TMI Blog2023 (3) TMI 651X X X X Extracts X X X X X X X X Extracts X X X X ..... ic and fiscal policy, which in this instance is the RBI. In INTERNET AND MOBILE ASSOCIATION OF INDIA VERSUS RESERVE BANK OF INDIA [ 2020 (3) TMI 364 - SUPREME COURT ] , the Apex Court held that directions issued by the RBI are supplemental to the statutory force of the RBI Act, 1934. Statutory directives issued by RBI are done in exercise of powers under Sections 21 and 35A of the Banking Regulation Act, 1949. The master circulars in the counter affidavit sets out extensive detailed norms for lending activities which would include housing loans, for banks to follow and implement. What emerges thus on a reading of the foregoing is that the RBI being a regulatory body is equipped with requisite expertise to advise on and to formulate economic policies, that have a binding effect on the banking system which is backed by statutory force - it is well settled law that while considering matters pertaining to economic policy, courts ought to yield to the wisdom of policy makers who are fully equipped to decide on matters of policy in their domain, and therefore to refrain from exercising powers of judicial review. A perusal of the same shows that a well structured regimen has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... availing home loans, including those buyers who haven t been given possession of their flats by their builders and are still paying monthly instalments towards EMI payment, and are thus unable to claim tax benefits on the payment of such monthly interest amounts. The Complainant prays for the formulation and implementation of a scheme that conclusively addresses the grievances of other home buyers who may not have the capacity to approach courts/forums to seek redressal against builders. The prayers, as sought for, are as follows: 1. Grant full tax benefit 'from the date of payment of- first instalment of EMI to the Bank' to all those home buyers who have taken home loan from the banks but possession of their dream home is delayed due to the fault of the builder; or 2. Even if the project is not delayed, grant tax benefit 'from the date of payment of first instalment of EMI to the Bank' to all those home buyers who have taken loan from the banks; 3. Grant free legal aid to the home buyers who are fighting against the mighty builders and trying to save their hard earned money; 4. Frame a law where interests of the buyers are fully protected and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uding the likes of home buyers facing financial constraints may approach their lending banks with requests for restructuring of their loans, which is as per extant norms in the master circulars. The sanctioning of credit through loans and their subsequent recovery are de-regulated activities as per RBI directions, meaning thereby that the Board of Directors of every bank may discharge these functions at their own discretion. It is thus the prerogative of each commercial bank s board of directors to frame their own guidelines for loan policies and ensure its implementation, on the basis of principles of commercial prudence and operating within the framework of the RBI s directions contained in the circulars. The master circular on housing finance extends this liberty to every scheduled commercial bank other than regional rural banks, for activities pertaining to, or incidental to, sanction and recovery of loans in the realm of housing finance as well. This is so that the housing sector receives more credit, and such that more direct financing options are made available to the larger body public. 6. It is stated that no specific averment has been set out against the Reserve Bank o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the directions of 1987, it is also important to note that Reserve Bank of India which is bankers' bank is a creature of statute. It has large contingent of expert advice relating to matters affecting the economy of the entire country and nobody can doubt the bona fides of the Reserve Bank in issuing the impugned directions of 1987. The Reserve Bank plays an important role in the economy and financial affairs of India and one of its important functions is to regulate the banking system in the country. It is the duty of the Reserve Bank to safeguard the economy and financial stability of the country. While examining the power conferred by Section 58-A of the Companies Act, 1956 on the Central Government to prescribe the limits up to which, the manner in which and the conditions subject to which deposits may be invited or accepted by non-banking companies, this Court in Delhi Cloth and General Mills v. Union of India [(1983) 4 SCC 166 : (1983) 3 SCR 438 : (1983) 54 Comp Cas 674] observed as under: (SCC pp. 188-89, para 28) Mischief was known and the regulatory measure was introduced to remedy the mischief. The conditions which can be prescribed to effectuate this purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd doubtlessly differ. Courts cannot be expected to decide them without even the aid of experts. 8. In Small Scale Industrial Manufacturers Association (Registered) v. Union of India, (2021) 8 SCC 511, the Apex Court while placing reference to the observation made in paragraph 30 and 31 of Peerless General Finance Investment Co. Ltd. (supra), proceeded to hold that the courts ought not to supplant themselves for government expert authorities fully competent in the domain of economic and fiscal policy, which in this instance is the RBI. 65. In Peerless General Finance Investment Co. Ltd. [Peerless General Finance Investment Co. Ltd. v. RBI, (1992) 2 SCC 343] , it is observed and held by this Court that 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. It is further observed that a public body invested with statutory powers must take care not to exceed or abuse its power. It must keep within the limits of the authority committed to it. It must act in good faith and it must act reasonably. Courts are not to interfere with economic policy which is the function of experts. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lic interest. It is precisely for this reason that it has been consistently held by this Court that in matters of policy the court will not interfere. When there is a valid law requiring the Government to act in a particular manner the court ought not to, without striking down the law, give any direction which is not in accordance with law. In other words, the court itself is not above the law. 67. In Prag Ice Oil Mills [Prag Ice Oil Mills v. Union of India, (1978) 3 SCC 459 : AIR 1978 SC 1296], this Court observed as under : (SCC p. 478, para 24) 24. We do not think that it is the function of this Court or of any court to sit in judgment over such matters of economic policy as must necessarily be left to the Government of the day to decide. Many of them, are matters of prediction of ultimate results on which even experts can seriously err and doubtlessly differ. Courts can certainly not be expected to decide them without even the aid of experts. 69. 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h policy cannot be said to be ultra vires the Act. 10. Statutory directives issued by RBI are done in exercise of powers under Sections 21 and 35A of the Banking Regulation Act, 1949. The master circulars in the counter affidavit sets out extensive detailed norms for lending activities which would include housing loans, for banks to follow and implement. What emerges thus on a reading of the foregoing is that the RBI being a regulatory body is equipped with requisite expertise to advise on and to formulate economic policies, that have a binding effect on the banking system which is backed by statutory force. As pointed out earlier, it is well settled law that while considering matters pertaining to economic policy, courts ought to yield to the wisdom of policy makers who are fully equipped to decide on matters of policy in their domain, and therefore to refrain from exercising powers of judicial review. A perusal of the same shows that a well structured regimen has been created by the RBI which includes guidelines to the various banks on the issue of advancing loans to home buyers. A perusal of the said Master Circular shows that RBI has given advice to various banks as to whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reservations regarding the funding of NPA accounts. In view of current social and economic conditions, the Court may direct the RBI to keep its circulars/guidelines relating to NPA in abeyance and permit all banking and financial institutions, etc. to disburse loans to home buyers notwithstanding the status of accounts as NPA. Banks and financial institutions be directed to work out a long-term restructuring of all home buyers' loans about Amrapali Projects as well as any charges on the Amrapali project held by banks and financial institutions. 30. On the previous date of hearing, i.e., 27.5.2020, we requested Mr. Vikramjit Banerjee, learned ASG to obtain instructions from the RBI concerning the release of loans by the banks and other financial institutions to the home buyers. It was clearly stated that RBI instructions do not come in the way of releasing home buyers' loans whose accounts are NPAs. It would be for the banks and other financial institutions to release the loan. In the facts and circumstances, appropriate directions can be issued by this Court, and the RBI guidelines would not come in the way in the facts of the case. Learned counsel appearing for the b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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