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The Maharashtra Chambers of housing Industry filed a writ petition under Article 32 of the Indian Constitution. The RBI’s decision to levy an interest during the moratorium period of the six months was challenged. The moratorium period was announced in the crisis of the COVID-19. The MCHI is a real estate developer based in Thane. Thane was worst affected by the COVID-19. Earlier, SC issued a notice on a plea, which challenged the levy of interest by the financial institutions in the moratorium period. The moratorium period was announced on March 27. On May 22, it which was further extended by 3 months.
The plea challenged both the circulars of March 27 and May 22. The circulars allowed an interest on the loans to be charged during the six-month moratorium period. This step of RBI would result in winding up of many real-estate companies. These companies would incur a great loss and burden to pay interest, amidst the pandemic. The action of imposing an interest during the moratorium period is completely devastating and wrong. The whole purpose of introducing the moratorium period itself gets defeated by taking an interest from the companies.
The Articles 14, 19(1)(g) and 21 have been taken into consideration. The RBI’s decision is arbitrary and unjustified. The fundamental right to carry out business and trade has been attacked. This automatically results in the violation of the Right to life and livelihood. The benefit of the Moratorium period has been neutralised. The interest charged shall be added to the EMIs at the end of the three months. It will raise the monthly bills. The Companies would have to pay an additional interest in one go, or adjust it in the EMIs. The additional interest burden for three months shall be equally divided in all future EMIs. The monthly bill for customers shall increase.
The plea stated that this was a violation of the principles of natural justice. The Government has ceased the working of the companies and then charged an interest on the loan in the crisis. The petition is likely to be listed in the next week.
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