For reference of such judgments please click DRT Judgments Favourable / Useful to Borrowers
Our Client wins in Securitisation Appeal against 4 Banks in DRT – amount
involved nearly Rs. 90 crores and a tooth & nail fight of 4 years
Entire Judgment reproduced vide link
DRT Orders in favour of Borrowers & Guarantors
Our Weekly Mails are DRT Guide and gold mine of practical information for the borrowers and
guarantors :- The visitors of this web site particularly Borrowers and Guarantors will be
immensely benefited by our weekly mails, all previous issues from 1st one till
the last one may be viewed by clicking
Drt Solutions Weekly Mail for Borrowers & Guarantors Separate
web pages have been created to contain these mails in batches of 10 so that
pages open up fast. These
mails are DRT Guide and gold mine of information on current topics giving lot of practical
suggestions and comments. Any new comer to this site must go through all the
weekly mails right from the issue no 1 to the latest. If possible please spread
the reference of this web site and the weekly mail among the persons, borrowers
and guarantors who are the bank victims. If anyone desires to get these mails
regularly, he may write to us for inclusion of his e-mail ID in the regular
mailing list. The weekly mail is issued on every Friday morning 6 AM. The
particular issue of the weekly mail is first published on the web site and then
mails are sent. These weekly mails have become quite popular among the borrowers
and guarantors in the country as we are getting huge no of mails appreciating
the same. We welcome suggestions for improvements as well as the topics on which more information
is required.
Important Announcement - Video Arguments presented in Indian Court for the First
Time :- We are pleased to announce that on
10th October 2007, proposed 'Computer Presentation' was held for the first time
in the country by Mr. Ram Kishan before Hon'ble District Judge, Indore and the
'Video Arguments' were submitted and shown to the said Judge on 15.10.07. Thus a
history has been made in the Judicial Management in our country. We have
prepared two DVDs, one showing the method and system for such
presentation, its advantages with a practical application. Another DVD showing
the actual presentation before the District Judge, Indore on 10th October 2007.
we have prepared an article titled 'Computer Presentation & Video Arguments'
vide click here
Court Technologies IT Presentation Video Arguments
DVDs containing Video Record of DRT
Conference at Indore and
Chennai:-
All the proceedings were video recorded and the DVDs containing the same
are available. Any
one desiring to have the DVDs may send through e-mail their postal address,
name of the company, and if possible details of the pending DRT case or Securitisation case and
the amount involved, name of concerned person and his contact details including
phone nos etc. to us. During these
conferences, eminent DRT experts using PowerPoint Presentation dealt with all the
aspects of Bank Litigations and Borrowers Defence. The participants from all
over the country were highly
impressed and benefited from the knowledge thus gained.
Important Victory of Our Client against Bank:-
One of our important clients at Chandigarh who filed damage suit of Rs. 1825
crores against a public sector Bank on 13.01.05 registered an important victory
on 03.03.07 when the Court waived the entire court fee despite all opposition by
the defendant Bank. The alleged dues of the Bank are Rs. 30 crores. Since the
damages are much more than the alleged claim of the bank, no recovery action can
be executed till the said damage suit is finally decided. The usual delay in the
litigation does not affect our client as the damages are increasing day by day
due to interest charges at rate which is much higher than the increase in the
alleged claim of the bank. The said damage suit was drafted by us and all
necessary advice and guidance was provided on all dates of proceedings.
Important Tip to Old and New Visitors:-
A visit to new page
Synopsis Video
Interview - BS Malik, Sr. Supreme Court Advocate
will
be highly useful. You may take out the print and study the same. Listening to
the video interview will be further useful. You may select the clips for replay
for discussions with your colleagues as well as the advocates
DRT,
drtsolutions, Debt Recovery Tribunal, DRT matters, DRT WS, DRT Legal Opinions,
DRT Arguments, DRT Documents, Appellate DRT, Bank litigations, Securitisation,
Counter-claims, NPAs Settlements,
checking of bank accounts and documents
etc., expertize in all these matters past 14
years being a
Leading Law Firm.
Legal BPO and offshore BPO is our new activity for which we have launched new
web site
www.usindolegal.com
Highlights:-
All problems of Debt Recovery
Tribunals i.e. DRT and Securitisation Act are tackled by us. People from all
over the country are phoning us, then visiting and getting their problems
solved. Please visit Home Page and other Pages also
Video CD containing Interview of Mr. B.S. Malik, the Supreme Court Advocate as well as Our
Client available from us:-
This video interview will be immensely useful to industrialists, borrowers,
guarantors and bank litigants in DRTs.
Our Client files damage suit of Rs. 1825 Crores against a bank and a
financial institution in Chandigarh:-
Our Client, an eminent Supreme Court Advocate (practice more than 25 years in Supreme
Court) has filed a damage suit of Rs. 1825 Crores in Chandigarh on 13.01.05 against a bank
and a financial institution. The said damage suit was drafted by us and it runs
in 118 pages having documents of 537 pages. In a video interview lasting more
than 30 minutes on 23.01.05, the said Mr. Malik appreciated our legal concepts, our drafting and our
knowledge and experience about application of law of torts to banking,
industrial sickness, drt, counter-claim, securitisation act and calculations of
damages.
Our Computer Cell for checking of Accounts has started functioning:-
Our Accounts Cell headed by an ex-Bank auditor (experience 38 years) has started
functioning. You get your entire account checked up and certified by him.
Invariably in all cases, the accounts filed by the banks are defective and
illegal and thus the very debt due for the purpose of DRT and Securitisation
becomes questionable requiring rework and refiling, a difficult task for the
banks and financial institutions. Please contact us for the details and charges
through e-mail
ramkishan@drtsolutions.com
News and Views (Please click
body of each
item below for details)
Contents
of some of the items below will be useful in framing legal defence in DRT as
well as against the Securitisation Ordinance.
◙
Important
Decision of Supreme Court on Court Fee on Damage Suit by Indigent Company
(Damage worth Rs. 300 Crores filed in 1990)
◙
Useful Supreme Court Rulings on the Law of
Torts
◙
Useful News and Views - Problems and Solutions
- Mardia Chemicals and Pam Pharma
◙
Are you
aware ?
◙ Useful tips for the banks and financial institutions
◙ Interactions
with Mr. B.S. Malik, Senior Advocate, Supreme Court
of India
◙ Economic
Times on the Law of Torts
M/s Khaders
International Constructions Ltd. filed a damage suit of Rs. 303.13
crores against the Union Bank of India in 1990. The suit was filed as an Indigent Person. The court fee was Rs. 39.31 crores. The
trial court in Kochi vide its order dated 21.11.91 exempted
the party from paying the said court fee.
The Union Bank of India approached the Kerala High Court in1992 requesting
reversal of the said order of the trial court. The Kerala High
Court vide its order dated 20.7.92
dismissed the application filed by the Bank. The Union Bank of India filed an appeal to
the Supreme Court in 1993.The Supreme Court vide its order dated 8.5.2001 dismissed the appeal
filed by the Bank.
Our Comments :-The
sick companies can file their damage suits under the provisions of the
Order-33 of the Civil Procedure Code 1908 as an Indigent Person citing the above
ruling of the Supreme Court. Counter-claims in DRT also can rely on this ruling.
This will also help in getting exemption from the deposit of 75% in appeal, if
any in DRAT in case of Securitisation Ordinance in DRT.
(1) The Supreme Court in its
rulings vide Jay
Laxmi Salt Works (P) Ltd.v State of Gujrat,
[(1994)4 SCC 1] has
stated "Truly speaking entire law of torts is founded and structured on
morality that no one has a right to injure or harm other intentionally or
even innocently. Therefore it would be primitive to class strictly or close
finally the ever-expanding and growing horizon of tortious liability.
Even for
social development, orderly growth of the society and cultural refineness the
liberal approach to tortious liability by courts is more conductive."
(2) The Supreme Court
in its rulings vide M.C. Mehta vs. Union of India, [AIR 1987 SC
1086; (1987) 1 SCC 395 P. 420; 1 ACC 157] has stated "
We have to evolve new principles and lay down new norms which will
adequately deal with new problems which arise in a highly
industrialized economy. We can not allow our judicial thinking to be
constricted by reference to the law as it prevails in England or for the
matter of that in any foreign country. We are certainly prepared to
receive light from whatever source it comes but we have to build our own
jurisprudence"
(3) The Supreme Court in its
rulings vide [(1958-65) ACJ 296 p. 304] stated that " there is no justification,
in principle or in public interest, that the State should not be held liable
vicariously for the tortious act of its servant “
(4) The Supreme Court in its
rulings vide Nagendra Rao vs State of Andhra Pradesh (1994) case has
stated that "No legal or political system can place the state above law as it is
unjust and unfair for a citizen to be deprived by negligent action of the state
without any remedy" The court also has the power to pay compensation to victims
of state violence or misconduct. The Supreme Court has laid down the
"deep pocket" principle in awarding
compensation - richer the accused, higher the
compensation. if only investigation and
prosecution against lapses by the state is as sharp as they are against private
parties, you would see a more accountable government.
(5) Under the law of Torts the
Supreme Court in Common
Cause, A Registered Society vs
Union
of India
[ 1996 (7) Scale
156] and in
a public interest petition
under Article 32 of the Constitution
set aside the allotment of petrol pumps to fifteen persons made by a central minister
(i.e. Captain satish Sharma)
from the
discretionary quota on the ground that the discretion was
mala fide
exercised.
Supreme
Court further issued notice to the minister to show cause
why he should not
be held personally liable to pay damages
for his mala
fide action on the ground that his action amounted to the tort of misfeasance
in public office. Elaborating
the nature and ambit of this tort the Court observed;
"public
servants may be liable in damages for malicious, deliberate
or injurious wrong doing. According to Wade ' there is thus a tort which has
been called misfeasance in public office and which includes malicious abuse of
power, deliberate maladministration and perhaps also other unlawful acts causing
injury. With the change in socio-economic
outlook, the public servants are being entrusted with more and more discretionary
powers even in the field of
distribution of
government wealth
in various forms. We take it to be perfectly clear, that if a public servant
abuses his office either an act of omission
or commission
and the consequences of that is injury to an individual or loss of public
property, an action may be maintained against such public servant. No public
servant can say that ' you may set aside an order
on the ground of
mala fide
but you cannot hold
me personally liable'. No public servant can arrogate to himself
the power to act in a manner which is arbitrary ".
The Court has
also elaborated as to what is 'Government Wealth'. According to the Court it
will include
" allotment of plots, houses, petrol pumps, gas agencies, mineral lease
contracts,
quotas and licenses etc."
After cause was
shown by the minister, he was ordered to pay Rs 50 lacs as exemplary
damages
to the Government exchequer on the following reasoning: Since the property with
which Capt. Sharma was dealing was public property, the Government which is by
the people has
to be
compensated. [Common
Cause, A Registered Society vs Union of India
[ 1996 (8)
Scale 127,
p.130]
The Court held that
exemplary damages can be awarded for oppressive, arbitrary and unconstitutional
action by the servants of the Government.
Our Views
;- (1) The above cases
are the well defined examples for the public that the Supreme Court has applied
the law of torts to penalize the two Ministers with damages in each case of Rs. 40 lacs and
above. If this could be done in case of Ministers, it can also be done with
the bankers who are intentionally disobeying the statutory RBI Guidelines apart
from violating the duty of care for which the industrial borrowers are specially
entitled.
(2) The famous Union Carbide Gas Tragedy case is
based on law of torts and it is first case of its kind where interim damages
were paid. There are numerous cases in our country where the provisions of law
of torts were fully applied. Hence the said law is fully applicable to the
banking cases also.
[Back to Top]
News :-
Gujrat High Court has asked Mardia Chemicals
'to file counter-claim
against ICICI Bank'
vide page 6 of the Economic Times dated
13.03.03.
Comments :-
We had announced this quite long back. The counter-claim
must be filed under the law of torts. The principles are given in the web site.
We have special expertize in drafting such counter-claims.
News :-
(a) Mardia Chemicals' Factory taken over and Management
given to ITCOT
(b) Pam Pharmaceutical's MD denied bail
Comments and Solutions :-
These parties have not put up their legal defence properly
at the lower level of judicial process. Had they made their exhaustive
counter-claims and filed the same in DRT and contested the same using all the
provisions of law, they would have not faced the above problems. Application of
the law of torts instead of promissory estoppel would have been more appropriate
and effective. Since the
counter-claims are much bigger than the banks' claims, there is no debt due and
hence no coercive action can be taken (i.e. for example Securitisation Act can
not be applied) till the claims and counter-claims are fully decided. They must
file the counter-claims without loss of time and try their best to retrieve out
of the situation. The higher courts like High Court and Supreme Court will
provide no remedy till the counter-claim in DRT is fully adjudicated. For further details please visit the pages - 'DRT Cases
Handled by Us', 'Frequently Asked Questions', 'Securitisation Act - Notes' and
'Mini Articles - Letters to the Editor' (Letter titled 'Real Wilful Defaulters'
published in the Financial Express dated 05.12.02 was written with specific
comments on the news item on 'Mardia Chemicals') of
this web site. The parties can even speak to us on 0731-5045883, or Reliance (WLLM)
35045883 or e-mail to us at
ramkishan@drtsolutions.com
News :-
One of our clients filed a counter-suit of Rs. 29
crores against a public sector bank under the law of torts. The court fee
was Rs. 87 lacs. The trial court waived the fee and declared the party as
indigent. The bank did not appeal. The bank filed a WS with general and evasive
denial Our client got a very good opportunity through the tool of discovery.
First of all exhaustive discovery of documents was made. The bank was forced to
produce the important documents. Our client then adopted the tool of discovery
through interrogatories. The bank desired framing of the issues. The trial court
did not agree with the request of the bank and accepted the application of the
client. The bank officials are finding it difficult to answer the
interrogatories. We have advised the party that the bank officials must be
called to witness box and they should be made to admit the wrong doing so that
no fact is left to the judge to apply his discretion.
Comments :-
The bank is now completely trapped.
News :-
MPEB (MP Electricity Board) files a Rs. 60 crores damages
against Orissa Electricity Board vide news item in the Economic Times dated
18.10.02. Past 50 years, the MPEB was getting free power from Orissa. Now that
free power has been stopped. MP government has moved a Jabalpur court seeking
damages of Rs. 60 crores.
Our Views :-
MPEB and MP government did not spare the Orissa government
and its Electricity Board and filed damages. As per law, the MPEB or other
Electricity Boards can not charge more than 20% above the cost of production
i.e. aprox. Rs. 2.20 per unit. They have illegally charged excess rates of Rs. 4
to 5 per unit to Industries and other consumers. In all such cases, damages
should be filed against MPEB or other Electricty Boards.
News :-
In DRT Jabalpur, a borrower Company filed a counter-claim
of Rs. 4 crores against the bank which filed a recovery application of Rs. 33
lacs. The counter-claim was based on our legal opinion. Initially the bank
delayed the reply. DRT imposed penalties on several dates. Despite this, when
the bank continued to avoid reply, the DRT ordered closure of defence. Finally
the bank submitted reply. As per our advice the borrower Company desired
cross-examination of bank officials. On this the bank has come forward for
compromise.
Our Views:-
This case proves the essentiality of counter-claim which we are emphasizing
right from the beginning. This case proves that the the counter-claim is
the best defence in DRT cases.
News :-
THE FINANCIAL EXPRESS
in its issue dated 10.9.02 at page 1, has
reported 'Angry Lady Guest Wants Rs. 50 lakh From Hotel' The said lady guest is
a corporate lawyer. She filed a damage suit of Rs. 50 lakhs under the law of
torts against Hotel Taj, Jaipur for negligence and deliberate wilful inaction.
Our Views :-
The responsible citizens like the said lady guest should organize claiming
damages for the wrong doings of the other party and fight such cases. In fact,
earlier in British days, the famous tort lawyers like Pandit Motilal Nehru,
Mohammed Ali Jinnah, Tej Bahadur Sapru, Sir Hari Singh Gaur have won several
cases based on the law of torts. Had such advocates been alive today, there
would have been considerable check on rampant corruption in politics and
bureaucracy. On account of DRT Act and Securitisation Act, the
industrialists have no choice to fight on basis of this law to not only ensure
their survival but to protect the safety of their property as well as the
property of the guarantors.
News :-
THE FINANCIAL EXPRESS
in its issue dated 5.7.02 at page 4 has
reported vide news item 'HC Restrains Pendse From Disposing Of Assets' that the
Tata Finance Limited has filed a damage suit of Rs. 426.50 crores against their
former managing director and his associates on account of breach of fiduciary
obligations, breach of contract and short of deceit.
Our Views :-
This item shows that nowadays
renowned organisation such as Tatas are also filing huge damage suits worth more
than Rs. 426 crores against group of individuals.
News :-
(1)
Amendment in Court Procedure
:- There is historic amendment in Court procedure with effect from 1.7.02,
highlights are as under:-
(a) Summons can be sent through courier,
e-mail, fax
(b) Written statement will have to be filed
within 30 days of receipt of summons which at the most could be extended
maximum upto 60 days only by the court.
(c) After receipt of the summons, the absenting
party will be fined Rs. 5000=00
(d) The examination-in-chief may be recorded
and filed through affidavit
(e) The evidence of the witnesses, their
cross-examination and re-examination may be carried out by the commissioners
(i.e. Advocates appointed by the Court) in their offices and report submitted
within 60 days
(f) For every stage of the trial, time
limits have been laid down
Conclusion:- The above
historic amendments have come into force with effect from 1.7.02
and will greatly improve the efficiency of the litigation process as well as
saving the costs
2) Establishment of e-court by
Supreme Court:- The Supreme Court is establishing an e-court.
The citizens can file and process their cases through e-media including
arguments. The parties need not visit the Supreme Court. There will be
tremendous improvement in judicial efficiency and saving in costs. The
initiative by the Supreme Court will have exemplary effect on the HIgh
Courts and Trial Courts.
News :- The
Financial
Express dated 28th Nov. 2001 at page 1
published a news item 'Shankar Sharma set to slap Rs. 500-cr suit on Centre'
It was reported that 'Accusing the government of victimizing them
for being the angel investor in Tehelka.com which exposed corruption in defence
deals last March, First Global's Shankar Sharma and his wife Devina Mehra on
Tuesday said they would file a case for 'punitive damages' worth Rs. 400-500
crores against the government some time next week.
Our Views
:- This news item shows that people in our country are also becoming bold enough to file damage suits against the government. Such action alone will make
the government and its machinery responsible and accountable for proper
functioning of the democracy. Similarly the injured borrowers and the guarantors
should also file their counter-claims and or counter-suits for the injury, loss
and damages under the law of torts.
News :-
The Economic
Times dated 10th Dec. 2001 at page 1 published 'RS
28,000-CRORE DAMAGES SUIT MAY PROVE TO BE LIFE-JACKET' 'Dabhol
fast turning out to be Enron's only ray of hope'
It was reported that 'As time ticks away DPC is gearing up to issue the
final termination notice on the Maharashtra State Electricity Board and then
start arbitration proceedings in London. DPC has pegged the net present value of
its loss of revenues over 20 years at Rs. 28,000 crore (around $ 5bn). The
revenue loss which has occurred is what DPC is likely to claim during
arbitration.
Our Views :-
The DPC under the ownership of the Enron executed
documents with the Electricity Board and Maharashtra
Government. These documents were not having one sided terms and
conditions. During course of implementation of the project, the DPC filed 18
suits against the said Electricity Board and the Government and won those suits.
And now in the arbitration proceedings the DPC is to claim the damages of Rs.
28,000 crores. The lesson is that our industrialists and businessmen should
scrutinize the documents to be executed and should not sign one sided terms and
conditions. They should keep in view as well as in writing any injury and claim
the same if the occasion, if so arises. The Industrial Associations in the
country should have alert and active law departments which should undertake legal scrutiny of
all the bank security documents and should initiate rectification of illegal and
one sided
terms and conditions. If such work is done earnestly, it will be greatly helpful
to industries, banks as well as the nation. We are prepared to undertake such
job if the Associations assign the same to us.
News :-
The Economic
Times dated 8th June 2001 at page 1 published
SMOKER GETS BIGGEST-EVER AWARD
'Jury tells Philip Morris
to pay up $3bn
(i.e. more than Rs. 14,000 crores) in damages'
The award was the highest individual punitive
damage award ever against a cigarette maker on account of negligence and fraud
in not properly warning the smoker of the risks of smoking causing incurable
lung and brain cancer.
Our Views :-
The damage to the human life is to be valued and proved by the
person concerned. This example shows that a single living individual human being
can claim damages to the extent of more than Rs. 14,000 crores for the incurable
disease. Hence the injury caused to a person like an
industrial unit on which several workers - direct as well as indirect and their
families, entire society due to various contributions through taxation depends could be enormous. It is
pity that we are neither valuing our life nor are prepared to assert our rights
based on law of torts. The competent and capable industrial borrowers and
guarantors who are injured must claim their rightful dues.
News :-
The
Financial
Express dated 20th Jan. 2002 at page 11
published a news item 'Respect for rules only can improve corporate
governance' The former chief justice of India and chairman of Centre for
Corporate Governance(CGC), Justice MN Venkatchaliah said 'General adherence of
the corporate governance norms cannot be achieved unless the fear of respect for
norms is there.'
Our views :-
were expressed in our letter (reproduced below) to
the editor published in The
Financial
Express
dated 22nd Jan. 2002 :-
'Fear is the key to governance
This refers to the
news item 'Respect for rules only can improve corporate governance' (Jan.20)
The former chief justice of India and Chairman of Centre for Corporate
Governance (CGC) Mr. MN Venkatchaliah has timely pronounced that fear of
violation of norms can alone improve the corporate governance and he called
upon the legal community to create such atmosphere. This is perfectly true
also for the governance of the country whose managers are the politicians and
the bureaucrats. All this boils down to reform of the conduct with the tool
of fear operating through legal provisions such as law of damages and law of
torts combined with criminal law to be applied widely first on the top
echelons of the society i.e. politicians, bureaucrats and businessmen. The
test for implementation should be the extent to which our corruption index of
71 among 91 nations can be brought down. A time bound program and achievement
can alone convince the voters about the true law abiding conduct of the
politicians. Then only they deserve to be called as public servants in our
democratic set up and the improvement in the per capita income would be
measurement of their duties for which they all unitedly have boosted their
emoluments and perks tremendously. They must practice first among themselves
as well as among the bureaucrats they control, before they preach the innocent
citizens.
Ram Kishan
on e-mail'
■ In
USA the Tort Costs are about 2.2. percent of the GDP,
which is the highest for any branch of law. The Americans spend
more than $300 billion on litigation. There are 307 lawyers
for each 1,00,000 Americans. There is separate Bar Association for Tort
Lawyers.
■ The
subject of 'Law of Torts' is taught in all the Law Colleges of our country. The
Indian book on this law authored by Ratanlal, Advocate and Dhirajlal,
Barrister-at-Law is more than 100 years old, it was published in 1897
and its 23rd edition was published in 1997.
■ The
famous Indian Tort Lawyers were Pandit Motilal Nehru, Mohd. Ali Jinnah,
Tej Bahadur Sapru, Sir Hari
Singh Gaur who won cases in India even against the British Govt.
■
The
success in bank litigations is mostly based on documentary evidence. The trial
court or DRT is the best place for such litigations and more so when there is
counter-damage claim. Trial court is the court of facts. Higher courts are for
law and justice based on facts established in trial court. The approach and
strategy should be to establish your facts with the tool of cross-examination
with aim and emphasis on admissions so that least matter is left for the
discretion of judges. We have expertise for formulating and implementing such
strategy offering consultancy from inception to every stage of trial at your
door step through your computer any time any where. We even provide instant
consultancy on phone as well.
■ Justice is supreme. The
whole and sole purpose of all courts including tribunals is to dispense justice.
The Supreme Court in S. Nagaraj & Ors. vs State of Karnataka & Anr.
[ JT 1993 (4) S.C. 27] has propounded:-
"Justice is a virtue
which transcends all barriers. Neither the rules of procedure nor technicalities
of law can stand in its way. The order of the court should not be prejudicial to
anyone...Even the law bends before justice. .. Technicalities apart if the
Court is satisfied of the injustice then it is its constitutional and legal
obligation to set it right by recalling its order. .. Rectification of an order
stems from the fundamental principle that justice is above all. The Court is not
precluded from recalling or reviewing its own order if it is satisfied that it
is necessary to do so for sake of justice."
■
The Supreme Court in Ganesh Trading Co. vs Moti Ram [AIR 1978
S.C. 484] has stated:-
"Procedural law is intended to facilitate and not to obstruct
the course of substantive justice. Provisions relating to pleadings in civil
cases are meant to give to each side intimation of the case of the other so that
it may be met, to enable the Courts to determine what is really at issue between
parties, and to prevent deviations from the course which litigation on
particular causes of action must take."
Useful tips for the banks and financial
institutions
■The
Entrepreneur, industrialist and businessman are the real soul of the wealth
generating activities. The presence or absence of the entrepreneur makes all the
difference to the dynamism of an industry, and indeed of the whole economy. Please ensure that they are not in trouble otherwise the
wealth generation will be in trouble and your lending will sure turn into NPA.
■Be
very thorough at the stage of the project appraisal. Once you sanction a
project, you create a right for the duty of care for the entrepreneur and as per
the law of torts, you cannot withdraw credit without paying compensation for the
injury, loss and damages upto the time of payment of damages for the industry
and its dependents. If your action is found to be oppressive, arbitrary and
unconstitutional with wilful defaults, you may be required to pay aggravated and
exemplary damages even for the remotest cause of action for the industry and its
dependents. The bank officials may be held personally responsible. The damages may be claimed
with interest at monthly rests as well as with penal if there is wilful delay.
The counter-damage claims have further legal support as there is no 'no-fault'
insurance of the borrower/guarantor as against multiple safeguards for
you such as mortgage, guarantee, margin, holding and operating the account in spite of being a
interested party, government support etc. One of the greatest flaw is that one
of the parties i.e. the bank is also holding the funds and its flow. All these are enough to disturb the
principles of justice, equity and good conscience in respect of the other party
which is much smaller and weaker compared to you.
■You
are aware that the RBI Guidelines are statutory and the same have been held so by
the Supreme Court of India. The RBI has issued such Guidelines in respect of
sick units and industrial sickness since 1976. The violation of such guidelines
amounts to breach of statutory duties resulting into injury, loss and damages.
In future you should be careful that no violation of the said guidelines takes
place'
■Industrial
loans are legally different from personal loans. Being object and purpose
oriented they are recoverable only out of surplus generation of running of the
industrial unit as shown by you in your appraisal reports. Since entire society,
government and RBI is legally involved, your isolated recovery will ultimately
prove to be abortive and illegal with the application of law of torts by the
borrowers and guarantors.
■The
interest rates are continuously falling. In China 4.5% is the lending annual
rate of interest to the industry. In developed countries, the bankers are at
their toes to watch the account and flow credit automatically as and when needed
so that the entrepreneur is not disturbed from his shop floor.
■Public
has tasted the fruits of privatization in telecom sector in form of improvement
in service, quality, cost and price due to open competition which is utterly
lacking in banking sector. Further the performance of the private banks is also far
superior. Hence you cannot resist the urgent public demand for immediate
privatization. The government and the RBI are under great pressure to improve the
performance of the public sector banks. Recent incidence of imposition of penalty of Rs. 36 crores
on an Indian Bank by the Fed Reserve of the USA is a pointer to the RBI which
has not imposed any penalty since 1976 for numerous violations of the statutory
RBI Guidelines. Now such sorry state of affairs cannot go on for ever due to
counter-claims and counter-suits in the DRT and civil court due to such
violations.
■Please
note that your security documents are not the contract documents. The
relationship between the banker and borrowers/guarantors is governed by the law
of torts. The said security documents cannot have any one sided terms and
conditions or against the equity otherwise they will be held illegal turning the
lending as unsecured.
■In
view of above, running of the industry and a happy entrepreneur is the best and
the only security which can alone stop creation as well as growth of NPAs. Rest
including coercive legal actions will be a farce bull work without any
realization of your over dues. You have now no option but to be business centric
rather than bureaucracy centric due to enlightenment of the consumer and
globalization of the society. This is a stark reality and a writing on the wall.
Your suggestions are heartily welcomed in the interest of desirable team work
between industry and bank with of course consumer being the king.
■The
Supreme Court vide citation contained in AIR 1982 SC 234 at p. 243 has warned as
under:-
"The imperative of equality and development
are impatient for implementation and in a rapidly changing society running on
the rails of rule of law and operated according to constitutional paradigms, the proprietariate is bound to suffer but the country cannot defer the
transformation, because, then, hunger will know no law."
■Kautilya
in Arthashastra has long back stated :-
"The
fundamental principle of economic activity is that no man you transact with will
lose, then you shall not"
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Interactions with Mr. B.S. Malik, Senior
Advocate, Supreme Court of India
Mr. B.S. Malik is a Senior Advocate of
Supreme Court and a famous constitutional lawyer with practice of nearly 30
years. He appreciated our articles and his comments were 'master piece' On
11.05.02, Mr. Malik rang us from Chandigarh and had useful interactions on the
telephone. We were pleased to know that he is not only regularly visiting our
web site every week, he is taking print and studying the content in depth. He
further informed that he has started studying the law of torts. He asked us to pay attention
to Delhi area,
for which he promised all help and cooperation. He very much appreciated the
work being done by us. Looking to the keen interest of Mr. Malik, we decided to
accord renewed priority to Delhi, Chandigarh and U.P. We have started getting
cases from the parties referred to by Mr. Malik. Similar such party from
Ludhiana approached us for our legal opinion which we have since rendered.
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Economic Times (Dtd. 04.06.02, pgs. 1and 7) on Law of Torts
The Economic Times in its issue dated
4th June 2002, for the first time, dealt with the law of torts vide the news
item 'What is the sauce for the goose....' at page 1, and 'The Debate' at page
7, contents of which is exhaustive and self explanatory. If you have any
difficulty in understanding the same, you may kindly either speak to us or send
an e-mail for clarifications, if any. Some of the politicians, bureaucrates and
businessmen have openly violated this law. It was the duty of the advocates,
judges and law professors to emphasize application of this law to book the said
violators. Had it been done right from the beginning of our democratic era, we
would not have such height of corruption, irresponsibility and unaccountability
in our society. In the international corruption index of 191 nation, India
occupies 171 position. Hence it is a proven fact that our spiritualism and
culture has no impact on our corrupt behaviour. Modern life requires application
of modern law. It is the only fear of the damages imposed by application of the
law of torts can make the bureaucracy more responsible, accountable and less
corrupt as proved by the experience in developed countries. As an example, we
have applied this law in DRT matters. We have received cases to apply this law
against bureaucracy in municipal corporation for illegal demolition of a
building, against an airline company for mental torture to passengers, against a
public sector company for unnecessary initiating action under sec. 138 of the
Negotiable Instruments Act due to dishonour of cheques.
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