better by adopting any policy different from   what   has   been   laid   down   and   to   strike   down   as unreasonable merely on the ground that the policy enunciated does not meet with the approval of the court in regard to its efficaciousness for implementation of the object and purpose of such policy decision. 22. With   the   limited   scope   of   judicial   review   on   the   policy decisions affecting the economy and/or it might have financial implications   on   the   economy   of   the   country,   the   reliefs   and submissions stated hereinabove are required to be considered. 123 Whether there shall be a waiver of interest during the moratorium period   or   whether   there   shall   be   sector­wise   relief   packages and/or   RBI   should   have   issued   directions   which   are   sector specific   and   addressing   such   sector   specific   issues   and/or whether   the   moratorium   period   should   be   extended   beyond 31.08.2020   or   the   last   date   for   invocation   of   the   resolution mechanism,   namely,   31.12.2020   provided   in   the   6.8.2020 circular should be extended are all in the realm of the policy decisions.   Not only that, if such reliefs are granted, it would seriously   affect   the   banking   sectors   and   it   would   have   far reaching financial implications on the economy of the country. 23. Now so far as the relief sought of waiver of interest during the moratorium period is concerned, it is required to be noted that   the   bankers/lenders   have   to   pay   the   interest   to   the depositors and their liability to pay the interest on the deposits continue   even   during   the   moratorium   period.     There   shall  be administrative   expenses   also   required   to   be   borne   by   the bankers/lenders.   Continue payment of interest to depositors is not only one of the most essential banking activities but it shall be a huge responsibility owed by the banks to crores and crores of small depositors, pensioners etc. surviving on the interest from 124 their  deposits.    There   may   be  several  welfare   funds  schemes, category specific and sector specific which might be surviving and are implemented on the strength of the interest generated from their   deposits.     All   such   welfare   funds   would   depend   on   the income generated   from   their  deposits   for   the   survival  of   their members.   Therefore, to grant such a relief of total waiver of interest during the moratorium period would have a far­reaching financial implication in the economy of the country as well as the lenders/banks.   Therefore, when a conscious decision has been taken not to waive the interest during the moratorium period and a policy decision has been taken to give relief to the borrowers by deferring the payment of installments and so many other reliefs are   offered   by   the   RBI   and   thereafter   by   the   bankers independently   considering   the   Report   submitted   by   Kamath Committee consisting of experts, the interference of the court is not called for.  24. Now so far as the submission on behalf of the petitioners that   the   RBI   should   have   issued   directions   which   are   sector specific and addressing such sector specific issues is concerned, at   the   outset,   it   is   required   to   be   noted   that   as   such   the Committee   headed   by   Shri   K.V.   Kamath   had   gone   into   such 125 sector   specific   issues   and   gave   its   recommendations.     The recommendations   of   the   Kamath   Committee   have   been substantially accepted by the RBI in its circular dated 7.9.2020 which provides for separate threshold for 26 sectors including power,   real   estate   and   construction.     Even   otherwise,   it   is required   to   be   noted   that   every   sector   might   have   suffered differently and therefore it will not be possible to provide sector specific/sector­wise reliefs.  The petitioners cannot pray for sector specific relief by either waiver of interest or restructuring by way of present proceedings under Article 32 of the Constitution of India   and   the   question   of   such   financial   stress   management measures   requires   examination   and   consideration   of   several financial parameters and its impact. 25. Now so far as the submission on behalf of the petitioners that as per the notifications/circulars/reliefs offered by the RBI and/or Finance Department of the Union of India ultimately it is left to the bankers and it should not have been left to the bankers and   the   Government/RBI   must   intervene   and   provide   further reliefs is concerned, at the outset, it is required to be noted that as   such   the   bankers   are   commercial   entities   and   since   the customer   profile,   organizational   structure   and   spread   of   each 126 lending institution is widely different from others, each lending institution   is   best   placed   to   assess   the   requirements   of   its customers and therefore, the discretion was left to the lending institutions   concerned.   Any   borrowing   arrangement   is   a commercial contract between the lender and the borrower.  RBI and/or the Union of India can provide for broad guidelines while recommending to give the reliefs. 26. Now so far as the submission on behalf of the petitioners that   the   relief   packages   which   are   offered   by   the UOI/RBI/Bankers/Lenders   are   not   sufficient   and   some   better and/or   more   reliefs   should   be   offered   is   concerned,   it   is   not within the judicial scope of the courts to issue such directions. No   mandamus   can   be   issued   to   grant   some   more reliefs/packages.     As   observed   hereinabove,   the   court   cannot interfere with the economic policy decisions on the ground that either they are not sufficient or efficacious and/or some more reliefs should have been granted.   The Government might have their own priorities and the Government has to spend in various fields and in the present case like health, medicine, providing food etc.  Even as per the case of the Union of India and so stated in the counter filed on behalf of the Union of India and the RBI, 127 so many policies have been announced to mitigate the impact of Covid­19 pandemic, which are referred to hereinabove. As can be seen that as such the Central Government has already given various reliefs and by providing various reliefs, they have already expanded huge financial burden.  It is required to be noted   that   pandemic   has   caused   stress   to   large   and   small businesses   and   the   individuals   who   have   lost   jobs   and livelihoods.     By   and   large,   everybody   has   suffered   due   to lockdown due to Covid­19 pandemic.  Even the Government has also suffered due to non­recovery of GST.  From the counter filed on   behalf   of   the   Central   Government,   it   appears   that   the Government has announced and offered ‘Garib Kalyan Package’ and ‘Aatma Nirbhar Package’.  The ‘Garib Kalyan Package’ was for Rs.1.70   lakh   crores,   involving   free   food   grains,   pulses,   gas cylinders and cash payment to women, poor senior citizens and farmers.     It  is   reported   that   more   than   42   crore   poor   people received financial assistance of Rs. 65,454 crores under the said package.     The   Government   has   also   come   out   with   ‘Aatma Nirbhar   Package’   which   was   for   Rs.   20   lakh   crores,   involving support   to   MSMEs,   Non­Banking   Finance   Companies, agriculture,   sectors   allied   to   agriculture,   contractors,   street 128 vendors,   State   Governments,   relief   in   provident   fund contribution, extension of subsidy on home loans etc.  Therefore, it cannot be said that the Central Government and/or the RBI have   not   done   anything   and/or   have   not   offered   any   reliefs whatsoever.     While   offering   the   financial   relief   packages,   the financial constraint and/or financial burden on the government is also required to be considered and borne in mind, which can be considered by the experts and the government and the courts have not expertise to assess the financial burden.  From   the   various   steps/measures/policy decisions/packages declared by the Union of India/RBI and the bankers, it cannot be said that the UOI and/or the RBI have not at all addressed the issues related to the impact of Covid­19 on the borrowers.  As such, none of the petitioners have specifically challenged  the various  circulars/policy  decisions  taken  by the UOI/RBI.     From the submissions made by the learned counsel appearing for the respective parties, it appears that the borrowers want something more than the reliefs announced.  Merely, since the reliefs announced by the UOI/RBI ither may not be suiting the desires of the borrowers, the reliefs/policy decisions related to Covid­19 cannot be said to be arbitrary and/or violative of Article 129 14 of the Constitution of India.  It cannot be said that any of the fundamental   rights   guaranteed   under   the   Constitution   are infringed and/or violated.  Economic decisions are required to be taken keeping the larger economic scenario in mind.  27. Similarly,   the   relief   sought   that   the   moratorium   period should be extended and/or the last date for invocation of the resolution   mechanism   namely   31.12.2020   provided   under   the 06.08.2020 circular should be extended are all in the realm of policy   decisions.     Even   otherwise,   almost   five   months   were available to eligible borrowers when circular dated 6.8.2020 was notified providing for a separate resolution mechanism for Covid­ 19 related stressed assets.  Therefore, sufficient time was given to invoke the resolution mechanism.   Therefore, the petitioners shall not be entitled to any reliefs, namely,  (i)  total waiver of interest during the moratorium period;  (ii) to extend the period of moratorium; (iii) to   extend   the   period   for   invocation   of   the   resolution mechanism,   namely   31.12.2020   provided   under   the   6.8.2020 circular;  130 (iv) that there shall be sector­wise reliefs provided by the RBI; and (v) that the Central Government/RBI must provide for some further reliefs over and above the relief packages already offered which, as observed hereinabove, can be said to be in the realm of the   economic   policy   decisions   and   for   the   reasons   stated hereinabove and as observed hereinabove granting of any such reliefs   would   have   a   far­reaching   financial   implication   on   the economy of the country.  It appears, whatever best can be offered has been offered for the different fields and to the common people as   well   as   those   persons   who   are   affected   due   to   Covid­10 pandemic.   However, the relief/prayer not to charge the penal interest/interest   on   interest/compound   interest   during   the moratorium period is concerned, it stands on different footing which shall be dealt with hereinbelow. 28. Now so far as the submission of Shri Sibbal, learned Senior Advocate   that   there   is   no   “National   Plan”   drawn   up   for   the disaster management due to Covid­19 pandemic and that NDMA has not performed its duty under the DMA 2005 is concerned, to 131 appreciate the above, the relevant provisions of DMA 2005 are required to be referred to and considered. Section 3 of the Act provides for establishment of National Disaster Management Authority which shall consist of the Prime Minister of India, who shall be the Chairperson of the National Disaster   Management   Authority   and   other   members   not exceeding   nine,   to   be   nominated   by   the   Chairperson   of   the National   Authority.     Powers   and   functions   of   the   National Authority are provided under Section 6, which reads as under: “6. Powers and functions of National Authority.—(1) Subject to the provisions   of   this   Act,   the   National   Authority   shall   have   the responsibility for laying down the policies, plans and guidelines for disaster management for ensuring timely and effective response to disaster.  (2) Without prejudice to generality of the provisions contained in sub­section (1), the National Authority may —  (a) lay down policies on disaster management;  (b) approve the National Plan;  (c) approve plans prepared by the Ministries or Departments of the Government of India in accordance with the National Plan;  (d) lay down guidelines to be followed by the State Authorities in drawing up the State Plan;  (e) lay down guidelines to be followed by the different Ministries or Departments   of   the   Government   of   India   for   the   purpose   of integrating   the   measures   for   prevention   of   disaster   or   the mitigation of its effects in their development plans and projects;  (f) coordinate the enforcement and implementation of the policy and plan for disaster management;  (g) recommend provision of funds for the purpose of mitigation;  (h)   provide   such   support   to   other   countries   affected   by   major disasters as may be determined by the Central Government; (i) take such other measures for the prevention of disaster, or the mitigation, or preparedness and capacity building for dealing with the threatening disaster situation or disaster as it may consider necessary;  132 (j) lay down broad policies and guidelines for the functioning of the National Institute of Disaster Management.  (3) The Chairperson of the National Authority shall, in the case of emergency, have power to exercise all or any of the powers of the National Authority but exercise of such powers shall be subject to ex post facto ratification by the National Authority.” Section 7 provides for constitution of Advisory Committee by National Authority, which shall consist of experts in the field of disaster management and having practical experience of disaster management   at   the   national,   State   or   district   level   to   make recommendations on different aspects of disaster management. Then comes constitution of National Executive Committee as per section   8   of   the   Act,   to   assist  the   National   Authority   in   the performance   of   its   functions   under   the   Act.     The   National Executive   Committee   shall   consist   of   the   Secretary   to   the Government of India, in charge of the Ministry or Department of the   Central   Government   having   administrative   control   of   the disaster management, who shall be the Chairperson, ex officio, and the Secretaries to the Government of India in the Ministries or Departments having administrative control of the agriculture, atomic etc., as mentioned in Section 8(2)(b) of the Act.  As per Section 9 of the Act, the National Executive Committee, as and when   it   considers   necessary,   constitute   one   or   more   sub­ 133 committees   for   the   efficient   discharge   of   its   functions.     The powers and functions of the National Executive Committee are as per Section 10 of the Act, and more particularly (a) to act as the   coordinating   and   monitoring   body   for   disaster management…. (b) coordinate and monitor the implementation of the National policy; (c)   monitor the implementation of the National   Plan   and   the   plans   prepared   by   the   Ministries   or Departments   of   the   Government   of   India;   (d)   monitor   the implementation   of   the   guidelines   laid   down   by   the   National Authority for integrating of measures for prevention of disasters and   mitigation   by   the   Ministries   or   Departments   in   their development plans and projects; (e) monitor, coordinate and give directions regarding the mitigation and preparedness measures to be taken by different Ministries or Departments and agencies of the Government; (f)  lay down guidelines for, or give directions to, the concerned Ministries or Departments of the Government of   India,   the   State   Governments   and   the   State   Authorities regarding measures to be taken by them in response to any threatening disaster situation or disaster; (g) advise, assist and coordinate   the   activities   of   the   Ministries   or Departments….engaged in disaster management.  Section 11 of 134 the Act provides for preparation/drawing up a Plan called the “National Plan” for disaster management for the whole of the country.  The National Plan shall include­ (a) measures to be taken for the prevention of disasters, or the mitigation of their effects;  (b) measures to be taken for the integration of mitigation measures in the development plans;  (c) measures to be taken for preparedness and capacity building to effectively   respond   to   any   threatening   disaster   situations   or disaster;   (d)   roles   and   responsibilities   of   different   Ministries   or Departments of the Government of India in respect of measures specified in clauses (a), (b) and (c). Section 12 of the Act provides for issuance of guidelines by the National Authority for minimum standards of relief.  Section 13 of the Act provides for relief in repayment of loan etc., which shall be dealt with hereinbelow at an appropriate stage.  Section 14   of   the   Act   provides   for   establishment   of   State   Disaster Management   Authority.     Similar   provisions   like   National Disaster Management Authority are made with respect to State Disaster Management Authority.   Section 33 provides for State Disaster Management Plan. Similar provisions are made with respect   to   District   Disaster   Management   Authority   and   the District Plan.  Section 35 of the Act provides for measures to be taken   by   the   Central   Government   for   disaster   management. Section 35 reads as under: 135 “35.  Central  Government   to  take   measures.—(1)  Subject   to  the provisions of this Act, the Central Government shall take all such measures as it deems necessary or expedient for the purpose of disaster management.  (2) In particular  and  without prejudice  to  the  generality  of  the provisions   of   sub­section   (1),   the   measures   which   the   Central Government may take under that sub­section include measures with respect to all or any of the following matters, namely:—  (a) coordination of actions of the Ministries or Departments of the Government of India, State Governments, National Authority, State Authorities, governmental and non­governmental organizations in relation to disaster management;  (b) ensure the integration of measures for prevention of disasters and mitigation by Ministries or Departments of the Government of India into their development plans and projects;  (c) ensure appropriate allocation of funds for prevention of disaster, mitigation, capacity­building and preparedness by the Ministries or Departments of the Government of India;  (d) ensure that the Ministries or Departments of the Government of India take necessary measures for preparedness to promptly and effectively respond to any threatening disaster situation or disaster; (e) cooperation and assistance to State Governments, as requested by them or otherwise deemed appropriate by it;  (f) deployment of naval, military and air forces, other armed forces of the Union or any other civilian personnel as may be required for the purposes of this Act;  (g)  coordination with the United  Nations agencies,  international organizations   and   governments   of   foreign   countries   for   the purposes of this Act;  (h) establish institutions for research, training, and developmental programmes in the field of disaster management;  (i) such other matters as it deems necessary or expedient for the purpose of securing effective implementation of the provisions of this Act. (3) The Central Government may extend such support to other countries affected by major disaster as it may deem appropriate.” Section   36   of   the   Act   provides   for   responsibilities   of   the Ministries   or   Departments   of   the   Government   of   India,   which reads as under: “36. Responsibilities of Ministries or Departments of Government of India.—It   shall   be   the   responsibility   of   every   Ministry   or Department of the Government of India to—  136 (a) take measures necessary for prevention of disasters, mitigation, preparedness   and   capacity­building   in   accordance   with   the guidelines laid down by the National Authority;  (b) integrate into its development plans and projects, the measures for prevention or mitigation of disasters in accordance with the guidelines laid down by the National Authority;  (c) respond effectively and promptly to any threatening disaster situation   or   disaster   in   accordance   with   the   guidelines   of   the National   Authority   or   the   directions   of   the   National   Executive Committee in this behalf;   (d) review the enactments administered by it, its policies, rules and regulations, with a view to incorporate therein the provisions necessary for prevention of disasters, mitigation or preparedness;   (e)   allocate   funds   for   measures   for   prevention   of   disaster, mitigation, capacity­building and preparedness;   (f)   provide   assistance   to   the   National   Authority   and   State Governments for—  (i)   drawing   up   mitigation,   preparedness   and   response   plans, capacity­building, data collection and identification and training of personnel in relation to disaster management;  (ii) carrying out rescue and relief operations in the affected area; (iii)assessing the damage from any disaster;  (iv) carrying out rehabilitation and reconstruction;   (g)   make   available   its   resources   to   the   National   Executive Committee or a State Executive Committee for the purposes of responding   promptly   and   effectively   to  any   threatening   disaster situation or disaster, including measures for—  (i)   providing   emergency   communication   in   a   vulnerable   or affected area;  (ii)   transporting   personnel   and   relief   goods   to   and   from   the affected area;  (iii)providing   evacuation,   rescue,   temporary   shelter   or   other immediate relief;  (iv) setting up temporary bridges, jetties and landing places;  (v) providing, drinking  water, essential provisions, healthcare, and services in an affected area;  (h)   take   such   other   actions   as   it   may   consider   necessary   for disaster management.” Section 37 of the Act provides for preparation of the Disaster Management Plans of Ministries or Departments of Government of India. Section 38 provides for measures to be taken by the State Government. 137 29. From the aforesaid, it can be said that the DMA 2005 is a complete code in itself and different functions and responsibilities by different  authorities  to  be  performed at  different  levels  are provided.   As per Sections 35 and 36 of the Act, it shall be the responsibility   of   the   Ministry   or   the   Department   of   the Government of India to take measures necessary for prevention of disaster,   mitigation,   preparedness   and   capacity­building   which shall include to allocate funds for measures for preparation of disaster, mitigation, capacity­building and preparedness. Therefore, on conjoint reading of the relevant provisions of the DMA 2005, which are referred to hereinabove, it cannot be said that the functions of all the Ministries are to be discharged by the NDMA which should take decision qua the area in each Ministry.     It   also   cannot   be   said   that   the   functions   of   the Ministries will stand transferred to the NDMA and will have to be discharged   by   the   NDMA   either   directly   or   indirectly   for   the purpose of disaster management.   Various Ministries under the Central Government have to take various relief measures within their respective spheres for remedying the effects of the disaster. From the pleadings, it is borne out that in fact there is already a National Disaster Management Plan prepared even prior to the 138 Covid­19 pandemic.  Under the National Plan, there is a National Disaster   Management   Institutional   Mechanism,   which   is reproduced   hereinabove.     The   said   plan   also   envisages   nodal ministries for management of different disasters.  For example, if the   disaster   is   due   to   drought,   Ministry   of   Agriculture   and Farmers Welfare would be the nodal agency; if the disaster is due to floods, Ministry of Housing and Urban Affairs would be the nodal   agency   and   if   the   disaster   is   due   to   “biological emergencies”, the Ministry of Health and Welfare would be the nodal agency.   The disaster due to Covid­19 pandemic would fall under   disaster   due   to   “biological   emergencies”.     However,   it appears that Covid­19 pandemic disaster is of such a nature that it   could   not   be   confined   to   one   nodal   ministry   and   whatever measures/reliefs are required to be taken/given are provided by every Ministry in each and every day needed.  Therefore, various reliefs/packages   are   provided   by   different   Ministries,   such   as, Ministry of Railways, Ministry of Finance, Ministry of Health and Family Welfare etc.  It also appears that even considering the very nature   of   the   pandemic   which   would   have   PAN­India   impact, empowered   groups   were   constituted   by   the   National   Disaster Management   Authority.     Therefore,   when   there   is   already   in 139 existence a National Plan, which might have been prepared even prior to the Covid­19 pandemic, it cannot be said that there is no National Plan by the NDMA at all.  National Plan would be for a long term and even with respect to disaster to happen in future. For   every   disaster,   there   shall   not   be   a   new   National   Plan. National Plan would be comprehensive in nature which is already there  in   existence.     Therefore,   the   submission   of   Shri   Sibbal, learned Senior Advocate that there is no National Plan at all and therefore   the   NDMA  has   failed   to  perform   its   duty   cannot  be accepted. 30. Now   so   far   as   the   submission   on   behalf   of   the   learned counsel for the respective petitioners that the NDMA has failed to perform its duty cast under Section 13 of the Act is concerned, at the outset, it is required to be noted that the word used in Section 13 is “ may”  and not  “shall” . As per the settled proposition of law, while interpreting a particular provision, the language used is to be read as it is.  On a fair reading of Section 13, it appears that the legislature has deliberately used the word “ may ”.  This “ may ” is used after considering the object and purpose of the Act as a whole as well as the role to be placed by the Central Government through   different   ministries,   role   to   be   placed   by   the   State 140 Government, role to be played by the District Authority at the district level.  In the present case, the Ministry of Finance and the RBI   have   already   come   out   with   different   packages/reliefs   in repayment of loans or grant of fresh loans to the persons affected by disaster.   30.1 Even the Central Government through Ministry of Finance and the RBI has taken various steps for granting reliefs to the disaster   affected   borrowers.   The   Central   Government   has announced the ‘Garib Kalyan Package’ for Rs.2.00 lakh crores, involving free food grains, pulses, gas cylinders and cash payment to   women,   poor   senior   citizens   and   farmers;   ‘Aatma   Nirbhar Package’ for various sectors like power sector, real estate sector, MSME   sector.     The   Central   Government   also   promulgated Emergency Credit­Linked Guarantee Scheme of Rs. 3 lakh crores providing additional credit at lower rate of interest, with 100% Government Guarantee and no fresh collateral.  The scheme has been   extended   with   higher   financial   limits   to   27   Covid­19 impacted sectors including restaurant and hotel sectors.   The Central   Government   has   also   granted   Rs.   20,000   crores Subordinate Debt with partial credit guarantee for over two lakhs stressed   MSME   units   including   from   hospitality   sector.     The 141 Central Government has also granted Rs. 50,000 crores Fund of Funds   for   providing   growth   equity   to   MSMEs.     The   Central Government has also come out with a new definition of MSMEs for   improving   turnover   caps   for   better   access   of schemes/benefits.  There are other reliefs also announced by the Central Government.  The Central Government has also declared the moratorium from March to August, 2020.   The proceedings under the IBC are also suspended during the moratorium period. 30.2 As per the provisions of the DMA 2005, the responsibilities and functions of the discharge of functions by the NDMA would be confined to Section 6 of the Act.  However, on­ground disaster management and relief measures shall have to be undertaken by the   Central   Ministries   and   the   State   Government   Ministries depending upon the need of the disaster and only in a case where the   NDMA   is   satisfied   that   the   reliefs   which   are   already announced are not sufficient and/or no steps are taken at all with respect to the reliefs mentioned in Section 13, the National Authority may recommend the reliefs in repayment of loans etc. Therefore, it cannot be said that the National Authority has failed to perform its duty as cast under Section 13 of the Act. 142 30.3 At this stage, it is required to be noted and so stated in the affidavit dated 31.08.2020 filed on behalf of the Union of India that NDMA also took cognizance of the issues being dealt with by the RBI and sent its “views and recommendations” given by O.M. dated   28.08.2020   and   the   NDMA   also   opined   that   RBI   may consider   granting   further   reliefs,   as   deemed   appropriate,   after considering and taking into account the financial relief packages issued   by   the   Ministry   of   Finance,   as   well   as,   other   relief measures   that   have   already   been   issued/declared   by   the   RBI itself.     The   “views   and   recommendations”   of   the   NDMA   were communicated   to   the   RBI   vide   letter   dated   31.08.2020. Therefore, it cannot be said that the NDMA has not stepped into at all.  It is to be noted that even as per Section 13 of the Act, the National Authority “ may ” and “ recommend ” relief in repayment of loans or grant of fresh loans to the persons affected by disaster on such concessional terms as may be appropriate. Thereafter, as per the “views and recommendations” of the NDMA, RBI has come out with Resolution framework and on the basis of the same the lenders/bankers   after   getting   the   approval   of   their   Board   of Directors have come out with the policies.  Thus, from the above, it cannot be said that NDMA has failed to perform its duty cast 143 under Section 13 of the Act.  From the above, it also cannot be said that there is no National Plan in existence at all.    31. Now  so  far   as   the   charging   of  penal  interest/interest  on interest/compound   interest   during   the   moratorium   period   is concerned, it stands absolutely on a different footing.   At this stage,   it   is   required   to   be   noted   that   in   fact   the   Central Government has come out with a policy decision subsequently by which it is decided not to charge the interest on interest on the loans up to Rs. 2 crores.  However, such relief is restricted to the following categories: (i) MSME loans up to Rs.2 crore (ii) Education loans up to Rs.2 crore (iii) Housing loans up to Rs.2 crore (iv) Consumer durable loans up to Rs.2 crore (v) Credit card dues up to Rs.2 crore (vi) Auto loans up to Rs.2 crore (vii) Personal loans to professionals up to Rs. 2 crore (viii) Consumption loans up to Rs.2 crore There   is   no   justification   shown   to   restrict   the   relief   of   not charging interest on interest with respect to the loans up to Rs. 2 crores only and that too restricted to the aforesaid categories. What   are   the   basis   to   restrict   it   to   Rs.   2   crores   are   not 144 forthcoming.   Therefore, as such, there is no rational to restrict such relief with respect to loans up to Rs. 2 crores only.   Even otherwise,   it   is   required   to   be   noted   that   the   scheme   dated 23.10.2020   granting   relief/benefit   of   waiver   of   compound interest/interest   on   interest   contains   eligibility   criteria   and   it provides that any borrower whose aggregate of all facilities with lending institution is more than Rs. 2 crores (sanctioned limit or outstanding amount) will not be eligible for ex­gratia payment under the said scheme.   Therefore, if the total exposure of the loan at the grant of the sanction is more than Rs. 2 crores, the borrower will be ineligible irrespective of the actual outstanding. For Example, if the borrower has been sanctioned a loan of Rs. 5 crores and has availed of the same, even though he might have repaid substantially bringing down the principal amount of less than Rs. 2 crores as on 29.02.2020, but because of the sanction of the loan amount of more than Rs. 2 crores, he will be ineligible. It also further provides that the outstanding amount should not be exceeded to Rs. 2 crores and for this purpose aggregate of all facilities with the lending institution will be reckoned.   Therefore, if a borrower, for example, MSME Category has availed and has outstanding of business loan of Rs. 1.99 crores and also has dues 145 of its credit card of Rs. 1.10 lakhs, thereby making the aggregate to Rs. 2.10 crores, it stands ineligible.   Therefore, the aforesaid conditions would be arbitrary and discriminatory. 31.1 Even otherwise, it is required to be noted that compound interest/interest   on   interest   shall   be   chargeable   on deliberate/willful default by the borrower to pay the installments due and payable.  Therefore, it is in the nature of a penal interest. By notification dated 27.03.2020, the Government has provided the deferment of the installments due and payable during the moratorium period.  Once the payment of installment is deferred as per circular dated 27.03.2020, non­payment of the installment during the moratorium period cannot be said to be willful and therefore   there   is   no   justification   to   charge   the   interest   on interest/compound interest/penal interest for the period during the moratorium.  Therefore, we are of the opinion that there shall not   be   any   charge   of   interest   on   interest/compound interest/penal interest for the period during the moratorium from any of the borrowers and whatever the amount is recovered by way of interest on interest/compound interest/penal interest for the period during the moratorium, the same shall be refunded 146 and to be adjusted/given credit in the next instalment of the loan account. 32. In view of the above and for the reasons stated hereinabove, the present petitions seeking reliefs, namely, (i) total waiver of interest during the moratorium period; (ii)to extend the period of moratorium;   (iii)   to   extend   the   period   for   invocation   of   the resolution mechanism, namely 31.12.2020 provided under the 6.8.2020   circular;   (iv)that   there   shall   be   sector­wise   reliefs provided by the RBI; and (v)that the Central Government/RBI must provide for some further reliefs over and above the relief packages already offered stand dismissed. Connected IAs stand disposed of. However, it is directed that there shall not be any charge of interest   on   interest/compound   interest/penal   interest   for   the period during the moratorium and any amount already recovered under   the   same   head,   namely,   interest   on   interest/penal interest/compound interest shall be refunded to the concerned borrowers and to be given credit/adjusted in the next instalment of the loan account.  All these petitions are partly allowed to the aforesaid extent only and as observed for the reliefs, the petitions 147 are dismissed.   Interim relief granted earlier not to declare the accounts   of   respective   borrowers   as   NPA   stands   vacated. However, there shall be no order as to costs. Writ Petition (Civil) No. 955 of 2020 Writ Petition (Civil) No. 955 of 2020 stands disposed of in terms  of   the   statement   made   by   Shri   V.   Giri,   learned   Senior Advocate   appearing   on   behalf   of   the   RBI   that   Circular   dated 27.03.2020   shall   be   applicable   to   all   banks,   non­banking financial   companies,   housing   finance   companies   and   other financial institutions compulsorily and mandatorily. …………………………………J. [ASHOK BHUSHAN] ………………………………...J. [R. SUBHASH REDDY] NEW DELHI; …………………………………J. MARCH 23, 2021. [M.R. SHAH] 148