(1)
Supreme Court of India faces extreme overload – over 70000 cases filed in
2009 only,
Compare with US Supreme Courts which hears only 100 to 120 cases per year
20th March 26, 2010 New Delhi
The Supreme Court, while deciding to examine
the scope of Article 136 of the Constitution, said it was like Article 226
(writ jurisdiction of High Courts) was a discretionary remedy and the
Supreme Court was not bound to interfere even if there was an error of law
or fact in the order under challenge.
A Bench consisting of Justices Markandey
Katju and R.M. Lodha, quoting various judgments, pointed out that Article
136 was never meant to be an ordinary forum of appeal at all. “It has become
a practice of filing SLPs against all kinds of orders of the High Court or
other authorities without realising the scope of Article 136.”
Exceptional circumstances
The Bench said: “The very conferment of the
discretionary power defies any attempt at exhaustive definition of such
power. The power is permitted to be invoked not in a routine fashion but in
very exceptional circumstances as [and] when a question of law of general
public importance arises or a decision sought to be impugned before the
Supreme Court shocks the conscience. The Supreme Court would not under
Article 136 constitute itself into a tribunal or court just settling
disputes and reduce itself to a mere court of error.”
Limited time
The judges said: “After all, the Supreme
Court has limited time at its disposal and it cannot be expected to hear
every kind of dispute. The apex court lays down the law for the whole
country and it should have more time to deliberate upon the cases it hears
before rendering judgment as Mr. Justice Frankfurter observed. However,
sadly the position today is that it is under such pressure because of the
immense volume of cases in the court that judges do not get sufficient time
to deliberate over the cases, which they deserve, and this is bound to
affect the quality of our judgments.” Let notice be issued to the
respondents, they said.
Alarming situation
The Bench noted the concern expressed by
senior advocate K.K. Venugopal in a lecture pointing out that an alarming
state of affairs “has developed in this court because this court has
gradually converted itself into a mere Court of Appeal which has sought to
correct every error which it finds in the judgments of the High Courts of
the country as well as the vast number of tribunals. Mr. Venugopal has
further observed that this court has strayed from its original character as
a Constitutional Court and the apex court of the country. According to him,
this is a self-inflicted injury, which is the cause of the malaise which has
gradually eroded the confidence of the litigants in the apex court of the
country, mainly because of its failure to hear and dispose of cases within a
reasonable period of time.”
Mr. Venugopal, the Bench said, “has pointed
out that in the year 1997 there were only 19,000 pending cases in this
court, but now, there are over 55,000 pending cases and in a few years' time
the pendency will cross one lakh cases. In 2009, almost 70,000 cases were
filed in this court, of which an overwhelming number were SLPs under Article
136. At present, all these cases have to be heard orally, whereas the U.S.
Supreme Court hears only about 100 to 120 cases every year and the Canadian
Supreme Court hears only 60 cases per year.”
The Bench, therefore, wanted the issue to be
settled by a Constitution Bench. It issued notice to the Supreme Court Bar
Association, the Bar Council of India and the Supreme
Court-Advocates-on-Record Association. The Constitution Bench may also
consider appointing some senior advocates of this court as amicus curiae to
assist in the matter so that it can be settled after considering the views
of all the parties concerned.
Our Comments
Through this weekly mail past nearly 2 years
we have been voicing concern over mindless working of Indian Judicial
System. The sole objective of award of Justice has taken a backseat and has
been replaced by quickest possible disposal. Such approach has resulted into
explosive growth in pendency.
The malady in one word is ‘mismanagement’ It
is simply not possible for the Judicial Community to find a solution without
resorting to application of fundamental principles of management. If we are
willing to learn a lesson from the developed countries, one may study as to
how ‘National Association for Court Management’ (NACM) in USA did pioneering
work as well as implementation commencing from 1990 basing the inputs from
Delphi Survey. Among other initiatives, NACM Professional Development
Advisory Committee was formed in 1992. Initial list of 10 core competency
areas were identified and levels of KSAs (Knowledge, Skill and Ability) were
formulated. 90 selected court administrators, court management faculty and
researchers delineated structure and substance of the said 10 core
competency.
Complete knowledge, method of implementation
and results on the above are available on the internet. We are watching the
intent and interest of the Judicial Community as to when it will awake from
its deep slumber to catch up with the modern world. The more it delays more
painful it will be not only to itself but to the litigant citizens who will
in turn will apply incalculable pressures resulting into complete chaos and
breakdown. We have a small working model in DRTs and through the citizens in
form of litigant borrowers and guarantors are attempting suggestions and the
solutions.
(2) Latest Developments in Defence in Securitisation Act
Our recent
clients whose cases are going on in Mumbai, Jabalpur, Nagpur and Bangalore
(who have just filed the SAs) have been in constant touch with us and based
on the feedback, following are our views on the problems faced by them:-
(a)
Bank Authorities can not take any action u/s 13(4)
:- As soon as the Appeal u/s 17 has been filed, the matter becomes
sub-judice and hence any such act committed by the bank officials is without
any jurisdiction, power and authority. It should be challenged by way of
Criminal Complaint and Report to DRT.
(b)
The DRTs have to award stay
particularly in those cases where the loss and damages are more than the
claim of the bank:- As per the law laid down by the Supreme Court in the
matter of Mardia Chemicals, the appeal u/s 17 is akin to a civil suit where
the complete adjudication has to take place particularly due to bar on civil
court u/s 34 of the Civil Court. On account of loss and damages being much
more than the alleged claim of the bank, there is ‘No Debt Due’ and hence
all the recovery actions have to be stayed till the said civil suit is
decided completely.
(c)
Adverse Orders issued by DRTs should be challenged by way of application u/s 151, Review and
Appeal. One should never jump to High Court. We have already highlighted the
pitfalls in several of our weekly mails.
DRT Solutions Weekly Mail – 98th Issue dated
26th March ’10
(1) Report on Madurai Conference organized by Bank Lobby
Mr. Arun
Murugan, Advocate from Madurai attended the said conference. His report is
submitted below:-
“I attended
the conference at Madurai which was totally in favour of the banks. Out of
140 delegates 120 were bank staffs and remaining were advocates. They spoke
only favouring the bank and stated as if the SRFAESI Act is a draconian law
which could not be defeated and borrowers are bound to pay the money
borrowed irrespective of the wrong doings of the bank. I really got shocked
to listen. I introduced myself as an associate of Ram Kishan Associates and
as soon as I told all kept quite and did not speak much. I informed them
that I attended all the conferences of Ram Kishan Associates and advised
them to visit the drtsolutions.com to achieve great success. I received the
copy of the booklet which they gave during the session. I will send the
same through courier to your goodself. Some of the advocates spoke
regarding the valuation of the property which the bank does not disclose to
the borrowers and they used to sell the properties at throw away prices.
For that Mr. Pala Ramasamy, Advocate (organizer of the conference) supported
the bank and told that the bank never do wrong and they value the property
properly and there is no need to disclose.
Mr. Pala
Ramasamy who was heading the session is basically a bank panel advocate for
nearly 20 years and usually gives legal opinion and also at present he is a
standing counsel for several banks before the Madras High Court Madurai
Bench. Now at present since due to his wrong doing and misuse of his
official capacity before the High court his service as a standing counsel
has been terminated by the High court. This happened only four to five days
before the Conference. I think this Conference was not encouraging to the
borrowers. It is disappointing to note that when such a outstanding
achievement is made by the DRT legal Solutions, the Conference at Madurai
has discouraged the borrowers in all prospects. The only way to get through
the disappointment is to watch the drtsolutions.com and the Weekly Mails
through which the borrowers could achieve success in long way.”
Our Reply:-
“We are
neither against banks nor in favour of borrowers. In democracy there is
only rule of law. Whosoever will go against rule of law will have to suffer.
The public servants are duty bound to serve the nation and the citizens,
keeping in view the constitutional goals and objectives. Even the judiciary
is one of the instrumentalities of state and it has to be positive and
creative.
Our only
aim is judicial determination of facts, application of appropriate law and
reasoned judgment. This is enough to bring about the truth.
I get lot
of feedback from bankers and their advocates some of whom support our views.
Our clients
are getting success on account of above. With passage of time, there will be
leading judgments which will establish the truth about industrial finance
and duties of the bankers.
My
forthcoming book and the proposed conference in Dec. ’10 will throw further
light on the problems and solutions for the hapless borrowers and
guarantors.”
Our further Comments:-
(a) We have
created one of the best ‘World Class Constitution’ but have not done
anything to create ‘World Class Courts’, ‘World Class Advocates’ and ‘World
Class Judges’ These aspects have been left to the system to struggle and to
evolve on its own. As a result, the Judiciary has been and will be continued
to be subjected to ever increasing extreme pressures. Even the sitting High
Court Judges have openly come out telling that the pendency will take 320
years to clear. The dogma of pendency has dominated the vision of present
Judiciary even at the cost of its quality marring its main objective and
function i.e. Justice. It has no time to modernize itself with requisite
Management and Technology tools.
(b) On
account of slow and overloaded Judiciary, the executives in Govt and Public
Sector have scant regard for the Constitutional Goals and Objectives.
(c) With
above backdrop, the bodies like DRTs are created and acts like DRT Act and
Securitisation Acts are enacted due to which the citizens (borrowers and
guarantors) are bewildered feeling helplessness and wary of injustice.
(d) The
matter becomes more complex and complicated when the legal personnels in
govt and statutory bodies like banks join hands with their counsels and
organize conferences for the bank officials as that in Madurai.
(e) The
silver lining is that the entrepreneurs (in the class of businessmen and
industrialists) as litigants in DRTs are a different lot. The expeditious
and draconian approach through Securitisation Act will boomerang on the
executives creating another pressure on the judiciary to deliver few leading
judgments like that of Mardia Chemicals. Till such time, the fight is going
to be painful, long drawn and expensive. Ultimately the Justice will win and
the Justice Delivery System will also be transformed.
(2) Registrar DRT appreciates our approach:-
One of our clients from Maharashtra who is contesting his own case in
Mumbai DRT happened to discuss the bank litigation with one of the
Registrars of the DRT Mumbai. The said Registrar advised our client to file
counter-claim or damages against the banks as it is the only defence for the
borrowers and guarantors. Our client was highly pleased over such validation
from one of the important DRT authorities.
DRT Solutions Weekly Mail – 97th Issue dated
19th March ’10
(1) Securitisation Appeal – Misconceptions & Clarifications
We are
getting continuous feedback and queries from our clients and the visitors of
our web site. Accordingly we have noticed following misconceptions on which
we have given our clarifications as under:-
(a)
Misconception
:- Tribunal is not a civil court and hence can not examine the tortuous
liability.
Clarification
:-
As per the law laid down by the Supreme Court in the matter of Mardia
Chemicals, the Appeal (under Sec 17) is a misnomer. It is akin to a civil
suit. Since the Sec 34 of the Securitisation Act, civil court is not to have
jurisdiction in any matter which a DRT or the DRAT is empowered by or under
the Act to determine, the said civil suit (i.e. Appeal under Sec 17) must
contain all the matters including loss and damages (even including tortuous
liabilities) for adjudication by the DRT under the Act.
(b)
Misconception
:- Action under Sec 13(4) can not be interfered even if the borrower comes
up with the plea of ‘No Debt Due’ on account of loss and damages pleaded in
the Appeal under Sec 17 being much more than the claim of the bank.
Clarification
:-
As per the definition of ‘Debt’ under Subsec (ha) of the Act, “debt” shall
have the meaning assigned to it in clause (g) of Sec 2 of the DRT Act, 1993,
which means any liability - - - legally recoverable on, the date of the
application. Thus if the pleadings in Appeal under Sec 17 contain loss and
damages which are more than the claim of the bank, there is no ‘Debt Due’
and hence action under Sec 13(4) has to be interfered by the DRT by granting
interim stay till the Appeal is fully adjudicated upon.
(2) DRTs’ Adjudication – Misconception & Clarification
Misconception
:- DRTs don’t have inherent powers like that civil court under Sec 151 of
CPC.
Clarification
:-
As per Sec 22 of the DRT Act, the DRTs and DRATs shall not be bound by the
procedure laid down by the CPC but shall be guided by the principles of
natural justice. As per the law laid down by the Supreme Court in the matter
of ICICI Ltd vs Grapco Industries Ltd vide citation 1999 AIR(SC) 1975, the
DRTs can exercise powers of civil court and even can travel beyond the scope
of CPC for the purpose of natural justice. In fact evolution of CPC is
nothing but codification of principles of natural justice. Hence the DRTs
have been made all powerful trial courts and such courts naturally have
inherent powers (which is codified as Sec 151 in CPC) which is also evident
from Sec 19(25) of the DRT Act according to which the DRTs may make such
orders and give such directions as may be necessary or expedient to give
effect to its orders or prevent abuse of its process or to secure the ends
of justice.
DRT Solutions Weekly Mail – 96th Issue dated
12th March ’10
(1) High Court orders cross-examination of Bank Officials in a DRT Case
One of
our clients from Bhuvaneswar informed that DRT Cuttack declined to
cross-examine the bank officials on the plea that cross-examination is not
required when examination-in-chief has been obtained on affidavit. The DRAT
upheld the decision of the court below. However the High Court of Orissa
Cuttack decided in favour of the borrower asking the DRAT and DRT to permit
the cross-examination of the bank officials. We have asked the client to
send us copy of orders of High Court, DRAT and DRT.
The
above is keeping in line with our contentions that the DRT is a trial court
where the complex facts relating to banking, industry and finance are to be
judicially determined in accordance with the principles of natural justice.
It is needless to mention that the DRTs can travel beyond the CPC (i.e.
provisions of CPC need to be followed and if necessary one can go beyond it)
and hence cross-examination is one of the most important tools to extract
facts from bank officials (including the Chairman of the Banks) The said
cross-examine must be conducted by a person having mastery of facts
(banking, industry and finance) and mastery of law (including Evidence, CPC,
Torts and Damages) Complete cross-examination must be video recorded so that
complete demeaner of the bank officials is duly recorded.
Until
and unless all the bank documents have been discovered and cross-examination
has been conducted, no final arguments can take place. All these require
experience trial lawyers in DRTs. Young and inexperienced lawyers can not
achieve the desired results particularly when entire atmosphere is against
the borrowers.
The
above presumes that perfect pleadings have been prepared and counter-claim
and or damages have been raised.
Few
determined borrowers will have to fight a tooth and nail battle for years
till leading judgments are achieved. This alone will help all other
borrowers who can not fight such battles.
(2) High Court Judge says that it will take 320 years to clear the pendency
in Indian Courts
Daily
newspaper Patrika in its issue dated 07.03.10 published a news item with the
title '320 Years will take to get Justice for all’ The extract from the
said news item along with our comments are as under:-
Justice
V.V. Rao of High Court Andhra Pradesh was delivering a lecture on
‘E-governance in Judiciary’ He informed that there are more than 3.2 crore
pending cases in Indian Courts and to clear such pendency it will take at
least 320 years. It is further informed that rate of increase is far more
than clearance of pending cases. It is observed that in literate State like
Kerala, 28 cases per 1000 citizens are being filed every year whereas in
educationally backward state like Bihar the said figure for new cases is 3
per 1000 per year. This means that the pendency will go up further due to
boost in literacy.
We have
been repeatedly highlighting this important aspect of ‘Pendency in Indian
Courts’ Our suggestions is that only increase in number of judges will never
achieve the desired results. We will have to use the modern management
techniques and latest technology in the judicial process. When the advocates
and judges are using latest mobiles, latest cars, airconditioned court rooms
etc then why not latest technology and management techniques.
The
first E-court in the country has started in Delhi very recently. Laptops
(costing more than Rs. 40 crores) were distributed to all judges in 2007 but
they are not seen in court rooms. When the proceedings in Parliament are
telecast live, why the court rooms proceedings should not be video and audio
recorded and telecast so that we know what is really happening in court
rooms. The level and quality of arguments will be known and the reasons of
rampant adjournments will also be known.
It is
needless to mention that complete information about the desired judicial
process is available on the internet. It is not possible for the advocates
and judges as they are heavily overloaded but lead has to be taken by the
public particularly businessmen and industrialists in DRT litigations
should become the torch bearers to usher in the latest technology in court
rooms.
DRT Solutions Weekly Mail – 95th Issue dated
5th March ’10
(1) Proper Defence against Notice under Securtisation Act
We receive
numerous queries regarding proper defence against Notice under
Securitisation Act. Some of these querists call on us for detailed
discussions. Those who assign jobs to us are saved but some of them either
are unable to decide or continue with actions as decided by them. We have
covered this topic in several of our weekly mails. The most important
aspect of the defence is the pleadings of loss and damages in the
representation and objections as well as in the appeal under sec. 17 of the
Securitisation Act. Since in almost all the cases the said loss and damages
being more than the claim of the secured creditors, there is ‘No Debt Due’.
Further the said Appeal being akin to a civil suit, the adjudication offers
widest possible scope for adjudication keeping in view the law and procedure
of law as applicable on the grounds of principles of natural justice. It is
needless to mention that the person or agency drafting the documents (i.e.
representation and objections and appeal) should have mastery of facts
relating to banking, industry, finance and mastery of law of torts, law of
damages, RBI Guidelines, banking laws etc. Practicing advocates normally do
not have spare time for the same including research as the DRT, DRT and
Securitisation Laws are relatively of recent phenomena. Even in England, it
took 157 years from 1800 for the Tribunal Laws to attain stability. In our
country also it will take time particularly when we have to do a lot in the
management and technology aspects in the Judicial process as the courts are
heavily overloaded.
DRT Solutions Weekly Mail – 94th Issue dated
26th February ’10
(1)
Bank Officials caught involved in a Serious Fraud and hence suspended at the
instance of CBI – matter relating to a Charitable Trust
1.
During the course of preparation of the Securitisation case pertaining to
one of our Bangalore clients in respect of Technical Institutes run by a
Charitable Trust in the South India, our Senior Advocate, Mr. B.K. Dubey
observed that one of the Trustees of the Trust, after his induction in the
Trust as the life Trustee, used the funds of the Charitable Trust for
purchase of land in the name of himself, and later on made out a lease deed
in the name of the Charitable Trust for a period of 10 years, thus had
created his personal right and title over the immovable and movable assets
created by the Trust out of loan funds and capital created by way of deposit
of fees and caution money from the students. By his greed of money unto his
personal account, he appropriated the funds sanctioned by the bank in the
name of construction activities of the Institute as well as for creating
movable assets like facilities for Laboratory, Library, latest Equipments as
required for in parting better education to the students. Side by side, the
said Trustee with all the malafides in his mind created 5-6 firms and in all
of the said firms, he posed himself as Proprietor. As soon as, the loans
were disbursed by the bank, the said Trustee immediately within a period of
5-7 days issued cheques to all the firms belonging to his proprietorship,
thus, siphoned away the loan amount.
2.
Not only this, he always acted in a manner prejudicial to the interest of
Technical Institutes. For grating permission to run the Technical Institute,
as per the norms of Government of India the Technical Institute desirous of
obtaining the permission for running the Institute has to create a Fixed
Deposit of Rs.25/- lacs in the case of “Diploma Course” and Rs.50 lacs in
the case of “Degree Course”. Such deposit is required to be created in the
shape of a Fixed Deposit to be issued by a Nationalized Bank in the joint
names of the Technical Institute and All India Council for Technical
Education for a period of ten years. The subject Trustee along with the
application for permission of “AICTE”, enclosed a photo copy of the Fixed
Deposit Receipt duly issued by Nationalized Bank and after receipt of the
permission, manipulated a document for cancellation of application for
permission and on the strength of such forged document withdrew the amount
of FDR causing thereby a serious breach of the terms and conditions of the ‘AICTE’,
leaving the ‘AICTE’ with no security for the Institute, in absence of which
the continuing permission may be subjected to cancellation. Thus, the
subject Trustee of the Technical Institute kept the sword hanging on the
students studying in the Institute, besides burdening the Trust with the
obligation of paying out the dues of the Bank, and in failure of which the
Bank might take over the physical possession of the assets so created, thus
forced closure of the Institute.
3.
In such fraudulent mischief of the said Trustee, numerous bank officers of
Nationalised Bank have also been found to be involved and some of them have
been suspended at the instance of Final Report submitted by Central Bureau
of Investigation – Banking Fraud Cell, who has filed a criminal case before
the Special Court for Economic Offences of the concerned place.
4.
Every time, whenever such an action of making deposit or withdrawing funds
on the strength of some forged documents. Though the said Trustee once
resigned from the life trusteeship and the Presidentship of the Trust, but,
with the aid of fraudulent design, and forged documents, carried out some
special resolution / amendment to the original Trust Deed and appointed
other persons as Managing Trustee under whose signature he withdrew the
amount unto his personal benefit with an intention to cause willful
financial loss to the Education Institutes and the persons appointed as
Managing Trustee / Executive Staff besides threat to the future of the
students which could have spoiled their career on account of cancellation of
permission / de-affiliation from the University. The miscreant trustee has
also carried out some amendments in the original trust deed, and has stated
that, the “Charitable Trust” from the date of amendment shall be deemed to
be the “Private Family Trust”. Thus, has changed the entire objects of the
Trust, i.e. Breach of Trust in Charitable Trust.
5.
The present Managing Trustee is running the Institutes successfully but the
former Managing Trustee is still playing a game of fraud and carrying
actions causing willful financial losses to the Technical Institute by
withdrawing the funds from the accounts of the trust, generated out of
deposit of fees/caution money from the students.
6.
The present management of the trust has to be very vigilant on all the
aspects of losses which may be caused by the former trustee in order to
safeguard the Institutes and reputation of the Technical Institutes, besides
safeguarding the properties of the trust, which cannot be vested in the
hands of single person.
7.
We have decided to include the loss and damages (in the Securitisation case)
caused to our client by the said bank on account of the wrong doings. Since
the said loss and damages are more than the claim of the Bank, there is ‘No
Debt Due’ and hence no recovery action can be invoked against our client.
(2) Answers to queries on Company Act
One of
visitors to our web site, made certain queries relating to the Company Act.
The same were replied to by our Associate Mr. N.K. Sharma, ex-GM(Law) as
under:-
Q.1. Can Board of Directors pass the special resolution about raising of
equity shares?
Answer:
Section 189 of the Companies Act (‘the Act’) defines an ordinary resolution
and a special resolution and both are passed in general meeting and not by
the Board of Directors. Section 81 (1) of the Act provides for further issue
of equity shares by passing an ordinary resolution and Section 81 (1A) of
the Act provides for the circumstances when further issue of equity shares
is to be made only by passing a special resolution.
Q.2. What amount of fees are to be paid to ROC for registration of special
resolutions?
Answer:
Schedule X of the Companies Act (‘the Act’) contains the Table of Fees to be
paid to the Registrar (‘ROC’). Para 6 of Schedule X has provided for the
fees to be paid, inter alia, for registration of special resolution on the
basis of nominal share capital of the company as follows:
Less than Rs. 1,00,000-----------------------------------Rs. 100
Rs. 1,00,000 but less than Rs. 5,00,000-------------Rs. 200
Rs. 5,00,000 but less than Rs.25,00,000-------------Rs. 300
Rs. 25,00,000 or more------------------------------------Rs. 500
DRT Solutions Weekly Mail – 93rd Issue dated
19th February ’10
(1) Framing of Issues in DRTs and Trial Courts:-
One of
our clients from Chandigarh has sent us proposed 39 issues in the matter of
damage suit filed against the bank in civil court. Our comments are as
under:-
(a)
First all the
material facts must be discovered and the machinery provided under O-11 of
CPC i.e. discovery of documents and interrogatories must be used before
proceeding with the framing of issues.
(b)
When the
discovery and inspection as per O-11 of CPC has been completed, the
provisions under O-12 and O-13 should be used.
(c)
When all the
material facts have been discovered, substantial facts relating to the case
and the applicable laws be listed. Then only provisions under O-14 relating
to Issues be utilized.
(d)
It is
observed that the trial courts and DRTs are in a hurry to expedite the
matter and as a result all the material facts are not discovered. This will
create a lacuna in the trial which can not be corrected by subsequent
proceedings or the higher courts.
(e)
As per O-14,
Issues arise when a material proposition of fact or law is affirmed by one
party and denied by the other. Material propositions are those propositions
of law or fact which a plaintiff must allege in order to show a right to sue
or a defendant must allege in order to constitute his defence. Each material
proposition affirmed by one party and denied by the other shall form the
subject of distinct issue. Issues are of two kinds i.e. issues of fact and
issues of law. The pleadings, contents of the documents and replies to
interrogatories are the materials from which the issues may be framed.
(f)
In view of
above, issue no 1 relating to affidavit is OK.
(g)
In our view,
the issue nos 2, 3 and part of 36 respectively relating to industrialization
of the country, industrial sickness and rehabilitation are not material
issues as they are the govt. policies and are part of statutory RBI
Guidelines.
(h)
In respect of
issue no 4 regarding appraisal note, it needs to be modified as proposed
below:-
“Whether sanction of loan is based on technical and financial appraisals
conducted by the bank? If so whether the payment of interest and repayment
of loan being out of surplus generated by the project is based on the said
appraisal?”
“Whether the security of the loan is limited to the portion of the assets
created out of the funds provided by the bank? Whether additional security
or personal guarantee asked for by the bank is illegal?”
(i)
Since we are
not aware about the take over of the unit, the issue no 18 and 24 relating
to sec 29 of SFC act may not be applicable in the present case.
(j)
In issue no
37, opening sentence may be corrected as under:-
“Whether - - - are liable for the damages caused as elaborated in this suit
i.e. - - ?“
(k)
The proposed
issues may be finalized based on our above contentions.
(2) Agitation & Srike against the PO DRT Jabalpur still continues:-
The
agitation and strike of the Advocates against the PO DRT Jabalpur is still
continuing. The office bearers of the Bar Association of DRT Advocates have
gone to Delhi to call on the Finance Minister and Law Minister of the
central govt.
DRT Solutions Weekly Mail – 92nd Issue dated
12th February ’10
(1) Threat of Physical Possession by Bank under Securitisation Act foiled:-
The banks have been threatening the borrowers to take physical possession
of the productive assets of their units. Gripped under panic, the borrowers
run here and there, agree to such terms and conditions which create lot of
financial problems and hence considerable mental tension. If such borrowers
happen to contact us at proper time, we guide them properly so that they are
saved out of such panic situation.
Recently one of our clients happened to contact us and the chain of
events were as under:-
(a)
Bank sent the notice under Securitisation Act. The
borrower submitted the representation and objections.
(b)
Negotiations were going on for few months for
settlement.
(c)
In the meantime, the bank sent the possession notice
on 01.02.10 and informed the borrower that on 10.02.10 they will be coming
with police for taking possession and locking the secured assets. At this
stage, the borrower contacted us.
(d)
We sent a notice (by e-mail and registered post) on
05.02.10 to the bank that the borrower has got a right to appeal to DRT
within 45 days from the date of notice and during this period, physical
possession can not be taken. The authorized officer of the bank through
e-mail dated 08.02.10 informed us and the borrower that:-
“Your
request for not taking any action against the above named defaulter party
for further 45 days under Securitisation Act is not at all acceptable. On
failure to comply with the requirement of our earlier notice of 60 days, we
have given notice to take possession of the assets on 10.02.2010. The
Authorised officer will be proceeding to take possession of the charged
securities on this date. Your client may be advised to handover peaceful
possession of all the securities on that date failing which further
appropriate action will be initiated.”
(e)
On 09.02.10 late evening, the said Authorised Officer
informed to the borrower that the bank will adhere to its action to take
physical possession on 10.02.10.
(f)
In the meantime in reply to above we sent a detailed
letter on 09.02.10 at 9:30 PM through an e-mail to the Chairman & MD of the
Bank with copy to the said Authorised Officer informing that any attempt by
the bank to take physical possession on 10.02.10 will be illegal and hence
will be resisted followed by legal action against the CMD and the said
Authorised Officer.
(g)
In the morning of 10.02.10, the said Authorised
Officer informed the borrower that they have reconsidered the matter and
instead of physical possession, the bank will take only technical (i.e.
symbolic) possession.
(h)
The borrower was relieved of the tension as the Appeal
u/s 17 will be filed within the prescribed period of 45 days and the same
will include the loss and damages suffered by the borrower due to wrong
doings of the bank. Since the said loss and damages are much more than the
claim of the bank, there will be no debt due and hence no recovery action
can be invoked till the said loss and damages are finally decided by the
court of law. Since the pleadings will be drafted by us followed by guidance
and advice on every crucial date, the matter will take several years.
Conclusion
The above incidence shows that with proper knowledge of law combined with
IT technology, the matter can be handled satisfactorily in least possible
time. As a result, the bank was not successful in taking physical possession
of the allegedly secured assets.
(2) Information and Fundamental Rights
In Vol. 10 Part 4 of 2009, SCC (Supreme Court Cases Weekly), an useful
article titled ‘Information and Fundamental Rights’ by Justice Ruma Pal,
former Judge of Supreme Court has been published. This article must be read
by borrowers facing litigation in DRTs or Court of Law. Following useful SC
Judgments have been cited in the said article:-
(a)
State of UP vs Raj Narain (1975) 4 SCC 428 ;- It is a
historic judgment on the citizen’s right to know.
(b)
Indian Express Newspapers (Bombay) (P) Ltd vs Union of
India, (1985) 1 SCC 641 :- in this judgment, SC has stated that the
fundamental principle underlying the fundamental right to freedom of
expression is the people’s right to know.
(c)
Reliance Petrochemicals Ltd. Vs Proprietors of Indian
Express Newspapers Bombay (P) Ltd. (1988) 4 SCC 592 :- SC said that ‘Right
to know is part of right to life itself.’
(d)
Popcorn Entertainment vs City Industrial Development
Corporation, (2007) 9 SCC 593 ;- Information obtained under the RTI Act can
be used to support the case in court of law.
Application of above Article and SC judgments in DRT Litigations
The most important aspects of bank litigations in DRTs are pleadings and
discovery of documents. With the application of above article and the SC
judgments, all the material bank documents can be discovered.
DRT Solutions Weekly Mail – 91st Issue dated
5th February ’10
(1) Supreme regrets and criticizes itself:-
Our associate Mr. T.R.
Radhakrishnan, a banking expert has sent the following news item which
is self explanatory. As soon as we get the SC judgment of 5th
ultimo, we shall publish the same.
Globalisation blinds us to aam
aadmi plight: SC
Thu, Jan
28 05:49 AM
In
unusual self-criticism, the Supreme Court said today that courts, including
the "last court in the largest democracy of the world", have lost sympathy
for the common man in pursuit of the "attractive mantras" of globalisation
and liberalisation.
A
Division Bench of Justice G S Singhvi and Justice A K Ganguly, in two
separate orders, cautioned judges of the Supreme Court and Constitutional
courts that there will be "precarious consequences" will visit the nation if
they dilute constitutional imperatives to promote the "so-called trends of
globalisation".
Both judges passed their orders on January 5 in an appeal filed by Harjinder
Singh, a retrenched worker with the Punjab State Warehousing Corporation,
who had challenged the Punjab and Haryana High Court decision to pay him Rs
87,582 as compensation instead of re-instating him with 50 per cent back
wages.
The judges set aside the High Court order and called for his re-instatement
with 50 per cent back wages and cost of Rs 25,000.
Justice Ganguly quoted Rabindranath Tagore in his order when he described
the "eventualities which may visit us in our mad rush to ape western ways of
life".
His brother judge on the Bench, Justice Singhvi, observed how he had noticed
a "visible shift" generally in the courts' approach in dealing with cases
involving the interpretation of social welfare legislation like the
Industrial Disputes Act.
"The attractive mantras of globalisation and liberalisation are fast
becoming the raison d'etre of the judicial process and an impression has
been created that the constitutional courts are no longer sympathetic
towards the plight of industrial and unorganised workers," Justice Singhvi
said in his order.
Justice Singhvi said a large number of cases end up with the workmen being
denied any relief from judges, who readily accept the justification
employers give about such "illegal retrenchments."
"Judges of this Court are not mere phonographic recorders but empirical
scientists and interpreters of the social context in which they work," said
Justice Ganguly.
"I
am in entire agreement with the view of my Lord Brother Justice Singhvi
about a disturbing contrary trend which is discernible in recent times and
which is sought to justified in the name of globalisation and liberalization
of economy," said Justice Ganguly.
"Our Constitution is primarily shaped and moulded for the common man. It
takes no account of the 'portly presence of the potentates, goodly in
girth'. It is a Constitution not meant for the ruler, but the ranker, the
tramp on the road, the slave, the man with too weighty a burden, too weary a
load," said Justice Ganguly, quoting eminent jurist N A Palkhivala.
Justice Ganguly said the "ditches" created in the society by the advance of
globalisation can only be overcome if "this Court makes an effort to protect
the rights of the weaker sections of the society as per the Constitutional
mandate".
"Judges and specifically the judges of the highest court have a vital role
to ensure that the promise (to secure all citizens justice, liberty,
equality and fraternity) is fulfilled. If judges fail to discharge their
duty, they fail to uphold and abide by the Constitution which is their oath
and office... Judges of the last court in the largest democracy of the world
have a duty to articulate the Constitutional goal," the Bench said.
(2) Our contention in respect of limitation on the execution of the order
under Sec 138 of NI Act appears to be correct:-
We raised an
important issue vide details at item no (3) in the 80th Issue of
weekly mail dated 13th Nov. ’09 that the limitation for the
execution of order under Sec. 138 of NI Act should be 3 years. We
experimented this in a real case. On 04.11.09 an application was submitted
in respect of an order dated 20.12.04 that it can not be implemented being
beyond limitation of 3 years. The complainant was asked to give reply and
the date was fixed as 04.02.10. The complainant could not furnish any reply
and sought further time of 5 months. This shows that our contention appears
to be correct.
