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DRT Solutions Weekly Mail – 410th Issue dated 15th April ’16

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(1) DRT Rules Challanged in Gujrat HC


The following news item is self explanatory:-

Gujarat HC issues notice on petition challenging DRT Rules as unconstitutional for lack of independence from parent Ministry

By: Apoorva Mandhani | April 12, 2016

A Division Bench of Gujarat High Court recently issued notice [ORDER] on a petition challenging the validity and constitutionality of the Debt Recovery Tribunal (Procedure for Appointment as Presiding Officer of the Tribunal) Rules, 1998. The petition, filed by Indra Cotton Ginning and Pressing Private Limited (ICGPPL), contends that the rules impinge the principle of independence of judiciary and are therefore, violative of the guarantee of equal protection of the law provided by Article 14 of the Constitution of India. The Bench, comprising Chief Justice R. Subhash Reddy and Justice Vipul M. Pancholi, however refused to stay the proceedings initiated against ICGPPL by the State Bank of India, under the demand notice issued Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. 


ICGPPL was issued a notice by the State Bank of India (Respondent Bank), under Section 13(2) of the SARFAESI Act, 2002, on April 15, 2015, initiating action under the SARFAESI Act. This notice was replied to, giving a detailed reply to the Respondent Bank, and disputing the creation of valid security interest in its favour. The Respondent Bank had thereafter taken symbolic possession of the properties. Being aggrieved by the measure, ICGPPL now approached the High Court, contending that it was “not in a position” to approach the Debt Recovery Tribunal, which is the forum prescribed under SARFAESI Act, for challenging any measure under Section 13(4) of the Act. It has contended that the DRT lacks independence from executive interference, especially the Ministry of Finance, which is the parent ministry of the Respondent bank. “That the petitioner’s right to have its rights, adjudicated by a forum which exercises judicial power in an impartial and independent manner, consistent with the recognized principles of adjudication, which is an adjunct of Article 14, is violated on account of the manner in which the appointment is made to the DRTs as per DRT (Procedure for Appointment as Presiding Officer in Tribunal) Rules, 1998,” the petition contends. The petition brings to the Court’s attention Rule 3 of the Appointment rules, which provides the composition of the Selection Committee responsible for appointing Presiding Officers in the DRT. The Selection Committee comprises of the Chief Justice of India or a Judge of the Supreme Court of India, Secretary to the Government of India in the Ministry of Finance, the Secretary to the Government of India in the Ministry of Law and Justice, the Governor of the Reserve Bank or the deputy Governor of the Reserve Bank, and the Secretary or Additional Secretary to the Government of India in the Ministry of Finance. It contends that the presence of only one judicial officer on the committee, and four executive members “seriously compromises the independence of the tribunal”. Further, presence of members from the parent ministry has also been alleged to be violative of the guidelines issued by the Supreme Court in the case of Madras Bar Association v. Union of India. The petition hence terms as “eyewash” the consultation of the Central Government with the selection committee for appointment of members. ICGPPL also challenges the Rule relating to meeting of the Committee as arbitrary, unreasonable and unconstitutional. This rule states that any three members of the Committee, including the Chairman, shall form a quorum for meeting of the Committee. It contends that such a quorum requirement, wherein two members can be from the parent Ministry is a “blatant breach of the principle of Independence of Judiciary and Separation of Powers”. Rule 5, which states that the appointment of a Presiding Officer would be made from a list of candidates prepared by the Ministry of Finance, has also been termed as “eyewash”. 


Further, Rule 8 has been demanded to be struck down, on the ground of it bestowing unbridled power on the Central Government to suspend the Presiding Officer. The petition also challenges Section 16 of the RDDB Act, 1993 to the extent that it bars judicial review of orders appointing Presiding Officers of DRT. Debt Recovery Tribunal (Procedure for Investigation of Misbehaviour or Incapacity of Presiding Officer) Rules, 2010, as well as Debt Recovery Tribunal (Financial and Administrative Power) Rules, 1997 have been demanded to be quashed.

(2) Technology in Indian Legal Sector


The following news item is self explanatory:-

Wed, Apr 13 2016. 07 53 PM IST

Can there be ‘Uber moment’ in India’s legal sector?

The Indian legal ecosystem too has seen a push toward technology over the last few years


New Delhi: In this story Mint profiled the fees charged by the top lawyers in the country. The numbers are a reflection of the exclusivity of access to the best legal advice. The only counter, according to this 11 April report in the Financial Times, is technology. The FT report, titled Technology: Breaking the Law, said that the legal sector in the US and UK was headed towards an Uber moment, referring to the overhaul that took place in the taxi system after the launch of the app-based service.

The Indian legal ecosystem too has seen a push toward technology over the last few years.

Case law database and search engine Indian Kanoon recently launched a virtual assist software or legal research tool. The virtual assist option, available for a fee, will help with annotating cases and creating ready documents with existing research, the website’s creator Sushant Sinha said. The feature also boasts of being free of advertisements.

The search engine has the look and feel of Google, having been inspired by it. Sinha has maintained the website by himself, with a little help from his lawyer friends, since its launch in January 2008. The process of collecting judgments across all high courts (except three) and the Supreme Court happens daily and is completely automated. Each day, roughly 4,000 judgments are added. While there are other competing (and usually more relied on by lawyers) databases like Manupatra and SCC Online, neither is free.

Automation is key in today’s fast-paced environment. That’s also the motto of a 25-year-old lawyer-turned-entrepreneur Akshat Anand, who started Provakil—an app and website which helps you track your cases, so you can know when it will be heard next, whether an order has been uploaded and such. The app, launched in August 2015, is still being developed.

The look of the app is clean, with a simple white and green interface. I tried the app, and it turned out to be almost instantaneous with its updates of orders and possible next date of hearing. Anand said that the website was based on Google material design. As of now, the Provakil database contains material on nearly 5 lakh cases from three courts—the Supreme Court, Delhi high court and the National Consumer Disputes Resolution Commission.

If the case numbers for any of one of these is entered into the app, the details start showing. It is public data that Provakil hunts for and stores it in its database, Anand said.

Regular updates of orders, the next dates of hearing and other relevant information is fed into the database, and the process is completely automated. The venture has been profitable for Anand and his small team of five developers. Anand hopes to add case details from 10 high courts, the National Green Tribunal, the Competition Appellate Tribunal and Delhi district courts in the next six months into the database. His vision, however, is to cover 200 courts within the next year.

The other area where technology is seeing a boom is in providing access to legal services.

One such website, which has gained visibility over the last five years is Vakilsearch.

Hrishikesh Datar, a 2010 graduate of the National Law School of India University, Bengaluru, started the website which provides services like incorporating companies, helping with trademarks and taxes. Launched in 2011, Vakilsearch now boasts of a gross revenue of Rs.1.2 crore per month and a 120,000-strong client base. This shows an increasing move towards accessing legal services online, over emails and calls.

Quality control is an important aspect of the business, Datar said. He added that they rely on inputs from the customers to assess the quality of lawyers and service providers they connect with.

Two of the three entrepreneurs talked of bringing a disruption in the legal sector—while that level of disruption may not have been achieved yet, according to Datar, the attempt is on.

Will the Indian legal system reach its Uber moment?

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DRT Solutions Weekly Mail  409th Issue dated 8th April ’16

All Weekly mails right from 1st Issue to latest, click links on top of this page


(1) Lessons from Mallya’s Case


The following news item is self explanatory:-

Lessons from the Vijay Mallya episode

It presents a good opportunity to carry out fundamental reforms in the banking industry

By: Hardayal Singh | April 2, 2016 12:20 AM

Vijay Mallya’s failure to pay Kingfisher debt may have created a huge national outrage, but that outrage will be wasted unless we face the issue squarely. Otherwise, there will be a Vijay Mallya every few years.

The latest episodes of bad lending generate a strange sense of deja vu. It also makes us worry. As someone who dealt with hundreds of cases of this kind in the aftermath of the Harshad Mehta and the Indian Bank scams, I sometimes wonder what lessons we have collectively learnt over the years. Then, as now, a shell-shocked nation stood aghast at both the audacity of the main actors and the challenges faced by the system to check them. At that time, I was in the Central Vigilance Commission (CVC), and my colleagues and I advised immediate initiation of disciplinary action in many cases; and quite a few of these ended with imposition of tough punishments. The CVC’s advice was consistent and we always prided ourselves on being fair. Bankers, however, always thought we were harsh, and judged their cases as we would those of civil servants, without understanding the fundamentals of banking.

Some time in 1998, N Vittal, the then CVC, appointed me as head of a drafting committee to write a special chapter on vigilance management in banks. We consulted all the stakeholders—public sector banks (PSBs), the banking division of the ministry of finance, RBI and others—and finished the task within a month. This chapter remains the basic document governing vigilance management in banks till today.

The chapter lays down a modified version of the seven-fold test formulated by the Supreme Court in the KK Dhawan vs Union of India case. Although this case dealt with a civil servant performing quasi-judicial functions, we felt—and the bankers we consulted agreed—that it was broad enough to cover cases of bank managers as well. The test laid down, inter alia, that a vigilance angle in a case would be perceived only if it was characterised by mala fides or if a wrongful loss had been caused to the organisation; or a wrongful gain had resulted to a private party. It could also be perceived if the person concerned had been reckless or grossly negligent in performing her duties; exceeded her powers or jurisdiction; or flagrantly violated systems and procedures. Some amount of protection was provided to bankers by recognising that risk taking formed an integral part of their business. Thus, every loss suffered by a bank need not necessarily become the subject of a vigilance inquiry, unless the decision taken was motivated or reckless.

An investigator had to ask a basic question: Given the circumstances, could an ordinary prudent person have taken the decision in question? Only if the answer was in the negative, would there be a possibility of a vigilance case.

This line of thinking did not satisfy bankers. This test, they said, was too subjective. They also felt the CVC was attaching too much importance to procedural lapses. With the passage of time, in line with the government’s general policy, the role of the CVC was gradually diluted so as to limit its jurisdiction to a few senior managers. Bankers were understandably relieved when this happened because they felt that the CVC was, along with the CAG and CBI, creating a fear psychosis and causing managers to be totally risk-averse. The CVC, on the other hand, always felt that it was only signalling banks to respect prudential banking norms and respect rules.

This conflict has never really been resolved. Banks have always demanded more powers to conduct their own vigilance without the intervention of the CVC or any other third party; but in many cases that has led to cronyism.

The banks’ own relationship with the CVC has been uneasy even in the best of times.

This is the context in which the Vijay Mallya and other NPA cases will come up for decision. The CVC will examine if irregularities have occurred. If they have, it will examine whether there was a vigilance angle; and if there is such an angle, it will insist that accountability be fixed. After the initiation of disciplinary action, it will examine the inquiry reports and recommend punishments in accordance with the nature and gravity of the lapses, the extenuating circumstances, if any, and the past track-record of the officer. If a borrower is guilty of any form of corruption or criminal connivance, the CBI will invoke the Prevention of Corruption Act and initiate appropriate criminal proceedings. These will then undoubtedly drag on for years.

There will be cases where junior officers are made convenient scapegoats simply because they signed on the dotted line, whereas they might only have been following verbal instructions of their seniors. Being off the record, this fact, however, will be difficult to establish in judicial or quasi-judicial forums. Similar is the position of the role of politicians, board members, bureaucrats and others who might have unfairly influenced banks.

In the meantime, after the heat has died, bankers will again cry that they cannot function in this atmosphere of a fear psychosis. Thus, the cycle will play itself out ad nauseam without the managements or the government becoming any the wiser.

The possibility of losses to the tune of lakhs of crores, however, should make the government and indeed all of us think deeply of the nature of the problem. PSBs have had to be repeatedly recapitalised with the help of taxes we all pay. It is not as if the people running them are all incompetent. The incentives they face, however, are perverse. They are sometimes made to feel that they should behave like civil servants; when it comes to meeting targets, however, they are told that they are commercial bankers and should function as such. The two worlds are different, “…and never the twain shall meet.”

Private banks face no such problems. They are guided only by pure commercial considerations, and today their NPAs are much lower than PSBs’ because they cannot be bullied into taking unacceptably high risks.

India is the only democratic country in the world where the state owns commercial banks. Currently, it controls 70% of the banking industry. Shouldn’t a modern state move out of this space and leave the PSBs concerned to swim or sink on their own? Shouldn’t it focus instead on providing an enabling environment where businesses—large and small—can flourish? This role would imply that it should continue to perform its sovereign functions (related to law and order, foreign policy, defence, settlements of disputes, etc), and in addition also take the lead in providing primary education, healthcare and infrastructure to its citizens.

What happens then to the Centre’s efforts at achieving financial inclusion and bringing poor people within the fold of the modern economy? The realisation of these commendable objectives is important. The future of financial inclusion lies in mobile banking. RBI should be liberal in licensing ‘payments banks’. Since PSBs have already opened 20 crore new Jan-Dhan Yojana accounts, the government may, out of practical considerations, continue to use them for this purpose, but compensate them for any losses they incur for performing this function. In fact, this crisis is a good opportunity to carry out fundamental reforms in the banking industry.


(2) Donations to the Parties from Foreign Sources


The following news item is self explanatory:-

Last Modified: Fri, Apr 08 2016. 02 35 AM IST

Move to legalize donations from foreign sources to benefit parties

Proposed amendment to FCRA could put to rest cases being fought by BJP and Congress on such violations


New Delhi: Donations to political parties by foreign-owned companies in India will soon be legalized—retrospectively from 2010—under government proposals that will benefit the ruling Bharatiya Janata Party (BJP) and opposition Congress.

In a move that could have a major impact on the manner in which political parties are funded in India, finance minister Arun Jaitley has proposed a retrospective amendment to the Foreign Contribution (Regulation) Act, 2010 or FCRA.

Under the proposed amendment—part of the budget proposals presented on 29 February—a donation by a company which has majority foreign ownership will no longer be treated as “foreign source” as long as it conforms to the sectoral foreign investment cap and conditionality.

The amendment, once passed, could put to rest all the legal cases currently being fought by BJP and the Congress party.

They have been accused of violating FCRA while receiving donations from foreign-owned companies.

News website The Wire first reported this on 2 April.

The finance bill seeks to amend the definition of what will constitute a foreign source of funding retrospectively with effect from 26 September 2010 to state that: “Provided that where the nominal value of share capital is within the limits specified for foreign investment under the Foreign Exchange Management Act, 1999, or the rules or regulations made thereunder, then, notwithstanding the nominal value of share capital of a company being more than one-half of such value at the time of making the contribution, such company shall not be a foreign source.”

Currently, any company in India with foreign investments of over 50% is considered as a “foreign source.”

At present, under FCRA, political parties are barred from receiving foreign funding, as are election candidates, elected legislatures, reporters, editors, owners, printers and publishers of registered newspapers, judges and government employees.

The amendment will go through once the Finance Bill, 2016 gets Parliament’s nod in May, during the second half of the budget session.

“This is a very important amendment because without this amendment Indian companies which are subsidiaries of foreign companies are treated as foreign source and consequently any contribution made by such Indian companies is treated as foreign contribution although the company making the contribution is a company incorporated in India,” said Lalit Kumar, Partner at law firm J Sagar Associates.

“Therefore, only those Indian entities which are registered under FCRA could receive contribution from such Indian subsidiaries and entities that are not registered under the FCRA cannot receive the contribution. That will change now with this proposed amendment,” he said.

While the Aam Aadmi Party (AAP) was quick to oppose the government’s move, demanding the withdrawal of the amendment, BJP defended the proposal.

“As far as election funding is concerned, what is important is to ensure that there is transparency as to what is the source of funding and the legitimacy of such funds. These are not compromised in any manner as per the proposed changes,’’ said G.V.L. Narasimha Rao, national spokesperson for BJP.

Rao also rejected the criticism levelled by AAP that the amendment was being introduced to bypass the judicial process, saying: “This criticism is not valid because Parliament is supreme in making laws. It has happened in the past also that issues were under court’s observation and Parliament made laws. Law making is the sole preserve of the legislature.’’

AAP said: “This development will encourage black money in politics and will further harm the country’s democracy, if this FCRA amendment is allowed to be passed in Parliament. The AAP appeals to all the non-BJP, non-Congress parties to ensure the defeat of this amendment in Parliament and expose the unholy nexus of these two parties, which do not want transparency in political funding.”

A senior leader of the Congress party said that the opposition party is yet to take a stand on the issue.

“We have not been consulted or our views sought on this issue. The government has decided this unilaterally. We need to get more details before commenting on the issue,’’ the Congress leader quoted above said.

Lawyer Prashant Bhushan, representing the Association for Democratic Reforms (ADR)—a New Delhi-based not for profit organisation that works in the field of electoral reforms in both the Delhi high court and the Supreme Court—against Indian political parties accepting foreign funding (which ADR said was illegal as per Indian laws), said that the government had not yet filed its response on the issue of alleged violation of foreign funding laws in the Supreme Court.

ADR moved the Delhi high court in 2013 alleging that both BJP and Congress violated the FCRA when they accepted donations from Indian subsidiaries of the British mining company Vedanta, owned by Indian-born billionaire Anil Agarwal.

“All along the government was contemplating retrospectively amending the provision to absolve themselves of the foreign funding violation,” he added.

Bhushan was referring to a Delhi high court ruling on 28 March 2014, which found the Congress and BJP violating provisions banning foreign donations under the Foreign Contributions Regulations Act, 1976.

This ruling was challenged by both political parties in 2014 and now awaits a hearing in the apex court. “The acts of the respondents (INC and BJP)...clearly fall foul of the ban imposed under the Foreign Contribution (Regulation) Act, 1976 as the donations accepted by the political parties from Sterlite and Sesa (Vedanta subsidiaries) accrue from ‘Foreign Sources’ within the meaning of law,” the Delhi High Court ruled.

The case is likely to be heard in the Supreme Court next on 12 July. On 10 August last year, the court had asked the government to file its response at the earliest. Mint reported that the court gave the government three weeks to respond.

Those campaigning to ban foreign funding of political parties fear the proposed amendment may now nullify the case. “The Supreme Court case may not survive as it is,” Bhushan said.

However, the amendment will not close the issue of foreign funding violations.

“We will be challenging the validity of the amendment before the Supreme Court as the case is pending there,” Bhushan added.

ADR had moved the Delhi high court last year seeking an independent body to govern FCRA violations, also, in order to prevent any misuse of the law. That case shall be heard on Monday.

Jagdeep Chhokar, founder-member of ADR, said, “If FCRA is being diluted, it is to help the BJP and the Congress. Political parties will now become clearly open to the influence of foreign elements which will upset the integrity of a democratic country like India. The judicial process is being subverted and there is an attempt to block it.”

“If it comes to Parliament, it will be in the form of a one-line amendment. It has been 31 days since the budget was introduced and no one had a clue about this. It shows that the intent of the government is to get this passed quietly,’’ he said adding that if the bill gets passed, ADR will mount a legal challenge against it.

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DRT Solutions Weekly Mail – 408th Issue dated 1st April ’16

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(1) Private Bankers are Public Servants


The following news item is self explanatory:-

Private Bankers Are Public Servants, decrees the SC

SUCHETA DALAL | 29/03/2016 02:03 PM 



While IDBI Bank’s officers may launch an agitation to demand that government holding remains above 51%, the accountability of private bankers has been tightened significantly by a landmark judgement of the Supreme Court of India (SC). The case pertains to the Ketan Parekh scam that saw the collapse of Global Trust Bank (GTB). It is well documented that Ramesh Gelli, then a high-flying banker, was close to most of the scam-accused and the corporates which colluded with him. The egregious flouting of lending norms in order to bail out Ketan Parekh  destroyed GTB’s finances.


Investigations had shown that GTB lent money to corporate houses and allowed the funds to be transferred to Ketan Parekh via multiple transfers in a single day. While the details of the case are forgotten by the public and the corporate houses involved got away with their collusion, it is judicial orders that make us realise how and why cases drag on for decades. In GTB’s case, the Reserve Bank of India (RBI) quickly covered up its regulatory failure and avoided massive losses to depositors and shareholders by forcing a merger between GTB and a reluctant Oriental Bank of Commerce (OCB) in 2004. 


Mr Gelli and company almost evaded accountability by taking advantage of a loophole. Twelve years later, the SC has ruled that Mr Gelli, the Bank’s executive director, Sridhar Subashri, and others were public servants under the Prevention of Corruption Act (PCA) and are liable to be tried under its stringent provisions. In doing so, the SC bench of Justices Ranjan Gogoi and PC Pant, in separate but concurring orders, overturned a Bombay High Court judgement which had let them off because of a serious omission in a legal amendment. 


The apex court decided to go into the legislative intent in amending the PCA, which was to “make the anti-corruption law more effective and widen its coverage” by expanding it to cover whole-time “chairman, managing director, director, auditor, liquidator, manager and any other employee” for the purposes of Chapter IX of the Indian Penal Code (45 of 1860). 


Poor attention to detail by the law ministry meant that changes in the Indian Penal Code, in line with changes to the PCA, were not accompanied by a simultaneous amendment to Section 46A of the Banking Regulation Act (BRA). The SC order, in dealing with this omission said, “Section 46-A of Banking Regulation Act, 1949, cannot be left meaningless and requires harmonious construction.” Pertinently, the substance of Section 46A would not be defeated merely because the Prevention of Corruption Act deleted a few Sections from the Indian Penal Code without making corresponding changes to the BRA.


Sherbir Penang, a lawyer who specialises in white-collar crime and criminal compliance, says in his blog that the SC order “comes against the backdrop of India battling a major non-performing asset crisis, where several banks have been accused of sanctioning loans without following due process. It is highly likely (and hoped) that law enforcement will explore the ‘quid pro quo’ angle more seriously now that private bank officers can be charged with the PCA.” Following the judgement, Mr Penang says, “Officers of private banks must understand the nuances of criminal liability that the PCA would cast on them, which is a considerable departure from the earlier substantive position of the law.” In Ramesh Gelli’s case, the matter goes back to the trial court after SC’s clarification on the conflict between provisions of the PCA and BRA. However, the significance of the judgement lies in its timing, when bad loans of several large industrialists are set to come in for deep scrutiny. Will the government actually use PCA for cases like Kiingfisher, Bhushan Steels, Winsome Diamonds, etc?

(2) Meritocracy in Judiciary


The following news item is self explanatory:-

Strong Case for Meritocracy in Judiciary

By V Sudhish Pai

Published: 27th March 2016 04:00 AM

Last Updated: 27th March 2016 01:16 AM



It’s important that the composition of the highest court should not be on geographical lines or simply an amalgam of various interests nor should it be a court of high court chief justices. It ought to be a seat of meritocracy. It is necessary to remember that some of the most eminent judges, who sat in the Supreme Court, were not chief justices in the high court. To go by seniority as of now is to deny the Supreme Court the best available talent. So too having a benchmark of age for elevation to the Supreme Court serves no purpose.

Talking of geographical representation, when the great Justice Holmes retired from the US Supreme Court, it was almost universally agreed that Judge Cardozo was the most appropriate person to succeed him. However, there was some apprehension whether President Hoover was reluctant to nominate Cardozo as he hailed from New York and four judges of the Supreme Court were already from New England. To allay this misgiving, Justice Harlan Stone, who was also from New England, wrote to the President offering to step down and urging him to nominate Cardozo. It is a matter of history that Cardozo was nominated without Stone resigning. The zone of consideration for appointment to the Supreme Court should not be restricted to the high court judges or even practising advocates. Art 124(3) should be given its full play. The constituencies from which to choose judges of the Supreme Court should be the high courts, the Bar and the lawyers outside. The infusion of academic jurists of the right order into the highest Tribunal may lead to its enrichment. Justice Frankfurter aptly remarked, “One is entitled to say without qualification that the co-relation between prior judicial experience and fitness for the function of the Supreme Court is zero.”

A busy practitioner is more concerned with cases while an academician has to build on basic principles and has more freedom to arrive at conclusions where there are no precedents or to differ from precedents of the highest authority where they are out of tune with fundamental principles. Such freedom is essential for the highest court. At times, a non-practising lawyer-judge might be in a better position to deal with problems of public law because of his outlook and freedom from a narrow and technical approach. Paradoxically, sometimes, persons with no constitutional law background are assigned constitutional cases in the Supreme Court and there are astounding judgments for all to see.

Moving for introduction of the provision which is now Art 124 (3)  (c), Shri HV Kamath spoke of the need to have persons of outstanding legal and juristic learning and referred to similar provisions relating to qualifications for judges of the International Court of Justice at the Hague. Supporting the proposal, Shri Ananthasayanam Ayyangar was of the opinion that out of the seven judges of the Supreme Court as originally contemplated, one must be a jurist of great reputation. It has too often been suggested that the court should have a regular Constitution Bench to deal with constitutional issues and the Appellate Division of the court should deal with other cases. The suggestion bears repetition because of its urgency and importance.

One suggestion is to increase the judge-strength of the Supreme Court. But that may not be wise. The highest court, to retain its character, should be compact. The original strength was seven besides the Chief Justice. Chief Justice Subba Rao, who strongly believed in building the image of the court, considered a maximum strength of nine to be appropriate. Whether or not that would be ideal in the present circumstances, a mere increase in judge-strength would perhaps be counter-productive — Parkinson’s law being attracted and the work expanding and distributing to fill the time available for its completion and subordinates multiplying regardless of the amount of work produced, as Justice Krishna Iyer forcefully pointed out.

It is also important to have judges of the highest calibre to man the superior courts — judges, according to Chief Justice Dixon, possessing ‘integrity, equanimity, legal knowledge, patience and common sense.’ It is appropriate to refer to what Shri KK Venugopal advocated in the First RK Jain Memorial Lecture: “The Supreme Court should have a separate cell, which would analyse a few judgments of each high court judge for the purpose of finding out the quality of the judge. That would disclose whether he has statesmanship, legal knowledge, experience, balance and impartiality. If all these are present, then the inputs of each of the Supreme Court judges would ensure a meaningful and effective decision in the cases before them. If all this is done, then one can look forward to a glorious future for the court where judges will be able to listen to arguments with detachment and patience and perhaps, be able to even devote themselves to the reading of legal classics, ponder over the arguments addressed and deliver pioneering and celebrated judgements.”

It is not known why for appointment of high court judges there is no such category as ‘eminent jurist’ as in Art 124 (3) (c). It is interesting that in Draft Article 193, which is the present Article 217, an amendment for incorporating a similar provision was moved by Prof Shibban Lal Saksena which was negatived without debate. The 42nd Constitutional Amendment Act introduced that provision which was perhaps the only good provision in it. It was, however, omitted by the 44th Amendment Act. It may be advisable to have a Constitution Amendment to incorporate such a provision.

It is also necessary to do away with the pernicious practice of appointing Additional Judges. Art 224 contemplates appointment of Additional Judges only when there is a temporary increase in work or accumulation of arrears, i.e., to meet a particular contingency and not to be a permanent feature. The original idea behind the provision has been perverted in practice. While this was so denounced by the Supreme Court way back in 1981 in the First Judges’ case which is still good law, in recent times, the Supreme Court on the administrative side has perpetuated this baneful practice and even worsened the situation by requiring some certification of the judgments passed by the Additional Judges by their peers. This has no constitutional or legal sanction and it is not understandable how high court judges pusillanimously put up with this which is derogatory for judges of the highest court of a State.

Durga Das Basu, in his Tagore Law lectures, observed that one cannot but emphasise the importance of proper personnel for the success of judicial review and poignantly added that even those, who are responsible for the selection of judges, sometimes lament over the performance of the courts, forgetting that the original sin was perhaps that of the critics themselves. In no other situation is this brought out more piquantly than when a sitting judge is sought to be removed for his inappropriate actions before he became a judge. Impressions and public perception — perception of right thinking people are indeed important and cannot be brushed aside. The situation can worsen when one tries to push under the carpet any allegations; the entire system may get corroded.

Shri Fali Nariman hit the nail on the head when he said that regrettably — with a few notable exceptions — the fraternity of justices in the higher judiciary in India tend to stick together when anyone speaks of any wrongdoing about one of them. It is imperative that there is a social boycott of black sheep by their peers and the public at large. Otherwise, all our crying about deviant and unworthy conduct is not only futile but also dishonest. It has been well said that when the Constitution gives the judiciary enormous power and responsibility to ensure that every institution and every citizen must strictly conform to law, it is logical then to expect that the institution of the judiciary itself must be worthy of the full confidence of the people.


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DRT Solutions Weekly Mail – 407th Issue dated 25th March ’16

All Weekly mails right from 1st Issue to latest, click links on top of this page


(1) Justice Delayed?


The following news item is self explanatory:-

Justice delayed?

By Soma Chakraborty, New Delhi 



According to an official estimate, there are over three crore cases pending at the three levels of the Indian judiciary. The situation became graver with no system in place on the appointment of Judges to the Supreme Court and the High Courts between April 13 and October 16 last year due to the fiasco over the National Judicial Appointments Commission (NJAC) Act. The alarming state of affairs in the Indian judiciary is evident from the fact that in the Supreme Court alone, as many as 59,468 cases were pending as on February 19, 2016. Bureaucracy Today analyses the situation and brings an in-depth report to its readers. 


As a well-known adage goes, “Justice delayed is justice denied”.  With every tick of the clock, the shortage of Judges and an ever increasing number of pending cases are making the wait for justice longer in India. According to Law and Justice Ministry data, the Supreme Court and the High Courts across the country are functioning with a strength of Judges much below the sanctioned one.

As per information available by the Supreme Court of India, it had 59,468 cases – 48,418 civil and 11,050 criminal –pending as on February 19, 2016.  


The situation is grimmer in the 24 High Courts and District and Subordinate Courts in the country.    

According to Ministry of Law and Justice data, a total of 41,53,957 cases were pending in High Courts across the country as on December 31, 2014. The situation was similar in the District and Subordinate Courts where around three crore cases were pending. As per official data, a total of 2,64,88,405 cases – 82,34,281 civil and 1,82,54,124 criminal – were pending in the District and Subordinate Courts as on December 31, 2014.

A Law Ministry statement says, “Some of the main factors responsible for pendency of cases in courts are increasing number of State and Central legislations, accumulation of first appeals, continuation of ordinary civil jurisdiction in some of the High Courts, vacancies of Judges, appeals against orders of quasi-judicial forums going to High Courts, number of revisions/appeals, frequent adjournments, indiscriminate use of writ jurisdiction, lack of adequate arrangement to monitor, track and bunch cases for hearing.”

Of all the factors, the number of vacancies in the judiciary stands out.


There is a huge backlog of Judges vacancies in courts across India. According to a Law and Justice Ministry document, the Supreme Court itself has a backlog of six Judges as against a sanctioned strength of 31.

The High Courts are also not far behind. The Ministry document says that as many as 464 positions of Judges were lying vacant in the 24 High Courts as against a sanctioned strength of 1,056 Judges – 754 permanent and 302 additional -- as on February 29, 2016.

The Delhi High Court had 21 positions of Judges vacant as against a sanctioned strength of 60. The ratio is serious in view of the number of cases going up substantially every year in the metropolis. 

The Allahabad High Court, which is the country’s largest, has 88 vacant positions as against the official strength of 160. The High Courts of other States like West Bengal, Maharashtra, Madhya Pradesh, Rajasthan and Punjab and Haryana have the same story to tell. Only the Tripura High Court with a total strength of just four Judges has no vacancy. 

“With some High Courts having nearly 40 per cent vacancies, appeals go unheard for years together,” a practising lawyer in the Gauhati High Court tells Bureaucracy Today. The Gauhati High Court has nine positions of Judges vacant as against a sanctioned strength of 24. 

The Judge-population ratio in India works out to be 17.72 Judges/judicial officers per 10 lakh persons. In 2002, based on a comparative assessment of the position in other countries, the Supreme Court decided in the All India Judges’ Association case that the ratio must be 50 Judges for 10 lakh people in the country.



The Chief Justices’ Conference held on April 3 and 4, 2015 had resolved that each High Court would establish an Arrears Committee to clear the backlog of cases pending for more than five years.  

As per information available from the Ministry of Law and Justice, Arrears Committees have been set up in 19 High Courts. These 19 High Courts are of Allahabad, Bombay, Calcutta, Chhattisgarh, Delhi, Himachal Pradesh, Jammu and Kashmir, Jharkhand, Kerala, Madhya Pradesh, Madras, Manipur, Meghalaya, Orissa, Patna, Punjab and Haryana, Sikkim, Tripura and Uttarakhand.


No doubt, the Government is making effort to reduce the Judges’ shortage but experts opine that there is lot more to do. Experts say delays in the disposal of cases affect all sections of society and unless urgent steps are taken, the judiciary will crumble under its own weight and people will lose faith in the justice delivery system. Though Article 39-A of the Constitution directs the State to secure equal justice and provide free legal aid for its citizens, can we assume that in view of the present state of affairs in the legal system it (the State) has failed to address the basic issues of quick and inexpensive justice and protecting the rights of the vulnerable?


(2) Funds Needed for Effective Judiciary


The following news item is self explanatory:-

Funds, infrastructure needed for effective judiciary: SC judge

PTI | Mar 19, 2016, 07.30 PM IST


Hyderabad, Mar 19 () Expressing concern over huge pendency of cases, a Supreme Court judge today stressed on the need for more number of courts for effective functioning of judiciary, saying courts do not possess a magic wand to reduce the number of cases which have become "a factor of injustice".

Addressing at the inaugural function of a two-day state-level Judicial Officers Conference here, Justice N V Ramana said while judiciary is often blamed for the huge pendency of cases, very little attention has been paid to the reasons for the 'unfortunate' situation.

"Courts do not possess a magic wand where it can be just waived to wipe out the huge pendency of cases," he said.

"Instead of blaming the system it is high time that some soul searching is done by stakeholders to find out the root cause so that the problem can be addressed effectively and expeditiously," he said.

Ramana also suggested that government of Andhra Pradesh and Telangana must provide ample infrastructure and funds to create more number of courts.

He requested chief ministers - N Chandrababu Naidu of AP and his Telangana counterpart K Chandrasekhar Rao - who were present during the function, to take necessary steps in this direction.

The Supreme Court judge said the enormous increase in filing of cases at all levels across all courts is a "good symbol" and an indication of common man's faith in the judiciary.

"This good symptom brings along with major challenges of maintaining high standards of judicial administration and providing the litigants a cost-effective and speedy relief. Both higher and lower judiciary is grappling with the issue of pendency of cases. The system has reached a point where it has become a factor of injustice," he said.

He further said Indian judiciary has played an instrumental role in shaping the nation that follows the rule of law in its governance.



DRT Solutions Weekly Mail – 406th Issue dated 18th March ’16

All Weekly mails right from 1st Issue to latest, click links on top of this page


(1) DRTs Problems


The following news item is self explanatory:-

What prevents India's Debt Recovery Tribunals from actually recovering bad debts?

At the end of December 2015, 69, 659 cases were pending with 33 DRTs

Abhijit Lele  |  Mumbai March 14, 2016 Last Updated at 13:29 IST


The country’s largest lender has approached the Debt Recovery Tribunal to help it recover loans given to Vijay Mallya-promoted Kingfisher Airlines, as well as to seek a stay on the disbursement of $72 million to Mallya as part of a deal he has struck with Diageo Inc.
Debt Recovery Tribunals (DRT) were initially set up for speedy adjudication and recovery of debts due to banksand financial institutions. DRTs deal with two different Acts: the Recovery of Debts Due to Banks and Financial Institutions Act, and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act. While the aim of the both the Acts is one and the same, but their route is different. 
Initially DRTs did perform well and helped lenders recover substantial parts of bad debt, but their progress stumbled when it came to large and powerful borrowers, who were able to stall proceedings on various grounds, including that claims against the borrowers were pending in civil courts. If the DRT were to adjudicate the matter and auction their properties irreparable damage would occur to them while cases were still pending elsewhere in the judicial system. 

While the DRT has issued orders in Mallya’s case, other cases continue to languish. Overall, the number of cases pending with 33 DRTs stands at 69, 659 at the end of December 2015, up from 42, 819 at the end of FY2013, according to Finance Ministry data.
Pushed by the Reserve Bank of India, Indian banks are on an overdrive to recognise and provide for stressed loans.  While this will undoubtedly clean up the books, bankers are worried about how they will recover the bad debts, fraught as the process is with inordinate delays and hurdles.
So what are the major problems that the DRTs face?
1. There is no mechanism in place to ensure that the tribunal disposes the case in a timely manner. There is a strong need to bring in more accountability for the DRT.
2. Inadequate infrastructure  - the small number of DRTs and Debt Recovery Appellate Tribunals, where judgments of DRTs can be appealed.
3. Delaying tactics by large borrowers.
A prime example is the debt racked up by Vijay Mallya-promoted Kingfisher Airlines. A consortium of banks, led by India’s largest lender State Bank of India, is fighting 20 cases across various courts, including the DRT, since June 2013. So far, more than 500 hearings have been held with over 180 adjournments.


Steps underway to improve DRTs’ performance

1. Six more DRTs to be set up in places like Chandhigarh and Siliguri
2. Scanning and digitisation of legacy data
3. Collection of MIS data
4. Implementation of e-filing in DRTs
5. Delegation of administrative and financial powers to DRTs.


(2) Video Recording Court Proceedings


The following news item is self explanatory:-


Transparent Judiciary: Law Ministry Again Moots Proposal to Record Court Proceedings

By Express News Service

Published: 14th March 2016 04:45 AM

Last Updated: 14th March 2016 04:47 AM


NEW DELHI: In a bid to enhance transparency, the Ministry of Law and Justice has again mooted the audio-video recording of court proceedings and asked the Chief Justice of India to consider the proposal again.

If the government’s proposal becomes a reality, India will not be the first to record trial proceedings – 45 countries, including the US and the UK, are already doing so.

The matter had come up for discussion at a meeting of the e-committee of the Supreme Court on January 8, 2014.  The then Chief Justice of India had advised the deferment of the audio-video recording of court proceedings as he wanted the issue to be discussed with the judges of the apex court and 24 High Courts. Law Minister D V Sadananda Gowda wrote to the CJI on July 10 and again on January 20 this year requesting him to consider the issue afresh.

The ministry says it has been receiving suggestions favouring the audio-video recording of proceedings for greater transparency. The electronic recording of court proceedings would usher in transparency as it would discourage witnesses from going back on their statements. Rerecording of witnesses’ statements often leads to unwarranted delay in trials and adds to the pendency list, says the agenda note for the meeting of the Advisory Council of National Mission for Justice Delivery and Legal Reforms.

There are over 3.64 crore cases pending in various courts. Of these, almost 3 crore are pending in subordinate courts alone, according to data compiled by the ministry.

The top court had last year dismissed petitions seeking approval for video recording judicial proceedings. The view put forth was that the legal system had not reached the level where the video recording of court proceedings could be allowed.

Currently, litigants can access case status information in respect of over 4.76 crore pending and decided cases and approximately 1 crore orders/judgments in more than 13,000 district and subordinate courts. The availability of data aids transparency and facilitates easy access to lawyers and litigants.

In camera

video-audio recording of Trials prevalent in 45 countries including the United States, United Kingdom, Italy, Sri Lanka, France, Germany and even the United Arab Emirates

In July, for the first time in the Indian judiciary, the Calcutta HC recorded proceedings on a directive by Justice Aniruddha Bose

Bose’s order came on persistent pleas by advocate Deepak Khosla

In 2010, Khosla made the same request to the Delhi HC, but his plea was not accepted


Weekly Mails are DRT Legal Guide and gold mine of practical information for the borrowers and guarantors – The mail recipient particularly Borrowers and Guarantors will be immensely benefited by our weekly mails and DVDs, all previous issues of weekly mails from 1st one till the last one may be viewed by clicking the links given at the top. Separate web pages have been created to contain these mails in batches of 10 so that pages open up fast. These mails are gold mine of information on current topics giving lot of practical suggestions and comments. Any new recipient to these mails must go through all the weekly mails right from the issue no 1 to the latest. If possible please spread the reference of our web site and the weekly mail among the persons, borrowers and guarantors who are the bank victims. If anyone desires to get these mails regularly, he may write to us for inclusion of his e-mail ID in the regular mailing list. The weekly mail is issued on every Friday. The particular issue of the weekly mail is first published on the web site and then mailed to borrowers, guarantors and their advocates in the country. This service is free in the best interest of society in general and litigant borrowers and guarantors in particular. We are getting huge no of mails appreciating our weekly mails.  We welcome suggestions.

DRT Solutions Weekly Mail – 405th Issue dated 11th March ’16

All Weekly mails right from 1st Issue to latest, click links on top of this page


(1) SC asks How Mallya Got Loan


The following news item is self explanatory:-

How did defaulter Vijay Mallya get loan: Supreme Court

By FE Bureau | The Financial Express


Controversial businessman Vijay Mallya’s troubles mounted further on Wednesday, with the Supreme Court issuing notice to him seeking his response within two weeks on pleas filed by a consortium of banks demanding direction for freezing his passport and his presence in the court. However, what came as a surprise was the revelation by attorney general Mukul Rohatgi that Mallya had left the country a week back and was probably in London.

“I spoke to the CBI a little while ago and it told me that on March 2, he (Mallya) left the country,” Rohatgi told the bench comprising justices Kurian Joseph and R F Nariman. The bench, therefore, allowed the plea of the AG that the notice to him can be served through his official Rajya Sabha e-mail ID, the Indian High Commission at London, through the counsel representing him before various high courts, the Debt Recovery Tribunal and also through his company.

The next hearing has been scheduled for March 30.

During the brief hearing, the AG said that an amount of more than Rs 9,000 crore was due to various banks and on one or the other pretext, Vijay Mallya avoided to settle them.

There have been various proceedings going on against him in debts recovery tribunals in Bangalore and Goa, he said.

The AG said that Mallya has assets, both movable and immovable, abroad which are far in excess of the loans secured by him in the country. At this, the bench wanted to know how the banks granted him loan under such circumstances. The AG said the loans were granted keeping in mind that Kingfisher Airlines had a fleet of aircraft as well as brand value, and loans were given also on the basis of the logo. The aircraft were attached to the third party. He told the bench that it is permissible to grant loans on intangible assets when justice Joseph asked if the banks could have granted loans when pledged assets had only one-tenth or one-fifteenth of the value of loan.

“We are not after anyone’s blood but we want our money. The gentleman should appear in person and bring his passport and disclose his assets. Information available to us is that he (Mallya) has assets, both movable and immovable, abroad and they are far in excess of loans secured by him,” the AG said.

The consortium of banks, in their appeal, have assailed the March 4 order of the Karnataka High Court that refused to freeze Mallya’s passport and issue arrest warrants against him. The plea before the apex court is that both the HC and DRT have failed to protect the interests of lenders and public at large, as they are yet to recover R9,000 crore from Kingfisher Airlines, United Breweries (Holdings) Ltd, Vijay Mallya and Kingfisher Finvest (India) Ltd.

On Monday, the DRT in Bangalore had blocked a $75-million settlement Mallya had recently entered with Diageo Plc at the request of SBI and other creditors. The settlement was in lieu of Mallya stepping down as chairman of USL and signing a non-compete agreement with it. In a statement on Sunday evening. Mallya had said that he had no plans to run away from his creditors and was in talks over a one-time settlement with banks to resolve Kingfisher’s debt.

Besides State Bank of India, other banks which have moved the SC are: Axis Bank, Bank of Baroda, Corporation Bank, Federal BankLimited, IDBI Bank, Indian Overseas Bank, Jammu and Kashmir Bank, Punjab and Sind Bank, Punjab National Bank, State Bank of Mysore, UCO Bank and United Bank of India.


(2) Public Sector Banks’ NPAs Soar 1 Lakh Crores in 9 Months of 2016


The following news item is self explanatory:-

Arun Jaitley: PSBs’ NPAs soar Rs1 lakh cr in 9 months of FY16

To speed up recovery of bad loans, the government has approved establishment of 6 new Debt Recovery Tribunals, in addition to existing 33, he said.

Public sector banks’ (PSBs) bad loans increased by Rs 94,666 crore in first nine months of the current financial year, finance minister Arun Jaitley said on Tuesday. Gross non-performing assets (NPAs) of PSBs increased from Rs 2,67,065 lakh crore in March 2015 to Rs 3,61,731 lakh crore in December 2015, he said. “The gross non-performing assets (NPAs) of the PSBs increased from 5.43 per cent as on March 2015 to 7.30 per cent as on December 2015,” he informed Rajya Sabha in a written reply.

The government has taken specific measures to address issues in sectors such as infrastructure, steel and textiles where incidence of NPAs is high, Jaitley said in reply to another question. To speed up recovery of bad loans, the government has approved establishment of 6 new Debt Recovery Tribunals, in addition to existing 33, he said.

With regard to the loans which are written off, MoS for finance Jayant Sinha said: “The percentage of amount recovered against the write-off done by PSBs has declined from 24.50 per cent in FY13 to 20.59 per cent during 2013-14 and further to 15.23 per cent during FY15.” The recovery rate has declined in recent years due to exponential growth of the NPAs, Sinha said. The banks have written off loans of 38 accounts worth Rs 8,033 crore during 2015-16, he said.


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DRT Solutions Weekly Mail – 404th Issue dated 4th March ’16

All Weekly mails right from 1st Issue to latest, click links on top of this page


(1) Arrest Vijay Mallya, SBI Moves DRT


The following news item is self explanatory:-

Arrest Vijay Mallya, seize his passport: SBI moves DRT before he shifts to UK


Mar 3, 2016 09:38 IST


Mumbai - Top state-run lender State Bank of India (SBI) has sought arrest of Vijay Mallya, and also impounding of his passport, as the bank approached Debt Recovery Tribunal (DRT) seeking action against the UB Group promoter for defaulting on loans.

State Bank of India, which heads the consortium of 17 lenders to the grounded Kingfisher Airlines, moved the Debt Recovery Tribunal in Bengaluru against the airline's chairman Mallya in its bid to recover over Rs 7,000-crore dud loans from him.

According to sources, SBI has moved four applications at the DRT in Bangalore, seeking impounding Mallya's passport, getting him arrested, securing the lenders' first right on the payout from Diageo and getting full disclosure of his assets in the country and abroad.

The immediate objective of the lenders moving the DRT is to secure a first right on the $75 million severance package that Mallya will be getting for quitting Diageo-owned United Spirits (USL) as its chairman last week.

An SBI official confirmed to PTI that they have moved the DRT seeking right on $75 million severance package, as the borrower Mallya who has already been declared by the bank a wilful defaulter, has decided to leave the country and settle down in London.

Mallya and Kingfisher Airlines owed Rs 7,800 crore to a consortium of 17 lenders led by State Bank which had an exposure of over Rs 1,600 crore to the now defunct airline.

Since January 2012, the loan was not serviced. Other lenders include Punjab National Bank, Bank of Baroda, Canara Bank, Bank of India, Central Bank of India, Federal Bank, Uco Bank and Dena Bank among others. Last year, SBI declared Mallya as wilful defaulter.

Last month, Punjab National Bank had also declared him, his group holding company United Breweries Holdings and the long-defunct Kingfisher Airlines as wilful defaulters.

As part of a deal, Diageo said it would pay $40 million immediately to Mallya with the balance being payable in equal installments over the next five years. It will also absolve Mallya of all liabilities over alleged financial lapses at the company founded by his family.


(2) Unsettled Recovery Cases cross Rs 4 Lac Crores


The following news item is self explanatory:-

Unsettled Recovery Cases cross Rs 4 lac croreshttp://www.dnaindia.com/money/report-unsettled-debt-recovery-cases-cross-rs-4-lakh-crore-2182887

Economic Survey points to weakness of Debt Recovery Tribunals and the fear of investigative agencies preventing public bank managers from taking prudent decisions

Even as the debate over bad loans (non-performing assets or NPAs in banking parlance) grows, the Economic Survey has pointed out that the number of settled cases is steadily declining in India. While banks have approached the Debt Recovery Tribunals (DRTs), the inherent 'weakness' of these tribunals in doing their job of recovering the money has hampered the process of recovery. So much so that the amount involved in unsettled cases crossed well over Rs 4 lakh crore in 2015

The survey also has a veiled reference to high-profile corporate wilful defaulters in India. The survey notes, "Another stark example of weak institutions is simply the inability to punish wilful defaulters: if demonstrable wrongdoing goes unpunished, the legitimacy of all institutions is called into question."

While lamenting that the growth of bank credit remained merely at 10% as compared to 20% during India's high-growth phase between 2003-2008, the survey also listed out several reasons for the abysmal credit growth. One of the primary reasons was the unwillingness of banks to lend on account of rising NPAs in addition to the worsening of corporate balance-sheets.

The survey pointed out that only 10 corporate groups in India accounted for the bulk of its private capital expenditure and also owed the most money to banks. While stressing that these corporate groups must be made accountable under the Perpetrator Pays Principle (PPP), "tricky trade offs" needed to be made to make them pay.

The survey stated that one of the primary reasons behind the inability of public bank managers to take decisions like writing off loans from their books was the "Damocles sword" of strong investigative agencies in India. The survey noted that investigative agencies had grown immensely powerful in India over the past few decades. It goes on to say, "In the case of public sector banks, it is well-known that senior managers are often reluctant to take decisions to write down loans for fear of being seen as favouring corporate interests and hence susceptible to scrutiny. This encourages ever-greening of loans, postponing exit."

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DRT Solutions Weekly Mail – 403rd Issue dated 26th February ’16

All Weekly mails right from 1st Issue to latest, click links on top of this page


(1) Sedition Law Necessary


The following news item is self explanatory:-

Sedition law ‘necessary’ to stop talks against country: Hegde


Former Solicitor General of India N Santosh Hegde today said he is in “favour” of the sedition law as some “restrictions” are needed to stop people from abusing and talking against the country.

The retired Supreme Court judge argued that the act of some JNU students, who allegedly termed the execution of Parliament attack convict Afzal Guru as “judicial murder” and raised anti-India slogans, “definitely amounts” to sedition.

JNU Students Union President Kanhaiya Kumar was arrested on sedition charges earlier this month. Five students, accused of sedition and missing for days, surfaced on the JNU campus last night.

“I believe in sedition law. I am a patriot. Any patriot cannot go on abusing the country. There are certain parameters,” the former Karnataka Lokayukta said.

“Many people think differently in this country whose allegiance is with some other country or some other group..if democracy has to survive, then there should be some restrictions on the people talking against the country. “Forget all other things. You criticise the government, criticise the individuals, criticise the system. Patriotism can never be criticised,” he said. Hegde said he does not believe in the previous judgement of the Supreme Court that says mere talk is not sedition and should be followed by actions, something contrary to law. “I don’t believe in that judgement. Sedition means propagating some views which are against the nation. As long as the judgement of the Supreme Court is there, I am bound to say its the law of the day today. I am one of those personswho would say that the judgement should be changed,” Hegde said, citing events in JNU after the February 9 controversial event, including violence in Patiala House. “You can’t meddle with patriotism. Everything is alright (but) patriotism can never be compromised,” Hegde said. He strongly sought to counter those who favour junking the century-old sedition law saying it’s an archaic legislation and a relic of British colonialism. “What about Indian Penal Code. How old is it? You scrap Indian Penal Code because somebody is involved in a crime? (and wants it to be scrapped). Its a 230-year-old act. You change it,” Hegde said, reacting angrily to suggestions in some quarters on scrapping the sedition law. “There are ways and means of saying it. There are people who say they don’t believe in death sentence. But I would ask them a question. What happens to the fundamental right of a victim who died? Who was killed by somebody else. It’s a very, very sad day for a country. “In Pakistan what happened? A Virat Kohli’s fan showed Indian flag and was sentenced for 10 years. No country can never ever compromise on its integrity. Forget everything else. So far as integrity of the nation is concerned, never ever compromise it,” Hegde said, adding. “Urgent reform is a system by which every judgement is delivered within one year in criminal cases and within two years in civil cases. Remove all the appeals provision. Like in the United States, there is one trial court and one appellate court. Supreme Court (in the US) is not meant for civil cases,” he said. “(The) American Supreme Court is meant only for interpretation of constitution of the United States. Here (in India), just imagine, in Lalu Prasad Yadav’s case, charge sheet was filed in 1996 and first conviction was in 2013, sixteen years later. What sort of justice (is this)? Who will be afraid of punishment? Because of freedom of speech, we have been talking anything and everything. And we get away with it,” he said. The former SG said that there should be judicial reforms. “There was a time when we (Judges) used to respect precedent law, that is, law laid down by superior court or larger bench had to be followed implicitly by other judges. Today, I don’t find that discipline. People either not notice earlier judgements, just bypass the judgement and deliver their judgement or they say on facts this is different from that case. No…there should be more judicial discipline than what it is today,” Hegde added.


(2) Bank Lending for NPA Projects


The following news item is self explanatory:-

Banks may get to lend to NPA highway projects

 TNN | Feb 23, 2016, 06.41 AM IST



NEW DELHI: In what may come as a major relief for the highway sector, the Reserve Bank of India (RBI) is expected to allow banks and financial institutions to lend o companies even if a project turns into a non-performing asset.

Sources said the indication came during a meeting between governor Raghuram Rajan and NHAI chairman in Mumbai. The RBI governor told Chandra that the central bank has come out with a circular, clarifying that a project becoming NPA will not result in choking of fund flow and it will not translate into lenders stopping loans, sources added. "We were told hat when any investment becomes NPA, the financial institutions have to provide additional funds for this. They need to deal with such project carefully rather than stopping release of loan. They will provide us this circular," said an NHAI official.


A loan is classified as an NPA if a borrower fails to pay installments for 90 days. "Usually highway projects become NPA for a certain period. As toll revenue starts flowing or vehicle flow increases, the project becomes viable," said an official.


NHAI chief also took up the issue of lowering the cut off amount for restructuring of loans. At present, restructuring is allowed only if the amount is at least Rs 500 crore. "Since many of the projects are smaller ones and the cost is also less, we have suggested to revise this norm. The RBI governor's response was positive," an official told TOI.


Although Chandra also took up the issue of priority sector status for highway projects with Rajan, RBI has said that too many sectors are now seeking this status.


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DRT Solutions Weekly Mail – 402nd Issue dated 19th February ’16

All Weekly mails right from 1st Issue to latest, click links on top of this page

(1)      Bad Debts: Write-offs Big Fraud


The following news item is self explanatory:-

Bad debts: Write-offs big fraud, give us defaulter list, orders Supreme Court



Taking suo motu cognizance of The Indian Express report that Rs 1.14 lakh crore of bad loans had been written off by state-owned banks between 2013 and 2015, the Supreme Court Tuesday ordered the Reserve Bank of India (RBI) to share with it names of all defaulters who owe over Rs 500 crore and continue to lead “lavish lifestyle”.

“People are owing thousands of crore to the public banks… it is a big fraud. Top ten public sector banks have written off Rs 40,000 crore alone in 2015. It is all there in this Indian Express report. Public financial institutions are lending money despite knowing no returns. RBI is supposed to keep a watch on these banks. What are you doing about it?” a bench headed by Chief Justice

T S Thakur asked Solicitor General Ranjit Kumar.

 (2)      Two Crore Cases Pending in Lower Judiciary


The following news item is self explanatory:-

Over Two Crore Cases Pending in Lower Judiciary


NEW DELHI: Over two crore cases are pending in the country's lower judiciary, out of which more than 10 per cent have remained unsettled for over 10 years, latest Law Ministry data says.

As per available data on the National Judicial Data Grid website as on December 31, 2015, there are a total of 2,00,60,998 cases pending across the district courts in the different states.

Out of these, 83,00,462 or 41.38 per cent cases are pending for less than two years. At the same time, 21,72,411 or 10.83 per cent cases are pending for over 10 years, a note prepared by the Department of Justice for a high-level meeting on Justice Delivery and Legal Reforms says. The meeting will be held next week.

While referring to the data available on NJDG website, the note clarifies that it does not cover all courts across the country, therefore, the Department of Justice periodically collects the data on pendency of cases from the 24 high courts and the Supreme Court.

The data states that 36,30,282 or 18.1 per cent of the cases are pending for the last five to ten years.

The number of cases pending between 2 and 5 years stands at 59,83,862 or 29.83 per cent of the total cases.

In a written reply, Law Minister D V Sadananda Gowda had informed Lok Sabha in December last that the subordinate courts settled 1,9019,658 cases in 2014.

He had said that the 24 high courts disposed of 17,34,542 cases in 2014. The pendency in the high courts was estimated at 41.53 lakh at the end of December 2014.

The Supreme Court disposed of 44,090 cases last year till December one, while the pendency there has been estimated at 58,906 till the beginning of December 2015.

Regarding the pending cases, the Department of Justice says that one of the biggest problems facing policy makers in this field is the "lack of any benchmark" to determine when a case should be considered delayed.

"For example, if a case is not disposed of within a year of it being instituted, will it be considered to be delayed?

The lack of a clear criterion to determine what constitutes delay poses a hurdle to determine the policy changes needed to address the issue," the note reads.

Usual attempts to reduce pendency include increasing the number of judges or creating additional benches, and while there is no disagreement that the number of judges does need to be increased, this cannot be the only measure to reduce the pendency, it says.

"A linear formula applied across the different states without taking into consideration the actual reasons behind the delay as well the socio-economic factors of the different states is not going to be too effective in reducing pendency," the government feels.

The e-Committee of Supreme Court had launched the National Judicial Data Grid  to provide data on cases pending in the district courts across the country.

The data is segregated into civil and criminal cases and further broken down on the basis of the number of years the cases have been pending.

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DRT Solutions Weekly Mail – 401st Issue dated 12th February ’16

All Weekly mails right from 1st Issue to latest, click links on top of this page

(1)      Scope of Public Policy


The following news item is self explanatory:-


The Ever Expanding Scope of Public Policy




An arbitration clause is a sine qua non for companies while executing commercial contracts. Arbitration is expected to provide an easy and cost effective option for dispute resolution and, as a consequence, the Indian parliament passed the Arbitration and Conciliation Act of 1996 ("Act") replacing the old 1940 law on arbitration. One of the key objectives of the Act was to ensure that there is minimum judicial intervention and finality once an award is issued. However, the absence of finality has become a serious cause for concern for the disputing parties on account of the challenges to awards.

The Act is divided into two parts; the first part deals with arbitration proceedings conducted in India and their enforcement and the second part deals with foreign arbitration proceedings and its enforcement. The grounds of challenge to a domestic award are covered in section 34 of the Act and public policy is one such ground. The interpretation of the word public policy has been changing and expanding due to which companies have started to lose faith in the system as there is a failure to secure finality of an award. This newsletter focuses on the limited aspect of jurisprudential evolution in case of public policy as a ground of challenge for domestic awards.

The Relevant Law

Section 34 of the Act provides several grounds of challenge to an arbitration award. Amongst others, these include a party's incapacity, the arbitration agreement was not valid, the award is beyond the scope of submissions made to the arbitrator, and if the subject matter of dispute is not capable of settlement by arbitration under the law in force.

Section 34(2)(b)(ii) provides with the last ground of challenge i.e., the arbitral award is in conflict with the public policy of India. However, as noted, public policy has not been defined in the Act and has been left open to interpretation by the courts.

The Relevant Case Law

One of the first cases where the courts discussed the scope of public policy was Renusagar vs. General Electric Co. ("Renusagar").1 Although the case was of Foreign Awards (Recognition and Enforcement) Act, 19612, the interpretation of public policy was held valid for domestic awards too. In this case, there was a delay in payments as the Government of India refused to re-structure the payment plan as it would have led to massive outgo of foreign exchange. Due to this refusal, the installments to be made by Renusagar were late by 3 to 6 years. Therefore, General Electric invoked the arbitration clause.

The court differentiated between the two conflicting ways of understanding public policy. According to the "narrow view" no new heads of public policy can be created while the "broad view" suggests the court can broaden its scope. After a detailed consideration the court concluded that the underlying object of the Act was to facilitate international trade and commerce and giving public policy a broad view would defeat this very objective. Thus, in Renusagar the Supreme Court enunciated three well recognized heads of public policy i.e. fundamental policy of Indian law, interest of India, and the grounds of justice and morality. A noteworthy aspect of this ruling is, "Since the expression "public policy" covers the field not covered by the words "and the law of India" which follow the said expression, contravention of law alone will not attract the bar of public policy and something more than contravention of law is required3."

Renusagar was considered a valid authority until 2003 when the judges in ONGC Ltd. v. SAW Pipes Ltd. ("SAW Pipes")4 distinguished between foreign awards and domestic awards. In this case, ONGC contracted SAW Pipes for delivery of off shore oiling equipment on or before a certain date. Due to general strike of steel mill workers in Europe, SAW Pipes failed to deliver the equipment. As a result, ONGC withheld the payments up to a certain amount as liquidated damages. This was challenged and the arbitral tribunal ruled that ONGC was wrong to withhold the payments as they could not prove any actual loss suffered by them. ONGC challenged this award on the basis that the terms of the contract did not require ONGC to prove that they suffered any loss and, thus, arbitrators' decision overlooked the terms of the contract and acted against public policy. In other words, the parties had expressly agreed that recovery for breach of the contract was to be by way of pre-estimated liquidated damages. The arbitral tribunal, however, held that the purchaser should establish actual loss. As the loss suffered was not proved, the arbitrator refused to award damages without assigning reasons.

A challenge was raised under section 34 and SAW Pipes contended that an erroneous decision by the arbitrator cannot be a valid ground for challenging the decision of the arbitrator as the court cannot go into the merits of the decision. The Supreme Court observed that the award can also be challenged on the grounds of wrong interpretation of law by the tribunal if the substantive law of the contract is Indian law, thereby considerably widening the scope of judicial review on the merits of the decision. The ratio established that as a fundamental principle any direction which is contrary to (a) fundamental policy of Indian law; (b) interest of India; (c) justice or morality and; (d) if it is patently illegal, then such direction has to be set aside considering it to be against public policy. The Supreme Court held that if the award is contrary to the substantive provisions of the Act and against the terms of the contract, it was patently illegal, and liable to be interfered with under section 34. Any award which is, on the face of it, patently in violation of statutory provisions cannot be said to be in public interest as such award was held likely to affect the administration of justice adversely. While adjudicating upon the matter, the Supreme Court further held that award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court. In this case, the award was set aside.

It is clear that the Supreme Court was of the opinion that there is no need to adopt a narrow view of public policy in domestic arbitrations as public policy is ever expanding and its interpretation cannot be limited to specific heads. On the basis of this reasoning the court added "patent illegality" as another dimension of challenge. It is clear that through this  judgment, parties looking to prevent enforcement got a wider canvas on which to raise challenges thereby allowing courts to delve into the merits of a case which, in fact, is completely contrary to the spirit of speedy dispute resolution.

The next major expansion in the scope of public policy was done in ONGC Ltd. v. Western Geco International ("Geco").5 Briefly, ONGC contracted Western Geco for supply of hydrophones for upgrading their vessels. Western Geco agreed to supply US made hydrophones but due to inability to obtain a license there was a delay of 9 months and 28 days. As per the contract, ONGC deducted liquidated damages while making the payments but Western Geco challenged and argued that the damages and period of delay is extremely exaggerated. The question arose who was responsible for this delay and how should the deductions be made. The arbitral tribunal held Western Geco responsible only for a delay of 4 months and 22 days and the rest was attributed to ONGC which led to a reduction in damages. Western Geco challenged this award and eventually approached the Supreme Court who examined the scope of public policy. They considered the established principles in SAW Pipes and concluded that the earlier decisions made by the court do not elaborate enough on the principles of fundamental policy of India. As a result, the court laid down three distinct principles within the ambit of fundamental policy of India and stated that (a) the judiciary should not rule on a whimsical basis, (b) decisions taken by courts and competent authorities should be based on principles of natural justice and (c) no decision taken by the court should be so perverse or irrational that no reasonable person would have made it.

These principles provided the Supreme Court with such wide powers to examine awards that it may do more harm than the test of patent illegality laid down in SAW Pipes. Based on these principles, the court went into the facts of the case and reduced the delay to only 56 days. The decision was, yet again, a retrograde step in the ability of the judiciary to re-open well-reasoned awards.

In Associate Builders v. Delhi Development Authority ("Builders")6 the pro judicial intervention stand taken by the Supreme Court continues. A works contract was executed for construction of houses in Delhi. The project was to be completed in a certain time frame but there was a delay of 25 months which, according to the sole arbitrator, was attributed to DDA and they were asked to pay damages. DDA challenged this decision in the High Court which was dismissed. Finally, the case came to the Supreme Court who upheld the principles laid down in SAW Pipes and Geco. The court also expanded on all the four principles of public policy but, as a result, made an already vague term even more unclear.

They decided that in order to determine fundamental policy the judge should act in a fair, reasonable and objective matter. This is such a subjective test that it would allow an appellant to challenge almost anything as it has not been made clear enough what really would be the test of fairness, reasonableness and objectiveness. The court did not elaborate much on what should construe as interest of India and justice and morality, but clarified the position on the test of patent illegality which would include any award that goes against any substantive law of India, against the Act in itself or against the terms of the contract. The Supreme Court also  clarified again that such illegality should go to the root of the matter and should not be trivial in nature. But, the question that arises is if this test of triviality is enough?


The Parliament enacted the Act on the basis of the UNCITRAL model law with an intention to make arbitration an effective and efficacious means of dispute resolution. However, the evolution in the interpretation of public policy from Renusagar to Builders appears to have negated some of the efforts. Justice Burrough describedpublic policy as, "a very unruly horse, and when once you get astride it you never know where you are going."7It appears that Renusagar followed this principle and ensured that a narrow view of public policy is adopted. Lord Denning said, "With a good man in the saddle, the unruly horse can be kept in control. It can jump over obstacles."8 Over the years, the judiciary has been expanding the meaning of the word public policy but, has failed to keep in control this unruly horse. In conclusion, judicial intervention in well-reasoned awards should be kept to the minimum the enforcing courts should not be permitted to examine the merits of the case or not. The court should not be question the opinion of the arbitrator(s) if they have given reasons. The judiciary should ensure that they alleviate the concerns of the business and minimize the scope of judicial intervention.

(2)      DRTs to be Computerised


The following news item is self explanatory:-

Debt Recovery Tribunal to be computerised soon: Jaitley

The administration of DRT is not under any judicial authority and it is looked after by the Department of Financial Services in the Finance Ministry. 


In a bid to fast-track recovery of bad loans by banks, the government is looking to computerise the Debt Recovery Tribunal (DRT) and reduce the number of oral hearing to just two, Finance Minister Arun Jaitley said today. "I have suggested to the Department of Financial Services... to consider on a high priority basis the computerisation of the entire procedures of the DRT itself," Jaitley said at the 68th Annual General Meeting of Indian Banks Association here today. The administration of DRT is not under any judicial authority and it is looked after by the Department of Financial Services in the Finance Ministry. Jaitley said the Sarfaesi Act has worked well but the slow procedure at the DRT level at times can defeat the expeditious provisions available to the lenders in the Act. He further said that all kinds of filings can be done over internet with the computerisation. "The filing of pleading, the filing of document, the filing of replies would all be done on the net itself, with only a provision for two oral hearings in a defined period of time -- one for an interim order and one for a final order." He also said there have been some concerns about absence of an exit policy in bankruptcy law but soon the draft guidelines will be out on this. "I myself has taken some meetings with the committee which is drafting the law. It is almost in the final stages of the draft and by end of this month, or early next month, the final draft will be out. I hope it will be placed before Parliament very soon," Jaitley said. He said the draft on resolution of disputes relating to major contracts will also be out soon. "Very soon, hopefully in the course of this very fiscal, that law should see the light of the day," he said. On Arbitration Law, he said the proposed law provides for fast-track arbitration with a one-member Arbitration Board that will have a mandate to complete the entire process within six months. Talking about bad loans of banks, Jaitley said problems of the steel sector are on account of external factors, where cheap imports are hurting the domestic industry. He also said much progress had been made in the highways sector and the projects are being implemented without major bottlenecks. "The review of the stalled projects was now being done at the Prime Minister's office level. The number of stalled projects has decreased considerably," he said.


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(2) We have created a separate web site www.usindolegal.com which deals exclusively with our US joint venture enterprise for activities like BPO, legal BPO, DRT etc. This site has started appearing in the search results of Google, Mamma, Alexa and Yahoo.

Application of Law of Torts in claiming Damages from Municipal Corporations for demolition of structures, closure of shops etc:- In many parts of the country, the Municipal Corporations are demolishing structures like shops and houses which existed for number of years. The shops existing for number of years are proposed to be shut down. The affected persons should claim Damages under the Law of Torts, which would be substantial. It is learnt that in Delhi itself about 5 lac shops are to be closed down and about 25 lac persons would be out of jobs. All these persons should file damage suits in the civil court. Since the damages would be substantial, the suits may be filed as Indigent Persons. Since the damages would attract interest, the usual delay by the civil courts will not affect the final outcome. The affected shop owners may discuss the details with us on phone.

Our Articles for Borrowers and Guarantors:- Our articles on DRT matters have been published in the Financial Express. The All India Manufacturers Organisation in its famous web site www.aimoindia.org has reproduced copies of our four articles. These original articles can be searched in the archive of the Financial Express in its web site www.financialexpress.com Two of these articles have been reproduced in other pages of this web site. 

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About Us in Brief :-  (1) We specialize in DRT (Debt Recovery Tribunal) and NCLT (National Company Law Tribunal) matters. As a whole you may approach us for all DRT Problems and Solutions as well as matters connected with ARCIL i.e. Asset Reconstruction Company (India) Limited,  We have a Joint Venture with an America based law firm for various activities like BPO, legal BPO and DRT. The details of the said American firm and the joint venture may be seen at the page - Our US Joint Venture with Anand Ahuja Associates or in www.usindolegal.com (2) For your all problems including those in DRT, please phone us or send e-mail. Please give your contact details along with your problems in brief. As a whole you may approach us for all DRT Problems and Solutions.  (2) With our Legal Opinion, you need not worry about the Securitisation Act or other DRT matters or NCLT. Please visit the page Products & Services and Frequently Asked Questions (3) On account of our expertise in the Law of Torts and Banking and experience past 15 years, we can help you to submit suitable defence with winning strategy in DRT cases, Securitisation Act, Guarantors' defence etc.  (4) We need only copies of all available documents  to render our expert 'Legal Opinion' which will be quite useful and valuable to you particularly in DRT i.e. Debt recovery Tribunal. (5) We have also handled assignments for preparation of damage claims against Electricity Boards, Insurance Companies, Municipal Corporations etc. all on the basis of the Law of Torts.  (6) The DRT counterclaims is to be prepared well in advance so that it could be raised at proper time in DRT or other forum to safeguard the securities and assets. (7) Several DRT counterclaims drafted by us are being handled by different advocates at DRT Mumbai, DRT Delhi, DRT Jabalpur etc. Thus DRT advocates are available in these cities. Cases in other Debt Recovery Tribunals are under process. (8) This site is updated monthly mostly on every first Monday of the month or for urgent release on any day with latest material. (9) For further details about us, please visit the page About Us-DRT Solutions As a whole you may approach us for all DRT Problems and Solutions. We hail from the place to which Maharishi Mahesh Yogi and Acharya Rajnish belong and hence this site is dedicated to them.

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We regularly practice TM and SCI of Maharishi Mahesh Yogi. We also regularly practice Hath Yoga including Pranayam based on Baba Ramdev Ji  Maharaj. We daily watch his global TV program on Astha Channel from 05:30 AM to 8AM and 8PM to 9PM Indian Standards Time. On Sanskar channel, we daily view the discourse of Pradumn Maharaj from 4 AM to 5:30 AM. Many chronic diseases such as Cancer, Parkinsons' disease, Polio, Asthma, Hypertension, diabetes etc. have been cured by the said method of Pranayam which can be learnt even by watching his program on TV. Since 30th March '06, we have started practicing Sun Gazing as prescribed by HRM.

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