The Kerala High Court has expressed dissatisfaction with the Central Government's decision to deny a loan waiver for victims of the Wayanad landslide. Instead, the Centre has approved a one-year moratorium on loan repayments while continuing to charge interest.
On March 26, a division bench comprising Justices AK Jayasankaran Nambiar and Easwaran S. raised concerns over the Centre’s refusal to waive loans. The judges pointed out that the government has previously granted loan waivers, particularly in 2008-09 for agricultural debts. They questioned why similar relief was not being provided to Wayanad’s affected population.
"Who takes into account the plight of the debtors? You have waived agricultural loans in 2008-09, so it is not as though you are powerless to grant a waiver. Suppose the entire agricultural land is taken away by the landslide..." the judges observed.
The Court had earlier instructed the State Level Banking Committee (SLBC) not to take coercive action against victims defaulting on their loans until the Centre made a final decision regarding waivers.
Additional Solicitor General of India (ASGI) ARL Sundaresan informed the Court that the Centre had accepted SLBC's recommendation to grant a one-year moratorium on loan repayments for the affected individuals. However, he clarified that interest would continue to accrue during this period.
As the Court voiced its dissatisfaction, ASGI defended the decision by stating that it was made unanimously in a meeting attended by Kerala’s Chief Minister. He also pointed out that even during the COVID-19 pandemic, the government had only granted a moratorium without offering a loan waiver.
Unconvinced by this argument, Justice Nambiar stated:
"The Central Government cannot cite an antecedent of unreasonableness to justify a subsequent unreasonableness. Somebody has to get in touch with the reality of the situation."
The ASGI further submitted that authorities had reviewed all categories of loans—MSME, agricultural, housing, and commercial—before arriving at their decision. Despite this, the Court directed the Centre to file a detailed affidavit specifying:
- The proposal made by SLBC,
- The proposals accepted by the Central Government,
- The Centre’s final decision on loan waivers.
Regarding the Rs. 529.50 crore interest-free loans sanctioned by the Centre for rehabilitation, the ASGI informed the Court that the deadline for utilizing these funds had been extended from March 31 to December 31. He clarified that the state only needed to credit the funds to the respective implementing agencies, and there would be no obstacle even if construction work was incomplete by the deadline.
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The Court has now directed the Kerala Finance Department to transfer the allocated funds to the designated agencies, ensuring they are used strictly for the intended projects. A utilization certificate must then be submitted to the Centre as per scheme requirements.
Next Hearing Scheduled for April 9
With these directives in place, the case has been scheduled for its next hearing on April 9, where further deliberations on the loan waiver and rehabilitation measures will take place.
Case Title: In Re: Prevention And Management Of Natural Disasters In Kerala V State Of Kerala
Case Number: WP(C) 28509/ 2024 & Connected Cases
