DRT  Legal  Solutions

(Debts Recovery Tribunal Legal Solutions) is an India based

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

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

Phones (India) - Mobile - +91-9691103689, Off. & Res. +91-731-4049358

E-mail :- ramkishandrt@gmail.com  Web Site :- www.drtsolutions.com

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

 

 

 

DRT Solutions Weekly Mail – 50th Issue dated 24th April ’09

All Weekly mails right from 1st Issue to latest, click links above

(1) Example of Superb Arguments before a Tough DRT Judge at Bangalore  

One of our clients from USA facing litigation in DRT Bangalore assigned us the complete task of pleadings and advocacy. Our Senior Advocate Mr. B.K. Dubey has been regularly attending DRT Bangalore in the matter of SA filed on behalf of the said client.

Our other clients at Bangalore had already informed to us that the PO Bangalore has been insisting for quick disposal, does not like any interim applications and as a whole was favoring the banks. Keeping all these factors in view, we made all necessary preparations. The matter belongs to the consortium finance of four banks. The lead bank filed reply to the SA, and sought to get the SA dismissed. We filed an application seeking certain documents from the lead bank as well as all other consortium member banks, which was earlier dismissed on the ground of apprehension of adopting delay tactics. Hence, the Presiding Officer insisted to conclude the arguments on the point of whether it is mandatory on the part of the bank to mention the date of NPA, and whether, the bank violated the law ?

It was argued by Mr. Dubey that, the SA has been held to be a civil suit on the part of the borrower, against the wrong doings of the banks, by the Hon’ble Supreme Court in the matter of Mardia Chemicals on the ground that, no one can be left remediless, and since, the filing of civil suit is barred by virtue of section 34 of the Securitisation Act, 2002, and further argued that, since the bank had not filed any document in support of their fairness and transparency, nor substantiated their stand that, they had followed all the RBI Guidelines, as applicable to the finance to the project of the company in the priority sector, therefore, the PO should ask the bank to provide all documents relating to the transactions between the lead bank and the borrower, as also the minutes of all the meetings and action taken thereon, in order to substantiate and prove the said civil suit in line with the pleadings of the SA, by leading evidence, which if not done would lead to denial of opportunity to prove the case before the Tribunal constituted for the purposes.

The PO further stated that, the scope of enquiry in the Act, 2002, is limited and the matter is to be decided within 4 months from the date of filing.

Upon this, Mr. Dubey put forward some arguments based on the non compliance of certain RBI Guidelines on the part of the banks particularly the lead bank, and sought to prove the same by leading evidence on the points. It was further argued that, there is no fixed time frame in rendering justice to the aggrieved party, which if done on the strength of shortage of time, would lead to denial of justice with a prejudiced mind.

The arguments lasted for nearly 50 minutes, all the facts were elaborated. The said PO asked several questions which were replied fully.

After hearing all this, the PO, directed the counsel of the bank to provide all the documents as may be demanded by the borrower company, by the next date of hearing i.e. by 18.5.09, and the matter is posted for further hearing in the matter after completing the exercise of furnishing of the documents by the bank.

In this connection, it is to be noted that the said PO DRT Bangalore is known to be a tough PO and many of the advocates are unable to face particularly during the arguments.

Incidentally, the client himself was present during the above arguments. He sent the mail appreciating the said arguments:-

From: Ash Damre
Date: Sun, Apr 19, 2009 at 5:30 AM
Subject: Re: Arguments in DRT
To: Bhupendra Dubey
Cc: Ram Kishan , Randy Bart

 

Dear Shri Dubeji,

Hope you arrived in Indore safely.

Just want you know how much I appreciated your convincing arguments on 18th before the PO of the DRT court, Bangalore. Because of you, PO directed the lawyer representing UCO bank to cooperate in providing documents per your request before the next hearing set for May 18th.Kindly expedite sending your list in consultation with Shri Ram Kishanji.

We'll also confer early next week to decide on as to how to proceed in preparing our counter claim against the consortium banks.

Again, thank you for a job well done.

Regards,

Ashok Damre  

 

(2) DRT PO changes his stand after the writ is filed against him in High Court  

One of our clients from Mumbai informed that the PO Madurai disregarded giving any decision on pending interim applications as well as appeal pending in DRAT Chennai.  The said PO made use of a very old ex-parte order to quash certain proceedings and created all pressures to undertake final arguments. Since such approach of the said PO were against the Principles of Natural Justice, the said client and his advocated filed a writ in High Court.

Surprisingly the behaviour of the said PO changed completely. He informed the client that he would dispose off the pending applications first and also pay attention to all the pending matters.

Our Comments:-

(a)     as usual the POs in DRTs are under great pressures to dispose off the DRT cases as early as possible. The said pressure emanates first from the DRT Act to dispose off the case in six months. The bank advocate simply mentions that so much amount of public funds are due. The Ministry of Finance and bank officials also apply pressures for quick disposal. All these result in efforts by POs even by disregarding the basic principles of Natural Justice.

(b)    Noticing such behaviour of POs all over the country from the feedback of our clients, we advised them to create records of the POs by application of law and procedure of law by keeping everything in writing. On account of hurry, the POs are found making mistakes in their orders. Hence such orders must be reviewed and appealed. Such approach in the above case in Madurai resulted in massive records against the PO Madurai.

(c)     When the behaviour of PO became erratic, the writ was filed in High Court. It appears that on account of the said writ, the PO had no option but to abide by law and procedure of law.

(d)    The bank litigation involve numerous and complex facts relating banking, industry and finance which need to be judicially determined. Even simple application of principles of Natural Justice will result in lot of time particularly when the bank do not provide the documents and try to hide their wrong doings. In almost in respect of all our clients, since the counter-claims and or damage suits have already been filed, the overall case will definitely take several years. This is due to huge workload in DRTs, poor management, old technology of court practice, no specialized knowledge of banking, industry and finance.

(e)     Those borrowers who do not pay attention to all these facts will have to face quick decrees and executions. No remedy will be possible in higher courts and the case will be lost. 

 

(3) Magistrate asks Police to register and initiate criminal proceedings against the Chairman and the AGM of a Public Sector Bank  

One of our clients in Mumbai was being constantly harassed and threatened by an AGM of a public sector bank. He did not bother to follow the law. We had no option but to initiate criminal proceedings. Notice was sent to the bank, Chairman and the said AGM. Since no satisfactory reply was received, the case was filed in the court. The Metropolitan Magistrate, 22nd Court, Andheri ON 22.04.09 ordered the Senior Inspector of Police, MIDC Mumbai to register the complain and submit the report after full investigations as per Sec 156(3) of Cr.P.C.

Perhaps this is first case of such kind in the country when the Chairman of a Bank will be made to realize that the bank officials must behave lawfully with borrowers.

 

(5) Economic Times, Mumbai seeks and publishes views of Mr. Ram Kishan on DRTS

The Economic Times, Mumbai in its news item 'Debt recovery tribunals see NPA surge due to slowdown' at Page 5 of its issue dated 21st April '09 published the following views of Mr. Ram Kishan based on an interview:-

"The meltdown in the economy will lead to increased cases of NPAs" said DRT Consultant Ram Kishan" Also the current process of debt recovery proceedings are old and hence inefficient. We need better management of the court for speedy disposals" he added."

 

(6) Visit to Chandigarh and Delhi postponed

On account of certain unavoidable circumstances, visit of Mr. Ram Kishan to Chandigarh and Delhi has been postponed. The new date will be announced as soon as the program is finalized.

Our Weekly Mails and DVDs are DRT Legal Guide and gold mine of practical information for the borrowers and guarantors - The mail recipient particularly Borrowers and Guarantors will be immensely benefited by our weekly mails and DVDs, all previous issues of weekly mails from 1st one till the last one may be viewed by clicking the links given at the top. Separate web pages have been created to contain these mails in batches of 10 so that pages open up fast. These mails are gold mine of information on current topics giving lot of practical suggestions and comments. Any new recipient to these mails must go through all the weekly mails right from the issue no 1 to the latest. If possible please spread the reference of our web site and the weekly mail among the persons, borrowers and guarantors who are the bank victims. If anyone desires to get these mails regularly, he may write to us for inclusion of his e-mail ID in the regular mailing list. The weekly mail is issued on every Friday morning 6 AM. The particular issue of the weekly mail is first published on the web site and then mails are sent. These weekly mails have become quite popular among the borrowers and guarantors in the country as we are getting huge no of mails appreciating the same. We welcome suggestions as well as the topics on which more information is required. As regards, the DVDs, the complete set is  available from us at a token price of Rs. 800. The interested persons may send a separate mail giving their postal address. As soon as they deposit the amount in our account, the set of DVDs will be dispatched to them within a week.

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DRT Solutions Weekly Mail – 49th Issue dated 17th April ’09

(1) Further Interactions on Application on OA Dismissal in DRT Mumbai  

 

One of our clients at Mumbai has communicated the written reply filed by the bank to the written arguments submitted by our client. Our comments are as under:-

(a)     Reply by the Bank ;- “Once the OA has been numbered by the Registry of the DRT, it is certain that the Registry is of the view that there is no technical inadequacy in it.”

Our Comments:-  If the OA primarily and ab-initio violates any law, the violation will continue to remain so even if the Registry has numbered it. The defendant borrowers are within their rights to submit the matter before the PO that the OA deserves to be dismissed on account of the said violations. This is akin to ‘Rejection of Plaint’ as per the provision of O-7 R-11(d) of CPC 1908.

(b)     Reply by the Bank:- “If the Application of the defendants is entertained then it will defeat the very provisions of the RDDB Act. The RDDB Act is a special law for speedy recovery of the amounts due under the financial facilities that were granted to the borrower by the bank.”   

Our Comments:-  None is authorized to violate the legal procedures in case of any Act including the special acts and hence can not cause any injustice. If the bankers desire speedy recovery, it is all the more important that they prepare the OA in such a manner that there is no violation of law prescribed under the DRT Act, DRT Rules, Banker’s Books Evidence Act, Evidence Act, IT Act, law laid down by the Supreme Court etc. 

(2) High Court admits writ against injustice being caused by the PO DRT

One of our clients at Madurai has strongly felt that injustice was being caused by the PO DRT Madurai on account of the following:-

(a)     PO was insisting for conducting final arguments without deciding the pending IAs.

(b)    PO was not prepared to wait till the relevant Appeal is decided by the DRAT.

(c)     PO made a reference to an ex-parte order of few years back which though was not set aside but the court itself ignored it by continuing the proceedings.

(d)    PO was having a partisan attitude towards the bankers.

(e)     There were several other grievances.

The said client and his advocate created sufficient record about all the above matters and filed a writ in the High Court. At the time of motion hearing, when all these matters were pointed out, the Govt Pleader could not reply properly and hence the said writ was admitted.

Our Comments:- We have all along been emphasizing to insist for following the prescribed law and procedure of law at the trial court perfectly at every stage and on every date. One must exhaust all possibilities at the bottom court first. This will result in creation of sufficient records of the adjudication. Such records will be of immense use as in the above case to point out Injustice if any. The Judge is a Public Servant and he has no power or authority to violate any law or procedure of law. He has to be always reasonable and fair. Democracy is rule of law and not rule of persons.

 

(3) Brief for Interactions with Legal Luminaries like Retd. Chief Justice, Supreme Court of India and Senior Advocates 

 

During our forthcoming visit to Chandigarh/Delhi, we shall be interacting with the legal luminaries like the Retd Chief Justice, Supreme Court of India and Senior Advocates. The brief for such interactions will be as under 

(1)           Our purpose of discussions & interactions is to help in solving the problems faced by litigants in Trial Courts like DRTs 

(2)           Our observations & suggestions are borne out of court experience of numerous businessmen & industrialists facing such litigations past 20 years

(3)           We intend to submit ground realities, obtain your views as a validation to our analysis. The complete interactions will be video recorded so that it would serve as guidance and review for those interested persons who are not present

(4)           The whole exercise is a social service so that litigants can improve themselves to obtain justice. We shall also try to submit our feedback and suggestions to Justice Delivery System and the Executive System

(5)           To start with, we refer to Hon’ble SC Judgment vide citation AIR 1969 AIR 1167 Swaranlata vs Harendra Kumar Para 6 and Para 13

(6)           In Para 13, the Hon’ble SC says that it is with regret we have to state that the case is to be remanded for retrial after 18 years. This means that the original trial started in 1951 and after 18 years it is found in 1969 that the trial was not correct and the whole trial is to be done again.

(7)           Let us visualize the period 1951 to 1969. There were no TVs, no mobile, no internet, no computers, no modern gadgets and hence the life was simple having ample free time. The general moral standards were also high. Hence the people had sufficient time for study and interactions. The litigants, advocates and judges were spending sufficient time for their cases. Despite this backdrop, the trial was defective and to arrive that it took 18 years. During this period, the advocate got their professional charges and Judges received their salaries. It is the litigant who bore all these expenses for 18 years and then was told that the whole exercise was of rejected quality and his expenses were lost completely for no fault of his own. We are not aware as to what measures were taken or initiated in 1969 or thereafter till date to correct the system so that such thing is neither repeated or could be minimized.

(8)           Let us consider the present state of affairs. Mobile, Internet, TV Channels round the clock, computers, global connectivity and instant availability of desired knowledge etc. has made life of everyone extremely busy, competitive and complex. The Courts are heavily overloaded and rate of incoming cases far outweigh the disposal. The accumulation and pendency are fast growing. Hence there is extreme pressure for quick disposal. System has been modified for linking performance with quantity disposal. The Point System emphasizing faster disposal has least regard for justice. As a result, the review, revision and appeals have multiplied and thus enhancing the burden as well as pendency on Higher Courts.

(9)           Interestingly there is ‘Arears Committee’ of Supreme Court of India which is guiding the Judges of lower courts as to how to achieve expeditious disposal.

(10)       The new enactments like DRT Act 1993, Securitisation Act 2002 mention various time limits for various activities in the Justice Delivery System. There are regular meetings to review the disposal and there are now various reporting system on the status of disposal and pendency.

(11)       Under such facts and circumstances, the quality of adjudication and hence justice has become the first victim. As a result, the number of reviews, revisions and appeals have and are tremendously increased. The higher courts are also under pressure to dispose off the same as quick as possible. The aim of getting justice has become highly time consuming as well as hugely expensive. The situation today is far worse than that in 1969.

(12)       Let us compare with the working in the developed countries like USA and UK. A study of internet resources reveal the following in respect of working of US Supreme Court:-

(a)     There are not more than 2 hearings in a day. There are not more than 12 hearings in a month.

(b)    The briefs are quite exhaustive. The Judges have ample time during the office hours to study and decide the matter perfectly. They have sufficient number of research staff. They use the modern management practices as well as the latest technology.

(c)     The Judges study the briefs and documents thoroughly and major part of the arguments is devoted to answering the questions of the Judges.

(d)    Complete proceedings of the court are video recorded. The said proceedings are also transcribed simultaneously. The audio, video and transcribed record of the said proceedings is made available on the internet on the same day.

(e)      There are lot of discussions among the Judges before the final decision is issued. Thus thorough and perfect work is carried out at every stage of the adjudication. As a result the ultimate goal of courts i.e. Justice is achieved.

(13)       Recently it was reported in our news papers that one bench of  Delhi High Court disposes about 14,000 cases in a year. Similar bench in UK disposes only 150 cases in a year. Thus our courts are overloaded 90 times. If the elements of management and technology is duly considered, the overload is much more than this figure. Humanly it is not possible to carry on such overload on permanent basis. As a result the Judges and hence the Advocates are continuously working long hours daily to achieve only unsatisfactory results far from the desired level of Justice.

(14)       Our major clients are the Borrowers and Guarantors facing Bank Suits in DRTs. We have found that the bureaucracy in banks commit numerous wrong doings and hence huge loss and damages are caused to our clients resulting into counter-claims or damage suits against the banks. We prepare thorough pleadings based on law of torts and law of damages. We provide all guidance and advice on every date.

(15)       We have evolved indigenously most modern method of ‘Video Arguments’ which is quite useful to the Advocates and Judges.

(16)       Whatever problems are faced by our clients, we find out the solutions. These instances are reported by us every Friday to all our clients through ‘Weekly Mail’ so that the community of interested persons are empowered for similar circumstances.

(17)       At our end, we have been advising our clients to stick to law and procedure of law at every stage and on every date. We have further advised them to put down everything in writing. Since we are concentrating mainly on trial courts like the DRTs, we find defects in almost all the interim orders and hence Review is being invoked to in all these cases. We observe that the Reviews are not being disposed off properly and hence Appeal is also filed within the prescribed period of limitation. In many cases, the Judges are getting irritated and annoyed over these remedies including the written records. Ultimately, one has to resort to ‘Change in Court’ All these result into further burden and pendency. The Judges are heavily overloaded. They carry files to their homes and daily spend several hours and even then they are unable to achieve disposal as per the norms. There is tendency to attend to simple and easy matters so that disposal norms are achieved. Any complicated matter is set aside or disposed off in an indifferent manner.

(18)       Those of our clients who have filed counter-claim or damage suits against the bank and when the said damages are much more than the claim of the bank such clients are in a better position to stick to and achieve perfect adjudication as there is situation of ‘No Debt Due’ It is such litigations which will bring ‘Leading Judgments’

(19)       We have formed a body ‘Legal Forum of India’ Mr. B.S. Malik is President, Mr. Ram Kishan is Vice President and Mr. BK Dubey is Secretary. The said ‘Legal Forum of India’ held its first National Conference at Indore on 3rd and 4th May 2008. Complete proceedings were video recorded and are available on DVDs. Further details may be had from Mr. Ram Kishan M – 9691103689.

(20)       We have following suggestions in respect of DRT Litigations:-

(a)     First emphasis should be on perfect disposal at every stage and on every date. This way alone the overall time and cost of litigation will be controlled.

(b)    Laptop computers were distributed to 14000 Judges in the country on 9th July 2008 with provision of 3 months training. The DRT Judges should be asked to bring them to court room and use the same in day to day work.

(c)     The DRTs and their method of working be studied and made known to the defendants.

(d)    The trials are to be conducted thoroughly and strictly in accordance with the law laid down by the Supreme Court in AIR 1969 SC 1167 Swaranlata vs Harendra Kumar.

(e)     The Review, Revision and Appeal must be analyzed to determine the flaw in the disposal of the original case. Such analysis must be published.

(f)      The cases decided by the DRTs should be published so that the trials being conducted by the DRTs are made widely known to the litigants. The knowledge thus spread will improve the quality of trials in DRTs.

(g)    As originally recommended by Tiwari Committee, an expert member be included on the bench as in Tax Tribunals, Consumer Forums etc. The expert member should have knowledge of banking, industry and finance. (h)    The DRT litigations are most unequal fights. On one hand the Banks are a huge organization having well experienced law deptt supported by well experienced counsels as well as unquestionable financial resources. On the other hand, most of the defendants are sick or closed units which are not having sparable financial resources for legal fights on account of which they can not hire good legal counsels. Looking to these problems, we have been concentrating on empowering the clients who in turn start having meaningful dialogues with their advocates.

(i)      Any other suggestions   

Our Weekly Mails and DVDs are DRT Legal Guide and gold mine of practical information for the borrowers and guarantors - The mail recipient particularly Borrowers and Guarantors will be immensely benefited by our weekly mails and DVDs, all previous issues of weekly mails from 1st one till the last one may be viewed by clicking the links given at the top. Separate web pages have been created to contain these mails in batches of 10 so that pages open up fast. These mails are gold mine of information on current topics giving lot of practical suggestions and comments. Any new recipient to these mails must go through all the weekly mails right from the issue no 1 to the latest. If possible please spread the reference of our web site and the weekly mail among the persons, borrowers and guarantors who are the bank victims. If anyone desires to get these mails regularly, he may write to us for inclusion of his e-mail ID in the regular mailing list. The weekly mail is issued on every Friday morning 6 AM. The particular issue of the weekly mail is first published on the web site and then mails are sent. These weekly mails have become quite popular among the borrowers and guarantors in the country as we are getting huge no of mails appreciating the same. We welcome suggestions as well as the topics on which more information is required. As regards, the DVDs, the complete set is  available from us at a token price of Rs. 800. The interested persons may send a separate mail giving their postal address. As soon as they deposit the amount in our account, the set of DVDs will be dispatched to them within a week.

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DRT Solutions Weekly Mail – 48th Issue dated 10th April ’09

 

(1) Query on Review 

One of the mail recipients, an Advocate from Delhi has sent us following query:-

‘I request you to explain in the forthcoming weekly newsletter, your further opinion on " Review", in the background of the following SC judgments:-

"A power of review is not to be confused with appellate power which may enable an Appellate Court to correct all manner of errors committed by Trial Court.  Reference may be made in this connection to the decision in the case of A. T. Sharma -vs- A.P. Sharma reported in A.I.R. 1979 S.C. 1047.

In the case of Thungabhadra Industries - vs - The Government of Andhra Pradesh reported in A.I.R. 1964 S.C. 1372 it was pointed out that there was a distinction which is real, though it might not always be capable of exposition, between a mere erroneous decision and a decision which could be characterised as vitiated by error apparent.  A review is by no means an appeal in disguise whereby an erroneous decision is reheard and corrected but lies only for patent error.  Where without any elaborate argument one could point to the error and say here is a substantial point of law which stared one in the face and there could reasonably be no two opinions entertained about it, a clear case of error apparent on the face of the record would be made out."

Our Comments:- are as under:-

(a) Review and Appeal are two distinct and separate remedies provided under the CPC.

(b) The provision of Review will only be applicable in respect of ingredients mentioned in Sec 114 and O-47 of the CPC and hence the errors coming only under the perview of the said ingredients can be corrected by invoking the Review.

(c) On the other hand, the scope of Appeal is not to any such ingredients. The only limitation in Appeal is that new matter can not be considered whereas the Review is possible for New Matters as per the provisions of O-47.

(d) Review is done by the same judge whereas Appeal is carried out by the higher bench.

(e) Review is to be filed first and if during the limitation period the Review is not decided, Appeal may be filed. First Review will be decided and if the decision is favorable, the Appeal may be withdrawn. On the other hand, if the Review is rejected, the Appeal may continue.

(f) The scope of Review has been widened by the Supreme Court to include misconception of facts or misconception of law. Any violation of the law laid down by the Supreme Court also comes under the scope of Review.

(g) Review is an important provision existing right from inception of English Law. In our country, the advocates and the judges are not paying adequate attention to such important provision of law. An impartial and serious Justice Delivery System will appreciate such provision as it serves to correct the mistakes right from inception instead of matter going to higher courts and then getting it remanded to lower court. Hence logical approach would be to accurate and correct right from the inception. Overall time taken in thorough trial in the beginning will be much less than the trial being conducted hurriedly and then time being wasted in appeal and remand. Swaran Lata (AIR 1969 SC 1167) is a famous case where the Supreme Court remanded the case for retrial after 18 years. Had the advocate been serious right from the beginning, such a debacle would have not happened.

(h) In view of above, we have been emphasizing the importance of perfect trial at every stage and on every date. Even such perfection may take time but overall time will be much less as well as the quality will be much superior.

(2) Proposed Discussions at Chandigarh & Delhi 

Mr. Ram Kishan will be in Chandigarh and Delhi with effect from 23rd April ’09. On 25th and 26th April, he will be meeting with two American Attorneys. He will also be calling on few retired Chief Justices of Supreme /Court of India. All these interactions will be video recorded and the DVDs will be available to interested persons. The discussions will be mainly centered on improving efficiency of Trials in DRTs, improving management and technology in court rooms and solving legal problems of borrowers and guarantors. Mr. BS Malik, the President of Legal Forum of India will be present during all these interactions.

(3) Restructure of Accounts by Banks 

The Govt. and RBI have decided to restructure the NPA account of potentially viable sick units. Hence the bankers are approaching the borrowers for their consent for such restructure. The bankers are adding all charges and uptodate interest to arrive at the new principal. With such approach, the unit gets further overburdened. The borrower must resist such overburdening. The bankers must consider the loss and damages caused by their wrong doings otherwise such restructuring will only postpone the NPA date to future. Ultimately when the case is brought back to DRT, the only and ultimate defence will be counter-claim or damage suit against the lending bank.

Our Weekly Mails and DVDs are DRT Legal Guide and gold mine of practical information for the borrowers and guarantors - The mail recipient particularly Borrowers and Guarantors will be immensely benefited by our weekly mails and DVDs, all previous issues of weekly mails from 1st one till the last one may be viewed by clicking the links given at the top. Separate web pages have been created to contain these mails in batches of 10 so that pages open up fast. These mails are gold mine of information on current topics giving lot of practical suggestions and comments. Any new recipient to these mails must go through all the weekly mails right from the issue no 1 to the latest. If possible please spread the reference of our web site and the weekly mail among the persons, borrowers and guarantors who are the bank victims. If anyone desires to get these mails regularly, he may write to us for inclusion of his e-mail ID in the regular mailing list. The weekly mail is issued on every Friday morning 6 AM. The particular issue of the weekly mail is first published on the web site and then mails are sent. These weekly mails have become quite popular among the borrowers and guarantors in the country as we are getting huge no of mails appreciating the same. We welcome suggestions as well as the topics on which more information is required. As regards, the DVDs, the complete set is  available from us at a token price of Rs. 800. The interested persons may send a separate mail giving their postal address. As soon as they deposit the amount in our account, the set of DVDs will be dispatched to them within a week.

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DRT Solutions Weekly Mail – 47th Issue dated 3rd April ’09

 

(1) Mr. Ram Kishan will be in Delhi during 2nd Week of April ‘09

 We have our US joint venture web site vide www.usindolegal.com This web site is hosted and maintained by us from Indore. Mr. Anand Ahuja and his Associate Attorney Stephanie Ovadia from New York will be visiting India during 2nd week of April ’09. We will have an interactive session at  Delhi in which Mr. Malik and Mr. Ram Kishan will also be present. The details of the date and venue will be announced in due course of time. The entire session will be video recorded and will be available in form of a DVD. 

(2) The Bank Officials have become afraid of our Damage Suits and Counter-claims 

This refers to news item titled ‘Fear of Suits raise Demand for D&O Insurance covers’  of )published at Pg 13 of The Economic Times Mumbai dated 16th March ’09. The Directors and Chief Executives of Banks are going for the said insurance covers despite there is rise in premium rates. They will be further scared when the NCLT (i.e. the Companies Bill 2008) bill is enacted (in fact lying with the Govt and Court since 2002) as it provides for class action suits. As per the said news item, large part of damage claims are against the managements of the banks including MD, CEO and Legal Heads These damage claims have triggered the said Insurance Cover.

We are incorporating the above development in the pleadings as well as the cross-examination. We shall also get the terms and conditions of the said insurance cover as additional public money is being spent by the Banks.

The above has also validated our demand for Insurance covers for the Promoters which we have been voicing since 2001.

(3) Application for OA Dismissal and Filing of WS 

One of our clients from Mumbai has informed that during adjudication of his application for dismissal of OA in DRT, the following points have emerged:- 

(A) PO is of the opinion that first WS be filed, the said WS may contain the said pleadings contained in the present application for OA Dismissal.

Our Comments:-

(I) As per the DRT Act, the DRTs have to evolve their own procedures and the same have to be based on Principles of Natural Justice. Since the DRT is a new Court, the evolution of its procedure will take some time e.g. the CPC 1908 took more than 200 years to evolve. When there is no well defined procedure, the DRT has to adopt the well defined procedure laid down in CPC.

(ii) Whatever PO says is not the procedure duly evolved in DRT, its his own opinion which can be judicially questioned when he mentions the same in his order. The said order will be adjudicated upon through the established chain of DRAT, High Court and Supreme Court. The final verdict given by the apex court will alone validate the proposed procedure.

(iii) As the matter regarding the OA Dismissal stands, the established law laid down in CPC 1908 is O-7 R-11 i.e. Rejection of Plaint (i.e. OA) After this only there is the stage of O-8 which is on WS. This must be told to the PO orally as well as in writing through Written Arguments. His orders be examined and if he persist with his own opinion, further action be taken through Review and Appeal.

(iv) Generally the POs and Banks are in a hurry to pressurize for the WS and affidavits followed by final arguments and the final order. This is highly illegal and the ignorant borrowers (who are already victims of banks) become victims of Judicial System in the name of quick disposal. Subsequently there is no corrective measures in higher courts as the said order of the lower courts is generally not interfered. On account of such state of affairs, the borrowers must enforce the provisions of law strictly at every stage and every date of the complete trial in respect of the adjudication of the said application for OA Dismissal as per the O-7 R-11 without agreeing to submission of WS.

(v) It is needless to mention that DRT Mumbai has already dismissed few OAs. The banks have lost their appeal in DRAT in respect of such dismissals. Our clients have raised this matter since 2002 and got success. After all the Banks as well as the POs are duty bound to follow the law laid down by the Supreme Court in the matter of Central Bank vs Ravindra as well as the law laid down in DRT Rules and Bankers Books Evidence Act. The banks are having their established law departments and competent counsels as well as the audit and resources. Despite this they are not framing correct OA as per the law, they have to suffer. In fact the Registry of the DRTs should not entertain such OAs. Why the borrower should be forced to undergo full trial when the case can be dismissed at the stage of filing of OA itself. Hence the dismissal of OAs must be with heavy costs so that the bankers become law abiding.

(B) Another point has been raised that if we do not agree to the opinion of the PO, he may be annoyed and pass derogatory comments and orders.

Our Comments:-

(I) In democratic setup like ours, even the Chief Justice, Supreme Court has no such power and authority. They are Public Servants. Even CPC 1908 has mentioned them as Public Officers whose duty is to serve the public. If any judge does like this, he is not a Judge at such moments when he becomes annoyed. We have advised our clients to file affidavits on such behavior  and include the same in written arguments.

(ii) If the said Judge behaves persistently, we should apply for change in court. Each and every of their orders must be scrutinized and questioned by way of Review and Appeal. Since everything is available in writing i.e. Daily Proceedings and Written Arguments, no Judge will dare to misuse his power and authority.

(iii) We have advised our clients to maintain their behavior nicely but to be very strict in creating written records. The trial court is a foundation which must be handled with all thoroughness and perfection without bothering about time element as the Indian Judiciary is already 90 times overloaded and hence the perfect trial will take more than 90 times the time compared with developed countries. We have high hopes from the DRT litigants as they are competent as well as resourceful compared with the common public in civil courts. As a result there are now many decisions in favour of the borrowers.

(iv) What is required is perfect implementation of law and procedure of law at every stage and on every date. Any sweet behavior will not correct the illegalities if we are afraid of getting anybody's annoyance. In many cases we have found that the Judges started becoming more careful and delivering better judgments if one sticks to law rigidly.

(v) We have no comments in respect of advocates as they are already under great pressure due to quick disposal by the Judges apart from cut throat and deadly competition which leaves very little time for them to do any legal research and studies or specialize in complex fields like banking, finance, law of torts and law of damages. On account of these factors only, we have been empowering the clients who are the only player with ultimate stakes.

(vi) Further we have no comments about the atmosphere in High Court and Supreme Court as we have found that most of weakness in DRT Cases are due to defective and hurried trial to finish off the case quickly and hence all our efforts and focus is in DRTs. 

(4) Powerful Tool of Sec. 24 of CPC may be used if there are definite signs of Injustice created by the Justice Delivery System.

One of our clients at Mumbai and his Advocate are fighting a praiseworthy battle with all inputs and guidance from us every moment of time. The PO DRT is now pressurizing them to go for final arguments without disposing of the interim applications for inspection of documents and cross-examination, fixing quicker dates even once he ordered to submit written arguments within 4 hours. Since all his requirements are being fulfilled he has become damn annoyed. His annoyance has also been recorded in court records. All this has infuriated him so much that he has made it a prestige issue. This is a typical characteristic of any bueauracracy.  We agree that judges are being highly pressurized for quick disposal but the law of the land does not permit to cause any injustice. Every one has to be fair and reasonable. Now enough documents have been created, our client should use the powerful tool of ‘Sec 24 of the CPC 1908’ i.e. transfer of the proceedings in other courts. The salient feature of this provision to be applied in the present case are:- 

(1) Application is to be made to DRAT Chennai to transfer the case to other DRT.

(2) Since the injustice will be definitely proved, the bank or the court should  provide the expenses to go and attend other DRT as there is only one DRT in Mumbai. Why the litigant should suffer for fault of the Justice Delivery System.

(3) If such application is rejected by DRAT, the entire case denovo can be filed in Chennai High Court which has already criticized the banks and judicial officers for the credit card case wherein 5000 cases have been taken over from the lower judiciary to be directly tried by the High Court itself, shall provide the complete judgment to the really needy persons.

(4) This is a clear-cut of open injustice being caused by the Judge, which has been properly documented in court records.

(5) If under pressure litigant goes for final arguments, entire case will be lost. We must fight for perfect disposal at every stage and every date.

(6) Now there will be several such cases due to determination of the businessman and guarantors facing litigation in DRTs.

(7) The affected clients must go through all the available digests and take photocopy of the Sec 24. Go through the Supreme Court judgment thoroughly several times and provide to your advocate.

(8) All proceedings must be put down in writing. If the judge does not accept any document, the same be sent through Registered Post.

(9) We feel sorry and pity on the huge workload on the judges and daily pressure for quick disposal but that does not mean that anybody has any authority to cause any injustice to anybody. We do not expect much from the advocates as they have day to day dealings with the Judges and they can afford to antagonize the Judges. Clients alone will have to take the lead without being afraid as the guilty person will commit more mistake and if such mistakes are well documented, the chain from DRAT, High Court, Supreme Court or the Media will definitely of use as nobody is remediless. We never advice to higher court for such matters as once final order has been passed, the superior court will say that you have lost your chance in the lower and hence nothing can be done as he is also under the same crushing pressure to dispose off.  

(5) Calling Mr. Ram Kishan for Group Discussions

Our DVDs and Weekly Mails have become quite popular among the DRT litigants in the country and we have received several invitations to interact with group of persons. In past we had such discussions at Ludhiana, Chennai and Indore. Now we have evolved a package to participate in such sessions. The interested persons may contact us through mail for the details.   

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DRT Solutions Weekly Mail – 46th Issue dated 27th March ’09

(1) Filing of Counter-claim after filing of WS – not barred

One of our clients from Bhubneshwar is preparing to file counter-claim at a late stage.  Objection has been raised that since the WS has been filed long back, the counter-claim can not be filed in view of the Sec. 19(8) of the DRT Act 1993.

We have found in several cases in past also, such objections have been raised. The confusion arises due to improper interpretation of the relevant provision in the said Sec. 19(8) of the DRT Act.

This matter has been settled long back by the Supreme Court and the interpretation of law is as under:-

(a)     The provision of counter-claim in DRT Act is exactly same as that in Order 8 of CPC 1908. The said provision in CPC was made in 1976 amendment. 

(b)    The Supreme Court in the matter of Mahendra Kumar vs State of Madhya Pradesh vide citation 1987 AIR (SC) 1395 has laid down “ What is laid down under Rule 6-A(1) is that a counter-claim can be filed, provided the cause of action had accrued to the defendant before the defendant had delivered his defence or before the time limited for delivering his defence has expired, whether such counter-claim is in the nature of a claim for damages or not. The High court, in our opinion, has misread and misunderstood the provision of Rule 6-A(1) in holding that as the appellants had filed the counter-claim after the filing of the written statement, the counter-claim was not maintainable. The finding of the High court does not get any support from Rule 6-A( 1) of the Code of Civil Procedure. As the cause of action for the counter-claim had arisen before the filing of the written statement, the counter-claim was, therefore, quite maintainable.”

(c)     Since the loss and damages in Industrial Finance are based on continuing cause of action, there is no bar of limitation. Hence the above ruling of the Supreme Court is applicable so long as the trial has not been completed.

(2) The Co-operative Banks are not authorized to invoke Securitisation Act.

One of our clients from Mumbai has approached us about the action to be taken in respect of Notice received from them from their lender viz. a Co-operative Bank. We have advised them to submit prescribed Representation and Objection to the Bank stating that the matter is under consideration of the Supreme Court of India. If this does not satisfy the Bank, then a writ petition may be filed in the High Court.  

(3) Defective Affidavits being filed by the Bank Officials

It is observed that in many cases the Bank Officials are making defective and hence illegal affidavits viz. “the averments made in the affidavit are true to the personal knowledge of the deponent” or “ - - true to the best knowledge of the deponent”  In banking matters there is nothing like personal knowledge of the bank official. He must disclose the source of knowledge or the document in which the facts mentioned in the averments have been made.

The Supreme Court of India in the matter of Shivajirao vs. Dr. Mahesh Madan Gosavi 1987 SCC (1) 227, has observed and held as below:-           

Our attention was drawn by learned counsel Dr. Singhvi on the observations of this Court in The  Barium  Chemicals Ltd.  vs. Company Law Board [1966] Supp. SCR 311 where  at page  352 of the report the Court observed that  where evidence was adduced by affidavits, such affidavits  might  be properly  verified either  on knowledge or from sources.  But the basis of such knowledge or source of information must be clearly stated. This was laid down as early as 1909  by Jenkins,  C.J. and Woodroofe, J. in Padmabati Dasi v.  RasikLal Dhar, [ILR XXXVII Calcutta 259] where the Division Bench of the Calcutta High Court observed that the provisions  of Order  XIX Rule 3 of the Code of Civil Procedure,  must  be strictly  observed: every affidavit should  clearly  express how much is a statement of the deponent's knowledge and  how much of the statement was in his belief, and the grounds of belief must be stated with sufficient particularity. This has been followed more or less universally  by  courts in matters where reliance is placed on affidavits.  This view has been reiterated by this Court in The State of Bombay v. Purushottam Jog Naik. [1952] SCR 674 It is on this principle that Dr. Singhvi urged   that the original petition should not have been entertained because of the defective affidavit  in this  case. Undoubtedly the affidavit and the petition were defective as mentioned hereinbefore.”

(4) Caution in Submission of Citations

It is observed that following mistakes or deficiencies are committed while submitting the citations before Court of Law:-

(a) Citation numbers or reference are not given. Simply mentioning the name of the court will not the serve the purpose.

(b) Extract of the Index Notes are given. It may be understood that the Index Notes are not the Judgments.

(c) Full judgments are not read thoroughly and citations are only given based on Index Notes or partial reading of the judgments. In some cases, the body of the judgments may contain certain comments or portion which may be adverse and hence such citation may turn out to be a double edged sword.

(d) Number or quantity of citations are least important. Even if only one citation is given, it should be fully applicable in all respect.

(e) We have seen that since the advocates are not having sufficient free time, we have been emphasizing that the borrowers must read and study the judgments thoroughly several times and if there is anything adverse, such judgments should not be cited. Perfection at every stage and in every activity is essentially needed if one desires to be successful in litigations.     

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DRT Solutions Weekly Mail – 45th Issue dated 20th March ’09

(1) An Important Judgment of the Supreme Court which has highly discouraged the Bankers

This refers to the news item with the caption ‘The Final word on secured lending’ at page 13 of the Economic Times Mumbai dated 18th March ’09 which is based on the Judgment of the Supreme Court of India delivered on 27th February ‘9 This judgment dilutes the rights of the banks under the DRT and Securitisation Acts. These acts do not create first charge in favor of the banks, financial institutions and other lenders. The effect of the said Supreme Court judgment is that the claims of the State Govt. for arrears of sales tax and other taxes, if given a statutory first charge over the properties of the assesses, will have the priority over the claims of the secured creditors.

Our Comments :- The above news item has been prepared by Mr. MR Umarji, Chief Advisor (Law) IBA. Mr. Umarji is the person who originally drafted the Securitisation Act. He is the former Executive Director of the RBI. He has also authored a book on the Securitisation Act, 2nd Edition of which was published in 2004. The said judgment has heavily discouraged the bankers. Our view right from the inception has been that even Mr. Umarji and the bank officials are not paying requisite attention to the Constitution of India as well as various enactments which if applied with an unbiased application of mind will conclude that the best recovery is out of running of the business and not the securities. Above referred judgment of the Supreme Court has strengthened our views. Since the dues of the Govt and the dues of the workers will rank senior to that of the secured creditors, the intended recoveries by the bankers through the Securitisation Act and DRT Act will have to move to back seat. Litigation aspects will create new complications and hence delays.  

(2) The Bankers feel that DRTs are a Failure

One of our clients from Mumbai has sent us a copy of a news item ‘DRT recovers 32% of dues in six years’ published in the Times of India. According to the RBI, in the period 2001-07, of the Rs. 1,88,00,000 outstanding amount, DRTs could recover only 32% i.e. 62,983 crores. One of the Borivli residents has filed a PIL in Bombay High Court. The said PIL says that the Ministry of Finance has failed to expedite the functioning of DRTs. Even the Securitisation Act of 2002 failed to help reduce the burden on DRTs. The lender and borrowers are hand in glove in the settlements and there is no scrutiny by RBI, DRTs or any other authority. The amount written off by banks in 2000 was Rs. 4,500 crores which went up to Rs. 13,490 crores in 2004. In the meantime the Govt has pumped in Rs. 37,000 crores to maintain the capital adequacy ratio of the banks.

Our Comments :- On account of the poor recovery results as mentioned above, the Bank Officials generally feel that the DRTs are a failure. This is born out of their mistaken view that the DRTs are the Recovery Arm of the banks. We have been emphasizing that the DRTs are Courts and the more borrowers become aware of the working of the courts, not only the DRTs will take more time but with the tools like Counter-claims or Damage Suits, the recovery will be nearly impossible even in decades. The scenario will be more difficult for the banks when the NCLTs will come into play when the big borrowers who are availing BIFR stay will start fighting DRTs cases. As a result there will be several judgments coming from the courts which will favor the borrowers. Finally the DRTs will be reduced to nothing better than the civil courts. That is why we have been telling since 2001 that instead of forming new courts like DRTs, the existing civil courts should have been improved. Now the DRTs are suffering the same ills of mismanagement and lack of technology as in civil court apart from chaos due to heavy workload resulting into more reviews,  appeals and change in courts.  

(3) Cross-examination of Bank Officials is a must in Counter-claim and or Damage Suits

It was said that the cross-examination is a rarity in the DRTs but in respect of several of our clients we find that the cross-examination is going to be a regular feature in all the DRT cases. This we predicted in 2001 itself. Our view is based on the normal behavior of the Bank Officials emanating from the buearacratic and dominating attitude after the Nationalization of the Banks in 1969. As a result, they have been mostly ignoring the RBI Guidelines resulting into serious wrong doings which are questioned in the legal defence by the borrowers in DRTs. The usual denial mode adopted by the bank officials creates a situation for the cross-examination of the concerned bank officials. Ultimately the said wrong doings will come out by an effective cross-examination. The person cross-examining the bank officials should have mastery of facts and mastery of law in the arena of banking, industry, finance, CPC, Evidence Act and Banking Laws. 

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DRT Solutions Weekly Mail – 44th Issue dated 13th March ’09

(1) Reference to High Court u/s 113 of CPC

As per Sec 113 of CPC 1908,     subject to such conditions and limitations as may be prescribed, any Court may state a case and refer the same for the opinion of the High Court, and High Court may make such order thereon as it thinks fit.

An important proviso was added to the above section in 1951 by way of CP Code (Am) Act 24 according to which where the Court is satisfied that a case pending before it involves a question of as to the validity of any Act  ……, the determination of which is necessary for the disposal of the case ……., the Court shall state a case setting out its opinion and the reasons thereof, and refer the same for the opinion of the High Court.

On account of the above proviso, the scope of Sec 113 has become much wider than Art. 228 of the Constitution as the later is only confined to substantial questions of law as to the interpretation of the Constitution and nothing else.

We intend to utilize the above in questioning certain deficiencies of the Securitisation Act in DRTs. The progress will be reported in Weekly Mails in due course of time.  

(2) Judge had to personally pay the Costs 

As per citation AIR 1968 Bombay 439LS Sherlekar vs DL Agarwal, the High Court held and directed the subordinate Judge to personally pay the costs of the other party’s Counsel.

This shows that Justice is above all, even the Law bends before Justice. The Courts are meant only for Justice and nothing else.

(3) Chances of Winning against Bank in Recovery Litigations- Importance of Perfect Trial 

We are repeatedly being approached by the Borrowers facing DRT cases enquiring as to chances of winning against bank. The chances are quite high provided following aspects are kept in view:-

(a)     The person preparing the pleadings should have mastery of facts and mastery of law.

(b)    The facts include those relating to Banking, Finance, Industry and Business.

(c)     The law includes that relating to Pleadings, Constitution, Torts, Damages, CPC, Law of Evidence, Banking including  RBI.

(d)    The advocate should also have above mastery of facts and mastery of law.

(e)     The Indian Courts are heavily overloaded to the extent of even 9000 per cent compared with those in developed countries. Hence the disposal on every date is likely to be defective. Even a single defect will seriously affect the chances of winning. There is no other option but to ensure that such defect does not occur. This requires hard work and patience in bringing everything in writing.

(f)      All the material facts are to be judicially determined. The procedural law laid down by the Supreme Court vide citation AIR 1969 Supreme Court 1167 Swaran Lata vs Harendra Kumar has to be strictly followed.

(g)    The bank cases are based only on documents. All the documents are in possession of the banks. Full use of CPC Order 11 will result in getting all the documents or getting the defence of the banks closed in respect of damage suits or counter-claim.

(h)    Since the banks do not admit their wrong doings in pleadings, there is no option but to examine the bank officials (at least Chairman and Branch Manager) in witness box by a person having mastery of facts and mastery of law.

(i)      Since the common sense of the judges is in favor of the banks, nothing should be left for any decision by the judge i.e. complete admission of the wrong doings of the banks must be obtained before any decision is taken by the Judge.

(j)      The above assumes that a perfect counter-claim or Damage Suit has been filed at proper time resulting in a situation of ‘No Debt Due

(k)    The above may take a long time but if any hurry is caused, the chances of winning will come down drastically. Any correction by Higher Courts will not be possible.

(l)      All our clients who are following our guidance and advice are definitely progressing to win their cases against the bank.

(m)  Each case is different from the other.

(n)    Until and unless success is obtained in DRTs (i.e. Trial Court) or the facts have been judicially determined, one should never approach High Court or Supreme Court. These courts can not do anything about the facts. If by chance one has to approach these higher courts, each and every fact should have clearcut determination by the lower courts otherwise it may boomerang and future corrections will be impossible.

(o)    The advocates of our clients are requested to hold periodical dialogues with us so that there is no lacuna or deficiencies in the trial

(4) Future of Trial Courts in India 

We are repeatedly being approached by the Borrowers facing DRT cases enquiring as to the future of trials (i.e. in DRTs) in India. Our views are as under:-

(a)     The UNO finalized a model IT Act (Information and Technology Act) in 1998 and sent to all its member countries to enact the same in their individual country.

(b)    Accordingly India enacted the IT Act 2000.

(c)     At the instance of Dr. Abdul Kalam Azad, the then President of India, on 9th July 2007, laptops were distributed to 15,000 Judges in the countries with the provision of 3 months training.

(d)    The Supreme Court of India and the High Courts are continuously adopting modern IT technology in their court rooms. The Annul Chief Justices’ Conference is emphasizing use of such technology in Trial Courts and accordingly e-courts are being established. All the 14,000 courts are being interconnected with an outlay of Rs. 450 crores in next 5 years.

(e)     Many of the Advocates have started using modern IT tools in their day to day operations.

(f)      We have developed a superior method of ‘Video Arguments’ for the first time in India and demonstrated the same on 10th July 2007 before the District Judge, Indore. The said method was also demonstrated before the Legal Forum of India on 4th May 2008 and before the All India Conference of Chartered Accountants on 22nd February 2009.

(g)    The TV Program like ‘Aapki Kachahry’ by Dr. Kiran Bedi will become a Model for commencing such Courts not only in the country but throughout the world. As a result the bulk of the small cases will be decided by such community courts.

(h)    At present 70% of the litigations are at the instance of the Govt or Public Sectors. The scheme of Ombudsman will come up in a large way. A mandatory certificate from Legal Audit or Ombudsman will settle most of the case before coming to the regular courts.

(i)      The Alternative Dispute Redressal by way of Lok Adalat, Arbitration and Mediation will be more effective in reducing the incidence of cases coming to the regular courts.

(j)      Legal Education of the litigants as we have started for our clients will improve the quality of disposal on every date of the litigations.

(k)    As in USA and UK, complete proceedings of the courts will be video recorded, televised online, transcribed on the same day and all such information available on the internet on the same day will definitely improve the quality of disposal on every day. The requirement of ‘Open Court in presence of parties’ will be truly served.

(l)      On account of all the above measures there may be separate ‘Bar Association of Trial Lawyers’ as in USA.

(m)  Most of the above will be achieved in next 5 years.

(n)    The litigants of the DRTs will give the lead as they constitute the most competent and able litigants being Entrepreneurs, Businessmen and Industrialists who have capabilities as well as the resources to bring in better management and improved technology in the DRTs (i.e. Trial Courts) in India.    

Note:-This issue of the weekly mail is prepared and published from Sagar where Mr. Ram Kishan is staying with effect from 11th March to 15th March ’09. It is the application of modern technology which enables 24X7 working irrespective of place of work.

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DRT Solutions Weekly Mail – 43rd Issue dated 6th March ’09

(1) Impact of E-mail to CMD of a Public Sector Bank 

In respect of one of our clients from Indore, the Authorised Officer of the Bank took objections to the reply being submitted by the Advocate of our client. He was informed that the proceedings being quasi-judicial in nature, no such objection is tenable in the eyes of law. When this matter was complained through an E-mail endorsement by Mr. B.K. Dubey, our Senior Advocate to the CMD of the Bank, the Law Division of the Head Office of the said Bank, immediately on the same day replied through E-mail as under (name of the bank and its officials have been suppressed to maintain professional secrecy). We wish that the problems of the borrowers are also handled with such seriousness and urgency. Our contention is proved that the CMD of the Bank must be informed and made as a necessary party in the DRT pleadings will definitely improve the overall quality of the defence. 

 

From: Bhupendra Dubey  
Sent: Thursday, March 05, 2009 6:08 PM
To:
Cc: Ram Kishan
Subject: Fwd:

---------- Forwarded message ----------
From: LAW 
Date: Thu, Mar 5, 2009 at 4:05 PM
Subject: 
To:

Shri BK Dubey,

Advocate 

 

Dear Sir,

 

We have received your email message dated 5.3.2009, addressed to Chairman & Managing Director, which has been brought to our notice. 

 

We have since advised the concerned official that the representations received from the advocates, on behalf of their clients, under SARFAESI Act, be also appropriately replied by the authorized official.

 

Our authorized official has already replied to the representation which you have raised directly to your client.  However, we are advising the authorized official to send copy thereof to you. 

 

Regards 

 

CHIEF MANAGER(LAW)

LAW DIVISION

H.O., NEW DELHI

(2) DRT Mumbai rules that until and unless Counter-claim has been decided, no recovery action can be taken by the Bank   

One of our Associate Advocates from Mumbai has informed that one of the DRTs in Mumbai has ruled that since the counter-claim was more than the claim of the bank and hence there was ‘No Debt Due’, no coercive action for recovery can be taken under the Securitisation Act. The details of the case shall be given in the future Weekly Mail when the same are received by us.

(3) SC Ruling – ‘Statutory First Charge in favour of State has primacy over right of banks to recover its dues. 

Mr. Rajendra Seth, Mumbai has been kind enough to communicate us copy of an important Supreme Court ruling decided on 27th Feb. 2009 in the matter of Central Bank vs State of Kerala, Civil Appeal No 95 of 2005  according to which “statutory charge created in favour of the state has primacy over the right of the bank to recover its dues under the Securitisation Act or DRT Act.”

(4) Limitation in the matter of Counter-claims or Damage Suits of Borrowers

We continue to receive several queries in respect of the limitation in the matter of Counter-claims or the Damage Suits filed by the borrowers  and Guarantors against the banks and FIs in DRTs.

In almost all the cases, we have found that the loss and damages caused are continuing in nature and are covered under Sec. 22 of the Limitation Act, 1963 reproduced below:-

“22. Continuing breaches and torts.  In the case of a continuing breaches of contract or in the case of a continuing tort, a fresh period of limitation begins to run at every moment of the time during which the breach or tort, as the case may be, continues.”

In view of above and in the event of continuing cause of action, there is no limitation for initiation action for counter-claims or damage suits by the borrowers and guarantors.     

(5) Court Fee in the matter of Counter-claim or Damage Suits of Borrowers 

The court fee in the matter of Counter-claims or Damage Suits of the Borrowers will depend on the following facts and circumstances:-

(a) In DRTs, the maximum court fee is Rs. 1.5 lac depending on the quantum of Loss and Damages.

(b) In civil court, one has to find out the schedule laid down under the Court Fee act of the State where the subject Counter-claim or Damage Suit is filed. In many of the States, it is ad-valorem and varies from 10% on wards. In some States like Maharashtra, the maximum court fee is Rs. 3 lacs.

(c) Depending on the quantum of the Loss and Damages, the court fee is calculated and if is beyond the financial means of the litigant, it is waived in accordance with the procedure laid down in Order 33 of the CPC applicable to ‘Suits by Indigent Persons’

(d) In case of Co-operative Courts, the maximum court fee is Rs. 15,000=00

(e) In certain Union Territories, the Court Fee is Rs. 6,000=00 maximum.  

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DRT Solutions Weekly Mail – 42nd Issue dated 27th Feb. ’09

(1) ‘Video Arguments in Judicial Proceedings’ – Special Address delivered in All India Conference of CAs on 22.02.09 at Indore 

Mr. Ram Kishan delivered a special address on ‘Video Arguments in Judicial Proceedings’ on 22.02.09 in Dhirubhai Ambani Auditorium. Daly College, Indore  during the 4th Technical Session of the National Conference of the CAs. A background paper was already published on our web site vide link http://www.drtsolutions.com/courtech.htm The ‘Present Method of Oral Arguments’, its deficiencies vis a vis ‘Proposed Method of Video Arguments’ were explained along with extract from an actual case. It was entirely a new concept to the large gathering of CAs. Mr. R. Bupathy, Chairman of the Session and Past President, ICAI, Chennai himself appreciated, took keen interest and desired to spend exclusive time. The entire address was video recorded and a DVD will be available in due course of time.  

 

(2) Cross-examination of Bank Officials:-

We have received several queries regarding cross-examination of the bank officials. Our views are as under:-

(a)     As per provisions under Sec. 22 of the DRT Act, the bank officials can be examined.

(b)    In some cases when DRT PO has declined cross-examination, the High Courts in appeal have ordered to conduct cross-examination in accordance with the principles of natural justice as well as the provisions u/Sec 22 of the DRT Act.

(c)      The stage for the cross-examination is reached only after all efforts have been made to discover the facts contained in the documents and the bank officials have declined to provide the required documents.

(d)    The sole purpose of the cross-examination of the bank officials is to obtain their admissions for the wrong doings committed by them.

(e)     The person conducting cross-examination should have mastery of facts and mastery of law relating to banking, industry, finance, evidence, contract, torts and damages. The principle of direct and best evidence is to be kept always in view.

(f)      We have advocates as well as retired bank officials who have been specifically trained to conduct cross-examination of the bank officials.

(g)    In bank litigation, the cross-examination of the bank officials is one of the most important tools to extract facts and admissions from the said bank officials.

 

(3) Damage Suit and or Counter-claim in Bank Litigations:-

We continue to receive several queries on this important subject. Our views are as under:-

(a)     If the bank has filed an OA (Original Application) u/s 19 of the DRT Act and stage has been reached to file WS. Under such situation, the Counter-claim must be filed along with the WS. It is needless to mention that pleadings in the said Counter-claim has to be quite exhaustive as in a civil suit for damages. All the facts relating to project report, financial application, sanction, correspondence, balance sheets, all categories of loss and damages etc. must be pleaded along with the documents. It is needless to mention that the person drafting the said counter-claim should have mastery of facts and mastery of law relating to banking, industry, finance,  torts and damages.  

(b)    We have seen that in many cases, the pleadings of the counter-claim are contained only in few paragraphs whereas the pleadings in properly drafted counter-claims run in 80 to 150 pages excluding the documents.

(c)     In some cases, the counter-claim has not been set up the decree has been passed by the DRT and the borrower is at the stage of appeal. The said borrower must file his damage suit in the civil court.

(d)    After passing of the decree by the DRT, if there is any possibility of retrial, counter-claim may be filed in DRT before restart of the trial.

(e)     In almost all the cases, we have found that the amount of counter-claim or damages are much more than the claim of the bank and hence there is no debt due. Hence till the damage suit or the counter-claim is decided, no recovery action can be initiated.

(f)      The loss and damages suffered are continuing in nature and hence there is no limitation. Hence the damage suit or counter-claim can be filed at any time.

(g)    If the pleadings of the said damage suit or counter-claim are prepared thoroughly and are contested properly, it will be nearly impossible for any bank to recover their alleged claim which is always much less than the damage suit or the counter-claim of the borrowers. Ultimately, the banks will have no option but to settle the matter if the borrower agrees and the settled amount has been seen ranging from 3% to 20% in respect of many of our clients.

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DRT Solutions Weekly Mail – 41st Issue dated 20th Feb. ’09

(1) Update on Gujrat High Court Kotak Mahindra Judgment holding debt assignment or its substitution illegal:-

In continuation of above matter reported in news item in 37th issue of weekly mail, the ICICI Bank has filed a SLP No 2240/2009 in the Supreme Court along with several SLPs. The petition was called on hearing on 16.02.09. It was ordered that if  these SLPs are dismissed, the assignor banks and the assignee banks will have to reverse the transactions which they enter into during the interim period to be stipulated by the Supreme Court at the final hearing which will be held on 16.04.09.. Such order was passed to ensure that the secured debts do not go unrepresented. Further the SC directed that any disbursement to secured creditors shall, where the debt stands assigned, be made to the assignees. This order will not be construed as an acceptance of the assignments pending the present Special Leave Petitions.  

(2) Query on provision of Counter-claim in Securitisation Act:-

With reference to the item no 2 In the last issue of the weekly mail, one of the mail recipients has raised a query reproduced below:-  

I wonder why a field expert like you you have changed from your earlier learned stand that a Securitisation Application is in lieu of a civil suit and damages can be claimed in an SA.

Besides Mardia, I also find that iIn the case of Jammu and Kashmir Bank Ltd. v. Jai Lakshmi Dravid, as is reported in  I (2007) BC 227, the Punjab and Haryana High Court had held:
"Para 5. The argument that the question of title cannot be examined by the Debt Recovery Tribunal in the proceedings under Section 17 of the Act is not tenable inasmuch as all objections which are available to a person against the proceedings initiated by the Bank are to be raised before the Tribunal."

I request you to give a detailed rely to the said issue in the forthcoming newsletters.

Our comments

There is no change in our stand. It is a question of strategy based on convenience due to existing legal provisions. Looking back to the history, the well defined provision of counter-claim in CPC 1908 was incorporated in 1976. Similarly it was done so in DRT Act 1993 in 2000. Such well defined amendment in Securitisation Act is still awaited. These do not mean that there were no counter-claims in civil courts prior to 1976 or in DRTs prior to 2000. They were there but one has to justify on the basis of fundamentals of law. Same thing will have to be done in the arena of Securitisation Act till there is well defined amendment. That is why our first approach is to explore possibility of filing counter-claim if there is any existing OA under DRT Act or there is any possibility of the same. If such situation does not exit, then there is no option but to file the damage claim in the appeal (i.e. civil suit) under section 17 of the Securitisation Act. That is why initially we mention in the said appeal about the loss and damages reserving our rights to file such claim in due course of time.   

(3) Strategy for Borrowers’ litigation in DRTs :-

Several borrowers have been discussing with us about their strategy in DRT litigations. The following analysis will have a practical utility:-

(1) The Indian courts are heavily overloaded. Recently on 16th Feb 2009, it was reported in a news item that in Delhi High Court, a bench is disposing about 13,800 cases in a year. While making a comparison, it was informed that similar bench in UK disposes only 150 cases in a year. This means that our courts are overburdened nearly 90 times. If the aspects of management and technology is also considered, our courts are much more overloaded even beyond 90 times.

(2) The above is a stark reality which no one can shut his eyes. The result is that the trials in almost all the cases will be defective. That is why we have been emphasizing importance of review in almost all the interim orders. If these initial defects are not corrected at the trial stage, the Higher Courts will not be able to do anything.

(3) The civil suits in UK are decided in about one year. This means if thorough work is done in our courts, the suits will take 90 years. That is why we have been concluding that a thorough trial in DRTs will take 10 to 20 years.

(4) In view of above, we have been emphasizing our clients that they have to organize their litigation of counter-claim on thorough basis. Since the litigation is going to last for more than 10 to 20 years, the borrower must concentrate earning of wealth.

(5) Under the above facts and circumstances, since in almost all the cases, the counter-claim being much more than the claim of the lenders, there is no debt due and hence the recovery action as per law can not take place for the said period of 10 to 20 years, it would be worthwhile concentrating on earning. This will also create a strength for better litigation as well as settlement if any. All this is possible if one has prepared a thorough counter-claim followed by thorough fight on every date. That is why we have been emphasizing that the Counter-claim is the ultimate and the only defence for the Borrowers in DRTs.

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E-mail - ramkishandrt@gmail.com and ramkishan@drtsolutions.com

Popularity of our web site :- The key word for search of our website is 'drt'  or any phrase commencing with 'drt'  We are on the top in Google Search for 'drt' among 28,60,000 results globally. In most of the search engines like yahoo, msn, google, excite, altavista, mamma, alexa etc., To verify, you may visit www.yahoo.com, www.msn.com, www.rediff.com, www.indiatimes.com, www.altavista.com, www.google.com, www.excite.com, www.hotbot.com, www.123india.com, www.aol.com, etc. Our reference appears in www.economictimes.com, www.amazon.comwww.financialexpress.com, www.lawcrawler.com, www.findlaw.com, www.law.com, www.supremecourtofindia.com, www.supremecourtonline.com

(2) We have created a separate web site www.usindolegal.com which deals exclusively with our US joint venture enterprise for activities like BPO, legal BPO, DRT etc. This site has started appearing in the search results of Google, Mamma, Alexa and Yahoo.

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. 

Useful link www.WorldVideoBusiness.com :- WorldVideoBusiness-WVB® is a business to business e-marketplace source of international trade leads, and tender opportunities from companies and government organizations around the globe.

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.

Our this web site is dedicated to Yoga Rishi Baba Ramdev Ji Maharaj:- Our this web site is respectfully dedicated to Yoga Rishi Baba Ramdev Ji Maharaj whose method of Pranayam has cured even incurable diseases and thus has revolutionized modern medical science. For further details please visit our special page by clicking here Baba Ramdev Ji Maharaj, Yoga Guru, Cure for All Diseases, Medical Science Revolution

Site also dedicated to:-   (1) Swami Ramdevji, Acharya Balkishan and their Guru Pradumn Maharaj.

                                             (2) H.H. Maharishi Mahesh Yogi and Acharya Rajnish, the greatest gurus of all time www.maharishi.com, www.osho.com

                                           (3) Shri Hira Ratan Manek (HRM) for his pioneering work on Solar healing vide his web site www.solarhealing.com and forum at www.lifemysteries.com                                    

We regularly practice TM and SCI of Maharishi Mahesh Yogi. We also regularly practice Hath Yoga including Pranayam based on Baba Ramdev Ji  Maharaj. We daily watch his global TV program on Astha Channel from 05:30 AM to 8AM and 8PM to 9PM Indian Standards Time. On Sanskar channel, we daily view the discourse of Pradumn Maharaj from 4 AM to 5:30 AM. Many chronic diseases such as Cancer, Parkinsons' disease, Polio, Asthma, Hypertension, diabetes etc. have been cured by the said method of Pranayam which can be learnt even by watching his program on TV. Since 30th March '06, we have started practicing Sun Gazing as prescribed by HRM.

                                    (3) Shri Satyanarayan Morya alias 'Babaji' for his praiseworthy service to our nation. Please visit his site www.artistbaba.com 

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