Moratorium Therapy with Unique Assessment in Glow of Gajendra Sharma v. Union of India (2020)

Abstract

A moratorium is a temporary suspension of activity until future events warrant lifting of the suspension or related issues have been resolved. Moratoriums are often enacted in response to temporary financial hardships. A moratorium is often affected in response to a crisis that disrupts normal routine. In the aftermath of earthquakes, floods, droughts or disease outbreaks, an emergency moratorium on some financial activities may be granted by a government or the central bank. It is lifted when the novel virus COVID-19 outbreak, which left over a million people infected across more than 180 countries, caused several nations to implement a lockdown of their towns and cities. The highly contagious disease rocked the global markets and led the economies to a recession. On March 23, the government of India imposed a lockdown in the entire country to combat the virus. The move led to unaccounted job losses, grounding of flights, train and bus services as well as businesses took a hit. Taking stock of the situation and in response to the temporary financial hardship, the RBI on March 27, 2020, said all lending institutions, including banks and housing finance companies, will have to give their borrowers a three-month moratorium on term loans. The moratorium was for payment of all instalments falling due between March 1 and May 31, 2020.