INTRODUCTION:
An extract is reproduced below from ‘Walk the Talk’ on NDTV 24×7 with
The Indian Express Editor-in-Chief Shekhar Gupta, former Supreme Court
judge and now chairman of the Press Council of India, Justice Markandey
Katju, talks about ‘judicial overreach’ and ‘media excesses’ (posted on Indian Express website: Tue Oct 18 2011, 03:52 hrs)
“But the anger that we are generally seeing is more of what the executive now complains about—obiter dicta.
I don’t want to comment about other judges but I became a judge in
the Supreme Court in 2006 and shortly after, I gave a judgment in which I
said that the judges must know their limits and not behave like
emperors. They must not try to run the government; judges must not
ordinarily encroach into the domain of the legislature or the executive.
Judges must know their limits, they must be restrained, particularly in
economic and social matters. When it comes to civil liberties and
fundamental rights, then a judge must be an activist.”
In my humble view, by and large, even the judiciary is completing a
“formality” in delivering the judgments as detailed below. With
respect, my views are as follows.
(1) The Recovery of Debts Due to Banks and Financial Institutions
Act, 1993 (hereinafter called ‘DRT Act’). SECTION 19. Application to
the Tribunal.—
(1) Where a bank or a financial institution has to recover any debt
from any person, it may make an application to the Tribunal within the
local limits of whose jurisdiction—………..x……….x……….x……..x……….x…….
Provided that the bank or financial institution MAY, with the
permission of the Debts Recovery Tribunal, on an application made by it,
WITHDRAW THE APPLICATION, whether made before or after the Enforcement
of Security Interest and Recovery of Debts Laws (Amendment) Act, 2004for
the purpose of taking action under the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 (54 of 2002), if no such action had been taken earlier under
that Act:
Provided further that any application made under the first proviso
for seeking permission from the Debts Recovery Tribunal to withdraw the
application made under sub‑section (1) shall be dealt with by it as
expeditiously as possible and disposed of within thirty days from the
date of such application:
Provided also that in case the Debts Recovery Tribunal refuses to
grant permission for withdrawal of the application filed under this
sub‑section, it shall pass such orders after recording the reasons
therefor.”
AUTHOR’S OBSERVATION:- Notwithstanding the mandatory language of
Proviso to section 19 of DRT Act, recently, hon’ble Supreme Court in
M/s Transcore Vs Union of India & Anr {(2008) 1 SCC 125; Date of
Judgment: 29/11/2006}, held, inter alia, as follows.
“For the above reasons, we hold that withdrawal of the O.A. pending
before the DRT under the DRT Act is not a pre-condition for taking
recourse to NPA Act. It is for the bank/FI to exercise its discretion as
to cases in which it may apply for leave and in cases where they may
not apply for leave to withdraw. We do not wish to spell out those
circumstances because the said first proviso to Section 19(1) is an
enabling provision, which provision may deal with myriad circumstances
which we do not wish to spell out herein.”
COMMENT (1): Whether, even hon’ble Supreme Court can put an
interpretation, which is wholly inconsistent with a statutory provision
and thus violate the well settled ‘Literal Rule of Interpretation’?
(2) Further, hon’ble Supreme Court in United Bank of
India Vs Satyawati Tondon and others{(2010) 8 SCC 110; Decided on
26.07.2010} observed and held, inter alia, as follows.(SCC para 35 and
36)
“35…………….The reason which prompted the High Court to pass the
impugned interim order and operative portion thereof are extracted
below:
“Learned counsel for the petitioner has urged that the loan was taken
by respondent No.4 for opening a colour lab at 50/43, Raj Complex, K.P.
Kakkar Road, Allahabad, but the loan has not been repaid by respondent
No.4 and the bank is proceeding against the petitioner who is the
guarantor of the loan. It is not clear from the documents produced by
learned counsel for the bank as to what steps have been taken by the
bank against the borrower of the loan and merely issuance of notice
under section 13(2) of the Securitization and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002 against
the borrower is not sufficient. The bank should have proceeded against
the borrower and exhausted all the remedies against him and thereafter
the bank could have proceeded against the guarantor……”
“36. We have heard learned counsel for the appellant and perused
the record. Normally, this Court does not interfere with the discretion
exercised by the High Court to pass an interim order in a pending
matter but, having carefully examined the matter, we have felt persuaded
to make an exception in this case because the order under challenge has
the effect of defeating the very object of the legislation enacted by
the parliament for ensuring that there are no unwarranted impediments in
the recovery of the debts, etc. due to banks, other financial
institutions and secured creditors.”
COMMENT (2): The Indian Contract Act, 1872. “SECTION 128. Surety’s
liability.—The liability of the surety is co-extensive with that of the
principal debtor, unless it is otherwise provided by the contract.” In
my view, section 128 does not provide that “The liability of the surety
is PRIMARY to that of the principal debtor”. This might have prompted
Allahabad High Court to pass orders quoted above with a view to trying
to CHASE INJUSTICE, which also stands to reason.
COMMENT (2-A) How the order of High Court under challenge had the
effect of defeating the very object of the legislation enacted by the
parliament by merely stating that “The bank should have proceeded
against the borrower and exhausted all the remedies against him and
thereafter the bank could have proceeded against the guarantor?”
(3)(a) The Indian Contract Act, 1872-“SECTION 130. Revocation of
continuing guarantee.—A continuing guarantee may at any time be revoked
by the surety, as to future transactions, by notice to the creditor.”
(b) Still further, hon’ble Supreme Court in Sita Ram Gupta Vs. Punjab
National Bank and Ors{(2008) 5 SCC 711; Decided on 10/03/2008} has held
as follows:
“7. The question is whether the appellant, having entered into such
an agreement of guarantee with the Bank, had waived his right under the
Act. In our view, the High Court has rightly held and we too are of the
view that the appellant cannot claim the benefit under Section 130 of the Act because he had waived the benefit by entering into the agreement of guarantee with the Bank……”
(c) Also, hon’ble Supreme Court in Remdeo Chauhan @ Rajnath Chauhan
Vs Bani Kant Das & Others [JT 2010 (12) SC 516 = 2010(12) SCALE
184; Decided on 19.11.2010] has held as follows:
“52. ……..The jurisdiction of NHRC (‘National Human Rights
Commission’) thus stands enlarged by section 12(j) of the 1993 Act, to
take necessary action for the protection of human rights. Such action
would include inquiring into cases where a party has been denied the
protection of any law to which he is entitled, whether by a private
party, a public institution, the government or even the courts of law.
we are of the opinion that if a person is entitled to benefit under a
particular law, and benefits under that law have been denied to him, it
will amount to a violation of his human rights.”(capitals mine in all
above paras)
COMMENT(3): Whether, now Sita Ram Gupta can legitimately expect that
in near future a subsequent bench of hon’ble Supreme Court will declare
that his human rights had been violated by Supreme Court judgment dated
10.03.2008 in aforesaid Sita Ram Gupta case (supra)?
COMMENT(4): Keeping in view the detailed contents given above at para
(1), (2) and (3) above, why one shall not be justified to carry an
impression that an attempt is being made to any how upheld the claim of
the Banks / FIs (being an instrumentality of “the State” as per Article
12 of the Constitution) vis a vis the individual Borrower / Guarantor,
who is admittedly an inseparable constituent of “WE, THE PEOPLE OF
INDIA”?
AUTHOR’S OBSERVATION:- In support of my COMMENT(4) above, kindly have
a look at the following news item (another news item is also attached).
ONE LAKH CRORE CREDITS ON INDUSTRIALIST FAMILIES
Jaipur: The reputation of the government bank is losing its
credibility because of Industrialist families. The loan of 1.5 lakh
crore taken by the government bank is still missing out of which more
than 70 percent loan is taken by the industrialist families.
On Sunday (30.10.2011), All India Bank Officers Association’s two day
conference being here in which this issue was brought in to light. The
National President Alok Khare and General Secretary R.J.Sridharan said
in the meeting that private banks earned around 45 thousand crore in the
year 2011, but because of centre’s leniency around 20 thousand crore
rupees is being distributed like corporate loan.
The banks which are running on the orders of the Reserve Bank publish
the defaulter list of the common people but they don’t have the list of
the defaulters of the corporate families. According to the bankers in
the Bank Director’s meeting also this list is never mentioned, because
of which till today the list have not come into existence. Some
specialists blame the government for this.For the common man there are
norms to return the money in a given time whereas there are no norms for
the corporate families. There are laws of recovery but it is only
implemented on the common man.
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