DRT  Legal  Solutions

(Debts Recovery Tribunal Legal Solutions) is an India based

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DRT Solutions Weekly Mail – 429th Issue dated 26th August ’16

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(1) Public Interest - Defining

The following news item is self explanatory:-

Defining public interest

Harish Gupta case involves questions about the very nature of governmental decision-making.

August 25, 2016 3:07 am



When there is no element of criminality, how does a public servant defend a governmental decision in a criminal court? There is no apparent evidence in the chargesheets filed against Harish Gupta of “quid pro quo”, mens rea (criminal intent) or meeting of minds to commit an illegal act to make his decisions a criminal offence. In seven cases, the CBI found no evidence of criminality, the special court then ordered re-investigation and the CBI, again, did not find evidence against Gupta. Subsequently, the court charged him and other civil servants with criminal conspiracy, misconduct and corruption. The CBI has then raised issues related to non-adherence with guidelines in other cases.

The Supreme Court has held that guidelines are not binding and are not law, therefore, whether they were followed should be reviewed under procedures within the government, not by the CBI or a criminal court.

In a similar case relating to the allocation of a coal block by Manmohan Singh , as coal minister, on the recommendation of P.C. Parakh, secretary coal, the issue of summons has been stayed by the Supreme Court on the basis of three legal issues. First, whether a public servant could be prosecuted for criminal conspiracy, misconduct and corruption charges when “there is not even a whiff, let alone an allegation, of quid pro quo”? Second, whether mens rea was no longer a requirement under the law to prosecute a public servant under Section 13 of the Prevention of Corruption Act? Third, how can administrative decisions be part of a criminal conspiracy? These questions fully apply to the case of Harish Gupta.

The substantive issue relates to the nature of governmental decision-making. Singh explained the allocation of mines as a “governmental decision” taken in the public interest as part of the country’s liberalisation process. He said, “the exercise of balancing the needs of the public as well as the private sector in the larger public interest is complex and final solutions emerge by responding to the concerns of all stakeholders involved”.

Public interest is the most used and least defined term in public administration. The Australian senate committee on constitutional and legal affairs described public interest as “aggregating any number of interests that may bear upon a disputed question that is of general — as opposed to merely private — concern”.

Exercising discretionary power in any particular case is not a mathematical proposition. In the allocation of mines, the sectoral ministry, the states where mines are located and the states where end-use projects are planned, can have different, but equally valid views on what constitutes the public interest. Gupta, as chairman of the screening committee, was tasked with arriving at a unanimous decision. Out of around 1,400 applications, the 100-odd allocations were all unanimous decisions, which is the critical element of “due process” for such decisions. This is what a secretary to the government does in every decision and is considered to be acting in the public interest.

Two other issues stand in the way of justice for Harish Gupta. The Supreme Court, in the case Dr Subramanian Swamy vs Dr Manmohan Singh & Anr, 31 January, 2012, has observed that “it is not the province of the court at that stage of taking cognisance of a case to embark upon and sift the evidence to come to the conclusion whether or not an offence has been made out”. In the case of Gupta, contrary to the observations of the Supreme Court, the trial court came to a prima facie finding which was not based on the investigation and framed charges against public servants.

The second issue relates to the protection for taking honest decisions. The government’s stand is that there is a need for independent review and prosecution sanction as “it is the administrative ministry which has the best domain knowledge to take a clear view on the involvement of an officer in any given set of circumstances.” Inexplicably, this protection is not available to retired public servants.

Justice for Harish Gupta requires the government to review the chargesheets for any evidence of criminality, and if there is none, recognise he acted in the public interest, defend him at government cost and get him the same relief the Supreme Court has given to P.C. Parakh, who was Gupta’s immediate predecessor. This will also be the essential signal the bureaucracy is waiting for in order to take the hard decisions needed for India to be a $10 trillion economy.


(2) Judicial Delays

The following news item is self explanatory:-

What causes judicial delay? Judgments diluting timeframes in Code of Civil Procedure worsen the problem of adjournments

August 25, 2016, 2:00 AM IST 


There are around 21.3 million cases currently pending in various courts in India including the Supreme Court. The magnitude of this problem was brought sharply into perspective in a magazine article last year, which stated “if the nation’s judges attacked their backlog nonstop with no breaks for eating or sleeping and closed 100 cases every hour, it would take more than 35 years to catch up”. How did we get here?

The problem of delay in Indian judicial system has been studied extensively by the Indian Law Commission over the years. In these studies, infrastructural deficiencies have frequently been blamed for the delay. Accordingly, more courts and more judges are seen as a solution. However, a cause that remains under-examined in the literature and public discourse on delay is the contribution of the courts to the problem by non-adherence to procedural timeframes.

Specification of time limits has emerged as a distinctive feature of process reforms across jurisdictions that have been able to quantifiably minimise judicial delay, such as the UK and Singapore. In India, there have been at least two major amendments to the Code of Civil Procedure, in 1999 and 2002, which specified timeframes vis-à-vis completion of various processual steps in civil proceedings. But that doesn’t seem to have remedied the problem in any significant way.

Why, one may wonder, have the prescribed timeframes not worked in India?

A close examination of the Supreme Court’s reception of these timeframes is revealing. Let’s look at an indicative assortment of four amending provisions that introduced specific outer timeframes in the Code and their interpretation by the Supreme Court.

Prior to 1999, there was no limit on the number of trial adjournments courts could grant. The 1999 Amendment fixed an upper limit of three adjournments that courts could grant during the hearing of a suit. However, in the 2005 case of Salem Advocate Bar Association-II (2005 (6) SCC 344), the Supreme Court interpreted this restriction as not curtailing the court’s power to allow more than three adjournments.

This decision has had an active afterlife, having been invoked by tens of high court decisions which proudly proclaim the court’s inherent rights to endlessly adjourn.

The 1999 Amendment fixed the timeframe for yet another important provision which directly impacted the court’s general power to extend timelines. It specifically disallowed the courts from enlarging the time granted by them for doing any “act prescribed or allowed by the Code” beyond a maximum period of 30 days. However, in the same 2005 case, the Supreme Court interpreted this timeframe as one not attenuating the inherent power of Indian courts to “pass orders as may be necessary for the ends of justice or to prevent abuse of process of the Court”.

In order to curb the practice of non-prosecution of cases filed by litigants, the 1999 Amendment also fixed an outer timeline of 30 days for service of summons on defendants. However, in 2003, in the case of Salem Advocate Bar Association-I (AIR 2003 SC 189) the Supreme Court interpreted this to mean that 30 days limit designated only the outer timeframe within which steps must be taken by the plaintiff to enable the court to issue the summons. In other words, the court held that the provision did not specify a time limit within which summons ought to be served on the defendant by the court.

Insertion of another timeframe that was pivotal to curbing delays was introduced in 2002. Prior to 2002, a written statement could be filed within any time as permitted by the court. The 2002 Amendment incorporated a mandatory outer timeline for filing written statement by not allowing the courts to accept it beyond a period of 90 days from the date of service of summons. However, in the 2005 judgment of Kailash vs Nanhku (AIR 2005 SC 2441), the Supreme Court relaxed this statutorily prescribed deadline by interpreting it as merely directory and not mandatory.

It held that courts could use their discretion in unspecified exceptional circumstances to accept delayed written statements. This case has been applied as a virtual carte blanche by lawyers to file written statements beyond 90 days as a matter of course. Thus the exceptional has become the new normal.

Evidently, in each of these illustrations, the Supreme Court relaxes the timeframe inserted by the amendments and restores to the courts discretion to dilute them in accordance with the courts’ perceived sense of justice.

These illustrations are not merely fragmentary instances. Similar examples of the undoing of procedure may be found for nearly every provision in the Code that contains a time limit. These illustrations are in fact, a sampling of the adjudicatory manoeuvres by which the Supreme Court has unwittingly come to countenance delay, in contradiction to the express wordings and intent of the Code.

In addition, phrases like “procedures are the handmaiden of justice”, frequently invoked by the Supreme Court, serve as lexical alibis by which departures from procedure are introduced and justified.

Solving the infrastructural deficit by itself would not reduce delays unless a simultaneous effort is made at reforming this jurisprudence of delay that has been allowed to take root. With over 21 million cases pending, treating procedural laws as the equal partner rather than a handmaiden of justice would be a better way forward through the crisis.



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


DRT Solutions Weekly Mail – 428th Issue dated 19th August ’16- Camp-Sagar

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


(1) Law for Debts Recovery

The following news item is self explanatory:-

Law for bad debts recovery good for Indian banks: Moody's

Will lead to structural improvements in banks dealing with bad assets

August 8, 2016 Last Updated at 14:30 IST


Moody's said on Monday the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions Bill, 2016, and the Insolvency and Bankruptcy Code, 2016  (bankruptcy), will lead to structural improvements in banks dealing with bad assets.

While the bankruptcy law  has been enacted, the Enforcement of Security Interest and Recovery of Debts Bankruptcy Code, 2016, has to be passed by the Rajya Sbha after it was cleared by the Lok Sabha.

The Enforcement of Security Interest and Recovery of Debts Bankruptcy Code, 2016, is a credit positive for the Indian banks as it aims to expedite the recovery and resolution of bad debts, said a statement issued by Moody's Investors Services.

"Weakness in current processes for bad debt resolution has been a key structural credit challenge for Indian banks. There are currently about 70,000 cases pending in debts recovery tribunals (DRTs), and these cases have been pending for many years owing to various adjournments and prolonged hearings," Moody's said.

According to Moody's, the provisions relating to promotion of asset reconstruction companies for banks to off-load their non-performing assets (NPA) and prioritise debt due to secured creditors over all other debts and claims (including government claims) are credit positive features for the Indian banks.

The Enforcement of Security Interest and Recovery of Debts Bankruptcy Code, 2016, proposed electronic filing of all proceedings, time limit for filing appeals against decisions of Debt Recovery Tribunals (DRTs) reduced to 30 days from 45 and debtors to deposit 50 per cent of the amount of debt payable before filing an appeal are positive for Indian banks, said the credit rating agency.

(2) Huge Cost of Litigation

The following news item is self explanatory:-

Huge cost of litigation means denial of justice to the poor in India

Aug 17, 2016 17:16 IST


In the 2013 courtroom drama Jolly LLB, Boman Irani appears on the silver screen in his three piece suit, descending from his swanky BMW, escorted by another SUV and army of secretaries. He looks every bit a corporate honcho. The mistake can come easy for anyone who has been lucky enough not to have been embroiled in a legal case which took him to the steps of the Indian courts.

If he would have been, he would have known that the ‘new nawabs’ now wear the black robe.

JNU student union leader Kanhaiya Kumar, who was accused of sedition charges, was defended by a battery of lawyers, whose fees Kumar might take a lifetime to pay. But then he was a ‘hero’, whom everyone wanted to defend.

The court of law is a place where justice has a cost; that cannot be easily borne by majority of its helpless visitors. And everyone is not as lucky as Kumar is.

On Tuesday, as reported by The Times of India, former coal secretary HC Gupta — who is an accused in several coal scam cases — moved a special court seeking to surrender his bail, 

saying he wanted to "face trial from inside jail". The reason: He couldn't bear the financial burden of litigation.

Has justice become so expensive in India that it becomes evasive even for a senior ranking bureaucrat?

Gupta, who sought to withdraw the authorisation letter issued in favour of his lawyers, also said that he did not wish to examine any witness in his defence. This reflects the abject sense of dejection of a government servant who with “due diligence” did his work all this service and is being “targeted for his honesty”.

TSR Subramanian, former cabinet secretary and author of India at Turning Point: The Road to Good Governance, told Firstpost, “I will not believe that Gupta can take even a rupee. He would not be tempted with Rs 100 crore bribe. Our system is so rotten that while those unscrupulous lot making crores, by all wrong means, are never punished, officers like Gupta are hounded. To my best of my knowledge, he is one of the most upright officer I know."

Subramanian adds, “The expenses in the higher courts are astronomical. The lawyers have made it a practice to earn adjournments somehow. As they charge hefty amount per appearance, the adjournments suit them. This is a racket that needs to be stopped from functioning."

But then Gupta is not alone in his failing pursuit of justice.

‘Death Penalty India Report’ released by the Centre of Death Penalty at National Law University, Delhi, in the month of May, made an observation which has a significant bearing on the issue of “cost of justice” in India.

The report noted: “Very often, the concern about the quality of legal representation has been couched in terms of inadequacies of the legal aid system. More than 60 percent of the prisoners sentenced to death had private lawyers in the trial court and high courts. It must be a cause for extreme concern that prisoners and their families wanted to avoid the legal aid system at all costs and therefore went to great lengths to ensure that they had private legal representation.”

The inadequacies of legal aid system in India push millions of litigants — majority of which belongs to the economically weaker section (a fact highlighted in various reports) — to hire 'expensive’ courtroom heroes, making justice impossible for many.

The apex court on several occasions, through its judgments, has highlighted the issue of unequal access to justice, but hardly any serious attempt has been made to ensure ‘justice for all'.

Justice BS Chauhan and Justice SA Bobde in August 2013 while dismissing the anticipatory bail plea of IPS officer PP Pandey, accused in Ishrat Jahan fake encounter case, observed, "We are sorry to say that the court's time is being used by senior advocates and big criminals. We can say on oath that only 5 percent of the time is being used for common citizens, whose appeals are waiting for 20 or 30 years. This court has become a safe haven for big criminals. You come here for the sixth or eighth time for anticipatory bail and we should hear as if we were a trial court.”

In yet another case, involving former Haryana chief minister Om Prakash Chautala, who was serving a ten-year jail term in a corruption case and had sought extension of his interim bail, a bench of justices HL Dattu and SJ Mukhopadhaya observed, “Sometimes, I wonder at my system. Here is an appeal of the year 2013 which gets a quick hearing. In how many cases are we doing so? That's why poor man feels that the system cares only for known persons and the unknown persons (common man) gets ignored."

In 1850, Supreme Court of United States in Stockton v Ford observed, “There are few of the business relations of life involving a higher trust and confidence than that of attorney and client, or, generally speaking, one more honourably and faithfully discharged; few more anxiously guarded by the law, or governed by sterner principles of morality and justice; and it is the duty of the court to administer them in a corresponding spirit, and to be watchful and industrious, to see that confidence thus reposed shall not be used to the detriment or prejudice of the rights of the party bestowing it."

Ironically, all benchmarks stated in the judgement seem to be eroding.

The bewilderment of the ‘My Lords’ at the unequal access to justice was obvious. But the irony rests elsewhere. Host of lawyers who are elevated to judgeship knows the rules of the game. Then why do they allow justice to evade the poor? The apex court has through its various landmark judgments addressed concerns that perhaps touch every aspect of its citizen’s life. From environmental concerns to administration, all has been regulated by the higher judiciary time and again.
Then, what stops them from regulating the ground that underpins the entire judicial processes?

In this respect, an important observation was made by Kaleeswaram Raj, a lawyer practising in the Supreme Court of India and the High Court of Kerala, in his article in The Hindu in March 2014.

It reads, “In a Maharashtra case, M.P. Vashi v. Union of India, the levy of exorbitant fees by senior lawyers was the matter in issue. Vashi argued that most of the designated lawyers, by making use of their star value and face value, charge unfair fees. He submitted that a kind of monopoly is being created in the business, detrimental to the interest of the common man at “the other side” who is unable to afford such highly priced lawyers. Unfortunately, the Bombay High Court was not inclined to accept the contention and a historical opportunity for institutional introspection was lost."

While the fact remains that 5-10 lakh per hearing charges can be peanuts for corporate houses, embroiled in legal battles, or a superstar makings 200 crore a film, or even for a ‘superstar activist’, it is likes of SP Gupta who has to give up all hopes of justice as it cost too much.



DRT Solutions Weekly Mail – 427th Issue dated 12th August ’16

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

(1) Counter-claim in DRTs


One of our clients has desired that we express our opinion on the counter-claim in DRTs. Our views are as under:-

(a)   In this connection please go through our weekly mail 55th issued dtd 29.05.09 reproduced below which is self explanatory.

(b)   It is reiterated that in any bank case in DRTs, the borrowers must file the counter-claim and then only their defence will be complete. There are numerous wrong doings committed by the bank and almost in all the cases, the said wrong doings give rise to counter-claims. It is observed that the said counter-claims are much more than the claims of the banks and hence there is ‘No Debt Due’ Till such time the said condition of ‘No Debt Due’ is fully and finally decided by the judicial system, no recovery can be made out of the secured assets.

(c)   DRT is a trial court. The DRT Advocates have to conduct full trial. It is needless to mention that the bank cases depend on documents and all the documents are in power and possession of the banks. The borrower is entitled to get certified copies of all the documents right from the stage of appraisal reports. In that eventuality no bank can win against the borrower.

(d)   For further details, our clients may discuss on phone or in person with us.


“DRT Solutions Weekly Mail – 55th Issue dated 29th May ’09

(1) An Important Judgment on DRT Counter-claim:- 

One of our clients from Mumbai has forwarded the following judgment seeking our analysis and advice. Our comments are as under:-

(a)        The citation is 2007(2) Bank CLR 549 (DRAT Kol), State Bank of India vs J.S. Oil Fats (P) Ltd

(b)       The bank's OA of 1999 for Rs. 68.58 lacs was rejected by DRT Guwahati on 22.08.02 as the said OA was premature and bank did not have any cause of action. In respect of Counter-claim which was filed in 2001 for Rs. 90.93 lacs, the said DRT on 22.08.02 decreed the counter-claim to the extent of Rs. 45 lacs.

(c)        The DRAT Kolkata on 14.11.03 upheld the said decision of DRT rejecting the said OA as well as decreeing the counter-claim.

(d)       This matter went upto Supreme Court which set aside the part of the decree which related to the counter-claim and remitted the case to DRAT to reconsider the matter. The relevant extract of the order of the SC was as under:-

“There may be substance in what is being stated by learned counsel of the respondents, but we feel that the matter required a more detailed consideration of the material on record. We, therefore, set aside that part of the decree which relates to the counter-claim and remit the matter to the DRAT to reconsider the matter after hearing the parties and to record the findings as to the extent of the counter-claim which may be allowed.”

(e)        DRAT reexamined the entire matter and reversed the original judgment of DRT.

(2) Analysis of above Important Judgment on DRT Counter-claim:- 

The judgment reveals lot of important aspects of pleadings and trial, our comments are as under:-

(a) The borrower in his counter-claim has claimed only direct loss sustained. Various other legally permissible loss and damages like profit lost, mental tension, image and reputation, aggravated damages, exemplary damages etc. have not been claimed.

(b) The above deficiency has not been revealed at the level of DRT, DRAT, High Court and Supreme Court. That is why we have been emphasizing that the person who is drafting the pleadings must have mastery of facts and mastery of law. The facts include those pertaining to banking, industry and finance. The law includes banking law, law of torts, law of damages, law of evidence, CPC, contracts, law relating to principles of natural justice etc. That is why we took up the job of preparing the pleadings since 2001 and all our clients have benefited due to our perfect pleadings. We have also found many borrowers suffering as proper pleadings have not been prepared.

(c) The Supreme Court remitted the case to DRAT. The said DRAT conducted the retrial. This should have been resisted by the borrower. The retrial should have been conducted by the DRT.

(d) No new matter or documents were permitted in the said retrial. This also should have been resisted. All the deficiencies should have been corrected in the said retrial in the interest of complete justice.

(e) The retrial conducted by the DRAT was also defective and objectionable. This also should have been objected to by the borrower.

(f) A thorough analysis of this case confirms our oft repeated insistence that one has to be perfect in the pleadings as well as adjudication on every date right from the day one.  The DRT is the court of first trial where all the disputed facts are to be judicially determined. Since everything of the counter-claim is resisted and denied by the bank, the whole process is automatically delayed. No hurry to cut short the adjudication should be tolerated otherwise it will result in incurable mistake.     

(3) Suspected Reaction of SC on Counter-claim:- 

One of our clients has expressed his doubt whether SC will permit decree of Counter-claim on the Banks. Our opinion is as under:-

(1) SC as any other court in the country has to abide by law, procedure of law and the Constitution of India.

(2) Since all odds are against the borrowers, we have been advising our clients that they have to be very careful right from the day one so that no court in the country including the SC is able to locate any legal flaw in the procedure of law as well as application of law at any stage of the adjudication.

(3) Facts of each and every case differ and hence no two cases can be compared in the factual aspects. It is only in regard to the law and procedure of law the SC can find deficiencies.

(4) The first most important stage is ‘Preparation of Pleadings of the Counter-claim’ It must  be prepared by a person having mastery of law and mastery of facts. Further the trial has to be conducted thoroughly by such DRT advocate who are quite knowledgeable, proficient and experienced in trials including those involving principles of natural justice.

(4) Law of Evidence fully applicable in DRT:- 

As per the DRT Act, while the DRTs are not bound by CPC but they are required to be guided by the principles of natural justice. As per the Supreme Court, the DRTs can travel beyond CPC. Thus the DRTs are supposed to be an expert court in the matter of banking recovery disputes with the objective of expeditious trials.

The DRTs as trial courts have to abide by the Law of Evidence. Past 10 years we have observed that the trials in DRTs require proper advocates who are experienced in trials. Since these advocates should have expert knowledge in factual aspects of banking, industry and finance, they are required to apply law of evidence particularly in respect of documentary evidence. They are also required to be expert in cross-examination of the bank officials.

Looking to the above requirements, we have created an expert Advocacy wing to conduct arguments before DRTs and DRATs as well as cross-examination of bank officials.  

(5) Standard of Proof for Counter-claim:- 

We have closely observed the working of DRTs for more than a decade. We find that the DRTs are not independent rather they are biased towards the banks. Further the standard of proof for the borrowers and guarantors is very high compared with that for the banks. Hence the trial of counter-claim becomes highly challenging and difficult. One has to be more than expert in application of law of evidence in proving each and every disputed fact. We are of the opinion that one has to be cautious right from the stage of pleadings when it must be thought of and planned as to how he is going to prove his averments. Since the required standard of proof is very high, lot of ground work has to done right from the beginning. All the provisions of Law of Evidence particularly those pertaining to the documentary evidence must be mastered and practically applied in respect of all the facts contained in the counter-claim. 

(6) Various  models of Advocacy for DRT Defence 

We have observed various models of advocacy in DRT Defence. Assuming that the pleadings of counter-claim has been prepared by us. Our comments are as under:-

(a) Client takes active interest. He is in constant touch with us for our guidance and advice. In turn he himself interacts with his advocate. All interim documents are prepared by the client and his advocate. This model depends on client and his advocate. If they are competent, the model may be successful as well as economical.

(b) Client takes active interest and employs our junior representative local advocate. Interim applications and other documents are prepared by us at our professional charges. Crucial arguments are handled by our advocate. This model is successful but comparatively costly.

(c) Complete work is handled by us including complete drafting and advocacy. This model is highly successful but is costly.”


(2) Parliament Passes New Bill for Debt Recovery


The following news item is self explanatory:-

Parliament passes bill for easier debt recovery

The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016, will not, however, apply to loans for agricultural land as well as student loans. 

Aug 10, 2016, 09.22 AM 

Parliament today passed a bill which empowers banks to confiscate security in the case of loan default, a development that assumes significance in view of the episode surrounding industrialist Vijay Mallya.

The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016, will not, however, apply to loans for agricultural land as well as student loans.

The bill, approved by Lok Sabha last week and cleared by Rajya Sabha today, amends four laws -- Sarfaesi Act, DRT Act, Indian Stamp Act and Depositories Act.

Replying to a debate on the bill, Finance Minister Arun Jaitley emphasised the need for "firmness coupled with fairness" in recovering bad loans. He said the banks must be empowered to take effective legal action against defaulters and the insolvency law, securitisation law and DRT law are steps in that direction. "So far the laws were in favour of the defaulters. We tried to correct the balance. There should be firmness, coupled with fairness in recovery of loans," he said.

He said banks should take a "compassionate view" on education loan defaults but there will be no waiver and somebody will have to pay. The Minister further said that fears regarding farm and education loans are "exaggerated".

Jaitley said banks are supposed to give loans and "if banks start squeezing loans", there will be no economic growth. "The cause of worry is when loan becomes either NPA or stressed asset or the activity in which the loans are invested is not generating money," he said adding in some cases there will be willful default.

The development assumes significance as it comes against the backdrop of the episode involving Mallya, who owes Rs 9,000 crore to banks, but has left the country to take refuge in England.

Jaitley said if loan has been taken it must be repaid. The Minister said stressed assets were mostly in sectors such as steel, power and textile.

The law simplifies the procedure which ensures quick disposal of pending cases of banks and financial institutions by Debt Recovery Tribunal (DRT). DRTs will have to dispose a case in 180 days and the affected party will have to deposit 25 per cent of the amount if he or she chooses to appeal against the order. There are around 70,000 loan related cases pending in the DRTs. To further stress his point, he said 20 people sitting on bank money prevent the lender from giving credit to another 20,000 people. It should not happen that a bank manager has to keep awake all night after he clears a loan, he said.




DRT Solutions Weekly Mail – 426th Issue dated 5th August ’16

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


(1) Judicial Appointments - Need for Reform

The following news item is self explanatory:- 

Need for reform

August 19, 2016


Formal procedural framework to select judges, guaranteeing openness and transparency, is necessary to counter the trust deficit affecting the collegium system.

Neither the Constitution nor any statute provides for an instrument like the Memorandum of Procedure (MoP) for judicial appointments in India. Like the collegium, the MoP is also a judicial invention imposed on the executive by the judgment in the Second Judges’ case (1993). Last year, the Supreme Court struck down the statute for the National Judicial Appointments Commission (NJAC) and the 99th Constitutional Amendment by its 1st NJAC judgment of October 16, 2015, which resuscitated the collegium. The most unfortunate part of the judgment was that it had the effect of deluding the people, by its pomposity, about “glasnost” and “perestroika” in the judiciary. Through a tumultuous judicial call, the entire nation was requested to put forward suggestions for reforms. The public in the republic responded. The suggestions ran over 11,500 pages, as acknowledged later by the Supreme Court in its 2nd NJAC judgment of December 16, 2015.

It was this judgment that again asked the Centre to come up with a new MoP. Practically, the entire rhetoric on reforms in the 1st NJAC judgment stood reduced to this MoP. Recently, the Centre, by way of the revised MoP, sought a system which it claimed would be relatively translucent and adorable. The Centre’s plea for some limited privileges for itself, the Attorney General, and the Advocate General in the matter of selection to the higher judiciary was turned down by the collegium (“SC sends back draft on judges’ appointment”, The Hindu, May 5, 2016).The MoP arms the government with the power to reject a nomination citing the “national interest”. The Centre is not bound to reconsider a recommendation once rejected. The collegium, finding such clauses “undesirable”, returned the MoP to the government (“High Court faces shortage of 458 judges, say latest data”, The Hindu, June 3, 2016). The number of vacancies of High Court judges has grown to 470 (The Hindu, July 5, 2016).

The revised MoP, which is substantially a reiteration of the earlier one, was again turned down by the collegium, according to the news reports of July 7, 2016. A uniform complaint redress mechanism against the judges, substituting the earlier “in-house mechanism”, was also sought by the government, according to the reports. The Law Minister responded to the rejection in a conciliatory tone, clarifying that “the government is willing to work in harmony with the judiciary” (NDTV, July 7, 2016). This means that no fundamental change is going to be effected in the process or procedure. The opaque system is to stay on, unswayed by possible cosmetic changes. This, in turn, would invigorate judicial supremacy, which T.T. Krishnamachari famously described as “Imperium in Imperio”.

No democracy can dispense with a formal system and a clear procedure for judicial appointments, which should be predetermined and structurally guaranteed. We have, in effect, neither a constitutional provision nor any legislation on the subject. In a consecutive adjudicative tragedy, Articles 124 and 217 of the Constitution, dealing with the appointment of judges to the Supreme Court and the High Courts, were practically done away with, as per the Second and Third Judges’ cases of 1993 and 1998 respectively, which installed the system of the collegium. Last year’s NJAC verdicts just repeated, extended and expanded the tragedy. They had an exacerbating effect on our polity. The Constitution was practically rewritten, though the authority to do so is vested only with Parliament and not with the court. The National Lawyers Campaign for Judicial Transparency and Reforms, through its letter dated November 2, 2015, bemoaned: “The judgment of the Supreme Court in the NJAC case, running into more than 1,000 pages, means that what legislative or administrative policy the country should adopt could not be decided by the people through their elected representatives.”

In the 2nd NJAC verdict, the court noted that the “practice (of MoP) had been consistently adopted” following the Second Judges’ case (1993). The court asked the Centre to finalise the existing MoP “by supplementing it in consultation with the Chief Justice of India”. It was further held that “the Chief Justice of India will take a decision based on the unanimous view of the collegium”. Though it was opined that factors such as (i) eligibility criteria; (ii) transparency in the appointment process; (iii) secretariat; and (iv) complaint redress mechanism are to be considered, there was no “wholesale change” in the matter, to use the words of Justice Jagdish Singh Khehar. The “trust deficit” that “has affected the credibility of the collegium system”, as lamented by Justice Kurian Joseph, remained unaddressed in the verdict.

The primacy of the executive or the judiciary has been the moot question whenever the issue was adjudicated or legislated in India. Both the executive and the judiciary wanted to have the final say and this fissure is one of the greatest misfortunes in India’s constitutional history. A procedural framework for judicial selection is quite feasible and possible, provided there is a will to formalise the method and to institutionalise it by way of an independent commission that guarantees objectivity and openness. Lobbying is an unhealthy means for selecting the umpires of democracy.

Though the Supreme Court emphasised reform in the 1st NJAC judgment, it took a highly undemocratic position in the 2nd NJAC judgment. The plea for eligibility (as different from suitability) got reduced to the prescription of a minimum age and such other “innocuous” aspects since it appeared that the collegium did not favour any radical shift. The secretariat that the legal fraternity aspired for as a centre for judicious selection became a storehouse of data on those who were fortunate enough to be close to the power centre.

Unfair system

In such a system, denial of opportunity to ordinary hands would be ensured and secrecy preserved as a “great Indian judicial value”. The “kin syndrome”, a term coined by Justice V.R. Krishna Iyer, would hold the field with judges choosing those lawyers who are in their own image while those from “non-traditional backgrounds” would be practically fenced out. Thus, the collegium after the NJAC verdicts is in no way different from the one that has functioned until now. In my view, it is fallacious to think about reforms either by way of the collegium or by way of the MoP, both of which are ostensibly unconstitutional.

The NJAC judgments empirically demonstrate that judicial reforms do not happen from within. They also show that any move for executive predominance would be curtailed in the review jurisdiction, relying on the doctrine of “judicial independence” as interpreted by the judiciary itself, which would project itself as the “‘basic structure” of the Constitution. The basic structure doctrine, evolved in Kesavananda Bharati (1973), is, again, the court’s own creation, used to preserve another creation, namely, the collegium.

Global trends

According to the Commonwealth Latimer House Principles, judicial appointments need to be made by following “clearly defined criteria and by a publicly declared process” (Principle No. IV (a)). Relying on the same, Jan van Zyl Smit says: “The criteria for judicial office will usually be determined to a greater or lesser extent by the Constitution or by statute, although there may be some scope for commissioners to bring to bear their experience and expertise if the Commission is authorised to elaborate the criteria for particular judicial posts, or develop guidelines or tools for use when evaluating individual candidates” (British Institute of International and Comparative Law, 2015).

The MoP in India and its latest additions are apparently antithetical to the practice elsewhere in the Commonwealth, which Smit does not analyse. He says that he is “surprised and fascinated” by the 1st NJAC judgment (“Judicial Appointments in the Commonwealth: Is India bucking the trend?”, U.K. Constitutional Law Association, 2016). As acknowledged by him, when “more than 80 per cent of the Independent Commonwealth jurisdictions have a Commission, established by law or under the Constitution”, any euphoria, or even a gesture of optimism, based on India’s collegium is unfounded, given the flexible and uncertain characteristics of the MoP. It is doubtful whether the MoP is a “law” even for the limited purpose of Article 13 of the Constitution. Thus, the collegium stays far away from the “Second Wave Commissions” found elsewhere, as noted by Smit. When the process of selection and appointment does not provide for “advertisement and open applications”, and since the process remains “confidential”, as held by the Supreme Court, Smit’s hope that the “Court’s recommendations would constitute valuable improvements” would remain surreal.

Practising advocates continue to form the principal source of judicial appointments in India. A judge is essentially a public officer. James E. Moliterno reiterates his position by indicating that lawyers who are “client centred” “may have an important disadvantage in the role of public official” (Fordham Law Review, Volume 77, Issue 4). Daniel Markovits, while explaining the structural character of a lawyer’s function, puts the issue in perspective: “ [T]he effort to connect partisan lawyering to the pursuit of justice” is “both theoretically and practically unsatisfying” (Three Issues in Legal Ethics, Daniel Markovits, Yale Law School, 2010). Article 124(3) (c) of the Indian Constitution says about appointing “a distinguished jurist” as a judge of the Supreme Court, which, however, never happened in the country. A broader platform for judicial appointments should resort to a larger spectrum of academics, jurists, researchers, and also intellectuals with a legal background.

In a recent study, the authors Graham Gee and Kate Malleson, while praising the “robust processes” in the United Kingdom that have “identified suitably qualified candidates of good character”, worried about “the slow progress in increasing judicial diversity” (U.K. Constitutional Law Blog, May 6, 2014). Their plea is to “remove barriers that might prevent non-conventional candidates from being called for interview”.

The pre-selection debate in the United States Senate on judicial candidates is another captivating idea. South Africa and Kenya have also opted for open interviews as part of the selection process. Malaysia and Nigeria have gone for sizable commissions. In Bulgaria, according to Peter Roudik, the National Assembly has adopted a law to amend the Constitution in order to establish a Supreme Judicial Council for selection to the highest national courts (Global Legal Monitor, December 30, 2015). The U.K. has an evocative institutional model, a 105-member secretariat, to ensure objectivity and transparency in the selection process. There were concerns, however, when the staff strength of the secretariat was reduced later because of budgetary constraints.

The details of global trends were placed before the Supreme Court after the 1st NJAC judgment through detailed written submissions. But the plea for radical reforms was rejected by the apex court, which did not want to do away with the collegium system. The court, after noting that it had a “challenging responsibility to embark and reflect” on the suggestions, did not, however, synthesise them appropriately or prescribe any fundamental change.

Simon Evans and John Williams recommend “a modified version” of the U.K. system even for Australia, where the opportunity to apply for judicial posts is already recognised. According to them, the U.K. model “is a cautious and incremental development that does not break with Australia’s legal traditions” (“Appointing Australian Judges: A New Model”, 2008). India needs to follow suit. The NJAC judgments do not foreclose further legislative imagination, as commonly perceived. A valid law on the subject is worth attempting, provided it satisfies the characteristics of curative and competent legislation. The legislative potential in such situations was underlined by the apex court in Indira Nehru Gandhi (1975) and Hari Singh (1972). The Centre has to assiduously try a new law on the subject for revamping the system of judicial appointments and in that process the executive should forsake its “political” interests. It should also defend the democratic cause staunchly when subjected to judicial scrutiny in future.

(2) New Bill Passed – Fast Track Debt Recovery

The following news item is self explanatory:-

Govt moves to avoid Vijay Mallya-like embarrassment, LS passes Bill to fast track debt recovery


02 Aug 2016, 


In a move that could prevent the government landing in a sticky situation in the case of loan defaults, the Lok Sabha on Monday passed a Bill that seeks to provide for more stringent provisions to recover dues. The Bill passed in Lok Sabha on Monday amends four different Acts to empower banks to take possession of collateral in the case of loan default. 

The new law will not apply to farm lands and Finance Minister Arun Jaitley also promised a compassionate view on education loans. 

One of the big challenges that we face is with regard to the enforcement of securities and the recovery of debt by financial institutions," Finance Minister Arun Jaitley said while moving the Bill in the Lok Sabha.

To avoid repetition of Vijay Mallya-like loan default matter, the government in May introduced the bill to amend existing law to provide for expeditious disposal of debt recovery applications pending before tribunals.  

The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016, which was passed by voice vote in the Lok Sabha, seeks to amend four laws — the Sarfaesi Act, the DRT Act, the Indian Stamp Act and the Depositories Act.

The changes in the Sarfaesi Act allow secured creditors to take over a collateral against which a loan had been provided, upon default in repayment. It also provides that the process will have to be completed within 30 days by the district magistrate.

Jaitley said the banks must be empowered to take effective legal action against defaulters, and the insolvency, securitisation and DRT laws are steps in that direction.

The present law simplifies the procedure by which there will be quick disposal of pending cases of banks and financial institutions by the debt recovery tribunal,” Jaitley said.

Jaitley said farm land has been kept out of the purview of the Act. On concerns expressed with regard to education loans, the minister ruled out any waiver but said that “some compassion” has to be shown if someone is unemployed and till he gets a job, but the loan cannot be written off.

Pitching for speedier recovery of debt, he said, “We cannot have a banking system where people take loans and do not repay.”

The Bill, which was introduced in the Lok Sabha in May, aims at faster recovery of debt by PSU banks, which are grappling with Rs 4 lakh crore of NPAs and Rs 8 lakh crore of stressed assets. The Bill was then referred to the Joint Parliamentary committee. 

“This Bill is an offshoot of the Insolvency and Bankruptcy Code,” Jaitley had said at that time. 

The move assumes significance as it comes against the backdrop of the case involving liquor baron Vijay Mallya, who owes nearly Rs 9,400 crore to banks, but has left the country to take refuge in England.

Around 70,000 cases are pending in Debt Recovery Tribunals and the proposed amendments are being aimed to "facilitate expeditious disposal of recovery applications", as per the Bill's Statement of Objects and Reasons.



DRT Solutions Weekly Mail – 425th Issue dated 29th July ’16

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

(1) SC Notice to Mallya – More Time to DRT TO Complete Hearing

The following news item is self explanatory:-

SC Issues Notice To Vijay Mallya, Gives More Time To Debt Recovery Tribunal To Complete Hearing

New Delhi | Updated: July 25, 2016 

The Supreme Court on Monday gave more time to Debt Recovery Tribunal to complete hearing in Mallya loan default case and issued a notice to Vijay Mallya, asking the liquor baron to disclose his assets

The notice was issued over contempt petition filed by the banks.

This is the second notice issued by SC to Mallya in regards to declaration of his assets.

Earlier, the Attorney General told the Supreme Court that Mallya’s assets abroad were far in excess to loans taken by him.

(2) JPC Proposal on SARFAESI Act

The following news item is self explanatory:-

JPC proposals on Sarfaesi Act, DRT to ease business

TNN | Jul 23, 2016


New Delhi: The unanimous recommendations of the joint parliamentary committee on the debt recovery tribunal and the Sarfaesi Act are in sync with the bankruptcy code that was passed in the last session of Parliament and will help improve ease of business and reduce the non-performing asset problem, committee chair Bhupendra Yadav said. 

The report of the JPC contains measures that go a long way to assure investors of transparent tax policies and security of their funds in the event of disputes, Yadav said. He expressed the hope that the JPC report would be considered by the Cabinet soon so that an amended law can be passed in the current monsoon session of Parliament. The committee has negotiated tricky terrain like designation of agricultural land that will now be left to the states.

"The business of designating tribal, forest, agricultural land is not easy and often varies from state to state," explained Yadav. The MP, who has previously headed committees on the GST and bankruptcy code, said he saw the 21 major amendments recommended by the JPC being an important part of a series of measures taken by the Modi government to make business more transparent and reduce the scope for discretion and corruption. Yadav said the report calls for fixing a 30-day window to submit a view on the status of properties being taken over by banks and financial institutions, reducing the possibility of delays and connivance between officials and affected parties.

The committee also felt that a vacancy in a tribunal need not delay proceedings as a similarly placed judicial official can also hear a case relating to debt recovery and the securitisation of financial assets and enforcement of security interest Act. Yadav said there were some 70,000 disputes that add up to around Rs 5 lakh crore, and the changes recommended to the two Acts will help reduce pendency with several cases relating to individuals and corporates. The contentious issue of tenancy in properties that are to be taken over has also been addressed with the tribunal now expected to reach an assessment on whether tenants predate the dispute. "This is necessary as sometimes tenancies are created to delay or stall the recovery process," the MP explained.

The committee has also suggested that non-financial institutions also be allowed to take over stressed assets apart from asset reconstruction companies. This would help in reducing NPAs, the panel has held.


DRT Solutions Weekly Mail – 424th Issue dated 22nd July ’16

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(1) Hyderabad HC – Paperless – Country’s First

The following news item is self explanatory:-

In a first, Hyderabad HC goes paperless with e-courts

By Express News Service

Published: 17th July 2016 07:22 PM


HYDERABAD: The High Court of Judicature at Hyderabad for the states of Telangana and Andhra Pradesh has created a history of sorts by becoming the first court in the country to set up an e-court.

Supreme Court Justice Madan B Lokur inaugurated the first ever e-Court at the High Court premises here on Sunday.

“E-Courts (paperless courts) will ensure easy and better access to justice for public and will also provide solution for large number of pending cases in the country,” said Justice Madan B Lokur, who is the incharge of e-Committee of SC.

According to him, e-Court will ensure easy and better access to justice for people and will also make the work of judges, advocates and all those related with judiciary a lot more effective.

“E-Court system is extremely user friendly and soon an e-Court will be set up even at Supreme Court. People are asking more and more questions to us and we have to gear up to face the future challenges by integrating and engaging technology in judiciary,” said Justice Madan Lokur.

Giving examples of digitising case records and video conferencing, the benefits accrued from introduction of technology in judicial process, the Supreme Court judge said in future all courts will be turned into e-Courts and urged judicial officers to gear up for the change.

Acting Chief Justice of High Court Dilip Bhosale said efforts are being made to set up e-Courts even at all other courts in Hyderabad and also in various district courts.

“Digitisation of records will be completed in a year and we are also actively taking steps to introduce e-filing of cases from June 2017,” added Chief Justice Bhosale. 

(2) Over 8.100 Willful Defaulter Owe Banks Over Rs 76,000 Crore

The following news item is self explanatory:-

Over 8,100 willful defaulters owe banks over Rs 76,600 crore: Arun Jaitley


There are 8,167 wilful defaulters who owe banks an amount of Rs 76,685 crore and 1,724 FIRs have already been filed in 2015-16, government said on Tuesday.

The details were provided by Finance Minister Arun Jaitley in Rajya Sabha during Question Hour, where he also said that a Joint Committee of Parliament is presently looking into a Bill relating to debt recovery which aims at empowering banks to take more effective steps in dealing with default situations.

Congress leader Anand Sharma raised the matter relating to many positions in the Debt Recovery Tribunals being vacant.

Jaitley said Sharma was “perfectly right that the Debt Recovery Tribunals have to be made more effective.”

He said in the Debt Recovery Bill that the Committee was examining, the government has proposed increasing the number of these tribunals. He also said that several notifications regarding filling up of vacant positions are in the pipeline.

Congress member Digvijay Singh expressed concern over the poor conviction rate in such matters which, as per the details provided by the Finance Minister, was just 1.14 per cent during 2015-16.

To this, Jaitley said the convictions depended on the kind of evidence that investigation agencies are able to produce.

He said that ‘wilful defaults’ pertained to those cases where someone who has the capacity to pay and does not do so, or where money has been siphoned for a purpose which is not originally intended for.

The Minister said many defaults that banks have been seen pertain to sectors like steel, infrastructure and power and government has worked in the last one and a half years to address problems of these sectors.

He said several other measures have been taken to help banks in such situations and added that the insolvency law has also been recently passed.



DRT Solutions Weekly Mail – 423rd Issue dated 15th July ’16

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(1) Over 2 Crore Cases Pending Verdict

The following news item is self explanatory:-

Over 2 Crore Cases In Indian Courts Await A Verdict

All India | Press Trust of India | Updated: June 26, 2016 18:47 IST

 India has over 2.2 crore pending cases and more than 31 lakh of them have not even been assigned the next date of hearing.

According to the National Judicial Data Grid data as on June 24 this year, 2,20,75,329 cases are pending in various courts. Out of these, 31,45,059 (or 14.25 per cent of the total pending cases) have been categorised as 'undated cases'.

Of the 31 lakh undated cases, 21,75,750 are criminal cases, while 9,69,309 are civil in nature.

According to the data available, Gujarat leads with 20.46 per cent undated cases, followed by West Bengal with 14.96 per cent cases, Madhya Pradesh with 13.13 per cent and Delhi 3.22 per cent.

At a recent meeting of the Supreme Court eCommittee, the Himachal Pradesh High Court had suggested introduction of "some sort of incentive" for reducing the number of undated cases.

The eCommittee of the Supreme Court was set up in 2004 to assist the Chief Justice of India in formulating a national policy on computerisation of Indian judiciary and advise on technological, communication and management-related changes.

More than 10 per cent of the pending cases have remained unsettled for over 10 years.

(2) Access to Justice is a Fundamental Right Pending Verdict

The following news item is self explanatory:-

Access to Justice is a fundamental right

Wed, 13 Jul 2016-08:05am , Mumbai , dna


Thirty million cases are pending in Indian courts. According to the Law Minister this is a “worrisome backlog.” Clearly, several causes contribute to this enormous judicial pendency in India. The reasons would include improper infrastructure, the inadequate budget allocation for the courts, the dire need for judicial reforms and case management, the shortage of judges and the need for efficient alternative dispute resolution mechanism. Two significant reasons for the exorbitant number of pending cases are the high vacancy of judges and minuscule judges-to population ratio.

With the recent elevation of Justice AM Khanwilkar, Justice DY Chandrachud, Justice Ashok Bhushan and the former additional solicitor general L Nageswara Rao as Supreme Court judges, the working strength of SC judges has reached 29 as against the total sanctioned strength of 31.

Further as per the 2015 statistics, in the District and Sub-ordinate Courts, the total strength and working strength was 20495 and 15421 respectively. 5074 posts of District Judges were vacant as on June 30, 2015. The vacancy of judges in High Courts today is 44%. The District Court vacancy position is about 25%. India has one of the highest number of judges in the world, but yet the judges to population ratio is significantly lower as compared to the judicial systems in developed countries. In 1987, the Law Commission of India in its 120th Report recommended that the number of judges be increased from 7,675 to 40,357, increasing the ratio of judges from 10.5 to 50 judges per million population. Based on the above recommendation, the present Judges to population ratio works out to 13 judges for one million people. This is one of the lowest ratios in the world. In All India Judges ‘Association & Ors. vs. Union of India & Ors, the Supreme Court took note of the inadequacy of the number of the judges, and said that since an independent and efficient judicial system is part of the basic structure of the Constitution, it is important to have an adequate number of judges for a successful justice delivery mechanism. .

In the recent Chief Justices Conference, the Chief Justice of India TS Thakur referring to the 120th Law Commission report, made an appeal to the Centre to increase the number of judges to 40,000 to adjudicate the ever growing number of pending cases in India. The CJI said that infrastructure and manpower for the judiciary remain far shorter than what was recommended by the Law Commission, almost three decades ago. Access to justice is a fundamental right of every citizen, and it is the duty of the Parliament to ensure that the citizens are not denied of rights.


DRT Solutions Weekly Mail – 422nd Issue dated 8th July ’16

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(1) Shrenuj Seeks Legal Opinion Over Bank Action

The following news item is self explanatory:-

Shrenuj Seeks Legal Opinion Over Bank Action

Jul 3, 2016 10:35 AM   By Rapaport News



ICICI Bank on May 16 appointed a receiver for Shrenuj Far East Limited, the company’s Hong Kong subsidiary which has a $15 million credit limit with the bank, Shrenuj said in a note to the Bombay Stock Exchange (BSE). ICICI then pursued an order from India’s debt recovery tribunal to add Indian inventories to the assets that Shrenuj Far East had already given up to the receiver. 

“In its apparent over-enthusiasm, ICICI Bank Limited approached the DRT-III [debt recovery tribunal] in India and sought an ‘ex-parte’ order for attaching all the inventories in India and placing restrictions on the international movement of the promoters,” Shreyas Doshi, chairman of Shrenuj, said. “This order was sought on frivolous grounds, far from the factual situation.” 

Doshi, along with group executive director Vishal Doshi, were named by The Economic Times as the people who have been prevented from leaving India. He stressed the bank’s action will not impact the company’s current operations but it does jeopardize the rights of the other 18 banks who form the lending consortium in India. 

“The company is in the process of seeking a legal opinion to challenge this ex-parte decision of DRT-III and take remedial measures,” Doshi said. 

The news followed 
Shrenuj’s decision to “rationalize” its workforce after annual revenue slumped 34 percent and the company swung to a loss. The gem cutter has faced “severe liquidity pressure,” accountants Rajendra & Co wrote in an independent auditors’ report May 28. 

ICICI Bank did not immediately respond to a request for comment. The BSE has requested further clarification from Shrenuj about the matter.


(2) Supreme Court Asks Unitech to Deposit Rs 5 Crores

The following news item is self explanatory:-

Supreme Court asks Unitech to deposit Rs 5 crore for delay in handing flats

Jul 02, 2016, 01.51 AM IST


NEW DELHI: The Supreme Court has askedreal estate firm UnitechBSE 2.31 % to deposit Rs 5 crore by August 5, 2016 for delaying the completion of a high-end residential project Burgundy it had launched on the Noida-GreaterNoida Expressway near New Delhi. 

"If the amount is not deposited, liberty is granted to the respondents to move an application for contempt of this Court and in that event, the Directors of the petitioner-company may be sent to custody," Justice Dipak Misra and C Nagappan said in their order. 

The court had earlier asked the company to deposit the amount by June 10, 2016 after it had failed to comply with a 2015 order of the National Consumer Disputes Redressal Commission (NCDRC). "The amount so deposited shall be kept in a short term fixed deposit in the 
UCO BankBSE -0.11 %, Supreme Court Compound, New Delhi, so that interest can be accrued on the same." 

The court revised the date for depositing the money as August 5 after Unitech filed an application for extension of time to pay the amount. 


An email questionnaire sent to Unitech did not elicit any response. 

On the complaint of two home buyers—Diwakar Mishra and Vinay Kumar Singh—who had bought apartments in the project in October 2010 and were to get possession by April 2012, NCDRC had asked Unitech to offer possession of the apartments on or before October 31, 2017 and also pay "compensation in the form of simple interest @ 12% per annum w.e.f. 16.04.2013 till the date on which possession is offered to them or till 31.10.2017, whichever be earlier. The interest payable till 31.12.2015 shall be paid in three equal instalments. The first instalment shall be paid by 10.01.2016, the second instalment by 10.02.2016 and the third instalment by 10.03.2016. The compensation in the form of interest for the period w.e.f. 01.01.2016 shall be paid on monthly basis by the 10th of each succeeding month." 

"The grievance of the complainants is that despite they having paid more than 95% of the agreed sale consideration to the opposite party, the possession has not been offered to them and in fact the construction of the flats is still far from complete," the NCDRC order had said.


DRT Solutions Weekly Mail – 421st Issue dated 1st July ’16

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(1) SBI Seeks Recovery Certificate for Mallya

The following news item is self explanatory:-

SBI seeks DRT certificate to recover debts from Mallya


Published: 29th June 2016 11:19 PM

Last Updated: 29th June 2016 11:19 PM

BENGALURU: The State Bank of India today pleaded before the Debt Recovery Tribunal here for granting recovery certificate to start the proceedings against liquor baron Vijay Mallya to recover debts from him in the alleged bank loan default case.

"We have not been able to trace the money (USD 40 million) which was transferred to Mallya by Diageo Plc and subsidiaries. Therefore, we request the honorable Tribunal to  grant us recovery certificate to start proceedings against  Mallya to recover our debts from him," SBI Counsel Nagananda  said.

He made the plea while making a submission on its original application seeking recovery of debts from Mallya and his companies before DRT Presiding Officer C R Benakanahalli.

DRT had on March 7 passed an order stalling the USD 75 million transaction between Diageo Plc and its  subsidiaries and Mallya.

Making submissions on Kingfisher Finvest India versus the bank case, Nagananda submitted the defendants - Mallya  and Kingfisher Airlines Limited - have not filed any denial  against allegations of fraud made against them, which makes  the bank's case strong to recover debts from Mallya and his  companies.

"Mallya and Kingfisher have not submitted any denials against the allegations of fraud made by us against them and hence it makes our case strong to recover  debt," he said.

Nagananda contended Kingfisher Finvest was fully owned by Mallya, in contrast to the submissions made by the company's  counsel in the Tribunal earlier.

Kingfisher Finvest's counsel had submitted that the company was neither a party nor a guarantor for the loans  taken by Kingfisher Airlines, United Breweries Holding Limited (UBHL) or Mallya and just was a pledgor, and hence as  per existing laws action cannot be initiated against the pledgor.

Nagananda also said the bank has been making sincere and genuine efforts to recover debt from Mallya and his entities but he had been thwarting the bank's efforts to take over his properties by seeking adjournments in courts.

Hence, Kingfisher Finvest India's pleas could be heard at the disposal stage of the final hearing, he said.

Mallya, whose now-defunct group company Kingfisher Airlines owes over Rs 9,000 crore (Rs 90 billion) to a consortium of 17 banks led by SBI, had left the country on March 2 and is in the UK.

The beleaguered businessman has been declared a  proclaimed offender by a special PMLA court in Mumbai on a plea by the Enforcement Directorate in connection with its money laundering probe against him in the alleged bank loan default case.

(2) Judges’ Appointments

The following news item is self explanatory:-

Government says no to crucial objections of Supreme Court collegium

The collegium, while returning the government’s draft, was of the view that it was an attempt by the government to circumvent judicial pronouncements and settled law on appointments in the higher judiciary.

June 28, 2016 3:39 am


The government is learnt to have decided not to accept many crucial recommendations and observations made by the Supreme Court collegium regarding the draft memorandum of procedure (MoP) for appointments to higher judiciary.

Among other things, transparency — or the lack of it — in the manner in which the collegium feels the appointment process should be carried out is turning out to be a major sticking point and the same will be conveyed to the Chief Justice of India (CJI).

The government is also of the opinion that the fear of the collegium that a clause in the draft MoP, which will allow the government to reject any recommended name on grounds of national security, is unfounded.

“Names will still come from the CJI. The government, if such a case arises, will share with the CJI any information that it has about a recommendee which makes it clear that his appointment will not be in the interest of the country. Also, the issue of Healthy Convention, which the judiciary refers to while arguing against such a clause, was not a mandamus that has to be followed. Read the Second Judges Case judgment,” a source told The Indian Express.

In its judgment in the Second Judges Case — Supreme Court Advocates-on-Record Association versus Union of India (1993) — the Supreme Court, while dealing with the issue of “non-appointment of anyone recommended on the ground of unsuitability”, had said that in case, “after due consideration of the reasons disclosed to the CJI, the recommendation is reiterated with the unanimous agreement of the other members of the collegium, then that appointment as a matter of healthy convention ought to be made”.

It is this sentence that the government is planning to cite to buttress its stand that its objection to any candidate recommended by the collegium merits more consideration than simply reiteration.

The Chief Justice of India T S Thakur had last month conveyed the collegium’s views to the government, voicing the collegium’s outright rejection of many of the clauses of the draft MoP finalised by a committee of ministers headed by External Affairs Minister Sushma Swaraj.

Work on bringing in a new MoP started after the judgment of a five-judge bench of the Supreme Court, headed by Justice J S Khehar in October 2014, declared as “unconstitutional and void” the National Judicial Appointments Commission (NJAC) Act passed by Parliament. The bench later directed that a new MoP be finalised by the government in consultation with the CJI.

The government sent the draft of the MoP to the CJI on March 22 while the CJI returned the same with the views of the collegium on May 23. The government will write to the CJI soon, sources said.

The government, after a series of meetings, has now decided to convey to the CJI that most clauses in the draft MoP to which the collegium has objected to reflect the spirit of judgments of the Supreme Court in the second, third and fourth (NJAC case) Judges cases, and also the crux of the reports finalised by the Supreme Court-appointed amicus after going through suggestions received from the public and others after the NJAC judgment.

At a meeting last week, where Union Law Minister D V Sadananda Gowda was also present, the consensus was that the collegium’s views don’t take into consideration that the new MoP is aimed at framing a transparent “eligibility criteria” for those considered for appointments to higher judiciary.

“There has to be fixed criteria to be followed by each high court while recommending names of lawyers and sessions judges for elevation to the HC bench. We want HC collegiums to consider 15 years record of each sessions judge while considering his case, so that performance as a judicial officer is the main criteria while making the recommendation, whereas the SC collegium wants to focus on seniority,” said a source in the Union Ministry of Law.

“Similarly, for lawyers, who are being considered for elevation, we are keen that the number of cases in which they have appeared should not be the sole criteria — focus should be on the quality of that lawyer’s work, something that is easily found out by going through the judgments in important cases he has appeared. We are also not in agreement with the view of the collegium on the issue of age bracket of those being considered for elevation. While the collegium feels that persons between the age of 44/45 years and 58 years can be considered for elevation, we are keen that the upper age limit should be pegged at 55 years,” the source said.

The government is of the view that while deciding to make additional judges of the HC — appointed for a period of two years — permanent or even re-appointing them after completion of two years, the collegium isn’t “strictly complying” with the existing MoP.

“The existing MoP clearly says that the Chief Justice (collegium) while recommending an additional judge as a permanent judge, should furnish statistics of month-wise disposal of cases and judgments rendered by the judge concerned as well as the number of cases reported in the law journal duly certified by him. However, we have found that this system is not being followed. We are going to insist on it,” the source said.

The government is also planning to cite the existing MoP to buttress its case for a more prominent role — read recommending names — for the executive in the appointment process. “Under the existing MoP, in case the Chief Minister desires to recommend the name of any person, he can forward the same to the Chief Justice for consideration by the collegium. However, this is not being followed now since Chief Ministers are never told about the Chief Justice’s plan to hold a meeting of the collegium,” the source said.

The government is also going to push the CJI and other members of the collegium to establish a “transparent and workable” complaint mechanism to deal with complaints against sitting judges. The government is of the view that the in-house mechanism is not working well and is shrouded in “too much secrecy” and, hence, should be replaced with a more effective system.

Sources said the government will insist on putting in place a uniform complaint redressal mechanism across all high court which “clearly define” a time-bound procedure to deal with complaints.

Another issue where the government is not in sync with the collegium’s view is on the establishment of a permanent secretariat to assist the collegium in the appointment process. “It should be clearly said in the MoP who will head the secretariat,” the source said.

The collegium, while returning the government’s draft, was of the view that it was an attempt by the government to circumvent judicial pronouncements and settled law on appointments in the higher judiciary. As first reported by The Indian Express, CJI Thakur and four senior-most judges of the Supreme Court held extensive deliberations on the MoP, with the final view that the draft wasn’t “acceptable” in its present form.




DRT Solutions Weekly Mail – 420th Issue dated 24th June ’16

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


(1) Debt Recovery Bill

The following news item is self explanatory:-

Debt recovery bill 

THE HANS INDIA |    Jun 18,2016 , 03:34 AM IST


The Cabinet recently approved ex facto ‘The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions Bill, 2016.” The bill aims to improve ease of doing business, facilitate investment leading to higher economic growth and development, it added. It would help in in faster recovery of bad loans. 

Introduced in Lok Sabha in May, the bill seeks to amend four legislations Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, 2002, the Recovery of Debts due to Banks and Financial Institutions Act, 1993, the Indian Stamp Act, 1899 and the Depositories Act, 1996.

The government has come up with this legislation at a time when there is mounting concerns over loan recovery in view of stressed assets to the tune of over Rs 8 lakh crore in the banking system. Around 70,000 cases are pending in Debt Recovery Tribunals and the proposed amendments would facilitate expeditious disposal of recovery applications.

The SARFAESI Act allows secured creditors to take possession over a collateral, against which a loan had been provided, upon a default in repayment, in 30 days, with the help of District Magistrate, if the banks convert their outstanding debt into equity shares, and consequently hold a stake of 51% or more in the company. The Act creates a central registry to maintain records of transactions related to secured assets.  

This includes integration of registrations made under Companies Act, 2013, Registration Act, 1908 and Motor Vehicles Act, 1988. The Bill provides that secured creditors will not be able to take possession over the collateral unless it is registered with the central registry.  Further, these creditors, after registration of security interest, will have priority over others in repayment of dues.

The Act empowers the RBI to audit and inspect Asset Reconstruction Companies and penalize if company fails to comply with any directions issued by it. Amendments to the RDDBFI Act increase the retirement age of Presiding Officers of Debt Recovery Tribunals from 62 years to 65 years.

Further, it increases the retirement age of Chairpersons of Appellate Tribunals from 65 years to 67 years.  The Act provides that banks and financial institutions will be required to file cases in tribunals having jurisdiction over the defendant’s area of residence or business.

(2) Bankruptcy Law

The following news item is self explanatory:-

Here’s what will add bite to new bankruptcy law

The wait is finally over. On June 1, 2016, the ministry of corporate affairs notified the constitution of the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT).

By: Pavan Kumar Vijay | Published: June 20, 2016 6:19 AM


The wait is finally over. On June 1, 2016, the ministry of corporate affairs notified the constitution of the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT).

The journey of the new corporate forum has been full of hustle and bustle. It was first introduced in the Companies (Amendment) Act, 2002, to adjudicate all matters culminating from the Companies Act, 1956, and vesting the powers exercised by the Company Law Board and High Courts to the NCLT and NCLAT.

The same was challenged, on the Constitutional validity, by the Madras Bar Association before the Madras High Court, and later before the Supreme Court in the Union of India versus R Gandhi, president, Madras Bar Association case (2010). The Constitution Bench in the Union of India supra gave its approval insofar as Constitutional validity of the NCLT and NCLAT was concerned with certain modifications or corrections. Although the verdict came in 2010—upholding the creation of the NCLT and NCLAT—these two bodies could not be constituted and made functional immediately thereafter, and the matter got stuck in imbroglio of one kind or the other.

Then, in 2013, Parliament passed a new company law in the form of Indian Companies Act, 2013, which replaced the earlier Act of 1956. In this Act, substantive provisions have been made again with regard to the establishment of the NCLT and NCLAT. Moreover, the power and jurisdiction of the Board of Industrial and Financial Reconstruction (BIFR) and the Appellate Authority for Industrial and Financial Reconstruction (AIFR) are to be merged into the NCLT and NCLAT.

However, another twist in the tale occurred when a new writ petition, Madras Bar Association versus Union of India, and another Writ Petition (C) No 1072 of 2013, on the same lines, was filed by the same party, assailing the Act, stating that findings and direction issued in the 2010 judgment were not followed in the new Act. The verdict came in May 2015, wherein the Constitution Bench upheld the validity of the NCLT and NCLAT, with some modifications in the qualifications of the technical member, and paved the way for the establishment of the NCLT and NCLAT under the provisions of the Companies Act, 2013.

Now, the ministry of corporate affairs has issued notifications, giving effect to the constitution of both the NCLT and NCLAT and 44 provisions wherein the NCLT has been vested with substantial powers, including power to adjudicate matters pertaining to mismanagement and oppression, class action suit, inspection, inquiry and investigation, and compounding of offences, etc. A class action suit—in which a large group of people collectively bringing a claim to court—is new for the Indian ecosystem, even though it is very popular in the US, the UK, Singapore and some European countries.

Further, all the pending cases with the Company Law Board stand transferred, from the date of notification, to the NCLT. In addition to that, provisions relating to appeal from the order of the NCLT to the NCLAT have been issued. In simple words, provisions relating to merger and amalgamation, reduction of share capital and sick companies would be gradually transferred to the NCLT after consultation with the chairperson.

Before the aforesaid notifications, there were only four benches of the Company Law Board, with three members—one technical and two judicial—and a chairperson.

According to the new constitution, initially there will be 11 benches of the NCLT—two at New Delhi and one each at Ahmedabad, Allahabad, Bangalore, Chandigarh, Chennai, Guwahati, Hyderabad, Kolkata and Mumbai—while the location for the NCLAT is yet to be notified. According to media reports, it may be at New Delhi, headed by SJ Mukhopadhaya, the retired judge of the Supreme Court of India. The NCLT could be headed by MM Kumar, the retired Chief Justice of the High Court of Jammu and Kashmir, who is currently the chairman of the Company Law Board.

The NCLT and NCLAT will be consolidated bodies which would adjudicate and decide all issues relating to companies in India, including, but not limited to, insolvency and bankruptcy, and cases pending before the various benches of the Company Law Board, BIFR, Debt Recovery Tribunal, all the company courts, AIFR and Debt Recovery Appellate Tribunal. The NCLT will also help in faster implementation of the bankruptcy code passed by Parliament last month; the NCLT is the adjudicating authority while the NCLAT is the appellate authority. Although the move to consolidate all proceedings relating to companies in India under the NCLT and NCLAT is an ambitious one, it is also much welcome by the industries. 



DRT Solutions Weekly Mail – 419th Issue dated 17th June ’16

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(1) Vijay Mallya Colluded with Bankers

The following news item is self explanatory:-

Vijay Mallya colluded with bankers, alleges StanCon

Agencies | Jun 16, 2016, 06.21 AM IST


Bengaluru: Standard Chartered on Wednesday levelled allegations of collusion between liquor baron Vijay Mallya and a consortium of banks, led by SBI, during the hearing of its interlocutory application see king vacation of the Debt Recovery Tribunal (DRT) interim order, preventing it from transacting with British liquor giant Diageo Plc.

Making submissions before DRT presiding officer C R Benakanahalli, Standard Chartered's counsel G Krishnamurthy argued that the fact that Mallya did not object to the interim order passed by DRT preventing StanC's transaction with Diageo stands clear "testimony" to collusion between the liquor baron and banks.

"Mallya could have objected to the interim order, but did not do it. Why he did not object? Because it served his purpose as the interim order prevented the sale and transfer of UBHL shares that were to be acquired by Diageo who had issued a guarantee to Standard Chartered for around Rs 877-crore loan to Watson, a holding 
company of Mallya," Krishnamurthy added.

Responding to Standard Chartered's allegations, the bankers' counsel, said, "If the bankers had colluded with Mallya, we would not have been waging a court battle against the high-profile defendant."

Diageo, which acquired control of United Spirits (USL) in 2012, had issued a guarantee to Standard Chartered for a $135million (around Rs 877-crore) loan to Watson to release certain UBHL shares that were to be acquired as part of the deal. The company had said that the risk had arisen due to default by Watson in May and DRT preventing sale or any other transfer of such UBHL shares in June as part of the enforcement process pending further orders following the petition by bankers.

(2) Violent Words, Free Speech & Constitution

The following news item is self explanatory:-DS, FREE SPEECH

Violent Words, Free Speech and the Constitution


Article 19(2) of the Constitution lists eight grounds on the basis of which the state can restrict the freedom of speech and expression. Four of these have to do not so much with the content of speech, or what words are said, but the consequences that speech might have, especially in promoting violence. These are “sovereignty and integrity of India”, “security of the State”, “public order” and “incitement to an offence”.

While Article 19(2) allows the state to restrict speech “in the interests of” these categories, it also insists that the restrictions must be “reasonable”. Soon after the Constitution came into being, the Supreme Court stated—not very helpfully—that a “reasonable” restriction is one that establishes a relationship of proportionality between the goal that the state wants to achieve and the extent to which it aims to restrict speech.

In the context of restrictions formulated on the basis that certain kinds of speech will lead to violence or actual destruction (the four categories mentioned above), this question has taken the form of a “proximity” enquiry: that is, at what stage of the causal connection between speech and violence can the state act?

The classic example is that of “shouting fire in a crowded theatre”. Nobody doubts that it is constitutionally legitimate to prohibit—and punish—shouting fire in a crowded theatre. On the other hand, if the state was to prosecute an individual for calling upon people to protest the government’s policies by refusing to pay their taxes, the position might be very different.

This is not, as it turns out, a hypothetical scenario. At the turn of the 1950s, Ram Manohar Lohia, the famous socialist leader, was prosecuted for doing just that: exhorting citizens not to pay their taxes. The applicable law was a colonial statute that prohibited the kind of speech that Lohia engaged in, and its constitutionality was challenged before the Supreme Court.

The state argued that even something as innocuous as a call not to pay taxes could be a “spark” that would one day set the country ablaze in the flames of revolution. The court, however, rejected this argument. It held that the state must establish a “proximate” or “imminent” connection between speech and violence, and not merely rely upon hypotheticals, or remote possibilities.

Furthermore, the Supreme Court would carefully scrutinize the justification offered by the state, and decide for itself whether the relationship of proximity was satisfied. Here, it found the link between an exhortation not to pay tax and eventual revolution too remote and fanciful to justify upholding the statute. The law was struck down.

Lohia’s case is one of the most important free speech judgements in the Supreme Court’s history. It marked a decisive break with a jurisprudence that the court had developed in the 1950s. In various cases, the court had upheld pre-censorship of the press, the colonial Press Act and Section 295A of the Indian Penal Code (blasphemy law).

In each of these cases, the court had held that as long as there was some connection between speech and public disorder, it would not substitute its own views about how realistic or proximate the threat was, but simply defer to the state’s assessment. James Madison, one of the framers of the US Constitution, had once famously referred to a bill of rights as a “parchment barrier’ against state overreach. The Supreme Court’s jurisprudence of the 1950s seemed set to prove Madison right.

Decided in 1960, Lohia’s case was the first to add a layer of brick to the parchment. By actively requiring the state to demonstrate the proximity between speech and violence or disorder, the court ensured that the word “reasonable” in Article 19(2) was not rendered entirely meaningless.

Initially, the impact of the Lohia case was limited. In 1962, the Supreme Court upheld Section 124A of the Indian Penal Code (the law of sedition), jettisoning Lohia’s approach of proximity—and indeed, not even referring to Lohia at all. Soon after, the court also upheld Section 144 of the Code of Criminal Procedure, which allows executive magistrates to ban public assemblies in advance, and without any prior judicial oversight. In these cases, once again, the bogey of public disorder was invoked to justify far-reaching restrictions upon the freedom of speech.

Although the SC refined Lohia’s test in the intervening years (in S. Rangarajan vs P. Jagjivan Ram, for instance, it said that the relationship between speech and public disorder must be like that of a “spark in a powder keg”), it was only in 2011—more than 50 years after Lohia’s case—that the doctrine of proximity began to have actual impact.


In a set of cases dealing with anti-terror laws such as the Terrorist and Disruptive Activities (Prevention) Act, the court held that a clause prohibiting and penalizing “membership” of unlawful organizations would have to be “read down” (that is, interpreted narrowly) in order to survive the test of constitutionality.


The court drew a distinction between “active membership” and “passive membership”. Defining “active membership” as the incitement to imminent violent action, the court held that anything short of that—including participation in meetings and propagation of ideology—was protected by the constitutional guarantee of freedom of speech, expression and association.


Using this, the court granted bail to, and acquitted, various individuals whom the state had charged with being members of unlawful associations, but against whom it was unable to prove any actual incitement to violence.


Lohia’s case had a further impact in the famous Shreya Singhal vs Union of India judgement, where the Supreme Court struck down Section 66A of the Information Technology Act, which criminalized “grossly offensive” or “menacing” online speech. Drawing together various threads from previous judgements, the court distinguished between “advocacy” and “incitement”, and held that only the latter could be constitutionally prohibited.


At the heart of the distinction is the philosophical idea that as autonomous individuals, we are all entitled to receive and listen to speech, evaluate it for its merits, and decide for ourselves whether or not we agree with it. The state disrespects the autonomy of individuals when it takes that decision upon itself, and blocks access to speech on the grounds that individuals might, on listening to it, come to hold wrong views, or do illegal things.


The famous American judge Louis Brandeis once stated that as long as there was time for “counter-speech”, the remedy for unpleasant speech was more speech, and not an enforced silence. Around the same time, Mahatma Gandhi wrote that assemblies of citizens should be allowed to discuss even revolutionary projects, with the state stepping in only when there was an actual outbreak of violence.


Both men were committed to the idea of autonomy at the front and centre of any understanding of free speech, and the relationship between the state and the individual.


There are, of course, situations where “counter-speech” is not possible, and where human beings operate under circumstances of diminished autonomy. This is why the state can step in to proscribe shouting fire in a crowded theatre, or punish incitement to imminent lawless action.


However, the set of such circumstances is a small one, and the court must carefully scrutinize the state’s claims on that point. This has now become established judicial wisdom in the Indian constitutional landscape, and we have Lohia’s case to thank for that.



DRT Solutions Weekly Mail – 418th Issue dated 10th June ’16

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


(1) Public Comments on Debt Recovery Laws

The following news item is self explanatory:-

Parliament panel invites public comments on debt recovery laws

PTI | Jun 8, 2016, 02.42 PM IST


New Delhi, Jun 8 A Parliamentary Committee has sought comments from the stakeholders on a bill to amend the debt recovery laws with an overall objective of improving the ease of doing business.

The views of stakeholders are being sought by June 22 on the Enforcement of Security Interest and Recovery of Debt Laws and Miscellaneous Provisions (Amendment) Bill, 2016, currently being scrutinised by the 30-member Joint Parliamentary Committee headed by Rajya Sabha MP Bhupender Yadav .

The bill, which was introduced in Lok Sabha last month, seeks to amend four legislations -- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, 2002, the Recovery of Debts due to Banks and Financial Institutions Act, 1993, the Indian Stamp Act, 1899 and the Depositories Act, 1996.

The bill aims to improve ease of doing business and facilitate investment leading to higher economic growth and development.

"It has been decided by the Joint Committee to seek views and suggestions from various stakeholders and public at large on the provisions of the aforesaid Bill," a finance Ministry statement said.

The government has come up with this legislation at a time when there is mounting concerns over loan recovery in view of stressed assets to the tune of over Rs 8 lakh crore in the banking system.

The legislation proposes to give RBI powers to regulate asset reconstruction companies, prioritise secured creditors in repayment of debts and provide stamp duty exemption on loans assigned by banks and financial institutions to asset reconstruction firms.

Around 70,000 cases are pending in Debt Recovery Tribunals ( DRT ) and the proposed amendments would facilitate expeditious disposal of recovery applications.

Another proposal is to empower the central government to provide for uniform procedural rules for conduct of proceedings in the DRT and Appellate Tribunals.

With respect to Sarfaesi Act, 2002, amendments have been proposed to suit changing credit landscape and augment ease of doing business.

These include specific timeline for taking possession of secured assets, debenture trustees as secured creditors as well as integration of "registration systems under different laws relating to property rights with the Central Registry so as to create a central database of security interest on property rights".

Further, the bill seeks to amend the Indian Stamp Act, 1899, so as to exempt assignment of loans in favour of asset reconstruction companies from stamp duty and the Depositories Act, 1996 for facilitating transfer of shares held in pledge or on conversion of debt into shares in favour of banks and financial institutions.

(2) More than 2 Crore Cases Pending in Indian District Courts

The following news item is self explanatory:-

More than 2 crore cases pending in India’s district courts: Report

‘Around 38.3 lakh cases are pending for over five yrs but less than 10 yrs’.

New Delhi | Updated: June 9, 2016 6:29 am


There are more than 2.18 crore cases pending in district courts across the country; 12 states have more than 5 lakh cases to decide; while a little more than one case, on an average, is awaiting conclusion for at least 10 years. Of the total pending cases, more than 20 lakh — almost 10 per cent — have been filed by women while over 3 per cent are being fought by senior citizens. 

Close on the heels of a debate triggered by Chief Justice of India T S Thakur’s impassioned appeal to the government over shortage of judges and lack of infrastructure, the Supreme Court’s E-Committee has released the latest statistics on pending cases in district courts.

The data, as of April 30, highlights the glaring problem of the huge pendency across states and Union territories. Over 2.18 crore cases remain pending, of which more than 22.5 lakh cases have failed to be decided in the last 10 years — 10.3 per cent of total pendency.




DRT Solutions Weekly Mail – 417th Issue dated 2nd June ’16 – Camp Delhi

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


(1) Vijay Mallya Case

The following news item is self explanatory:-

Last Modified: Thu, Jun 02 2016. 10 38 AM IST

Vijay Mallya case: Debt recovery tribunal to hear SBI plea today

Mallya’s lawyers and other defendants are expected to present evidence, objections and arguments to various interim orders passed by the DRT in recent times


Bengaluru: The Debt Recovery Tribunal (DRT) in Bengaluru is likely to hear the applications filed by public sector lender State Bank of India (SBI), leading 17 secured creditors against Vijay Mallya, Kingfisher Airlines and other defendants, seeking to recover unserviced debts of overRs.9,000 crore.

Though it is unlikely that an order will be passed on Thursday, Mallya’s lawyers and other defendants in the case are expected to present evidence, objections and arguments to various interim orders passed by the DRT in recent times, according to two people directly involved in the matter.

This includes the ex-parte interim order passed by the DRT on 17 May, asking JP Morgan Chase Bank (North America) not to disburse the $40 million that was already paid out by Diageo Plc. to Mallya. The $40 million was part of the $75 million sweetheart deal Mallya got for stepping down as chairman of his former company United Spirits Ltd (USL) on 25 February.

However, Mallya’s legal team has moved the Karnataka High Court, challenging the DRT order restricting the $40 million payout.

The case in question refers to the 2013 (Original Application) filed by SBI against Mallya, who owes overRs.9,000 crore to banks after his airline venture Kingfisher Airlines incurred heavy losses and accrued debts since its inception in 2005.

But the case gained steam after news of Mallya’s $75 million sweetheart deal surfaced in the media in February. SBI filed four interlocutory applications (IA) on 2 March seeking Mallya’s arrest, impounding of his passport, disclosure of all assets and liabilities and stopping the $75 million payout by Diageo, Mint reported on 2 March.

On the same day, Mallya left for United Kingdom where he continues to reside. In an interview to Financial Times on 29 April, Mallya said that he was in “forced exile” and that reporting by the Indian media had moulded public opinion against him and inflamed the government as well.

On 7 March, DRT passed an order restricting the payout.

Since this order, Mallya has lost his Rajya Sabha membership, had his diplomatic passport suspended, was convicted in a cheque bounce case and had a non-bailable warrant issued against him. Also, the ministry of external affairs has requested the UK government to deport Mallya, among other stern measures.

On 26 April, the Supreme Court also asked the DRT to expedite the hearing within two months.

Mallya’s troubles began around the end of 2011, when his airline venture was burning cash but had not reported a single quarter of profits. On 20 October 2012, the airline was grounded by the civil aviation authorities after large-scale flight cancellations and protests by its employees, who at the time had not been paid for nearly seven months. The airline never took off since then.

With mounting debts and no relief in sight, all stakeholders—including secured and unsecured creditors, tax and airport authorities and even unpaid employees—moved various courts to recover their dues.

This includes several winding up petitions against United Breweries Holdings Ltd, which owned Kingfisher Airlines. The Karnataka High Court will hear all winding up petitions against UBHL on 20 June.

A Timeline

25 February: Vijay Mallya resigns as USL chairman; Diageo agrees to pay $75 million for stepping down. Pays $40 million.

2 March: SBI moves fresh application in DRT; seeks Mallya’s arrest, impounding of passport, disclosure of assets and liabilities and stopping payment of $75 million.

2 March: Vijay Mallya leaves for UK.

4 March: SBI moves Karnataka High Court seeking Mallya’s arrest.

7 March: DRT stops Diageo from paying out $75 million to Mallya.

1 April: Siddharth Mallya steps down as UBHL director.

11 April: Government agencies, Supreme Court demand Mallya’s return.

13 April: SBI moves application to stop sale of Mallya’s corporate jet by service tax department.

14 April: ED seeks revocation of Mallya’s passport in money laundering case.

16 April: Mallya’s diplomatic passport suspended.

17 April: UB Group denies siphoning money to buy foreign properties.

18 April: Warrant issued for Mallya in money laundering case.

21 April: Mallya convicted in cheque bounce case. Non-bailable warrant issued.

3 May: Mallya resigns from Rajya Sabha.

16 May: Mallya tells UBHL board he has every intention to pay, but can’t come to India fearing arrest.

17 May: DRT orders JP Morgan Chase Bank (North America), New York not to disburse $40 million to Mallya.

(2) Why Did Justice Thakur Weep?  

The following news item is self explanatory:-

Justice Thakur wept because Modi is deaf to his concerns for Indian democracy


PUBLISHED: 23:40 GMT, 29 May 2016 UPDATED: 23:40 GMT, 29 May 2016

·         http://www.dailymail.co.uk/indiahome/indianews/article-3615409/Justice-Thakur-wept-Modi-deaf-concerns-Indian-democracy.html

Prime Minister Narendra Modi doesn't think much of 'the rule of law.'

During his time as Chief Minister, Modi famously took pot-shots at the judiciary, which had exposed communal violence in Gujarat.

His attitude was no different at the inaugural session of the Joint Conference of chief ministers and chief justices. 


The strength of the judiciary depends on the money provided by the Union and state governments.

The new appointments are not being processed, and despite the victory in the NJAC case giving primacy to the collegiums in making judicial appointments, the files are not moving with the necessary speed.

The executive is never impolite, but always holds the upper card. 

Modi’s haughty intervention: "Jab jago tab savera?" was both an indictment and offensive. 

Who was to wake up? The judiciary? The Chief Justice of India? 

Modi made the promise of an “in camera meeting” to resolve issues. Why doesn’t he resolve these issues? The judiciary is not asking him for a personal favour.

Chief Justices of India speak for the judiciary - and Justice Thakur was brought to tears because his concerns overwhelmed him, as they do the judiciary.

After Justice Sabharwal, there was a lull in judicial statesmanship. Although loose allegations against Sabharwal CJ were irresponsible, his successors invited questions.

What if I told you a clerk once wrote a judgment I saw? Another, earlier Chief Justice, could not dictate judgments in court. They were incompetent administrators. Both were political appointments.

The advent of Justice Lodha changed things. He appointed two members from the Bar to the Supreme Court and sorted out many things. Justice Dattu carried some of the momentum, but not all. 

Chief Justice Thakur rose to the challenge with great assiduity. The problem posed by him is pre-eminently one of resources. Given India’s 1.2 billion people, Thakur’s conservative estimate was that the present strength of 22,000 in the higher judiciary was not enough and there is a need for 40,000 – in other words double the budget to increase these numbers.

I would put the need on the basis of my research at 60,000.

The judiciary does not raise revenue. There are court fees, and of course stamp fees which are gobbled by the government and not credited to the judiciary.

CJI Thakur also wants substantive increases for the lower judiciary. That money will come from chief ministers.

It is impossible to get substantial funds for the High Courts and lower courts.

Thakur CJ recounted that the Law Commission in 1987 and a Parliamentary Committee in 2002 said that instead of 10 judges for every million people, the figure should be 50.


India is not a fair tale, the judiciary is not Cinderella, and Modi and Jaitley are not fairy godmothers.

So what can the judiciary do?

That is why CJI Thakur said: “I beseech you to rise to the occasion and realise, it is not enough to criticise. You cannot shift the burden to the judiciary... Inaction by the government and the increase does not take place”.

The frustration of the moment overtook him and he shed a tear, and this attracted the media more than the cause he was espousing.

So, the controversy became why did the Chief Justice cry? Or even, was it dignified for the Chief Justice to cry?

The question should have been: What was the Chief Justice crying about? He was crying about the impossibility of justice unless the executive was serious about solving it.

Till recently, the short fall in the Supreme Court was 9 and 464 in the High Courts.

There should be 20,358 subordinate courts. There are only 15,360 with a deficit of 49,938. 

According to Daksh’s research, the average number of hearings per judge in the high court per day is colossal: 149 in Patna, 148 in Calcutta, 109 in Telangana and Andhra, Rajasthan’s 97 may be compared with Allahabad’s 77.

Hurried justice is no justice at all. These figures are abysmal.

Final hearings are reduced. The length taken to decide cases increases. 

Judges of the Supreme Court hear cases during the day, write judgments in the evening, and read briefs for the next day.

What they produce is reasoned and closely argued. This is why the rule of law survives and lives on a tender thread.


We think the ‘rule of law’ is just a phrase. But imagine a democracy without the rule of law. Many such countries are failed states.

A major reason for this is that rule of law institutions are deprived of finances, resources, and respect.

Indians should begin to recognise that many parts of India constitute failed states - not because of Maoists and terrorists, but because of endemic decay in governance.

No account of false pride in India as a democracy can hide this process of degeneration.

If politicians and bureaucrats are the custodians of the democratic and instrumental texts of governance, the judiciary is the custodian of the rule of law texts.




DRT Solutions Weekly Mail – 416th Issue dated 27th May ’16 – Camp Delhi

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(1) DRTs in Need of Helping Hand

The following news item is self explanatory:-

May 24, 2016, 2:11 AM; last updated: May 24, 2016, 4:15 PM (IST)

Debt Recovery Tribunals in need of helping hand


Even as the government and the banking regulator are heading towards stronger debt recovery rules, including a new bankruptcy law, the Debt Recovery Tribunals (DRTs) in Chandigarh, set up for expeditious adjudication and recovery of debts due to banks and financial institutions, is in dire straits. Currently, there are two operational DRTs in Chandigarh with jurisdiction over Punjab, Haryana, Chandigarh and Himachal Pradesh.

The third DRT at Chandigarh, approved by the Union Cabinet in December 2014, is yet to start functioning.  and the Finance Ministry is yet to notify its jurisdiction. The DRT-I with jurisdiction over Chandigarh, Haryana, Himachal Pradesh and DRT-II with jurisdiction over Punjab are grappling with staff and space shortage. Data shows that 9,267 cases are pending before these tribunal for the financial year 2016-17. The DRT data shows 3,915 cases pending before DRT-I. The number of such cases before DRT-II till April 2016 was 5,352. On an average, 60-100 cases come for hearing at each DRT.

To offload the pressure on the two DRTs in Chandigarh, the government gave its nod to a third one in December 2014 but without making any provision for space. A presiding officer too was appointed in February 2016. Sources say the government now plans to hire a semi-government building in Sector 38. As far as the staff strength goes, against the sanctioned staff of 24, only six employees have been appointed.

“The area of jurisdiction of DRT-III has not been notified and the staff has been sitting idle for the past couple of months,” said IP Singh, past president, DRT Bar Association. Amit Rishi, the present president, in a letter to Assistant Solicitor-General, has stated that presiding officer of  DRT-III Sanjeev Mago, District and Sessions Judge (Rajasthan cadre), was forced to sit in a small room earlier occupied by the private secretary of the presiding officer, DRT-I. "Sanjeev Mago, Presiding Officer officer DRT-III, Chandigarh, has to sit idle as his area of jurisdiction has not been notified and he has not been provided accommodation to hold court. DRT-I and DRT-II are already overburdened due to which DRT-III was created. However, the same has not become functional till date,” the letter reads.

DRT-I and DRT-II do not present a rosy picture either. The former is functioning from rented premises in Sector 8 and the latter in Sector 17. Sources said the two are  understaffed. Against the sanctioned staff strength of 30, DRT-I has 17 employees.


(2) Indian Judiciary – Supreme Court & High Courts

The following news item is self explanatory:-

Indian Judiciary - Supreme Court and High Courts

24 MAY 2016



Recently, Chief Justice of India (CJI) Mr T. S. Thakur showed his emotions in public and exhorted and beseeched upon the executive head of the country Mr. Narendra Modi, the Prime Minister, to get filled the vacancy of twenty-two thousand judges as recommended by the Law Commission in 1987.


Mr. Thakur opined that with judicial fleet of only 18,000 judges across the country, it is but impossible to tackle and dispose off over three crore pending courts cases. Law Commission had sought 40,000 judges then. While CJI commitments and sincerity in minimizing the mounting court cases are well appreciated, there is a flip side of the picture which he wisely didn't touch upon.

The Supreme Court and High Courts are closed for long summer vacation (45 days or so) and there is no record available regarding reason for this long vacation. Without doubt, the British style of judicial aristocracy is being perpetuated upon merrily at the cost of hapless litigants and other affected parties. That apart, the Supreme Court calendar (which is applicable to other courts too) shows week-long vacation each for Holi, Dussehra, Muharram and Diwali apart from fortnight-long winter vacation for Christmas Day and New Year.

In Christian country of USA there are only two days vacations, i.e., one each for Christmas and New Year. Is there any rationale for this long vacation in secular country of ours? Is it again the continuation of British judicial aristocracy? This has been the tradition since India got its independence. But is there a rule for this?

A reply received for a query filed under the Right to Information (RTI ) Act has revealed that there is no formal record with the Supreme Court, which has formed this system about this long vacation. On Jan 10, 2016 during a hearing, the representative of the apex court stated that the Supreme Court has 193 working days and that they "do not have record as to how the tradition of summer leave started." Law Commission has recommended long ago for scrapping long court vacations but they are being blissfully ignored continuously.

It is high time that Union Ministry of Law and Justice should immediately scrap any privileged vacations for courts ensuring a common pattern of holidays from Supreme Court to lower courts. CJI should dispassionately amend the vacation system so that eighty two days of working are further added to bring the total working days to (82+193=275 days). Divided by 30, the Supreme Court and High Courts will get nine months and seventeen days of working days which will definitely go a long way in minimizing the mounting court cases and without expecting to get appointment of judges in the immediate future. Of course, there will be still two weeks of summer vacation and one each for six festivals and one for the New Year. This will not curtail much vacation time and privileges for the judges and they should most willingly accept the additional working days if they are serious about reducing the pending cases.

Needless to say that justice delayed is justice denied and in reality it is murder of the Rule of Law. We have Law of Limitation for filing court cases, why can't there should be a Law of Limitation for delivery of judgements?

Rule of Law is Dead, Long Live Supreme Court and High Courts!


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

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DRT Solutions Weekly Mail – 415th Issue dated 20th May ’16 – Camp Delhi

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(1) DRT Laws & Bank Confidentiality clause

The following news item is self explanatory:-

DRT vs Vijay Mallya: Debt recovery laws prevail over bank's confidentiality clause with clients

Debt Recovery Tribunals have powers of a civil court under Civil Procedure Code, 1908

Sudipto Dey  |  New Delhi May 18, 2016 Last Updated at 16:48 IST




When the Debt Recovery Tribunal (DRT) on Tuesday ordered J.P.MorganChase Bank not to give defaulter Vijay Mallya access to $40 million parked in its New York branch, and also sought the statement of accounts with the bank, it was well within its rights to do so under Indian debt recovery laws.

Debt Recovery Tribunals have the same powers as are vested in a civil court under the Civil Procedure Code, 1908 (CPC). The procedure and powers of
 DRT and the Debt Recovery Appellate Tribunal are mentioned in section 22 of Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

Under Section 2 of the Act, DRTs have powers to summon and enforce the attendance of any person and to examine him or her on oath, receive evidence on affidavits, examine witnesses or documents, review its own decisions, dismiss an application for default or deciding it ex parte, among others.


Further, in the case of Allahabad Bank vs Radhakrishna Maity, the Supreme Court held that in view of Section 22 (1) of the Act, DRT can exercise powers contained in CPC, and can even go beyond as long as it passes orders in conformity with the principles of natural justice,” said Babu Sivaprakasam, partner and head of banking & finance practice, Economic Laws Practice.

Legal experts said that it will be within the powers of DRT and DRAT for the purposes of discharging their functions to seek the production of bank statements and details of share sale of a defaulter.

A consortium of banks, led by the State Bank of India, has been taking measures to recover Rs 9,000 crore of dues from Vijay Mallya-promoted bankrupt airline, Kingfisher Airlines. The $40 million is part of the $75 million deal that Vijay Mallya received from Diageo Plc, to give up his chairmanship in United Spirits.

(2) Supreme Court on Defamation

The following news item is self explanatory:-

Last Modified: Thu, May 19 2016. 03 42 PM IST

Supreme Court’s curious approach on defamation

At a time when we still don’t have a fundamental right to food, we are told that the right to a reputation is a fundamental right



While our fundamental rights are guaranteed by the Constitution, they are shaped and expanded by our judges. Generally, from the mid-1980s, the Supreme Court has interpreted the right to life to include the right to legal aid, the right to health and the right to a clean environment.

While elevating the right to a reputation, such as it may be, to the level of a fundamental right, the court should have asked itself the question, does the right to a reputation stand on the same footing as these non-enumerated rights?

At a time when we still don’t have a fundamental right to food as part of the right to life or the right to housing as a fundamental right, we are told that the right to a reputation is a fundamental right, such that it can be enforced by criminal sanctions. This is how the right to life was used to scuttle another precious right—the right to free speech.

Surely, on the scale of necessity, one of the most fundamental of needs of all humans is the need to communicate, speak, read and write. It is a capability, as Martha Nussbaum and Amartya Sen recognize, that comes with being human.

How could the court have found a contradiction between the two rights that needed to be managed through the policing powers of the state?

Freedom of expression and communication is not only part of being human, but is also essential to an enlightened democracy, and is a basic political right. While referring to the Preamble and noting fraternity as a desirable goal, the court seems to have overlooked political justice, which is also an essential part of the Constitution.

Traditionally the Preamble and the right to life have both been used to expand, not shrink, our rights, as seems to have happened in this case of upholding the validity of the law of criminal defamation.

The reference to Vishaka guidelines against sexual harassment at workplaces is not only misplaced but also ironic. That judgement expanded the right to work to include the right to work free from sexual harassment, based on the application of international law.

If anything, this judgement takes away from the Vishaka guidelines, by preventing women from complaining of sexual harassment or revealing the names of their aggressors on pain of being prosecuted for defamation.

Such is the horrendous implication of the judgement that it protects wrongdoers; since truth cannot be pleaded as a defence in a prosecution, one has to go a further step and prove that it is in public good to disclose the names of the offender.

The Indian Penal Code was drafted in 1860 by an imperial power and it bore the birthmarks of colonialism. The law of criminal defamation belongs to that period and the challenge to the law provided the ideal opportunity to explain why it needs to be a criminal offence.

A wrong may be a civil wrong or a criminal wrong—or both.

In the case of defamation, it is both a criminal and a civil wrong. The distinction, as claimed, is that a civil wrong is a wrong against the individual while a criminal wrong is one against society. By this definition, the court ought to have come to the conclusion that defamation is not a wrong against society, as reputation after all belongs to the individual, not society.

The justification then appears to be that we need to protect “people like us” from society, not the other way round as claimed.

Many famous men have sued women for allegedly defaming them with allegations of sexual harassment—justice Swatanter Kumar and R.K. Pachauri, to name two. These examples give us an idea of the users of the law of defamation.

Civil law is inaccessible to most people given the large court fees that are to be paid. If reform is what the court was looking for, it was in the realm of civil law.

Given that we collectively express ourselves through the media, the rights of the media are have also been shrunk rather than expanded and no benefit to society seems to emerge from making defamation a crime. Journalists are at great risk from this judgement, as is free speech for all of us.

While demanding civilization of conduct, we need to factor in the dysfunctional nature of the criminal justice system; it is the process that is the punishment. The world over, defamation has been decriminalized, in recognition of its chilling effect on free speech and in recognition of the fact that it produces no social good.

The approach of the Supreme Court is curious—when all arguments fail, the court falls back on the “wisdom of the legislature”, meaning a hands-off approach to the policy decisions of the government of the day. The Supreme Court of India seems adrift, as it has in the past when faced with difficult political challenges, and this more than anything else is such a time.

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DRT Solutions Weekly Mail – 414th Issue dated 13th May ’16 – Camp Delhi

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(1) Rise of NPAs

The following news item is self explanatory:-

The rise of Non Performing Assets in India


At noon today, the Finance Minister introduced a Bill in Parliament to address the issue of delayed debt recovery.  The Bill  amends four laws including the SARFAESI Act and the DRT Act, which are primarily used for recovery of outstanding loans.  In this context, we examine the rise in NPAs in India and ways in which this may be dealt with.

I. An overview of Non-Performing Assets in India 

Banks give loans and advances to borrowers which may be categorised as: (i) standard asset (any loan which has not defaulted in repayment) or (ii) non-performing asset (NPA), based on their performance.  NPAs are loans and advances given by banks, on which the borrower has ceased to pay interest and principal repayments. 

In recent years, the gross NPAs of banks have increased from 2.3% of total loans in 2008 to 4.3% in 2015 (see Figure 1 alongside*).  The increase in NPAs may be due to various reasons, including slow growth in domestic market and drop in prices of commodities in the global markets.  In addition, exports of products such as steel, textiles, leather and gems have slowed down.[i]

The increase in NPAs affects the credit market in the country.  This is due to the impact that non-repayment of loans has on the cash flow of banks and the availability of funds with them.[ii]  Additionally, a rising trend in NPAs may also make banks unwilling to lend.  This could be because there are lesser chances of debt recovery due to prevailing market conditions.[iii]  For example, banks may be unwilling to lend to the steel sector if companies in this sector are making losses and defaulting on current loans.

There are various legislative mechanisms available with banks for debt recovery.  These include: (i) Recovery of Debt Due to Banks and Financial Institutions Act, 1993 (DRT Act) and (ii) Securitisation and Reconstruction of Financial Assets and Security Interest Act, 2002 (SARFAESI Act).  The Debt Recovery Tribunals established under DRT Act allow banks to recover outstanding loans.  The SARFAESI Act allows a secured creditor to enforce his security interest without the intervention of courts or tribunals.  In addition to these, there are voluntary mechanisms such as Corporate Debt Restructuring and Strategic Debt Restructuring, which   These mechanisms allow banks to collectively restructure debt of borrowers (which includes changing repayment schedule of loans) and take over the management of a company.

II. Challenges and recommendations for reform

In recent years, several committees have given recommendations on NPAs. We discuss these below.

Action against defaulters: Wilful default refers to a situation where a borrower defaults on the repayment of a loan, despite having adequate resources. As of December 2015, the public sector banks had 7,686 wilful defaulters, which accounted for Rs 66,000 crore of outstanding loans.[iv]  The Standing Committee of Finance, in February 2016, observed that 21% of the total NPAs of banks were from wilful defaulters.  It recommended that the names of top 30 wilful defaulters of every bank be made public.  It noted that making such information publicly available would act as a deterrent for others.

Asset Reconstruction Companies (ARCs): ARCs purchase stressed assets from banks, and try to recover them. The ARCs buy NPAs from banks at a discount and try to recover the money.  The Standing Committee observed that the prolonged slowdown in the economy had made it difficult for ARCs to absorb NPAs. Therefore, it recommended that the RBI should allow banks to absorb their written-off assets in a staggered manner.  This would help them in gradually restoring their balance sheets to normal health.

Improved recovery: The process of recovering outstanding loans is time consuming. This includes time taken to resolve insolvency, which is a situation where a borrower is unable to repay his outstanding debt.  The inability to resolve insolvency is one of the factors that impacts NPAS, the credit market, and affects the flow of money in the country.[v]  As of 2015, it took over four years to resolve insolvency in India.  This was higher than other countries such as the UK (1 year) and USA 1.5 years). 

The Insolvency and Bankruptcy Code seeks to address this situation.  The Code, which was passed by Lok Sabha on May 5, 2016, is currently pending in Rajya Sabha. It provides a 180-day period to resolve insolvency (which includes change in repayment schedule of loans to recover outstanding loans.)  If insolvency is not resolved within this time period, the company will go in for liquidation of its assets, and the creditors will be repaid from these sale proceeds.


(2) India’s New Law on Bankruptcy

The following news item is self explanatory:-

Thu, May 12 2016. 01 06 AM IST

India has a new law on bankruptcy

Rajya Sabha passes Insolvency and Bankruptcy Code 2016; implementation will be the key, say analysts


The Rajya Sabha on Wednesday passed the Insolvency and Bankruptcy Code 2016, a vital reform that will make it much easier to do business in India.

Once the President signs the legislation, India will have a new bankruptcy law that will ensure time-bound settlement of insolvency, enable faster turnaround of businesses and create a database of serial defaulters.

But implementation will remain the key, analysts point out, as the new code is presaged on the creation of a complementary eco-system including insolvency professionals, information utilities and a bankruptcy regulator.

Along with the proposed changes in India’s two debt recovery and enforcement laws, it will be critical in resolving India’s bad debt problem, which has crippled bank lending.

The bill, which received the Rajya Sabha’s nod on Wednesday, was passed by the Lok Sabha last week. A majority of the parties in both Houses supported this legislation after all the amendments proposed by a joint parliamentary committee were accepted by the government.

The new code will replace existing bankruptcy laws and cover individuals, companies, limited liability partnerships and partnership firms. It will amend laws including the Companies Act to become the overarching legislation to deal with corporate insolvency. It will also help creditors recover loans faster.

The move is also expected to help India move up from its current rank of 130 in the World Bank’s ease of doing business index, since all reforms undertaken by 31 May are incorporated in the next ranking.

On the parameter of resolving insolvency, India is ranked 136 among 189 countries. At present, it takes more than four years to resolve a case of bankruptcy in India, according to the World Bank. The code seeks to reduce this time to less than a year.

The bill proposes the creation of a new class of insolvency professionals that will specialize in helping sick companies. It also provides for creation of information utilities that will collate all information about debtors to prevent serial defaulters from misusing the system. The bill proposes to set up the Insolvency and Bankruptcy Board of India to act as a regulator of these utilities and professionals.

It also proposes to use the existing infrastructure of National Company Law tribunals and debt recovery tribunals to address corporate insolvency and individual insolvency, respectively.

Anjali Sharma and Susan Thomas of the Indira Gandhi Institute of Development Research wrote in a 10 May column in Mint that the code assumes the existence of institutional infrastructure like information utilities and insolvency professionals, information repositories like stock depositories; a new regulator, without the failings of existing regulators; and a high-quality adjudication infrastructure.

“Unless these four pillars are in place, the Code will fail,” they wrote, highlighting the huge pendencies faced in the debt recovery tribunals.

Responding to the debate in Rajya Sabha, minister of state for finance Jayant Sinha said the government will try to go through a stage-wise process to ensure smooth implementation, “notifying provisions as and when the necessary infrastructure is ready”.

Ashwin Bishnoi, a partner at law firm Khaitan and Co., said the insolvency code proposes a vast change and its implementation will take time.

“The code has set the framework for bringing in changes in the debt recovery tribunals,” he said adding that India has many professionals who can easily step into the role of insolvency professionals.

The bankruptcy code has provisions to address cross-border insolvency through bilateral agreements with other countries. It also proposes shorter, aggressive time frames for every step in the insolvency process—right from filing a bankruptcy application to the time available for filing claims and appeals in the debt recovery tribunals, National Company Law Tribunals and courts.

Bankruptcy applications will now have to be filed within three months; earlier, it was six months.

To protect workers’ interests, the code has provisions to ensure that the money due to workers and employees from the provident fund, the pension fund and gratuity fund shouldn’t be included in the estate of the bankrupt company or individual. Further, workers’ salaries for up to 24 months will get first priority in case of liquidation of assets of a company, ahead of secured creditors.

There are also provisions that disqualify anyone declared bankrupt from holding public office, thereby ensuring that politicians and government officials cannot hold any public office if declared bankrupt.Why

Sinha said the code seeks to protect interest of workers who are the most vulnerable. “It enables workmen to initiate the insolvency process and they will be first in line to get the proceeds of liquidation,” he said.

The Lok Sabha was adjourned sine die on Wednesday, two days earlier than scheduled. Both the government and the opposition parties agreed to an early adjournment. One of the key legislations listed for this session, the finance bill, was passed on Wednesday.

One reason why the session ended early is the election campaign underway in Kerala, Tamil Nadu and Puducherry.

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DRT Solutions Weekly Mail – 413th Issue dated 6th May ’16

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(1) India’s Long Wait for Justice

The following news item is self explanatory:-

India's long wait for justice: 27m court cases trapped in legal logjam

Calls for wholesale reform of legal system, with delays costing the country billions of rupees every year

Thursday 5th May 2016


Ashish Kumar last saw his brother Vinod when he was being driven away by a senior police officer in Ludhiana, in northern India.

Vinod’s body was never found but the CBI, India’s intelligence agency, believes that the officer, Sumedh Singh Saini, was responsible for his death.

They filed murder charges against him within a month. That was in 1994.

Twenty-two years have passed since the murder case began. Only three of 36 witnesses have been heard so far. Four witnesses have already died without being presented in court.

At 94 years old, Vinod’s mother, Amar Kaur, cannot hear or speak well. She does not seem to understand much about life at present. But when she hears her son’s name, she yells at the top of her voice, “Insaaf!”, which means justice.

Kaur, who used to go to court on a stretcher, gave her testimony in the murder case when she was aged 86, 14 years after her son went missing.

She asked the court several times to hear her statement sooner, fearing that she did not have long to live. When she was finally heard, the judge had to step down from the podium and stand next to the witness box to be able to hear her thin, fading voice. But before she could finish, he decided to break for lunch. The next available date for her to deliver her statement was a month later.

In the time that has passed since Vinod disappeared, Saini has continued in his role and was promoted to director general of police in Punjab. He still has charges hanging over him.

Vinod’s family on the other hand, have had to leave their family home, give up their business, and move to Delhi. They claim to have been threatened on numerous occasions and moved in order to remain safe and follow the case.

Vinod’s murder case is not exceptional in India.

More than 22m cases are currently pending in India’s district courts. Six million of those have lasted longer than five years. Another 4.5m are waiting to be heard in the high courts and more than 60,000 in the supreme court, according to the most recently available government data. These figures are increasing according to the decennial reports.

Last week, Tirath Singh Thakur, the chief justice of India’s supreme court, broke down while addressing the prime minister, Narendra Modi, as he lamented government inaction over judicial delays, particularly for failing to appoint enough judges to deal with the huge backlog of pending cases.

In the government’s budget for 2016, only 0.2% of the total budget was given to the law ministry, one of the lowest proportions in the world.

 More than 22m cases are pending in India’s district courts

“There is a systematic problem with India’s courts,” Vinod’s younger brother Ashish says. “And because of it our family has suffered so much.”

The number of cases, however, is only a part of the problem. Take a walk through any court building in India and you’ll see long queues of people waiting outside courtrooms without any guarantee of getting a complete hearing.

India has one of the world’s lowest ratios of judges to population in the world, with only 13 judges for every million people, compared with 50 in developed nations. As a result, scores of cases are heard every day, which leads to a large number of adjournments, judges passing cases between them, and increasingly long queues of people waiting outside courtrooms on the off-chance that their case is heard. 

“Judges are under enormous pressure,” Mukul Mudgal, a former high court judge, says. “You have around 30 or 40 cases every day, and usually, you spend an hour before court reading the files. I used to do half of them the previous night. It’s a lot of work, and it is chimerical to hope that any judge will read every page of every case he’s dealing with.” 

Judges are paid little compared with lawyers, which has led to a steady decline in the calibre of those hearing cases.

To add to the burden, lawyers frequently use delaying tactics such as routinely appealing against verdicts, or saying they are sick or failing to show up in court.

“Adjournments are given freely, witnesses don’t come on time, and there’s nobody looking at judicial administration,” says Harish Narasappa, whose thinktank Daksh analyses data on judicial delays.

“If you go to court and ask the judge for an adjournment, the judge will ask ‘OK, what day do you want?’ At that time, neither the judge nor the lawyer has any clue what the judge’s capacity is for that day next week. What’s the point of saying ‘I’ll hear you on this day next week’ if he just doesn’t have the time?”

Narasappa estimates that the delays cost India’s economy trillions of rupees every year.

Major Manjit Rajain had to miss a day of work every month for nine years over a case against him that was eventually dismissed as a clerical error.

After he retired from the army and opened his first business, the registrar of companies filed a suit against him for misrepresenting himself because his army files showed his surname to be Rajan, without the i, and he had written his surname Rajain, with an i, on the forms to register his company.

Rajain explains how trivial the error was. Even though the former soldier showed the court his passport, birth certificate, marriage certificate and several other documents to prove there was an i’ in his last name, the case against him was not dismissed for nine years.

“The good thing that came out of it,” Rajain says, “was that I made friends with many major businessmen sitting outside the courtroom, because they had all been dragged there for equally trivial reasons.”

“This country’s progress depends on a strong judicial system which can provide quick justice in commercial matters,” says Dushyant Dave, a senior advocate in the supreme court, who believes the judicial system has deteriorated since he began practicing in 1978.

“We need foreign investment to improve technology and capital. If we’re not able to protect technology in terms of intellectual property rights, and if we’re going to drag investors into our court system for several decades, then they’re not going to come.

“We have more than 700 million people living in poverty, and this is the greatest challenge of our democracy. The judiciary has a great role to play. Unfortunately, I don’t think the judiciary really realises that.” 

The legal logjam has led to overcrowded prisons, with more than 68% of the prison population still on remand. Some prisons are more than two or three times over capacity. Getting bail usually depends on the quality of a defendant’s lawyers.

“In criminal trials, the process itself is a punishment. Many under-trial prisoners end up doing their entire sentence without getting a full trial,” says Alok Prasanna, an analyst from the Vidhi Centre for Legal Policy, a thinktank.

The result of these never-ending cases is a crisis of faith in the legal system. Two-thirds of ongoing cases are criminal rather than civil cases, which suggests that India’s judicial system more than six decades after independence is not much different from the one inherited from the British Raj, where rulers used the legal system as a means of maintaining order and criminalising agitators, while the majority of civil disputes were settled outside court.

“Parties don’t see litigation as a way to resolve disputes so much as get what they want by making the other party suffer and come to court repeatedly for years,” Prasanna says.

“I always tell people who approach me for legal advice not to go through the courts, because you may win or lose the case, but you will definitely lose both your money and your sanity.”

Attempts to improve the system have seen little success. After the horrific gang rape of a medical student in Delhi, a series of fast-track courts were set up to speed up cases concerning violence against women. It has not made much of a difference – more than 93% of rape cases are still awaiting trial as trivial matters hold up the progress of cases.

Asha* was gang raped in 2005, when she was 13. Until 2013, the court was simply trying to decide whether one of the men accused of raping her should be tried as a juvenile or an adult.

Even after her case was fast-tracked, it took two years for the court to sentence the man who arranged the gang rape.

Her friend, who cannot be identified for legal reasons, says: “Her entire childhood has been eaten away by this trauma. The man is now married and has children and has even run for election. No one will marry Asha or her younger sister because of what happened to her.”

Her lawyer says that he is certain the man will appeal against the verdict. “Why would you not appeal?” he says, over the phone. “It’s a way out.”

In the absence of speedy justice, vigilantism thrives. Groups defending women’s rights such as the Gulabi Gang or the Love Commandos are infamous for taking their revenge in cases of domestic violence and so-called “honour” killings. Corruption too, is endemic. People would rather bribe a police officer or a judge than go through the lengthy hassle of a trial.


Meanwhile, the impunity that criminals may enjoy because of how slowly the legal system operates, is exemplified by India’s elected politicians. One in three politicians in the Indian parliament have criminal records, with the vast majority of those involving serious cases such as rape, murder or kidnapping.

Prasanna says that even the most basic needs of the courts are not met. “Some courts are having to hold sessions in the dark because there’s no electricity. Old buildings need to be maintained. People need to be trained better, even when computers are provided people are not trained to use them.”

Dave believes that the judicial system is in dire need of a complete overhaul. Laws need rewriting. Judicial process needs to be streamlined. Lawyers need to be penalised for delaying matters without reason. “The government is not interested,” he says. “No politician or bureaucrat wants a strong judiciary.”

Mudgal agrees, but doesn’t believe the changes needed to strengthen the judiciary will come in his lifetime.

In the meantime, Ashish Kumar will keep fighting for his brother. “I believe in this country, and I believe I will get justice one day,” he says. “My brother was a great man. That’s why I’ve spent my entire life trying to get justice for my brother. The rest is up to God.”

A request was made to talk to the lawyers for Sumedh Singh Saini in preparation of this article but no response was forthcoming.

(2) Is Speedy Justice Possible?


The following news item is self explanatory:-


Is speedy justice possible?

MAY 03, 2016 04:33AM

WHY did the Chief Justice of India (CJI) recently break down in tears? Because of the huge pendency of cases before the Indian courts. It is not clear what the real figure for pending court cases is in India but they are certainly over 20 million. By one reliable estimate, they may number between 26m and 27m. But what made the CJI tearful is the realisation that it may now be an impossible problem to solve especially in view of the constant avalanche of new cases.

Why is delay in court cases a problem? Firstly, justice is only possible if your case is heard and decided. This is the minimum requirement of justice. In actual fact, most people are looking for closure of their disputes, and a decision, even if it goes against them.

Secondly, justice delayed is justice denied. Anyone who has any experience with the judicial system understands the destructive and corrosive effects of justice delivered after many years of delay.

Thirdly, expeditious justice is both a fundamental right of every citizen under Article 9 and a fundamental responsibility of the state under Article 37(d) of the Constitution. If the state (ie government, judicial system) cannot deliver expeditious justice, it is a failure of its constitutional obligations.

Justice is only possible if your case is heard and decided. This is the minimum requirement.


Is speedy justice possible in Pakistan, or should Pakistani judges also be tearful like the chief justice of India?

Understanding the numbers: On the basis of the official statistics available up to Dec 31, 2014, there are 1,754,420 cases pending in the Supreme Court, Federal Shariat Court, high courts and the district courts in Pakistan. The breakdown is as follows: Supreme Court (22,764), Federal Shariat Court (1,014), Lahore High Court (164,683), Sindh High Court (70,046), Peshawar High Court (27,541), Balochistan High Court (5,279), Islamabad High Court (14,500), Punjab district courts (1,161,524), Sindh district courts (127,314), KP district courts (145,203), Balochistan district courts (9,458), and Islamabad district courts (27,858).

In addition to these cases, on the basis of official statistics available up to Dec 31, 2013, there are 123,531 pending cases before the various special courts and tribunals (eg anti-terrorism courts, national accountability courts, banking courts etc.). Therefore, the grand total of all cases pending before various courts is 1,900,715 and even if the statistics are updated, it is most probably around 2.1m cases.

A more detailed scrutiny of the statistics reveals as follows. Firstly, the delay in case disposal is further complicated by the avalanche of new cases. For example, the Punjab district courts in 2014 disposed of 1,885,534 cases but there were 2,037,110 fresh cases instituted before it. Another example is the Lahore High Court which in 2014 disposed of 152,776 cases but there were 144,422 new ones instituted.

Secondly, pendency is unevenly distributed across Pakistan and is not necessarily proportionate to size and population. For example, there are more cases pending in the Islamabad High Court (14,500) and Islamabad district courts (27,858) than in the Balochistan High Court (5,279) and the Balochistan district courts (9,458). Also, there are more cases pending in the KP district courts (145,203) than in the Sindh district courts (127,314).

Thirdly, even within each province, there are more cases pending in certain districts than in others.

Fourthly, even within each high court, there is a pendency concentration of certain kinds of cases. For example, in the Sindh High Court, a major portion of pending cases consists of civil suits and writ petitions.

Fifthly, there is a pendency concentration in certain special courts and tribunals. For example, there are 43,130 and 13,954 cases pending in the banking courts and the appellate tribunal inland revenue respectively as compared to 2,505 cases in the anti-terrorism courts.

Possible solutions: Unlike the over 20m cases pending in the Indian courts, a two-million case pendency in the Pakistani courts is a solvable problem. But beware, 15 years from now, this pendency can easily reach 5m on the basis of the current avalanche of new cases.

Although numerous solutions can be proposed, the following suggestions are critical.

Firstly, the solutions to the problem of delayed justice must come from the judiciary itself. The judges are the foot soldiers in this battle against the pendency of cases, and the feedback regarding the problems faced by them in the management of this is critical to any solution. Part of this solution is an indigenous management strategy regarding case pendency which is both relevant and practical to Pakistan and not to England. We must abandon our colonial mindset.

Secondly, the problem is: there are too few judges chasing too many cases. Moreover, there is a concentration of case pendency in certain courts, in certain territorial areas and in certain categories. True, there should be a general increase in the number of judges in all courts. But as the above statistics show, some courts need more judges than others. Therefore, all current judicial vacancies need to be filled and the number of judges should be increased in specific high courts and specific district courts with high-case pendency.

Thirdly, it is not possible to reduce the delay in all pending cases. Therefore, in the short and medium term, pendency in cases of public priority should be targeted for reduction eg older cases pending since before 2000, terrorism cases, criminal cases involving persons in custody, women and minority rights cases, selective commercial cases, tax cases etc.

Fourthly, simplification of the law relating to case procedure, especially the law of evidence and reform of the appeals process, is needed. This is where the legislature must act.

As compared to a judicial commission on the Panama leaks, what is more urgent is a judicial commission on the issue of delayed justice. Trying to solve this problem now may help our future chief justices and judges celebrate instead of shedding tears over the Pakistani judicial system.

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DRT Solutions Weekly Mail – 412th Issue dated 29th April ’16

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


(1) Diffusing Judicial Burden


The following news item is self explanatory:-


April 28, 2016

Updated: April 28, 2016 01:18 IST

Diffusing the judicial burden


Why the debate on the National Court of Appeal is so vital for our democracy.

The Supreme Court’s request to the Central government to consider the possibility of establishing a National Court of Appeal has elicited mixed reactions from the legal community. Bodies such as the Law Commission of India have given their considered opinion, and from these a solution must emerge.

The issue relates to access to justice, that is at the core of our constitutional values, and thus problems related to the issue have to be understood in their entirety and possible solutions must be deliberated upon and discussed by all stakeholders. The problem is essentially threefold.

The Supreme Court was meant to be a Constitutional Court. However, the sheer weight of its case backlog leaves the court with little time for its primal functions. In spite of recently accelerated rates of case disposal in the Supreme Court (in 2015 it disposed of 47,424 cases compared to 45,042 in 2014 and 40,189 in 2013), the backlog was still a staggering 59,468 cases as of February 2016.

A ‘substantial question’ of constitutional law has to be heard by five or more judges. According to a study by Nick Robinson titled “A Quantitative Analysis of the Indian Supreme Court’s workload”, in the 1960s it was common for the court to decide over 100 such cases a year. He points out that in the past decade, because of the unreasonable workload borne by the court, the average is now fewer than eight constitution benches a year. In effect, therefore, the functions of the Supreme Court as a Constitutional Court have been seriously impaired.

Ease of access

Geographical proximity to the court is definitely an aspect of access to justice. The fact that the Supreme Court sits only in New Delhi limits accessibility to litigants from south India. Mr. Robinson’s study reveals that of all the cases filed in the Supreme Court, the highest numbers are from high courts in the northern States: 12 per cent from Delhi, 8.9 per cent from Punjab and Haryana, 7 per cent from Uttarakhand, 4.3 per cent from Himachal Pradesh, etc. The lowest figures are from the southern high courts: Kerala 2.5 per cent, Andhra Pradesh 2.8 per cent, Karnataka 2.2 per cent and a mere 1.1 per cent from Madras High Court. There is therefore an urgent need to find a solution to such an inequitable state of affairs.

The Supreme Court, it must be acknowledged, has played its role as sentinel qui vive of the Constitution with aplomb. This does not, naturally, go down well with the other organs of the state and while their present proclivity to abide by the orders of the Supreme Court is creditable, it is but natural that attempts may be made to curtail the constitutional powers of the court. The problem of backlog may be a convenient handle for the other organs of the state to seek drastic curtailment of the court’s powers. Well-regarded leaders in stable democracies have attempted this in the past.

Franklin D. Roosevelt saw nothing amiss in using his presidential powers to attempt to ‘reorganise’ the American Supreme Court when it consistently dealt death blows to many of the legislations brought in under the rubric of the New Deal. The pendency of cases before the Supreme Court was at that time cited as the ostensible reason for the ‘reorganisation’ plans. In pursuance of the same, Senators William H. King and Warren Austin called upon Chief Justice Charles Evans Hughes to appear as a witness in the Senate hearing and to outline the court’s ability to deal with its docket. Chief Justice Hughes refused, and instead sent a note which ultimately played an important role in thwarting the President’s plan to reorganise the court.

An institution which on a daily basis hauls up several other bodies for defects and deficiencies must place itself well above criticism of any nature. It is only such an unassailable stature that can add to its effective functioning.

A reasoned solution

In considering the issues posed by the Supreme Court to it, the Central government has a rich repository of information which it must refer to in order to reach a well-reasoned decision. The 229th report of the Law Commission of India delved into this problem in depth and came up with the suggestion of retaining the New Delhi bench of the Supreme Court as a Constitutional Court and the establishment of Cassation Benches of the Supreme Court in the four regions at New Delhi, Chennai/Hyderabad, Kolkata and Mumbai. The 2009 report pointed out that since Article 130 of the Constitution provides that “the Supreme Court shall sit in Delhi or such other place or places as the Chief Justice of India may with the approval of the President, from time to time, appoint”, the creation of Cassation Benches of the Supreme Court would require no constitutional amendment. It also pointed out how this basic model with appropriate variations has worked very successfully in countries such as Italy, Egypt, Ireland, the U.S. and Denmark.

In coming to its conclusions and recommendations the report had also made extensive reference to the 95th report of the Law Commission titled “Constitutional Division within the Supreme Court — A proposal for”; the 125th Law Commission report titled “The Supreme Court — A Fresh Look”; reports of the parliamentary standing committee on personnel, public grievances, law and justice as also the 120th report of the Law Commission on “Manpower planning in judiciary”.

In addition to the above, Mr. Robinson’s report referred to earlier is also available to guide the deliberations of the government.

The Supreme Court has earlier rejected suggestions to have benches of the Supreme Court in other parts of the country. Given this fact, it is imperative we look at other options to the problem and seriously debate the possibilities. The solution may not even be the National Court of Appeal but a completely different idea which emerges during the course of deliberations and is found acceptable to the government, the Supreme Court and the stakeholders. It is, however, important that whatever may be the consensus, it must find a solution to the problems mentioned earlier.

As the saying goes, if we do not do something because it has never been done before, we will go nowhere. The law will stagnate while society advances, which is not good for both.

(2) Complaint against Chandigarh DRT-1 Presiding Officer


The following news item is self explanatory:-

Punjab and Haryana HC grants Centre 2 weeks to decide on complaints against DRT-I presiding officer

Says ‘DRT should be scrapped’ as ‘civil courts are doing better’ .

Published:April 27, 2016 4:14 am


TAKING A serious view of the functioning of Debt Recovery Tribunal (DRT)-I at Chandigarh and allegations of misbehaviour with advocates by its presiding officer Harcharan Singh, the Punjab and Haryana High Court has granted two weeks’ time to the Union Finance Ministry to decide three pending complaints against him about misbehaviour and financial irregularities.

A division bench comprising Justices S S Saron and Gurmit Ram, during the arguments of the case on Monday, observed that “DRT should be scrapped” as “civil courts are doing better than DRT”. The court said that the manner in which DRT was functioning, it would be more appropriate that cases be transferred back to the civil courts. Before the constitution of the DRT at Chandigarh in 2000 with the sole aim of expeditious trial of claim applications by banks and financial institutions against their defaulting borrowers, its cases were being heard by the civil courts.

Speaking for the bench, Justice Saron also made an observation that the court had come to know about Harcharan Singh’s harassment and misbehaviour even with the senior High Court advocates. DRT-I has jurisdiction over Haryana, Chandigarh and Himachal Pradesh.

It was on September 16 last year that Additional Solicitor General of India Satya Pal Jain had informed the High Court that the Union Finance Ministry had sent the complaints to the then chairman of Debt Recovery Appellate Tribunal (DRAT) at New Delhi, Justice (retd) Ranjit Singh. Justice Singh retired on April 4.

However, Jain assured the court to submit the status of complaints within two weeks.

The High Court had taken suo motu cognisance of the functioning of the DRT-I last year and had ordered its Registrar Vigilance to conduct an inquiry into the allegations of misbehaviour and financial irregularities by Harcharan Singh in July last year. After going through the sealed cover report of the Registrar Vigilance on the last date of hearing on March 15, Justice Saron had observed that the report spoke more of the working and conduct of the presiding officer of DRT-I than the functioning of its registry. Earlier, the High Court had also observed that the presiding officer had failed to pronounce the judgment in a case even for more than eight months after the judgment was reserved.

DRT advocate I P Singh filed an application seeking a copy of the Registrar Vigilance’s inquiry report to enable DRT advocates to improve functioning of DRT on the suggestions in the report.

Amicus curiae in the case, advocates R S Bhatia and Vikas Mohan Gupta, contended that they should also be provided a copy of the report so that they could come to know whether any follow-up action was required or they should be discharged from the case.

However, advocate N C Sahni representing DRT Bar Association (Punjab) opposed the handing over of the report to the advocates stating that the report could be used to damage the image of the presiding officer.

The court will now decide about the report on May 10.

The DRT Bar Association members had from July 1 to 7 last year refrained from work in their protest against Harcharan Singh. The members had alleged that he was not only in the habit of misbehaving with the advocates but also with various senior bank officers after summoning them, and his attitude was vindictive against them.


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DRT Solutions Weekly Mail – 411th Issue dated 22nd April ’16

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


(1) SC Fines for Loss of Judicial Time


The following news item is self explanatory:-
Supreme Court Fines 3 Firms Rs. 25 Lakhs Each For Loss Of 'Judicial Time'

All India | Press Trust of India | Updated: April 20, 2016 03:26 IST


NEW DELHI:  Supreme Court on Tuesday slapped a fine of Rs. 25 lakh each on three companies, including a German firm, which have been involved in legal battles emanating from their contracts, saying it was a classic case of "unscrupulous litigants with money power" abusing the judicial process.

"We ... deem it appropriate to impose exemplary costs quantified at Rs. 25,00,000 to be paid by each of the three parties i.e. GGL, MGG and RUIAS.

"The said amount is to be paid to National Legal Services Authority as compensation for the loss of judicial time of this country and the same may be utilised by the National Legal Services Authority to fund poor litigants to pursue their claims before this Court in deserving cases," a bench comprising Justices J Chelameswar and A M Sapre said.


The companies which have been fined are German firm Messer Griesham GmbH (MGG) and Indian firms Goyal Gases Ltd (GGL) and Bombay Oxygen Corporation Limited.

The apex court, in its order, said "this case, in our view, is a classic example of abuse of the judicial process by unscrupulous litigants with money power, all in the name of legal rights by resorting to half-truths, misleading representations and suppression of facts.

"Each and every party is guilty of one or the other of the above-mentioned misconducts. It can be demonstrated (by a more elaborate explanation but we believe the facts narrated so far would be sufficient to indicate) but we do not wish to waste any more time in these matters."

Initially, German firm MGG entered into a Share Purchase and Cooperation Agreement with the shareholders of GGL.

Subsequently, MGG entered into a similar agreement with BOCL, in a move that was objected to by the GGL.

The legal battles ensued among them which went on for nearly two decades at various judicial fora, including the apex court.

"The net effect of all the litigation is this. For the last 18 years, the litigation is going on. Considerable judicial time of this country is spent on this litigation. The conduct of none of the parties to this litigation is wholesome," the apex court said.


(2) Strike in DRT


The following news item is self explanatory:-

Strike hits Debt Recovery Tribunal

TNN | Apr 17, 2016, 06.13 AM IST



Ahmedabad: For the first time the Debt Recovery Tribunal (DRT) office under the Union ministry of finance witnessed a complete strike on Saturday.

The strike was led by the bar association at the tribunal who protested a six-day working day for the tribunal. Lawyers demanded that the central government's five day week working schedule be made applicable as any central government staff should work for 42 hours in a week - which is five days. The DRT was established to help financial institutions recover dues without the hassle of passing through lengthy procedures of civil courts. The lawyers have threatened that they will not allow any procedures till April 21, if the finance ministry does not withdraw a notification under section 19 that has made six-day working compulsory for the tribunal.

"There are no stenographers to type lengthy tribunal proceedings, nor there is enough competent staff to handle cases. And now the government insists that the tribunal work for six days. We as lawyers need time for case preparations and debt tribunal cases are quite complex. We have declared a strike and will continue till April 21," said Gujarat DRT Advocates' Association president Kulin Shah. Tnn


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

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

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

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