Bombay HC asks cooperative banks to disburse loans to farmers without requiring payment of interest and repay interest already received [Read Order]

In a major relief for nearly a lakh of farmers who are waiting for harvest loans to be disbursed for the current kharif season, the Bombay High Court has again ordered the Aurangabad District Cooperative Central Bank to disburse new crop loans for the current season without insisting on collecting interest. In fact, the court ordered the bank to repay 5 crore rupees that had already been collected for the interest payment.

The divisional bench of Judge SV Gangapurwala and Judge SD Kulkarni in Aurangabad heard a PIL filed by an RTI activist Kishor Tangade in which he requested the disbursement of loans in accordance with the government order dated January 17, 2020 which has was issued to the Central District Cooperative (DCC) banks not to charge interest from October 1, 2019, until the actual benefit is granted to those entitled to it under the scheme , namely the “Mahatma Jotirao Phule Shetkari Debt Waiver Scheme, 2019”.

Previously, during the hearing of the present case, another bench led by Judge Gangapurwala had ordered the said bank to immediately pay agricultural loans to farmers without requiring the payment of interest which the government has waived.

Appearing on behalf of the petitioner, lawyer SB Talekar argued that the advantageous scheme sanctioning the waiver of the agricultural loan was introduced by the government in view of the economic situation of the farmer in the state of Maharashtra. All farmers benefiting from the harvest loan from April 1, 2015 to March 31, 2019 are entitled to the benefit of the harvest loan exemption to the extent of Rs. 2 lakh.

Under the government resolution of January 17, 2020, it is also ordered by the state government that from October 1, 2019 until the actual benefit of the loan exemption scheme is granted, the Bank will not charge interest. However, banks do not disburse loans on the grounds that farmers did not pay interest from October 1, 2019. The same is not in line with the government resolution of January 17, 2020. The resolution of the January 17, 2020 Government of 17.01.2020 granting a waiver of interest is issued under section 79 (A) of the Maharashtra Cooperative Societies Act, 1960, it is binding. force on cooperative banks, argued Talekar.

Adv Talekar further argued that the defendant bank did not grant loans to the farmer who was entitled to the loan exemption scheme under the government resolution of December 27, 2019 on the grounds that he did not paid interest since October 1, 2019. Similarly, Respondent No. 6-Bank requests a certificate of absence of contribution, if the loan is unpaid and must be payable to other banks.

Relying on the main circular issued by RBI, Adv Talekar argued that the Bank cannot require a certificate of non-assessment, it only needs to request a certificate of no objection. A large number of farmers were deprived of the benefit of the loan during the Kharif season due to the inflexible attitude and policy of Respondent No.6- Bank, Talekar said.

However, the previous Court Order of July 9 was not implemented by Respondent No. 6-Bank and, as a result, the bank was in contempt of an order of this Court. Action deserves to be taken against them, Talekar concluded.

On the other hand, Senior Counsel RS Deshmukh appeared on behalf of Respondent No.6 Bank and argued that the bank has started to reimburse the amount up to Rs. 5 crore recovered by it as interest. on these loans.

He further informed the judiciary that he had asked Respondent No. 6-Bank not to insist on a certificate of non-assessment, but to request a certificate of no objection and the necessary clarifications are also issued to this effect by virtue of the circular of 5 June 2020.

Chronic defaulters are not entitled to the benefit of the loan exemption scheme. The Bank has already taken steps to disburse the Kharif crop loan to all eligible beneficiaries without requiring payment of interest. The people benefiting from the credit exemption scheme are increased from 89,937 to 98,820. Among the beneficiaries, 26,659 are such farmers who are not beneficiaries of the said scheme, 55,184 farmers have effectively been extended for the benefit of the credit exemption and 20,143 farmers. are still active. They have not yet approached the Bank through the respective companies and if they approach in the near future, the Bank undertakes to disburse the loan in accordance with said program without charging interest, said Sr Adv. Deshmukh.

According to Adv Talekar, 26,659 farmers were illegally denied the allowance, mainly on the grounds that they did not produce a certificate of non-contribution. The farmers who died and sold the land are barely around 3,000, the other 23,000 farmers are denied their right to get the loan, Talekar said.

After reviewing the submissions on behalf of all parties, the judiciary explained the need for such a loan waiver program-

“The State of Maharashtra enacted the Mahatma Jyotirao Fule Shetkari Debt Waiver Scheme 2019 to improve the precarious economic situation of 1,53,000,000 farmers in the State of Maharashtra. The State has noted that from 2015-2016 to 2018-2019 a continuous drought situation prevailed throughout the state and in some places witnessed unusual rains.Due to drought for four consecutive years and unusual rains, the farmer suffered losses .2,000,000 to farmers. having obtained a short-term harvest loan from 01.05.2015 to 31.03.2019 by virtue of the government decree of 27.12.2019. “

The Court also noted that the three government resolutions dated December 27, 2019, January 17, 2020 and May 22, 2020 indicate that the government was aware that farmers are in a precarious economic situation.

The Court observed-

“The year 2020 is a tumultuous year. The whole country is affected by the Covid-19 pandemic. Fortunately, this year the state has experienced timely rains and there is a need for farmers to get financial assistance for the kharif planting season.

The court further noted that the defendant bank should not have insisted on a certificate of non-assessment as it does not comply with the main circular of the Reserve Bank of India dated July 1, 2009. Sr Adv RS Deshmukh a agreed to the same and said he advised his client not to insist on a certificate of non-contribution from eligible beneficiaries while sanctioning a short-term crop loan for the 2020 kharif season.

The bench observed-

“We had already adopted an interim order directing the bank not to require payment of interest from 01.10.2019 from beneficiaries. It was clarified that around 5 crore rupees are levied by banks for payment of interest and the same is reimbursed. If the Bank has recovered the amount of interest, it will be returned to the persons / parties from whom they recovered the amount of interest. Disbursement of the amount of interest recovered will be made by the Banks immediately. “

Finally, the Court declared:

“We hope and hope that Banks will be sensitive to the problems of farmers.

Respondent No. 6-Bank will immediately extend the benefits of the crop loan to farmers for the 2020 Kharif season in accordance with the mandate of the government resolutions of 27.12.2019, 17.01.2020 and 22.05.2020. “

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