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

- **Citation:** [2021] 15 S.C.R. 1
- **Court:** Supreme Court of India
- **Decided:** 2021-03-23
- **Bench:** Ashok Bhushan, R. Subhash Reddy, M.R. Shah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/small-scale-industrial-manufactures-association-regd-v-union-of-india-and-others-35376
- **Pages:** 95

## Headnote

Judicial review - Economic policy matters - Covid-19
pandemic - Financial strain faced by industrial sector - Policy
decisions by RBI and/or Government w.r.t relief/regulatory packages
- Judicial review of - Limited scope - Held: Economic and fiscal
regulatory measures are a field where Judges should encroach upon
very warily as Judges are not experts in these matters - Wisdom
and advisability of economic policy are ordinarily not amenable to
judicial review - Function of the court is not to advise in matters
relating to financial and economic policies for which bodies like
RBI are fully competent - Court can only strike down some or entire
directions issued by the RBI in case it is satisfied that the directions
were wholly unreasonable or in violative of any provisions of the
Constitution/any statute - Matters of economic policy ought to be
left to the government - No writ of mandamus can be issued directing
the Government/RBI to announce/declare particular relief packages/
policy or to grant some more reliefs/packages - Merely because
some class/sector may not be agreeable/satisfied with such packages/
policy decisions, the courts should not ordinarily interfere with the
policy decisions, unless it could be faulted on the ground of mala
fide, arbitrariness, unfairness etc. - Present petitions seeking reliefs
w.r.t total waiver of interest during the moratorium period; sector-
-wise relief packages; extension of moratorium period beyond
31.08.20 or extension of the last date for invocation of the resolution
mechanism provided in the 6.8.2020 circular, are all in the realm of
the policy decisions - If such reliefs are granted, it would seriously
affect the banking sectors and have far reaching financial
implications on the economy of the country - However, there shall
be no charge of interest on interest/compound interest/penal interest
for the period during the moratorium and any amount already
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recovered under thereunder be refunded to the concerned borrowers
and be given credit/adjusted in the next instalment of the loan account
- Constitution of India - Articles 14, 32, 226, 227 - Disaster
Management Act, 2005.
Disaster Management Act, 2005 - ss.3,6-14, 23, 35-37 -
Natural disasters; Pandemic - Plea that there is no National Plan
at all therefore, the National Disaster Management Authority failed
to perform its duty - Held: Cannot be accepted - There is already a
National Disaster Management Plan prepared even prior to the
Covid-19 pandemic - Under the National Plan, there is a National
Disaster Management Institutional Mechanism - The said plan also
envisages nodal ministries for management of different disasters -
Disaster due to Covid-19 pandemic would fall under disaster due
to "biological emergencies" - Considering the very nature of the
pandemic which would have PAN--India impact, empowered groups
were constituted by the NDMA - 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 - For every disaster, there shall
not be a new National Plan.
Words & Phrases - "may" - Disaster Management Act, 2005
- s.13 -Held: Word used in s.13 is "may" and not "shall" - While
interpreting a particular provision, the language used is to be read
as it is - The legislature has deliberately used the word "may" --
"may" is used after considering the object and purpose of the Act
as a whole and the role to be played by the Central Government
through different ministries, by the State Government, by the District
Authority at the district level - In the present case, the Ministry of
Finance and the RBI have already come out with different packages/
reliefs in repayment of loans or grant of fresh loans to the persons
affected by disaster - Interpretation of Statutes.
Partly allowing the writ petitions, the Court
HELD: 1.1 In catena of decision

## Text

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[2021] 15 S.C.R. 1
1
 SMALL SCALE INDUSTRIAL MANUFACTURES
ASSOCIATION (REGD.)
v.
UNION OF INDIA AND OTHERS
(Writ Petition (C) No. 476 of 2020)
MARCH 23, 2021
[ASHOK BHUSHAN, R. SUBHASH REDDY AND
M.R. SHAH, JJ.]
Judicial review - Economic policy matters - Covid-19
pandemic - Financial strain faced by industrial sector - Policy
decisions by RBI and/or Government w.r.t relief/regulatory packages
- Judicial review of - Limited scope - Held: Economic and fiscal
regulatory measures are a field where Judges should encroach upon
very warily as Judges are not experts in these matters - Wisdom
and advisability of economic policy are ordinarily not amenable to
judicial review - Function of the court is not to advise in matters
relating to financial and economic policies for which bodies like
RBI are fully competent - Court can only strike down some or entire
directions issued by the RBI in case it is satisfied that the directions
were wholly unreasonable or in violative of any provisions of the
Constitution/any statute - Matters of economic policy ought to be
left to the government - No writ of mandamus can be issued directing
the Government/RBI to announce/declare particular relief packages/
policy or to grant some more reliefs/packages - Merely because
some class/sector may not be agreeable/satisfied with such packages/
policy decisions, the courts should not ordinarily interfere with the
policy decisions, unless it could be faulted on the ground of mala
fide, arbitrariness, unfairness etc. - Present petitions seeking reliefs
w.r.t total waiver of interest during the moratorium period; sector-
-wise relief packages; extension of moratorium period beyond
31.08.20 or extension of the last date for invocation of the resolution
mechanism provided in the 6.8.2020 circular, are all in the realm of
the policy decisions - If such reliefs are granted, it would seriously
affect the banking sectors and have far reaching financial
implications on the economy of the country - However, there shall
be no charge of interest on interest/compound interest/penal interest
for the period during the moratorium and any amount already
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recovered under thereunder be refunded to the concerned borrowers
and be given credit/adjusted in the next instalment of the loan account
- Constitution of India - Articles 14, 32, 226, 227 - Disaster
Management Act, 2005.
Disaster Management Act, 2005 - ss.3,6-14, 23, 35-37 -
Natural disasters; Pandemic - Plea that there is no National Plan
at all therefore, the National Disaster Management Authority failed
to perform its duty - Held: Cannot be accepted - There is already a
National Disaster Management Plan prepared even prior to the
Covid-19 pandemic - Under the National Plan, there is a National
Disaster Management Institutional Mechanism - The said plan also
envisages nodal ministries for management of different disasters -
Disaster due to Covid-19 pandemic would fall under disaster due
to "biological emergencies" - Considering the very nature of the
pandemic which would have PAN--India impact, empowered groups
were constituted by the NDMA - 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 - For every disaster, there shall
not be a new National Plan.
Words & Phrases - "may" - Disaster Management Act, 2005
- s.13 -Held: Word used in s.13 is "may" and not "shall" - While
interpreting a particular provision, the language used is to be read
as it is - The legislature has deliberately used the word "may" --
"may" is used after considering the object and purpose of the Act
as a whole and the role to be played by the Central Government
through different ministries, by the State Government, by the District
Authority at the district level - In the present case, the Ministry of
Finance and the RBI have already come out with different packages/
reliefs in repayment of loans or grant of fresh loans to the persons
affected by disaster - Interpretation of Statutes.
Partly allowing the writ petitions, the Court
HELD: 1.1 In catena of decisions and time and again this
Court has considered the limited scope of judicial review in
economic policy matters. From various decisions of this Court,
this Court has consistently observed and held-The Court will
not debate academic matters or concern itself with intricacies of
trade and commerce; It is neither within the domain of the courts
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nor the scope of judicial review to embark upon an enquiry as to
whether a particular public policy is wise or whether better public
policy can be evolved. Nor are the courts inclined to strike down
a policy at the behest of a petitioner merely because it has been
urged that a different policy would have been fairer or wiser or
more scientific or more logical. Wisdom and advisability of
economic policy are ordinarily not amenable to judicial review;
Economic and fiscal regulatory measures are a field where Judges
should encroach upon very warily as Judges are not experts in
these matters. [Para 14][75-D-F]
1.2 Laws relating to economic activities should be viewed
with greater latitude than laws touching civil rights such as
freedom of speech, religion etc. The function of the Court is to
see that lawful authority is not abused but not to appropriate to
itself the task entrusted to that authority. The function of the court
is not to advise in matters relating to financial and economic
policies for which bodies like RBI are fully competent. The court
can only strike down some or entire directions issued by the
RBI in case the court is satisfied that the directions were wholly
unreasonable or in violative of any provisions of the Constitution
or any statute. It would be hazardous and risky for the courts to
tread an unknown path and should leave such task to the expert
bodies. Matters of economic policy ought to be left to the
government. What is best in the national economy and in what
manner and to what extent the financial reliefs/packages be
formulated, offered and implemented is ultimately to be decided
by the Government and RBI on the aid and advise of the experts.
The same is a matter for decision exclusively within the province
of the Central Government. Such matters do not ordinarily attract
the power of judicial review. Merely because some class/sector
may not be agreeable and/or satisfied with such packages/policy
decisions, the courts, in exercise of the power of judicial review,
do not ordinarily interfere with the policy decisions, unless such
policy could be faulted on the ground of mala fide, arbitrariness,
unfairness etc. The correctness of the reasons which prompted
the government in decision taking one course of action instead
of another is not a matter of concern in judicial review and the
court is not the appropriate forum for such investigation. The
policy decision must be left to the government as it alone can
 SMALL SCALE INDUSTRIAL MANUFACTURES ASSOCIATION
(REGD.) v. UNION OF INDIA [M. R. SHAH, J.]
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adopt which policy should be adopted after considering of the
points from different angles. In assessing the propriety of the
decision of the Government the court cannot interfere even if a
second view is possible from that of the government. [Paras 14.1,
14.5, 15, 17][76-G-H; 77-C-D; 78-F-H; 79-B-C]
R.K. Garg v. Union of India (1981) 4 SCC 675 : [1982]
1 SCR 947; Arun Kumar Agrawal v. Union of India
(2013) 7 SCC 1 : [2013] 3 SCR 508; Peerless General
Finance and Investment Co. Ltd. v. RBI, (1992) 2 SCC
343 : [1992] 1 SCR 406; State of M.P. v. Nandlal Jaiswal,
(1986) 4 SCC 566 : [1987] 1 SCR 1; BALCO
Employees' Union (Regd.) v. Union of India, (2002) 2
SCC 333 : [2001] 5 Suppl. SCR 511; Narmada Bachao
Andolan v. Union of India, (2000) 10 SCC 664 : [2000]
4 Suppl. SCR 94; Prag Ice & Oil Mills v. Union of
India AIR 1978 SC 1296 : [1978] 3 SCR 293; P.T.R.
Exports (Madras) P. Ltd. v. Union of India (1996) 5
SCC 268 : [1996] 2 Suppl. SCR 662 - relied on.
Metropolis Theatre Co. v. Chicago, 57 L Ed 730 : 228
US 61 (1913) - referred to.
1.3 Legality of the policy, and not the wisdom or soundness
of the policy, is the subject of judicial review. The scope of judicial
review of the governmental policy is now well defined. The courts
do not and cannot act as an appellate authority examining the
correctness, stability and appropriateness of a policy, nor are the
courts advisers to the executives on matters of policy which the
executives are entitled to formulate. Government has to decide
its own priorities and relief to the different sectors. It cannot be
disputed that pandemic affected the entire country and barring
few of the sectors. However, at the same time, the Government
is required to take various measures in different fields/sectors
like public health, employment, providing food and shelter to the
common people/migrants, transportation of migrants etc. and
therefore, as such, the government has announced various
financial packages/reliefs. Even the government also suffered due
to lockdown, due to unprecedented covid-19 pandemic and also
even lost the revenue in the form of GST. Still, the Government
seems to have come out with various reliefs/packages.
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Government has its own financial constraints. Therefore, as such,
no writ of mandamus can be issued directing the Government/
RBI to announce/declare particular relief packages and/or to
declare a particular policy, more particularly when many complex
issues will arise in the field of economy and what will be the overall
effect on the economy of the country for which the courts do not
have any expertise and which shall be left to the Government
and the RBI to announce the relief packages/economic policy in
the form of reliefs on the basis of the advice of the experts.
Therefore, no writ of mandamus can be issued. [Paras 18, 19][79D-H; 80-A]
1.4 No State or country can have unlimited resources to
spend on any of its projects. That is why it only announces the
financial reliefs/packages to the extent it is feasible. The court
would not interfere with any opinion formed by the Government
if it is based on the relevant facts and circumstances or based on
expert advice. When Government forms its policy, it is based on
a number of circumstances on facts, law including constraints
based on its resources. It is also based on expert opinion. It
would be dangerous if court is asked to test the utility, beneficial
effect of the policy or its appraisal based on facts set out on
affidavits. No right could be absolute in a welfare State. Man is a
social animal. He cannot live without the cooperation of a large
number of persons. Every article one uses is the contribution of
many. Hence every individual right has to give way to the right of
the public at large. Not every fundamental right under Part III of
the Constitution is absolute and it is to be within permissible
reasonable restriction. This principal equally applies when there
is any constraint on the health budget on account of financial
stringencies. It is the cardinal principle that it is not within the
legitimate domain of the court to determine whether a particular
policy decision can be served better by adopting any policy
different from what has been laid down and to strike down as
unreasonable merely on the ground that the policy enunciated
does not meet with the approval of the court in regard to its
efficaciousness for implementation of the object and purpose of
such policy decision. Whether there shall be a waiver of interest
during the moratorium period or whether there shall be sectorwise relief packages and/or RBI should have issued directions
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which are sector specific and addressing such sector specific
issues and/or whether the moratorium period should be extended
beyond 31.08.2020 or the last date for invocation of the resolution
mechanism, namely, 31.12.2020 provided in the 6.8.2020 circular
should be extended are all in the realm of the policy decisions.
Not only that, if such reliefs are granted, it would seriously affect
the banking sectors and it would have far-reaching financial
implications on the economy of the country. [Paras 20-22][80-BD-G, H; 81-A-B]
1.5 Now so far as the relief sought of waiver of interest
during the moratorium period is concerned, it is required to be
noted that the bankers/lenders have to pay the interest to the
depositors and their liability to pay the interest on the deposits
continue even during the moratorium period. There shall be
administrative expenses also required to be borne by the bankers/
lenders. Continue payment of interest to depositors is not only
one of the most essential banking activities but it shall be a huge
responsibility owed by the banks to crores and crores of small
depositors, pensioners etc. surviving on the interest from their
deposits. There may be several welfare funds schemes, category
specific and sector specific which might be surviving and are
implemented on the strength of the interest generated from their
deposits. All such welfare funds would depend on the income
generated from their deposits for the survival of their members.
Therefore, to grant such a relief of total waiver of interest during
the moratorium period would have a far-reaching financial
implication in the economy of the country as well as the lenders/
banks. Therefore, when a conscious decision has been taken not
to waive the interest during the moratorium period and a policy
decision has been taken to give relief to the borrowers by
deferring the payment of installments and so many other reliefs
are offered by the RBI and thereafter by the bankers
independently considering the Report submitted by Kamath
Committee consisting of experts, the interference of the court is
not called for. [Para 23][81-C-F]
1.6 Now so far as the submission on behalf of the petitioners
that the RBI should have issued directions which are sector
specific and addressing such sector specific issues is concerned,
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at the outset, it is required to be noted that as such the Committee
headed by Shri K.V. Kamath had gone into such sector specific
issues and gave its recommendations. The recommendations of
the Kamath Committee have been substantially accepted by the
RBI in its circular dated 7.9.2020 which provides for separate
threshold for 26 sectors including power, real estate and
construction. Even otherwise, it is required to be noted that every
sector might have suffered differently and therefore it will not be
possible to provide sector specific/sector-wise reliefs. The
petitioners cannot pray for sector specific relief by either waiver
of interest or restructuring by way of present proceedings under
Article 32 of the Constitution of India and the question of such
financial stress management measures requires examination and
consideration of several financial parameters and its impact. Now
so far as the submission on behalf of the petitioners that as per
the notifications/circulars/reliefs offered by the RBI and/or Finance
Department of the Union of India ultimately it is left to the bankers
and it should not have been left to the bankers and the
Government/RBI must intervene and provide further reliefs is
concerned, at the outset, it is required to be noted that as such
the bankers are commercial entities and since the customer
profile, organizational structure and spread of each lending
institution is widely different from others, each lending institution
is best placed to assess the requirements of its customers and
therefore, the discretion was left to the lending institutions
concerned. Any borrowing arrangement is a commercial contract
between the lender and the borrower. RBI and/or the Union of
India can provide for broad guidelines while recommending to
give the reliefs. [Paras 24, 25][81-G-H; 82-A-E]
1.7 Now so far as the submission on behalf of the petitioners
that the relief packages which are offered by the UOI/RBI/
Bankers/Lenders are not sufficient and some better and/or more
reliefs should be offered is concerned, it is not within the judicial
scope of the courts to issue such directions. No mandamus can
be issued to grant some more reliefs/packages. The court cannot
interfere with the economic policy decisions on the ground that
either they are not sufficient or efficacious and/or some more
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reliefs should have been granted. The Government might have
their own priorities and the Government has to spend in various
fields and in the present case like health, medicine, providing
food etc. Even as per the case of the Union of India and so stated
in the counter filed on behalf of the Union of India and the RBI,
so many policies have been announced to mitigate the impact of
Covid-19 pandemic. While offering the financial relief packages,
the financial constraint and/or financial burden on the government
is also required to be considered and borne in mind, which can
be considered by the experts and the government and the courts
have not expertise to assess the financial burden. From the
various steps/measures/policy decisions/packages declared by
the Union of India/RBI and the bankers, it cannot be said that
the UOI and/or the RBI have not at all addressed the issues
related to the impact of Covid-19 on the borrowers. As such,
none of the petitioners have specifically challenged the various
circulars/policy decisions taken by the UOI/RBI. The borrowers
want something more than the reliefs announced. Merely, since
the reliefs announced by the UOI/RBI ither may not be suiting
the desires of the borrowers, the reliefs/policy decisions related
to Covid-19 cannot be said to be arbitrary and/or violative of
Article 14 of the Constitution of India. It cannot be said that any
of the fundamental rights guaranteed under the Constitution are
infringed and/or violated. Economic decisions are required to be
taken keeping the larger economic scenario in mind. [Para 26][82F-H; 83-E-H]
1.8 Similarly, the relief sought that the moratorium period
should be extended and/or the last date for invocation of the
resolution mechanism namely 31.12.2020 provided under the
06.08.2020 circular should be extended are all in the realm of
policy decisions. Even otherwise, almost five months were
available to eligible borrowers when circular dated 6.8.2020 was
notified providing for a separate resolution mechanism for Covid19 related stressed assets. Therefore, sufficient time was given
to invoke the resolution mechanism. Therefore, the petitioners
shall not be entitled to any reliefs, namely, (i) total waiver of
interest during the moratorium period; (ii) to extend the period
of moratorium; (iii) to extend the period for invocation of the
resolution mechanism, namely 31.12.2020 provided under the
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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 which can be said to be in the realm of
the economic policy decisions and for the reasons stated
hereinabove and as observed hereinabove granting of any such
reliefs would have a far reaching financial implication on the
economy of the country. It appears, whatever best can be offered
has been offered for the different fields and to the common people
as well as those persons who are affected due to Covid-19
pandemic. [Para 27][84-A-F]
2.1 On conjoint reading of the relevant provisions of the
DMA 2005, 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
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 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
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,
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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 would be comprehensive in nature
which is already there in existence. Therefore, the submission
that there is no National Plan at all and therefore the NDMA has
failed to perform its duty cannot be accepted. [Para 29][90-D-H;
91-A-D]
2.2 Now so far as the submission on behalf of the petitioners
that the NDMA has failed to perform its duty cast under Section
13 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 have already come out with different
packages/reliefs in repayment of loans or grant of fresh loans to
the persons affected by disaster. 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 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. As
per the provisions of the DMA 2005, the responsibilities and
functions of the discharge of functions by the NDMA would be
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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, 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. 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 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,
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 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. [Paras 30, 301.1-30.3][91-D-H; 92-A-E; 93-B]
2.3 There is no justification shown to restrict the relief of
not charging interest on interest with respect to the loans up to
Rs. 2 crores only and that too restricted to the categories as
enumerated. What are the basis to restrict it to Rs. 2 crores are
not forthcoming. Therefore, as such, there is no rational to restrict
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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/
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 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. 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/compound interest/
penal interest for the period during the moratorium. The present
petitions seeking reliefs, namely, (i) total waiver of interest during
the moratorium period; (ii)to extend the period of moratorium;
(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
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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. 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
vacated. [Paras 31, 31.1, 32][93-F-H; 94-A-E, G-H; 95-A-C]
Charan Lal Sahu v. Union of India, (1990) 1 SCC 613
: [1989] 2 Suppl. SCR 597; Union Carbide Corporation
Limited v. Union of India, (1991) 4 SCC 584 : [1991] 1
Suppl. SCR 251; Kailash Chand Sharma v. State of
Rajasthan, (2002) 6 SCC 562 : [2002] 1 Suppl. SCR
317; M. Nagaraj v. Union of India, (2006) 8 SCC 212
: [2006] 7 Suppl. SCR 336; Rattan Arya v. State of T.N.
(1986) 3 SCC 385 : [1986] 2 SCR 596; State of W.B. v.
Anwar Ali Sarkar [1952] SCR 284 : AIR 1952 SC 75;
D.S. Nakara v. Union of India, (1983) 1 SCC 305 :
[1983] 2 SCR 165; Roop Chandra Adlakha v. Delhi
Development Authority, 1989 Supp. (1) SCC 116 :
[1988] 3 Suppl. SCR 253; T.N. Godavarman
Thirumulkpad v. Union of India (1997) 2 SCC 267 :
[1996] 9 Suppl. SCR 982; Pradip Kumar Maity v.
Chinmoy Kumar Bhunia (2013) 11 SCC 122 : [2013] 7
SCR 117; Chinnamarkathian v. Ayyavoo (1982) 1 SCC
159 : [1982] 2 SCR 146; Official Liquidator v. Dharti
Dhan (P) Ltd. (1977) 2 SCC 166 : [1977] 2 SCR 964;
Bachahan Devi v. Nagar Nigam, Gorakhpur (2008) 12
SCC 372 : [2008] 2 SCR 424; Delhi Administration v.
Umrao Singh (2012) 1 SCC 194 : [2011] 11 SCR 838;
Union of India v. Kumho Petrochemicals Co. Ltd. (2017)
8 SCC 307 : [2017] 4 SCR 324; Federation of Railway
Officers Association v. Union of India (2003) 4 SCC
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289 : [2003] 2 SCR 1085; Dhampur Sugar (Kashipur)
Ltd. v. State of Uttaranchal, (2007) 8 SCC 418 : [2007]
10 SCR 199; Dalmia Cement (Bharat) Ltd. v. Union of
India (1996) 10 SCC 104 : [1996] 1 Suppl. SCR 825;
Villianur Iyarkkai Padukappu Maiyam v., Union of India
(2009) 7 SCC 561 : [2009] 9 SCR 225; Shri Sitaram
Sugar Co. Ltd. v. Union of India (1990) 3 SCC 223 :
[1990] 1 SCR 909 - referred to.
Case Law Reference
[1989] 2 Suppl. SCR 597
referred to
Para 3(xviii)
[1991] 1 Suppl. SCR 251
referred to
Para 3(xviii)
[2002] 1 Suppl. SCR 317
referred to
Para 3(xix)
[2006] 7 Suppl. SCR 336
referred to
Para 3(xix)
[1986] 2 SCR 596
referred to
Para 3(xxviii)
[1952] SCR 284
referred to
Para 3(xxviii)
[1983] 2 SCR 165
referred to
Para 3(xxviii)
[1988] 3 Suppl. SCR 253
referred to
Para 3(xxix)
[1996] 9 Suppl. SCR 982
referred to
Para 3
[2013] 7 SCR 117
referred to
Para 7.24.3
[1982] 2 SCR 146
referred to
Para 7.24.3
[1977] 2 SCR 964
referred to
Para 7.24.3
[2008] 2 SCR 424
referred to
Para 7.24.3
[2011] 11 SCR 838
referred to
Para 7.24.3
[2017] 4 SCR 324
referred to
Para 7.24.3
[2013] 3 SCR 508
relied on
Para 7.25
[1992] 1 SCR 406
relied on
Para 7.25.1
[2003] 2 SCR 1085
referred to
Para 7.25.2
[2007] 10 SCR 199
referred to
Para 7.25.3
[1987] 1 SCR 1
relied on
Para 7.25.4
[2001] 5 Suppl. SCR 511
relied on
Para 7.25.4
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[1996] 1 Suppl. SCR 825
referred to
Para 7.25.4
[2009] 9 SCR 225
referred to
Para 7.25.4
[2000] 4 Suppl. SCR 94
relied on
Para 7.25.4
[1982] 1 SCR 947
relied on
Para 7.25.4
[1990] 1 SCR 909
referred to
Para 9.3
[1978] 3 SCR 293
relied on
Para 9.3
[1996] 2 Suppl. SCR 662
relied on
Para 9.3
CIVIL ORIGINAL JURISDICTION: Writ Petition (Civil) No.
476 of 2020
[Under Article 32 of the Constitution of India]
With
W.P. (C) No. 542/2020, 945/2020, 937/2020, 1024/2020, 1025/
2020, 1006/2020, 959/2020, 955/2020, 506/2020, 568/2020, 606/2020, 608/
2020, 711/2020, 785/2020, 802/2020, 829/2020, 826/2020, 964/2020, 1029/
2020, 1157/2020, 1132/2020, 1178/2020, 1190/2020 and W.P. (C) Diary
No. 12389 of 2020.
Ravindra Shrivastava, Siddharth Bhatnagar, Huzefa Ahmadi,
Mukul Rohatgi, Harish Salve, Sr. Advs., Kunal Vajani, Kunal Mimani,
Shubhang Tandon, Abhimanyu Bhandari, Ms. Rooh-e-hina Dua,
Cheitanya Madan, Pranjal Kishore, Atul Shankar Vinod, Vijay
RAghunathan, Dinesh Balachandran, M.P. Vinod, Ashish AGarwal, Ms.
Shashi Kiran, Ms. Sangeeta Bhalla, Ms. Kirti Sinha, Arjun Chaudhary,
Ashish Virmani, Himanshu Dhuper, Ms. Nishi Chaudhary, Manjeet Kirpal,
Yashartha Gupta, Chandra Prakash, B V Balaram Das, B. RAmana
Murthy, Kumar Dushyant Singh, Devesh Chauvia, Mukul Lather, Ms.
Pooja Singh, Ms. Swati Setia, Shashank Kunwar, Ms. Sonia Dube,
Shatadru Chakraborty, Ms. Kanchan Yadav, Anurag Singh, Ms. Surbhi
Anand, M/s. Legal Options, Anil Soni, Harish Pandey, Utsav Trivedi,
Chirag Sh??? Abhinay, Ms. Pragya Wal, Himanshu Sachdeva, Ms. Srishti
Kumar, Ms. Astha Prasad, A. Karthik, Syed Jafar Alam, Shankh
Sengupta, Ms. Tina Abraham, Ms. Chhavi Jain, Mahesh Agarwal,
Vijayesh Atri, Ankur Saigal, Rohan Sharma E. C. Agarwala, Sanjay
Kapur, V M Kannan, Sambit Panja, Ms. Megha Karnwal, Gaurav
Sharma, Dhawal Mohan, Prateek Bhatia, Ms. Alankrita Sinha, Keshav
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Mohan, R.K. Awasthi, Prashant Kumar, Piyush Vatas, Ms. Ritu Arora,
Santosh Kumar - I, M/s. Lambat And Associates, M/S. D.S.K. Legal,
M.s. Manju Jetley, Manoj V. George, Ms. Shilpa Liza George, Ms.
Bhavika, Ashish Virmani, M. P. Vinod, Mrs. Anil Katiyar, Jinendra Jain,
Ms. Shashi Kiran, Ms. Manjeet Kirpal, Ramesh Babu M. R., Abhikalp
Pratap Singh, Abhigya Kushwah, Ms. Sunita Yadav, Pradeep Kumar
Dubey, Siddharth Rajkumar Murarka, Ms. Anamika Kushwaha, Ms.
Nandita Rao, Ms. Mahija Reddy, K. N. Agnihotri, Virendra Arora, ADvs.
For the appearing parties.
The Judgment of the Court was delivered by
M. R. SHAH, J.
1. Writ Petition (Civil) No. 476 of 2020 has been preferred under
Article 32 of the Constitution of India by the Small Scale Industrial
Manufactures Association, Haryana for an appropriate writ, direction or
order directing the Union of India and others to take effective and remedial
measures to redress the financial strain faced by the industrial sector,
particularly MSMEs due to the Corona Virus Pandemic. It appears that
the writ petitioner is not satisfied with the steps taken by the RBI vide
notification dated 27.03.2020. According to the petitioner, the Covid-19
Regulatory Package notified by the RBI vide notification dated 27.03.2020
insofar as the terms loans, working capital facilities and restructuring of
Stressed Account is inadequate, ineffective and does not offer any
substantial relief, aid or assistance to the industries particularly MSMEs.
According to the petitioner, the above-mentioned Regulatory Package
will not in any manner salvage the MSMEs and help them recover from
financial losses that have been caused due to the unforeseen
circumstances. With the above broad grievances, it is prayed as under:
(a) issue writ/writs including a writ of mandamus or any other
writ or direction in the nature thereof, directing the respondents to
permit the lending institutions not to recover interest component
from the industries particularly MSMEs on Term Loans and
Working Capital Facilities availed by them for three months from
01.03.2020 to 31.05.2020;
(b) issue writ/writs including a writ of mandamus or any other
writ or direction in the nature thereof, directing the respondents to
permit the lending institutions to grant interest free moratorium
period for Term Loan and not recovery of interest on Working
Capital Facilities for three months from 01.03.2020 to 31.05.2020;
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(c) issue writ/writs including a writ of mandamus or any other
writ or direction in the nature thereof, directing the respondents to
allow restructuring of Stressed Accounts;
(d) issue writ/writs including a writ of mandamus or any other
writ or direction in the nature thereof, directing the respondents to
extend the date for depositing GST from 20th of every month to
30th of every month for a period of six months;
(e) issue writ/writs including a writ of mandamus or any other
writ or direction in the nature thereof, directing the respondents to
refund the pending GST amounts and utilise pending GST amounts
for payment of Government expenses for the MSMEs industries.
1a. Writ Petition (Civil) No.542 of 2020 under Article 32 of the
Constitution of India has been preferred by the petitioners - CREDAI -
Maharashtra Chambers of Housing Industry and another which has been
filed for and on behalf of the real estate sector challenging notification
dated 27.03.2020 issued by the RBI with a prayer that the same may be
declared as ultra vires to the extent it charges interest on the loan amount
during the moratorium period (which has been declared between March
1, 2020 till August 31, 2020). Therefore, the main grievance in this writ
petition is to continue not to charge the interest on the outstanding portion
of the term loans during the moratorium period.
1b. By way of Writ Petition (Civil) No. 945 of 2020 preferred
under Article 32 of the Constitution of India, the petitioner, a practising
Advocate, has prayed for an appropriate writ, direction or order directing
the Union of India - Ministry of Finance, Ministry of Home Affairs and
the RBI to extend the moratorium period till 31st December, 2020, which
was lastly extended vide notification dated 23.05.2020.
1c. Writ Petition (Civil) No. 937 of 2020 has been preferred under
Article 32 of the Constitution of India by the Contract Carriage Operators
Association to quash notification dated 27.03.2020 issued by the RBI to
the extent charging interest during the moratorium period. It is also prayed
to direct the RBI to extend the period of moratorium by another six
months, without any interest being levied on the loans availed by the
members of the petitioner organisation.
1d. Writ Petition (Civil) No. 1024 of 2020 has been preferred
under Article 32 of the Constitution of India by the petitioner -
Confederation of Real Estate Developers Association of India (CREDAI),
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