Interest on loans not a matter of law–ECONOMIC TIMES

Clipped from: https://economictimes.indiatimes.com/

The Supreme Court is a key pillar of democracy, ensuring that laws and the Constitution are followed and not subverted. It has a huge backlog of cases, showing it already has too much on its plate. It should not enter areas best left to other arms of the State. One must wonder why the court has admitted a petition pleading that interest should not be charged on bank loans already benefiting from a recent Reserve Bank of India (RBI) moratorium —it is not a subject that invites extraordinary intervention under Article 142.

The petitioner argues that postponing interest payments will not solve the problem of borrowers hit by the economic crisis since they will face large accumulated interest when the moratorium ends. RBI says interest cannot be waived because the financial system depends on debts being honoured. If borrowers from banks do not pay interest, how will the banks themselves pay interest to depositors? Whatever the merits of these arguments, why should the courts be concerned when no law is being violated? India faces the greatest recession since the Great Depression of the 1930s. The government has provided a Rs 20 lakh crore package covering a wide range of people and institutions hit by the crisis.

Whether this is enough is a matter of political and economic judgement of the government and RBI. The Supreme Court must not be the arbiter of the economic or political policy unless some legal or constitutional violation has occurred.

Constitutional purists argue that the courts must stick to their turf, and excessive judicial activism has been criticised by learned legal experts. Now, if the executive or other arms of government are guilty of gross negligence or violation of fundamental rights, judicial activism to stem the rot is justified. But such activism must be used sparingly, to check gross violations. There is absolutely no reason for the courts to intervene in matters like loan moratoriums.

Opinions can differ, but these are economic and political issues, not judicial ones. The court needs to focus on clearing the backlog of cases it alone can resolve.

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