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(1) Importance of Counter-claim - Misconceptions

Despite our repeated emphasis on the importance of counter-claim, still lot of misconceptions exist among the litigants and the advocates. Our comments are as under:-

(a)    The banks are initiating recovery actions stating their alleged debt due in money value

(b)    The borrowers do not have adequate in-depth knowledge about banking and banking laws. Accordingly whatever they know, they tell to their lawyers. Thus the lawyers knowledge is limited to what the are told to them by their clients.

(c)    Most of the books and literature available is helpful and inclined towards banks.

(d)    On account of historical reasons and prevalent practice, we continue to base our thinking on lending and borrowing based on security, collateral, guarantee etc.

(e)    Prior to Nationalization of Banks in 1969-70, the complete lending was based on security.

(f)      We were under British Rule, when the concept and practices of ‘Object and Project Oriented Lending’ based on appraisal was started in the developed countries.

(g)    After independence, our govt also desired to resort to the modern lending but all the bankers declined and the govt was forced to nationalize them in 1969-70.

(h)    The new concept of lending was not introduced for which the banks were nationalized. Even till today, the banks continue to resort to multiple securities which are all against the law enshrined in the Nationalization Act of 1970.

(i)      Another erroneous aspect was delayed development of Administrative Law in our country. The British knowingly did not allow the same. Even after independence, it took for the said law to develop. The leading judgment of Kripack in 1970 has still not been put into practice.

(j)      The mandatory RBI Guidelines still are not being followed followed by the banks. Such violations are continuing since 1976 when some of the most important guidelines relating to Sickness and Rehabilitation were issued.

(k)    All the above legally amount to wrong doings by the banks. Some of them are known to the litigants and accordingly are mentioned in the pleadings.

(l)      Simply pleading the violations will not lead to remedies by the courts. What we have been emphasizing that the said violations result into loss and damages and the said loss and damages must be claimed as part of the counter-claim.

(m)  In absence of the said counter-claim, the defence will never be complete. That is why we have been emphasizing that ‘Counter-claim is the only and ultimate defence in bank litigations’

(n)    Proper preparation of the said counter-claim requires complete knowledge about banking, business, industry, law of torts, law of damages, project, balace sheets etc. It does not end with the preparation of pleadings, complete knowledge is required on all dates in the trial court. There are cases which are going on since 1989 and the parties still come to us for guidance and advice.

(o)    Some of our clients got counter-claims prepared by us but their advocates advised not to file it. Subsequently on account of legal troubles, they realized their mistakes and came to conclusion that the counter-claim should have been filed. They approached us and we advised them to file the same. Slowly their legal position improved after filing the counter-claim. Some of the clients did not seek our guidance and advice after filing the counter-claim but when they encountered problems, they came to us. It is needless to mention that we have keen taking interest and actively involving ourselves in these matters since 1989 and that is why we have acquired the relevant knowledge and experience. Hence we advise our clients to keep in touch with us, understand pros and cons and then take any decision during the trial. Without achieving perfect trials, one should never approach to the higher courts otherwise, the entire case may be spoilt or lost.

(2) Law of Defamation and its Application

Past one year we have been working on the law of defamation. There are judgments which are dating back to even 1670. After thorough study of the subject for about one year, recently we have prepared a notice against a central govt deptt which colluded with a leading news paper group of the country to defame our client. Through such notice we have claimed damages of Rs 1400 crores. We shall now be equipping our web site on the matter of defamation.

DRT Solutions Weekly Mail – 189^th Issue dated 23^rd Dec. ’11

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(1) Govt introduces SARFAESI Amendment Bill in Parliament to effectively deal with Bad Loan Recovery  

The following news item appeared in the internet edition of Economic Times dated 23^rd Dec ’11, 03 22 AM:- 

23 DEC, 2011, 03.22AM IST, AVINASH CELESTINE,ET BUREAU 

Sarfaesi laws may lessen banks' bad loan burden 

NEW DELHI: Banks will be allowed to take property seized from defaulting borrowers onto their own books, or in effect 'buy' the asset they secured, thus reducing their non-performing loans, according to a revised securitisation law awaiting parliamentary sanction. 

In effect, this would allow banks to clean up their books but at the risk of being saddled with an asset worth far less than what the bank paid for it. 

This change, which forms a part of the proposed amendments to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Sarfaesi), introduced last week, comes at a time when banks face the risk of rising non-performing loans, and of being saddled with property seized from borrowers unable to pay back their loans. 

Worse, a weak property market means that banks may be unable to find buyers for the property they have seized - at least at the price they want. 

The same set of amendments also propose to give the finance ministry wide-ranging powers to notify certain types of banks to whom the provisions of Sarfaesi will not apply, or apply only with certain 'exceptions, modifications and adaptations'. 

It also brings multi-state co-operative banks within the ambit of Sarfaesi and allows asset reconstruction companies (ARCs) to convert debt into equity as part of a restructuring. At present, Sarfaesi allows banks and ARCs to seize assets from loan defaulters, which in many cases include immoveable property. Banks then typically hold an auction to sell the property. 

However, if a bank is unable to find buyers willing to bid above the reserve price, or the minimum bid amount, it currently has little option but to postpone the auction to a future date, and hope for a better bid. 

Under the proposed changes, in case of a failed auction, the bank can depute one of its own officers to bid for the property at the reserve price at any future auction. If there are no other bidders yet again, or the bank's own bid is the highest, the property stands 'sold' to the bank. Under current law, a bank is not allowed to bid for property it puts up for auction. 

"This is allowed under the Civil Procedure Code and the incometax recovery laws," said MR Umarji, chief advisor-legal, Indian Banks' Association. The changes also apply to ARCs.

Our Comments

(a)    The said amendments are very minor in nature and will not materially expedite the recovery against the legally competent litigants. Small or Ignorant borrowers however will face more problems.

(b)    We have been advising our clients to raise thorough Representation and Objections to the notice u/s 13(2) which should include the loss and damages due to the wrong doings of the banks and the copy should be endorsed to the Chairman. We welcome the enhancement of limit of 7 days to 15 days for the reply to the said Representation and Objections. It is needless to mention that as per the verdict of the Supreme Court in the matter of Mardia Chemicals, the reply has to be given with due application of mind. The subsequent pleadings should mention that the banks have been double of the time period to reply properly.

(c)    Any transfer of the property to the bank will only be possible if there is debt due and so decided by the DRT. In the event of ‘No Debt Due’ situation when the said loss and damages are more than the claim of the bank, the proposed transfer or conversion of debt into equity will become legally questionable before DRT.

(d)    We have been emphasizing since 2001 that the best recovery is through earnings of the business for which as per the RBI Guidelines, the banks should make sincere and serious efforts for restructuring, reviving or rehabilitating the business rather than coercive powers which will only increase the litigations. Such litigations will result in greater burden on the judicial system which is already highly burdened. In such context, we have been advising our clients to have perfect pleadings right from the inception and perfect adjudication on every date by competent and experienced trial lawyers.

DRT Solutions Weekly Mail – 188^th Issue dated 16^th Dec. ’11

(1) Ignorance, Lack of Knowledge and or Defective Knowledge – Pathetic Condition of Borrowers and Guarantors facing Recovery Actions

On 15^th instant we have received the following mail which shows the pathetic condition of the borrower. Our comments given below shows that such condition has arisen due to total lack of knowledge on part of the borrower and his advocate:-

“Dear Sir,

I have a case with bank in DRT. They issued notices under 13(2) and 13(4) and and have taken possession of the property. They have made a publication for auction of the asset for 1.96 crores. There were no bidders. after some time they brought down the upset price to 1.36 crores and made a publication. Then we approached drt and the tribunal gave an order asking us to pay the 50% of the upset price in 20 days and the balance in 20 days. we then approached DRAT and were asked to pay 80 lacs in one month. we approached the high court and the court directed us to pay 80 lacs in one month. we did not honour the court order, as we could not pool in the required amount.

There was one bidder for 1.58 crores during the second auction. The bank has sold the property to that bidder and transfered the property to him.

As the value of the property is more than 5 crores as on date and the bankers valuer at the time of granting loan has assessed the same property for 3.72 crores.

Sir, can i get some relief by setting aside the sale proceedings........ kindly help”

Our Comments

(a)    The borrower discussed the matter over phone. It was revealed that there was total lack of knowledge on his part as well as his advocate. We asked him to discuss the matter personally along with the documents.

(b)    As soon as the notice u/s 13(2) is received, we must send a legal notice to the bank asking for the documents. Side by side, we must prepare the ‘Representation and Objections’ to be submitted within 60 days of receipt of the said notice. This should be quite exhustive to deal with the wrong doigs committed by the bank along with the loss and damages suffered. Copy must be sent to the Chairman of the bank.

(c)    A caveat must be filed with the CMM and or DM of the place where the secured assets are situated requesting to provide opportunity for hearing whenever the bank approaches u/s 14 of the Securitisation Act for taking physical possession of the secured assets.

(d)    As soon as the notice u/s 13(4) is received, legal notice should be sent to the bank intimating that application u/s 17 will be filed within 45 days.

(e)    No deposit is required by any authority at any stage if all the provisions of law are fully understood,properly pleaded and contested.  No physical possession of the secured assets can be taken till the application u/s 17 is fully decided which will take few years. On the other hand there will be tremendous pressure on the bank to settle the case.

(2) Caveat to be filed before CMM or DM

Despite our repeated emphasis, the caveats are not being filed before CMM or DM and as a result the bankers are approaching these authorities to get ex-parte orders for taking physical possession of the secured assets. The caveat is meant for opportunity of hearing when the bankers approach the Magistrate for taking physical possession of the secured assets. Opportunity for hearing is one of the principles of natural justice and is also a fundamental right. It is the duty of the Magistrate and the Banker to honour such caveat otherwise it will a contempt of the court.

(3) Finance Ministry pushes Banks for Fast-track Bad Loan Recovery

The following news item appeared in The Economic Times, Mumbai in its issue dated 12 Dec. ’11. Our comments are given below:-

MUMBAI: The finance ministry is pushing capital-strapped public sector banks to hasten recovery of bad loans to improve health, and has promised to fill vacancies at debt recovery tribunals (DRT) across the nation, partly responsible for inordinate delays in ending disputes. 

"Needless to say that Rs 2 lakh crore (of bad loans) are a drag on the capital of banks," a bureaucrat from the finance ministry wrote to bank chairmen recently. 

"All cases should be reviewed and... ensured that all cases pending above two years should be cleared by March 2012." Banks last year wrote off almost 10% of their gross bad loans as various recovery forums failed. 

Recovery through DRTs fell to 28% of the total referred cases in 2011, from 32% ayear earlier, data from the Reserve Bank of India (RBI) shows. 

Under the SARFAESI Act, it was a little better at 38%, compared with 30% in the same period previous year. 

Bankers had complained to the finance ministry that the DRT mechanism was not functioning efficiently, which in turn was making it difficult for them to recover dues. They had said the tribunals lacked presiding officers and recovery officers.

Our Comments

(a)    It is the same Ministry of Finance which is not even caring about the verdict of the Supreme Court to transfer the administration of DRTs from its fold to the Ministry of Law. Hence the present working of DRTs is itself questionable.

(b)    The said Ministry of Finance is making several illegal appointments of the Presiding Officers of the DRTs out of the Bankers. Such cases are being questioned in the court of law.

(c)    If quicker recovery is required, the Ministry should ask the banks to introduce ‘Legal Audit’ before approaching the DRTs so that all the wrong doings of the bank are set right before case if filed in DRTs.

(d)    It must be understood that the best recovery is out of of profits of the running of the business and not by legal actions or by selling the securities.

DRT Solutions Weekly Mail – 187^th Issue dated 9^th Dec. ’11

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(1) OA Dismissal – Existence of SA – DRT Recovery Action – Article - ‘Transcore Vs UOI’- A Judicial Monocracy to Anyhow Uphold Unwarranted Multiple Action(s) of the Banks/FIs.’  

We have been repeatedly emphasizing that as soon as the Securitisation Act is invoked and if there is OA pending or OA is initiated, the same should be dismissed. In such circumstances, we have been advising our clients accordingly. A comprehensive article with title as above has been prepared by Mr. N.K. Sharma, ex-GM (Law) and our Associate. The same has been published on our web site vide link  http://www.drtsolutions.com/OA_Dismissal.htm  

(2) Threat and or Fear of Physical Possession of Secured Assets   

It is observed that the banks are taking undue advantage of ignorance of the borrowers. They threaten physical possession of secured assets by saying that they have unlimited powers to do so after the enactment of the Securitisation Act. The relevant legal aspects are as under:-

(a)                No physical possession by the banks can be taken without any order of court of law i.e. Magistrate, DRT, &  or Civil court.

(b)                If any bank official or police officials approach the borrower for delivering physical possession, they should be asked to produce the court order. In absence of valid and genuine court order, no physical possession should be given.

(c)                If there is no court order, the borrower is not bound to give physical possession.

(d)                The borrower should file an FIR for such visit of the banker and or police without court order.

(e)                If the bank officials demand any deposit or promise for deposit for postponing the physical possession, no such condition should be agreed upon.

(f)                  The facts and circumstances as above should be included in the application u/s 17 before the DRT treating as a wrong doing involving additional loss and damages.

DRT Solutions Weekly Mail – 186^th Issue dated 2^nd Dec. ’11

(1) DRT though not bound by CPC can seek aid of principles of CPC by applying them wherever it matters  

The Madras High Court vide 2011 (2) DRTC 695 (Mad) in the matter of Dr. E. Prabhakaran vs Lakshmi Vilas Bank in its judgment dated 11.4.11 stated that “No wonder, the Tribunal is a creation of a statute which is to observe the principles of natural justice by adopting/deciding its own procedure in dealing with the disputes before it. Admittedly the provisions of CPC are not applicable to the Tribunal constituted under the DRT Act. Of course there is no embargo for the Tribunal under the DRT Act to seek the aid of principles of CPC in applying them wherever it matters.”

Our Comments  

The Supreme Court of India vide 1999 AIR(SC) 1975 in the matter of ICICI vs Grapco Industries has ruled that DRTs can exercise the power of civil court and even can travel beyond the scope of CPC for the purpose of CPC.

In fact, the CPC is nothing but codification of principles of natural justice and hence the scope the said principles is much higher than that under the CPC. Hence the DRTs has much wider scope than CPC.

(2) Precondition of minimum 25% Deposit u/s 18 of the Securitisation Act becoming great Handicap for the Litigants as well as Judiciary in several cases  

There are now several judgments where the said precondition of minimum 25% Deposit u/s 18 of the Securitisation Act becoming great Handicap for the Litigants as well as Judiciary. We have been voicing our concern since last two years. The constitutional validity of this provision needs to be questions without further delay otherwise many genuine litigants will be deprived of the justice on account of such oppressive and unconstitutional provision.

DRT Solutions Weekly Mail – 185^th Issue dated 25^th Nov. ’11

(1) Bar of Civil Court in Securitisation Act - Extent  

This important matter is exhaustively dealt with in the Civil Revision decided on 11.02.11 by Bombay High Court vide 2011(3) Bankers’ Journal 659, State Bank of India vs Sagar & Others. The sum and substance of the decision in brief are as under:-

(i)                  The jurisdiction of civil court in respect of the property which is subject matter of security interest is barred only to the extent of the matters which DRT and DRAT is empowered under the Act to determine.

(ii)                For remaining matters, the jurisdiction of the civil court is not outested or barred under the provision of sec 34 of the Act.

(iii)              In order to decide whether the jurisdiction of the civil court under sec 9 of the CPC is ousted or not, the real test would be to find out whether the DRT under sec 17 is empowered to hold an enquiry on a particular question and to grant relief in respect thereof.

(iv)              The jurisdiction of civil court in respect of the matters covered by sec 13 of the Act is completely barred.

(v)                The matter connected with the partition and separate possession of the property is not barred.

(vi)              The matter connected with declaration that action of the secured creditor in respect of the secured assets is fraudulent and void is not barred.

(vii)            The matters of permanent and temporary injuction for taking possession of the property in respect of (vi) is however barred.

(viii)          But when matter in respect of (vi) has been decided, the injuction and relief may be granted by the civil court.

(ix)              The coclusion as in (viii) is also applicable in respect of suits relating to partition and separate possession.

(x)                It is open for the affected person to lodge his objections u/s 17 of the Act to protect his interest and also to balance the equities.

(xi)              The effect of the decree passed by the civil court can be determined only after culmination of both proceedings and not before.
 

(2) Deposit Conditions for Appeal in DRT Act and  Securitisation Act  

The above Acts incorporate deposit conditions for Appeal. Our comments are as under:-

(a)                As per Rule No 9 of the DRAT, 75% of the debt due is to be deposited with the DRAT. The DRAT is empowered to waive or reduce this amount. Hence proper pleadings should be made before DRT supported by documents like balance sheets so that when time comes for the appeal, the deposit is waived.

(b)                As per the sec. 18 of the Securitisation Act, minimum 25% of the decided amount of debt due has to be decided. We have been repeatedly emphasizing that such provision needs to be challenged.

(c)                On account of above, it is all the more important that complete pleadings be made before DRT right from the inception and case fought perfectly on all dates. The raising of counter-claim in the matter of DRT Act and the loss and damages in the matter of Securitisation Act becomes highly essential.  

(3) Amount of Counter-claim  

It is observed that all categories of damages are not being claimed in our country and as a result only bare minimum direct losses only are claimed. But the law of damages is highly developed and numerous types of loss and damages such as those pertaining to opportunity lost, loss of image and reputation, nervous and mental tension, stresses, aggravated damages, exemplary damages etc need to be claimed. These are based on the project report, appraisal, correspondence and balance sheets. We have described the various factors in our website in the pages relating to ‘Notes on Damages’ and Notes on Law of Torts’ If all the factors are considered, the damages work out to be quite huge compare with the alleged claim of the secured creditor and hence the situation becomes that of ‘No Debt Due’ This is the only and ultimate defence for the litigant borrowers in DRTs.

DRT Solutions Weekly Mail – 184^th Issue dated 18^th Nov. ’11 – Camp Sagar

(1) Securitisation Act – Sec 13(4) – Possession Notice - Publication in Newspapers – Stay thereof  

One of our clients from Tamilnadu approached us informing that he has received the possession notice u/s 13(4) of the Securitisation Act and he desired to obtain stay against the publication of the said notice in the news paapers. He further informed that his advocate has proposed to approach the DRT to grant stay for further action by the secured creditor. Our comments are as under:-

(a)                As per Rule 8(2) of ‘The Security Interest (Enforcement) Rules, 2002, the possession notice (which has been affixed on the outer door) shall also be published in two leading newspapers …..

(b)                Since the said rule uses the word ‘shall’, it will be mandatory for the secured creditor.

(c)                Further, as per the established law relating to ‘Ownersip and Possession of Properties’, the possession is legally valid only after it is made known to world at large. Hence after the notice, the publication in newspapers is a must.

(d)                In view of above, DRT Judge has no legal authority for staying the publication in newspapers. Even if he does so, such decision will be reversed by the higher courts.

(e)                Hence our view is that the said prescribed publication of possession notice can not be stayed and hence such exercise will be premature and infructuous. The expenses involved in court fee and advocacy will be a waste apart from secured creditor registering a victory on such well established matter. We came across two such cases in Chennai and Ahemdabad, when the DRTs dismissed the SA on this count.

(2) Counter-claim is the only ultimate defence for the borrowers in DRTs  

Recently we came to know that one of our clients contesting his case in DRT Hyderabad got counter-claim prepared by us but after advice of his advocate, the said counter-calim was not filed. Our comments are as under:-

(a)    There was no specific provision of counter-claim in the DRT Act 1993. On account of insistence of the Supreme Court of India, specific provision of counter-claim was made in the said Act in 2000.

(b)    It is observed that the secured creditors are committing numerous wrong doings in almost all the cases resulting into huge loss and damages to the borrower.

(c)    It is further observed that almost in all the cases, the said counter-claim is much more than the alleged debt due and hence there is ‘No Debt Due’

(d)    The said ‘No Debt Due’ has to be first decided by the trial court of the DRT as per law and the procedure of law. Till the final verdict is obtained, no recovery action can be carried out.

(e)    With our experience of past 22 years, we have found that in those cases where counter-claim was setup, the bankers either lost the case or approached the borrower to settle. In one of the case, the settlement was within 5% and in several cases the settlement amount ranged from 15% to 25%.

(f)      We have voicing the above approach through our web site www.drtsolutions.com since 2000.

(g)    One of our Mumbai clients got two counter-claims prepared from us and at the instance of his advocate, the said counter-claims were not filed. After two years, the client experienced certain problems which could be solved only by filing the said counter-claims. With such experience, he approached us for preparing counter-claim for his third case.

(h)    We welcome open discussions with any legal authority to prove and validate our above mentioned contentions.

DRT Solutions Weekly Mail – 183rd Issue dated 11.11.11

(1) Willful Defaulters’ Norms–Different for Corporate Sector and remaining Sectors  

Mr. N.K. Sharma, one of our Associates and ex-GM (Law) has drawn our attention to the following news item published on 31.10.11:- 

One lakh crore credits on Industrialist families 

http://jaipur.co/one-lakh-crore-credits-on-industrialist-families/ 

Jaipur: The reputation of the government bank is losing its credibility because of Industrialist families. The loan of 1.5 lakh crore taken by the government bank is still missing out of which more than 70 percent loan is taken by the industrialist families. 

On Sunday (30.10.2011), All India Bank Officers Association’s two day conference being here in which this issue was brought in to light. The National President Alok Khare and General Secretary R.J.Sridharan said in the meeting that private banks earned around 45 thousand crore in the year 2011, but because of centre’s leniency around 20 thousand crore rupees is being distributed like corporate loan. 

The banks which are running on the orders of the Reserve Bank publish the defaulter list of the common people but they don’t have the list of the defaulters of the corporate families. According to the bankers in the Bank Director’s meeting also this list is never mentioned, because of which till today the list have not come into existence. Some specialists blame the government for this. For the common man there are norms to return the money in a given time whereas there are no norms for the corporate families. There are laws of recovery but it is only implemented on the common man. 

Our Comments  

(1) The above news item confirms our views regarding wrong doings committed by the banks in declairng willful defaulters.

(2) As a result we have been advising our clients to file Injunction suits in civil courts to stay their actions to declare the borrower as willful defaulter.

(3) The said suit is to be based on specific RBI guidelines and the Chairman of the bank must be made as a necessary party.

(4) Such suit has been filed by one of our clients from Mumbai and another client from Bhubneshwar has been contemplating to file the same.  

(2) Sec 14 of the Securitisation Act – Attempt for Physical Possession by the secured creditor – Precautionary Measures   

Our long held views in this respect have now getting supported by the court judgments. We have now started advising our clients to initiate precautionary actions as soon as the 60 days period as under sec 13(2) is over. A notice should be sent to the secured creditor that since there is no debt due [having informed about the loss and damages being much more than the alleged claim in the said notice u/s 13(2)] due to several wrong doings committed by the said creditor, application u/s 17 will be made in due course of time, no action should be initiated u/s 14 and if it is done, application will be made u/s 17 within 45 days of such initiation. Side by side caveat be filed with the Magistrate. The borrower should be alert and vigilant to pursue these actions in DRT as well as in the court of Magistrate. 

(3) Tablet PC – A most useful device for the Borrowers and the Advocates

We have been using the Tablet PC since October 2010 and found it to be of great utility for the borrowers and the advocates. We have illustrated the use with real life applications. As a result, our Associtates and the acquintances have started using the tablets. There are lot of pockets of free time in our day to day life such as waiting, travelling etc. A tablet can be used during such free time. The reading of mails, judgments, articles and books can be done in standing and walking mode and thus one is freed of sitting which is greates source of modern life style diseases like high blood pressure, diabetes and consequent complications, aging etc. The use of tablets is further enhanced with the use of digital camera for scanning the documents. The scanning of documents and the articles is done with the least time of clicking and the scanned image may be transferred dirctly to the tablet for record and study. Time is not far when we shall find tablets being used along with the mobiles in day to day life. 

(4) Ranking of Our Website in Google  

Our web site www.drtsolutions.com has been topping the Google and other search engings. Please go to Google and search for ‘drt’ The result of ranking may be mailed to us. It will help us in maintaining proper ranking and hence proper service to the borrowers and guarantors. 

DRT Solutions Weekly Mail – 182^nd Issue dated 4^thNovember ’11

(1) Appointment of PO by Ministry of Finance found to be Defective as he was not qualified for the said Post

One of our clients from Trichi informed that the Presiding Officer at DRT Madurai is not qualified to hold that post and this information was obtained through RTI by an advocate from chennai and he has filed a writ of quo warranto. It is also learnt that another two writs on the same basis has been filed against the PO of Coimbatore and Chennai. It seems that the Min. of Finance had blundered in making appointments to the posts of these Presiding Officers. The relevant RTI Applications and the Writs have been reproduced at the end of this weekly mail.

There have been several allegations against the Ministry of Finance which is not even caring for implementing the orders of the Supreme Court of India to transfer the DRTs from its control to the Mininistry of Law. It is proposed that all such wrongful acts of the Ministry of Finance must be submitted as ‘Special Pleas’ in the pleadings at the stage of DRT so that one of the important sources of injustice is also highlighted in the arguments and becomes part of the proceedings eligible to be dealt with in the judicial orders.

All the affected persons suffering on account of above must file Reviews and Appeals to cure the consequent injustice. Such proceedings will pressurize the Ministry of Finance to abide by the orders of the Supreme Court to transfer the establishment of the DRTs to Ministry of Law.

It is hightime that the above is spread among the borrowers and guarantors so that concerted efforts are made by one and all through the tool of the RTI and pleadings to do away with the wrong doings of the Ministry of Finance.

(2) An Useful and Important judgment of the Bombay High Court – All possible grievances can be raised before DRT u/s 17 of the Securitisation Act

The Bombay High Court in its judgment vide 2011 (2) DRTC 496 (Bom), B.D. Agarwal vs Official Assignee has held that all possible grievances can be raised before DRT u/s 17 of the Securitisation Act as the said proceedings are in lieu of a suit.

We have been holding this view past several years and in all our pleadings we were even including loss and damages due to wrong doings of the secured creditors. The above judgment has supported our views. Since the Securitisation Act is a complete code in itself and as per the sec 34 of the said Act, there is specific bar against invoking the civil court, all grievances of the affected borrower has to be raised u/s 17 to obtain complete relief.

DRT Solutions Weekly Mail – 181^st Issue dated 28^th  October ’11

(1) Most Useful & Important Judgment of Kerala High Court – Our Contentions upheld – Even Approach to Magistrate for Physical Possession is appealable to DRT – Entire Judgment reproduced at the end of this Weekly Mail 

For past several years, we have been emphasizing that the even the approaching the Magistrate by the secured creditor is appealable to the DRT. On our own, we have even started the practice of filing caveat to secure opportunity of hearing before the Magistrate. Our contentions have now been upheld by the High Court Kerala (entire judgment reproduced at the end of this weekly mail) which stated as reproduced below (marked red in the para 6 of the judgment:- 

I am of opinion that despite the vehement protestations of Counsel for the banks, particularly by the Union Bank of India, going by the decisions of the Supreme Court, the very fact of the financial institutions approaching the Magistrate under Section 14 itself would constitute a measure under Section 13 (4) of the Act, against which an appeal can be filed by the aggrieved person before the Tribunal under Section 17. 

All the borrowers and persons reading this mail should provide copy of this judgment to their advocates in all DRTs so that this knowledge spread far and wide to end the sleepless nights which the borrowers are suffering due to the impending threat of physical possession. As soon as any notice under sec 13(2) is received, the borrowers should keep in touch with the office of the Magistrate as well as file caveat so that as soon as it is learnt that the banks have approached the Magistrate, appeal under sec 17 be filed with DRT. 

(2) DRAT and HC separately order to deliver back the possession of the properties wrongly taken over – Banks directed to return money deposited by the auction purchasers with interest till date of payment  

There are now several judgments of DRATs and HCs ordering to deliver back the possession of the properties wrongly taken over and the banks directed to return money deposited by the auction purchasers with interest till date of payments. Two recent judgments are as under:-

(a)    2011 (3) Bankers’ Journal 350 (DRAT, Delhi) – Girish Lalwani vs Punjab National Bank.

(b)    2011 (3) Bankers’ Journal 362 (Calcutta High Court) – Debasree Das vs State of Bengal