DRT Solutions Weekly Mail – 270th Issue dated 12th
July ’13
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(1) To Recover Bad Loans, Banks will now shame the Guarantors too
The following news published in ‘The Indian Express’ is reproduced below
with our comments:-
To recover bad loans,
banks will now shame the guarantors too
George Mathew :
Mumbai, Wed Jul 10 2013, 08:53 hrs
http://www.indianexpress.com/news/to-recover-bad-loans-banks-will-now-shame-the-guarantors-too/1139922/
With bad loans or non-performing assets (NPAs) rising sharply,
banks have hit upon a new strategy to force borrowers to pay their dues
— besides publishing photographs of defaulters in newspapers, they have
also decided to put alongside pictures of those who stood guarantee for
those loans
Public sector banks have been publishing photographs with names and
addresses of willful loan defaulters in newspapers and on notice boards
of their branches.
These banks have now decided to give the same treatment to the
guarantors of borrowers and initiate recovery measures against them for
loans that have gone sour. The move comes on the heels of 39 listed
banks reporting a 36 per cent rise in gross NPAs to Rs 1,79,431 crore as
on March 31, 2013.
On Tuesday, Allahabad Bank became the first of the banks to take this
unusual step.
It published the names of three guarantors — Sanjay Jain, Rajiv
Jain and Surya Vinayak Hospitality Pvt Ltd — who acted as guarantors of
Surya Vinayak Industries for a loan of Rs 314 crore. The bank has put on
auction three properties of the guarantors. The properties, one in
Haryana and two in Mumbai, carry a reserve price of Rs 64.83 crore.
"We feel this is an effective measure to recover the bank's money.
Guarantors are also equally responsible for loan repayment. We have to
take recourse to this method to bring down delinquency levels," said S A
Panse, chairperson and managing director of Allahabad Bank.
A Supreme Court order earlier this year specified that if a
borrower defaulted on repayment to a bank, the guarantor was responsible
for making good the entire loan. banks say there is no minimum loan
limit below which they cannot go to enforce the new name-and-shame rule.
Banks are enthusiastic about this new method as recoveries have
already shot up with the publication of pictures of just the defaulters.
UCO Bank chairman and managing director Arun Kaul said the bank has been
successfully recovering money from willful defaulters. "We will
intensify the recovery methods through this measure," he said.
Panse of Allahabad Bank said her bank recovered Rs 900 crore in the
December quarter. "For the full year ended March 2013, the recovery was
Rs 2,300 crore," she added. The bank has, however, not kept a record of
what percentage of the recovery came from the advertisement campaigns.
A senior State Bank of India official said they too have adopted this
route. "Our bank has been publishing photographs of defaulters
region-wise. We have found it very effective. Nobody wants to see his/
her photo appearing in newspapers in this manner," the official said.
He said the bank initially warns guarantors and borrowers that their
photographs and other details would be published in newspapers if the
borrowers do not clear their dues within 15 days of the notice.
The total amount stuck in deliberate defaults by borrowers has shot up
to Rs 24,283 crore as on June 30, 2012 as against Rs 15,324 crore in
March 2011, according to figures available with the Credit Information
Bureau (India) Ltd. This is over 13 per cent of total NPAs.
Our Comments
(a)
The
notice received from the bank should be replied highlighting the wrong
doings committed by the bank. The loss and damages due to the said wrong
doings must be mentioned. In most of the cases, we have found that the
said loss and damages are much more than the claim of the bank resulting
into ‘No Debt Due’ Under such facts and circumstances, no recovery can
be effected from the borrower and or guarantor till the ‘No Debt Due’ is
decided by court of law. Copy of all communications must be endorsed to
the Chairman of the bank.
(b)
The bank
must be told that despite above, if they proceed with the publication of
photos, it will amount to defamation for which civil and criminal
actions will be taken against the bank, bank officials including the
Chairman of the bank.
(c)
If felt
necessary, suitable injunction suits be filed.
(d)
When some
of our clients took the above actions, the bank did not proceed with the
publication of the photos.
(2) Multiple SAs – Mindless Recovery Actions Recoil on Banks and DRTs
On account of steep rise in NPAs, the banks have become panicky and are
initiating all possible actions for quick recoveries. Some of their such
actions and consequences are as under:-
(a)
Earlier
the banks used to file OAs. When they found that the DRTs are taking
time, they started concentrating on invoking Securitisation Act.
(b)
When the
borrowers started including the loss and damages in the SAs, the banks
again started filing OAs after initiating actions under the
Securitisation Act. The borrowers then started filing the ‘Applications
for dismissal of the OAs’ The Patna High Court decision supporting such
dismissal of the OAs has dampened the spirit of the banks.
(c)
The banks
have now started holding meetings with the DRT Judges to emphasize
quickest possible recoveries. Such meetings are highly against the
principles of natural justice.
(d)
The
borrowers with resources have started filing separate SAs on each cause
of actions. The guarantors are also filing separate SAs. There may be
conflicting orders resulting into complications to arrive at a suitable
decision. Further there may be multiple Reviews and Appeals.
(e)
The DRT
cases involve complex and complicated facts relating to banking,
industry and finance. Perfect pleadings combined with competent advocacy
will definitely need lot of court time, attention and knowledge. On
account of such complications only the Industrial Tribunals were wound
up. The BIFR failed. NCLTs could not be launched so far. Matters
relating to co-operative banks continues to be pending in the Supreme
Court.
(f)
All the
above is resulting into huge workload and pendency for the DRTs. The
rate of disposal will be less than the rate of incoming cases. The
counter-claims against the banks are going up. All this is similar to
the civil courts where the pendency is now more than 3 crore cases about
which once Justice Rao of Andhra Pradesh High Court said that it would
take 320 years to clear the pendency.
(g)
The
correct remedy lies in helping the borrowers to achieve surplus
generation instead of mindless recovery actions. Will prudent top
management of the banks dare to go by fundamentals?
DRT Solutions Weekly Mail – 269th Issue
dated 5th July
’13
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(1) Beware of Bank Officials’ Discouragement to Legal Fight as they are
getting Incentives for Recovery
This refers to the news item at page 8 in ‘The Economic Times,
Indore/Bhopal dated 3rd July
2013’ with the caption “PSBs Reward Staff to Recover Loans” reproduced
below. In order to get such incentives, the bank officials may even
mislead, misrepresent and discourage the borrowers for legal fight.
Hence the borrowers should keep these aspects in mind while discussing
the relevant matters with the bank officials:-
MUMBAI:
State-owned banks have started giving incentives to employees for
recovering small loans, resorting to this innovative measure to reduce
their burden after a sharp rise in non-performing assets. State Bank
of India (SBI),
Bank of India (BoI) and Bank
of BarodaBSE
0.64 % (BoB)
are among the banks aggressively pursuing this option — targeting loans
that may be small individually but are significantly large in terms of
the number of accounts.
"In a
normal situation, a banker is expected to do recovery of loan, but these
incentives are typically given for old NPAs where special effort has to
be put and which are typically beyond call of duty," said SS Mundra,
chairman and managing director of Bank of Baroda. Net NPAs, or bad loans
after provisions, rose 51% in 2012-13 over the previous year to Rs
92,825 crore for listed banks.
Stressed
assets - bad loans and restructured loans - amount to 10-12% of banks'
loan book. Public
sector banks such
as State Bank of India offer incentives not only to their employees but
also to self-help groups while Bank of India extends incentives to
business correspondents as well. Incentives are offered in cash for
written-off accounts that can be as small as Rs 10,000.
Banks pay
2-5% of the written-off account as cash incentive, which is generally
shared by the entire team that works on the recovery. "Incentive schemes
are for written-off accounts because they are like no man's baby. They
are for small amounts, for which the branch manager may not have the
time to go and visit the borrower, and there are 4,000 such accounts in
every branch," said Bank of India CMD VR Iyer.
"We also
engage business correspondents. We allocate accounts for them to recover
against commission," she added. According to an SBIBSE
0.10 % official,
who did not want to be named, the idea behind involving employees is
also to broaden the recovery mechanism. "We pay commission to recovery
agents for old written-off accounts anyway. So why not pay the same to
employees?" he asked.
The idea
to incentivise employees emanated after the government announced
autonomy for public sector banks in 2005. This was primarily done to
help the PSUs match the high salaries paid by competing private banks.
Unlike in private banks, public sector bank employees receive the same
salary in a particular grade irrespective of the efforts they put in.
So far,
most banks have given incentives for mobilising deposits, getting new
customers and selling third party products. As per the condition set by
the government, banks can pay up to 1% of their net profit as
incentive.
This is
reflected in the employees' expense in their books of account. "It's not
that a banker will not work without any incentives. But such schemes are
framed to encourage them. The rewards give them a sense of recognition
that good work is acknowledged," said Mayank
Mehta, chief financial officer of Union Bank of India, which
also offers such incentives.
(2) Knowledgeable Borrower can and should contest His Case Himself while
His Company may be represented by His Advocate
Many competent and knowledgeable borrowers find that their advocates are
not able to present and explain their cases properly. Under such facts
and circumstances, it would be better that they should contest their
cases personally and their company or firm be represented by their
advocates. With such arrangement, they will be able to present and
explain the complex facts properly and even such deficiencies on part of
the advocates will be taken care of. This will also help the judicial
process to achieve complete justice.
DRT Solutions Weekly Mail – 268th Issue
dated 28th June
’13
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(1) Be Careful in Depositing Any Amount with the DRTs and DRATs.
One of visitors of our web site, on 27.06.13, has informed the
following, which is self explanatory:-
“In
2007-08 as per orders of the Chairperson I had deposited Rs 21.35 lacs
to set aside the auction sale which was wrongly conducted by the then
RO. The Chairperson on seeing the illegalities granted a stay which is
existing even today.
4) Now
just last week to my surprise I was called upon by the Registrar DRAT
who told my that the drafts deposited in 2008 were not deposited in the
DRAT Govt account and that I should collect the old stale drafts and
once again revalidate the amount of Rs 21.35 lacs. I argued with the
Registrar and told him that that is the fault of the DRAT not mine. I
even told him that it is a criminal offence when the drafts given by me
way back in 2007-08 were not deposited in the Govt treasury. I asked him
as to why he has not informed me all these 5 years instead he put the
blame on me telling me that I ought to take special investment orders
then only. I did not agree to that as it was not my responsibility to
advise DRAT about that. Kindly advise me as to what action I should take
now that I have already lost the interest amount on Rs 21.35 lacs for 5
years.
5) Regarding filing criminal complaints The police very conveniently
dodge by saying that the matter is of civil nature and advice us to act
in that matter when the criminal wrong is committed. The do not file FIR
and do not investigate the matter very seriously. Please advise.”
In view of above, one has to be cautious while depositing any amount
with the DRTs.
In respect of the above, we have advised that the querist that he has to
take actions as if the wrong has been committed by any private person.
FIR can be filed online or sent through Registered Post. If there is any
difficulty with the police, private complaint be lodged with the
Magistrate.
(2) An Important Supreme Court Judgment on Review – Misconception of the
Court is Sufficient Reason for Review
Utility of this Judgment – Borrowers, Guarantors and their Advocates
must scrutinize all the orders and if there is any Misconception (in
respect of the Facts or the Law) of the Court, Review must be filed
Full text of the judgment with comments and important portion marked in
Red may be seen by clicking the link http://www.drtsolutions.com/Moran-Review-Misconception.htm The
highlights of the judgment are as under:-
Moran Mar Basselios Catholicos vs Moat Rev. Mar Poulose Athanaslus decided
on 02.05.52 by Supreme Court of India, Case No – 193 of 1952
Judges – B. Jagannath Das; Ghulam Hasan and S.R. Dass.
DRT Solutions Citation – DRTS-019-Moran
MB Catholicos vs Moat MP Athanaslus-1952
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-019.
Conclusion
On
account of hurry, bias towards the banks and lack of knowledge of
banking, industry and finance, in most of the cases at times, the DRT
Judges are passing such judgments and orders which contain
Misconceptions of facts and or law, Review Petitions must be filed so
that such error is corrected.
Comments
The full text of the judgment is given below with important portions
marked in Red reproduced below with comments:-
(1) Extract
from Para 29
“the defendants filed a petition for review
of the Judgment on the ground that It contained several mistakes or
errors apparent on the face of the record and that in that event there
were sufficient reasons post of ft District Judge. Not less than 92
grounds were set forth in the petition of review.”
Our Comments:-
There were 92 grounds for Review when the Review Petition was filed on
22.08.46. This shows how much in detail and depth the advocates were
preparing the said Review Petition.
(2) Extract
from Para 36
The cases to which reference has been made indicate that the
misconception of the court must be regarded as sufficient reason
analogous to an error on the face of the record. In our opinion it is
permissible to rely on the affidavit as an additional ground for review
of the judgment.
(3) Extract
from Para 40
In
our opinion the appellants have made out a valid ground for allowing
their application for review we accordingly allow this appeal, set aside
the judgment of the High court and admit the review
DRT Solutions Weekly Mail – 267th Issue
dated 21st June
’13
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(1) Our Client wins SA in Kolkata – Complete DRT Order dated 04.06.13
Reproduced on Our Web Site with Comments
Complete DRT Order dated 04.06.13 is reproduced on our web site vide
link http://www.drtsolutions.com/Azmeer-UBI-SA-allowed.htm
Particulars in brief are as under:-
Azmeer Business Pvt Ltd vs United Bank of India decided
on 04.06.13 by DRT-II, Kolkata SA No – 101 of 2011
Presiding Officer – S.K. Mishra
DRT
Solutions Citation – DRTS-018-Azmeer
Business vs UBI-2013
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-018.
Comments by DRT Solutions
A DRT-II Kolkata Judgment of 2013 Allowing the SA, Setting Aside
Auction Sale and Ordering the Bank to Restore Possession
Utility of this Judgment – If all the wrong doings committed by banks
are questioned & contested properly, the borrowers and Guarantors can
win against the banks
Conclusion
If
proper pleadings have been made and the case contested properly, the
borrowers and guarantors can win their SAs. In this case, the borrower
will have to file Review and Appeal to have their amendment to the
pleadings permitted as it contains his counterclaim. This will be the
only and the ultimate defence if the bank goes for Appeal and any
further recovery action.
Comments
The
full text of the judgment is given on our web site vide link http://www.drtsolutions.com/Azmeer-UBI-SA-allowed.htm which
is self explanatory.
(a) In
this judgment the DRT has dealt with several wrong doings committed by
the bank which has caused loss and damages to the borrower.
(b) In
the last para, DRT has categorically stated that it is a fit case for
awarding compensation but has made a erroneous and misconceived
conclusion that “the defendant bank being a public sector bank, I am not
inclined to grant compensation” Perhaps the PO DRT is not aware about
the law laid down by the Supreme Court in Luknow Development Authority
case (1994 AIR 787 1994 SCC (1) 243; JT 1993 (6) 307 and 1993 SCALE
(4) 370, wherein the Supreme Court has given a verdict that such
compensation can be made. An extract from the said SC judgment is
reproduced below:-
“When
a citizen seeks to recover compensation from a public authority in
respect of injuries suffered by him for capricious exercise of power and
the National Commission finds it duly proved then it has a statutory
obligation to award the same. It was never more necessary than today
when even social obligations are regulated by grant of statutory
powers. The test of permissive form of grant is over. It is now
imperative and implicit in the exercise of power that it should be for
the sake of society. When the court directs payment of damages or
compensation against the State the ultimate sufferer is the common
man. It is the tax payers' money which is paid for inaction of those
who are entrusted under the Act to discharge their duties in
accordance with law. It is, therefore, necessary that the Commission
when it is satisfied that a complainant is entitled to
compensation for harassment or mental agony or oppression, which
finding of course should be recorded carefully on material and
convincing circumstances and not lightly, then it should further
direct the department concerned to pay the amount to the
complainant from the public fund immediately but to recover the same
from those who are found responsible for such unpardonable behavior by
dividing it proportionately where there are more than one
functionaries.”
(c) The
proposed amendment to the SA relates to the loss and damages suffered by
the borrower but the DRT has not permitted the amendment to the
pleadings stating that there is no legal evidence. On one hand, the DRT
itself has dealt with the wrong doings committed by the bank, what more
evidence is required as it is based on the documents gone through by the
DRT.
(d) Hence
for the above erroneous and misconceived opinions of the DRT about the
amendment and the counterclaim, the borrower has been advised to file
Review and Appeal.
(2) Counter-claim must be filed in DRT instead of Civil Court
One of our clients from Ahemdabad got prepared SA from us. The said SA
included complete loss suand damages (i.e. counter-claim). After filing
the SA, his advocate prepared a damage suit based on the said SA and
filed the same in the civil court. Such suit is liable to be dismissed
in limine due to bar specified in Sec 34 of the Securitisation Act.
Hence the professional charges and the court fee for the said suit will
be totally wasted.
In view of above, the best course of action is to file and pursue the
counter-claim in DRT itself. In almost all the cases, the counter-claim
is much more than the claim of the bank resulting into ‘No Debt Due’.
The borrower is entitled to get it adjudicated for complete justice.
Whenever he finds that the DRT is unable to provide complete justice, he
is entitled to get it transferred to the civil court. In that
eventuality, not only he will get full justice, there will be no deposit
in the appeal. The whole process will take 15 to 20 years. If there is
any decision of the DRT for recovery, the execution can not be completed
till the counter-claim is decided. In all probabilities, the bank will
lose the case. If there are few such cases, the banks will be careful in
appraising the loan proposals properly, they will be serious about
following the RBI Guidelines, helping the borrowers in need and not
bothering the guarantors unnecessarily etc. Thus the whole process will
not only improve the banks but the judicial systems as well as the
officers of the courts.
DRT Solutions Weekly Mail – 266th Issue dated 14th
June ’13 – Camp Yog Gram, Haridwar
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(1) Our Client wins SA in Kolkata
Azmeer Business Pvt Ltd.
Siliguri came to us. We amended his SA No SA/101/2011 to include all
wrong doings of the bank as well as the counter-claim. The DRT Kolkata
allowed his said SA. The details will be reported in the forthcoming
weekly mail after study of the DRT Order.
(2) Property is a Constitutional and Human Right – Guarantors can get
complete justice in saving their properties
As
per an important Supreme Court judgment (vide Sl No 2 of this weekly
mail – Full text with comments and important portions marked in Red),
property being a Constitutional Right as well as a human right can not
be taken away without trial for complete justice.
If
perfect pleadings with counter-claim are made, the DRTs will not be able
to adjudicate the matter completely and hence it has to be transferred
to civil court which will take considerable time to decide the same.
The above will curb the tendency of the bankers to rush for quick
disposal particularly of the personal residential assets of the guarantors including
the directors. It will be extremely difficult for the banks to lay their
hands on the residential properties.
DRT Solutions Weekly Mail – 265th Issue dated 7th
June ‘13
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(1) Multiple Recovery Actions taken by Banks should be Questioned as the
Same should be with Due Application of Mind
There is tendency of banks to initiate multiple recovery actions without
application of mind. The borrowers should carefully examine each and
every such action and must interact with the bank questioning the
legalities of such actions with copy to the Chairman of the bank. At
appropriate time such interactions will be quite useful before the
concerned court of law.
In one of the current case of our client, the bank first invoked
Securitization Act followed by invoking DRT Act by filing OA. Our client
filed SA and also submitted an application for dismissal of the said OA.
DRT issued order against the said application. Our client has filed
Review and Appeal followed by WS and Counter-claim. In the meantime the
bank made a publication for e-auction of the securities. Our client
filed WP in the High Court questioning the hurried actions by the bank
without waiting for the outcome of the SA and the Counter-claim. The
bank also initiated actions for declaring willful default and
publication of photos of the Directors. Our client questioned the
legalities of such actions and if necessary suitable injunction suits
will be filed in civil court.
The Hon’ble Judiciary is now being informed that due to above mentioned
hurried and aimless recovery actions, the courts are loaded with SA, WS,
Counter-claim, Review, Appeal, WP and several Injunction Suits.
The above is on account of typical characteristics of the bureaucracy
which is criticized by the Hon’ble Supreme Court in several judgments.
One of such Judgment is given in the Sl No (2) of this Weekly Mail
below.
(2) An Important Supreme Court Judgment of 2009 about Frivolous & Unjust
Litigation by Bureaucracy
The judgment is given on
our web site vide link
http://www.drtsolutions.com/Urban-Improvement-Trust-Mohanlal.htm
Utility of this Judgment – There are many Frivolous and Unjust
Litigations by Banks & FIs in the name of Recovery or Public Funds where
this Judgment becomes very Useful
Urban Improvement Trust vs Mohanlal
decided on 30.10.09 by Supreme Court of India, SLP No – 29852 of 2009
Judges – R.V. Raveendran
and G. S. Singhvi.
DRT Solutions Citation –
DRTS-016-Urban Improvement Trust-vs Mohanlal-2009
http://www.drtsolutions.com/Urban-Improvement-Trust-Mohanlal.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-016.
Comments by DRT Solutions
An Important Supreme Court Judgment of 2009 about Frivolous & Unjust
Litigation by Bureaucracy
Utility of this Judgment – There are many Frivolous and Unjust
Litigations by Banks & FIs in the name of Recovery or Public Funds where
this Judgment becomes very Useful
Conclusion
The bureaucracy unnecessarily indulges into frivolous and unjust
litigations. The Govt since 1957 is trying to curb this tendency but
without any results. This is also happening with the banks and the
financial institutions. Whenever one finds that the banks unnecessarily
indulge in such approach, this SC judgment will be highly useful to put
up before the judiciary. Further it should be understood by the litigant
borrowers and guarantors that on account of such characteristics, the
banks will fight upto the Supreme Court even if they lose in the lower
courts. Under such facts and circumstances, the counter-claim will be of
immense use as the interest on counter-claim will continue to go up even
if there is delay caused by the banks.
Comments
The full text of the
judgment is given on our web site vide link
http://www.drtsolutions.com/Urban-Improvement-Trust-Mohanlal.htm
with important portions marked in Red, which are self explanatory
DRT Solutions Weekly Mail – 264th Issue
dated 31st May ‘13
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(1) Review & Appeal – Necessity & Importance in DRTs, & Civil Courts in
India
(a) There
is huge pendency in Indian Courts now crossing more than 3 crore cases.
There was no such pendency in British India but after the country became
free, there was deluge of cases due to fundamental rights and those
arising due to separation of powers between executive, judiciary and
legislative wings
(b) The
country needed immediate Judicial Reforms in 1947 and thereafter but
till date no real seriousness has been shown by all those who are
concerned.
(c) On
account of huge pendency and delay in civil courts, the bank lobby
voiced for separate courts for quick recoveries of bank over dues and as
a result the DRTs were proposed. The right course of action was to
improve the civil courts instead of establishing new courts in the name
of Tribunals.
(d) In
establishing and running of the DRTs also there is no real seriousness
on following two counts:-
(1) In
the recommendation of Tiwari Committee in 1981, it was said that the
Advocates and Judges in DRTs should be experts in banking, industry and
finance but till date neither such experts have been appointed nor the
existing persons have been trained.
(2) We
have not learnt anything from the experience of Tribunals in UK. The
tribunals were first established there in 1800 and it took 157 years to
find out the solutions by Sir Frank committee who recommended that the
tribunals should be monitored and supervised by public bodies.
(e) On
the other hand, the DRTs themselves appear to be working against the
Principles of Natural Justice (which they are supposed to follow as per
the DRT Act) as despite the 15 years old verdict of the Supreme Court,
the DRTs are not being transferred from the control of the Ministry of
Finance to Ministry of Law. The Ministry of Finance is holding regular
meetings with the DRT judges. The said Ministry is openly posting bank
officers as the Judges and Recovery Officers of the DRTs. Recently the
Supreme Court has said that only Judicial Officials be posted as
Recovery Officers.
(f) It
is well known that Lenders’ Liability Act was to be enacted along with
the Securitisation Act but the bank lobby managed to drop the same and
diverted the attention by getting Lenders’ Liability Guidelines from
RBI.
(g) In
view of above, there is all around pressure and lobbying for quickest
possible recovery of bank overdues. Under such facts and circumstances,
most of the proceedings and orders in DRTs are having legal defects due
to obvious hurry and bias towards lendes. It is well known that ‘Justice
hurried is justice buried’
(h) It
is now responsibility of the Borrowers’ Advocates to immediately examine
all the proceedings and orders thoroughly and critically whether any
Review and or Appeal will cure the defects.
(i) We
have been emphasizing all along that the litigant borrowers and
guarantors have to take personal interest for the above examination and
prevail upon their advocates to take remedial measures without loss of
time. The borrowers must understand the parameters of Review and Appeal.
They should go through the petitions and attend the court hearings and
arguments.
(j) The
complete history of Review past 150 years, analysis of ingredients and
comparison with Appeal is given in ‘AIR 1948 Allahabad 353’ which needs
to be studied by the borrowers and their advocates.
(k) The
limitation for filing Review and or Appeal must be kept in view.
(l) If
Review and Appeal both are required, first Review must be filed and then
Appeal must be filed in such a manner that both are within limitation.
If there is any delay, application for condonation must be moved.
(m) As
per the SC judgment of 1963 vide link http://www.drtsolutions.com/Thungabhadra-GovtAP-Review-Appeal.htm full
text given on our web site along with important portion marked in Red as
well as our comments. This judgment is dealt with today in this weekly
mail below. Accordingly
the Review and Appeal both can be prosecuted simultaneously. As soon as
one is finally decided, other should be discontinued.
(n) In
view of facts and circumstances, we reiterate that when the bank lobby
is sticking to its guns right from legislation of DRT Act and
Securitisation Act as well as their amendments, controlling DRTs,
postings and meetings with the DRT judges and Recovery Officers,
excluding rightful appeals due to huge deposits for stay and appeals
etc; the borrowers must file their counter-claims and damages which are
the only defence. The pleadings of the said counter-claims must be
drafted by persons having knowledge of banking, industry and finance as
well as law of torts and damages.
(o) The
Review and Appeals must be properly contested keeping in view the
important judgments given by us on our web site vide link http://www.drtsolutions.com/DRT-Judgments.htm.
The petitions be drafted thoroughly, arguments held keeping in view the
various points given above, written arguments be submitted and the court
forced to mention all the points pressed in accordance with the SC
Judgment given vide link http://www.drtsolutions.com/Points-Pressed.htm
(p) Side
by side the counter-claim be transferred to civil court as per the
comments for the judgment vide link www.drtsolutions.com/Nahar-HSBC-Counter-claim-Appeal.htm
(q) It
is reiterated that the best recovery is by running of the business with
the application of tools like revival, rehabilitation and restructuring.
Further if the lenders desire quick recoveries through DRTs, they should
set their own house in order first i.e. follow all the RBI Guidelines
strictly, hold a thorough legal audit before filing case before DRT,
compensate the borrowers for the wrong doings and delays committed by
the lender etc.
(r) It
is unlikely that the behavior of the lenders will change and the only
factor which will change them will be when they are flooded with several
damage and counter-claims. Such damages are quite common in US where the
banks now take all precautions to help the borrowers and guarantors due
to the said damage claims.
(s) Justice
Krishna Iyer said that our courts are 200 years behind developed
countries. Further there are 74 countries whose judicial management and
systems are better than us and hence there is enough scope for
improvements in DRTs and civil courts in India. The advocates should not
hesitate to apprise the DRT Judges to understand the realities so that
they do not cause any injustice to the borrowers who are very small
compared with the mighty banks. Borrowers are not asking for any favour
to them but their only demand is that no favour or bias be shown to the
lenders. If the Judges only follow the rule and procedure of law, the
wrong doings committed by the lenders will come to light and due to the
counter-claims, there will be no debt due rather the lenders will have
to pay huge sums to the borrowers. Day is not far when some sincere and
honest DRT Judge will definitely award such judgment.
(t) Many
of our clients have understood the above facts and followed the strategy
mentioned by us and as a result they are either winning their cases
against the lenders or the lenders are forced to settle as less as 5% of
the dues.
(2) Important & Useful Judgment of the Supreme Court on Review & Appeal
Full text of this judgment available on our web site with important
portions marked in Red as well as our comments vide link http://www.drtsolutions.com/Thungabhadra-GovtAP-Review-Appeal.htm
Thungabhadra Industries vs Govt of AP decided
on 20.10.63 by Supreme Court of India, Case No No – 781, 783 of 1962
Citations – 1964 AIR 1372, 1964 (5) SCR 174
Judges – A.K. Sarkar; K.C. Das Gupta and N. Rajagopala Ayyangar.
DRT Solutions Citation – DRTS-015-Thungabhadra-vs
Govt AP-1963
http://www.drtsolutions.com/Thungabhadra-GovtAP-Review-Appeal.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-015.
Comments by DRT Solutions
An Important Supreme Court Judgment of 1963 about Review and Appeal
Utility of this Judgment – On account of Hurried Disposals in DRTs,
Several Orders are inherently Defective calling for Review and Appeal,
where this Judgment becomes very Useful
Conclusion
With this SC judgment of 1963, law is well settled that if Review is
filed first and then Appeal is filed, both can be proceeded with
simultaneously till either of the two is finally decided, other should
be discontinued.
Comments
(a) The
full text of the judgment is given below with important portions marked
in Red on para 8 and 13 which are self explanatory and are reproduced
below:-
Extract from para 8 is reproduced below:-
O.
XLVII R. 1(1) of the Civil Procedure Code permits an application for
review being filed `from a decree or order from which an appeal is
allowed but from which no appeal has been preferred.` In the present
case, it would be seen, on the date when the application for review was
filed the appellant had not filed an appeal to this court and therefore
the terms of O. XLVII R. 1(1) did not stand in the way of the petition
for review being entertained. Learned Counsel for the respondent did not
contest this position. Nor could we read the judgment of the High court
as rejecting the petition for review on that ground. The crucial date
for determining whether or not the 'terms of O. XLVII. R.1 (1) are
satisfied is the date when the application for review is filed. If on
that date no appeal has been filed it is competent for the court hearing
the petition for review to dispose of the application on the merits
notwithstanding the pendency of the appeal, subject only to this, that
if before the application for review is finally decided the appeal
itself has been disposed of, the jurisdiction of the court hearing the
review petition would come to an end.
Extract from para 13 is reproduced below:-
IN
the result the appeal is allowed and the common judgment of the High
court in the three appeals is reversed and the petitions for review--C.M.Ps 4672,
4673 and 4674 of 1959 on the file of the High court are allowed with
costs here and in the High court--one set of hearing fees.
Further Comments
Same as item no (1) of this weekly mail.
DRT Solutions Weekly Mail – 263rd Issue
dated 24th May ‘13
All Weekly mails right from 1st Issue to latest, click links
on top of this page
(1) Important & Useful Judgment of the Supreme Court of Fundamental
Rights – Relevant to Sec 14 of Securitization Act – Magistrate should
give Hearing to Borrowers
Full text of this judgment available on our web site vide link http://www.drtsolutions.com/Maneka-Gandhi-UOI-Natural-Justice.htm important
portions marked in Red as well as our following comments.
Maneka Gandhi vs Union of India decided
on 25.01.78 by Supreme Court of India, Writ Petition No – 231 of 1977
Citations – 1978 AIR 597, 1978 SCR (2) 621
Judges – Beg M. Hameedullah, C.J.; Chandrachud Y.V.; Bhagwati P.N.;
Krishna Iyer V.R.; Untwalia N.L.; Fazalali Syed Murtaza and Kailasam
P.S.
No : 4796 of 2009
DRT Solutions Citation – DRTS-014-Maneka-Gandhi
vs UOI-1978
http://www.drtsolutions.com/Maneka-Gandhi-UOI-Natural-Justice.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-014.
Comments by DRT Solutions
An Important Supreme Court Judgment of 1978 about Principles of Natural
Justice, Fundamental Rights
Utility of this Judgment - Magistrate’s Action u/s 14 of Securitisation
Act for taking Physical Possession – Bank and Magistrate have to give
opportunity of hearing – Hearing has to be Real & with Application of
Mind
Conclusion
With this SC judgment of 1978, law is well settled that the Magistrate
in Securitisation Act has to extend reasonable opportunity for real
hearing to the borrower. Since such views were not held by the Judges
and the Advocates in DRTs, we were referring to this judgment. Since
they had no time to go through this 200 page judgment, we have now given
full text on our web site, with important portion marked in Red as well
as above our comments. The borrowers and guarantors should go through at
least the portions marked in Red and show the same to their advocates.
Comments
The full text of the judgment is given vide link http://www.drtsolutions.com/Maneka-Gandhi-UOI-Natural-Justice.htm with
important portions marked in Red on pages 03, to 07,09 to16,26,27,42 to
46,51 to 56,65 to 67,74 to 82,95to 97,103 and 104,
This judgment is highly useful whenever the banks approach to Magistrate
to take physical possession u/s 14 of the Securitisation Act. The legal
explanation is as under:--
(a) As
soon as notice u/s 13(2) is received, we asked the litigant borrowers to
be in touch with the office of the DM/CMM Magistrates so that whenever
any application u/s 14 is received from the bank, he should submit a
reply. Side by side he should submit an application u/s 17 to DRT.
(b) In
the said reply to the Magistrate, the borrower is asked to cite this
judgment requesting to extend an opportunity of hearing.
(c) In
almost all the cases of our clients, there is loss and damages due to
the wrong doings of the bank. The said loss and damages are much more
than the claim of the bank resulting into ‘No Debt Due’ Hence no
physical possession of the secured assets can be taken till the said
application u/s 17 is decided finally by the courts.
The
following extracts are important and self explanatory. The litigant
borrowers and guarantors should read the same and show them to their
advocates:-
Extract from Page No – 06
“It is well-settled that even when there is no specific provision in a
statute or rules made thereunder for showing case against action
proposed to be taken against an individual, which affects the right of
that individual the duty to give reasonable opportunity to be heard will
be implied from the nature of the function to be performed by the
authority which has the power to take punitive or damaging action.”
Extract from Page No – 07
”Even executive authorities when taking administrative action which
involves any deprivation of or restriction on inherent fundamental
rights of citizens must take care to see that justice is not only done
but manifestly appears to be done. They have a duty to proceed in a way
which is free from even the appearance of arbitrariness,
unreasonableness or unfairness. They have to act in a manner which is
patently impartial and meets the requirements of natural justice.”
Extract from Page No – 09
“extent of protection against the impairment of a fundamental right is
determined by the direct operation of an action upon the individual's
rights and not by the object of the Legislature or by the form of the
action.”
Extract from Page No – 13
“It is true that the Passports Act does not provide for giving
reasonable opportunity to the holder of the passport to be heard in
advance before impounding a passport. (Similarly
the Securitisation Act does not provide for giving reasonable
opportunity by the Magistrate to the borrower) But
that is not conclusive of the question. If the statute make itself clear
on this point, then no more question arises but even when statute is
silent the law may in a given case make an implication and apply the
principle. Natural justice is a great humanising principle intended to
invest law with fairness and to secure justice and over the years it has
grown into a widely pervasive rule affecting large areas of
administrative action”
“There can be no distinction between a quasi-judicial function and an
administrative function for the purpose of principles of natural
justice. The aim of both administrative inquiry as well as the
quasi-judicial enquiry is to arrive at a just decision and if a rule of
natural justice is calculated to secure justice or to put it
'negatively, to prevent miscarriage of justice, it is difficult to see
why it should be applicable to quasi- judicial enquiry and not to
administrative enquiry. It must logically apply to both. It cannot be
said that the requirements of fairplay in action is any the less in an
administrative enquiry than in a quasi-judicial one. Sometimes an unjust
decision in an administrative enquiry may have far more serious
consequences than a decision in a quasi-judicial enquiry and hence rules
of natural justice must apply, equally in an administrative enquiry
which entails civil consequences.”
Extract from Page No – 14
“The duty to act judicially need not be superadded but it may be spelt
out from the nature of the power conferred, the manner of exercising it
and its impact on the rights of the person affected and where it is
found to exist the rules of natural justice would be attracted. Fairplay
in action requires that in administrative proceedings also the doctrine
of natural justice must be held to be applicable”
Extract from Page No – 14 & 15
“the power conferred on the Passport Authority to impound a passport is
a quasi judicial power. The rules of natural justice would in the
circumstances be applicable in the exercise of the power of impounding a
passport even on the orthodox view which prevailed prior to A. K.
Kraipak's case. The same result must follow in view of the decision in
A. K. Kraipak's case, even if the power to impound a passport were
regarded as administrative in character, because it seriously interferes
with the constitutional right of the holder of the passport to go abroad
and entails adverse civil consequences.”
Extract from Page No – 15 & 16
”The life of the law is not logic but experience. Therefore, every legal
proposition must in the ultimate analysis be tested on Me touch-stone of
pragmatic realism.
The audi alteram partem rule may, therefore, by the experiential test,
be excluded, if importing the right to be heard has the effect of
paralysing the administrative process or the need for promptitude or the
urgency of the situation so demands. But, at the same time, it must be
remembered that this is a rule of vital importance in the field of
administrative law and it must not be jettisoned save in very
exceptional circumstances where Compulsive necessity so demands. It is a
wholesome rule designed to secure the rule of law and the Court should
not be too ready to eschew it in its application to a given case. The
Court must make every effort to salvage this cardinal rule to the
maximum extent permissible in a given case. The audi alteram partem rule
is not cast in a rigid mould and judicial decisions establish that it
may stiffer situational modifications. The core of it must, however,
remain, namely, that the person affected must have reasonable
opportunity' of being heard and the hearing must be a genuine hearing
and not an empty public relations exercise.”
Extract from Page No – 51 & 52
In England,
the rule was thus expressed by Byles J. in Cooper v. Wandsworth Board of
Works [1863 (14) C.B. (N.S.) 180]
"The laws of God and man both give the party an opportunity to make his
defence, if he has any. I remember to have heard it observed by a very
learned man, upon such an occasion, that even God himself did not pass
sentence upon Adam before be was called upon to make his defence. "Adam
(says God), "where art thou ? Hast thou ? not eaten of the tree whereof
I commanded thee that thou shouldest not eat And the same question was
put to Eve also."
Extract from Page No – 52 & 53
“It appears to me that even executive authorities when taking
administrative action which involves any deprivations of or restrictions
on inherent fundamental rights of citizens must take care to see that
justice is not only done but manifestly appears to be done. They have a
duty to proceed in a way which is free from even the appearance of
arbitrariness or unreasonableness or unfairness. They have to act in a
manner which is patently impartial and meets the requirements of natural
justice.”
Extract from Page No – 54 & 55
”The procedure prescribed by law has to be fair, just and reasonable,
not fanciful, oppressive or arbitrary. The question whether the
procedure prescribed by a law which curtails or takes away the personal
liberty guaranteed by article 21 is reasonable or not has to be
considered not in the abstract or on hypothetical considerations like
the provision for a full-adressed hearing as in a Courtroom trial, but
in the context, primarily, of the purpose which the Act is intended to
achieve and of urgent situations which those who are charged with the
duty of administering the Act may be called upon to deal with. Secondly,
even the fullest compliance with the requirements of article 21 is not
the journey's end because, a law which prescribes fair and reasonable
procedure for curtailing or taking away the personal liberty guaranteed
by article 21 has still to meet a possible challenge under other
Provisions of the Constitution like, for example, articles 14 and 19.”
Extract from Page No – 56
“The culmination of this thought process came in the Bank
Nationalisation Case (supra) where it was held by the majority, speaking
through Shah J., that the extent of protection against impairment of a
fundamental right is determined by the direct operation of an action
upon the individual's rights and not by the object of the legislature or
by the form of the action. In
Bennett Coleman [1973] 2 SCR 757 the Court, by a majority, reiterated
the same position by saying that the direct operation of the Act upon
the rights forms the real test”
Extract from Page No – 76
Thus, the soul of natural justice is fair play in action' and that is
why it has received the widest recognition throughout the democratic
world. In the United States, the right to an administrative hearing is
regarded as essential requirement of fundamental fairness. And in
England too it has been held that 'fair play in action' demands that
before any prejudicial or adverse action is taken against a person, he
must be given an opportunity to be heard. The rule was stated by Lord
Henning, M.R. in these terms in Schmidt v. Secretary of State for Home
Affairs [1969] 2 Chancery Division 149 :-where a public officer has
power to deprive a person of his liberty or his property, the general
principle is that it has not to be done without his being given an
opportunity of being heard and of making representations on his own
behalf". The same rule also prevails in other Commonwealth countries
like Canada, Australia and New Zealand. It has even gained access to the
United Nations.
Extract from Page No – 80
This Court, speaking through Hegde, J., in ,I. K. Kraipak's case quoted
with approval the above passage from the judgment of Lord Parker, C.J.,
and proceeded to add : "The aim of the rules of natural justice is to
secure justice or to put it negatively to prevent miscarriage of
justice. These rules can operate only in areas not covered by any law
validly made. In other words they do not supplant the law of the land
but supplement it-Till very recently it was the opinion of the courts
that unless the authority concerned was required by the law under which
it functioned to act judicially there was no room for the, application
of the rules of natural justice. The validity of that limitation is now
questioned. If the purpose of the rules of natural justice is to prevent
miscarriage of justice One fails to see why those rules should be made
inapplicable, to administrative enquiries. Often times it is not easy to
draw the line that demarcates administrative enquiries from
quasi-judicial enquiries. Enquiries which were considered administrative
at one time are now being considered as quasi-.judicial in character.
Arriving at a just decision is the aim of both quasi- judicial enquiries
as well as administrative enquiries. An unjust decision in an
administrative enquiry may have more far reaching effect than a decision
in a quasi- judicial enquiry.
Extract from Page No – 81
The law must, therefore, now be taken to be well settled that even in an
administrative proceeding, which involves civil consequences, the
doctrine of natural justice must be held to be applicable.
Conclusion
Thus with this SC judgment of 1978, law is well settled that the
Magistrate in Securitisation Act has to extend reasonable opportunity
for real hearing to the borrower. Since such views were not held by the
Judges and the Advocates in DRTs, we were referring to this judgment.
Since they had no time to go through this 200 page judgment, we have now
given full text on our web site, with important portion marked in Red as
well as above our comments. The borrowers and guarantors should go
through at least the portions marked in Red and show the same to their
advocates.
(2) Completion of 5 Years of Weekly Mails
We
have received several mails and phone calls conveying congratulations on
completion of 5 years of our weekly mails which have become quite
popular among borrowers, guarantors, advocates, judges and bankers. We
are highly thankful to them. Its constant interactions with them which
provides the material for these weekly mails. We are committed to try to
throw light on the solutions mainly for the defence of borrowers and
guarantors who are made to fight against all odds with the mighty banks
with the tool of law. Our these mails also carry a message to live
healthy and happy life. We have now embarked on another journey for next
5 years.
DRT Solutions Weekly Mail – 262nd Issue dated 17th
May ‘13
All Weekly mails right from 1st Issue to latest, click links
on top of this page
(1) Important & Useful Judgment of the Supreme Court – Court, Tribunal,
DRT, Counter-claim & Appeal
Nahar Industrial Enterprises vs Honkong & Shanghai Banking Corp.
decided on 29.07.09
by Supreme Court of India, Judges – S.B. Sinha & Ashok Kumar Ganguly,
Civil Appeal No : 4796 of 2009
DRT Solutions Citation –
DRTS-013-Nahar vs HSBC-2009
http://www.drtsolutions.com/Nahar-HSBC-Counter-claim-Appeal.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-013.
Comments by DRT Solutions
An Important Supreme Court Judgment about Tribunal, Court, DRT, Transfer
from Court to Tribunal, Counter-claim and Appeal
The full text of the
judgment is given
http://www.drtsolutions.com/Nahar-HSBC-Counter-claim-Appeal.htm
with important portions marked in Red on pages 29, 35, 36, 38, 43, 44,
45, 49 to 52, 54, and 55. If the borrower litigants find that the
adjudication of their counter-claim is not being done properly, based on
this judgment, they should request DRT to transfer the said
counter-claim to civil court in the interest of justice, equity and good
conscience. They will not only get complete justice but their right to
appeal will be safe guarded without any deposit. Since in all the cases,
the amount of counter-claim is much more than the claim of the bank,
there is ‘No Debt Due’ and hence until and unless the counter-claim is
decided, no recovery action can be initiated against any decision of the
DRT. The following are the important aspects:-
(1)
The ‘Tiwari
Committee’ constituted by the RBI in 1981 first proposed establishment
of Tribunals for expeditious recovery of bank overdues. The said
committee recommended that these tribunals should be manned by persons
(i.e. the Advocates and the Judges) having knowledge and experience in
banking, industry and finance. Till date (even after 20 years of
establishment of DRTs) the said recommendation has not been implemented.
On one hand, huge court fee and other charges are being collected by the
DRTs, no money is being spent on the training of the Judges and the
Advocates on the essential knowledge of banking, industry and finance.
This is clearly affecting award of justice particularly to the borrowers
and guarantors.
(2)
The Supreme Court of
India, 15 years back laid down the law that the Tribunals be transferred
from control of the Administrative Ministry (i.e. Ministry of Finance
in case of the DRTs) to Ministry of Law. Till date even after the SC
verdict, the DRTs are not being transferred from the control of Ministry
of Finance to Ministry of Law. The Ministry of Finance continues to post
bank officials as DRT Judges and Recovery Officers. The Ministry of
Finance continues to hold regular meetings with the DRT Judges asking
them to expedite bank recoveries. All these are open violations of
Principles of Natural Justice which are governing the DRT Act and the
Securitisation Act. Under such facts and circumstances, the borrowers
and guarantors can not expect justice.
(3)
The DRT Act was
enacted in 1993. The provision of counter-claim in this Act was
incorporated in 2000 and is exactly the same as in CPC 1908. In CPC
itself such provision was made in 1976. The salient features of the
counter-claim are as under:-
(a)
The counter-claim is the suit filed by the borrower. Whereas the banks
are bound to file their claim for adjudication in DRTs, the borrowers
are not bound to do so. The bar of civil court vide section 18 of the
DRT Act applies to the banks only.
(b)
Further as per Section 19(11) of the DRT Act, “Where a defendant sets up
a counter-claim and the applicant contends that the claim thereby raised
ought not be disposed of but by way of counter-claim but in an
independent action, the applicant may, at any time before issues are
settled in relation to the counter-claim, apply to the Tribunal for an
order that such counter-claim may be excluded, and the Tribunal may, on
the hearing of such application, make such order as it thinks fit.”
(c)
In view of above, either the DRT has to adjudicate the counter-claim
following the established procedure laid down in the CPC or transfer the
case to the civil court.
(d)
Since the amount of counter-claim is much more than the claim of the
bank, there can not be any recovery action as there is ‘No Debt Due’
till the counter-claim is fully adjudicated upon either by the DRT or by
the civil court.
(4)
While all out
emphasis has been laid on expeditious adjudication and enforcement of
securities to free blocked public funds, an important aspect has not
been paid attention. If all these matters are so important, the banks
and the financial institutions have to be always careful and ever
vigilant to avoid such actions which will delay the matters in court of
law. The RBI has emphasized all these aspects since 1976 but the bank
bureaucracy has not been serious in respect of e.g. signing of blank
documents, execution of proper documents, eliminating questionable one
side documents, providing copy of complete set of documents executed,
timely sanction of needed funds, timely revival, restructure and
rehabilitation, avoiding questionable delays, strict observance of RBI
Guidelines and Govt policies, strict observance of duty of care, strict
observance of Supreme Court leading judgments like Kripack, Maneka
Gandhi, Mardia etc., proper determination of NPA as per RBI Guidelines,
proper process for initiation of declaration of willful defaulters,
proper conduct and actions of the Authorised Officers, strict legal
audit by independent auditor before issue of notice u/s 13(2), 13(4),
application u/s 14 and any appeal, transfer of DRTs from Ministry of
Finance to Ministry of Law etc. If all these are strictly enforced, the
consequent cases filed before DRT will be expeditiously decided. Further
the burden of unnecessary cases on DRTs and Civil Courts will come down
heavily. Under such circumstances only there will be expeditious
recovery. Otherwise the present system of mindless litigation and
unsatisfactory recovery will continue.
(5)
The bureaucracy in
banks and financial institutions instead of correcting themselves and
devising remedial internal measures are more inclined to secure stronger
legal powers, having controls on DRTs through Ministry of Finance by
appointing bank officers as Judges and Recovery Officers in DRTs and
blaming others. It is like if you point out one finger to others, you
forget that three fingers are pointing towards you.
(6)
Since the banks and
financial institutions are less likely to correct themselves, the legal
compulsions like damages and counter-claims will alone force them to do
so.
(7)
The full
text of this useful judgment is given
http://www.drtsolutions.com/Nahar-HSBC-Counter-claim-Appeal.htm
with important portions marked in Red on page 29, 35, 36, 38, 43, 44,
45, 49 to 52, 54, and 55.
(2) Landmark Judgment on the Role of DRT
In a news item dated
04.08.09, the judgment dealt by us in Sl No 1 above has been termed as
Landmark Judgment on the role of DRT. The said news item is reproduced
below:-
http://indiacorplaw.blogspot.in/2009/08/landmark-judgment-on-role-of-debt.html
The role of the Debt Recovery Tribunal has been the subject of a great
deal of controversy. Some aspects of this issue have been discussed on
this blog.
The main question has been whether an independent suit filed by a
borrower against a bank in a civil court could be transferred to the DRT
as a “counterclaim” against his wishes. The law on the point was
uncertain, with several conflicting judgments. Last week, the Supreme
Court put the controversy to rest with a comprehensive and well-reasoned
judgment. A copy of the decision, Nahar Industrial Enterprises Ltd. v. HSBC, is
available here.
The case concerned several appeals that had been filed against decisions
of various High Courts on this question. Some had held that an
independent suit was not barred, while others had held that it was, and
transferred it to the appropriate DRT. To briefly recapitulate the
context, s. 17 of the RDB 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”. S. 18 ousts the jurisdiction of all courts
except on writ jurisdiction to hear matters that form the subject of s.
17. Originally, the RDB Act did not contain any provision that allowed
the borrower to raise a counter claim or set off. S. 19 of the Act was
amended, and the law as it stands today allows a borrower to raise those
issues as well. Consequently, some courts began holding that an
independent suit may constitute a “counterclaim” for the purposes of s.
19 and is consequently liable to be transferred.
The two main, and conflicting decisions on the point prior to Nahar were Indian
Bank v. ABS
Marine Products, (2006) 5 SCC 72 and SBI v. Ranjan
Chemicals Ltd., (2007) 1 SCC 97. ABS Marine had held that an
independent suit cannot be transferred without the consent of the
borrower even if it inextricably connected with the bank’s suit and is
in the nature of a counter claim. Ranjan Chemicals had held that
the consent of the parties is not a limitation on the power of the court
to order a transfer.
In Nahar, the Supreme Court held that Ranjan Chemicals could
not have departed from the law laid down in ABS Marine, as it was
a decision of a coordinate Bench. The Court also seems to have accepted
the argument that s. 31 of the DRT Act is exhaustive of the powers of
transfer under the Act. Substantively, the Court agreed with the
reasoning that a DRT is incapable of adjudicating complex issues of law
and fact. It noted that a Tribunal that has the “trappings” of a court
is not necessarily a court, and approved decisions that had held that
the DRT is not a court. Moreover, the DRT cannot issue a decree, but
only a recovery certificate. Although a DRT is empowered to take
evidence in a detailed manner, the Court observed that its function is
intended to make this the exception and not the rule. Thus, the position
is that the DRT is not a civil court for the purposes of ss. 23, 24 and
25 of the CPC. Nor is it subordinate to the High Court. The following
observations are apposite:
“Concededly in the proceeding before the Debt Recovery Tribunal
detailed examination; cross-examinations, provisions of the Evidence Act
as also application of other provisions of the Code of Civil
Procedure like interrogatories, discoveries of documents and admission
need not be gone into. Taking recourse to such proceedings would be an
exception. Entire focus of the proceedings before the Debt Recovery
Tribunal centers round the legally recoverable dues of the bank… Under the
Act, as it originally stood, did not even have any power to entertain a
claim of set off or counter-claim. No independent proceedings can be
initiated before it by a debtor. A debtor under the common law of
contract as also in terms of the loan agreement may have an independent
right. No forum has been created for endorsement of that right.
Jurisdiction of a civil court as noticed hereinbefore is barred only in
respect of the matters which strictly come within the purview of Section
17 thereof and not beyond the same. The Civil Court, therefore, will
continue to have jurisdiction” [emphasis supplied].
The Court evolved two other important propositions. The first is the
well-settled principle that a bar on the jurisdiction of the civil court
is not to be readily inferred. The second, and more important, was the
Court’s finding that since the right to appeal is a vested,
statutory right by virtue of s. 96 of the CPC, the line of reasoning
employed in Ranjan Chemicals would not only deprive the borrower
of his right to sue, but also of his right to appeal.
In sum, the Court has not only reached the correct conclusion, but also
finally clarified the law on DRTs with a well-reasoned and authoritative
judgment. Worries remain, however, that the judgment may be used by
borrowers as a tool to stall the efficacy of DRTs. -
(3) Latest Cancer Information from John Hopkins
Dr V.P.
Bansal, M.B.B.S (Gold Medalist), M.D.(Allopathy),D.H.M.S.(Homoeopathy)
from Indore Mobile: 91-9926020111
has sent the following useful
information. Interestingly Mr Chauhan, the promoter of ‘New Diet System’
has already done pioneering work past more than 10 years and proposed
that we should take only the raw natural products like fruits and
vegetables when we are hungry. He termed milk as white poison. He came
out with a remarkable suggestion of daily 6 hours fasting as soon as we
wake up in the morning.
LATEST CANCER INFORMATION
from Johns Hopkin
AFTER YEARS OF TELLING PEOPLE CHEMOTHERAPY IS THE ONLY WAY TO TRY AND
ELIMINATE CANCER, JOHNS HOPKINS IS FINALLY STARTING
TO TELL YOU THERE IS AN ALTERNATIVE WAY …
1. Every person has cancer cells in the
body. These cancer cells do not show up in the standard tests until they
have multiplied to a few billion. When doctors tell cancer patients that
there are no more cancer cells in their bodies after treatment, it just
means the tests are unable to detect the cancer cells because they have
not reached the detectable size.
2. Cancer cells occur between 6 to more
than 10 times in a person's lifetime.
3. When the person's immune system is
strong the cancer cells will be destroyed and prevented from multiplying
and forming tumors.
4. When a person has cancer it indicates
the person has multiple nutritional deficiencies. These could be due to
genetic, environmental, food and lifestyle factors.
5. To
overcome the multiple nutritional deficiencies, changing diet and
including supplements will strengthen the immune system.
6. Chemotherapy involves poisoning the
rapidly-growing cancer cells and also destroys rapidly-growing healthy
cells in the bone marrow, gastro-intestinal tract etc, and can cause
organ damage, like liver, kidneys, heart, lungs etc.
7. Radiation while destroying cancer
cells also burns, scars and damages healthy cells, tissues and organs.
8. Initial treatment with chemotherapy
and radiation will often reduce tumor size. However prolonged use of
chemotherapy and radiation do not result in more tumor destruction.
9. When the body has too much toxic
burden from chemotherapy and radiation the immune system is either
compromised or destroyed, hence the person can succumb to various kinds
of infections and complications.
10. Chemotherapy and radiation can cause
cancer cells to mutate and become resistant and difficult to destroy.
Surgery can also cause cancer cells to spread to other sites.
11. An
effective way to battle cancer is to STARVE the cancer cells by not
feeding it with foods it needs to multiple.
What cancer cells feed on:
a. Sugar is a cancer-feeder. By cutting
off sugar it cuts off one important food supply to the cancer cells.
Note: Sugar substitutes like NutraSweet, Equal, Spoonful, etc are made
with Aspartame and it is harmful. A better natural substitute would be
Manuka honey or molasses but only in very small amounts. Table salt has
a chemical added to make it white in colour. Better alternative is
Bragg's aminos or sea salt.
b.
Milk causes the body to produce mucus, especially in the
gastro-intestinal tract. Cancer feeds on mucus. By cutting off milk and
substituting with unsweetened soy milk, cancer cells will starved.
c. Cancer
cells thrive in an acid environment. A meat-based diet is acidic and it
is best to eat fish, and a little chicken rather than beef or pork. Meat
also contains livestock antibiotics, growth hormones and parasites,
which are all harmful, especially to people with cancer.
d. A
diet made of 80% fresh vegetables and juice, whole grains, seeds, nuts
and a little fruits help put the body into an alkaline environment.
About 20% can be from cooked food including beans. Fresh vegetable
juices provide live enzymes that are easily absorbed and reach down to
cellular levels within 15 minutes t o nourish and enhance growth of
healthy cells.
To obtain live enzymes for building
healthy cells try and drink fresh vegetable juice (most vegetables
including bean sprouts) and eat some raw vegetables 2 or 3 times a day.
Enzymes are destroyed at temperatures of 104 degrees F (40 degrees C).
e. Avoid coffee, tea, and chocolate,
which have high caffeine. Green tea is a better alternative and has
cancer-fighting properties. Water--best to drink purified water, or
filtered, to avoid known toxins and heavy metals in tap water. Distilled
water is acidic, avoid it.
12. Meat protein is difficult to digest
and requires a lot of digestive enzymes. Undigested meat remaining in
the intestines will become putrified and leads to more toxic buildup.
13. Cancer cell walls have a tough
protein covering. By refraining from or eating less meat it frees more
enzymes to attack the protein walls of cancer cells and allows the
body's killer cells to destroy the cancer cells.
14. Some supplements build up the immune
system (IP6, Flor-ssence, Essiac, anti-oxidants, vitamins, minerals,
EFAs etc.) to enable the body's own killer cells to destroy cancer
cells. Other supplements like vitamin E are known to cause apoptosis, or
programmed cell death, the body's normal method of disposing of damaged,
unwanted, or unneeded cells.
15. Cancer
is a disease of the mind, body, and spirit. A proactive and positive
spirit will help the cancer warrior be a survivor.
Anger, unforgiving and bitterness put
the body into a stressful and acidic environment. Learn to have a loving
and forgiving spirit. Learn to relax and enjoy life.
16. Cancer cells cannot thrive in an
oxygenated environment. Exercising daily, and deep breathing help to get
more oxygen down to the cellular level. Oxygen therapy is another means
employed to destroy cancer cells.
DRT Solutions Weekly Mail – 261st Issue
dated 10th May ‘13
All Weekly mails right from 1st Issue to latest, click
top of this page
(1) Important & Useful Judgment of the Supreme Court – DRTs even can go
beyond CPC
ICICI Ltd vs Grapco Industries Ltd decided
on 14.05.99 by Supreme Court of India, Judges – D. P. Wadhwa & S. Sagir
Ahmed, Case No : 3167 of 1999
Citations - 1999
(3) Scale 674 : 1999 (4) SCC 710 : 1999 (2) UJ(SC) 1010 : 1999 AIR(SCW)
1664 : 1999 AIR(SC) 1975 : 1999 (5) Supreme 547 : 1999 (3) JT 619
DRT Solutions Citation – DRTS-012-ICICI
vs Grapco-1999
http://www.drtsolutions.com/ICICI-Grapco.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-012.
Comments by DRT Solutions
An Important Supreme Court Judgment laying down that DRTs can even go
beyond CPC
(a) The
full text of the judgment is given below with important portions marked
in Red vide linkhttp://www.drtsolutions.com/ICICI-Grapco.htm As
per the Section 22 of the DRT Act, the DRT and DRAT shall not be bound
by the procedure laid down by the CPC but shall be guided by the
principles of natural justice. The general impression was that the CPC
is not applicable in DRTs.
(b) But
as per this Supreme Court judgment, the DRTs can even go beyond CPC.
Hence whenever our clients pointed out that the POs in DRTs were not
permitting application of CPC, we cited this particular judgment to
them. Since such queries have increased we have thought appropriate to
publish the full text of the judgment as under with important portions
marked in Red, which are self explanatory. The said Red portions from
Para Nos are reproduced below.
(c) It
is relevant to point out that the CPC is nothing but codification of the
principles of natural justice. Hence in the interest of justice and
depending on the facts and circumstances, the DRTs will have to follow
not only the CPC but as per the law laid down in this Supreme Court
judgment, the DRTs can even travel beyond CPC.
Extract from Para 7
“For all intent and purpose, an application (u/s
19 of the DRT Act) is
like a plaint in civil suit and applicant would be plaintiff and
respondent a defendant. The
details which are required to be given in the application in substance
conform to the requirements of a plaint under the Code of Civil
Procedure. - - -it may perhaps be better to describe the applicant as a
plaintiff, an application as a plaint and respondent as defendant.”
Extract from Para 11
“When Section 22 of the Act says that the tribunal shall not be bound by
the procedure laid by the Code of Civil Procedure, it does not mean that
it will not have jurisdiction to exercise powers of a court as contained
in the Code of Civil procedure. Rather,
the tribunal can travel beyond the Code of Civil Procedure and the only
fetter that is put on its powers is to observe the principles of natural
justice.”
(2) Court Judgments – Important, Useful & Favourable to Borrowers &
Guarantors
We have so far published 12 important, useful and favourable judgments
on our web site in full text with comments as well as important portions
marked in Red. Many of our clients and their advocates have appreciated
these valuable judgments. Encouraged by such feedback, we are adding one
such judgment every week. Instant availability on our web site has
proved a great utility and valuable instant resource for the practicing
DRT advocate. The titles of the relevant web pages and URLs have been
technically chosen in such a manner so that the search engines will rank
the same for most easy search. Our citation i.e. DRTS-000-Names of
Parties-Year of Decision also will make the referencing an easy and
convenient task. We invite comments and suggestions for further
improvements, if any.
