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
http://indianexpress.com/article/opinion/columns/defining-public-interest/
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
http://blogs.timesofindia.indiatimes.com/toi-edit-page/what-causes-judicial-delay-judgments-diluting-timeframes-in-code-of-civil-procedure-worsen-the-problem-of-adjournments/
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.
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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
http://www.firstpost.com/india/huge-cost-of-litigation-means-denial-of-justice-to-the-poor-in-india-2961484.html
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.
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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
http://www.moneycontrol.com/news/economy/parliament-passes-bill-for-easier-debt-recovery_7238101.html
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
http://www.frontline.in/the-nation/a-for-reform/article8932526.ece
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,
http://www.indiatvnews.com/business/india-lok-sabha-passes-bill-to-fast-track-debt-recovery-vijay-mallya-like-situation-to-be-avoided-342047
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
http://timesofindia.indiatimes.com/india/JPC-proposals-on-Sarfaesi-Act-DRT-to-ease-business/articleshow/53348156.cms
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
All Weekly mails right from 1st Issue to latest, click
links on top of this page
(1) Hyderabad HC – Paperless – Country’s First
The
following news item is self explanatory:-
In a first, Hyderabad HC goes paperless with e-courts
Published: 17th July 2016 07:22 PM
http://www.newindianexpress.com/cities/hyderabad/In-a-first-Hyderabad-HC-goes-paperless-with-e-courts/2016/07/17/article3534008.ece
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
http://indianexpress.com/article/business/banking-and-finance/over-8100-willful-defaulters-owe-banks-over-rs-76600-crore-arun-jaitley-2923796/
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
All Weekly mails right from 1st Issue to latest, click
links on top of this page
(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
HTTP://WWW.NDTV.COM/INDIA-NEWS/OVER-2-CRORE-CASES-IN-INDIAN-COURTS-AWAIT-A-VERDICT-1423643
NEW DELHI: 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
https://www.google.com/url?rct=j&sa=t&url=http://www.dnaindia.com/analysis/column-access-to-justice-is-a-fundamental-right-2233867&ct=ga&cd=CAEYBSoTMzgwMTExNzI0NDQ2NjQ2NzQwMzIcYTIyNzQ0YjY5Y2VjNzdhMjpjby5pbjplbjpJTg&usg=AFQjCNGsZh0BaK2dXjVLTxSi3vjoJTsPCA
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
All Weekly mails right from 1st Issue to latest, click
links on top of this page
(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
http://www.diamonds.net/(S(j4wvcamtrpjs0v55lwh2rvfi))/News/NewsItem.aspx?ArticleID=57491&ArticleTitle=Shrenuj+Seeks+Legal+Opinion+Over+Bank+Action
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
http://economictimes.indiatimes.com/wealth/real-estate/supreme-court-asks-unitech-to-deposit-rs-5-crore-for-delay-in-handing-flats/articleshow/53008701.cms
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
All Weekly mails right from 1st Issue to latest, click
links on top of this page
(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
http://indianexpress.com/article/india/india-news-india/sc-collegium-sc-judges-appointment-ts-thakur-nda-govt-2880284/
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
http://www.thehansindia.com/posts/index/Hans-Classroom/2016-06-18/Debt-recovery-bill/235987
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
http://www.financialexpress.com/article/fe-columnist/heres-what-will-add-bite-to-new-bankruptcy-law/290254/
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
All Weekly mails right from 1st Issue to latest, click
links on top of this page
(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
http://timesofindia.indiatimes.com/business/india-business/Vijay-Mallya-colluded-with-bankers-alleges-StanC/articleshow/52772495.cms
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
http://mintonsunday.livemint.com/news/violent-words-free-speech-and-the-indian-constitution/1.0.4019103091.html
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
http://timesofindia.indiatimes.com/city/delhi/Parl-panel-invites-public-comments-on-debt-recovery-laws/articleshow/52652303.cms
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
http://indianexpress.com/article/india/india-news-india/indian-judiciary-shortage-judges-ts-thakur-2-crore-cases-pending-in-indias-district-courts-report-2842023/
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
http://www.livemint.com/Companies/RPONCTtSvBnietlRa86p5H/Vijay-Mallya-case-Debt-recovery-tribunal-to-hear-SBI-plea-t.html
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
By RAJEEV
DHAVAN
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.
Issues
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.
Choice
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.
Law
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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391-Latest
(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
http://www.tribuneindia.com/news/nation/story/241388.html
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
http://www.patnadaily.com/index.php/readers-write/11803-indian-judiciary-supreme-court-and-high-courts.html
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
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mails. We welcome suggestions.
DRT Solutions Weekly Mail – 415th Issue
dated 20th May
’16 – Camp Delhi
All Weekly mails right from 1st Issue to latest, click
links on top of this page
(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
http://www.business-standard.com/article/finance/drt-vs-vijay-mallya-debt-recovery-laws-prevail-over-bank-s-confidentiality-clause-with-clients-116051800823_1.html
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
http://www.livemint.com/Opinion/beekHMzutk7PQJG0fiOTuI/Supreme-Courts-curious-approach-on-defamation.html
http://www.livemint.com/Opinion/beekHMzutk7PQJG0fiOTuI/Supreme-Courts-curious-approach-on-defamation.html
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.
DRT Solutions Weekly Mail – 414th Issue
dated 13th May
’16 – Camp Delhi
All Weekly mails right from 1st Issue to latest, click
links on top of this page
(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
http://www.livemint.com/Politics/mQNm3XHXSqFVFoSCGsn3bO/Parliament-clears-Insolvency-and-Bankruptcy-Code-2016.html
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.
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
http://www.theguardian.com/world/2016/may/05/indias-long-wait-for-justice-27-million-court-cases-trapped-in-a-legal-logjam
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.
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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.
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
http://indianexpress.com/article/cities/chandigarh/punjab-and-haryana-hc-grants-centre-2-weeks-to-decide-on-complaints-against-drt-i-presiding-officer-2772023/
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.
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
HTTP://WWW.NDTV.COM/INDIA-NEWS/SUPREME-COURT-FINES-3-FIRMS-RS-25-LAKHS-EACH-FOR-LOSS-OF-JUDICIAL-TIME-1397367
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
http://timesofindia.indiatimes.com/city/ahmedabad/Strike-hits-Debt-Recovery-Tribunal/articleshow/51860956.cms
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
