DRT  Legal  Solutions

(Debts Recovery Tribunal Legal Solutions) is an India based

Law Firm specializing in DRT, Securitisation, Sarfaesi, IBC, NCLT, Borrowers, Guarantors in Debts Recovery Tribunals and Defamation Solutions with Damages

Pioneers in Counter-claims and Damage Suits based on Law of Torts and Law of Damages

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 DRT Solutions Weekly Mail - 271st to 280th Issues

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Expert in:- DRT, Counterclaim, securitization, debt recovery tribunal, NCLT  matters




DRT Solutions Weekly Mail – 280th Issue dated 20thSeptember ’13

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

(1) Useful Feedback from a Borrower Litigant in DRT 

Recently one of the borrowers facing litigation in DRT narrated his following experience which could be an eye opener to others:-

(a)   A financial consultant assured the borrower that he had very good relations with the top management of the lender bank and hence would arrange most economical settlement. Further the said consultant advised the borrower that he would also deal with the DRT litigation. The borrower fell into the trap and assigned the entire matter to the said consultant

(b)   The borrower went through our web site and during phone discussions desired our comments on the above arrangement. We advised him to be careful, alert and vigilant. We emphasized that he should attend all the dates in DRT and should go through the proceedings recorded. He should go through all the replies submitted by the bank.

(c)   The borrower did not heed to our advise and left entire matter to the said consultant and his advocate.

(d)   Recently the borrower informed that he lost the Securitisation Case in DRT, He found that the said consultant and his advocate colluded with the bank officials.

(e)   In several weekly mails as well as in several pages in our web site, we have cautioned the litigant borrowers to be always vigilant and alert. They should have sittings with their advocates at least a week in advance. We ask our clients to discuss with us the outcomes of the said sittings. As soon as the hearing is over, we ask our clients to keep us posted with the proceedings. We ask them to take out certified copies of the said proceedings and mail to us so that we may render suitable guidance and advice whenever needed.

(f)    Had the borrower heeded to our advice and gone through our weekly mails and the web site, he would have not lost the case in DRT.  

(2) RBI Governor & Finance Ministry to Stem Rising Bad Loans 

The following news item of 18.09.13 is informative and is self explanatory:-

RBI governor Raghuram Rajan, FinMin to stem rising bad loans

By Dheeraj Tiwari, ET Bureau | 18 Sep, 2013, 06.07AM IST


NEW DELHI: The Reserve Bank of India (RBI) governor Raghuram Rajan and the finance ministry will work out measures to stem the rising bad loans and ways to strengthen the banking sector.

In an hour-long meeting on Tuesday, Rajan and financial services secretary Rajiv Takrudiscussed new banking licences, the proposed Bhartiya Mahila Bank, financial inclusion and other banking sector reforms, an official told ET.

Ahead of his maiden monetary policy review, Rajan also met prime minister Manmohan Singh and finance minister P Chidambaram as the government readies a set of measures based on different scenarios when the US Fed decides to taper the stimulus.

The series of measures are likely to be announced by Chidambaram over the next few days. "Discussed a gamut of issues with the finance minister," said Rajan after his meeting with the finance minister. The rise in wholesale inflation to a six-month high 6.1% in August has made it difficult to cut rates to stimulate growth that is projected to fall to 4% this year. Both Rajan and Chidambaram have favoured consolidation among the 26 state-run banks.

"It was an informal meeting. A host of issues were discussed," said Takru, adding that the finance ministry will again hold discussions with RBI after the monetary policy is announced on August 20.

"We are going to meet Indian Banking Association (IBA) later this month. More measures will be announced after the discussions," added Takru.

The meeting can also set stage for more financial and managerial autonomy for bank boards, and additional powers to recover bad loans through the Debt Recovery Tribunals or SARFESI Act. The non-performing accounts or bad loans of state run banks rose to 3.84% of advances at the end of March from 2.32% in March 2011, forcing the ministry to look into the issue.

The finance ministry has been pushing banks to focus on their top 30 non-performing assets or NPAs. As on March 2013, top 30 NPAs of state-run banks are worth Rs 61,123 crore and constitute for 39.7% of their gross NPAs.

Earlier, Takru had said that banks will take strict action against wilful defaulters. He had warned that promoters who are wilful defaulters are likely to lose control or management of their companies. "If the companies don't shape up, they should ship out," he had said.

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DRT Solutions Weekly Mail – 279th Issue dated 13thSeptember ’13

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

(1) Bankers’ View – Recovery of Bad Loans still a Struggle as Defaulters use Law to Delay Process 

The Bankers’ View regarding recovery of bad loans is illustrated by the following news item. Banks forget that the fight with the borrowers is that between the Mightiest with the Weakest. It is just like a well fed Wrestler is permitted to fight with a sick hungry child. It is known to everybody that the Child will be killed but fight is allowed to take place to ascertain the winner. The banks have well established law department without any financial restrictions for the legal expenses staffed with persons with knowledge and long experience aided by numerous outside advocates. Despite 15 years back verdict of the Supreme Court that the DRTs should be transferred from Ministry of Finance to Ministry of Law, the Ministry of Finance continues to post bank officials as Judges and Recovery Officers in DRTs, continues to hold regular meetings with the said Judges. Despite numerous SC verdicts that the cases should be settled with due compensation, the bank advocates continue to fight upto Supreme court even for petty matters. Special court like DRTs are created to expedite recovery instead of improving civil courts which are having more than 6 crores cases pending. Draconian laws like Securitisation Act are enacted to expedite recovery. The collaterals like single dwellings are being forcibly sold without bothering what happens to the family and children of the hapless borrower. Under such facts and circumstances, numerous farmers are committing suicides. 

On the other hand the usual DRT litigants do not have money even for survival leave alone the legal expenses. He does not have proper knowledge and experience in court battles. He is destined to be killed like a sick hungry child in the battle with strong well fed wrestler. 

On account of above most unequal fight, if some borrowers having knowledge and resources to fight put up a fight based on law and legal process, the bankers complain about the legal process for recovery. In future more and more such fights will become common and the banks will have to face huge counter-claims and damages. The borrowers will use the ultimate knowledge of the Constitution of India and Law of Torts to bring all the wrong doings committed by the bank bureaucracy to the notice of the DRTs. If there is faster recovery process in DRTs for the banks, same thing will happen for the borrowers’ counter-claim and damages.

Recovery of bad loans still a struggle as defaulters use law to delay process

By Anita Bhoir, ET Bureau | 28 Aug, 2013, 11.59AM IST

The problem of credit recovery is compounded due to the differences among lenders over possession of collateral.

MUMBAI: Banks say recovery of bad loans is getting even more difficult as corporate borrowers are increasingly engaging lawyers with the intent to further delay repayment. 

"Borrowers are hiring the best of lawyers to delay the process of loan recovery," a senior bank executive said, who did not wish to be named. "With the rise in non-performing loans, the pressure of recovery is mounting. However, promoter borrowers are delaying the process, " he added. 

For instance, the Calcutta High Court recently restricted 
SBIBSE -1.71 % from getting photographs of defaulters published in newspapers and magazines, saying it is "impermissible". The court said in its order that "such a common practice by secured creditors is an act that resorts to extra legal means in the process of enforcing their security interest under the Securitisation and Reconstruction of Financial Asset and Enforcement of Security Interest Act, 2002". 

The bank executive quoted earlier cited another instance, where SBI had placed the two wheeler manufacturing company Global Automobiles in the category of 'willful defaulters'. The company challenged this in court and won Rs 51,000 in damages from the bank. 

"We are facing difficulties in recovering debt from companies like Bengal Shelter & Housing Dev, Barnaparichay Book Mall, 
Big Boss Infotech, Elba Enterprises and National Moulding Co, as they have taken legal recourse. These are just few names," the same executive said. 

The problem of credit recovery is also compounded due to the differences among lenders over possession of collateral. In the three months to June, gross non-performing assets (NPAs) in the 
Indian banking system increased 12.02 per cent to Rs 2.06 lakh crore and made up 3.85 per cent of the total advances. 

The gross NPA ratio was 3.23 per cent at the end of March. Rating agency Standard and Poor's expects bad unilateral stays the registrars of the Debt Recovery Tribunal are granting to the borrowers without giving banks a proper hearing. 

The issue has been raised by us at a DRT 
forum at several occasions, where the finance ministry officials have been present," said a chairman of a public sector bank. "Borrowers also challenge the order passed by the DRT in the Debt Recovery Appellate Tribunal, delaying the process further. The tribunal is also short-staffed, which adds to the delay." 

The consortium-led lending model followed by banks has also added to the trouble. This was evident in the recent conflict between 
IDBI BankBSE -0.84 % and Kotak Mahindra BankBSE -1.83 % over the rights to sell the assets of debt-ridden Deccan Chronicle HoldingsBSE -4.15 %. 

The private lender has contested the claim of IDBI Bank on the rights over key trademarks of the Hyderabad-based ailing media house. "We should try to resolve our differences mutually. Instead of objecting to sale or any recovery proceeding, there is a need for co-ordinated action. We are still of 
the view that rather than coming in the way of the sale, we should sell whatever is left and share the proceeds among lenders," the same banker said. 

The spurt in bad loans has prompted 
finance minister P Chidambaram to warn corporate bigwigs against willful defaults, and say that it is the duty of promoters to bring in additional capital, if their companies get into trouble. 

"We cannot have an affluent promoter and a sick company," he had said in March. The banks have large exposures in sectors such as infrastructure and power, where projects generally face delays due to a host of issues, including a slow-moving clearance process. There are sticky loans in other sectors too, such as the Rs 7,000-crore exposure to grounded 
Kingfisher AirlinesBSE 1.50 %.

(2) Two Feedbacks on the News Item - New RBI Governor desires Efficient Loan Recovery through Accelerated Working of DRTs 

(A)  One of the active readers of our weekly mails and an ex-banker sent his comments on 6th instt on the said news item which are reproduced below:-- 

Dear Ram Kishanji, 

Good morning . All persons with 'RAM' can't be expected to deliver 'GOOD' or deliver 'NOBLE' result. You have quoted that new Governor of RBI Sri Raghu Raman has announced concerns  of functioning of DRT , growing NPA and has initiated steps to rectify , improve their functioning etc..... and special committees is also appointed under Dy.Governor Sri K.C Chakrabarthy for speedy recovery of NPA. And you have pinned hope that there will be drastic and fast changes in the functioning of DRT , recovery process etc.... 

2. Myself and Dr. K.C.Chakrabarthy were working together in the bank in 1985 to 1990 . He is basically Economist and has little knowledge about advances and financing of industry etc.... with promotion and change of banks , before he was selected as Dy Governor of RBI , he was CMD of Punjab National Bank....and in that year among all PSB of the country highest NPA was of PNB , even though he was selected as Dy Governor why...? He is from West Bengal ( Like our President Sri Pranav Mukharji.) .......In 2007 or 2008 same Sri K.C.Chakarabarthy committee report was prepared on SICK UNITS..... What happened ? No positive result in rehabilitation ...... And really what ever report on NPA now he will prepare will be :

(1) Not to find fault with bankers , (2) Not to consider bankers accountable, and or punishmnet to tentted bankers (3) Not to appoint Presiding Officer in DRT with banking knowledge or experience, (4)  Not to favor innocent borrower / guarantor ...(5) Not to focus recovery first from principal securities ......In short there will be no expected  miracle changes in present status and possibility of things going bad to worse can not be ruled out....only THE GOD CAN SAVE THE COUNTRY......FROM MANY EVILS INCLUDING  NPA  ........ all new GOVERNOR will make show that something new they will do..... SHOW MUST GO ON......Country's economy is under pressure from many forces from within and also from outside....


(B)  Another reader of our weekly mails  sent his following comments on 10th instt on said news item. This gentleman came to us few years back. On account of scares financial resources, he could not afford our services. Normally for all our clients, our approach is first they have to take active interest in the litigation. After the initial battle when the process is fully under their control, we advise them to create sources for generation of wealth so that there is no problems of survival and also expenses for litigation are taken care of. With such approach, the bankers come forward for settlement. The settlements have been reached from 5% to 25% of the principal amount. In another case, recovery certificate was issued by DRT but it could not be enforced for 12 years and hence legally it became ineffective being beyond limitation. The entrepreneur had filed damage suit against the bank and the same is continuing. During this period, the entrepreneur created very good source of income. Thus there is no case of recovery. On the other hand, the bank is facing huge damage suit. There is no problem about survival and litigation expenses. We have been narrating all these cases to our clients. All depended on them as to how they applied this knowledge in their own case.

Clean-up act: Robust loan recovery takes centre stage - Our comments 

All borrowers, especially SME and individual, should be allowed to challenge Legality/wrongful NPA classification of accounts within a specified period of 45/60 days of NPA classification and also after issuance of Sarfaesi act 13(2) recall notice at Banking Ombudsman who should be specially empowered to investigate this aspect and deliver his verdict within 30 days. 

This would help the honest borrower to survive the onslaught of corrupt bank officials and ruining his entire life savings, business establishment, financial agony to his family and employees and most importantly avoid long drawn and expensive legal battle which will shut down his career/business and entire life’s savings. 

I am and SME and fighting a legal battle for past 7 years at DRT where even the hearing has not commenced. 5 years ago, Banking Ombudsman observed wrong and illegal NPA classification due to fraud, illegal Sarfaesi act invocation and actions but still refused to pass an order/award since it is matter of recovery under Sarfaesi act and bank filed frivolous OA at DRT and asked Banking Ombudsman to stop further intervention. 

By business is shut down since 2008, my entire life’s savings is lost by paying to lawyers and Rent, wages and electricity charges for the now defunct manufacturing unit. My family is living on handouts from family and friends. 

Warm regards, 

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DRT Solutions Weekly Mail – 278th Issue dated 6thSeptember ’13

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

(1) New RBI Governor desires Efficient Loan Recovery through Accelerated Working of DRTs 

The following news item is self explanatory:-

Clean-up act: Robust loan recovery takes centre stage

FE BUREAU : MUMBAI, SEP 05 2013, 09:14 IST 

On the first day of his appointment as Reserve Bank of India governor, Raghuram Rajan emphasized on the need for an efficient system to recover loans at a time when the bad loan problem in the banking sector continues to aggravate. 

“While the resumption of stalled projects and stronger growth will alleviate some of the banking system difficulties, we will encourage banks to clean up their balance sheets, and commit to a capital raising programme, where necessary. The bad loan problem is not alarming yet, but it will only fester and grow if left unaddressed,” Rajan said.

He also said the working of Debt Recovery Tribunals and Asset Reconstruction Companies had to be accelerated and to assure this Rajan, along with deputy governor Anand Sinha, will examine the necessary steps to be taken.

Deputy governor KC Chakrabarty will take a close look at the rising NPAs and the restructuring and recovery process, and necessary steps in the direction will be announced in the coming days, said Rajan. The RBI plans to collect credit data and examine large common exposures across banks to enable the creation of a central repository on large credits, which can be shared with the banks. 

“This will enable banks themselves to be aware of building leverage and common exposures,” Rajan said. It will follow the suggestions from Financial Sector Legislative Reforms Commission to set up an enhanced resolution structure for financial firms. The working group on resolution regimes for financial institutions is looking at this and “we will examine its recommendations and take action soon after”, he said. 

The gross NPAs in the banking system is currently estimated at 4.2-4.4% at the end of June 30, while restructuring approved through corporate debt restructuring cell in FY13 was over Rs 76,000 crore. In the April-June quarter restructuring cases approved through the cell were worth Rs 21,266 crore.

Our Comments

(a)           First the bank officials need to properly trained in appraisal of the projects. They need to have proper outlook towards working and problems of business and finance. The emphasis should be on flow of adequate finance without any delay.

(b)           The banks need to have their internal legal audit so that if there are any wrong doings by the banks, instead of referring to the courts and DRTs, the wrong doings should be corrected.

(c)           The banks should have a system to provide compensation for the wrong doings.

(d)           Ultimately, it should be realized by one and all that the best recovery is by running of the business rather than recovery through legal means.

(e)           Till the above is achieved the borrowers should devote time for legal studies so that they can interact gainfully with their advocates. In all cases, the counter-claims and damages must be filed right from the beginning. The cases should be contested seriously on all dates. Mastery of facts and mastery of law should be key words at every moment of time.

(f)            A through and repeated study of our web site and weekly mails will achieve the above objectives. 

(2) Declining Standards in Lower Judiciary & Costly Higher Courts – Total Denial for Justice 

The following article is a stark reality of insensitive Supreme Court and the Govt. On account of these reasons, we have been all along advising the borrowers to pay all time and energy in lower courts to help their advocates otherwise no justice can be achieved. 

People’s Verdict

Nine out of 10 cases of failure of justice do not come to the SC’s notice because people can’t afford the cost.



If the Supreme Court is inaccessible to a large segment of society because of cost barriers, then doesn’t it amount to total denial of justice? The apex court is the last resort for justice, and in my estimate 9 out of 10 cases of failure of justice are not brought to its notice because people simply cannot afford the cost. The misery is compounded by the declining standards prevailing in the lower judiciary. The framers of the Constitution fell into grievous error when in 1950 they did not provide for setting up of benches of the Supreme Court at other major centres—because they ought to have appreciated the fact that India’s population at the time was about 40 crore and its territories extended from Kanyakumari to Ladakh and from Kutch to Calcutta, and that the overwhe­lming majority of the population were poor or middle-class.

Article 136 of the Constitution creates a right to appeal by Special Leave to the Supreme Court from any judgement, decree, determination, sentence or order in any cause or matter or made by any court or tribunal in the territory of India. How then can the Supreme Court sit only in Delhi? Even so, the Constitution makers did envisage that at some time in the future benches of the Supreme Court at other places would be necessary and, therefore, empowered the Chief Justice of India to set them up from time to time, with the approval of the president. But here too, conferring this power on one authority was again a grave error. The power should have been vested in a body of persons representing all stakeholders.

Unfortunately, the power has not been exercised even after a lapse of 63 years despite the Law Commission of India headed by former CJI A.R. Lakshmanan recomm­ending setting up of benches at four other places in India in its 229th report. The proposal was rej­ected by the Chief Justice of India on the wholly untenable ground that it would affect the court’s unitary character.

Such an argument was not contemplated by Article 130, which places no impediments on the CJI if he wishes to cre­ate SC benches elsewhere. So the decision in the circumstances we see now, in my view, amounts to abdication of power and failure to perform a duty. I agitated this matter by addressing letters dated 27/4/2012 and 11/7/2012 to the then CJI S.H. Kapadia pointing out the gravity of the situation and urging him to set the ball rolling. I did not even receive an acknowledgment. I then add­r­essed a letter to just retired CJI Justice Altamas Kabir, complaining that the SC had shown complete lack of transparency and accountability by ignoring my letters. I received a cryptic reply dated 23/1/2013 from the ass­istant registrar that the proposal of the Law Commission, which was forwarded by the central government for implementation, had been rejected and therefore no act­ion could be taken on my representations. The learned chief justice surprisingly did not state as to why the issue could not be revisited in the light of recent research done by renowned academicians, which showed that cost was a barrier to approaching the Supreme Court.


The author is a former Additional Solicitor General of India; E-mail your columnist: letters AT outlookindia.com

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DRT Solutions Weekly Mail – 277th Issue dated 30th August ’13

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

(1) Useful and Favourable Court Judgments for Borrowers and Guarantors 

Despite our repeated information that we have published full text of several court judgments which are highly useful and favourable to the borrowers and guarantors, still we are getting many queries even from Senior Advocates, borrowers and guarantors asking for citations and text of the said judgments. In this connection the following is proposed:-

(a)   Complete list of the said judgments is available at three web pages on our web site as under:-

(i)            Home Page i.e. www.drtsolutions.com

(ii)           DRT Judgments Favorable for Borrowers & Guarantors i.e. http://www.drtsolutions.com/DRT-Judgments.htm

(iii)         DRT Judgments Favorable/Useful to Borrowers i.e. http://www.drtsolutions.com/DRT_Judgments.htm

(b)   The above mentioned list is reproduced below:-

 DRTS-021 Calcutta High Court judgment on 'Publication of Photos in newspapers' in the matter of 'Ujjal Kumar vs SBI' decided on 03.05.13. The said High Court ruled that the Publication of Photos in newspapers of the borrowers to recover debts can not be resorted to as it is not covered in Securitization Act. Full text of the judgment with our comments and important portion marked in Red is available vide linkhttp://www.drtsolutions.com/Ujjal-Kumar-vs-SBI-2013.htm         

 DRTS-020 Gujrat High Court judgment on 'Securitization Act not applicable to Co-operative Banks' in the matter of 'Rajendra N Shah vs Unknown' decided on 22.04.13. The said High Court ruled that the Amendment issued by the Govt in January 2013 is ultravires in respect of co-operative banks. Full text of the judgment with our comments and important portion marked in Red is available vide linkhttp://www.drtsolutions.com/Rajendra-Shah-vs-Unknown-2013.htm

 DRTS-019 Supreme Court judgment and order on 'Review due to Misconception of Court' in the matter of 'Moran Mar Basselios Catholicos vs Moat Rev. Mar Poulose Athanaslus' decided on 02.05.52. The Supreme Court allowed the appeal, set aside the judgment of the High Court and admit the Review. Full text of the judgment with our comments is available vide link http://www.drtsolutions.com/Moran-Review-Misconception.htm

 DRTS-018 DRT-II Kolkota judgment and order on 'SA No 101 of 2011' in the matter of 'Azmeer Business Pvt Ltd. vs Union Bank of India' decided on 04.06.13. The case has been decided in favour of the borrower. The PO DRT has set aside the Bank's notice u/s 13(2), set aside the auction and ordered restoration of the property to the borrower. Full text of the judgment with our comments is available vide linkhttp://www.drtsolutions.com/Azmeer-UBI-SA-allowed.htm .

 DRTS-017 Supreme Court of India Judgment on 'Guarantor's Property - Constitutional and Human Rights' in the matter of 'KSFC vs N. Narasimahaih & Others' decided on 13.03.08. This is highly relevant to get 'Complete justice for Guarantor's Property'. Full text of the judgment with our comments is available vide link http://www.drtsolutions.com/KSFC-Narasimahaih.htm  Important portions of the judgment have been marked in Red.

 DRTS-016 Supreme Court of India Judgment on 'Frivolous and Unjust Litigation by Bureaucracy' in the matter of 'Urban Improvement Trust vs Mohanlal' decided on 30.10.09. This is highly relevant to 'Frivolous,  Unjust and Multiple Litigations' filed by banks '. Full text of the judgment with our comments is available vide link http://www.drtsolutions.com/Urban-Improvement-Trust-Mohanlal.htm Important portions of the judgment have been marked in Red.

 DRTS-015 Supreme Court of India Judgment on 'Review and Appeal - Simultaneous Adjudication' in the matter of 'Thungabhadra Industries vs Govt of AP' decided on 20.10.63. This is highly relevant to 'Filing of Review and or Appeal and their adjudication'. Full text of the judgment with our comments is available vide link http://www.drtsolutions.com/Thungabhadra-GovtAP-Review-Appeal.htm Important portions of the judgment have been marked in Red.

 DRTS-014 Supreme Court of India Judgment on 'Natural Justice - Opportunity of Hearing - Fundamental Rights' in the matter of 'Maneka Gandhi vs UOI' decided on 25.01.78. This is highly relevant to 'Magistrate in Sec 14 of Securitization Act to provide opportunity of hearing to Borrowers'. Full text of the judgment with our comments is available vide link http://www.drtsolutions.com/Maneka-Gandhi-UOI-Natural-Justice.htm Important portions of the judgment have been marked in Red.

 DRTS-013 Supreme Court of India Judgment on 'Court, Tribunal, DRT, Transfer from Court to DRT, Counter-claim and Appeal' in the matter of 'Nahar Industrial Enterprises vs Hongkong & Shanghai Banking Corp' decided on 29.07.09. Full text of the judgment with our comments is available vide link www.drtsolutions.com/Nahar-HSBC-Counter-claim-Appeal.htm Important portions of the judgment have been marked in Red.

 DRTS-012 Supreme Court of India Judgment on 'DRTs even can go beyond CPC' in the matter of 'ICICI Ltd vs Grapco Industries Ltd' decided on 14.05.99. Full text of the judgment with our comments is available vide link http://www.drtsolutions.com/ICICI-Grapco.htm Important portions of the judgment have been marked in Red.

 DRTS-011 Supreme Court of India Judgment on 'Counter-claim can be filed even after filing of WS' in the matter of 'Mahendra Kumar vs State of MP' decided on 04.05.87. Full text of the judgment with our comments is available vide link http://www.drtsolutions.com/Mahendra-MP.htm   Important portions of the judgment have been marked in Red.

 DRTS-010 Supreme Court of India Judgment on 'Discovery, Production and Inspection of Documents' in the matter of 'H.L. Sethi vs R.P. Kapur' decided on 19.07.72. Full text of the judgment with our comments is available vide link http://www.drtsolutions.com/Sethi-Kapur.htm  Important portions of the judgment have been marked in Red.

 DRTS-09 Kerala High Court Judgment on 'Bank's Application to Magistrate u/s 14 is appealable to DRT u/s 17' in the matter of 'Sami vs Bank of India' decided on 22.07.11. Full text of the judgment with our comments is available vide link http://www.drtsolutions.com/Magistrate-Appeal.htm Important portions of the judgment have been marked in Red.

 DRTS-08 Supreme Court Judgment on 'Points Pressed during Arguments have to be mentioned in the Judgment/Order' in the matter of 'Mohd. Akram Ansari vs Chief Election Officer and Others' decided on 04.12.07. Full text of the judgment with our comments is available vide link http://www.drtsolutions.com/Points-Pressed.htm Important portions of the judgment have been marked in Red.

 DRTS-07 Allahabad High Court Judgment on 'SA u/s 17 and 18 to be decided before any Recovery Action' in the matter of 'Gulshan Rai, Jain and Others vs Debts Recovery Appellate Tribunal and Others' decided on 28.09.11. Full text of the judgment with our comments is available vide http://www.drtsolutions.com/SA-Before-Recovery.htm Important portions of the judgment have been marked in Red.

 DRTS-06 DRAT, Delhi Judgment on 'Counterclaim permissible in SA u/s 17 of Securitisation Act' in the matter of 'Vijaya Bank vs B. L. Gupta' decided on 16.03.11. Full text of the judgment with our comments is available vide http://www.drtsolutions.com/counterclaim-SA.htm  Important portions of the judgment have been marked in Red.

◙ DRTS-05 Supreme Court Judgment on 'Property Valuation, Sale, Auction and Disposal' in the matter of 'Ram Kishun & Others vs State of UP & Others decided on 24.05.12. Full text of the judgment with our comments is available vide http://www.drtsolutions.com/SC-Property-Disposal.htm Important portions of the judgment have been marked in Red. 

◙ DRTS-04 Karnataka High Court Judgment on 'Notice u/s 13(4) is a must before initiating action u/s 14 for approaching to the Magistrate' in the matter of K.R. Krishnegowda vs Authorised Officer decided on 27.03.12. Full text of the judgment with our comments is available vide link  http://www.drtsolutions.com/13(4)-14-Magistrate.htm Important portions of the judgment have been marked in Red. 

◙ DRTS-03 Patna High Court Judgment on 'Dismissal of the OA' in the matter of Purnea Cold Storage vs State Bank of India decided on 27.08.12. As soon as SA is filed, the existing OA or if OA is filed, the same deserves to be dismissed. Full text of the judgment with our comments is available vide link www.drtsolutions.com/OA_Dismissal.htm Important portions of the judgment have been marked in Red. 

◙ DRTS-02 Supreme Court of India on simultaneous proceedings of OA and SA in the matter of Transcore vs Union of India decided on 29.11.06 :- Full text of this judgment is available on this site vide linkhttp://www.drtsolutions.com/sc_judgment_on_drt,_securitisation,_transcore.htm

This judgment is referred to in the above Patna High Court Judgment. Past several years, we have observed that majority of the advocates and the judges are making mistake in interpreting this Transcore Judgment. Patna High Court has supported our line of thinking.

◙ DRTS-01 Bombay High Court Judgment on Condonation of Delay in the matter of Manilal Govindji Khona vs Indian Bank decided on 29.08.12 :- Full text of this judgment with our comments is available on this site vide link  www.drtsolutions.com/condonation_delay.htm Important portions of the judgment have been marked in Red. We have been opining past several years that the matter of condonation of delay has to be permitted in the DRTs despite several judgments of the High Courts. Now our contentions have been supported by this Bombay High court judgment. 

All the above 21 judgments are favourable and useful for the borrowers and guarantors. Whenever any need is felt for such judgments, the above list may be reviewed. Our comments, extracts given in Red and full text will help.

(2) Enrichment of Our Web Site and Weekly Mails 

We get many mails and phone calls for queries about the defence of borrowers and guarantors accordingly we go on modifying and enriching our web site as well as the weekly mails. With passage of time, the web site goes on becoming useful to the visitors. The following recent mail is an example as to how our web site is being used by the borrowers. The name and related details have been suppressed for the sake of professional secrecy:-

---------- Forwarded message ----------
Date: Wed, Aug 21, 2013 at 7:20 PM
Subject: Regards
To: ramkishandrt@gmail.com

Dear Shri Ram Kishan,
I have been thinking of writing to you but could not do so far. I am very minutely going through the various articles ( word of wisdom ) appearing on your web site and also the weekly mail which contain so much of useful information for the benefit of litigants that I have started feeling that on the basis of knowledge acquired during all this period I can possibly pass on some of the information for being utilized by my advocate who is fighting my case in DRT. Many a times I come forward to argue my case in the court and the brief is also prepared by me this in spite of the facts that I have no legal qualification. I must sincerely thank you for helping the borrowers and guarantors, for providing the knowledge without any personal benefit. 

Having exhausted my resources, I wonder whether I will be in a position to take your professional help as in my thinking your profile leads me to believe that you may be charging high fees which I may not be in a position to afford. At the age of 75 years and having retired from a senior position from a financial institution I have suffered because I took the risk of entering into Industry, not knowing the method of dealing with the banks, believing too much which has almost broken me . I could never imagine that senior officer in banks will back out after getting more than 50% of the debt due and will not bother to abide by the notification of the RBI for structuring of the balance loan /or OTS so that the production in the 
factory can be started the possession of which has been illegally taken by the bank more than a year back. It looks like that I shall never get a chance to get an opportunity to cover my past losses by running the factory. I do promise that once I am out of this long standing legal battle and as soon as I am little comfortable with the resources I must send fee for all knowledge which you have imparted to all and pay my gratitude for the help you are giving free as compared to other sites.
Thanking you, 

We sent the following reply:-

---------- Forwarded message ----------
From: Ram Kishan <ramkishandrt@gmail.com>
Date: Thu, Aug 22, 2013 at 3:32 AM
Subject: Re: Regards

Dear Mr,

(1)   You should contest your case in the capacity of the individual representing the MD/Partner etc whereas your Company/Firm may be represented by your advocate. 

(2)   Most of the entrepreneurs in our country do not conserve their reserves and not only invest everything but borrow privately. Ultimately when the banks file cases for recovery, the entrepreneurs do not have resources to fight leave alone survival.

(3)   The above is due to all out efforts for promotion of industries. In fact we should have first promotion for entrepreneurship and building up of infrastructure for industries before promotion of industries. On account of such faulty approach, we are endangering the entrepreneurship in the country.

(4)   Anyway, keep on fighting. Any human being is a living god with inherent strength unknown to him. 

With best wishes,

Ram Kishan   

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DRT Solutions Weekly Mail – 276th Issue dated 23rd August ’13

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


(1) Publication of Photos in Newspapers held Illegal by Calcutta High Court 

Full text of this judgment with comments and important portion marked in Red may be seen vide linkhttp://www.drtsolutions.com/Ujjal-Kumar-vs-SBI-2013.htm

Ujjal Kumar Das vs SBI decided on 03.05.13 by Calcutta High Court Writ Petition No – 10315 of 2013

Bench: Mr Justice Dipankar Datta

DRT Solutions Citation –  DRTS-021-Ujjal Kumar vs SBI-2013


We have now numbered the Judgments published on this web site as DRTS-00. Accordingly all the judgments published so far have been numbered. The judgment on this page is numbered as DRTS-021.

Comments by DRT Solutions

The above mentioned Calcutta High Court Judgment of 2013 lays down that Publication of Photographs of the Defaulting Borrowers in news papers is not permissible in terms of the Securitization Act or any other law

Utility of this Judgment – Whenever the banks threaten to publish the photographs of the borrowers, the law pronounced in this judgment be pointed out to the Banks and in case of disagreement, the matter be put up before the DRT. If there is any adverse decision, matter be taken up in higher courts based on this judgment.


The full text of the judgment is given on our web site vide link http://www.drtsolutions.com/Ujjal-Kumar-vs-SBI-2013.htm which is self explanatory. Important portions have been marked in Red. Our comments are as under:-

(a)   Past several years, many of our clients have been facing the threat of the banks to pubish their photographs in the news papers. We have been advising them to file injunction suits in the court of law. In some instances, injunctions have been granted. In some cases when the courts have not granted such injunctions, the Reviews and Appeals have been filed.

(b)   Even two High Courts have delivered judgments against our contentions viz MP High Court in the matter of Archana Chauhan and Madras High Court in the matter of K.J. Doraisamy.

(c)   But now this judgment has supported our contentions.

(d)   Extract from the marked Red portions of the said judgment is reproduced below:-

(18) With the deepest of respect I have for the learned Judges who decided the writ petitions in Archana Chauhan (supra) and K. J. Doraisamy (supra), I have failed to persuade myself to agree with Their Lordships.

(20) In my humble view, the opinions recorded in the paragraph extracted supra are neither backed by any reason nor can be supported with reference to any provision of the SARFAESI Act or the rules framed thereunder.

(25) - - -There is little doubt that the SARFAESI Act confers wide powers on the secured creditors to enforce the security interest without judicial intervention up to the stage of taking measures under Section 13(4) thereof. Classification of a loan account as non-performing asset, computation of the quantum of dues and taking over possession of the secured asset upon rejection of the response to the notice under Section 13(2) are the various steps that are required to be taken for enforcing the security interest. In course thereof, the secured creditors may not ordinarily face interference by the courts, since the vires of the SARFAESI Act has been upheld. It is only at the stage of Section 17(1) thereof that there is scope for a judicial determination of the issues raised by a borrower/guarantor by the Debts Recovery Tribunal having jurisdiction. Till such time the Tribunal is approached and requested to consider a prayer for interim relief, it is a totally one-sided affair. The secured creditor unilaterally decides whether one is a defaulter or not and further as to whether the photograph of such defaulter ought to be published or not. By no stretch of reasoning can I conceive of the SARFAESI Act conferring on the secured creditor the unfettered power to act in such manner. If it were accepted that the secured creditor enjoys the unfettered power of publishing the photograph of a defaulting borrower/guarantor and does so even before the Tribunal under Section 17 of the SARFAESI Act could be approached, and quite some time thereafter the Tribunal under sub-section (3) of Section 17 holds that the secured creditor had acted contrary to the other provisions thereof while enforcing the security interest under sub-section (4) of Section 13 and ultimately directs restoration of possession, the damage that could be caused to the reputation and dignity of an honest borrower/guarantor by reason of publication of his photograph in the interregnum would be irretrievable. It may not be possible to compensate such damage by money, if a borrower/guarantor, who has been proceeded against contrary to law by the secured creditor and whose photograph is published, is unable to bear the ignominy and takes a drastic step. Since publication of photograph of a defaulting borrower/guarantor has the potential of exposing him to irreparable loss, injury and prejudice, publication of photograph cannot be resorted to in the absence of an express power or an agreed term in this behalf. 

(2) Loan Defaults spark Rangarajan-Ranjit Sinha Debate; CBI Boss smells Fraud in Rising NPAs  

The following news item published in net edition of ET dtd 22.08.13 is useful. As per Mr Rangarajan the rising NPAs could also be on account of grim state of the economy rather than frauds. This can be pleaded or included in the arguments before the court. Under such facts and circumstances, the mindless pressure for recovery is unwarranted and if required it should be with due application of mind:-

Loan defaults spark Rangarajan-Ranjit Sinha debate; CBI boss smells fraud in rising NPAs

By Aman Sharma, ET Bureau | 22 Aug, 2013, 05.01AM IST


NEW DELHI: A plain-vanilla conference of PSU vigilance chiefs saw the unusual spectacle of two senior government officials openly disagreeing on the reason for the rising quantum of loan defaults. 

While CBI Director Ranjit Sinha on Wednesday pitched for fixing criminal accountability of public sector bank officials in case of loan defaults, he was contradicted by veteran economist C Rangarajan, who pointed out that the rise in non-performing assets of banks could also be on account of the grim state of the economy rather than frauds. 

Rangarajan, a former RBI governor and chairman of the Prime Minister's Economic Advisory Council, was the chief guest at the 5th Annual Conference of Central Vigilance Officers of government PSUs and officers from CBI on Wednesday. 

"While judging the increase in NPAs, CBI must also take note of what is happening in the economy," Rangarajan said. 

Director invokes Mark Twain 

...not all NPAs are attributable to suspect behaviour of those giving loans but many are also related to how the economy behaves," Rangarajan said. 

The veteran policymaker was responding to remarks by Sinha, who in his opening remarks referred to the high amount of NPAs of public sector banks and said they were a cause for concern. NPAs, said the CBI director, had risen substantially in the last two years, from Rs 59,924 crore in 2010 to Rs 1,17,262 crore in 2012. 

"The bulk of the NPAs is from the top 30 accounts, which is learnt to be running into thousands of crores. CBI has already initiated investigation or enquiries in some of the big defaulter accounts," Sinha revealed. He also said the amount involved in bank frauds had increased 324% in the last three years while large-value fraud cases involving amounts of Rs 50 crore and above had increased almost tenfold. 

The CBI chief director also complained of "reluctance" on the part of banks to declare bad accounts as frauds despite there being clear-cut manifestation of malfeasance, saying this hampered probes by his organisation. "There is need to realise that the delay in reporting of a fraud will adversely affect the tracking and recovery of proceeds of crime as the initiative is lost due to delays. Another issue is the fixing of accountability of staff and there are often differences of opinion between CBI and banks regarding the role of public servants. In my view, there should be no reason for denial of sanction for prosecution wherever mala fide acts by delinquent officials caused huge losses to the bank. CVOs present here may please keep this in mind while examining CBI reports in future," he said.

Rangarajan, however, pointed out that a certain amount of "risk-taking" was inherent in the task of banking. "We should not completely eliminate risk-taking of banks. Loans may have been given based on certain growth projections, but the growth did not happen. So the causes and factors behind NPAs may be beyond the control of the banks and individual officers cannot be held responsible (in every case). You need to go behind the reasons for NPA... you will have to see if the act of officials was motivated for personal benefit. If it is so, the action must be punished but every NPA is not due to motivated actions of bank employees," he said. 

The CBI director quoted Mark Twain to stress his point that timely criminal investigations into the cause of NPAs were the need of the hour. "A humorous definition of a banker in words of Mark Twain is: 'A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain'. If we see the figures of NPAs and number of high-value frauds, it seems to be raining quite heavily. The question is whether the bankers will be able to get their umbrellas back or not? And further, even if they get it, will it be in its original shape?" Sinha asked. 

Rangarajan, however, cautioned that CBI had a "very delicate task" at hand while dealing with NPAs. "Banking system is based on two attributes - safety and soundness. Banks deal with other people's money, so it is important that this money remains safe but banks cannot offer extreme security, which may mean doing nothing with the deposits. Banking should hence be sound too, so banks should be able to earn," he said.

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DRT Solutions Weekly Mail – 275th Issue dated 16th August ’13

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

(1) Bombay HC’s First Paperless Court to Start Today  

The following news item published in net edition of DNA is informative and useful:-

Bombay HC's first paperless court to start today

Thursday, Aug 15, 2013, 10:57 IST | Agency: DNA


On Independence Day, the Bombay high court will start its first paperless court. Petitions will be filled on pen drives and advocates will argue their cases by referring to information stored in laptops.

The Bombay high court, will be India’s second high court, after Delhi, to have an e-court.

The e-court, presided over by Justice Nitin Jamdar, will commence from August 15, and will take up company matters to start with. Later, it will also take up other cases. 

Prothonotary, senior master, DV Sawant said, “This is a pilot project and it will be extended to other courts soon.”

The Bombay high court has already started e-payment of court fees which has received good response.

In the e-court, litigants have been asked to lodge soft copies either on a pen drive or compact disk (CD). The date of presentation of a pen drive or CD shall be deemed to be the date of filing of the petition. However, as a precautionary measure, initially, the petitioners have also been asked to file a hard copy for some time.

The e-court programme is a central government initiative to computerise district and subordinate courts and to upgrade ICT infrastructure of the Supreme Court and high courts.

Under the project, 2,249 courts in 969 court complexes are expected to be computerised by March 31, 2014.

(2) SMS Case Tracking System Launched in Tripura High Court  

The following news item is self explantory:-

SMS case tracking system launched in Tripura HC



AGARTALA: India's first Case Information System (CIS) through SMSs was launched in Tripura high court on Saturday by Supreme Court justice Madan B Lokur and judge-in-charge of e-governance aiming to bring more transparency and accountability.

Lokur said, "It will facilitate day to day requirements of the people seeking information about the precedents and the case laws and also provide information through the use of technology about the way courts function and interact with the litigants, lawyers, judges and administrators."

Lokur added that timely availability of information has helped speedy disposal of cases in courts besides helping hundreds of justice-seekers who come to court just to enquire about the date of next hearing.

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DRT Solutions Weekly Mail – 274th Issue dated 9th August ’13

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

(1) Change in Our Mobile No:-   

Please note that our new mobile no is +91 969 110 3689. This has also been displayed on our web site in all the pages in place of the old mobile no. All calls will automatically be diverted to the new number. The change has been necessitated due to technical reasons for better network coverage and efficiency using Samsung Galaxy S4 mobile handset based on GSM technology instead of CDMA. Galaxy S4 is a marvel in smart phones which we are now using as a near replacement for computer, tablet, camera, voice recorder and handycam with most convenient pocket portability due to remarkable convergence in telecom technology.

(2) Advocates to Access their Case Flow via Smartphones.   

The following useful  news item is self explanatory:-

Advocates to access their case flow via smartphones

HT Correspondent , Hindustan Times  New Delhi, August 08, 2013

First Published: 02:15 IST(8/8/2013) | Last Updated: 02:18 IST(8/8/2013)


Advocates and litigants having mobile phones with Android Operating System-based internet connection can now easily access Supreme Court Display Board and know the flow of their case on any particular day.

Chief Justice of India P Sathasivam on Wednesday launched the facility at a function at the apex court in the presence of Law Minister Kapil Sibal, judges and bar leaders.

The CJI also inaugurated some other e-facilities, including SMS on filing and registration of cases. This facility enables an Advocate on Record (who does actual filing of cases in the SC) and parties in person to receive instant update through SMS on their mobile on successful filing or registration of their case.

Details about filing and pendency of courts across the country will also be easily accessible with the inauguration of the National Judicial Data Grid (NJDG) by the CJI.

With the launch of the first phase of NJDG, case data of all the courts, including those at district level, will be available on a single website - ecourts.gov.in. The portal will have data from around 10,000 courts.

"Any visitor to this website can access the status of the case, the cause list of the district courts and in some cases, daily order or judgement of the case, searchable on the basis of case number, party name, advocate name etc.," Justice Madan B Lokur, in-charge of the e-committee which was entrusted with the task of developing the portal, said.

CJI Sathasivam appreciated the effort and said this will go a long way in administration of justice as the Chief Justices of different high courts will have the actual idea of case status of different courts in the state.

Justice Lokur said the data of all the courts will also serve as a "backbone database" for the NJDG which is intended to become a case information storehouse for justice delivery system.

Law Minister Kapil Sibal said it will help in court management and will bring in more transparency.

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DRT Solutions Weekly Mail – 273rd Issue dated 2nd August ’13

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


(1) Gujrat High Court Judgment laying down Securitization Act not Applicable to Co-operative Banks  


The full text of the judgment with comments and important portion marked in Red is given on our web site vide link :-


The details are as under:-

Rajendra N. Shah vs Unknown decided on 22.04.13 by Gujrat High Court Writ Petition (PIL) No – 166 of 2012

Bench: Mr Bhaskar Bhattacharya and J.B. Pardiwala

DRT Solutions Citation –  DRTS-020-Rajendra Shah vs Unknown-2013


We have now numbered the Judgments published on this web site as DRTS-00. Accordingly all the judgments published so far have been numbered. The judgment on this page is numbered as DRTS-020.

Comments by DRT Solutions

Gujrat High Court Judgment of 2013 laying down that Securitization Act not Applicable to Co-operative Banks

Utility of this Judgment – Wherever the co-operative banks have invoked or going to invoke the Securitization Act, such action can be stayed by DRTs.


The full text of the judgment is given below which is self explanatory. Important portions have been marked in Red and are reproduced below:-


22. Thus, the amendment is violating the basic structure of the Constitution so long as the subject of Co-Operative Societies is in the List II of the 7th Schedule and at the same time, the provisions of Article 368(2) has not been complied with. The Constitution has not permitted curtailment of the power of the State Legislatures over the subject mentioned in List II without taking recourse to Article 368 (2).


27. We, therefore, allow this Public Interest Litigation by declaring that the Constitution [97th amendment] Act, 2011 inserting part IXB containing Articles 243ZH to 243ZT is ultra vires the Constitution of India for not taking recourse to Article 368(2) of the Constitution providing for ratification by the majority of the State Legislatures. This order, however, will not affect other parts of the Constitution [97th amendment] Act, 2011.


(2) Plan to Computerize DRTs put on hold  


The following news item appeared in  the e-paper of ‘Live Mint & THE WALL STREET JOURNAL’ of ‘Hindustan Times’Dated 01.08.13:-

Plan to computerize debt recovery tribunals put on hold


The finance ministry is reconsidering the move, given the high cost of computerizing these tribunals
First Published: Sun, Jul 28 2013. 11 45 PM IST

Updated: Sun, Jul 28 2013. 11 47 PM IST

New Delhi/Mumbai: The government has put on hold its plans of fully computerizing debt recovery tribunals (DRTs), a move that may further delay the overhauling of these tribunals saddled with long delays and pending cases.

Given the high cost of computerizing these tribunals, the finance ministry is reconsidering the move, two people familiar with the development said, requesting anonymity.

As on March, there were 40,866 cases pending in the tribunals involving an outstanding amount of Rs.1.41 trillion.

Implementation of electronic governance in DRTs would have helped banks, defendants and recovery officers by automating all processes and procedures and expediting the recovery process of public money, the government had said in an answer to a question in Parliament in March.

It would have ensured applicants and defendants got hassle-free access to information, made it easier for banks and financial institutions to track case-related information and helped recovery officers enforce orders. DRTs would also be able to efficiently manage case records and improve the efficiency of their services through this computerization.

“The approximate cost of this plan is around Rs.200 crore. The question being discussed is whether this will solve the problems plaguing the DRTs,” said one of the people mentioned above.

“DRT should look at appointing judges first before taking up computerization, etc. In key areas, there are no judges in DRT. They are also understaffed and frequently banks send their legal officers on deputation to DRT,” said the chairman of a state-run bank. “Yes, with computerization, things should have improved provided there were judges to pass a speedy judgement.”

Banks can take recourse to DRTs to recover any asset of a borrower, irrespective of whether they are pledged with the bank or not. This is in contrast to recovery under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, where only assets that are mortgaged with the banks can be recovered.

The situation has improved over the last year, said another senior official with another state-run bank. “The staff is being recruited and the situation is much better than before. However, it will take a long time for reducing the number of pending cases,” he said. But because of the long time taken by DRTs, partly due to the delaying tactics used by lawyers of the borrowers, banks prefer the Sarfaesi route, he said. Also, when DRT rules in favour of the banks, it can be challenged with the appellate tribunal in DRT and then at the Supreme Court, which makes it a long process, he added.

The number of pending cases at the end of 2012 was 41,205 involving Rs.1.30 trillion, compared with 54,061 cases involving Rs.1.46 trillion at the end of 2011.

To improve the functioning of DRTs, the government enacted the Enforcement of Security Interest and Recovery of Debt Laws (Amendment) 2012. Under this, a defendant will have to file a written statement in a case within 30 days. The number of adjournment per case was also restricted to three per defendant. DRTs have also been empowered to pass an order acknowledging the settlement reached between banks and borrowers.

Ajay Gautam, an advocate who handles cases in DRTs, said presiding officers take a long time in giving stay orders for applications.

“When we approach the tribunal for getting a stay order for an auction by the bank, the presiding officer does not decide the case in a day or two. Sometimes a stay order is given after the bank auctions the property,” Gautam said. “Because of this, the bank even adds the cost involved in auctioning, like advertisements in newspapers, to the client’s account.”

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DRT Solutions Weekly Mail – 272nd Issue dated 19th July  ’13

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



(1) Wilful Defaulter – Declaration – Bombay High Court, Nagpur Bench orders Interim Stay  


One of our clients informed that Nagpur Bench of Bombay High Court has ordered issuance of notice before admission and also granted interim relief restraining respondents from publishing including displaying the names of the petitioners under Wilful Defaulters’ List.

The matter of declaration of wilful defaulter has been covered by us in several previous weekly mails wherein it was pointed out that:-

(a)   In one case, the district court has granted such stay against the injunction suit.

(b)   In another case, during the proceedings of relevant Injunction suit in the district court, the bank itself withdrew declaration of the wilful defaulter.

(c)   Few writ petitions in High Courts have been filed and are at various stages of adjudication.

(d)   Filing of injunction suit in the civil court is preferable compared with filing writ petitions in High Court as the facts relating to the procedure laid down by the RBI may be ascertained in better manner by trial court compared with writ court. Further much greater time will be consumed in trial court apart from having larger number of higher courts for appeal jurisdiction. As a result the whole intention of harassment by the bank will be totally lost rather the bank officials will get involved in yet another litigation.  


(2)  ‘The Judgment will Create Awareness’  


The following recent interview published in “Frontline’ magazine of ‘The Hindu’ is self explanatory:-

‘The judgment will create awareness’

Interview with advocate Lily Thomas, the petitioner in the Supreme Court case on Representation of People’s Act. By SAGNIK DUTTA 


LILY THOMAS, 85, an advocate in the Supreme Court, has worked on constitutional law, women’s rights and issues of personal liberty. She was the petitioner in the Supreme Court case (Lily Thomas vs Union of India and others) where the court struck down Section 8(4) of the Representation of the People Act (RPA) as being unconstitutional. In 2000, in response to a petition filed by her, the Supreme Court came down heavily on conversion to Islam for the express purpose of entering into a second marriage. Lily Thomas spoke toFrontline about her passion for constitutional values, the possible impact of this judgment on the Indian polity, and the enhanced role of the judiciary and civil society. Excerpts:

The Supreme Court judgment striking down Section 8(4) of the RPA has been hailed as charting a path for decriminalization of politics. What objectives did you have in mind when you filed the petition?

The primary aim that we had in mind was to ensure that Parliament and public service should be free of criminals and corruption. This is our job; it’s the duty of the Bar. With my training and education as an advocate, I would consider it a serious dereliction of duty if I did not take up these issues. This petition was filed in 2005. Also, the Supreme Court has played an important role as the custodian of political ethics. It was receptive to this petition. There was an earlier judgment of the Constitution Bench of the Supreme Court inK. Prabhakarn vs P Jayarajan in 2005 which was interpreted by the respondents as upholding the validity of Sub-section(4) of Section 8 of the RPA. In the present judgment, the Supreme Court cited the case but said that the issue of constitutionality of Section 8 was not at all considered by the Constitution Bench.

What ramifications will the judgment have on Indian polity? Also, why did you think the Supreme Court did not apply the judgment retrospectively on politicians who have resorted to the use of this section?

It is for us as a society to make the judgment work. Corruption and criminality have become part of elections. This pattern of democracy has to be changed. All sorts of evils have crept into the practice of fighting elections. Thanks to judgments like these, our civil society is more active now. The civil society is a natural social phenomenon. We must create “centres of leadership”. This is how democracy works. Then only will you become a part of the system. Otherwise, the government becomes an organisation run according to a patron-client system. Citizens do not have access to administration because of corruption. We must create access to an administration and a political system free of corruption.

During the hearing of this case, S.N. Shukla, advocate, cited a passage from the Constituent Assembly debates which clearly provides for disqualification of a Member of Parliament convicted of a crime. Though Article 102 of the Constitution allows Parliament to define disqualification, the right to appeal and the consequent three months’ deferral of disqualification are not allowed by the Constitution. I think it was wise on the part of the Supreme Court not to apply the judgment retrospectively because this would have created a whole lot of practical problems. A huge amount of litigation would have come in then and it would have been a huge burden on the administration.

The judgment has once again brought to the fore the issue of Parliament restricting the powers of the government when legislation violates constitutional principles. Does this pre-empt more conflicts between the judiciary and the executive?

The judgment is a clinical interpretation of law, of what the Constitution says. The judiciary very well knows its own limits. The interpretation of law is the function of the judiciary. This judgment will make people think. It will create awareness about constitutional principles.

Doubts have been raised about the political implications of this judgment on the stability of governments in the long run. For instance, if a number of representatives are convicted on criminal charges, a crisis in the government might arise. What are your thoughts on this critique?

If stability is coming from criminals, it is against natural law. Crime does not give stability. Ethics give stability. Stability comes from natural justice. Politicians are making this argument because of their own vested interests. J.M. Lyngdoh had once referred to corrupt politicians as “cancer of society”. Only a clean, “satvic” image of Parliament can provide stability.

Are there more such petitions in the offing? What issues do they address?

The court will get to know about the petitions first [smiles]. There is no stale news for the court.

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DRT Solutions Weekly Mail – 271st Issue dated 19th July  ’13

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


(1) Securitization Act not Applicable to Co-operative Banks 


In previous mails we covered this item. However there were few queries from the clients as well as recipients of our weekly mails. Our comments are as under:-

(a)   The relevant news items are reproduced below after these comments.

(b)   The relevant judgment of the Gujrat High Court is available on net vide link http://indiankanoon.org/doc/114669987/

(c)   A study of the said judgment reveals that the law relating to co-operative societies and co-operative banks being a subject matter of State Govts, the Central Govt has no powers to enact or relevant central legislations will not govern them.

(d)   It is complex legal matter and since 1965, the Supreme Court has been facing several questions on this subject and several writs are still pending in the Supreme Court.

(e)   On account of political reasons, the State Govt do not want to lose control on the co-operative banks and therefore the matter becomes further complex.

(f)    The management of these banks desire to take advantage of the better Recovery Legislations like DRT and Securitization Acts and hence they are trying to invoke the same but they are bound to fail due to overriding legal considerations based on the ultimate mother law i.e. our constitution.

(g)   The borrowers are advised to bring the above to the notice of the banks and despite they continue to take action, the matter may be put up before the DRT or the court of law praying to grant stay. If there is any adverse order, they may appeal to DRAT and or the High Court.   

(h)   As regards multistate co-operative banks, the above will not apply as they are governed by the central legislation.

Premal Balan  |  Ahmedabad  April 22, 2013 Last Updated at 17:16 IST

Securitisation Act not applicable to cooperative banks: Guj HC

Further says: Securitisation Act would not be applicable to cooperative banks under the union govt notification of Jan 2003


The Gujarat High Court o n Monday held that cooperative banks cannot use the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SRFAESIA), 2002 orSecuritisation Act, for recovery of  debts from its defaulters.

A division bench of Chief Justice Bhaskar Bhattacharya and Justice J B Pardiwala in a common judgement declared 
Central governmentnotification dated January 28, 2003, bringing the cooperative societies within purview of Securitisation Act, as null and void.

They further held that Securitisation Act would not be applicable to cooperative banks under the union government notification of January 2003, as it would be in contradiction with provisions of the Banking Regulation Act,1949.
The bench was acting on a bunch of petitions seeking cancelation of Central government notification dated January 28, 2003, bringing the cooperative societies within purview of Securitisation Act.

Various petitioners (defaulters) had approached High Court through their lawyers Masoom Shah and Vishwas Shah, after the cooperative banks sent them notices under the Securitisation Act warning against property seizure as they had defaulted on loan payments.

The petitioners had further claimed that Securitisation Act was not applicable to the cooperative banks formed under the state acts as there is already a mechanism for recovery under those state Act, in this case it is Gujarat Cooperative Societies Act, 1961.

Also, the Act was applicable to “a company engaged in banking, and not a cooperative society engaged in banking”, they had said in their petitions, adding that there was a conscious exclusion and deliberate omission of cooperative banks from the purview of the Banking Regulation Act.

BS Reporter  |  Mumbai/ Ahmedabad  April 22, 2013 Last Updated at 20:18 IST

Guj HC: Certain provisions of 97th amendment unconstitutional

Claims that India has no legislative competence to enact law for co-operative society which is exclusively a state subject under the constitution


Gujrat High Court on Monday declared certain provisions of the97th amendment to the Constitution of India, dealing with cooperative societies, as unconstitutional and ordered them to be quashed.

The judgement was passed by Chief Justice Bhaskar Bhattacharya and Justice J B Pardiwala acting on a public interest litigation (
PIL) filed by Rajendra Shah of Consumer Protection Analytic Committee (CPAC ), claiming that Union of India has no legislative competence to enact Law for co-operative society which is exclusively a state subject under the Constitution of India. Counsel for the petitioner Masoom Shah and Vishwas Shah said that exact provisions declared unconstitutional would be known only after receipt of copy of the order. They however, said that court has held that 97th amendment was an infringement on the basic structure of fedralism where only state can make law for cooperative societies.

The 97th amendment with regard to promotion of cooperatives by the state government was passed by the Lok Sabha and Rajya Sabha in December 2011, had received Presidential assent in January this year, published in Gazette of India on the next day and the came into affect from February 15.

During the course of argument, the petitioners had argued that the 97th Constitutional amendment is not required as it legislates and encroaches on the occupied field of the State legislation thus it's a patent case of transgression Constitutional power. The Constitution amendment Act, cannot be used as a device to indirectly legislate on the State Entry, when directly it is prohibited, they argued.

The PIL further alleged that the 97th Amendment violates the procedure as laid down in articled 368 (2) for an amendment of the Constitution.

"As per Proviso of the Article 368, if Parliament intents to amend or delete, any of the Lists in the Seventh Schedule, such Amendment shall require to be ratified by the Legislature of not less than one half of the States by resolution to the effect passed by those Legislatures before the Bill making provision for such Amendment is presented to the President for Assent," it said. "Therefore, for amending or deleting any Lists of Seven Schedule ratification of State Legislative is unavoidable... and is basic requirement," the petitioner had claimed.


(2) Rising NPA – More Pains to Public Sector Banks


The following news item is self explanatory. The consequences of rising NPAs are greater efforts for recovery by the banks, greater recovery actions by the DRTs etc. All these will result into greater illegal actions and hence the borrowers need more vigilance and alertness about which we have dealt with in detail in our several weekly mails.

Rising NPA load to bring more pain for PSBs banks like Allahabad bank, Indian Bank others


MUMBAI: Shares of public sector banks(PSBs) such as Allahabad BankBSE 4.56 %, Indian Bank, Bank of India among others have crashed up to 25% over the past one month on fears of growing non-performing assets (NPAs) in sectors like chemicals, pharmaceuticals, steel and textiles, as well as the spectre of a rising wage bill.

The future also doesn't look promising for these banks as they are expected to report disappointing results in the coming earnings season.

Shankar Sharma of First Global, an ace investor, is bearish on the banking sector. "Banks are unlikely to deliver 15% to 20% earnings as the Indian economy itself is finding it tough to grow at 5%," he says. Therefore, if any bank is growing at 15%, then one has to conclude that it is taking excessive risk, he reasons.

Analysts say that these banks will have to take some tough decisions on debt restructuring, besides advising companies - where they have an exposure - on recasting their businesses.


The combined gross non-performing assets and restructured loans for the banking industryis around 10% of the total loan outstanding, which is a big worry, and most of the bad loans are from PSU banks," says Pankaj Pandey, head of research at ICICI Securities.
"PSU banks will continue to struggle with asset quality. Also, the Reserve Bank of India's new provisioning norms on bad loans will put PSU banks at further risk," he adds.

"We expect government banks to report disappointing results for the April-June quarter as they may be impacted at the net profit level by higher wage revisions. State-run banks like PNB, BoB, BoI and Canara Bank's headline earnings are expected to come down by 10 to 20% (year-on-year) on higher wage costs and lower loan yields," says Rajeev Varma, research analyst at DSP Merrill Lynch in a note.

Recently, the government asked state-run banks to reduce lending rates, and clear stalled projects. If this happens, it may hit banks' net interest margins adversely and further add to the rising NPAs, fear analysts.

"The pain for PSU banks may continue as non-performing liabilities, coupled with high restructuring, especially in the power sector, may add further pressure," says Manish Karwa, research analyst at Deutsche Bank in a research note.

RBI has issued draft guidelines that would require banks to make higher provisions (standard provisions) and increase risk weightage on exposure to companies that have unhedged foreign-currency exposure. "We believe large PSU banks such as SBI, BoB, BoI and PNB will get impacted as they are involved in lending through foreign currency, especially in long-term loans," says Kotak Institutional Equities in a research note.

The falling rupee has also made things worse for these banks, already grappling with a host of problems.

"Many corporates are under severe stress as the rupee has fallen to 60 against the dollar. We expect the asset quality of PSU banks to deteriorate further as business of many corporates has come under stress," says Amar Ambani, head of research, IIFL.

"We would like to advise investors to avoid PSU banks despite prices falling sharply from their highs," he adds.



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

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

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

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