Court
Craft – Review, Facts, Trial, Technology & Health
(Background Paper for the Talk delivered during the All India Conference held
on 4th May ’08)
-
Ram
Kishan
1.0
Introduction
At
present, the banks and financial institutions file their suits in DRTs (i.e.
Debt Recovery Tribunals) for the alleged claims above Rs. 10 lacs in accordance
with the DRT Act 1993. They may even invoke Securitisation Act 2002. In some
cases, they may even invoke the provisions under the Criminal Act. The said
actions by the bank are confined to emphasis only on recovery with least
attention to revival of the sick business/industry. The acute problem of the
borrowers and guarantors is how to face such suits and or recovery actions in
DRTs and or the court of law. The fight is just like between a sick hungry child
with a well fed wrestler or just like between a weakest with a mightiest. In
this article we bring about certain practical aspects and suggestions to face
the said actions effectively. You may send your list of questions so that the
same may be answered during the lecture. The talk by the author in the ensuing
conference will elaborate with greater details using a PowerPoint Presentation.
Subsequently video record of the said talk will also be available in form of
CD/DVD.
2.0
Courts are for Justice
The
entire arrangement of courts such as DRT, Civil Courts, High Courts and the
Supreme Court of India is only for Justice. The Supreme Court of India has said
that “the first duty of the Court is to do justice” vide citation 2003
Cr.L.R. [SC] 367 State of Maharashtra vs Dr. Praful B. Desai. The borrowers,
guarantors and their advocates must be determined to ensure that they have to
get justice from the existing system on every date. The obvious hurdles are
realities that the judges are heavily loaded, there is huge pendency, advocates
do not have time for requisite preparations and presentation before the court,
the judges in DRTs are in a hurry, the borrowers and their advocates are not
having adequate knowledge of banking, finance and related legal aspects etc.
Despite all these when decrees can be issued and executed by this system, the
defendant borrowers and guarantors need to have more effective and serious
measures to get justice. In this article we will outline the said measures and
how to achieve results. With our guidance, many of our clients have achieved
successful results.
3.0
Basic concepts in DRT Defence in the matter of Recovery of
alleged Bank Overdues
We have done lot of factual and legal research
in this arena and the details may be seen at our web site
www.drtsolutions.com
in which copies are available of two of our articles published in ‘Financial
Express’ in 2001 viz the titles being – (1) ‘Who’s afraid of Debt Recovery
Tribunals’ and (2) Debt Recovery Tribunals – There’s way out for defence of
Guarantors’ and 70 letters to editor. Our views are further contained in an
article ‘NPA Recovery by Banks – Defence of Borrowers’ vide copy link being
http://www.drtsolutions.com/conference.htm which was published in the
souvenir brought out on the occasion of ‘All India Fiscal & Corporate Law
Conference’ 24th
& 25th
February 2007 at Indore hosted by the Institute of Chartered Accountants of
India in which about 1000 CAs participated. The key concept is that after
nationalization of banks in India in 1969, the financial assistance by banks and
FIs is based on Viability of Project/Scheme and not the security. The payment of
interest and repayment is out of profit and under such legal framework the
financial assistance is sanctioned and hence the recovery will be only when the
profit is generated. Keeping these aspects in view only, the scheme for revival
and rehabilitation had been laid down in the statutory RBI Guidelines since
1976. Further for the first time in the country, we have applied law of torts
and law of damages for the violations of duty of care as well as the said
statutory RBI Guidelines. These concepts have been employed by us in the
pleadings prepared by us for several of our clients all over the country. I have
dealt with these concepts in detail in the ‘All India CA Conference’ held in
Indore on 25th February 2007 as well as in the interactive session
held in Chennai on 21st and 22nd July 2007. Video CDs of
both the said deliberations are available with the author of this article. Study
of the mentioned web site and the CDs will equip the person concerned with the
basic concepts propounded by us for the defence of borrowers in the DRTs.
4.0
Assumptions and Conditions Precedent
In this
article, we assume that the basic concepts mentioned in the previous paragraphs
have been grasped and the pleadings of the defence have been prepared
accordingly by agency like us who have mastery of facts and mastery of law
before commencing the drafting. It is further assumed that proper counter-claim
or damage suit has been framed and filed against the applicant bank or the
financial institution. It is assumed that the key person from the borrowing
company is one of the partied in the counter-claim or damage suit. In this
article we will deal with the activities just after this stage. If the reader of
this article is not aware about our said ground work, he should study our web
site in details, read our articles and view our CDs/DVDs already issued and
having video records of the talks given by the author in CA Conference,
Interactive Session in Chennai and a CD titled ‘How to win in DRT’ The said set
of CDs/DVDs may be obtained from the author vide address at the bottom of home
page of our web site i.e.
www.drtsolutions.com The author welcomes personal interactions at Indore
after getting prior appointment on phone vide (M) – 093 0210 3689 or fixing the
prior appointment through e-mail vide ID
ramkishan@drtsolutions.com or
ramkishandrt@gmail.com
5.0
Every
new business or new industry is just like a new born child
Parents
are under no obligation to produce a child. But once a child has been born, it
has a right to be grown and developed with due care and it is the duty of the
parents to do so otherwise as per law of torts, the child is entitled for
compensation if the said duty of care is violated. Similarly the same concepts
apply to a new business or an industry which is sanctioned a financial
assistance. We have developed this concept and used the same in the pleadings
prepared for the counter-claim or damage suits against the lending banks and
financial institutions. In most of the cases, the said counter-claim or damages
are more than the alleged claim of the said banks and financial institutions and
hence there is no debt due. As a result, no recovery action can be initiated
till the question of debt due is judicially decided. The practical use of this
concept is given in detail in the ground work mentioned in Para No 4.0 above.
Now let us proceed further i.e. after filing the said counter-claim or damages
against the lender, the case proceeds in the court or DRT. We shall elaborate
the winning strategy in the following paragraphs.
6.0
How to prepare for a date in the court
Time and
costs are very important in the proceedings in DRTs and or Civil Court but the
Justice is above all, it cannot be sacrificed on account of any reason,
whatsoever. It has no relation whether the judges are overburdened, advocates do
not have required knowledge, there is huge pendency in courts or special courts
like DRTs are empowered to ignore justice. The defendant borrower and or
guarantor and their advocates must prepare for any date at least 7 days in
advance. We provide full guidance for such preparation on phone or through
e-mail, audio and video records etc. In crucial matters even our expert
advocates can be made available. All options during ensuing proceedings must be
examined and prepared for various alternatives. Complete provisions of law and
procedure of law must be scrupulously be followed. Proper records be made in the
court proceedings and from time to time, certified copies of the proceedings be
obtained. The law is highly scientific. If anyone comes with a shortcut, please
tell him in a gentle manner that in our case it will not be possible. Perfection
on every date is the key word. If the judge is in a hurry, please tell him in a
respectful manner that adequate time and attention has to be given and if on
particular date it is not possible, the case be adjourned to such date where it
will be possible. Any failure in this respect will weaken the case for future
and no correction will be possible. Perfect trial will result in least time and
least costs. The advocate should be sincere, hard working and have sparable time
for preparing in depth much in advance of the date. Very senior or very junior
advocates will not fulfill these criteria and hence proper foundation of the
case will not be created leading to ultimate failure. In case of those clients
who are availing of our ‘Advocacy Services’, all these factors are scrupulously
taken care of.
7.0
How Trial should be conducted and costing
The
perfect method for conducting trials, its principles and practice has been
nicely laid down by the Supreme Court vide AIR 1969 Supreme Court 1167,
Swaranlata vs Harendra Kumar Every borrower taking part in DRT litigations
and his advocate must understand and assimilate this important judgment of the
Supreme Court of India. The defendant must keep a record of attendance in the
court and must carry out consting on date wise.
8.0
Thorough Watch and Examination of court proceedings and orders
As soon
as any court proceedings are over, proper recording of the proceedings are very
important. The defendant and his advocate must be very careful that correct
proceedings are recorded and signed by the advocate. If there are any mistake or
error, the same must be corrected then and there only. The defendant must keep a
record of the said proceedings by obtaining certified copies from time to time.
Similarly as soon as any order is received, it must be gone through word by word
thoroughly. If there is any mistake or error on face of records or if there is
any misconception of facts by the advocate or by the judge, the order must be
corrected under the provisions of law pertaining to ‘Review’ which is discussed
in detail in the following paragraphs.
9.0
The
Important Provision of ‘Review’ in CPC 1908
(a)
As
emphasized in previous paragraphs, every proceeding in the court of law
including that in DRTs must be perfect. The proceeding depends on pleadings
(assuming that the pleadings are perfect) of both the parties, arguments in
depth, proper understanding by the judge and reasoned order in accordance with
the law and procedure of law. Thus since first of all the original proceedings
and the interim order issued thereon itself being done perfectly will itself be
perfect. Since in such process human beings are involved, there may be slight
mistake, error or deficiency. The said shortcomings may be corrected by the
process of review. The order thus issued may be called to have attained
finality. Out of the two contesting parties whosoever is not satisfied may
approach to the High Court and if further needed Supreme Court. The test of the
quality of the order is that the said order should not be modified by the higher
points.
(b)
At
present, the courts are heavily loaded. There is huge pendency. Hence the judges
are under great pressure to dispose off the cases quickly and in such quick
disposal, there is all likelihood of committing mistakes and errors. Hence the
provision of review has become highly important. Another aspect is that the
higher courts being overloaded read only the order issued by the lower court and
hence once a defective order of lower court goes to higher courts without
corrections, one can not think of getting it corrected by the higher courts.
Under such facts and circumstances, it is all the more important that the
defendant borrower or guarantor must be quite serious to achieve perfection in
trial court only. In this context, if the order is having any defect which can
be corrected by review, it must be done.
(c)
The CPC
1908 is most litigated enactment and is now more than 100 years old. The
substantive law of ‘Review’ is contained in Sec. 114. The procedural aspects of
the said “Review” and its ingredients are contained in Order 47 of the CPC 1908.
It is prescribed in the said sec 114 that the Court may make such order
thereon as it thinks fit. “the Court” means such a court which is fully
competent in all respect. ‘may make such order” means there is no restriction of
any kind. “as it thinks fit” means first of all the thinking must be perfect
taking into account all the facts as well as all the provisions of the law. It
is needless to mention that these provisions are in existence by more than 100
years. During this period, many cases of the review must be successful. Even in
one of the cases in 1997, the author has seen the order of review in his favor.
(d)
Normally
the advocates are not in favor of review and they say that the judge is not
going to change his order. The judges are also not inclined to pay requisite
attention to the review. The said advocates and judges say that the scope of
review is very much limited and hence even in deserving cases, they are not
inclined to invoke the above mentioned provisions of Review. We have done lot of
research in this field for past several years. We have gone through several
judgments of the Supreme Court and our analysis shows that in achieving
perfection in trials, the review plays an important role and it must be paid
most serious attention by the trial lawyers. In fact due to our insistence many
of our clients have invoked the provisions of review. In case the review is not
completed and the limitation for appeal approaches, the appeal also is required
to be filed. Under these facts and circumstances, till review is decided, the
appeal is required to be kept pending. Now we shall take up the detailed
analysis of the said provisions of review.
10.0
Discovery of Facts in Counter-claim or Damage Suit
(a)
It is a
well known fact that right from the inception all the original documents are in
possession of the banks. All the facts i.e. material and relevant facts are
contained in the said documents. The banks file recovery suits i.e. application
in DRT based on standard proforma for an ordinary loan. The material facts
relating to industrial or business loans are not contained in the pleadings of
the banks submitted to DRT. As mentioned in earlier paragraphs, we did lot of
research in this arena and have been instrumental in bringing about those
missing facts in the counter-claim or damage suits filed by the borrowerst
Discovery such facts becomes most important part of the trial in DRT or civil
courts. On one hand, since the bank has suppressed such facts in their
pleadings, they try not to produce such documents so that the said facts are not
revealed. In their written statement to counter-claim or damage suits, the banks
normally submit near total denial. Hence the defendants is entitled to discover
all such facts in issue. The borrowers are advised to apply the well defined
procedure of law laid down in Order 11 of the CPC so that prescribed notice is
sent to the bank and application is submitted to the DRT for inspection of the
documents. If this process is keenly followed, the bank will be forced to come
out with all the material and relevant documents otherwise their defence will be
closed as per provisions of law laid down in O-11 R-21.
(b)
Here the
borrower and his advocate have to be quite alert and vigilant about the attitude
of the Judges in DRTs or Civil Courts. The said judges normally go by their
common sense which is not correct as per the principles of equity, justice and
good conscience. That is why we insist to submit written arguments, review and
appeal if there is any error or mistake in the interim orders. The borrower and
his advocate will have to fight tooth and nail so the trial is strictly
conducted as per law and procedure of law laid down in CPC as well as that in
the Supreme Court judgment in the matter of Swaranlata vs Harendra Kumar vide
citation AIR 1969 SC 1167
11.0
Presentation of Accounts by the Banks and FIs in Court of Law
including DRTs Checking of the said Accounts
The Banks
are submitting copies of their Accounts in DRTs and Court of Law without
bothering about the provisions of law in respect of such presentation. The said
Law is contained in the DRT Act 1993, DRT Rules 1993, The Bankers’ Books
Evidence Act, 1891 and The Information and Technology Act 2000 and the law laid
down the Supreme Court by a constitution bench of 5 judges in Central Bank vs
Ravindra, AIR 2001 SC 3095 Thus the suits filed by the banks and FIs are
not maintainable ab initio.
12.0
Cross
Examination of Bank Officials
Despite
all efforts, all the material and relevant facts may not be discovered with the
application of Order 11 of the CPC. Hence the next most important stage of the
trial is ‘Cross Examination of the Bank Officials’ Keeping these aspects in, we
have been including various concerned bank officials right from the Chairman of
the Bank to the Branch Manager in the pleadings of the counter-claim and damage
suit. If the Chairman has any shortage of time to come to witness box, we
mention in the pleadings that he may be examined in his own office and video be
prepared of such examination. The cross-examination of all the bank officials
must be conducted by a person who has mastery of facts and mastery of law
relating to banking, industry, RBI Guidelines, law of torts and law of damages.
The aim of the cross examination is to extract all the missing facts and finally
to obtain admissions for all the wrong doings.
13.0
Objective
and Goal of the Trial - Admission of Wrong Doings by the Bank Officials
All out
efforts are to be made by the borrower and his advocate to obtain admissions of
the wrong doings by the bank officials right from the inception to various
stages of the trial. This is possible only when lot of hard work is done right
from the inception with complete knowledge and experience. The present
environment being in favour of the banks and being against the borrowers makes
the task extremely difficult but with proper knowledge, guidance and advice from
agency like us, it can be done.
14.0
If there is Persistent Injustice by the Judge, Remedy is Tranfer
of Court
Despite
all best efforts by the borrower and his advocate, there is persistent
injustice, the injustice should not be tolerated and the provisions of CPC under
section 24 i.e. Change in Court or Change in DRT should be invoked.
15.0
The
Final Arguments be held only when all the above mentioned requirements of Trial
have been fulfilled
(a)
In many
cases in DRTs, there is a hurry to complete the case. Just after filing the
application by the bank, the judge applies pressure for the WS. After WS,
parties are pressed for proof affidavit and then final arguments are held. The
defendants and their advocates are advised that until an unless all the
requirements under the law and procedure of law are fully and perfectly
satisfied, final arguments should not be held.
(b)
As
advised in previous paragraphs, perfect trials have to be held on all dates,
facts should be judicially determined, correct law be applied and then only
conclusions be drawn. There can not be any compromise or violation of the legal
provisions by anybody including the Judge or the Advocates. Justice is above
all. Even law bends before Justice.
16.0
During the course of DRT Litigation, if there is any proposal by
the Bank for settlement, it should not be more than 3% to 5%
If the
defendant has filed counter-claim or damage suit against the bank and the trial
is conducted in accordance with above mentioned legal procedure, there is
likelihood of the bank coming forward for settlement. No settlement should be
carried out for more than 3% to 5% of the overdues as some of the parties have
achieved such settlements.
17.0
Study of RBI Guidelines, Supreme Court Judgments, Web Sites of the
Banks and FIs
It is in
the interest of the borrower to spend his free time in study of the above to
acquaint with the law on the subject and the global pronouncements being made be
the banks and the FIs.
18.0
Technology
There is
tremendous scope for better management and improved technology in the
DRTs/Courts. Mere enhancing number of judges and courts are not gong to achieve
the tremendous aspirations of the public in getting their problems solved
through the only wing of democracy i.e. judiciary.. .
19.0
Health
We have
been emphasizing that the bank litigations in DRTs are long drawn, time
consuming and expensive. The borrowers with limited means can not fight such
battle. Such persons should study our web site and along with their advocate
should fight to the stage whatever can be reached by them. In the meantime, we
are concentrating on the fights of those borrowers who are financially strong to
fight such battles. Even if the bank loses such fight, it will fight upto High
Courts and Supreme Court of India. The litigant borrowers have to be prepared
for such fight right from the inception. Those who wish to undertake such fight
has a great social responsibility. After the financial affordability, another
paramount factor for defendant legal fight in DRTs is the Health of the
defendant himself. At times, the development in the court room create tremendous
mental tension and with advancing age, the teachings and practice of Pranayam
taught by Swami Ramdevji is the best solution for keeping sound health under any
circumstances. If one can practice his method during 5 AM to 7:30 AM telecast of
Aastha channel, it will give tremendous benefits to physical, mental and
spiritual health.
20.0
Legal Forum of India
Several
aspects of bank litigations are related to defective or incomplete legislation
as voiced by us on our web site vide page titled ‘Legal Forum of India’
21.0
Conclusion
The
points mentioned in this article have been elaborated on our web site
www.drtsolutions.com The battle in court room is long drawn, highly time
consuming and quite expensive. But there is no option but to fight the same with
perfection and knowledge on every date. Side by side the ‘Legal Forum of India’
must relentlessly work for suitable amendment in legislation for effective and
built in implementation by the public servants as has been illustrated by the
RTI Act.
