HC issues notices on petition seeking interest waiver on term loans
Srinagar: The J&K High Court on Thursday issued notices to civil and financial institution authorities for waiver of interest on term loans availed by entrepreneurs in Jammu, Kashmir and Ladakh during periods of moratorium from 2014 to 2020.
Hearing a petition by two entrepreneurial bodies, a division bench of the court directed issuing notices to the concerned authorities with compliances returnable by 25th of this month. The petitioners prayed waiver of the interest on their loans for the unfavorable circumstances of 2014, 2016, 2019 and 2020.
The petitioners asked the court to term the official notifications dated 27.03.2020, Circular No.40-619 dated January 03, 2020, circular No.62-528 dated December 15, 2016 and circular bearing No.55-398 dated October 24, 2014, as ultra vires the Constitution of India.
These notifications directed charging of interest of loan amounts during the periods of moratorium.
The petitioners said that they are also unable to pay the installments of their loans adding “moratorium was granted by the banks on account of special rehabilitation and revival package for the persons affected by natural calamity – floods in 2014 in the erstwhile State of Jammu and Kashmir.”
They pleaded that the relief sought for is for the benefit of the business persons who have suffered on account of natural calamity of 2014, political disturbances of 2016 and lockdowns of 2019 and that of the present COVID-19 pandemic.
“We are not in a position to strictly comply with the conditions of the term loan agreements,” they said.
The petition submitted that upon the announcement of the national lockdown, a notification was issued by the authorities thereby permitting all term loans to be granted a moratorium of three months on payment of all installments falling due between 1st of March, 2020 and 31st of March, 2020.
It stated that the matter was taken note of and a special rehabilitation and revival package for the persons affected by the natural calamity in the erstwhile State of Jammu and Kashmir was notified by the Jammu and Kashmir Bank Limited.
“The rehabilitation packages were also notified by the bank in 2016 vide circular No.62-528 dated 15 December, 2016 and that of circular No.40-619 dated 3rd of January, 2020,” it said.
Appreciating the grant of moratorium, the petitioners said that continuation of interest component on the term loans during the moratorium periods defeats the very purpose of the scheme by the banks.