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DRT Solutions Weekly Mail – 80th Issue dated13th
November ’09
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(1) Chairman, Directors and Executive Officer of a Bank arrested:-
One of our clients from Nagpur has informed that in a Co-operative
Bank many of the borrowers of bank defaulted causing cancellation of license
of the bank. Due to public outcry, the State Govt. has initiated action
against all the directors of the bank including the Chairman. FIR was filed,
they were arrested, and charges filed against the directors and executive
officer of the Bank. The said bank officials and directors desired seeking
advice of ‘DRT Legal Solutions’ Our reply was as under:-
(1) The
Chairman can not escape from his responsibility as the RBI Guidelines and
related Banking Laws hold him ultimate responsible.
(2) This is the
reason that in all our counter-claim and damage suits we make Chairman as
the necessary party.
(3) Since all
our studies and efforts are in favour of Borrowers, we have not made any
studies as to how to save the bank officials including the Chairman.
(4) Many bank
officials approach us, they are prepared to offer heavy fees but we decline
as it requires massive studies as well as change in our mindset which at the
moment is not possible.
(2) Strategy to ensure that Facts are not overlooked or side tracked in DRT
Litigations:-
We have been receiving complaints from many of our clients that on
several occasions, the complex facts relating to Business, Industry and
Banking are neither understood nor placed before the DRT or High Court
Judges. Further the entrepreneur of sick units can not approach competent
lawyers and cheaper young lawyers may even spoil the case. Correction of any
wrong decision at any stage may prove to be very expensive and time
consuming rather it may become impossible to correct the situation. Our
advice is as under:-
(1)
If possible, the entrepreneur himself should take
part in court proceedings.
(2)
The applicants may be the Company and the
Entrepreneur.
(3)
On behalf of the Company, an advocate may be
hired but the entrepreneur should contest for his own case.
(4)
If the advocate does not agree for the above
arrangement, in the application by the Company, the entrepreneur may be made
respondent and anther application may be prepared and filed with the
entrepreneur as the applicant and the Company as the respondent. With such
arrangement, there will be no chance of facts getting overlooked or side
tracked.
(5)
There are many good books on Advocacy. Lot of
resources are on the Internet also.
DRT Solutions Weekly Mail – 79th Issue dated 6th
November ’09
(1) Chappal thrown at Supreme Court Judge – He awarded immediate sentence –
Fellow Judge objected stating that first Trial is essential:-
In the judgment decided on 21.10.09 in the matter of Leila David vs
State of Maharashtra. Altamas Kabir, Judge recorded vide extracts as under:-
(1) Writ Petitions were filed by on Leila David in the Supreme
Court of India on 04.08.08.
At the outset, the Supreme Court observed that some of the allegations
made in the two writ petitions, as well as in the supporting affidavits,
appeared prima facie to be per se contempt of the Court. Although, the
petitioners were asked to withdraw the allegations made, they refused to do
so and submitted that they stood by the said averments and strongly urged
the Court to issue process to arrest the 12 Judges of the High Court of
Bombay mentioned in prayer (4) to the Writ Petition. In view of the
obstinate stand taken by the petitioners, who were appearing in person, the
Court had no alternative but to issue notice as to why contempt proceedings
should not be issued against them. The matters were thereafter directed
to be placed before the appropriate Bench presided over by the Hon'ble Dr.
Justice Arijit Pasayat (as His Lordship then was).
(2)
The said two writ petitions
along with a third Writ Petition filed by one Pavithra Murali and four
Special Leave Petitions were listed before the Bench presided over by Dr.
Justice Pasayat on 10th September, 2008. While the writ petitioners appeared
in person, the respondents were duly represented by counsel and after
hearing the petitioners, the Court was of the view that the show cause reply
was equally contumacious and some action was required to be taken against
the petitioners for contempt of this Court. Accordingly, the Court initiated
proceedings for contempt and observed that charges would be framed. Since
the writ petitioners were appearing in person, the Court appointed Mr. G.E.
Vahanvati (who was then the learned Solicitor General) to act as amicus
curiae, in the matter. The matters were directed to be listed on 18th
November, 2008, with liberty to the petitioners to file any further response
if they wished to by 10th November, 2008. The Special Leave Petitions, which
had appeared along with the writ petitions, were de-linked. The writ
petitions and the suo motu contempt proceedings were taken up for
consideration on 20th March, 2009. As it appears from the record, when the
hearing commenced, the writ petitioners disrupted the proceedings by using
very offensive, intemperate and abusive language at a high pitch.
(3) The order
recorded by Dr. Justice Pasayat indicates that one of the petitioners had
gone to the extent of saying that the Judges should be jailed for having
initiated proceedings against them and that the Judges should be punished
for not taking care of their fundamental rights. One of the writ
petitioners, namely, Dr. Sarita Parikh, went to the extent of throwing a
footwear (chappal) at the Judges. His Lordship also recorded that all this
happened in the presence of the learned Solicitor General of India (later
Attorney General for India), two learned Additional Solicitor Generals and a
large number of learned counsel and advocates, including the President of
the Supreme Court Advocates-on-Record Association. Having recorded the said
incidents which had occurred within the sight of the Hon'ble Judges and the
other persons present in Court, Dr. Justice Pasayat held such behaviour to
be contemptuous in the face of the Court. Since the petitioners stood by
what they had said and done in Court, His Lordship felt that there was no
need to issue any notice and holding them to be guilty of criminal contempt
of this Court, inflicted a punishment of three months' simple imprisonment
on them.
(4) The said
course of action did not meet the approval of the other learned Judge, the
Hon'ble Mr. Justice Asok Kumar Ganguly, who by a separate order of even
date, observed that the writ petitioners could not have been punished for
contempt without due compliance with the provisions of Section 14(1)(a)(b)(c)
and (d) of the Contempt of Courts Act, 1971. His Lordship was also of the
view that the Court's power under Article 142 was not meant to circumvent
the statutory requirements. His Lordship, accordingly, observed as follows:
"Therefore, in this
view of the matter, I cannot agree with the view expressed in the order of
His Lordship Justice Pasayat, for sending the alleged contemnors to prison
for allegedly committing the contempt in the face of the Court without
following the mandate of the Statute under Section 14. I, therefore, cannot
at all agree with His Lordship's order by which sentence has been imposed. I
am of the view that the liberty of those persons cannot be affected in this
manner without proceeding against them under Section 14 of the Act. In my
opinion Section 14 is in consonance with a person's fundamental right under
Article 21."
(5) Having
regard to the difference of opinion as to the procedure to be adopted before
the petitioners could be found guilty of contempt of Court and sentenced,
the matter was directed to be placed before Hon'ble The Chief Justice of
India and a direction was given that the contemnors would remain in custody
till the matter could be heard by an appropriate Bench.
6. On the same day the
Hon'ble Chief Justice constituted a Bench comprising the Hon'ble Mr. Justice
B.N. Agrawal (as His Lordship then was), the Hon'ble Mr. Justice G.S.
Singhvi and the Hon'ble Mr. Justice H.L. Dattu and directed the matter to be
placed before the said Bench on 23.3.2009 at 2.00 p.m. A direction was also
given for production of the contemnors before the said Bench on the said
date. Pursuant to the said order, the matters were duly listed before the
said Bench and were adjourned till 13th April, 2009. In the meantime, the
alleged contemnors were enlarged on bail and the application for
intervention filed by the Supreme Court Bar Association was allowed. On 15th
April, 2009, the matters were released by the aforesaid Bench and were
subsequently placed before this Bench.
Important Conclusion
(1)
Chappal was
thrown by the lady appellant at one of the Two Judges of the Supreme Court
during the open hearing. This fact was known to everyone present in the
court room.
(2)
The judge who
faced the Chappal immediately ordered the sentence of 3 months.
(3)
But the
fellow Judge objected to such award of sentence stating that first trial was
necessary before awarding the sentence.
(4)
This is the
power of law and procedure of law.
(5)
On account of
above fundamentals we have been emphasizing past several years that having
pleaded all the facts about the counter-claim, none has any authority to
comment on it till trial has been completed.
(6)
Prima facie
since both the claims i.e. bank claim and borrower counter-claim both are at
pleading stage and since counter-claim is more than the claim of the bank,
there is ‘No Debt Due’ and hence any recovery action has to wait till the
trial of the counter-claim is completed in all respect.
(7)
It is
question of mindset (existing since British Days) which even Supreme Court
Judges are prone to what to talk about the DRT Judges. The silver lining is
that the defendant litigants (viz. Businessmen and Industrialist
Entrepreneurs) are competent enough to change the said mindset despite all
sufferings and odds against them.
(8)
First freedom
struggle was against the British Beauracracy. They were driven out. The
second freedom struggle is against the Indian Beauracracy (including in
banking and judiciary who are aping the British) who can not be driven out
but their consciousness needs to be transformed using the tool of law and
procedure of law. In democracy only ruler is rule of law and not the
individuals. Free citizens are more powerful to use the same more
effectively compared with the public servants.
DRT Solutions Weekly Mail – 78th Issue dated 30th October ’09
(1) Indian Judicial System at cross-roads:-
(1) The
Govt. and top echelons in the Judicial system have all along been expressing
their anxiety on account of huge pendency of 3.5 crore cases in Indian
Courts. Recently they have announced fire fighting measures like appointing
temporary 700 judges in High Courts and 15,000 judges in lower courts. They
also envisage to consider the senior advocates and legal luminaries to be
appointed as Judges, fast track courts, 3 shifts working, time bound program
for disposal under monitoring of a national agency headed by a Supreme Court
Judge etc. As a whole there is all round drive for quick disposal.
(2) All
the above measures ignore a basic fundamental that the sole purpose and
objective of the Judicial System in a democratic country is ‘Justice’ i.e.
‘True Decision’ and not ‘Quick Disposal’
(3) The
said basic objective can only be achieved if the system is designed keeping
in view the capability and capacity of the ‘Judge’ as the centre rather than
‘Mindless Disposal’
(4)
‘Judge’ is a human being and the requirement for ‘Justice’ can not be bogged
down by pressurized disposal norms.
(5) In
USA, to improve the ‘Judicial System’, it was decided to adopt ‘Management
Approach’ A body of 150 eminent persons from society from all disciplines
was formed. Ten ‘Core Competency’ areas were
identified and nation wide program was launched around the said areas with a
view that the court managers should have acceptable levels of knowledge,
skill and ability. All the agencies worked over a period of 10 years.
(6) The
said 10 core competency areas were (a) Purpose and Responsibilities of
Courts, (b) Caseflow Management, (c) Leadership, (d) visioning and Strategic
Planning, (e) Essential Components, (e) Court Community Communication, (f)
Resources, Budget and Finance, (g) Human Resource Management, (h) Education,
Training and Development, (i) Information Technology Management.
(7) If one
desires to study the above model in depth, internet resources on ‘National
Association for Court Management’ may be gone through.
(8) In
light of above, the mindless pursuit of quick disposal by the Indian
Judicial System will only result in all round chaos and great
dissatisfaction among the litigants.
(9) In
this context, the alert and vigilant litigants like the Industrialists and
Businessmen in DRTs will be the first to impress and force the judiciary to
pay attention to other equally important areas apart from ‘Only Quick
Disposal’ one.
(2) Bank Documents through RTI:-
One of our
clients from Delhi informed that he needed certain documents which were in
power and possession of the bank. He submitted his
requirement through an application under the RTI Act. The bank authorities
refused to provide the said documents on the pretext that the case was
subjudiced being under adjudication in DRT. He filed an appeal. The
appellate authority asked the bank to provide the copies of all the
documents within 15 days.
DRT Solutions Weekly Mail – 77th Issue dated 23rd
October ’09
(1) Query on Unregistered Firm filing Criminal Complaint:-
We received a query from group of advocates from Mumbai as under:-.
(a) Can a
Unregistered Partnership firm file a Complaint under
Section 138 of the Negotiable Instruments Act ?
(b) Can a Unregistered Partnership firm file a
Criminal Complaint
?
Reply from Our Legal Research Wing
Our Legal Research Wing headed by Mr. N.K.
Sharma ex-GM (Law) has communicated the following comments on the above
queries:-
Query: 1. Can
an Unregistered Partnership firm file a Complaint under Section 138 of the
Negotiable Instruments Act,1881
?
Query: 2. Can
an Unregistered Partnership firm file a Criminal Complaint ?
Answer
:-
Section 4 of the Indian Partnership Act, 1932 has
defined the terms ‘partners’, ‘a firm’ and ‘firm name’. In law, “a firm” is
only a convenient phrase for describing the partners, and the firm has no
legal existence apart from the
partners. It is neither a legal entity, nor it is a person or is a
corporation; it is a collective
name of members of
a partnership .
A firm is not a
separate legal entity. It can not be a member of a company, only its
partners can be. The difference between a firm and a company is clearly laid
down in the Supreme Court decision in Mrs.
Bacha F. Gazder v. CIT,
Bombay, AIR 1955 SC 74 (at page 77) paragraph 9 as follows:
“Partnership is
merely an association of partners for carrying on the business of
partnership and in law the firm name is a compendious method of describing
such as, however, not the case of a company which stands as a separate
juristic entity distinct from the shareholders.”
Suit by Firm: A suit by the firm is really
a suit by all the partners who
were its partners at the time of the accrual of the cause of action and,
therefore, all must join in the institution of the suit.
Suit for Libel or Slander: The Punjab & Haryana High Court in P.K.
Oswal Hosiery Mills v. Tilak
Chand AIR 1969 Punj. 150
has held that a firm is merely a
collection of partners and cannot bring a suit for libel or slander. Libel
or slander against a firm imply a libel or slander of its partners. Such
partners themselves or any one may file the suit for libel or slander.
In view of
aforesaid discussion, the reply to queries is as follows :
1. Neither
a Registered nor an Unregistered Partnership firm can file a Complaint under
Section 138 of the Negotiable Instruments Act, 1881. All the partners
themselves jointly or any one may file the same .
2. Neither
a Registered nor an Unregistered Partnership firm can file a Criminal
Complaint. All the partners
themselves jointly or any one may file the same.
(2) Remedy against Rogue Recovery Agents:-
We received the following news item from Mr. N.K. Sharma:-.
By - Khyati Dharamsi
Despite the hue and cry over the issue of
recovery agents and the guidelines suggested by the Reserve Bank of India to
regulate their activities, the menace fails to die down.
Not just in cities, but even in rural India
there are cases of harassment by recovery agents leading to suicide.
So, in case someone comes in shouting at you,
don't panic. Guidelines have been issued to banks and outsourced recovery
agents on what to avoid and how to behave. Here's your guide to be treated
the right way.
First of all, an agent is not supposed to
visit you unless the bank has provided you sufficient notice. Such notice
would include reminders via letters or phone calls. Only if these remain
unanswered can the bank resort to using recovery agents.
When a bank decides to go in for a recovery
agent, it has to inform the borrower of the agent's details, such as name
and telephone number. The recent guidelines issued by RBI on recovery agents
state: "To ensure due notice and appropriate authorisation, banks should
inform the borrower the details of recovery agency firms / companies while
forwarding default cases to the recovery agency."
If you do not get information on the recovery
agent from the bank, the bank's website is supposed to provide you with the
details.
The code of bank's commitment to customers,
recently revised by the Banking Codes and Standards Board of India (BCSBI),
states: "We will post details of the recovery agency firms/ companies
engaged by us on our website. We will also make available on request details
of the recovery agency firms/ companies at our branches."
The 79 member banks - which includes almost
all the scheduled commercial banks - and future members of BCSBI are
supposed to follow this code.
If the bank changes the recovery agent
mid-course, the borrower has to be kept updated, says RBI. "Where the
recovery agency is changed by the bank during the recovery process, in
addition to the bank notifying the borrower of the change, the new agent
should carry the notice and the authorisation letter along with his identity
card," the guidelines state.
When the recovery agent visits you, he will
first have to show an authority letter issued by the bank permitting him to
collect dues from you. If you want, you can cross-check details with the
agent's identity card.
The recovery agent is supposed to visit only
between 7 am and 7 pm. The BCSBI code also states: "You would be contacted
ordinarily at the place of your choice and in the absence of any specified
place, at the place of your residence and if unavailable at your residence,
at the place of business/ occupation."
This means the recovery agent is supposed to
ask for a place where the borrower is comfortable meeting and only if not
can he come at the residence, and if not there, then the office.
During all times or visits for dues
collection, decency and decorum should be maintained, the code suggests.
"Inappropriate occasions such as bereavement in the family or other
calamitous occasions would be avoided for making calls/ visits to collect
dues."
Under no circumstances is the recovery agent
permitted to thrash the borrower and his
furniture. If a customer tells the agent that
he doesn't want to speak to him, the recovery agent is required to oblige.
"The bank and their agents should not resort
to intimidation or harassment of any kind, either verbal or physical,
against any person in their debt collection efforts, including acts intended
to humiliate publicly or intrude the privacy of the debtors' family members,
referees and friends, making threatening and anonymous calls or making false
and misleading representations," state the RBI guidelines.
To ensure that you have a proof of the
agent's behaviour, RBI has provided for documenting or recording the
conversation.
"Banks should ensure that there is a tape
recording of the content / text of the calls made by recovery agents to the
customers, and vice-versa. Banks may take reasonable precaution such as
intimating the customer that the conversation is being recorded," the
guidelines on engagement of recovery agents state.
Recovery agents are known to offer a discount
in the repayment amount. Do not succumb to such offers, no matter how
tempting, as the agents are not authorised to make any verbal or written
promise to a customer. They are just supposed to remind borrowers about
non-payment of their dues.
Even if the agent offers a receipt for taking
a lesser amount, do not settle with him say bankers. If you wish to settle
the dues, approach the bank directly, they say.
An SBI official told DNA Money, "The recovery
agent is not allowed to compromise or manipulate with the customer in terms
of money at all."
Moreover, never hand over cash to the agent.
Either give a cheque or go to the bank and deposit the money with the loan
department.
For instructions, read the authorisation
letter handed over to the agent. This will tell you what would be acceptable
and what would not, as different banks follow different procedures.
If you have a dispute with the bank on a
certain amount that you have not repaid, inform the recovery agent about it.
"Where a grievance/ complaint has been
lodged, banks should not forward cases to recovery agencies till they have
finally disposed of any grievance/ complaint lodged by the concerned
borrower," state the RBI guidelines.
If these norms are not followed, the RBI has
the right to impose a ban on a bank from
engaging recovery agents in a particular
area, either jurisdictional or functional, for a limited period of time.
So, if you have witnessed otherwise, make the
same known to the RBI or the consumer forum. The banking ombudsman too can
be approached if complaints to the banks have remained unanswered.
DRT Solutions Weekly Mail – 76th Issue dated 16th
October ’09
(1) Reply by the Banks/FIs against Securitization Notice within a week is
mandatory and that too with application of mind:-
The above matter has been examined and determined by several courts
holding that the reply by the banks and FIs against the Securitization
within 7 days is mandatory. Our comments are as under:-
(1)
The said notice is a demand notice for
enforcement of the Security Interest and it is supposed to have been issued
after the verdict by the ‘Internal Mechanism’ (similar to a Court) of the
secured creditor.
(2)
This is also in conformity with the law laid down
by the Supreme Court in the matter of Kripack in 1970 according to which
when the rights of the borrowers are likely to be affected, the bank
officials should act just like a court .
(3)
Hon’ble Orissa High Court vide [2009(1) Bankers’
Journal 54] quashed the Notice under Securitisation Act on account of the
Bank not following the statutory requirement for disposal of the objections
of the borrower by a speaking order .
(4)
In several judgments the Hon’ble Supreme Court
has repeatedly emphasized that when the statute provides for a particular
procedure, the statutory authority has to follow the same and cannot be
permitted to act in contravention of the same .
(5)
It is not only necessary for the secured creditor
to reply to each and every objection/representation of the borrower in terms
of Section 13(3A) of the Securitisation Act but such communication must be
sent within the stipulated time of one week otherwise it will be deemed that
the Bank has accepted the said objections/representations and the said
notice under Sec. 13(2) of the Act be quashed as held by the Jharkhand High
Court vide [2009(1) bankers’ Journal 376 ]
(6)
As per the law laid down by the Supreme Court in
the matter of Mardia Chemicals the secured creditors are duty bound to give
the said reply with due application of mind otherwise their said notice
under the Securitisation Act will be dismissed in limine .
(7)
In view of above, the borrowers should first of
all demand all the relevant documents for preparing the said
objections/representation. If the secured creditor does not provide the
required documents, the said objections/representation should be submitted
with the available documents keeping the rights reserved to submit the same
further after receipt of the required documents .
(8)
If the secured creditor does not reply within the
stipulated period of a week, communication be sent to the said creditor
laying down the above contentions .
(9)
Despite above, if the said creditor proceeds with
the action u/s 13(4), the above facts be pointed out in the application u/s
17 before the DRT and the case contested under the prescribed judicial
procedure.
(2) DRT Bar Association, Jabalpur proceeds on Strike on account of no change
in the attitude of the lady Presiding Officer:-
Since there was no change in the attitude of the PO DRT, Jabalpur,
the DRT Bar Association went on strike. They also called upon the Chairman,
DRAT Allahabad (camp Jabalpur) apprising of the untoward behavior of the
said PO. The strike is still continuing.
DRT Solutions Weekly Mail – 75th Issue dated 9th October ’09
(1) Order under 138 NI Act - Limitation on Implementation thereof:-
Recently we came across an interesting case in the matter of 138 NI
Act. The final judgment and order was issued on 20.12.04. Till date the
said order could not be executed. Our view is that the same is barred by
limitation. Our view is based on the following considerations:-
(a) As per
Sec. 2(j) of the Limitation Act, 1963, the “period of limitation” is
prescribed by the Schedule. The “prescribed period” is the period of
limitation computed in accordance with the provisions of the said Act of
1963.
(b) As per
Sec. 3 of the said Act, 1963, subject to the provisions contained in Section
4 to 24(inclusive), every application made after the prescribed period shall
be dismissed although limitation has not been set up as a defence.
(c) In view
of above, the prescribed period for the orders under reference will be
“Three Years” as per Art. 137 of the Act of 1963.
(d) Art. 136
is not applicable as the order under reference is neither a decree nor order
of any civil court.
(e) Art. 135
is not applicable as the order under reference is not a decree granting a
mandatory injunction.
(f) Art.
118 to Art. 134 are not applicable at all.
(g) The
First and Second Divisions of the Schedule covering Art. 1 to Art. 117 are
not applicable at all.
(h) There is
no special provision relating to limitation having any bearing on the orders
under reference either in the Negotiable Instruments Act 1881, Criminal
Procedure Code, 1973 or any other enactments.
(i) Hence
in view of above, the implementation of the orders under reference has
become already barred with effect from 19.12.07 on account of 3 years being
over on this date.
(j) A
relevant judgment of the Supreme Court of India was delivered on 10th Feb.
2009 vide copy enclosed in the matter of Shakuntala Devi & Ors. Vs Chamru
Mahto & Anr. vide citations 2009 AIR(SCW) 1896. The highlights are as
under:-
“It relates to
matter of limitation in Criminal Law – Extract from Head Note from AIOL -
Code of Criminal Procedure 1973, Section 145(6) & 145(4) – application for
implementation of order u/s 145(4), since no period of limitation is
prescribed, same ought to have been filed within 3 years from the date of
the order – final order u/s 145 was passed on 7.10.94, application for
implementation was filed on 12.11.97, which held was beyond period of
limitation.”
(k) We
invite comments on the above from the readers of this weekly mail.
(2) Important Aspects of Law of Limitation:-
Law
of Limitation is a very important branch of law. Its historical and
important aspects are submitted below:-
(a) There is a Latin maxim “interest repubdicae utsit finish litium”
means “in the interest of the Society, there has to be some end to
litigation”.
(b) In pursuit of the above objective, Legislation has been passed from
time to time setting the time limit to actions that can be competently
pursued in the law.
(c) Under the Hindu Jurisprudence, there was only law of prescription and
no law of limitation as such. Hence our thinking due to legacy negates
limitation.
(d) In England before James
Statutes of 1523 there was no specific law of Limitation.
(e) In India the first attempt to introduce a uniform of Law of
Limitation was made in 1859. Subsequently based on court decisions, several
amendments were made in 1862, 1871 and 1877.
(f) Finally in order to consolidate and amend the law of limitation for
suits, appeals and applications, the act was amended in 1908.
(g) The statute of Limitation is a statute of repose, peace and justice.
It is one of repose as it extinguishes stale demands and quiets titles.
Controversies are limited to fixed period of time lest they should become
immortal while men are mortal. It secures peace as it ensures security of
rights. It secures justice as by lapse of time evidence in support of rights
may be destroyed.
(h) In free India, the Act was finally amended in 1963 on the basis of
recommendations of 3rd Law Commission.
(i) In
England originally the maximum limitation for recovery of state dues was 60
years which successively was brought down to 30, 12 and now 6 years (vide
1980 act) on account of rapidly changing socio-economic conditions.
(j) In India, the said maximum continued to be 12 years but in 1963 a
retrograde step was taken when it could be extended by the courts under
certain conditions. Even Sec. 48 of CPC was repealed, according to which
execution was barred beyond 12 years. Even for the said 12 years, one had to
approach to the court every 3 years. The retrograde step was that one may
approach at any time during 12 years. Thus in England, the period of 60
years was brought down to 6 years, whereas in India, the said limit of 12
years could even be extended. On one hand the Indian courts are heavily
overloaded, the effect of such amendments have been to overload the courts
further.
(k) The general period of limitation since 1908 has been 3 years. On
account of the said retrograde steps, the period could be extended in
certain cases. On account of all such steps, the legacy in India was allowed
to be continued in a modified form.
(l) Our general thinking is that on account of limitation, the truth may
be shut. However the thinking in England has been progressive and pragmatic
vide House of Lords in Amphill Peerage case – (1977) AC 547 – Society
considers that without a statutory time limit for litigation, truth may be
bought at too high a price, that truth bought at such expense is the
negative of justice.
DRT Solutions Weekly Mail – 74th Issue dated 2nd
October ’09
(1) Laudable Role of DRT Bar Association, Jabalpur:-
The DRT Bar Association is very active and dynamic. Its members
have very good unity. They fight for the common cause. Recently a lady PO
was posted. The said Association faced the following problems, passed a
resolution and accordingly submitted the same to the said PO:-
(a)
The members of the Association found that the
behaviour of the said PO was not good.
(b)
The said PO was not giving proper opportunity for
the hearing .
(c)
The said PO was not giving reasoned judgments and
orders .
(d)
If any submission was made in Hindi, the said PO
was demanding its English version .
(e)
Order sheets contained proceedings particularly
which are hand written are in very short form and mostly are not clear .
(f)
The written arguments submitted are not taken on
record.
(g)
The citations submitted are not discussed in the
orders .
(h)
Orders are not passed on interim applications and
hence the parties are deprived of remedies of appeal, if needed .
(i)
If the advocate is busy in other courts like High
Court, adverse orders are passed and opportunity is not given for him to
submit his arguments subsequently .
(j)
Many a times the conduct and tone of the PO is
harsh, irritating, short tempered and high pitched .
(k)
The said Association discussed all the above
matters and passed a resolution in its general body meeting.
(l)
Accordingly a resolution was passed and submitted
in Hindi to the said PO .
(m)
The copies were sent to High Court, Ministry of Finance and Ministry of Law .
(n)
Above action by the Association is expected to
have salutary effect on the PO
Our Comments:-
(1)
The above instance shows the power of
Constitution of India unfolding through democratic way of life. The British
days of ‘My Lord’ are over. The Judge is just like any other Public Servant
whose goal and duty is and should be Justice and Justice only. He himself
first should follow the ‘Principles of Natural Justice’
(2)
It is interesting to note that Viscount Haldane
in the year 1915 in ‘Local Government vs Arlidge [(1915) A.C. 120 (138) H.L.]
announced the following essential requirements of a judicial decision:-
“ . .. . those whose duty it is to decide must
act judicially. They must deal with the question referred to them without
bias and they must give to each of the parties the opportunity of adequately
presenting the case made. The decision must come to the spirit and with the
sense of responsibility of a tribunal whose duty is to mete out justice.”
(3)
Greer L. Judge put it more tersely in Errington
vs Minister of Health [(1935) 1 K.B. 249 (268)] as under:-
“ A judge must “hear both sides and must not hear
one side in the absence of the other”
(4)
Lord Hewart has made the following celebrated
observations in R. vs Sussex Justices [ (1924) 1 K.B. 256 (259)] :-
“ It is of fundamental importance that justice
should not only be done, but should manifest and undoubtedly be seen to be
done”
(2) An invigorating meeting with Dr. Poonia, Editor of ‘Lost Justice’:-
Mr. Ram Kishan met Dr. N.S. Poonia, Founder & Editor of a quarterly
Journal ‘Lost Justice’ published from Indore since 2006. Dr. Poonia is a
crusader and of the strong conviction that “Now common citizen needs to
learn basics of law for self and for the nation.”
The following articles in the very first issue of the said Journal
are interesting:-
(a)
Fair Criticism. Our Attitudes towards Criticism
are a Subject of Criticism .
(b)
Criminal Law Criminalized .
(c)
Law of Crime now be Repealed. No Law can survive
which invokes only against Poor and Powerless .
The said Journal specifically mentions – “Lost Justice is for kind
attention of CJI, CJs and Companion Judges”
Dr. Poonia discussed the various issues with Justice Krishna Iyer,
Former Judge Supreme Court who commented – “This is revolution which the
country needed long back”
The contacts of Dr. Poonia are M – 9926528245 and E-mail –
drdrpoonia@yahoo.co.in
DRT Solutions Weekly Mail – 73rd Issue dated 25th
September ’09
(1) Evolving New Bankruptcy Code in India for the corporate sector:-
The following comments are based on the news item, interactions and
debate published respectively in 17.09.09, 19.09.09 and 22.09.09 issues of
the Economic Times, Mumbai :-
(a)
The proposed new corporate bankruptcy code which
seeks to efficiently rescue financially distressed companies is facing
hurdles from the finance ministry which does not want to dilute lenders’
rights to take possession of the defaulting borrower’s assets in order to
facilitate the introduction of the new bankruptcy code.
(b)
The new code provides for a reasonable
stand-still period during which lenders can not attempt to take possession
of the defaulting borrower’s assets .
(c)
The idea is to give reasonable time to a
distressed company to revive before the court decided to liquidate date it
pay off the liabilities by selling its assets .
(d)
The above is not in sync with the Securitisation
Act which is known for helping lenders to recover their loans from the
defaulters. The bankers feel that diluting their this right can seriously
affect credit offtake .
(e)
Insolvency experts have a different view. ‘In
practice, banks put a lot of pressure on the borrower during the 60 days
period after demanding payment, which distracts him form focusing on
restructuring the company. Besides, the stand-still period is not an
automatic stay on creditor action as is the case now. This will commence
only on the order of the court, after which the debtor can not sell or
transfer the asset of the company. There are other safeguards to protect the
interests of the creditors ’
(f)
Under the existing law SICA, creditors do not
have such safeguards. Once distressed companies make a reference to the BIFR,
it triggers an automatic stay on creditor action for many years .
(g)
The Finance Minister recently said the government
will bring the new bankruptcy code once the Parliament passes the Companies
Bill .
(h)
It is incidentally pointed out that the SICA was
conceptualized keeping in view Chapter 11 of the US Bankruptcy Code. The US
is regarded as one of the most ‘debtor friendly’ regimes, with a good record
of facilitating rehabilitation and turnaround of distressed business. The
key objectives under this law are the preservation of a company and its
going concern value (not its current ownership) as it seeks to maximize the
value of debtor’s estate for the benefits of the creditors, with employees
for early completion the re-organization. This is markedly different from
how SICA has operated. While the US system allows retention of existing
management and enables it to take a lead in formulation of a rehabilitation
plan, the company usually emerges out of bankruptcy with a completely
revamped ownership and vastly different stakeholders rights. A short
standstill period to assess position and work out the restructuring, the
availability of debtor in possession financing, and an ability to ‘cram
down’ a plan on dissenting creditors are other key features which have
helped the US system relatively more effective and quicker.
(2) Govt aims to cut litigation time from 15 years to one:-
The above news item has appeared at pg 2 of 24.09.09 issue of the
Economic Times, Mumbai. Our comments are as under:-
(a) It is reported that there are 2.75 crores cases pending in the
country. Govt. wants to cut \down time first from 15 years to 3 years and
then to one year and finally to 6months .
(b) First the Govt. desires to set up new 5000 courts.
(c) Retired Judges will be hired to work in 3 shifts .
(d) There will be case management technology. “Everything will be
streamlined”
(e) Besides training the trial court judges, Govt will provide with
laptops .
Our Comments:-
(i) Such political statements have been made several times in past
but there has been no improvements .
(ii) Simply increasing the courts and hiring retired judges to work
in 3 shifts will not have much impact. Significant improvements can only be
made by adopting Modern Management Techniques and Latest Technology about
which there is no statement leave alone any action plan .
(iii) 15000 laptops costing Rs. 40 crores were provided to all
judges on 9th July 2007 with 3 months training. Not a single
laptops is seen in court room with the judges. Now the Govt. is again
talking to provide laptops to the judges .
(iv) Many of the judges and advocates are using latest mobile,
latest cars, latest TVs, latest dress materials but they don’t have desire
to use latest computers and court room technologies which are being used in
developed countries past 25 years.
(v) We have drafted world class constitution and adopted the same
in 1950. But we did not bother to create world class courts, world class
advocates and world class judges.
(vi) While as a litigants, we can not do anything on the above, we
can become world class litigants. If it is done, it will force the judges
and opposite side advocate to improve. This has been our aim in working with
all our clients. They also have been responding well .
(3) Application (misnamed as Appeal) u/s 17 of Securitisation Act –
Practical Problems of Borrowers in DRTs :-
Recently one of our clients from Chennai faced a serious problem
which in brief was as under:-
(a)
The Bank invoked Sec. 13(4) of the Securitisation
Act 2002 and the Borrower filed his application u/s 17 of the Act 2002 .
(b)
The said application i.e. SA was partly decided
in favour of the Borrower who then filed an appeal to DRAT u/s 18 of the
said Act .
(c)
The said Appeal is pending since there is no
Chairperson in DRAT Chennai .
(d)
In the meantime, the Bank again initiated action
under Sec. 13(4) and issued Possession Notice for the properties for which
the case was already decided in favour of the Borrower .
(e)
The borrower pointed out such illegal action of
the Bank to DRT. The DRT declined to interfere stating that since the matter
was already decided, nothing was possible at the end of the DRT and more so
when the Appeal is pending in DRAT .
(f)
The borrower was advised by his local counsel to
file another SA which was duly filed on 4.9.09.
(g)
The PO decided the said SA on 18.9.09 and
proceeded on leave wef 19.9.09 .
We studied and analyzed the said order and our observations are as
under:-
(h)
SA is akin to a civil suit as per the law
declared by the Supreme Court in the matter of Mardia Chemicals .
(i)
The procedure for trial of a civil suit is laid
down by the Supreme Court in the matter of Swaranlata .
(j)
The said law declared by the SC were openly
violated by the DRT as the facts were not judicially determined and hurried
trial was conducted. The said order has numerous errors and mistakes
apparent on face of records. It also shows misconceptions of facts and law
on part of the PO DRT .
(k)
Under the above facts and circumstances, the most
appropriate remedy is Review of the said order.
(l)
Since there was no PO in DRT as well as no
Chairperson in DRAT, we advised the borrower to first file Review in DRT and
also file a writ petition in High Court requesting for interim stay till the
Review is decided.
(m)
The local counsels are of the view that noting will be achieved by Review
and the borrower should approach High Court by filing a writ petition .
(n)
The logic behind our proposal is that first we
must exhaust all possible remedies in the lower courts instead of rushing to
the High Court. This approach will result in having the performance and
working of the trial court recorded e.g. first in form of the said order
dated 18.9.09 and then the order against the proposed Review. Depending on
the content of the order on Review, one may decide for going in for appeal
or change in court .
(o)
It is needless to mention that until and unless
the material facts are judicially determined, the case should not be allowed
to be handled by the higher courts. Further as per the law declared by the
Supreme Court in the matter of Ashok Saw Mills, DRT has all powers to decide
the matter even if the sale has been accomplished .
(p)
By our proposed approach the matter remains with
the lower courts until and unless the material facts are judicially
determined. By going slow, there is possibility of having favourable orders
from DRT or even DRAT as some Chairperson may be appointed.
(q)
Any approach other than above has a risk. The
High Court may be misled by the undetermined facts in the said order dated
18.9.09 and verdict if any may become difficult to be set right. One will
not have any chance of correction through trial by lower courts. The only
option will be to approach the Supreme Court which again may be misled by
the undetermined facts and new verdict of the High Court. Further such risky
exercise will be more expensive and even may involve some directives for
deposits which may further complicate the matter creating new handicaps for
the lower courts .
(r)
Most of our clients who are getting success in
bank litigations are those who have been going very thorough in lower courts
and availing all possibilities in these courts only instead of jumping to
higher courts. They all have the advantage of ‘No Debt Due’ situation on
account of counter-claims or damage suits. They get further advantages due
to well established procedure of trials to determine the facts judicially
which is not at all possible in higher courts. By going slow has another
advantage of getting new favourable judgments as the matter pertaining to
the Securitisation Act is being contested most vigorously. Last year itself,
there were more than 400 judgments and interestingly most important
judgments appeared as late as 16.7.09, 31.7.09 and 08.09.09. It is needless
to mention that cost of a competent and experienced trial lawyer is much
less than that in High Court and Supreme Court. As a whole until and unless,
all the material facts have been judicially determined by the established
process of trial, it would be risky, dangerous and costly to approach to
higher courts particularly in developing enactments like Securitisation Act
more so when the environment is against the borrowers.
DRT Solutions Weekly Mail – 72nd Issue dated 18th
September ’09
(1) Securitisation Act – DRT Trials – Problems faced by Defendant Borrowers
and Solutions
We have received several queries on this topic from our clients as
well as those visiting our web site. Our views are as under:-
(a)
It is presumed that exhaustive objections,
representation and facts have been submitted before the lender under section
13(3-A) of the Securitisation Act ’02 .
(b)
It is presumed that the said objections,
representation and facts include the claim of loss and damages suffered by
the borrower on account of wrong doings of the secured creditor. In some
cases where OA has been filed by the said creditor, it is presumed that
counter-claim has already been filed. It is presumed that the said loss and
damages or the said counter-claim are more than the claim of the said
creditor .
(c)
It is presumed that exhaustive appeal has been
filed u/s 17 of the said Act .
(d)
Under the above facts and circumstances, the
basis of the arguments will be as under:-
(A)
As per Art. 141 of the Constitution of India, the
law declared by the Supreme Court shall be binding on all courts within the
territory of India .
(B)
The Supreme Court in the matter of Mardia
Chemicals (AIR 2004 SC 2371) has declared that the said appeal u/s 17 is
akin to a civil suit. Hence it is binding on DRTs to try the said appeal as
a civil suit .
(C)
The Supreme Court in the matter of Swaranlata
(AIR 1969 SC 1167) has laid down the procedure by which trial of a civil
suit is to be conducted. Accordingly the DRTs are legally bound to follow
the said procedure .
(D)
As per the Supreme Court in the matter of
Commissioner of Central Excise vs Uni Products (I) Ltd [2009 STPL (Web) 19
SC] decided on 08.09.09. the tribunal (i.e. in our case DRT) is the last
authority on facts .
(E)
As per the Supreme Court in the matter of
Authorised Officer, Indian Overseas Bank vs Ashok Saw Mill decided on
16.07.09 has declared that the DRT has full powers set aside the actions
taken u/s 13(4) and even status quo ante can be restored by the DRT.
(F)
As per Sec. 22 of the DRT Act 1993, the DRTs and
DRATs shall not be bound by the procedure laid down by the CPC 1908 but
shall be guided by the principles of natural justice .
(G)
As per the section 34 of the said Act ’02, no
civil court shall have jurisdiction to entertain any suit or proceedings in
respect of any matter which a DRT or DRAT is empowered by or under the said
Act ’02 to determine. Hence the said appeal u/s 17 is the only suit for
adjudication .
(H)
As per the Supreme Court in the matter of ICICI
Ltd vs Grapco Industries Ltd. [1999 AIR (SC) 1975], the DRTs can exercise
the powers of civil court and even travel beyond the scope of CPC for the
purpose of natural justice .
(I)
When all the above provisions of the law declared
by the Supreme Court are to be followed by the DRTs and in fact they are
bound to do so, the trial of the said appeal u/s 17 should take not less
than 15 to 20 years .
(J)
If any PO wants to hurry up, he should be told
and explained about the above provisions. Despite this, if he hurries up the
matter, application should be made to change of court. If necessary a
petition for writ of certiorari may be filed in the High Court for the
violations of principles of natural justice as well as the law laid down by
the Supreme Court .
(K)
Few of our clients have followed the above
provisions and have achieved success .
(L)
If any clarifications are required the matter may
be discussed with us on phone or in person.
(2) Banks are preferring to invoke Securitisation Act
We have observed that the secured creditors are giving more
preference to invoke the Securitisation Act rather than the DRT Act. Our
comments are as under:-
(a)
In respect of our clients, we have saved many of
them by the various steps outlined by us in various weekly mails .
(b)
The most important aspect is perfect pleadings
and perfect trial on every date. Another most important aspect is perfect
cross-examination .
(c)
If all the legal aspects pointed by us are kept
in view and if an experienced trial lawyer is appointed, there is no reason
for the borrower (if he has filed a counter-claim or damage suit which are
more than the claim of the bank and hence there is ‘No Debt Due’) to win
against the secured creditor .
(3) A very good judgment of SC on OTS
On 31.07.09, the Supreme Court has delivered a very good judgment
on OTS vide Sardar Associates vs Punjab & Sind Bank declaring that RBI
Guidelines including those on OTS are binding on the banks and financial
institutions.
DRT Solutions Weekly Mail – 71st Issue dated 11th
September ’09
(1) Daily Supreme Court Judgments – free of cost – Full download:-
With effect from 1st September ’09, daily Supreme Court
Judgments – No Registration – No Fees – Bookish view / Print out – Download
facility, all these available from the following web site:-
www.stpl-india.in
(2) Lack of Execution and Mismanagement in Indian Judicial System with
particular reference to DRT Litigations:-
Many of our clients i.e. DRT Litigants raise numerous queries
during discussions and mail exchanges on the topic mentioned above. Our
comments and observations are as under:-
(a)
The origin of DRTs goes back to 1984 when the RBI
published the report of Tiwari Committee titled ‘Report of the Committee to
examine the Legal and other difficulties faced by the Banks and Financial
Institutions in Rehabilitation of Sick Industrial undertakings and suggest
Remedial Measures including change in the Law’
(b)
The said Committee in the said Report at Page 77
stated that ‘These Tribunals should be manned by persons having specialized
knowledge in the functioning of the banks, financial institutions and
industry. Till date even after 25 years, there is no effort for having any
trained advocates and judges having the desired specialized knowledge. This
is the first clear-cut lack of execution on part of the Govt and has
resulted in mismanagement in the DRTs .
(c)
Since Roman days (754 BC i.e. more than 2700
years ago), the Principles of Natural Justice were evolved for the Courts.
It is pathetic to see that many of the Judges in civil courts, DRTs, DRATs
and higher courts do not still abide by the said Principles of Natural
Justice. This is another part of lack of execution and hence mismanagement
in the Indian Judicial System .
(d)
The principles of Modern Management and its
practice evolved during the commencement of mass production of automobiles
in the beginning of 20th century. All other fields including
Judiciary in USA adopted the same later on around 1950. The computerization
of court judgments commenced in USA in 1974. Our Supreme Court judges
visited US several times but full scale computerization in our country has
not yet stared. On 9th July 2007, laptops (costing Rs. 40 crores)
were distributed to 15,000 judges in the country with 3 months training but
till date even after 2 years, the said computers are not seen in the court
rooms. Thus this is again total lack of execution and failure of supervision
and management in our judiciary .
(e)
The judges in DRTs were appointed through the
stream of ADJ and or retired DJ. These judges spent their life in civil
courts following procedures laid down in CPC and CrPC. They did not have any
experience in DRT Procedures based on principles of natural justice. Being
from the stream of law, they did not understand banking, finance and
industry. There is no training system. All these has resulted in the same
old type of adjudication in civil courts. Modern court management and
technology has not yet been introduced in DRTs. Its just like old wine in
new bottles and hence the results of the bank litigations in DRTs are not
satisfactory.
(f)
The system favors and is biased towards banks and
FIs. It is replica of British days when you can not fight against the Govt .
(g)
The Ministry of Finance (Banking Div.) plays an
important role in the appointment of judges in DRTs. The salary and expenses
of the DRTs and Judges are handled by the Ministry of Finance (Banking Div.)
There are regular meetings of the judges of the DRTs with the officials of
the said Banking Div. Such state of affairs is highly against the equity and
independence of judiciary resulting into mismanagement in DRTs.
(h)
When the DRTs commenced, only young advocates
without any court experience started practicing in DRTs. Such advocates are
now maximum in numbers in DRTs. Hence virtually there is no proper trial and
in the name of expeditious disposal, majority of cases are being decided
only in the favour of banks.
(i)
In our country there is no system of training of
advocates, judges and litigants in relevant spheres of constitution,
administrative law and SC judgments. Otherwise despite Swaranlata of 1969,
still the trials are not being conducted properly. There is virtually no
impact of Constitution, Administrative Law and Bank Nationalization read
with Kripak both of 1970 on the beauracracy of bank officials. The said
officials even don’t bother about the RBI Guidelines of 1976 and thereafter.
All these eloquently speak about total lack of execution and management in
the concerned beauracracy.
(j)
Its only on account of few SC judgments like that
in the matter of Mardia Chemicals (2004), Indian overseas Bank vs Ashok Saw
Mills (16.07.09) and very recently (i.e. 08.09.09) Commissioner of Central
Excise vs Uni Product (I) Ltd. which will have a great impact on the DRT
trials .
(k)
Within next few years, the DRT trials will
undergo a vast improvements mainly due to constant efforts of our clients
for proper adjudication of their counter-claims or damage suits. Hence the
DRT litigants are advised first to have perfect pleadings and then to have
perfect trials on every date based on our guidance and advice. Going slow
and steady without accepting any verdict which has slightest element of
injustice will alone enable such litigants to win their bank litigations .
(l)
The next item in this weekly mail confirms that
we are very poor in execution and management on account of mismanaged
beauracracy including the judiciary .
(3 India slips to 133rd position among 188 countries as against
top position of China in the ease of doing business
This refers to news item titled ‘Doing business still not easy in
India’ at page 9 of the 10th Sept ’09 issue of ‘The Economic
Times’ which is based on World Bank - IFC Index and is self explanatory.
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