(1) SC Notice to Centre on bringing Tribunals under One Ministry
Following is the extract from our web page vide link
http://www.drtsolutions.com/drt_DRT.htm
A
news item in the internet edition of Times of India dtd 25.07.12 is
reproduced below:-
SC notice to Centre on bringing tribunals under one ministry
Dhananjay Mahapatra, TNN Jul
25, 2012, 02.44AM IST
NEW DELHI: Litany of tribunals set up under diverse ministries to deal
with a slew of issues — ranging from environment to income tax — has
resulted in lack of uniformity in their functioning, so much so that
members appointed to decide cases were not qualified to practice in
them
A Supreme Court bench of Justices A K Patnaik and Madan Lokur issued
notice to the Centre — on the basis of a PIL filed by the Madras Bar
Association — that gave a direction to the Union government to bring all
tribunals under the administrative aegis of the ministry of law and
justice.
The PIL filed through advocate Nikhil Nayyar said Competition Commission
of India (CCI) and its Appellate tribunal along with Company Law Board
came under the ministry of corporate affairs, while Copyright Board
functioned under the HRD ministry.
"Intellectual Property Appellate Board was under the ministry of
industry and commerce, while Customs, Excise and Service Appellate
Tribunal, Debt Recovery Tribunal and its Appellate Tribunal, and
Securities Appellate Tribunal were set up under the aegis of the
ministry of finance," it said.
Since the tribunals were not set up under one administrative control,
there had been great diversity in the functioning of these grievance
redressal forums, it said.
"First, the qualification of members (of these tribunals and boards) is
not uniform. In many tribunals, 'administrative' or 'technical' members
do not even require a law degree. This has resulted in a curious
situation where 95% of the 'technical' members will not be allowed to
practice before the tribunal, but will be able to sit on its bench,"
senior advocate Arvind Datar said arguing for the petitioner.
The retirement age of the members were also not uniform, it said and
complained that the administrative ministries have adopted a
step-motherly treatment to these tribunals as far as providing
infrastructure and staff was concerned.
Besides, the government had never carried out judicial impact assessment
while enacting a new statute resulting in defeating the purpose of
creating tribunals, which was to reduce pendency.
The apex court had recently taken exception to the manner in which
government had treated the National Green Tribunal (NGT), which was
woefully short of office space, staff and residential accommodations.
Peeved over lack of basic amenities, two judicial members of NGT
resigned from their posts.
The PIL said that government had paid scant regard to two judgements of
the apex court - the 2010 judgement in R Gandhi case and 1997 judgement
in L Chandra Kumar case - that mandated all tribunals be brought under
the aegis of the ministry of law and justice.
(2) Bank (Secured Creditor) asking other Bank to freeze Account of a
running Industrial Unit is Illegal – Remedy – Injunction Suit
Following is the extract from our web page vide link
http://www.drtsolutions.com/drt_DRT.htm
One of our clients informed the following:-
(a) The
secured creditor Bank ‘A’ had initiated recovery action under SARFAESI
Act. Our client continued running his industrial unit through account
in another Bank ‘B’. The Bank ‘A’ asked Bank ‘B; to freeze the account.
(b) We
asked our client to file an Injunction Suit under the Specific Relief
Act, 1963.
(c) None
has right, power, authority and jurisdiction to create hurdle in a
running unit, stopping employment to workers etc which are violations of
fundamental rights under the Constitution of India. Court is duty bound
to award immediate injunction (i.e. stay)
DRT Solutions Weekly Mail – 219th Issue dated 20th July ’12
All Weekly mails right from 1st Issue to latest, click links
given at the top
(1) Use of Audio and Video Recordings and other Technological Tools
Following is the extract from our web page vide link
http://www.drtsolutions.com/drt_DRT.htm
The use of technology brings efficiency better recordings of the facts as
may be seen from the following instances:-
(a)
One
of our clients recorded all the telephone calls which he had with the
bank officials. There are nearly 300 such audio recordings. The same
will be transcribed and used in the pleadings. The CD containing such
recordings will be filed as document.
(b)
Some times the bank officials demand undue favours such as transfer of
money to their relatives. Details of such transactions as well as the
documents must be kept for future use.
(c)
During appraisal, there are several visits of the bank officials. Audio
and video records of such visits will be valuable document to prove the
viability of the project.
(d)
Telephone talks and visits of the recovery agents must be recorded. Most
often these persons misbehave or use unparliamentary language. One must
claim damages from the bank for such conduct.
(e)
In
most of the cases, the banks get blank documents signed. Record of
discussions and photo of such documents will be useful in the pleadings
as documents can not be allowed in the court of law.
(f)
Audio record of court proceedings and its transcript will be very much
useful in preparing the written arguments.
(2) Use of Video Conferencing for our Clients
Following is the extract from our web page vide link
http://www.drtsolutions.com/drt_DRT.htm
Sometimes
some of our clients visit us along with their counsels, fellow directors
and consultants. Video conferencing will be quite useful in reducing the
time and expenses as all such persons need not travel from their place
to Indore. Reliance web world has very good arrangements for such video
conferences. The record and DVDs will be quite useful for review and
revisions.
DRT Solutions Weekly Mail – 218th Issue dated 13th July ’12
All Weekly mails right from 1st Issue to latest, click links
at the top
(1) Beware of Such Advocates who are telling that they have Intimate
Relations with the Judges
Following is the extract from our web page vide link
http://www.drtsolutions.com/drt_DRT.htm
From two of our clients from two DRTs in the country, we have come to
know that certain advocates have been propagating that they have
intimate and personal relations with the judges. One should be careful
of such advocates and it will be better to avoid them due to the
following reasons:-
(a)
It may be only a rumour and the said advocate is taking undue
advantage of such rumour.
(b)
Such advocates will not pay any real attention to the legal
aspects and hence the case will have built-in deficiencies which may be
difficult to overcome in future.
(c)
If the advocates and judges are in league, the judgement will
be definitely wrong.
(d)
The litigation is long drawn process and there are several
stages of reviews and appeals. The wrong judgement due to relations will
get reversed in the higher courts.
(e)
Hence in view of above, it will be better to concentrate only
on true fight based on correct facts. It may take time but there will be
sure success at the end of fight.
(2) Receipt of Notice u/s 13(4) is Sufficient to Initiate Action u/s 17
of the Securitisation Act
Following is the extract from our web page vide link
http://www.drtsolutions.com/securitisation_securitization_SARFAESI_SA_Act.htm
After in-depth study and based on the judgments delivered by the Supreme
Court and the High Court, we have come to the conclusion that one should
initiate action u/s 17 of the Securitisation Act just after receipt of
the notice u/s 13(4).
DRT Solutions Weekly Mail – 217th Issue dated 6th July
’12
All Weekly mails right from 1st Issue to latest, click links
below:-
Weekly Mails - 1-10 11-20 21-30 31-40 41-50 51-60 61-70 71-80 81-90 91-100 101-110 111-120 121-130 131-140141-150 151-160 161-170 171-180 181-190 191-200 201-Latest
(1) Importance and Value of Entrepreneurs – India a Barren Land for
Entrepreneurs
Following is the extract from our web page vide link
http://www.drtsolutions.com/Entrepreneurs.htm
In the very beginning of creation of this earth when the human beings
were one among other animals. The lives of the said human beings was
just like animals. Some of those human beings were however different and
they came forward to improve the life and living. They questioned
everything around and they took risks to create useful things. Those
human beings are called ‘Entrepreneurs’. You just look around you and
several things you will find those are created by the entrepreneurs.
Just for an example – ‘Electric Bulb’ Thomas Alva Edison created the
first electric bulb. He experimented and failed 5000 times to reach the
final design of the electric bulb. When the first bulb was lighted for
public viewing in an open ground, most of the population of USA visited
the place where the said bulb was lighted. They were surprised to find a
light which was continuously burning with the same intensity and was not
affected by the wind. The said bulb became so useful to the humanity
that with passage of time, most of the human beings on earth were using
the said electric bulb.
It was the entrepreneurship of Edison that created the bulb and entire
humanity was benefited for all time to come. Like this there are
numerous products and several entrepreneurs who have made our life
virtually a heaven on earth.
The society which facilitates entrepreneurs and respects its
entrepreneurs becomes rich and prosperous. America is one of such
societies. On the other hand the environment in India is entirely
opposite. The Indian entrepreneurs have to struggle at every point of
time and many of them are killed before they achieve any success. That
is why at present we are 25 times poorer than America.
It was not so before the British ruled our country. The kings were
respecting and honouring the entrepreneurs. As a result India was one
among most prosperous countries in the world. Our export was highest and
numerous goods were produced. The Indian entrepreneurs invented and
discovered numerous products in the fields of mathematics, astronomy,
metallurgy, textiles, medicine, surgery, weapons etc. It was since the
ancient time of Vaidic period. On mental and spiritual plane, the work
done by the entrepreneurs of that time (they were called Rishies) is
matchless till today.
At present, the Govt and its instrumentalities are not paying any
attention to real development of entrepreneurship in the country. There
is only some show off or lip service. There are many entrepreneurs who
come forward to set up their projects but are killed on account of ill
financing by the banks and the financial institutions.
(2) Judiciary and Litigation Process in India
Following is the extract from our web page vide link
http://www.drtsolutions.com/drt_DRT.htm
In USA most of the suits are decided within 9 months. There is separate
‘Bar Association of Trial Lawyers’ The work load of the judges is
decided in such a mannIer so that he gets sufficient time during office
hours. Each case is thoroughly prepared by the advocates and everything
is put down on paper. All the arguments are audio and video recorded and
the transcript is prepared on the same day. There is no compulsion on
the judge to declare the judgment within a prescribed time. All out
effort and emphasis is on accomplishing the best quality so that
ultimate aim of justice is achieved.
On the other hand, in India, the suits may take 20 to 30 years and still
justice may not be achieved. Instead of improving the civil courts, the
attention was diverted to form tribunals but now the tribunals are
taking 5 to 10 years. In most of the cases, the justice is not achieved.
In view of above, we have been emphasizing the importance of perfect
pleadings and perfect disposal on every date. Since this is not possible
for the advocates, we have been asking our clients to be fully involved
on every date. Achieving perfect disposal on every date is the main
requirement during the trial. The trial court or DRT is the first and
the last opportunity if one aims at winning the litigation. Since it is
well known that the banks and the financial institutions will fight upto
Supreme Court, Hence we are very careful in choosing our clients who
should have sufficient financial resources to fight and survive till end
of the battle upto the Supreme Court. With such approach only leading
judgments may be achieved and such judgments alone will be useful to
other litigants in future.
It is needless to mention that functioning of the democracy depends on
‘Competent and Efficient Judiciary’ otherwise the society will be
corrupt and will be ruled by criminals as none will be afraid of
breaking the law. First we need judicial reforms before any other
reforms. With such mindset, we should fight our legal battle in DRTs.
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Our Weekly Mails and DVDs are DRT Legal Guide and gold mine of practical
information for the borrowers and guarantors - The
mail recipient particularly Borrowers and Guarantors will be immensely
benefited by our weekly mails and DVDs, all previous issues of weekly
mails from 1st one till the last one may be viewed by clicking the links
given at the top. Separate web pages have been created to contain these
mails in batches of 10 so that pages open up fast. These mails are gold
mine of information on current topics giving lot of practical
suggestions and comments. Any new recipient to these mails must go
through all the weekly mails right from the issue no 1 to the latest. If
possible please spread the reference of our 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. The particular issue of the weekly mail is
first published on the web site and then mailed to borrowers, guarantors
and their advocates in the country. This service is free in the best
interest of society in general and litigant borrowers and guarantors in
particular. We are getting huge no of mails appreciating our weekly
mails. We welcome suggestions.
DRT Solutions Weekly Mail – 216th Issue dated 29th June
’12- Camp Sagar
All Weekly mails right from 1st Issue to latest, click links
at the top of the page
(1) Judgments favourable to Barrowers
Following is the extract from our web page vide link
http://www.drtsolutions.com/DRT-Judgments.htm
(a) 2012
(1) DRTC 800 (Bom), Sterlite Technologies vs Union of India -
Writ Petition in Bombay High Court decided on 22.12.11 - DRT Act – Sec
21 Proviso – Appeal – Waiver of Deposit – Dispension with condition of
pre-deposit sought – Elements of prima facie case and question of
financial hardship required to be considered by the DRAT – DRAT did not
consider application for waiver in terms of legal position – Impugned
order of DRAT set aside – Application for waiver of deposit restored to
file of DRAT for a decision afresh.
(b) 2012
(1) DRTC 846 (P & H), Shiv Charan Singh vs Haryana State Industrial &
Infrastructure Development Corporation –
Writ Petition in Punjab and Haryana High Court decided on 09.01.12 – SFC
Act Sec 29 and 31(1) (aa) – Auction Sale – Jurisdiction of Corporation –
Parties by agreement cannot confer jurisdiction on Corporation to
proceed against the guarantor u/s 29 of the Act – Sec 29 can be
exercised only against the industrial concern – Corporation has a right
to proceed against guarantor u/s 31 or u/s 32-G but Sec 29 confers
limited jurisdiction on Corporation to act against the industrial
concern alone.
(2) Contesting the OAs filed by the Banks
Following is the extract from our web page vide link
http://www.drtsolutions.com/drt_DRT.htm
It is observed that the banks have gone back to filing of the OAs
instead of the action under Securitisation Act. The OAs need to be
contested like a civil suit and it will take much longer time than the
SA. Further there is express provision of the counterclaim. Hence if the
case is being handled by an experienced trial lawyer having intimate
knowledge of the CPC and with a strong counterclaim, it will be
extremely difficult for the banks to win the OAs. In past we have dealt
with numerous aspects of the counterclaim in our weekly mails. All those
will be very much helpful to the borrowers and their advocates.
DRT Solutions Weekly Mail – 215th Issue dated 22nd June ’12
All Weekly mails right from 1st Issue to latest, click links
at top of the page
(1) Indian Banks Rating downgraded from Stable to Negative by Fitch –
SBI, PNB, ICICI Bank, BoB, Canara Bank, IDBI Bank, Axis Bank, Exim Bank,
HUDCO, IDFC & IRFC are involved
Following is the extract from our web page vide link
http://www.drtsolutions.com/drt_DRT.htm
Fitch downgrades Indian banks
http://www.deccanherald.com/content/258346/fitch-downgrades-indian-banks.html
New Delhi, June 20, 2012, DHNS :
Credit
rating of SBI, PNB, ICICI, BoB and others turns negative
Fitch Ratings on Wednesday revised the credit rating outlook of State
Bank of India, Punjab National Bank and nine other financial entities
from ‘stable’ to ‘negative’, while affirming the rating.
The list
of other downgraded entities include four government banks (including an
international banking subsidiary of a government bank), two private
banks, two wholly owned government institutions and one infrastructure
finance company.
They include Bank of Baroda (BoB) and its international banking
subsidiary in New Zealand known as BOBNZ, Canara Bank, IDBI Bank, Axis
Bank, ICICI Bank, Export-Import Bank of India (Exim Bank), Housing and
Urban Development Corporation (HUDCO) and Infrastructure Development
Finance Company (IDFC).
The action by Fitch was consequent to the revision made earlier this
week of India’s outlook to negative.
In a statement Fitch said: “The outlook revision of the financial
institutions reflects their close linkages with the sovereign by virtue
of their high exposure to domestic counterparties and holdings of
domestic sovereign debt.”
Besides two wholly owned government institutions — Exim Bank and HUDCO
have also been similarly downgraded. The outlook of IDFC and Indian
Railway Finance Corporation outlook has also become negative.
Fitch, however, maintained that banks continue to have reasonable
customer deposit base, domestic franchises and adequate capital, while
the non-banking financial entities (NBFCs) lack the funding advantage
now which puts them more at risk during times of increased market
volatility.
Analysts are of the view that the cut in the rating outlook may raise
the cost of overseas borrowings for such institutions. The rating agency
also said sovereign support for both the large banks and ‘policy-type
institutions’ is expected to remain strong, with the former benefiting
from their large share of system assets and deposits and the latter from
their association with the government.
It may be noted, Fitch, on last Monday, lowered India’s credit rating
outlook to negative, citing corruption, inadequate reforms, high
inflation and slow growth. As such, India faces an “awkward combination”
of slow growth and elevated inflation, Fitch had said, adding that the
country “also faces structural challenges surrounding its investment
climate in the form of corruption and inadequate economic reforms”.
(2) Dilemma of Indian Banks to move from Securitisation to DRT Act due
to Slump in Property Market
Following is the extract from our web page vide link
http://www.drtsolutions.com/securitisation_securitization_SARFAESI_SA_Act.htm
On account
of slump in the property market vide news below, the banks and FIs are
in a fix. They have no interest to invoke the Securitisation Act. In
many cases, after issue of the legal notice u/s 13(2), the secured
creditors are postponing issue of possession notice u/s 13(4). They are
now afraid to take possession of the secured assets as there may not be
any buyer. They have no option but to file OA under the DRT Act. In that
eventuality, they will have to face the counter-claims and hence the
recovery cases in the DRTs will be delayed. Further on account of sharp
increase in NPAs, there will more number of cases in DRTs.
Sunday, June 17, 2012
http://indiahousingbubble.blogspot.in/
While MMR reported the sharpest drop of around 58%, NCR slumped 57% from
the year earlier. Bangalore witnessed a drop of 18% in sales, the report
added.
Sales in NCR dropped to 15,104 units from 35,420 units and it fell to
11,473 units from 27,676 units in MMR.
The two regions saw a residential supply of 107,731 and 89,461,
respectively, in the first quarter.
Samir Jasuja, founder and chief executive officer, PropEquity Analytics,
said, “In the coming quarters, there would be strong pressure on many
micro markets and we expect inventory overhang to increase and
absorption could continue to slow down. Mumbai in MMR and Gurgaon in NCR
have seen the sharpest falls in absorption.”
“If this trend continues, there could be a price correction of 5-20%,
especially in the micro markets of NCR, MMR and Hyderabad,” he added.
Bangalore hasn’t been as badly hit because of demand from genuine
homebuyers and end-users, apart from the fewer unsold properties.
Sales in the southern city fell 18% to 7,704 units from 9,410 units.
The other two markets are largely investor driven.
“Generally, investor-driven markets would see downward risks than
end-user driven markets,” added Jasuja.
DRT Solutions Weekly Mail – 214th Issue dated 15th June
’12
All Weekly mails right from 1st Issue to latest, click links
at the top
(1) Before Declaring NPAs, Bankers have Numerous Duties to Perform
including Rehabilitation not only Once but Multiple Times
Following is the extract from our web page vide link
http://www.drtsolutions.com/securitisation_securitization_SARFAESI_SA_Act.htm
One of our clients Mr. Mukund Murthy from Mumbai has sent the following
useful information:-
“Before declaring NPAs,
Bankers have numerous duties to perform including
rehabilitation not only once but multiple times –
Important Information for Borrowers and their advocates
Our Associate and Banking Expert has drawn attention
to the following important RBI Guidelines and circulars which will be
highly useful to Borrowers and their Advocates. These need to be studied
and important aspects included in the ‘Representation and Objections’ to
notice u/s 13 of the Securitisation Act as well as in the application
u/s 17 of the said Act:-
(a) Even before the prudential norms to declare
accounts as NPA was brought by RBI to be implemented from 31st March
2004, RBI issued a circular DBS.CO.OSMOS/B.C./ 4/ 33.04.006 /
2002-2003 dated September 12, 2002 on “Guidelines
on preventing slippage of NPA accounts” based
on a study on preventing slippage of NPA accounts, addressed to The
chairman/ Managing Director/Chief Executive Officer – All Commercial
Banks (Excluding RRBs) which means it is applicable to all commercial
banks irrespective of whether they are Indian banks or foreign banks or
multi state co-operative banks. Since the circular cited now is issued
previous to the circular issued for declaration of NPA, the guidelines
as prescribed in the aforesaid circular has to be implemented first
before declaring an account as NPA.
(b) RBI Master circular DBOD No.BP.BC.10/21.04.048/
2004-05 dated July 17, 2004 where in prudential norms are given. As per
the said circular of RBI, mere irregularity in the account cannot make
it a Non Performing Asset. It depends upon the nature of irregularity.
(c) RBI circular RPCD.PLNFS.BC.No.31/06.02.31/2005-2006
dated August 19, 2005 highlights the “Policy Package for Stepping up
Credit to Small and Medium Enterprises. - Further RBI circular RPCD.SME
& NFS.BC.No.9/06.02.31/ 2010-11 dated July 1, 2010 under lending to
Micro, Small & Medium Enterprises (MSME) Sector among other things
states about Debt Restructuring Mechanism for Micro Small and Medium
Enterprises.
(d) That as per Government of India policy and RBI
guidelines and directives, it is apparent that an account can be
classified as NPA only when all the means of making the account
performing, which includes repeated rehabilitation fail to produce the
desired result, and then and then only, the legal proceedings under
Securitization Act 2002 can be invoked and proceedings initiated by
issuing the notice u/s 13(2) of the said Act.”
Our Comments
(a) Almost in all the cases, the NPA Declaration by the banks is wrong
and illegal. Assuming that proper pleadings have been made, this
particular aspects should be tried as a Preliminary Issue.
(b) Further it is assumed that the pleadings contain the loss and
damages creating situation of ‘No Debt Due’
(c) Other important hurdles are (1) getting stay of DRT against physical
possession by the banks in the initial stages and (2) 25% deposit with
the appeal to the DRAT. These aspects have already dealt with in detail
in our previous mails.
(2) Public Sector Banks – Thoughtless Directives from Delhi
Following is the extract from our web page vide link
http://www.drtsolutions.com/drt_DRT.htm
One of our clients Mr. Sanjay Jain from Nagpur has sent the following
useful information:-
“Public Sector Banks : Brazen, Quixotic and Thoughtless directives from
Delhi
http://www.moneylife.in/article/public-sector-banks---1-with-government-keeping-the-control-who-will-put-in-the-capital/26249.html
June
12, 2012 07:45 AM |
A Banker
The
Department of Financial Services has been overactive in issuing
directives. Worse, DFS is resorting to brazen ways of dictating to PSBs
to sponsor their proposals to the board and get them approved
Notwithstanding the fact of substantial private
shareholding in PSBs and the managerial autonomy
granted to them in 2005, the central government’s power to give
direction to banks in regard to matters of public interest, after
consultation with the RBI derived from the Banking Companies
(Acquisition and Transfer of undertaking) Act 1970—in short Bank
Nationalization Act 1970—remains intact. The nature of consultation with
the RBI is not clear nor is it clear whether the government could
overrule RBI’s advice in matters where the RBI is professionally
competent. Be that as it may, in the recent past, the ministry of
finance, Department of Financial Services (DFS) has issued a number of
directions, advisories and directives to PSBs, some of which are in
contravention of the 2005 Managerial Autonomy granted to PSBs, and they
are also not in keeping with the aim of protecting
minority shareholders’ rights as mentioned in the 2005 document. There
is thus the potential risk that private shareholders could call into
question some of these directions/ advisories a la TCI against Coal
India. Besides, almost invariably the DFS wants banks to place its
letters before the board of directors within a fortnight, underlying
presumption being that the proposals would be approved without demur by
the board where majority of the directors are nominees of the
government.
This is bad enough but more worrisome is that some of
directives/advisories are thoughtless, if not downright quixotic, as
would be illustrated with
some glaring examples.
Constitution of Credit Approval Committee (CAC)
The ministry of finance, Department of Financial Services (DFS) issued
a Gazette Notification on 05 December 2011 under Section 9 of the Bank
Nationalization Act, 1970, in consultation with the RBI, to constitute
in each of the nationalized bank a credit approval committee which is
authorised to approve credit proposals of Rs400 crore in the case of
Category A banks with business of Rs3 lakh crore or more and up to Rs250
crore in the case of other banks. The notification clearly stated that
it is a committee of the board and that it shall have a chairman &
managing director, executive directors who are whole-time directors as
also designated chief general managers (CGMs)/general managers (GMs) as
members. This notification came as a surprise to many banks as they had
no prior indication nor did the government or the RBI consult them
though it was not obligatory to do so.
The banks sought clarifications from DFS on two major
issues: [i]
as the CGMs /GMs are not directors on the board, they cannot be members
of a board committee. More substantively, as they are the officials who
recommend credit proposals, they cannot be on CAC as it would amount to
proposers and approvers are the same at least in part. [ii] Whether the
credit approval limit of Rs400/ 250 crore refers to single borrower or
single proposal or for a group.
The DFS did not specifically clarify the position on
the first issue and apparently left it to the banks to keep the CGMs/GMs
as proposers and not members of CAC. On the second issue, DFS
clarified—it is worth quoting, “These powers are applicable to any
single proposal placed before the CAC, irrespective of group or
individual exposure as such” (emphasis added). In a single swipe, DFS
thus abolished the concept of exposure limit which is a prudential norm
followed by banks world over with reference to credit risk they can
undertake vis-a-
vis their net worth, and blew away to the chagrin of RBI prudential
norms prescribed by it. Neither DFS nor the RBI could be more
emphatically aggressive in discarding a well established and prudent
concept! Fortunately, banks kept their counsel and stuck to the credit
approval limit, as per borrower. Incidentally the clarifications do not
appear to have been gazetted though they are of substantial importance.
[B]
Setting up of credit approval committees at the corporate, regional and
zonal levels
The DFS
sent out a draft proposal on the above subject on 17 February 2012
asking banks to comment on the proposal within a week. The proposal
involved setting up of CACs at various administrative/controlling
offices to deal with credit proposals expeditiously for which the CACs
will be given specified powers by the boards of respective banks. In
this, and the subsequent letter of 27 February 2012 apparently based on
banks’ comments, the powers presently exercised by officers in the
hierarchy as per the scheme of delegation of powers in each bank was
agreed to be retained, and the powers of the CACs at corporate and other
controlling offices were to be prescribed for larger amounts. However,
in reversal of the foregoing, the DFS advised the banks on 03 April 2012
as follows: “With the setting up of these committees, the powers vested
in officers above the branch level should cease to exist” (emphasis
added).
Under the existing scheme of delegation of powers,
the discretionary powers of officials posted at the branches are
determined by the category of branch as per business volume and the
grade of officers. Thus, for example, a rural branch manger may be
vested with powers of approval up to say, Rs 2 lakh
while a metro branch manager may have powers up to Rs100 lakh. Under the
DFS dispensation, the CAC at say regional office could get a proposal
for more than Rs2 lakh from a rural branch and for more than Rs100 lakh
from a metro branch. This is totally incongruous with any rational
scheme of delegation! The last word on the subject is not yet out.”
Our Comments
(a) The Ministry of Finance continues to proceed with further illegal
acts and directives. Ultimately it will create legal problems resulting
into further delays in DRTs.
(b) It is needless to mention that the only and the best recovery is out
of surplus generation by running of the industry and or business. The
banks are duty bound to help the ailing units by revival, rehabilitation
and or restructuring so that surplus generation is achieved. Till that
time, no recovery action should be initiated.
(c) Despite above, if any recovery action is resorted to by the banks,
it will result in huge delay apart from huge loss and damages which will
create ‘No debt Due’ situation.
DRT Solutions Weekly Mail – 213th Issue dated 8th June
’12
All Weekly mails right from 1st Issue to latest, click links
at the top
(1) Open Violation of Law by Minister of Finance, Ministry of Finance
and POs of DRTs and DRATs
Following is the extract from our web page vide link
http://www.drtsolutions.com/drt_DRT.htm
Dr Suresh, Founder of the ‘Borrowers Rights Forum’ has sent the
following news item. Our comments are as under:-
(a) The
Supreme Court has ordered that the Tribunals should be transferred from
the control of the parent Ministries to the Ministry of Law.
(b) As
per Art 141 of the Constitution of India, the law declared by the
Supreme Court shall be binding on all courts within the territory of
India.
(c) As
per the Supreme Court judgment contained in AIR 1971 SC 179, Makhan Lal
vs State of Jammu, the Supreme Court decisions are binding on all States
and their Officers and all persons whether they are parties thereto or
not and to all pending proceedings.
(d) Despite
above as may be seen from the following news release, the Ministry of
Finance as well as the Minister of Finance, the POs of DRTs and the
Chairpersons of the DRTATs continue to openly violate the law declared
by the Supreme Court.
(e) A
writ was filed by the said ‘Borrowers Rights Forum’ in Andhra Pradesh
High Court. The Ministry of Finance has not yet replied to the Hon’ble
High Court despite reminders. Even they are not bothered about the
contempt proceedings.
(f) It
is suggested that all the litigant borrowers and guarantors should unite
under the said forum and send their e-mail supports to Dr Suresh drcsuresh@gmail.com proposing
countrywide actions.
“15”
pib.nic.in
PRESS INFORMATION BUREAU
GOVERNMENT OF INDIA
*****
UNION FINANCE MINISTER ASKS THE CHAIRPERSONS OF
DEBT RECOVERY
APPELLATE TRIBUNALS (DRATs) AND PRESIDING OFFICERS
OF DEBT
RECOVERY TRIBUNALS (DRTs ) TO SUGGEST WAYS AND
MEANS TO
EXPEDITE THE UNLOCKING OF RESOURCES OF VARIOUS
BANKS
New Delhi: Jyaistha 16, 1934
June 06, 2012
The Union Finance Minister Shri Pranab
Mukherjee asked the Chairpersons of Debt Recovery Appellate Tribunals (DRATs)
and Presiding Officers of Debt Recovery Tribunals (DRTs) to suggest ways
and means to expedite the unlocking of resources of various banks locked
in the form of Non Performing Assets (NPAs) etc. The Finance Minister
Shri Mukherjee said that there can be no lending unless there is
recovery. But today, the Banks are facing the problem of increasing
NPAs which needs to be addressed on priority, the Minister added. He
said that the Government has advised the Bankers to closely monitor
their NPAs. He further said that the role of DRTs is all the more
important in helping out the banks to deal with the mounting NPAs/loss
assets as they are the part of mechanism for recovery of loss assets.
The Union Finance Minister Shri Mukherjee was addressing the First
Conference of the Chairpersons of DRATs and Presiding Officers of DRTs
here today.
The Finance Minister Shri Mukherjee asked
the Chairpersons and Presiding Officers to deliberate and discuss in
detail during their one-day Conference and give their concrete
suggestions which would go a long way in improving the functioning of
DRATs and DRTs. Along with the Chairpersons of DRATs and Presiding
Officers of DRTs, the Conference was also attended by Shri D.K.Mittal,
Secretary, Department of Financial Services, Ministry of Finance and
other senior officers of his Department.
The Union Finance Minister Shri Mukherjee
said that this Conference is being held at a time when the Indian
economy is facing various challenges. He suggested that he has full
faith in the capacity and abilities of our people as well as in the
resilience of the Indian economy to overcome successfully such
challenges. The Finance Minister Shri Mukherjee said though it is a
matter of great concern that there is a slow down in the GDP growth rate
beside having higher current account and fiscal deficit yet there is no
need to press the panic button. He said that he is confident that
through patience, deligence, competence and capacity of our businessmen,
small and medium entrepreneurs, workers and economic experts, we would
be able to overcome these challenges successfully as we have done in the
past many times. Highlighting the positive aspects of Indian economy,
the Finance Minister said that basic fundamentals of our economy are
strong, rate of saving and investment from domestic sectors are also
high beside reversal in the tight monetary policy among others.
Therefore, the Finance Minister said that he is fully confident that the
objective of taking the economy back to the path of higher growth,
maintaining moderate rate of inflation, narrowing down the gap of
current account deficit and restricting the fiscal deficit to 2 per cent
of GDP are very much achievable. He said that during the international
financial crisis, the role of banks is very important. He said that due
to well placed regulatory mechanism and its effective and efficient
functioning in the country, our banks were not adversely affected during
the international crisis of 2008-09. Rather they helped in minimising
the impact of international crisis on our economy, the Minister added.
The Union Finance Minister said the role of DRTs is
all the more important in helping out the Banks to deal with the
mounting NPAs/loss assets as they are the part of mechanism for recovery
of loss assets.
The Union Finance Minister Shri Pranab
Mukherjee said that DRTs can ensure the effective and speedy recovery of
public money. Keeping in view this important aspect that the Recovery
of Dues due to the Banks and Financial Institutions Act, 1993 (RDDBFI
Act) prescribed that it should be the endeavour of the Tribunals to
decide the case in 180 days, the Minister said. He said that DRTs have
not been able to adhere to this time line. The Finance Minister Shri
Pranab Mukherjee said that it is informed that the pendency of cases in
the Tribunals is about 67,000 cases involving an amount of Rs.136 lakh
Crore as on 31.03.2012. He said that this is a matter of great concern.
The Finance Minister Shri Mukherjee said that
pendency of cases has increased and there is need to increase the pace
of disposal by DRTs. He said that there is delay at times as the Banks
representatives do not submit complete documents or seek adjournments.
He said that there is need for proactive action/approach to be taken by
the Banks. He further said that some of the DRTs may be over burdened
due to increased number of filing of cases or their large jurisdictions.
Therefore, the Finance Minister Shri Mukherjee said that there is a need
to look into the territorial jurisdiction of the existing DRTs. He said
that there is also need to rationalise and if considered absolutely
necessary, the setting-up of additional Tribunals can also be
considered.
The Finance Minister Shri Pranab Mukherjee said that
the steps are being taken to remove the bottlenecks and thereby improve
the performance of the DRTs. He said that we are also taking
legislative measures considered necessary. In this regard, he mentioned
about the Bill which has been introduced in the Parliament for amendment
of SARFAESI Act and RDDBFI Act.
The Finance Minister Shri Mukhjerjee asked the
participating officials to give a serious thought to the aspect of
judicial accountability and suggest ways and means to achieve higher
accountability, appropriate control and effective supervisory mechanism.
He further asked all the participants to give a serious thought to the
challenges before them and suggest measures to deal with this
situation. The Finance Minister assured full support of the Government
to the practicable recommendations of the Conference.
***
DSM/Hb
(2) The Bananas with Dark Patches on Yellow Skin – Anti Deadly Cancer
Following is the extract from our web page vide link
http://www.drtsolutions.com/new_page_9.htm
Mr Firoz Poonawalla has sent the following useful piece:-
The fully ripe banana produces a substance called TNF which has the ability
to combat abnormal cells. So don't be surprised very soon the
shopwill go out of stock for bananas. As the banana
ripens, it develops dark spots or patches on the skin. The more
dark patches it has, the higher will be its' immunity enhancement
quality . Hence the Japanese love bananas for a good reason. According
to a Japanese scientific research, banana contains TNF which has
anti-cancer properties.
The degree of anti-cancer effect corresponds to the degree of ripeness
of the fruit, i.e., the riper the banana, the better the anti-cancer
quality.
In an animal experiment carried out by a professor in Tokyo U comparing
the various health benefits of different fruits, using banana, grape,
apple, water melon, pineapple, pear and persimmon, it was found that
banana gave the best results. It increased the number of white blood
cells, enhanced the immunity of the body and produced anti-cancer
substance TNF. The
recommendation is to eat 1 to 2 banana a day to increase your body
immunity to diseases like cold, flu and others.
According to the Japanese professor, yellow skin bananas with dark spots
on it are 8 times more effective in enhancing the property of white
blood cells than the green skin version.
-------------------------------------------------------------------------------------------------------------------------------------
Our Weekly Mails and DVDs are DRT Legal Guide and gold mine of practical
information for the borrowers and guarantors - The
mail recipient particularly Borrowers and Guarantors will be immensely
benefited by our weekly mails and DVDs, all previous issues of weekly
mails from 1st one till the last one may be viewed by clicking the links
given at the top. Separate web pages have been created to contain these
mails in batches of 10 so that pages open up fast. These mails are gold
mine of information on current topics giving lot of practical
suggestions and comments. Any new recipient to these mails must go
through all the weekly mails right from the issue no 1 to the latest. If
possible please spread the reference of our 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. The particular issue of the weekly mail is
first published on the web site and then mailed to borrowers, guarantors
and their advocates in the country. This service is free in the best
interest of society in general and litigant borrowers and guarantors in
particular. We are getting huge no of mails appreciating our weekly
mails. We welcome suggestions.
DRT Solutions Weekly Mail – 212th Issue dated 1st June
’12
All Weekly mails right from 1st Issue to latest, click links
given at top of this page
(1) Judgments Favourable to Borrowers & Guarantors
Following is the extract from our web page vide link
http://www.drtsolutions.com/DRT-Judgments.htm
(a) Securitisation
Act – Sec 17 – Limitation Act, Sec 5 shall apply – Allahabad High Court
- Citation- 2012 (2) Bankers’ Journal 78, State Bank of Patiala vs
Chairperson DRAT Allahabad
(b) Securitisation
Act – Sec 13(4) – Appeal u/s 17 maintainable if action is against Act or
Rules framed thereunder e.g. notice for possession, preparation of
Panchnama, notice to sell property, to take assistance of DM/CMM/CJM for
taking possession etc. – DRT cannot reject appeal on the ground that it
was premature or not maintainable – Gujrat High Court - Citation –
2012(2) Bankers’ Journal 93, Analkumar Rajkishore Mishra vs Dena Bank
(2) Amendment of the SA
Following is the extract from our web page vide link http://www.drtsolutions.com/securitisation_securitization_SARFAESI_SA_Act.htm
“We are getting several cases where the SA has been prepared but it
lacked important portions like many of the wrong doings committed by the
lenders and the loss and damages on account of the said wrong doings. We
advised our such clients that the SA should be amended at the earliest
possible opportunity. If it is not done, the borrower shall be deprived
of an important right and his case will become weak and later on curing
such weakness will not be possible. There are few judgments of the
Supreme Court of India which lay down that “ The Courts should be
extremely liberal in granting prayer of amendment of pleadings unless
serious injustice or irreparable loss is caused to the other side.”
DRT Solutions Weekly Mail – 211th Issue dated 25th May
’12
All Weekly mails right from 1st Issue to latest, click links
given at the top
(1) ‘No Debt Due’ – Stages for Highlighting
Following is the extract from our web page vide link http://www.drtsolutions.com/securitisation_securitization_SARFAESI_SA_Act.htm
“The banks are out to misuse the coercive provisions of the
Securitisation Act. In order to secure favourable response from the
Magistrate u/s 14 or from the PO DRTs u/s 17, proper pleadings are to be
made to emphasize the situation of ‘No Debt Due’ at the following
stages:-
(a) In
the Representation and objections against the notice u/s 13(2), the loss
and damages should be pleaded stating that since the said loss and
damages are much more than the alleged dues of the bank and hence there
is ‘No Debt Due’. Copy be also sent to the Chairman and other higher
officials of the bank.
(b) In
the caveat filed before the Magistrate copy of the said Representation
and Objections be enclosed emphasizing the said ‘No Debt Due’ situation.
Copy of the said caveat be also sent to the Chairman and other higher
officials of the bank.
(c) In
the arguments before the Magistrate the said point of ‘No Debt Due’ be
emphasized. Also written arguments be submitted.
(d) Despite
above if the Magistrate order is not favourable, review be filed before
the Magistrate.
(e) Just
after review, appeal be filed before the DRT.
(f) Since
every stage, sufficient records have been created followed by Review,
Appeal and Written Arguments, the Magistrate and PO DRTs will have no
option but to grant stay for taking the physical possession.
(g) Despite
above, if desired results are not achieved, one will have sufficient
records and documents to file Appeal before DRAT and then subsequently
before the High Court and Supreme Court.
(2)
e-DRT Project of Govt of India
Following is the extract from our web page vide link
http://www.drtsolutions.com/drt_DRT.htm
The Govt of India has launched e-DRT project for modernization of the
DRTs. EoI (Expression of Interest) document has been published on the
web site of DFS (Deptt of Financial Services) of Ministry of Finance and
has been issued to the IT companies having minimum turnover of Rs. 500
crores with employees of minimum 1000 nos. All necessary software are to
be developed, hardware are to be supplied and the project implemented
and monitored for next 10 years.
With above, the entire setup of the DRTs will be much more
technologically oriented. Accordingly the litigants and the advocates
will be compelled to use modern ICT (Information and Communication
Technology) tools.
We shall be watching the above development with a view to equip
ourselves for the same.
