The Kerala High Court on Wednesday questioned the Central government on whether it intends to consider writing off loans for the victims of the 2024 landslides in Wayanad (In Re: Prevention and Management of Natural Disasters in Kerala).
A Division Bench of Justice AK Jayasankaran Nambiar and Justice Easwaran S made the observation in response to Assistant Solicitor General (ASG) ARL Sundaresan's submission that the Union government had approved the proposals of the State Level Bankers Committee (SLBC) regarding loan relief, subject to Reserve Bank of India (RBI) guidelines.
However, the ASG added that the relief would only extend as a one-year moratorium for restructuring outstanding loans.
The Bench took a dim view of the same, observing that such a relief would not suffice.
"The SLBC is only recommending a moratorium and no loan waiver. The Central government has to apply its mind as to whether a write-off is required under the circumstances...I mean, someone has to get in touch with reality," Justice Nambiar orally observed.
The Bench stated that the Central government must 'apply its mind' to consider whether a loan write-off is necessary given the circumstances in Wayanad after the devastating landslides.
"The interest during the moratorium will also carry, is it? Then what is the benefit that has been granted to the victims," Justice Nambiar remarked.
When the ASG pointed out that even during the COVID period, no write-off was considered, only postponement of days for repayment of loans, Justice Nambiar said, "The Central Government cannot cite an antecedent of unreasonableness to justify a subsequent order."
The Bench also pointed out that the Centre had waived agricultural loans during 2008 and 2009.
"So it’s not that you are powerless to grant a waiver. Suppose the entire agricultural land is taken by the landslide, what then?" Justice Nambiar asked.
The Bench was hearing a suo motu case initiated to address the rehabilitation of Wayanad landslide victims.
ASG Sundaresan explained that the loan restructuring involves a one-year moratorium, with outstanding capital and interest consolidated into a fresh loan, which would be repayable after the moratorium period.
He submitted that the decision was taken collectively by all stakeholders, including Kerala Chief Minister Pinarayi Vijayan.
However, Justice Nambiar remained unconvinced by the Centre stance.
"This is the unanimous decision of the creditors, but who is considering the plight of the debtors?" the judge demanded.
During one of the previous hearings in the case, the Court had sought clarification from the Centre on whether the deadline for utilising funds under the rehabilitation scheme, originally set for March 31, 2025, was merely an administrative cut-off or a mandatory completion date for projects.
ASG Sundaresan informed the Court that the Central Government had extended the deadline for crediting funds under the rehabilitation scheme to December 31, 2025.
The Court thereafter stated that the State Finance Department must credit the funds to the respective implementing agencies with a condition that the amounts be used solely for rehabilitation projects.
"We are also informed that the cutoff date of 31.03.2025 has been extended to 31.12.2025 and therefore it will suffice if on receipt of the funds allotted by the Central Government the finance department of the state which would originally receive the amount credits the amounts to the respective departments who are nominated as the implementing agencies for the various projects and with a rider issued at the time of allocation to the respective implementing agencies, that the funds so credited to their accounts would be used only for the purposes for the project specified there in," the Court said in the order passed today.
The Court today also directed the Centre to submit a comprehensive affidavit, clearly outlining the scope of the relief measures accepted and whether any further relief, including a loan write-off, is being considered.
The matter will be heard next on April 9.
