Various industrial lobbies on Wednesday urged the Supreme Court to direct the Centre and the RBI to extend the moratorium on loans till March 31, 2021; continue the stay on declaring default loans as NPA; besides extending the waiver of compound interest on all sectors instead of just those in the Rs 2 crore bracket because of the unprecedented pandemic.

The submissions were made during the inconclusive arguments on a batch of applications filed by different sectors complaining that the decision of the government to waive compound interest during the six-month moratorium period which ended on August 31 for only those in the Rs 2 crore bracket smacked of discrimination prohibited under Article 14 of the Constitution.

This was because other sectors such as real estate, power, educational institutions, shopping malls were also severely affected by the Covid-19 crisis.

Senior advocate Ravindra Srivastava arguing for some industrial groups pleaded that the government should adopt the role of a parens patriae —government acting as a guardian — to help all the other sectors affected by the crisis.

The three-judge bench of Justices Ashok Bhushan, R. Subhash Reddy and M.R. Shah pointed out that the government has to arrange its affairs only on the basis of its economic capacity.

However, the senior counsel submitted that the decision to extend the interest waiver only to those within the Rs 2 crore ceiling was discriminatory and violated Article 14, which mandates prohibition of discrimination between two groups of citizens.

Senior advocate Kapil Sibal appearing for real estate body Credai said the government has not done anything for most of the sectors.

“The stand of the government of India is very clear. That they are not going to do anything… For the Union of India, the disaster has changed nothing,” Sibal said.

Arguing that banks should not be allowed to declare default accounts as NPAs, Sibal said “eligible borrowers’ accounts should continue to be classified as standard”.

On September 3, the court had directed that “till further orders” banks and financial institutions shall not declare any account as NPA (non-performing assets), if the same had not been done prior to August 31, 2020, the day the six months moratorium announced by the RBI on all outstanding loans in the country ended.

The arguments will continue on Thursday when the consortium of banks, RBI and Centre will make their submissions.

The RBI had taken the decision in view of the hardships being faced by general public and various sectors due to the present pandemic.

The senior counsel rued that certain sectors like IT, pharma, mobile phones, digital platforms are prospering but not others.

“They (Govt) say 70 per cent have not asked for moratorium & 30% has - this 30% is distressed. How has the Govt. balanced the two? Complete violation of Article14, Sibal argued.

Another advocate appearing for an individual real estate developer argued that his fundamental right to carry any profession guaranteed under Article 19(1)(g) stood suspended during lockdown as such it was the government’s duty to provide succor to all sectors affected by the pandemic.

An advocate appearing for some educational institutions said they do not come under MSME's who have been extended the reliefs.

“The specific needs of educational institutions have not been taken into account by any circulars of RBI. All Engineering colleges run on non-profit basis”, the counsel said to which Justice M.R.Shah quipped “Who said so?”

Advocate Abhimanyu Bhandari for Shopping Centers Association of India (SCAI) said unlike other manufacturing sectors, the shopping malls in the country were completely shut down. People were not allowed to visit the malls as such it was one of the worst sector affected due to pandemic.

He said even today footfall in malls is now below 10 per cent.

The arguments will continue on Thursday when the consortium of banks, RBI and Centre will make their submissions. Ends