SMALL SCALE INDUSTRIAL MANUFACTURES ASSOCIATION (REGD.) v. UNION OF INDIA AND OTHERS

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A (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, capacity-building and preparedness by the Ministries B 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; C (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; D (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 G of India.—It shall be the responsibility of every Ministry or Department of the Government of India to— (a) take measures necessary for prevention of disasters, mitigation, preparedness and capacity-building in accordance with the guidelines laid down by the National Authority; H

SMALL SCALE INDUSTRIAL MANUFACTURES ASSOCIATION 89 (REGD.) v. UNION OF INDIA [M. R. SHAH, J.]

(b) integrate into its development plans and projects, the measures A 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 B 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; C (e) allocate funds for measures for prevention of disaster, mitigation, capacity-building and preparedness; (f) provide assistance to the National Authority and State Governments for— (i) drawing up mitigation, preparedness and response plans, D capacity-building, 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; E (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; G (iii) providing evacuation, rescue, temporary shelter or other immediate relief; (iv) setting up temporary bridges, jetties and landing places;

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A (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 B Management Plans of Ministries or Departments of Government of India. Section 38 provides for measures to be taken by the State Government.

29Copy pinpoint29. 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 C 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 capacity-building which shall include to allocate funds for measures for preparation of disaster, mitigation, capacity-building and preparedness. D 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 E 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 Covid-19 pandemic. Under F 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 Covid-19 pandemic would fall under disaster due to “biological emergencies”. However, it appears that Covid-19 pandemic disaster is of such a nature that it could not be confined to one nodal ministry and H

SMALL SCALE INDUSTRIAL MANUFACTURES ASSOCIATION 91 (REGD.) v. UNION OF INDIA [M. R. SHAH, J.]

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 PAN-India impact, empowered groups were constituted by the National Disaster Management Authority. Therefore, when there is already in existence a National Plan, which might have been prepared even prior to the Covid-19 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 C 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.

30Copy pinpoint30. 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 Government, role to be played by the District Authority at the district level. In the present case, the Ministry of Finance and the RBI F 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 G 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 Credit-Linked Guarantee Scheme of Rs. 3 lakh H

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A 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 Covid-19 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. B The 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, on-ground 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, E 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. 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 F 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, G 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 H

SMALL SCALE INDUSTRIAL MANUFACTURES ASSOCIATION 93 (REGD.) v. UNION OF INDIA [M. R. SHAH, J.]

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 under Section 13 of the Act. From the above, it also cannot be said that there is no National Plan in existence at all.

31Copy pinpoint31. 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 D (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 E (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 F 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 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/ G 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 ex-gratia payment under the said scheme. Therefore, if the total exposure of the loan at the grant of the sanction is more than Rs. 2 H

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A 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 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, non-payment 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/ E 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 F for the period during the moratorium, the same shall be refunded and to be adjusted/given credit in the next instalment of the loan account.

32Copy pinpoint32. 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; G (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 sector-wise 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. H

SMALL SCALE INDUSTRIAL MANUFACTURES ASSOCIATION 95 (REGD.) v. UNION OF INDIA [M. R. SHAH, J.]

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 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 C 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, non-banking financial companies, housing finance companies and other financial institutions compulsorily and mandatorily. D

Divya Pandey Writ Petitions partly allowed.