Country’s economy is booming after second COVID-19 wave, that’s what we have read: Supreme Court

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“Economy is booming in the country after the second COVID wave”, said the Supreme Court on Friday as it refused to entertain a batch of pleas seeking contempt action against the Governor of Reserve Bank of India and senior officials of other banks for declaring the loan accounts as Non-Performing Assets (NPA).

The top court said that contempt is between court and contemnor and it is not inclined to initiate contempt action against senior officials of banks.

“In our considered view, we are not inclined to exercise our contempt jurisdiction, since it is not in the interest of justice,” said a bench of Justices DY Chandrachud, Vikram Nath, and Hima Kohli.

The bench said that petitioners are at liberty to seek remedy under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act), 2002.

Advocate Vishal Tiwari, appearing in a batch of petitions said that despite the top court’s order of September 3, 2020, that the accounts which were not declared NPA till August 31, 2020, shall not be declared NPA till further orders, banks unilaterally declared the accounts as NPA under the SARFAESI Act.

At the outset, the bench said, “Economy is booming in the country after the second COVID wave. That’s what we have read in newspapers. Since the second wave, when these orders were passed, a lot of development has taken place. We are not going to haul up the RBI for this. Contempt is between the court and the contemnor”.

Tiwari said that RBI has itself issued a notice in March, last year after the nationwide lockdown granting moratorium from paying the installment for a loan.

Several traders have moved the top court against a declaration of their account as NPA by the banks and seeking contempt action against the senior officials of the banks.

One of the pleas filed by Ajay Hotel and Restaurants through its proprietor has contended that it was availing various credit facilities by way of financial assistance against various assets creating a security interest in favor of the State Bank of India and timely payment of the installments of the loan was made and its Account was not turned NPA till August 31, 2020.

“That on May 18, 2021, the State Bank of India (R-3) issued a demand notice under section 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 to the petitioner demanding the Amount…as on May 18, 2021, inclusive of interest”, the plea said.

It added that the bank had unilaterally classified the petitioner as NPA on November 30, 2020, under provisions of the SARFAESI Act and no show cause notice was given. The plea said that despite the express order of the top court on September 3, 2020, the banks continued to proceed under provisions of the SARFAESI Act.

“The respondents (bank) deliberately flouted the order dated September 3, 2020, which has caused big damage and loss to the petitioner. The stay order was passed in the pandemic COVID19 in the benefit of stressed borrowers so that they shall not suffer in present financial crises during the pandemic,” the plea said.

The plea sought the issuance of contempt notice to the alleged contemnors for having willfully violated the order/directions dated September 3, 2020, and action against contemnors for having committed contempt of this Court.

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