1) Important & Useful Judgment of the Supreme Court – Discovery,
Production and Inspection of Documents
H.L. Sethi vs R.P. Kapur decided
on 19.07.72 by Supreme Court of India, Judges – K.K. Mathew & P.
Jaganmohan Reddy, Case No : 665(n) of 19721
Citations - 1972
(2) SCC 427 : 1973 (1) SCR 697 : 1972 AIR(SC) 2379 : 1972 Legal Eagle
320
DRT Solutions Citation – DRTS-010-Sethi
vs Kapur-SC-1972
http://www.drtsolutions.com/Sethi-Kapur.htm
(We have now numbered the Judgments published on this web site as
DRTS-00.) Accordingly
all the judgments published so far have been numbered. The judgment on
this page is numbered as DRTS-010.
Comments by DRT Solutions
An Important Supreme Court Judgment relating to Discovery, Production
and Inspection of the Documents
(a) The
full text of the judgment is given on our web site vide link http://www.drtsolutions.com/Sethi-Kapur.htm with
important portion marked in Red.
(b) This
is one of the most important SC Judgments relating to the documents.
(c) All
the bank litigations are based on documents. Hence discovery of all the
material documents is most essential pre-requisite of the bank
litigations. In this connection the following extract from this judgment
are quite relevant.
(d) Extract
from Para 5:-
If
a party wants inspection of documents in the possession of the opposite
party, he cannot inspect them unless the other party produces them. The
party wanting inspection must, therefore, call upon the opposite party
to produce the document.
(e) Another
extract from Para 5:-
When the Court makes an order for discovery under the rule, the opposite
party is bound to make an affidavit of documents and if he fails to do
so, he will be subject to the penalties specified in Rule 21 of Order
11. An
affidavit of documents shall set forth all the documents which are, or
have been in his possession or power relating to the matter in question
in the proceedings. And as to the documents which are not, but have been
in his possession or power, he must state what has become of them and in
whose possession they are, in order that the opposite party may be
enabled to get production from the persons who have possession of them
(see Form No. 5 in Appendix C of the Civil Procedure Code). After he has
disclosed the documents by the affidavit, he may be required to produce
for inspection such of the documents as he is in possession of and as
are relevant.
(f) Extract
from Para 5:-
The documents sought to be discovered need not be admissible in evidence
in the enquiry or proceedings. It is sufficient if the documents would
be relevant for the purpose of throwing light on the matter in
controversy. Every document which will throw any light on the case is a
document relating to a matter in dispute in the proceedings, though it
might not be admissible in evidence. In other words, a document might be
inadmissible in evidence yet it may contain information which may either
directly or indirectly enable the party seeking discovery either to
advance his case or damage the adversary's case or which may lead to a
trial of enquiry which may have either of these two consequences
(g) If
the advocate of the borrower has proper knowledge and adequate
experience of trial and is well versed with material facts relating to
the banking, industry and finance and perfect pleadings of the
counter-claim has been made, no bank can win its recovery case as there
are lot of wrong doings committed by the banks. Under such facts and
circumstances, this particular judgment will be immensely useful.
(2) Strategy & Planning Borrowers’ Litigation in DRTs
Our observations and views are as under:-
(a) Right
from inception since the entrepreneurs were not having adequate finance
and therefore they approached the banks for financial assistance.
(b) The
banks are mammoth organizations having hundreds of branches and
thousands of employees. Most of the big banks are in existence for more
than 50 years and hence they have huge financial resources and long
experience. They have well established law departments headed by General
Manager(Law) The financial liquidity is also high due to CRR prescribed
by the RBI.
(c) Compared
with the banks, the borrowers are too small with virtually no knowledge
of banking and law. Their financial resources are also too small
compared with the banks. Further the said financial resources are
already tied up and deployed with very small liquidity.
(d) On
account of many external factors which may be beyond control, the
business becomes sick and the liquidity becomes negative. Under such
financial problems, the banks instead of helping, apply pressure for
recovery. The borrower may not have even funds for survival leave alone
for legal fight.
(e) The
advocates of the borrowers must keep in mind above facts and
circumstances while making strategy and planning the litigation in DRTs.
(f) The
case must be reviewed at least 7 days in advance of the date. One should
plan if there is any adverse happening on the ensuing date.
(g) Whatever
happens on the date, plan must be prepared on the said date itself.
(h) Since
most of the environment is against the borrower, greater effort and hard
work is required.
(i) The
pleadings should be perfect.
(j) In
most of the cases, the replies by the banks are only simple denials.
Hence right from the beginning preparations should be made for such
denials.
(k) Despite
orders of the Supreme Court more than past 15 years, the bank lobby is
not allowing transfer of the DRTs from Ministry of Finance to Ministry
of Law. Hence most of the POs and Recovery Officers are being appointed
and posted out of bank officials. Further it is against Law that
Ministry of Finance is holding regular meetings with the said POs to
expedite recovery. All such activities by Ministry of Finance amounts to
wrong doings being against the principles of natural justice.
(l) Under
the above biased environment, the advocates of the borrowers have to be
more vigilant and alert. As soon as any order is issued, it should be
thoroughly examined. If there is any scope for Review, review must be
planned. One has to plan the Appeal also so that just after Review,
Appeal is filed within the limitations. We have dealt with this aspect
in several weekly mails e.g. 1st to
8th (17.05.08 to 04.07.08), 21st to
30th, 31st to
40thand thereafter.
(m) As
per law, Review must be filed first and then Appeal should be filed. The
law on the subject was settled as early as 1909 vide exhaustive details
given in AIR 1948 Allahabad 353. Both proceedings may go on
simultaneously. As soon as there is any final order, the other may be
discontinued. Further steps be planned after the said final order.
(n) The
counter-claim is the suit filed by the borrower. It should be handled by
knowledgeable and experienced Trial Lawyer who has personally handled
several trial relating to the bank litigations.
(o) We
observed that the DRT Advocates are quite busy and mostly are not having
experience and knowledge of trial, we had no option but to empower the
borrower litigants so that he emphasizes all important aspects to his
advocate.
(p) With
the above approach several of our clients have achieved success in DRTs
and the wrong doer lenders have been forced either to settle even at 5%
to 20% of the debt due or they are fighting a losing battle in the
appellate court.
(q) We
have found that much will depend as to how thoroughly the counter-claims
are fought in DRTs. That will depend on knowledgeable and experience
trial lawyers. There is no other option or short cut.
DRT Solutions Weekly Mail – 258th Issue
dated 19th April
‘13
All Weekly mails right from 1st Issue to latest, click links
on top of this page
(1) Important & Useful Judgment of Kerala High Court – Bank’s
Application u/s 14 to Magistrate, Appealable u/s 17 to DRT
Sami vs Bank of India decided
on 22.07.11 by Kerala High Court, Judge – S. Siri Jagan, Full text of
the judgment with our comments and important portion marked in Red may
be seen by clicking the link http://www.drtsolutions.com/Magistrate-Appeal.htm
Our Comments
Past several years we have been advising our clients to file caveat with
the Magistrate and as soon as the bank approaches Magistrate, appeal u/s
17 be filed before DRT. This Kerala judgment has supported our line of
thinking. Important portion marked in Red are self explanatory
The concept and approach in this judgment can be further extended. The
moment there is any threat for taking possession and or disposal of the
property such as initiating sale or auction, we should approach to the
DRT u/s 17. In this context one must set up counter-claim which must
include loss and damages. We have found that the said loss and damages
are much more than the claim of the bank resulting into ‘No Debt Due’
Hence until and unless ‘No Debt Due’ is finally decided by the
adjudicatory process, no recovery action can be initiated leave alone
proceeding with.
(2) “Garbage Menace” – Your Little Effort can do Wonders
Mr Rajesh Jain M – 08427931111 and L - 01613966399, one of our clients
from Ludhiana has sent us his following valuable article:-
“GARBAGE MENACE”- YOUR LITTLE EFFORT CAN DO WONDERS
We all are facing one serious problem of Garbage. We all are
contributors to this problem and blame local municipality as they are
responsible to solve this problem. The garbage piles are taking shapes
of mountains if you enter Delhi from Karnal side you can see those
mountains, almost whole outskirts of Delhi or any metro city is being
developed on such type of landfills. The future generations is going to
occupy the land i.e our children.
Have you ever thought how can we minimise this problem? Have you tried
to take a note what is there in garbage? You will never have courage to
stop near the garbage dump and like to have a closer look while passing
near to it, because it stinks and is surrounded by flies, mosquitoes and
harmful bacteria.
But let me tell give you the idea. Industrial waste+ Institutional waste
like Hospitals etc. They are controlled by regulatory bodies but the
major contributor is house hold garbage, which is uncontrolled?
Our house hold garbage consists of: Mainly Kitchen waste &
polythene bags, plastics, metals, non metals, boxes and paper etc.
The Mantra is
“NOT TO DISPOSE EVERYDAY THE NON STINKING MATERIALS”
(Except decomposing matter)
WHY DISPOSE THAT PART OF GARBAGE EVERYDAY?
Which is not troubling you as it is not stinking and will not
decompose for years?
Keep it separate!!
Give to someone who is accepting and selling to those who recycling
it.
This will solve problems partially, without getting any help of
Govt. nominated bodies, you are right, they will not help, and we
help ourselves. It will not involve extra effort or money; no money
will be generated at our end.
Let municipality do the remaining job what is doing already, they
will not have any objection to it.
How we can do it ?
Kitchen waste, which stinks within no time and you want to get rid of it
as soon as possible, Go ahead! No one stops you...........
Stop! Stop! Why are you mixing it with other wastes which are not
troubling you as it is not stinking and will not decompose for years? WHY
DISPOSE EVERYDAY?
Why not keep it separate and collect it in a big jute bag to be kept in
the rear of the house. Dispose when it is full by donating it to some
rag pickers who makes his living out of it, at the same time reducing
his effort and avoiding his exposure to unhealthy working conditions (I
see mainly young girls or boys not even 13 in this category). But it
will not be wise for him or for you to collect the smaller lots; it has
to be considerable quantity so that next time he will come knocking at
your door asking for the collection. I am very much against child labour
or this type job and I do not promote it, our country is big and there
are too many unemployed, however this will be temporary arrangement
since there is no such agency so far which does collect this type of
recyclable materials like in developed nations where you will be charged
for the service.
Our main culprit in our garbage dumps is polythene bags, plastics,
metals, non metals, boxes and paper which is almost two third of the
whole pile, it will be easy for the municipality to handle the rest of
garbage efficiently.
However if you are really ENVIRONMENTALIST then kitchen waste also no
need to throw just like that you can convert it to VERMICOMPOST. Which
is a very good fertilizer for your lawns or flowerpots?
If his message can go to each and every house by NGO’s, Schools,
colleges or by social networking
It will do wonders and save lot of National wealth going down the drain
or in landfills and creating Garbage Menace.
The writer has been producing ‘Vermicompost’ from cow dung and Apple
pomace on large scale Basis and is ready to provide any help in this
sector for Public Interest.
My own House model to save environment is as below:
( My house can be visited to demonstrate to enthusiastic. )
SOLID WASTE:
· Total
kitchen waste+ Garden waste I convert into vermi-compost, I have a pit
of 2’x 8’ in my backyard (really it does not stink at all) the
fertilizer is used for organic vegetables + lawns.
· Plastics
of all types + all others, I keep in a Jute bag to be disposed every
fortnight, believe me it was a real help to our domestic helpers, who
were reluctant to so in the beginning, but it is easy for them now, and
to the rag picker too, who in kind keeps our area free from poly bags
thrown by unknown persons, as we deliver him only on this condition.
WATER DISPOSAL:
· Bath
rooms+ kitchen+ rain water is collected in a tank which we use for
kitchen garden and lawns by pumping.
· I
have separated toilet disposal to a septic tank and then to soak
pit.
ELECTRICITY SAVINGS:
· I
have installed solar water heater , we explore all the possibilities to
make use of this free heat
· We
use for bathrooms No geysers.
· We
use preheated water in kitchen.
· We
have washing machine with two water inlets hot and cold, hot one is
connected to solar water heater.
· We
have LED and CFLs
· We
use Fans+ Air coolers for APR –MAY-JUNE
· Air
conditioners with their outer units are placed in shade and in well air
circulated area so that maximum efficiency is obtained as compared to
the one placed in the Sun or where air circulation is minimum.
GAS SAVINGS:
I have traditional fire place (Chullah) in backyard to take care of wood
logs and very small paper and other non plastic materials, which can be
recycled, but I am afraid that rag pickers will collect from us and
throw at some other place, so to avoid that it is better to produce heat
for domestic purposes like water heating etc as LPG is becoming
costlier, may be it will save fraction of money , but more important is
proper disposal. About ash being produced , we use again on our
vegetables it has double action , it protects from pests as well as it
acts as a fertilizer.
GREEN BUILDING:
· I
have made my house using “VASTU” which makes best utilization of
Sunlight and Air, hollow walls in South and west, maximum windows and
doors in North and east, thus saving on Electricity on account of Light
and air-conditioning as you will require very less.
· It
has health benefits, thus you save on medicals also.
· I
have planted Appox 50 fruit bearing trees and climbers in the south
which gives you fruit as well protects you from harsh effects of SUN.
· I
have painted my house and roof top in white, so that minimum heat is
absorbed from SUN, and is reflected outwards.
· I
am waiting for Photo Voltaic panels to be cheaper and efficient to clad
my house from SOUTH/WEST and top to generate electricity for our use.
----------------------------------------------------------------------------------------------------------------------------------------
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
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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
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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 – 257th Issue
dated 12th April
‘13
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
131-140
141-150
151-160
161-170
171-180
181-190
191-200
201-210
211-220
221-230
231-240
241-250
251-Latest
(1) Important & Useful Judgment of SC - Points Pressed during Arguments
have to be dealt with in the Judgment/Order
Following is the extract from our web page vide link
http://www.drtsolutions.com/DRT-Judgments.htm
Mohd. Akram Ansari vs Chief Election Officer & Others decided
on 04.12.07 by Supreme Court of India, Judges – A.K. Mathur & Markandey
Katju, Civil Appeal No 4981 of 2006 with Civil Appeal No 5828 of 2006
Citations - 2008
(2) SCC 95 : 2007 (12) SCR 901 2007 (14) Scale 30 : 2007 AIOL 1255 :
2007 Legal Eagle 1255 :
Comments by DRT Solutions
The full text of the judgment is given vide
link http://www.drtsolutions.com/Points-Pressed.htm with
important portion marked in Red. It
is a common experience of the advocates that many points pressed during
the arguments are not dealt with by the Judge in the judgment/order.
When it is felt that such a thing is going to happen, this judgment will
be of immense use. This judgment be placed before the Judge requesting
him to deal with all the points pressed in the ensuing arguments. If he
does not do, an application be submitted to include the said points.
Following extract from Para 14 is self explanatory.
"there is a presumption in law that a Judge deals with all the points
which have been pressed before him. It often happens that in a petition
or appeal several points are taken in the memorandum of the petition or
appeal, but at the time of arguments only some of these points are
pressed. Naturally a Judge will deal only with the points which are
pressed before him in the arguments and it will be presumed that the
appellant gave up the other points, otherwise he would have dealt with
them also. If a point is not mentioned in the judgment of a Court, the
presumption is that that point was never pressed before the learned
Judge and it was given up. However, that is a rebuttable presumption. In
case the petitioner contends that he had pressed that point also (which
has not been dealt with in the impugned judgment), it is open to him to
file an application before the same learned Judge (or Bench) which
delivered the impugned judgment, and if he satisfies the Judge (or
Bench) that the other points were in fact pressed, but were not dealt
with in the impugned judgment, it is open to the concerned Court to pass
appropriate orders, including an order of review. However, it is not
ordinarily open to the party to file an appeal and seek to argue a point
which even if taken in the petition or memorandum filed before the Court
below, has not been dealt with in the judgment of the Court below. The
party who has this grievance must approach the same Court which passed
the judgment, and urge that the other points were pressed but not dealt
with."
(2) Favourable and & Useful DRT Judgments for Borrowers and Guarantor-
As a result ranking of our web site in ‘Google India’ for search ‘Weekly
Mail’ is top among 553,000,000 results
Following is the extract from our web page vide link
http://www.drtsolutions.com/DRT-Judgments.htm
Consequent on our weekly issue of favourable and useful DRT judgments
for borrowers and guarantors, we have received numerous response and
appreciation from not only the mail recipients but from several unknown
persons. As a result the ranking of our web site in the search word
‘Weekly Mail’ has gone so high that the same in ‘Google India’ is now
top among 553,000,000 entries. This shows and proves tremendous
popularity of our weekly mails.
We shall continue publishing at least one such judgment every week. We
need your feedback. The recipients have liked the format. Easy and free
of cost availability of full text of such important and useful judgments
with comments as well as important portion marked in Red have boosted
the value of such cyber publication. For quick and instant availability,
we have allotted exclusive separate page for each of the judgments.
So far we have published full text of the following judgments (with
comments and important portions marked in Red) which are favourable and
useful to the borrowers and guarantors:-
Note :- DRTS-00
stands for 'DRT Legal Solutions-00' and is the Citation for judgments on this
web site.
◙
DRTS-09
Kerala High Court Judgment on 'Bank's Application to Magistrate u/s 14 is
appealable to DRT u/s 17'
in the
matter of 'Sami vs Bank of India' decided on
22.07.11.
Full text of the judgment with our
comments is available vide
link
http://www.drtsolutions.com/Magistrate-Appeal.htm
Important
portions of the judgment have been marked in Red.
◙
DRTS-08
Supreme Court Judgment on 'Points Pressed during Arguments have to be mentioned
in the Judgment/Order'
in the
matter of 'Mohd. Akram Ansari vs Chief Election Officer and Others' decided on
04.12.07.
Full text of the judgment with our
comments is available vide
link
http://www.drtsolutions.com/Points-Pressed.htm Important
portions of the judgment have been marked in Red.
◙
DRTS-07
Allahabad High Court Judgment on 'SA u/s 17 and 18 to be decided before any
Recovery Action'
in the
matter of 'Gulshan Rai, Jain and Others vs Debts Recovery Appellate Tribunal and
Others' decided on 28.09.11.
Full text of the judgment with our
comments is available vide
http://www.drtsolutions.com/SA-Before-Recovery.htm
Important
portions of the judgment have been marked in Red.
◙
DRTS-06
DRAT, Delhi Judgment on 'Counterclaim permissible in SA u/s 17 of Securitisation
Act'
in the
matter of 'Vijaya Bank vs B. L. Gupta' decided on 16.03.11.
Full text of the judgment with our
comments is available vide
http://www.drtsolutions.com/counterclaim-SA.htm
Important
portions of the judgment have been marked in Red.
◙ DRTS-05
Supreme Court Judgment on 'Property
Valuation, Sale, Auction and Disposal' in the matter of 'Ram Kishun & Others vs
State of UP & Others decided on 24.05.12. Full text of the judgment with our
comments is available vide
http://www.drtsolutions.com/SC-Property-Disposal.htm
Important
portions of the judgment have been marked in Red.
◙
DRTS-04
Karnataka High
Court Judgment on 'Notice u/s 13(4) is a must before initiating action u/s 14
for approaching to the Magistrate' in the matter of
K.R. Krishnegowda vs Authorised Officer decided on 27.03.12.
Full text of the judgment with our
comments is available vide link
http://www.drtsolutions.com/13(4)-14-Magistrate.htm Important
portions of the judgment have been marked in Red.
◙
DRTS-03
Patna High
Court Judgment on 'Dismissal of the OA' in the matter of Purnea Cold Storage vs
State Bank of India decided on 27.08.12. As soon as SA is filed, the existing OA
or if OA is filed, the same deserves to be dismissed. Full text of the judgment
with our comments is available vide link
www.drtsolutions.com/OA_Dismissal.htm
Important
portions of the judgment have been marked in Red.
◙
DRTS-02
Supreme Court
of India on simultaneous proceedings of OA and SA in the matter of Transcore vs
Union of India decided on 29.11.06 :- Full text of this
judgment is available on this site vide link
http://www.drtsolutions.com/sc_judgment_on_drt,_securitisation,_transcore.htm
This judgment is referred to in the above Patna High Court Judgment. Past
several years, we have observed that majority of the advocates and the judges
are making mistake in interpreting this Transcore Judgment. Patna High Court has
supported our line of thinking.
◙
DRTS-01
Bombay High Court
Judgment on Condonation of Delay in the matter of Manilal Govindji Khona vs
Indian Bank decided on 29.08.12 :- Full text of this
judgment with our comments is available on this site vide link
www.drtsolutions.com/condonation_delay.htm
Important
portions of the judgment have been marked in Red. We have been opining past several
years that the matter of condonation of delay has to be permitted in the DRTs
despite several judgments of the High Courts. Now our contentions have been
supported by this Bombay High court judgment.
DRT Solutions Weekly Mail – 256th Issue
dated 5th April
‘13
All Weekly mails right from 1st Issue to latest, click links
on top of this page
(1) SA under 17 and 18 should have been Decided before Any Recovery
Action rules Allahabad High Court
Following is the extract from our web page vide link
http://www.drtsolutions.com/DRT-Judgments.htm
Gulshan Rai, Jain and Others versus DRAT, Allahabad and Others decided
on 28.09.11 by Allahabad High Court, Bench at Lucknow, D.B., Misc Bench
No. 9623 of 2011, Judges – Devi Prasad Singh & Dr. Satish Chandra
(Reference – from internet vide link of Allahabad High Court –
http://elegalix.allahabadhighcourt.in/elegalix/WebShowJudgment.do?judgmentID=1454559 )
Comments by DRT Solutions
The full text of the judgment is given vide
link http://www.drtsolutions.com/SA-Before-Recovery.htm with
important portion marked in Red. For easier reference in the comments,
the paragraphs of the judgment have been numbered. Our comments are as
under-
(a) In
para (5) this judgment it is stated that “Thus,
it appears that instead of deciding the issue with regards to question
involved therein (i.e.
in the SA), the original authority as well as
the appellate authority has permitted the respondent-bank to proceed
with the auction and sale of the property in question.”
(b) This
has validated our contentions past several years that the DRT should
first decide the SA before initiating any action for recovery. At the
most the bank may take symbolic possession.
(c) As
per the above judgment, the DRT and DRAT respectively in the matter of
application u/s 17 and 18 are required to take following measures:-
(i) to
issue interim orders as soon as the case is filed before them.
(ii) and
then to decide the matter on merits expeditiously within the time limit
prescribed in the Act.
(d) Till
the above is done, there should not be any action towards enforcement of
recovery against the securities.
(e) This
has been our contentions past several years and the same have been
validated by this judgment.
(f) As
regards expeditious action to decide the SA, the time period mentioned
in the Act is 4 months. This may be possible in simple cases where
proper defence has not been raised by the borrowers and guarantors and
no counter-claim has been setup.
(g) However
in respect of the pleadings prepared by us, full trial within 4 months
will not be possible. First of all our pleadings are based on all wrong
doings committed by the bank on account of the violations of the RBI
Guidelines which are proved by the documents. In most of the cases, the
declaration of NPA itself is wrong. Further there are mistakes in the
calculation of debt due. Over and above, on account of counter-claim
(loss and damages in the SA)which is much more than the amount claimed
by the bank, there is situation of ‘No Debt Due’ Such exhaustive
pleadings will result into several material issues, adjudication of
which will definitely require lot of time.
(h) The
adjudication will first start with inspection of original documents
which are in power and possession of the bank. If all the documents are
given, the bank will lose the case. Hence the banks avoid giving all the
documents. This controversy will itself take lot of time even for years.
(i) The
DRT may adopt all methods of expeditious adjudication but no short cuts
can be employed which may cause injustice.
(j) This
approach based on this judgment can be used as under:-
(i) When
one has pleaded counter-claim and situation has arisen for ‘No Debt
Due’,
(ii) No
recovery action against the securities as per sec 13(4) of the Act can
be taken until and unless the application u/s 17 and 18 are decided on
merits.
(iii) Hence
the interim orders should not have any element of deposit.
(iv) No
action can be taken by the Magistrate u/s 14.
(v) Since
the banking transactions in respect of business and industries involve
complex facts based on documents, the fair trial will take sufficient
time of the DRT or DRAT particularly when full pleadings have been
framed and counter-claim has been pleaded.
(k) We
have been emphasizing above past more than 10 years and this judgment
has supported our contentions.
DRT Solutions Weekly Mail – 255th Issue dated 29th
March ‘13
All Weekly mails right from 1st Issue to latest, click links
on top of this page
(1) Counter-claim Permissible in Securitisation Application u/s 17,
rules DRAT Delhi
Following is the extract from our web page vide link
http://www.drtsolutions.com/DRT-Judgments.htm
Vijaya Bank versus B. L. Gupta decided on 16.03.11 by Debts Recovery
Appellate Tribunal, Delhi
upholding that counter-claim can be filed in the application u/s 17 of
the Securitisation Act in DRT. This is validation of our contentions
past nearly 10 years. The full text of the judgment is given on our web
site vide link
http://www.drtsolutions.com/counterclaim-SA.htm The important
portions of the judgment has been marked in Red.
Comments by DRT Solutions
:-
Our comments are as under:-
(a)
Past nearly 10 years we have been telling our clients to include loss
and damages (i.e. counter-claim) in their application u/s 17 of the
Securitisation Act. In fact in several of the said applications drafted
by us, we have done so e.g. in case of one of our clients from Bangalore
in 2006.
(b)
We have voiced our contentions in our web site, DRT All India
Conferences held at Indore in 2008 and 2011 as well as in our weekly
mails.
(c)
In the above DRAT Delhi judgment, reference has been made to the SC
Judgment of 2004 in the matter of Mardia Chemicals.
(d)
As a whole our contentions are based on the following legal analysis:-
(i)
The borrower as a citizen has fundamental rights of fair trial under the
constitution of India and the said rights can not be abridged or
curtailed by anybody or by any enactment including the Securitisation
Act of 2002.
(ii)
Since Sec 34 of the said Securitisation Act has barred the civil court,
the said rights of fair trial for the borrowers are to be ensured and
assured by the DRTs.
(iii)
Since as per Mardia in 2004 and now specifically explained by the DRAT
Delhi in 2011, borrower’s counter-claim has to be adjudicated upon by
fair trial by the DRTs.
(iv)
The DRTs may adopt expeditious and summary process to judicial
determination of the bank claims but for the counter-claim of the
borrower, full and exhaustive trial has to be conducted and carried out
as he was entitled in the civil court before the said bar due to
Securitisation Act of 2002.
(v)
Since in most of the cases, we have found that the said loss and damages
or counter-claim is much more than the claim of the bank, there is the
situation of ‘No Debt Due’ and hence no recovery action on the
securities can be initiated till the said ‘No Debt Due’ is judicial
determined by the full and fair trial.
(vi)
On account of above, the DRT Act, Securitisation Act and DRTs have
limited role or function as it would have been better to improve the
civil courts as a whole instead of creating new forums like DRTs.
(vii)
We don’t want to learn from the experience of other countries. In UK,
the tribunals were introduced in 1800. It took more than 150 years to
find out correct solution i.e. by Sir Frank Committee in 1957.
(viii)
As told by eminent justice Krishna Iyer that our courts are 200 years
behind the courts in developed countries.. There are 73 countries whose
judicial systems are better than us. The only and better solution is to
improve the courts based on the system developed in those countries
which have better judicial system.
(ix)
Since the relevant institutions like Govt, Law Commission, Bar Council
of India and Law Colleges are not doing desirable work (and they will
not do for obvious reasons), the public has to come forward. While
litigants in civil courts can not do much, those in DRTs can do much
better as the Businessmen and Industrialists as litigants are much more
competent and resourceful. Till the judiciary and judicial systems are
improved, we cannot have real democracy i.e. rule for public, rule by
public and rule of public as against rule by Bureaucrats & Politicians,
rule of Bureaucrats & Politicians and rule for Bureaucrats &
Politicians.
(x)
The full and fair adjudication of claim for loss and damages or
counter-claim will alone bring to light the wrong doings committed by
the bureaucracy in the banks and financial institutions after which only
the banks and the said institutions will improve and after that only the
hold of the politicians on these institutions will come down. Thus the
DRT litigants have a great responsibility and role to play.
(2) Writ Jurisdiction ousted vis-à-vis Orders of Recovery Tribunals –
Yet Again
The following news item is self explanatory. We have been holding such
contentions past several years. DRTs being the trial courts first must
determine the facts judicially and then only there will be function of
higher courts.
Writ jurisdiction ousted vis-a vis orders of recovery tribunals- yet
again!!
http://www.lexology.com/library/detail.aspx?g=ef6ff727-5a54-4f8b-8819-9bded4fdabc6
·
March 15 2013
Introduction
The Supreme Court in the recent judgment of T. P. Vishnu Kumar v. Canara
Bank P.N. Road, Tiruppur and Ors1. reiterated the principle
that when specific remedy is made available to a party, invocation of
writ jurisdiction under Article 226 of the Constitution of India is not
permissible in matters of recovery of debts. Writ jurisdiction of the
Court cannot be invoked to test the validity/correctness of every
interim order passed by the Debt Recovery Tribunal (“DRT”)
under the provisions of the Recovery of Debts due to Banks and Financial
Institutions Act, 1993 (“Act”).
Factual Matrix
The present case arises from an appeal against the Madras High Court (“Mad
HC”) Division Bench judgment2 wherein
the appeals against Single Bench judgment were allowed on the ground of
availability of alternate remedy under Section 20 of the Act.
Canara Bank (“Respondent
Bank”) had filed application before the DRT for recovery
of amounts of INR 29, 68,161.93/- with interest @ 17% per annum with
respect to Open Cash Credit facilities granted to T. P. Vishnu Kumar (“Appellant”)
herein. These amounts were granted on the mortgage of other immovable
properties and guarantee given by other partners of the partnership firm
formed along with the Appellant herein. The debts were acknowledged by
the Appellant however over a period of time the accounts maintained with
the Respondent Bank became irregular and monies were not received
leading to issuance of notices. The Appellant filed its response and
submitted their inability to file detailed written statement in the
absence of non-production of accounts by Respondent Bank. The Appellant
filed separate interim applications seeking production of entire
accounts and other relevant documentation. All the interim applications
were dismissed by DRT.
In furtherance thereof, the Appellant filed writ petition under Article
226 of the Constitution before Single Bench of Mad HC for issuance of
writ of mandamus directing Canara Bank to produce statement of accounts.
The Appellant contended that merits of the matter should be decided in a
trial and same cannot be dealt with at the interim stage. Further, such
applications cannot be admitted without entire documents being submitted
as the same were absolutely necessary for filing detailed written
statement. The Respondent Bank contended that the Tribunal is permitted
to make such orders and give directions on discovery and production as
it deems fit. The Single Bench held that non-furnishing of documents
amounted to prejudice against the Petitioner and allowed the writ
petition directing the Respondent Bank to submit the documents.
The said decision was appealed by Respondent Bank before Division Bench
as despite alternate remedy prevailing under the Act writ jurisdiction
was invoked. The appeal was allowed leading to the present petition
before the Supreme Court.
Issue
The only issue to be determined before the SC was whether existence of
alternate remedy barred invoking the jurisdiction of the civil court.
Judgment and Analysis
The SC held that writ petitions cannot be filed in case of recovery of
dues unless there exists any statutory violation or proceedings are
conducted in an arbitrary, unreasonable and unfair manner. If the Act
itself provides for a mechanism or an alternate remedy, writ
jurisdiction of the High Court cannot be invoked as the same would
defeat the very objective of enacting a separate statute and
establishing a specialized Tribunal.
The purpose of the Act was ensuring speedy recovery of bank dues. Due to
severe delay in adjudicating and disposing such cases, banks and
financial institutions like any other litigants were subjected to go
through a process of pursuing the cases for recovery through civil
courts for unduly long periods, leading to the trapping of crores of
rupees in litigation proceedings, which the banks could not re-advance,
leading to enactment of the Act and DRT to assure expeditious recovery
proceedings and speedy adjudication of matters concerning debt recovery
of banks.
The Tiwari Committee which recommended the constitution of a Special
Tribunal for recovery of debts due to banks and financial institutions
stated in its report that the exclusive jurisdiction of the Tribunal
must relate not only in regard to the adjudication of the liability but
also in regard to the execution proceedings.
Section 17 of the Act provides that the DRT shall have jurisdiction to
“entertain and decide applications from banks and financial institutions
for recovery of debts due to such banks and financial institutions and
Section 18 of the Act clearly bars the jurisdiction of other authorities
and courts except the Supreme Court and High Courts under Articles 226
and 227 of the Constitution. It is a settled law that any provision
ousting the jurisdiction of civil court must be strictly construed3.
The Tribunals and the Appellate Tribunals established to bring about
special procedural mechanism for speedy recovery of the dues of banks
and financial institutions have also made provision for ensuring that
defaulting borrowers are not able to invoke the jurisdiction of Civil
Courts for frustrating the proceedings initiated by the banks and other
financial institutions. The SC in Allahabad Bank vs. Canara Bank & Anr4.
held that the Act confers exclusive jurisdiction on the Tribunal. That
being the position, the parties have to agitate their grievances only
before the said forum, DRT and not before this Court under Article 226
of the Constitution or any other forum.
Further, the said law was reiterated again in Punjab National Bank vs.
O. C. Krishnan & Ors5. , wherein the SC held that “the Act
was enacted with a view to provide a special procedure for recovery of
debts due to the banks and the financial institutions. There is a
hierarchy of appeal provided in the Act, itself namely, filing of an
appeal under Section 20 and this fast-track procedure cannot be allowed
to be derailed either by taking recourse to proceedings under Articles
226 and 227 of the Constitution or by filing a civil suit, which is
expressly barred. Even though a provision under an Act cannot expressly
oust the jurisdiction of the court under Articles 226 and 227 of the
Constitution, nevertheless, when there is an alternative remedy
available, judicial prudence demands that the Court refrains from
exercising its jurisdiction under the said constitutional provisions.”
The Supreme Court in Kohinoor Creations and Ors. v.Syndicate Bank6 held
that all matters within the purview of the Act are to be dealt by the
specialized tribunal, DRT and Appellate Tribunal constituted only for
this purpose and no other body or forum can deal with these disputes.
The bar of civil court thus applies to all such matters which may be
taken cognizance of by the DRT.
Not only in relation to the applicability of the Act and approaching DRT,
the SC in United Bank of India vs Satyawathi Tondon and Ors7.
observed that it is a matter of serious concern that despite repeated
pronouncements, the High Court’s continue to ignore the availability of
statutory remedies under the DRT and Securitization and Reconstruction
of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI
Act”) and exercise jurisdiction under Article 226 for
passing orders which have serious adverse impact on the right of banks
and other financial institutions to recover their dues.
It is surprising to note that the Mad HC in the past has itself ruled
against approaching civil courts; invoking writ jurisdiction in case of
recovery of debts by banks8 however
had allowed it in the present case. The present judgment is one more
attempt to clarifying the law and creating awareness among the litigants
in relation to recovery of dues from banks and financial institutions.
Failing to nip the bud of frivolous invocation of writ remedy under
Article 226 and 227, in this case resulted in a delay of more than five
years. If justice delayed is justice denied, then justice has certainly
been denied to Canara Bank despite SC’s proverbial rap on Mad HC’s
(single bench) knuckles.
DRT Solutions Weekly Mail – 254th Issue
dated 22nd March
‘13
All Weekly mails right from 1st Issue to latest, click links
below:-
(1) Useful / Favourable Judgment to Borrowers & Guarantors
Following is the extract from our web page vide link
http://www.drtsolutions.com/DRT-Judgments.htm
Our presentation of useful / favourable judgments to Borrowers and
Guarantors has been widely appreciated by our clients and visitors of
our web site. We received several phone calls and mails appreciating
utility of such information and web content. Our selection, content and
comments have been liked by one and all. Full text with red content has
been greatly appreciated. As a result the above web page has occupied
top ranking in important search engines in a short period for the
keyword ‘DRT Judgments’. We request our patrons to send us soft copies
of useful and favourable judgments to borrowers and guarantors, if
possible important content marked with red. We shall examine the same
and if it is found useful to one and all, we shall publish the same.
Please give a wide publicity to the above web page among your
colleagues, friends, entrepreneurs, borrowers, guarantors etc so that
they also go through such important judgments and apprise the legal
community including the advocates for presentation in court of law and
DRTs. Such efforts will definitely improve not only the banks but the
judiciary as a whole.
(2) SC Useful Judgment – on Valuation, Sale, Auction & Disposal of
Properties
Following is the extract from our web page vide link
http://www.drtsolutions.com/DRT-Judgments.htm
Comments by DRT Legal Solutions
The full text of the
judgment is given on our web site vide link http://www.drtsolutions.com/SC-Property-Disposal.htm in
the matter of 'Ram Kishun & Others vs State of UP & Others decided on
24.05.12.
Important
portions have been shown in Red. This is one of the most
useful and important SC judgments on Valuation, Sale, Auction and
Disposal of properties. The following extracts of the judgment are
relevant:-
“8 Undoubtedly, public money should be recovered and recovery should be
made expeditiously. But it does not mean that the Financial
Institutions which are concerned only with the recovery of their loans,
may be permitted to behave like property dealers and be permitted
further to dispose off the secured assets in any unreasonable or
arbitrary manner in flagrant violation of statutory provisions.
9. A right to hold property is a constitutional right as well as a human
right. A person cannot be deprived of his property except in accordance
with the provisions of statute. (Vide: Lachhman Dass v. Jagat Ram,
(2007) 10 S.C.C. 448; and Narmada Bachao Andolan v. State of Madhya
Pradesh, A.I.R. 2011 S.C. 1589).
Thus, the condition precedent for taking away someone's property or
disposing off the secured assets, is that the authority must ensure
compliance of the statutory provisions.”
“17. In view of the above, it is evident that there must be an
application of mind by the authority concerned while approving/
accepting the report of the approved valuer and fixing the reserve
price, as the failure to do so may cause substantial injury to the
borrower/guarantor and that would amount to material irregularity and
ultimately vitiate the subsequent proceedings.”
“19. Thus, in view of the above, it is evident that law requires a
proper valuation report; its acceptance by the authority concerned by
application of mind and then fIxing the reserve price accordingly ~"1d
acceptance of the auction bid taking into consideration that there was
no possibility of collusion of the bidders. The authority is duty bound
to decide as to whether sale of part of the property would meet the
outstanding demand. Valuation is a question of fact and valuation of the
property is required to be determined fairly and reasonably.”
20. - - there must be a proper valuation report, which should be
communicated to the judgment debtor and he should me his own valuation
report and the sale should be conducted in accordance with law. After
confirmation of sale, there should be issuance of sale certificate.
Court cannot interfere unless it is found that some material
irregularity in the conduct of sale has been committed. The Court
further held that it should not be a forced sale. A valuer's report
should be as good as the actual offer and the variation should be within
limit. Such estimate should be done carefully. The Court further held
that unless the Court is satisfied about the adequacy of the price the
act of confirmation of the sale would not be a proper exercise of
judicial discretion
DRT Solutions Weekly Mail – 253rd Issue
dated 15th March
‘13
All Weekly mails right from 1st Issue to latest, click links
on top of this page
(1) DRT Important Judgment - Notice u/s 13(4) is Must before initiating
Action u/s 14 - Karnataka
H.C. - K.R. Krishnegowda vs Authorised Officer, 2013(1) Bankers' Journal
382 –
Following is the extract from our web page vide link
http://www.drtsolutions.com/DRT-Judgments.htm
(a) Full
text of the this very useful DRT judgment for the borrowers has been
given on our web site vide linkhttp://www.drtsolutions.com/13(4)-14-Magistrate.htm Important
portions of the judgment have been marked in Red.
(b) It
is observed that in many cases, after issue of notice under section
13(2) and just after getting the Objection and Representation from the
borrowers, the banks are approaching the Magistrate without any notice
to the borrower. The Magistrate issues the order for possession and at
the last moment, the possession is taken all of a sudden. As per this
judgment, the notice u/s 13(4) as well as paper publication is
mandatory. Hence it is one of the important judgment helpful to the
borrowers.
(c) In
this connection it is relevant to submit that past several years we have
been cautioning our clients to be in touch with the office of the
Magistrate as well as to file caveat. This judgment has validated our
approach.
(2) DRTs and DRATs to Introduce e-Governance
The following news items are self explanatory
DRTs and DRATs to introduce e-governance initiatives
http://www.ciol.com/ciol/news/185210/drts-drats-introduce-governance-initiatives
The DRTs/DRATs
has planned to implement information technology to automate the
processes/procedures. As of now, the agency for the implementation of
the project is yet to be decided
News |
by CIOL Bureau
BANGALORE, INDIA: A proposal has been initiated to introduce
e-governance in Debt Recovery Tribunals (DRTs) and Debt Recovery
Appellate Tribunals (DRATs).
This proposal has been made to ensure smooth functioning of the DRTs and
DRATs and to provide a platform for seamless operations to Banks,
Financial Institutions and general public to expedite recovery of public
money.
The DRTs/DRATs has planned to implement information technology to
automate the processes/procedures. As of now, the agency for the
implementation of the project is yet to be decided, as per a written
reply by Namo Narain Meena, MoS, Ministry of Finance, to a question in
the Lok Sabha.
As a part of this initiative, the DRT officials will be provided with
technology enablers that would help them deliver best possible services
efficiently and to provide hassle free administrative services.
Some of the other objectives for the e-DRT engagement include the
facilitation of hassle free administrative services for the applicants
and defendants, making timely and accurate reports easily accessible,
efficient management of case records.
