DRT Legal Solutions
(Debts Recovery Tribunal Legal Solutions) is an India based
Law Firm specializing in DRT, Securitisation, 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 - +91-930-2103689, Off. & Res.- +91-731-4049358 and +91-731-3290201
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Highlights:- All problems of Debts NPA Recovery Tribunals i.e. DRTs, NPA Recovery and securitisation / securitization Act, ARCIL i.e. Asset Reconstruction Company (India) Limited, are tackled by us. People from all over the country are phoning us, then visiting and getting their problems solved. Please visit Home Page and other Pages also
20.07.12 - DRTs in Mumbai are staying the Adjudication in respect of Co-operative Banks- DRT Solutions Weekly Mail 219th
Mr. Bharat Gandhi, DRT Advocate, Mumbai has informed that the DRTs in Mumbai are issuing stay orders in respect of recovery cases filed by the Co-operative cases. Earlier the borrowers had to approach the Supreme Court which was issuing such stays and now he need not approach the Supreme Court
13.07.12 - Receipt of Notice u/s 13(4) is Sufficient to Initiate Action u/s 17 of the Securitisation Act - DRT Solutions Weekly Mail 218th
After in-depth study and based on the judgments delivered by the Supreme Court and the High Court, we have come to the conclusion that one should initiate action u/s 17 of the Securitisation Act just after receipt of the notice u/s 13(4).
13.07.12 - If Banks depute Recovery Agents, Borrowers should make Video/Audio Record the discussions with the said Agents - DRT Solutions Weekly Mail 218th
It is observed that the banks are deputing Recovery Agents for various activities. The Borrowers should make arrangements for recording telephone talks with the said Agents. In case the Agents come to spot, all discussions and dealings should be video recorded. At proper time the CDs containing the said audio and video records should be sent to the banks as documents to be used in future if necessary. It is needless to mention that simple gadgets and handicams are available for said audio/video recording. The borrowers should practice in advance to make trial recordings as well as the sample CDs so that the system does not fail when the real need arises.
22.06.12 - Dilemma of Indian Banks to move from Securitisation to DRT Act due to Slump in Property Market - DRT Solutions Weekly Mail 215th
On account of slump in the property market vide news below, the banks and FIs are in a fix. They have no interest to invoke the Securitisation Act. In many cases, after issue of the legal notice u/s 13(2), the secured creditors are postponing issue of possession notice u/s 13(4). They are now afraid to take possession of the secured assets as there may not be any buyer. They have no option but to file OA under the DRT Act. In that eventuality, they will have to face the counter-claims and hence the recovery cases in the DRTs will be delayed. Further on account of sharp increase in NPAs, there will more number of cases in DRTs.
Sunday, June 17, 2012
While MMR reported the sharpest drop of around 58%, NCR slumped 57% from the
year earlier. Bangalore witnessed a drop of 18% in sales, the report added.
15.06.12 - Before Declaring NPAs, Bankers have Numerous Duties to Perform including Rehabilitation not only Once but Multiple Times - DRT Solutions Weekly Mail 214th
One of our clients Mr. Mukund Murthy from Mumbai has sent the following useful information:-
“Before declaring NPAs, Bankers have numerous duties to perform including rehabilitation not only once but multiple times – Important Information for Borrowers and their advocates
Our Associate and Banking Expert has drawn attention to the following important RBI Guidelines and circulars which will be highly useful to Borrowers and their Advocates. These need to be studied and important aspects included in the ‘Representation and Objections’ to notice u/s 13 of the Securitisation Act as well as in the application u/s 17 of the said Act:-
(a) Even before the prudential norms to declare accounts as NPA was brought by RBI to be implemented from 31st March 2004, RBI issued a circular DBS.CO.OSMOS/B.C./ 4/ 33.04.006 / 2002-2003 dated September 12, 2002 on “Guidelines on preventing slippage of NPA accounts” based on a study on preventing slippage of NPA accounts, addressed to The chairman/ Managing Director/Chief Executive Officer – All Commercial Banks (Excluding RRBs) which means it is applicable to all commercial banks irrespective of whether they are Indian banks or foreign banks or multi state co-operative banks. Since the circular cited now is issued previous to the circular issued for declaration of NPA, the guidelines as prescribed in the aforesaid circular has to be implemented first before declaring an account as NPA.
(b) RBI Master circular DBOD No.BP.BC.10/21.04.048/ 2004-05 dated July 17, 2004 where in prudential norms are given. As per the said circular of RBI, mere irregularity in the account cannot make it a Non Performing Asset. It depends upon the nature of irregularity.
(c) RBI circular RPCD.PLNFS.BC.No.31/06.02.31/2005-2006 dated August 19, 2005 highlights the “Policy Package for Stepping up Credit to Small and Medium Enterprises. - Further RBI circular RPCD.SME & NFS.BC.No.9/06.02.31/ 2010-11 dated July 1, 2010 under lending to Micro, Small & Medium Enterprises (MSME) Sector among other things states about Debt Restructuring Mechanism for Micro Small and Medium Enterprises.
(d) That as per Government of India policy and RBI guidelines and directives, it is apparent that an account can be classified as NPA only when all the means of making the account performing, which includes repeated rehabilitation fail to produce the desired result, and then and then only, the legal proceedings under Securitization Act 2002 can be invoked and proceedings initiated by issuing the notice u/s 13(2) of the said Act.”
01.06.12 - Amendment of the SA - DRT Solutions Weekly Mail - 212nd
“We are getting several cases where the SA has been prepared but it lacked important portions like many of the wrong doings committed by the lenders and the loss and damages on account of the said wrong doings. We advised our such clients that the SA should be amended at the earliest possible opportunity. If it is not done, the borrower shall be deprived of an important right and his case will become weak and later on curing such weakness will not be possible. There are few judgments of the Supreme Court of India which lay down that “ The Courts should be extremely liberal in granting prayer of amendment of pleadings unless serious injustice or irreparable loss is caused to the other side.”
01.06.12 - Exhaustive Application for Stay before DRT- DRT Solutions Weekly Mail - 212nd
“Just after receipt of notice u/s 13(4) it will be better to submit SA before DRT with an exhaustive application for stay as early as possible. The SA may have even provision for subsequent amendment. Such action will prevent the lender to approach the Magistrate or direct auction of the secured assets.”
25.05.12 - ‘No Debt Due’ – Stages for Highlighting - DRT Solutions Weekly Mail - 211th
“The banks are out to misuse the coercive provisions of the Securitisation Act. In order to secure favourable response from the Magistrate u/s 14 or from the PO DRTs u/s 17, proper pleadings are to be made to emphasize the situation of ‘No Debt Due’ at the following stages:-
(a) In the Representation and objections against the notice u/s 13(2), the loss and damages should be pleaded stating that since the said loss and damages are much more than the alleged dues of the bank and hence there is ‘No Debt Due’. Copy be also sent to the Chairman and other higher officials of the bank.
(b) In the caveat filed before the Magistrate copy of the said Representation and Objections be enclosed emphasizing the said ‘No Debt Due’ situation. Copy of the said caveat be also sent to the Chairman and other higher officials of the bank.
(c) In the arguments before the Magistrate the said point of ‘No Debt Due’ be emphasized. Also written arguments be submitted.
(d) Despite above if the Magistrate order is not favourable, review be filed before the Magistrate.
(e) Just after review, appeal be filed before the DRT.
(f) Since every stage, sufficient records have been created followed by Review, Appeal and Written Arguments, the Magistrate and PO DRTs will have no option but to grant stay for taking the physical possession.
(g) Despite above, if desired results are not achieved, one will have sufficient records and documents to file Appeal before DRAT and then subsequently before the High Court and Supreme Court.
18.05.12 - Misconceptions of a DRT Advocate – Action after Notice u/s 13(2) - DRT Solutions Weekly Mail - 210th
One of our clients arranged a conference call during which he, his DRT Advocate and we interacted, his said advocate proposed certain actions against which our comments were as under:-
(a) The bank sent the legal notice u/s 13/2 of the Securitisation Act against which the borrower submitted the Representation and Objections within 60 days.
(b) The bank did not submit the reply within a week as prescribed u/s 13(3A).
(c) The bank did not take any further action. It was learnt that the bank officials desired to cancel the first notice and to issue another notice.
(d) The said DRT Advocate proposed to file SA in the DRT. We told him that the SA can be filed only after bank invokes any action u/s 13(4) or approaches to the Magistrate u/s 14 but not before that.
(e) The said Advocate proposed to file suit in the civil court. We told him that such action will ultimately not be of any use due to bar of civil court as per Sec 34.
(f) The said Advocate also proposed to file a writ petition in the High Court. We told him that the High Court will ultimately advise to approach DRT at appropriate time.
(g) On account of above such misconceptions, we have been advising our clients to go through the relevant legal provisions and discuss the matter with us so that unnecessary and ineffective actions are not indulged in. The borrower should keep in view that all the government policies, RBI Guidelines, banking and general laws and above all the Constitution support business, trade and industries so that there is growth, employment and revenue generation. All these should be pleaded properly and at every time, the borrower should strictly follow the law and the procedure of law. Any shortcut and hurry will ultimately go against him. We are always available for suitable guidance and advice at any stage of litigation. Our web site and weekly mail are continuously updated to provide latest practical knowledge.
(h) On account of professional ethics and other obvious reasons, we never disclose name of the clients, advocates, DRTs etc but our aim is that the relevant knowledge and experience must flow to one and all so that it will be useful to others.
18.05.12 - Proposal by a DRT Advocate – To file Injunction Suit against Classification of Account into NPA - DRT Solutions Weekly Mail - 210th
One of well known DRT Advocates proposed filing an Injunction Suit against classification of account into NPA. We advised him not to do so on account of following reasons:-
(a) The proceedings in the civil court are barred due to Sec 34 of the Securitisation Act and hence the efforts and expenses in the civil court will be wasted.
(b) The DRT is the most suitable jurisdiction as it is a specialized court for the matters relating in business, industry and finance being dealt under the DRT Act and Securitisation Act.
(c) The DRTs were formed on recommendation of the Tiwari Committee which in its report published by the RBI in 1984 said that the proposed tribunals (i.e. DRTs) should be manned (i.e. the DRT Advocates and DRT Judges) by persons having expertise in banking, industry and finance. Hence the DRT advocates and judges should undergo a training of at least 100 hours in banking, industry and finance. Such training should be repeated every two years.
(d) The adjudication in DRTs is guided on the Principles of Natural Justice scope of which is much wider than that in CPC. In fact the CPC is codification of the said Principles of Natural Justice and hence the deficiencies in CPC could be corrected in the DRTs.
(e) Classification of account into NPA is one of the ingredients to invoke sec 13(2) of the Securitisation Act. Such classification is a very tedious and exhaustive process being based on relevant RBI Guidelines. This could be one of the preliminary issues in the trial of the SA. If proper pleadings are made and thorough trial of the said preliminary issue is carried out, in most of the cases, the bankers will lose.
(f) Hence in view of above, it will be better to carry out the proposed adjudication in DRTs rather than the civil courts.
11.05.12 - Sec 14 of Securitisation Act – Important Observations and Comments - DRT Solutions Weekly Mail - 209th
On account of legal ignorance, the borrowers and guarantors are highly scared of the physical possession orders for which are obtained by the banks from the Magistrate u/s 14. Our observations and comments are as under:-
(a) After possession notice u/s 13(4), the borrower is entitled to file application u/s 17 before the DRT within 45 days of receipt and or publication of the said notice in two news papers.
(b) Hence we have been advising our clients to file caveat with the Magistrate so that opportunity is given to the borrower to participate in the proceedings.
(c) Further we have been advising our clients, to approach to DRT, the moment they come to know that the bank has approached the Magistrate.
(d) The Magistrate is bound to take action on the said caveat as well as to extend opportunity for hearing.
(e) If there are wrong doings by the bank upto the stage of 13(4), the Magistrate is bound to refuse to act u/s 14.
(f) In case the Magistrate orders for physical possession, his order is appealable u/s 17 before the DRT.
(g) Keeping all the above aspects and implications in view, we cove all the related aspects when we prepare the objections and representation against the notice u/s 13(2) including the claim for loss and damages. Such pleadings become useful and handy while dealing with the Magistrate as well as the DRT.
(h) The gist of the approach is that on account of huge loss and damages due to the wrong doings of the bank, there is ‘No Debt Due’, hence there is no cause for recovery. Until and unless this issue is settled by the DRT, no physical possession can be taken. This will be done only after final order against the SA u/s 17. As per the Supreme Court in the matter of Mardia Chemicals, the said SA is in lieu of a suit. The adjudication of a suit takes time of several years. Since the higher authorities in the bank are also impleaded in the said suit, lot of pressure is created and ultimately, the bank officers have no option but to settle as per the terms desired by the borrower.
(i) In above dealings, one should study and keep in view all the related case laws. Even there may be occasions to file Review and Appeal.- DRT Solutions Weekly Mail - 205th - DRT Solutions Weekly Mail - 205th - DRT Solutions Weekly Mail - 202nd - DRT Solutions Weekly Mail - 201st
DVDs of the 2nd All India DRT Conference held on 8th and 9th Jan ’11 are available – these DVDs contain goldmine of useful information to borrowers, guarantors and their advocates
We are pleased to inform that 5 DVDs and 1 CD of the said Conference are available at a token price of Rs. 1000=00. This amount is peanut compared to that spent by the participants who came from far off places like Cochin, Kolkata, Chandigarh, Chennai etc at their own expenses, stayed at Indore and paid the participation fee of Rs. 4500=00 per head.
These 5 DVDs are complete video record of the whole conference and are gold mine of the current information on:-
(a) Securitisation Act, important questions and answers, practical aspects of stay and trial in DRTs,
(b) Important court judgments and their applications,
(c) Court procedures and critical applications,
(d) Bank documents and their inspection,
(e) Legal maxims and their applications,
(f) Important provisions of Constitution and PILs,
(g) Present state of Indian Judiciary, problems and solutions,
(h) Application of modern management and technology etc.
We have provided in one CD complete audio record of the whole conference so that one can listen the same on i-pod. As a whole these DVDs and the CD provide the most latest and useful knowledge to the borrowers and guarantors as well as their advocates.
Our Weekly Mails are DRT Guide and gold mine of practical information for the borrowers and guarantors :- The visitors of this web site particularly Borrowers and Guarantors will be immensely benefited by our weekly mails, all previous issues from 1st one till the last one may be viewed by clicking Drt Solutions Weekly Mail for Borrowers & Guarantors Separate web pages have been created to contain these mails in batches of 10 so that pages open up fast. These mails are DRT Guide and gold mine of information on current topics giving lot of practical suggestions and comments. Any new comer to this site must go through all the weekly mails right from the issue no 1 to the latest. If possible please spread the reference of this 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 for improvements as well as the topics on which more information is required.
DRT Solutions Weekly Mail – 72nd Issue dated 18th September ’09
All Weekly mails right from 1st Issue to latest, click links below:-
(1) Securitisation Act – DRT Trials – Problems faced by Defendant Borrowers and Solutions
We have received several queries on this topic from our clients as well as those visiting our web site. Our views are as under:-
(a) It is presumed that exhaustive objections, representation and facts have been submitted before the lender under section 13(3-A) of the Securitisation Act ’02.
(b) It is presumed that the said objections, representation and facts include the claim of loss and damages suffered by the borrower on account of wrong doings of the secured creditor. In some cases where OA has been filed by the said creditor, it is presumed that counter-claim has already been filed. It is presumed that the said loss and damages or the said counter-claim are more than the claim of the said creditor.
(c) It is presumed that exhaustive appeal has been filed u/s 17 of the said Act.
(d) Under the above facts and circumstances, the basis of the arguments will be as under:-
(A) As per Art. 141 of the Constitution of India, the law declared by the Supreme Court shall be binding on all courts within the territory of India.
(B) The Supreme Court in the matter of Mardia Chemicals (AIR 2004 SC 2371) has declared that the said appeal u/s 17 is akin to a civil suit. Hence it is binding on DRTs to try the said appeal as a civil suit.
(C) The Supreme Court in the matter of Swaranlata (AIR 1969 SC 1167) has laid down the procedure by which trial of a civil suit is to be conducted. Accordingly the DRTs are legally bound to follow the said procedure.
(D) As per the Supreme Court in the matter of Commissioner of Central Excise vs Uni Products (I) Ltd [2009 STPL (Web) 19 SC] decided on 08.09.09. the tribunal (i.e. in our case DRT) is the last authority on facts.
(E) As per the Supreme Court in the matter of Authorised Officer, Indian Overseas Bank vs Ashok Saw Mill decided on 16.07.09 has declared that the DRT has full powers set aside the actions taken u/s 13(4) and even status quo ante can be restored by the DRT.
(F) As per Sec. 22 of the DRT Act 1993, the DRTs and DRATs shall not be bound by the procedure laid down by the CPC 1908 but shall be guided by the principles of natural justice.
(G) As per the section 34 of the said Act ’02, no civil court shall have jurisdiction to entertain any suit or proceedings in respect of any matter which a DRT or DRAT is empowered by or under the said Act ’02 to determine. Hence the said appeal u/s 17 is the only suit for adjudication.
(H) As per the Supreme Court in the matter of ICICI Ltd vs Grapco Industries Ltd. [1999 AIR (SC) 1975], the DRTs can exercise the powers of civil court and even travel beyond the scope of CPC for the purpose of natural justice.
(I) When all the above provisions of the law declared by the Supreme Court are to be followed by the DRTs and in fact they are bound to do so, the trial of the said appeal u/s 17 should take not less than 15 to 20 years.
(J) If any PO wants to hurry up, he should be told and explained about the above provisions. Despite this, if he hurries up the matter, application should be made to change of court. If necessary a petition for writ of certiorari may be filed in the High Court for the violations of principles of natural justice as well as the law laid down by the Supreme Court.
(K) Few of our clients have followed the above provisions and have achieved success.
(L) If any clarifications are required the matter may be discussed with us on phone or in person.
(2) Banks are preferring to invoke Securitisation Act
We have observed that the secured creditors are giving more preference to invoke the Securitisation Act rather than the DRT Act. Our comments are as under:-
(a) In respect of our clients, we have saved many of them by the various steps outlined by us in various weekly mails.
(b) The most important aspect is perfect pleadings and perfect trial on every date. Another most important aspect is perfect cross-examination.
(c) If all the legal aspects pointed by us are kept in view and if an experienced trial lawyer is appointed, there is no reason for the borrower (if he has filed a counter-claim or damage suit which are more than the claim of the bank and hence there is ‘No Debt Due’) to win against the secured creditor.
DRT Solutions Weekly Mail – 65th Issue dated 7th August ’09
All Weekly mails right from 1st Issue to latest, click links below:-
(1) Defence Strategy in respect of Securitisation Act:-
(a) The RBI Guidelines in respect of NPA should be studied thoroughly well
(b) If there is any likelihood of account becoming NPA on account of wrong doings of the bank, one should make necessary preparations to counteract the impending Notice under Securitisation Act. First of all he should study the Securitisation Act with emphasis on Sec. 13 and onwards of the said Act
The borrowers must study the concepts and law relating to ‘Possession’ and ‘Ownership’ particularly with reference to the Securitisation Act. Our views are as under:-
(a) Any good book on ‘Jurisprudence’ i.e. Science of Law has separate chapters on ‘Possession’ and ‘Ownership
Important Victory of Our Client against Bank:- One of our important clients at Chandigarh who filed damage suit of Rs. 1825 crores against a public sector Bank on 13.01.05 registered an important victory on 03.03.07 when the Court waived the entire court fee despite all opposition by the defendant Bank. The alleged dues of the Bank are Rs. 30 crores. Since the damages are much more than the alleged claim of the bank, no recovery action can be executed till the said damage suit is finally decided. The usual delay in the litigation does not affect our client as the damages are increasing day by day due to interest charges at rate which is much higher than the increase in the alleged claim of the bank. The said damage suit was drafted by us and all necessary advice and guidance was provided on all dates of proceedings.
Our approach of counter-claim or damage suit against the lenders fully endorsed by authorities:- Two leading authorities in law and banking both having more than 40 years of experience in law and banking have fully endorsed our approach to counter-claim in DRTs or damage suit against the lenders in civil courts. You may click the pages Video Interview - BS Malik, Sr. Supreme Court Advocate and Video Interview - GC Garg, Ex-Senior Bank Official which give the contents of the video clips of interview with them. You may take out the print and study the same. Listening to the video interview will be further useful. You may select the clips for replay for discussions with your colleagues as well as the advocates. You may obtain the VCDs from us to listen to their views which will be quite useful to all the borrowers and guarantors as well as to their advocates. The counter-claim or damage suit against the lenders are the only legal defence and we specialize in framing such defence. We have handled several such cases throughout the country. You may contact us on phone to know further details
DRTs, DRT solutions, Debts NPA Recovery Tribunal, DRTs matters, DRTs WS, DRTs Legal Opinions, DRTs Arguments, DRTs Documents, Appellate DRTs, Bank litigations, securitisation / securitization, Counter-claims, NPA Recovery, NPAs Settlements, checking of bank accounts and documents, 138 NI Act - Dishonour of Cheques etc., expertize in all these matters past 14 years. Legal BPO and offshore BPO is our new activity for which we have launched new web site www.usindolegal.com
Counter-claim is the only defence for the borrowers against Notice under Securitisation Act and or Original Application under the DRT Act:- Under the present provisions of law, the only legal defence for the borrowers is Counter-claim giving quantum of loss and damages suffered due to wrong doings of the lenders. The pleadings must be prepared by a person having mastery of facts and mastery of law. The documents such as project report, application for financial assistance, loan sanction letters, correspondence, balance sheets, annual reports need to be referred to properly keeping in view the law of pleadings, law of torts, law of damages, principles of natural justice, equity and good conscience. If you are unable to get such pleadings prepared, our professional services may be utilized. With our drafting of pleadings, you get additional advantage of expert advice during course of litigation from beginning to end. Since our clients are from all parts of the country and due to our focussed attention, you get complete and exhaustive guidance. All our clients are having upper hand over the lenders. In many cases the lenders have come forward to waive total interest and settle at fraction of the principal amount. In one of the cases the proposal of the lender is to waive the total claim provided the borrower withdraws the damage claim, which the borrower has declined.
Counter-claim must be prepared much in advance of the Notice under Securitisation Act or filing of the Original Application under the DRT Act:- The counter-claim or damage suit must be prepared much in advance of the recovery action initiated by the lender. The most appropriate stage is as soon as the lender declares the unit as NPA. The said counter-claim or damage suit must be ready before the lender issued Notice under Securitisation Act or files Original Application is filed by the lender in DRT. With such advance action only, the counter-claim or the damage suit will attain proper quality standards from legal considerations. As soon as the legal Notice from the lender under Securitisation or DRT Act is received the said counter-claim or damage suit is updated and filed before expiry of the Notice Period. Since prima facie there is no debt due, the lender can not take any action for the possession of the assets till the litigation pertaining to the said counter-claim or damage suit is decided by the court of law. Even if any attempt is made by the lender to take possession, the property can not be sold. Further steps in the DRT should be as outlined in the next para.
Winning bank litigations in DRT:- The first step is perfect pleadings drafted by a person having mastery of facts and mastery of law. The borrower must setup his counter-claim in money value based on law of damages and law of torts. In almost all the cases, the counter-claim is much more than the claim of the lender. These are the condition precedents before commencement of litigation in DRT. The next important step is thorough preparation of the case by the borrower as well as his advocate much in advance of the commencement of the trial in DRT. The borrower and his advocate must prepare at least 7 days before the date. In case the counter-claim has been drafted by us, the outcome of the said preparation must be discussed with us on phone so that our guidance is also available prior to the date. The proceedings on the date must be properly recorded in the DRT. All the relevant facts must be obtained much before the arguments and through preparation must be made. No arguments be held at any stage till all the facts are discovered. Long dates should be resisted. With proper alertness and vigilance by the borrower who must work in unison with his advocate in advance will ensure winning bank litigations in DRTs. It must be understood that the battle is long drawn, time consuming and expensive. Even after winning in DRT, the borrowe and his advocate will have to work hard in facing the appeals in ADRT, High Courts and Supreme Court. If the pleadings are drafted by us, we provide all guidance from DRT to Supreme Court.
Important Extracts from the SC judgment in the matter of Mardia Chemicala
(1) Extract from para 33 of the SC judgment, dealing with issues to be decided:-
33. Taking an overall view of the rival contention of the parties, we feel the main questions which broadly fall for consideration by us are :
i) Whether it is open to challenge the statute on the ground that it was not necessary to enact it in the prevailing background particularly when another statute was already in operation?
ii) Whether provisions as contained under Section 13 and 17 of the Act provide adequate and efficacious mechanism to consider and decide the objections/disputes raised by a borrower against the NPA Recovery, particularly in view of bar to approach the civil court under Section 34 of the Act?
iii) Whether the remedy available under Section 17 of the Act is illusory for the reason it is available only after the action is taken under Section 13(4) of the Act and the appeal would be entertainable only on deposit of 75% of the claim raised in the notice of demand?
iv) Whether the terms or existing rights under the contract entered into by two private parties could be amended by the provisions of law providing certain powers in one sided manner in favour of one of the parties to the contract?
v) Whether provision for sale of the properties without intervention of the court under Section 13 of the Act is akin to the English mortgage and its effect on the scope of the bar of the jurisdiction of the civil court?
vi) Whether the provisions under Sections 13 and 17(2) of the Act are unconstitutional on the basis of the parameters laid down in different decisions of this Court?
vii) Whether the principle of lender's liability has been absolutely ignored while enacting the Act and its effect?
(2) Extract from para 34 of the SC judgment, stating that borrowers rights under the constitution can not be ignored:-
34. Liquidity of finances and flow of money is essential for any healthy and growth oriented economy. But certainly, what must be kept in mind is that the law should not be in derogation of the rights which are guaranteed to the people under the Constitution. The procedure should also be fair, reasonable and valid, though it may vary looking to the different situations needed to be tackled and object sought to be achieved.
(3) Extract from para 44 of the SC judgment, stating that borrowers objections, if any about dues or in classification of NPA and or NPA Recovery be expeditiously be resolved:-
44. Nonetheless dues or disputes regarding classification of NPAs should be considered and resolved by some internal mechanism. In our view, the above position suggests the safeguards for a borrower, before a secured asset is classified as NPA. If there is any difficulty or any objection pointed out by the borrower by means of some appropriate internal mechanism it must be expeditiously resolved.
(4) Extract from para 45, 46, 47 and 48 of the SC judgment, purpose of 60 days notice and remedies to the borrower to ventilate his grievance:-
45. ….we may consider as to what forums or remedies are available to the borrower to ventilate his grievance. The purpose of serving a notice upon the borrower under sub-section (2) of Section 13 of the Act is, that a reply may be submitted by the borrower explaining the reasons as to why measures may or may not be taken under sub-section (4) of Section 13 in case of non-compliance of notice within 60 days. The creditor must apply its mind to the objections raised in reply to such notice and an internal mechanism must be particularly evolved to consider such objections raised in the reply to the notice. There may be some meaningful consideration of the objections raised rather than to ritually reject them and proceed to take drastic measures under sub-section (4) of Section 13 of the Act. Once such a duty is envisaged on the part of the creditor it would only be conducive to the principles of fairness on the part of the banks and financial institutions in dealing with their borrowers to apprise them of the reason for not accepting the objections or points raised in reply to the notice served upon them before proceeding to take measures under sub-section (4) of Section 13. Such reasons, overruling the objections of the borrower, must also be communicated to the borrower by the secured creditor. It will only be in fulfillment of a requirement of reasonableness and fairness in the dealings of institutional financing which is so important from the point of view of the economy of the country and would serve the purpose in the growth of a healthy economy……. At the same time, more importantly we must make it clear unequivocally that communication of the reasons not accepting the objections taken by the secured borrower may not be taken to give an occasion to resort to such proceedings which are not permissible under the provisions of the Act. But communication of reasons not to accept the objections of the borrower, would certainly be for the purpose of his knowledge which would be a step forward towards his right to know as to why his objections have not been accepted by the secured creditor who intends to resort to harsh steps of taking over the management/business of viz. secured assets without intervention of the court. Such a person in respect of whom steps under Section 13(4) of the Act are likely to be taken cannot be denied the right to know the reason of non- acceptance and of his objections. It is true, as per the provisions under the Act, he may not be entitled to challenge the reasons communicated or the likely action of the secured creditor at that point of time unless his right to approach the Debts Recovery Tribunal as provided under Section 17 of the Act matures on any measure having been taken under sub-section (4) of Section 13 of the Act.
46. ….it is necessary to communicate the reasons for not accepting the objections raised by the borrower in reply to notice under Section 13(2) of the Act more particularly for the reason that normally in the event of non-compliance with notice, the party giving notice approaches the court to seek redressal but in the present case, in view of Section 13 (1) of the Act the creditor is empowered to enforce the security himself without intervention of the Court. Therefore, it goes with logic and reason that he may be checked to communicate the reason for not accepting the objections, if raised and before he takes the measures like taking over possession of the secured assets etc.
47. This will also be in keeping with the concept of right to know and lender's liability of fairness to keep the borrower informed particularly the developments immediately before taking measures under sub-section (4) of Section 13 of the Act. It will also cater the cause of transparency and not secrecy and shall be conducive in building an atmosphere of confidence and healthy commercial practice. Such a duty, in the circumstances of the case and the provisions is inherent under Section 13(2) of the Act.
48. The next safeguard available to a secured borrower within the framework of the Act is to approach the Debts Recovery Tribunal under Section 17 of the Act. Such a right accrues only after measures are taken under sub-section (1) of Section 13 of the Act.
(5) Extract from para 64 of the SC judgment, holding illegal the 75% deposit along with submission before Debts Recovery Tribunal :-
64. The condition of pre-deposit in the present case is bad rendering the remedy illusory on the grounds that (i) it is imposed while approaching the adjudicating authority of the first instance, not in appeal, (ii)there is no determination of the amount due as yet (iii) the secured assets or its management with transferable interest is already taken over and under control of the secured creditor (iv) no special reason for double security in respect of an amount yet to be determined and settled (v) 75% of the amount claimed by no means would be a meager amount (vi) it will leave the borrower in a position where it would not be possible for him to raise any funds to make deposit of 75% of the undetermined demand. Such conditions are not alone onerous and oppressive but also unreasonable and arbitrary. Therefore, in our view, sub-section (2) of Section 17 of the Act is unreasonable, arbitrary and violative of Article 14 of the Constitution
(6) Extract from para 68 of the SC judgment, stating that writs does not lie against Private Banks, Co-operative banks, Foreign Banks etc. :-
68. ...So far remedy under Article 226 of the Constitution of India is concerned, the submission is that it may not always be available since the dispute may be only between two private parties, the banking companies, co-operative Banks or financial institutions, foreign banks, some of them may not be authorities within the meaning of Article 12 of the Constitution of India against whom a writ petition could be maintainable...
(1) The High Court Gujrat asked Mardia Chemicals to 'To file counter-claim against ICICI bank in DRTs' vide page 6 of the Economic Times dated 13.03.03.
Our Comments:- This is legal validation of our stand which we have emphasizing on this web site past several months.
claim must be framed and kept ready so that as soon as the notice is received, the counter-claim is filed within 60 days. Please study this web site and in case of any difficulty or clarification contact us on our off. cum res. phones +91-731-3290201, Mobile- 930-2103689 or through e-mail at our ID firstname.lastname@example.org
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(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.
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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