tag:blogger.com,1999:blog-68167373889486191952024-02-20T00:31:21.067-08:00SELECT 100 LEGAL ARTICLES OF KPC RAO AND Dr PADMAkpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.comBlogger157125tag:blogger.com,1999:blog-6816737388948619195.post-52967387551730232992016-11-18T09:13:00.002-08:002016-11-18T09:13:40.760-08:00HYDERABAD HC PERMITS VISUALLY-CHALLENGED IDIA SCHOLAR NAGA BABU TO TAKE JUDICIAL SERVICE EXAM <div dir="ltr" style="text-align: left;" trbidi="on">
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">HYDERABAD HC PERMITS
VISUALLY-CHALLENGED IDIA SCHOLAR NAGA BABU TO TAKE JUDICIAL SERVICE EXAM <o:p></o:p></span></b></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Arepalli
Naga Babu, a visually-challenged IDIA scholar from Machilipatnam in Andhra
Pradesh, has yet again strengthened the well-known belief that the only
disability in life is lack of will and fortitude. Acting on his petition, the
Hyderabad High Court has directed the authorities to accept his application and
permit him to write the Judicial Service Exam to be held on 27th of this month,
which he was denied earlier. <o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
court also directed that he be allowed to take the examination in a separate
room with the assistance of a scribe and be granted 20 minutes extra for every
hour to compensate for the disability.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">A
division bench comprising Chief Justice Ramesh Ranganathan and Justice A.
Shankar Narayana affirmed that he cannot be denied participation in the
selection process under the open category merely on account of his handicap(blindness)
and stated that ‘there does not appear to be any prohibition in the Andhra
Pradesh State Judicial Service Rules 2007 prohibiting visually-challenged
candidates from participating in the selection process for appointment to the
posts in the AP State Judicial Service’. <o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Naga
Babu, a law graduate from National Law University, Odisha, and a practising
advocate of the high court, said the exam notification issued for the Andhra
Pradesh and Telangana Judicial Services Exam confined the benefit of
reservation only to the orthopedically handicapped and excluded the visually
impaired persons.<o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> He stated that after he applied for the exam,
he was informed that his application would be rejected as he was not entitled
to write the exam and is neither eligible for reservation as per the rules.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
petitioner challenged the constitutional validity of Rule 7 of the Andhra
Pradesh State Judicial Service Rules 2007, and sought its suspension.<o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">He
also pleaded the court to permit his to write the exam pending disposal of the
writ petition. He contended that Rule 7 is violative of Article 14 and Article
21, as it specifically excludes reservation for the visually -challenged and
for the same reason is ultra vires the provisions of The Persons with
Disabilities (Equal Opportunities, Protection of rights and Full Participation)
Act 1995. While he won the right to take the exam in open category, the high
court, however, stopped short of declaring Rule 7 as ultra vires the Act of
1995.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> It stated that it could be examined only after
a counter affidavit was filed by the respondents. The high court said the
question whether reservation should be provided needed further examination.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">In
his petition, he had put forth that as per the Persons with Disabilities Act of
1995, the state government is obliged to identify and reserve not less 3 per
cent posts for persons with disability. Out of which, 1 per cent posts have to
be reserved for the visually-impaired. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
petitioner’s counsel referred to the Delhi High Court order directing provision
of 3 per cent reservation for the persons with disability, followed by the 2015
notification, which extended reservation in favour of visually handicapped in
the Delhi Judicial service Examination 2015.<o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">He
also submitted that Rajasthan High Court has also issued notification providing
reservation for the blind. <o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Hailing
from a modest background, resolute and talented Arepalli never got bogged down
in the face of economic constraints and visual impairment. He passed 10th grade
from his village and secured 80 per cent marks in state board exams.<o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">With
the all-encompassing support of Increasing Diversity by Increasing Access
(IDIA), he took to legal profession and cleared CLAT securing all-India rank 4.
After completing his law graduation from National Law University, Odisha, he
has been practising in the high court ever since. The promising former IDIA
scholar is also an IAS aspirant and wishes to lead his community to a bright
future.<o:p></o:p></span></div>
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">*****<o:p></o:p></span></b></div>
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kpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.com0tag:blogger.com,1999:blog-6816737388948619195.post-66786926326782924802016-11-18T09:12:00.003-08:002016-11-18T09:12:36.472-08:00NOT PLACING AN ORDINANCE IN THE LEGISLATURE IS FRAUDULENT, SAYS SC CONSTITUTION BENCH<div dir="ltr" style="text-align: left;" trbidi="on">
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">NOT PLACING AN ORDINANCE IN THE
LEGISLATURE IS FRAUDULENT, SAYS SC CONSTITUTION BENCH<o:p></o:p></span></b></div>
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
Supreme Court today reserved its judgment in the case of Krishna Kumar Singh v
State of Bihar, after grilling the counsel on both the sides on the propriety
of promulgating an ordinance, and not placing it in the legislature to seek its
approval, within the prescribed period.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Under
Article 123(2)(a), an ordinance shall cease to operate at the expiration of six
weeks from the reassembly of Parliament, or, if before the expiration of that
period resolutions disapproving it are passed by both Houses, upon the passing
of the second of those resolutions. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Article
213(2) (a) has a similar provision with regard to the validity of ordinances
promulgated by the Governor of a State, during the recess of state legislature.
<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Senior
advocate, Salman Khurshid, appearing for one of the petitioners, argued that
the focus in the case is on repromulgation of ordinances, and therefore, the
question whether a Government can avoid placing an ordinance in a legislature,
to seek its approval to it, after promulgation, is a minor issue. This prompted
the Chief Justice T.S.Thakur to remark that power can’t be exercised without
concomitant obligation.<o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Khurshid
then asked the bench to lay down grounds which would ensure that certain
effects of an ordinances would endure, even after its expiry. Khurshid
suggested that whatever the ruling of the bench in this case, it should apply
prospectively, so that the petitioners’ prayer is granted. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">When
Justice Chandrachud pointed out that the Constitution mandates that the
Government should place the Ordinance in the House, senior advocate, Amarendra
Sharan, also appearing for a petitioner, suggested that every Ordinance should
be treated as a separate ordinance, even if there is a series of repromulgated
Ordinances. Therefore, the question of the first Ordinance losing its validity
because of the Government’s failure to place it in the legislature, and thereby
making the subsequent repromulgated ones vulnerable, does not arise, he
contended.<o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> Earlier, the Solicitor General, Ranjit Kumar,
suggested that whether the effects of an Ordinance would endure after its
expiry would differ from case to case. He showed his agreement with Justice
Sujata Manohar who said in her 1998 judgment that the effect of an Ordinance
can be considered as permanent when that effect is irreversible or possibly
when it would be highly impractical or against public interest to reverse it,
e.g. an election which is validated should not again become invalid.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> The Solicitor General’s view came as a
disappointment to many petitioners, who are retired Sanskrit teachers, and who
were present in the Court today. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
Bihar Government, through an Ordinance, had granted them the status of
government employees, and allowed the Ordinance to lapse subsequently, after
repromulgating it a few times. The principle of reversibility would mean that
their status as government employees could be reversed, by virtue of the expiry
of the Ordinance.<o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">*****<o:p></o:p></span></div>
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kpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.com0tag:blogger.com,1999:blog-6816737388948619195.post-78488311990654939682016-11-18T09:11:00.002-08:002016-11-18T09:11:30.260-08:00SC TO REVISIT JUSTICE KRISHNA IYER’S LANDMARK JUDGMENT IN BANGALORE WATER SUPPLY CASE<div dir="ltr" style="text-align: left;" trbidi="on">
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">SC TO REVISIT JUSTICE KRISHNA IYER’S
LANDMARK JUDGMENT IN BANGALORE WATER SUPPLY CASE<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
Supreme Court’s seven-Judge Constitution bench will hear on Thursday arguments
on whether it or a nine-Judge bench should review the definition of “industry”
as interpreted by Justice Krishna Iyer, as part of another seven Judge Bench,
way back in 1978. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
seven Judge bench comprises the Chief Justice T.S.Thakur, and Justices Madan
B.Lokur, S.A.Bobde, Adarsh Kumar Goel, Uday Umesh Lalit, D.Y.Chandrachud, and
L.Nageswara Rao.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> In the landmark Bangalore Water Supply and
Sewerage Board v A.Rajappa, decided by the seven Judge bench, Justice
V.R.Krishna Iyer, had amplified the definition of “industry”, as the result of
disputes arising in establishments that are not manufacturing industry, but belong
to categories such as hospitals, educational and research institutions,
government departments, public utilities, professions and clubs.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> The bench, presided by the then CJI, Justice
M.H.Beg, included justices Y.V.Chandrachud, P.N.Bhagwati, Krishna Iyer, Jaswant
Singh, V.D.Tulzapurkar, and D.A.Desai.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> Of the five Judges who constituted the
majority, three had given a common opinion, but two others gave separate
opinions, projecting a view partly different from the views expressed by the
other three Judges. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Justice
Beg, having retired in the mean time, had no opportunity to see the opinions
delivered by the other Judges subsequent to his retirement.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> Justice Krishna Iyer, and the two Judges who
spoke through him, did not have the benefit of the dissenting opinion of the
other two Judges (Justices Jaswant Singh and Tulzapurkar) and the separately
partly dissenting opinion of Justice Chandrachud, as those opinions were prepared
and delivered subsequent to the delivery of the judgment. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
majority judgment, authored by Justice Krishna Iyer, was delivered by him and
on behalf of justices Beg, Bhagwati, and Desai. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Justice
Krishna Iyer had expanded the definition of “industry” for the purposes of
interpretation of Section 2(j) of the Industrial Disputes Act (IDA), to cover
most establishments that involved employer-employee relationship, irrespective
of the objectives of the organisation concerned and its ownership and structure.
<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">In
1982, Parliament amended the IDA, to exclude many kinds of establishments from
the definition. However, the amendment was never notified. The official reason
for not notifying the amendment was that no alternative machinery for redress
of grievances of employees in establishments excluded by the amendment had been
provided. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">In
2005, a five Judge bench, headed by Justice N.Santosh Hegde, referred the case
to a larger bench, in State of Uttar Pradaesh v. Jai Bir Singh. The other
members of this bench were justices K.G.Balakrishnan, D.M.Dharmadhikari, Arun
Kumar and B.N.Srikrishna. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua", serif; font-size: 12pt;">The
Hegde bench favoured a review of the 1978 judgment, because it felt it carries
an “overemphasis on the rights of workers” in industrial law, and that this has
resulted in payment of “huge amounts as back wages” to workers illegally
terminated or retrenched and that these awards sometimes “take away the very
substratum of industry”.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua", serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
Hegde bench also assumed that an over-expansive interpretation of the
definition of industry might be a deterrent to private enterprise in India
where public employment opportunities are scarce. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
question before the Hegde bench was whether ‘social forestry’ department of
State, which is a welfare scheme undertaken for improvement of the environment,
would be covered by the definition of “industry” under Section 2(j) of the IDA.
<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
bench of three Judges in the case of Chief Conservator of Forests v. Jagannath
Maruti Kondhare concluded that social forestry department is covered by the
definition of “industry” whereas a bench of two Judges in State of Gujarat v
Pratamsingh Narsinh Parmar took a different view. This had led to a debate
whether the two Judge bench was not bound to follow the precedent set by a
three Judge bench earlier.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> The Hegde bench attributed the
non-notification of the amendment to the IDA, defining “industry”, to lack of will
on the part of the Legislature and the Executive. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Senior
advocates, Indira Jaising and Colin Gonsalves, appearing for the employees, had
vehemently opposed the prayer made on behalf of the employers for referring the
matter to a larger Bench for reconsideration of the judgment in the Bangalore
Water case. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
question before the Hegde bench was whether the amended definition, which is
now a part of the statute, although not enforced, was a relevant piece of
subsequent legislation which could be taken aid of to amplify or restrict the
ambit of the definition of “industry” in Section 2(j) of the IDA as it stands
in its original form.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> On behalf of the employees, it was urged
before the Hegde bench that the unamended definition of industry, as
interpreted by the Bangalore Water case, has been the settled law of the land
in the industrial field. The settled legal position, it was urged, had operated
well, and no better enunciation of scope and effect of the ‘definition’ could
be made either by the legislature or by the Indian Labour Organization in its
report. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
Hegde bench also took the view that judicial interpretation of the word
“industry” in Bangalore Water Supply case was one of the inhibiting factors in
the enforcement of the amended definition of the IDA.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> However, the Hegde bench left it to the larger
bench to give such meaning and effect to the definition clause in the present
context with the experience of all these years and keeping in view the fact
that the amended definition of industry was kept dormant all these years. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">“Pressing
demands of the competing sectors of employers and employees and helplessness of
legislature and executive in bringing into force the Amendment Act compel us to
make this reference”, the Hegde bench said while referring the case for
reconsideration by a larger bench. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
Supreme Court is still struck on the question of the size of the bench to
reconsider the 1978 judgment in the Bangalore Water Supply case, it is likely
to decide this preliminary issue first, before proceeding further. <o:p></o:p></span></div>
<br />
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">*****<o:p></o:p></span></div>
</div>
kpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.com0tag:blogger.com,1999:blog-6816737388948619195.post-76887536119392635872016-11-18T09:09:00.004-08:002016-11-18T09:09:49.781-08:00SC DIRECTS MICROSOFT, GOOGLE AND YAHOO TO DROP FOETAL SEX TEST ADVERTISEMENTS IMMEDIATELY <div dir="ltr" style="text-align: left;" trbidi="on">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">SC DIRECTS MICROSOFT, GOOGLE AND YAHOO
TO DROP FOETAL SEX TEST ADVERTISEMENTS IMMEDIATELY <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div align="right" class="MsoNormal" style="text-align: right;">
<i><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">“Whether
one is going to have a boy or a girl, that kind of information is not necessary
in India. The sex ratio is going down in the country and we are concerned about
that. Whether you are making money or not we are not concerned with that”<o:p></o:p></span></i></div>
<div align="right" class="MsoNormal" style="text-align: right;">
<i><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></i></div>
<div align="right" class="MsoNormal" style="text-align: right;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">-
Supreme Court <o:p></o:p></span></b></div>
<div align="right" class="MsoNormal" style="text-align: right;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Supreme
Court today (16/11/2016) directed Microsoft, Google and Yahoo to block all
pre-natal sex determination advertisements hosted by them as it was a violation
of the Pre-Conception and Pre-Natal Diagnostic Techniques (Prohibition of Sex
Selection) Act, 1994 as per which sex determination of the foetus is prohibited
in India.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">A
bench headed by Justice Dipak Misra asked the search engines to do so within 36
hours of a nodal agency of the Centre, which is to be appointed, pointed out to
them each such advertisements.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> The nodal agency is also empowered to receive
complaints from the general public:<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> “Union of India shall constitute a nodal
agency which would give advertisments on TV, radio and in newspapers that if
anybody comes across anything which identify a girl or a boy (at pre-natal
stage), it should be brought to the notice of the nodal agency. Once it is
brought to the notice of the nodal agency, it shall inform the search engines
and they, after receiving the information, are obliged to delete it within 36
hours and inform the nodal agency, the bench said. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
apex court, which fixed the matter for further hearing on February 17 next
year, said the interim arrangement would continue till the issue pertaining to
advertisements relating to pre-natal sex determination was debated upon before
it. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
apex court was acting on a petition filed by Sabu Mathew George who is a member
of the National Inspection and Monitoring Committee set up by the SC in 2003 to
inspect and report the implementation of the Pre-Conception and Pre-Natal Diagnostic
Techniques (Prohibition of Sex Selection) Act, 1994.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> The plea said such advertisements flooded the
internet after the Pre-Natal Diagnostics Technique (PNDT) Act, which came into
force in 1994 to crack down on female foeticide, and banned the publication of
such ads in the print media. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">According
to the latest estimates, five lakh female foetuses are aborted annually.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">UNICEF,
in a recent report, said that India has lost over one crore girls since 2007. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Eighty
per cent of the districts in India have recorded an increasingly skewed sex
ratio since 1991, the report said.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
1994 (Pre-Conception and Pre-Natal Diagnostic Techniques) Act says nobody shall
propagate (pre-natal sex determination) and if anyone is propagating, it has to
be stopped, it said. Whatever is prohibited under the Act cannot go through it
(websites), the bench observed, adding, If anyone comes across anything which
offends or has an impact on the sex ratio in India, it shall be removed by the
search engines within 36 hours. Senior advocate Abhishek Manu Singhvi, who was
appearing for Google India Pvt Ltd, said they have complied with the earlier
order passed by the apex court in the matter and they have already taken steps
to block any such advertisements. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
counsel appearing for the other search engines also said that they have taken
steps to comply with the provisions of the Act. However, they contended that
the matter requires further debate.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Copy
of Order is attached.<o:p></o:p></span></div>
<br />
<div align="center" class="MsoNormal" style="text-align: center;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">*****<o:p></o:p></span></b></div>
</div>
kpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.com0tag:blogger.com,1999:blog-6816737388948619195.post-52086882344728715672016-11-18T09:08:00.002-08:002016-11-18T09:08:48.830-08:00FREEDOM OF SPEECH V. CONTEMPT OF COURT<div dir="ltr" style="text-align: left;" trbidi="on">
<div align="center" class="MsoNormal" style="text-align: center;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">FREEDOM
OF SPEECH V. CONTEMPT OF COURT<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: center;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><span style="color: magenta;"><br /></span></span></b></div>
<div class="MsoNormal" style="text-align: right;">
<i><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><span style="color: magenta;">"Those
who expect to reap the blessing of freedom must undertake to support it.” </span><o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: right;">
<i><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><span style="color: magenta;"><br /></span></span></i></div>
<div align="right" class="MsoNormal" style="text-align: right;">
<b><i><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">– </span></i></b><b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Thomas Paine<o:p></o:p></span></b></div>
<div align="right" class="MsoNormal" style="text-align: right;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Art.
19(1)(a) of the Constitution guarantees freedom of speech & expression. It
is also guaranteed under Liberty clause to the preamble. The major international
& regional instruments on civil & political rights – the International
Covenant on Civil & Political Rights (ICCPR), the European Convention on
Human Rights (ECHR), the American Convention on Human Rights (ACHR), &
African Charter on Human & People’s Right (ACHPR) – all protect both
“freedom of expression” and the “administration of justice.” Freedom of
expression is protected in Art.19 of the ICCPR as follows: <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l2 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: "Book Antiqua"; mso-fareast-font-family: "Book Antiqua";">1)<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Everyone shall have the right to hold
opinions without interference. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l2 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: "Book Antiqua"; mso-fareast-font-family: "Book Antiqua";">2)<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Everyone shall have the right to freedom of
expression; this right shall include freedom to seek, receive and impart
information and ideas of all kinds, regardless of frontiers, either orally, in
writing or in print, in the form of art, or through any other media of his
choice. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
permissible restrictions on freedom of expression are expressed in similar
terms in the international and regional instruments. Article 19(3) of the ICCPR
& the glimpse of same can be seen under Art. 19(2) of the Indian
Constitution. It says; <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
exercise of the rights provided in article carries with it special duties and
responsibilities. It may therefore be subject to certain restrictions, but
these shall only be such as are provided by ‘law’ and are ‘necessary’; <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> (a) For respect of the rights and reputations
of others; <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> (b) For the protection of national security,
public order, public health, morals, &‘contempt of court.’ <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Case Analysis<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">In
the Australian case of Attorney-General for N.S.W. v. Mundey ([1972] 2 NSWLR
887,p.809), Hope J stated:<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> There is no more reason why the acts of courts
should not be trenchantly criticised than the acts of public institutions,
including parliaments. The truth is of course that public institutions in a
free society must stand upon their own merits: they cannot be propped up if
their conduct does not command the respect and confidence of the community; if
their conduct justifies the respect and confidence of a community they do not
need the protection of special rules to protect them from criticism. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">In
the United Kingdom, Australia and New Zealand, the common law test of liability
requires a real risk, as opposed to a remote possibility, that public
confidence in the judicial system would be undermined [Solicitor-General v.
Radio Avon Ltd. [1978] 1 NZLR 225, p.234]. By contrast, in the United States,
the offence of “scandalising the court” has been limited in application for
several decades. The Supreme Court has made it clear, in a series of cases,
that the publication must create a “clear and present danger” to the
administration of justice [Bridges v. California, 314US 252].<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Since
the purpose of this branch of contempt law is to maintain public confidence in
the administration of justice, it seems logical that criticisms of judges as
individuals, rather than as judges, should not be subject to contempt of court
proceedings. This was confirmed in In the Matter of a Special Reference from
the Bahama Islands [[1893] AC 138], where the Privy Council ruled that
criticisms of the Chief Justice which were not directed at him in his official
capacity as a judge were not contempt. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Long
back the Privy Council in Ambard [Ambard v. Attorney-General for Trinidad and
Tobago [(1936) AC 322]] held that reasoned or legitimate criticism of judges or
courts is not contempt of court. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
Privy Council held: The path of criticism is a public way; the wrong headed are
permitted to err therein: provided that members of the public abstain from
imputing improper motives to those taking part in the administration of
justice, and are genuinely exercising a right of criticism, and not acting in
malice or attempting to impair the administration of justice, they are immune.
Justice is not a cloistered virtue: she must be allowed to suffer the scrutiny
and respectful, even though outspoken, comments of ordinary men.”<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 38.85pt; mso-add-space: auto; mso-list: l1 level1 lfo2; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: "Book Antiqua"; mso-fareast-font-family: "Book Antiqua";">1)<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">In
Wills [Nationwide News Pty. Ltd. v. Wills [(1992) 177 CLR 1]] the High Court of
Australia suggested that truth could be a defence if the comment was also for
the public benefit. It said, “…The revelation of truth – at all events when its
revelation is for the public benefit – and the making of a fair criticism based
on fact do not amount to a contempt of court though the truth revealed or the
criticism made is such as to deprive the court or judge of public confidence…”.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 38.85pt; mso-add-space: auto; mso-list: l1 level1 lfo2; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: "Book Antiqua"; mso-fareast-font-family: "Book Antiqua";">2)<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> In Duda P.N. v. Shivshankar, P., the Supreme
Court observed that the contempt jurisdiction should not be used by Judges to
uphold their own dignity. In the free market places of ideas, criticism about
the judicial system or the Judges should be welcomed, so long as criticisms do
not impair or hamper the “administration of justice”. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 38.85pt; mso-add-space: auto; mso-list: l1 level1 lfo2; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: "Book Antiqua"; mso-fareast-font-family: "Book Antiqua";">3)<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">In
Auto Shankars’ Case, Jeevan Reddy J., invoked the famous “Sullivan doctrine”
that public persons must be open to stringent comments and accusations as long
as made with bonafide diligence, even if untrue. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 38.85pt; mso-add-space: auto; mso-list: l1 level1 lfo2; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: "Book Antiqua"; mso-fareast-font-family: "Book Antiqua";">4)<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">In
Arundhati Roy, In re, the Supreme Court observed that a fair criticism of the
conduct of a Judge, the institution of the judiciary and its functioning may
not amount to contempt, if made in good faith and in public interest. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 38.85pt; mso-add-space: auto; mso-list: l1 level1 lfo2; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: "Book Antiqua"; mso-fareast-font-family: "Book Antiqua";">5)<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">In
Indirect Tax practitioners’ Association v. R.K. Jain, the S.C. observed that
the Court may now permit truth as a defence if two things are satisfied, viz.,
(i) it is in public interest and (ii) the request for invoking said defence is
bona fide. (S.13 ,Contempt of Courts Act,1971). <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Scope <o:p></o:p></span></b></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo3; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: "Book Antiqua"; mso-fareast-font-family: "Book Antiqua";">a)<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Is it Art. 19(1)(a) v. rest of the
provisions which perhaps imposes reasonable restrictions & curb the speech
& expression given under the above provision r/w Liberty clause to the
Preamble. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo3; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: "Book Antiqua"; mso-fareast-font-family: "Book Antiqua";">b)<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Can a persons’ right to express himself be
curtailed for the reasons which perhaps are driven by ones’ own sense of wisdom
!<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo3; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: "Book Antiqua"; mso-fareast-font-family: "Book Antiqua";">c)<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> Can
a emerging democracy or a power like us afford to put someones’ right of
expression in rest by using any tool given under Art.19(2) ! <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l0 level1 lfo3; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: "Book Antiqua"; mso-fareast-font-family: "Book Antiqua";">d)<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Whether it is advisable in a country like
ours to put the expression or speech to rest by using this & that tool for
the most minuscule of the reasons. Whether it be curtailed but only in the
exceptional of the exceptional circumstances. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Freedom
to express is not just fundamental but it is natural also. Taking into
consideration the various acts & treaties & the law laid down by
various Courts across the various jurisdictions, Free speech & restrictions
on it…, we cannot balance the two interests as if they are of equal weight. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Free Speech has a greater weight in
this balance that finds itself in various cases delivered by the Supreme Court
of India itself. And whenever there is a curb which is being put on free
speech, it does then have chilling effects on the very ethos of the
Constitution. <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: center;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">*****</span></b></div>
<div class="MsoNormal" style="text-align: center;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: center;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: center;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">[Published in Livelaw]</span></b></div>
</div>
kpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.com0tag:blogger.com,1999:blog-6816737388948619195.post-86418441724073023102016-11-18T09:05:00.003-08:002016-11-18T09:05:59.696-08:00BHOPAL POLICE ENCOUNTER AND THE QUEST FOR JUSTICE <div dir="ltr" style="text-align: left;" trbidi="on">
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">BHOPAL
POLICE ENCOUNTER AND THE QUEST FOR JUSTICE<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The aftermath of the recent Bhopal
jailbreak and the subsequent police encounter epitomizes how the rule of law
runs the risk of being forsaken at the altar of the modern day discourse around
the idea of nationalism in India. The Constitution of India guarantees to every
person who is accused regardless of the nature of crime, the right to fair
trial and this is further bolstered by the one of the most fundamental
principles of in Criminal Law which provides for the presumption of innocence
unless proven guilty in the court of law. Therefore, the fact that a person is
accused of an act of terrorism does not entitle the State to make any inroads
into his constitutionally guaranteed fundamental rights. However, this incident
is certainly not a case of denial of fair trial only; in fact it directly
pertains to the right to life and human dignity guaranteed to every person
under Article 21 of the Constitution of India.<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Let us try and break up the reasons
why fake encounters pose a threat to the idea of rule of law. The conclusion of
a criminal trial will either result in acquittal or conviction of the accused
and if convicted for an offence for which death penalty is an alternative
punishment, the convict can be sentenced to death by the court, if the case falls
in the category of rarest of rare. Thereafter, there is the provision for the
mandatory appeal to the High Court, as a person sentenced to death by the trial
court cannot be executed without High Court having assented to it. Then if the
High Court also affirms the conviction and death sentence, the leave to appeal
to the Supreme Court lies and thereafter only if the Supreme Court also affirms
the conviction and death sentence, the judicial process culminates, however,
the discretionary remedy for the convict at the behest of the Supreme Court
still exists in the form of a review petition and in the event of rejection of
the review petition, a curative writ petition. <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">If this judicial process comes to
fruition by way of death sentence for the convict; the convict can file a
clemency petition before the President of India or the Governor of the State
and only after the rejection of mercy petition that the convict can be finally
executed. However, even the decision of the President and the Governor is amenable
to judicial review before the Supreme Court and High Courts, and most
significantly on account of the inordinate and unreasonable delay in the
disposal of the mercy petition. Then the exercise of this option of judicial
review if done by the High Court can again be challenged in the Supreme Court
and Supreme Court’s verdict can still be sought to be reviewed by way of review
petitions and in case of rejection of mercy petitions by way of curative writ
petitions. This makes the picture of our judicial and constitutional process
very onerous and cumbersome on the State, in so far as a person is to be
sentenced to death and in relation to the execution of the death sentence. But
these are the safeguards which make the retention of death penalty in the statute
book, constitutional in India and therefore death of under trials or suspects
at the hands of Police must always be viewed with circumspect eyes and not by
the expression of jubilation, euphoria and hero worship for the police
personnel involved in the incident, regardless of the nature of crime for which
the persons killed were suspects or accused. An encounter is no substitute for
the legal and constitutional process of dealing with an accused or suspect.<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Death of any person in a Police
encounter legitimately raises the suspicion about the commission of a
cognizable offence; however, in such encounters because of the involvement of
Police, death of the accused or suspects by the Police is not taken prima facie
as a case which legitimately raises suspicion about the commission of a
cognizable offence. A three judge bench of the Supreme Court of India, speaking
through the then Chief Justice of India R. M. Lodha in People’s Union for Civil
Liberties v. State of Maharashtra, [(2014)10SCC635] lamented the absence of
structured guidelines and procedures when a police officer is involved in
shooting as is the case in some of the countries. The Court therefore framed
guidelines to be followed in case of such incidents and emphasised that doing
so is the constitutional duty of the Supreme Court and specifically declared
the guidelines to be law as per Article 141 of the Constitution of India. <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Key features of the guidelines framed
by the Supreme Court: <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: Wingdings; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;">ü<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">When death is caused by a firearm used
by the Police, an FIR is to be registered to that effect and the same must be
forwarded to the Magistrate under section 157 of CrPC in accordance with
section 158 of CrPC. <o:p></o:p></span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: Wingdings; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;">ü<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The Court further stated that the
investigation is to be conducted by CID or Police team of another Police
Station under the supervision of a senior Police Officer who is at least one
rank above the head of the Police party involved in the incident to be
investigated. <o:p></o:p></span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: Wingdings; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;">ü<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">A magisterial inquiry under section
176 CrPC must invariably be done and the report of the inquiry must be sent to
the Magistrate competent to take cognizance as per section 190 of CrPC. <o:p></o:p></span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: Wingdings; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;">ü<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Information of the incident must be
sent to the National Human Rights Commission or the State Human Rights
Commission.<o:p></o:p></span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: Wingdings; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;">ü<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> It should be ensured that there is no delay in
sending FIR, diary entries, panchnamas, sketch etc. to the Court concerned.<o:p></o:p></span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: Wingdings; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;">ü<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> After thorough investigation, the Police
report must be sent to the competent court under section 173 CrPC and the trial
must be concluded expeditiously. <o:p></o:p></span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: Wingdings; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;">ü<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">If on the conclusion of the
investigation there are material evidences to show that the use of the firearm
by a police officer amounts to commission of an offence under IPC, then the
disciplinary action must be promptly initiated against such officer and such
officer must be placed under suspension.<o:p></o:p></span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: Wingdings; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;">ü<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> The Police officers concerned must surrender
their weapon or any other thing for forensic and ballistic analysis. <o:p></o:p></span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: Wingdings; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;">ü<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">No out of turn promotions or instant
gallantry rewards are to be given, the same can only be given when the
gallantry of the officer concerned is proved beyond doubt. <o:p></o:p></span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Apart from these
measures to be followed in the aftermath of a Police encounter resulting in
death of a person, the Court also mandated that a six monthly report of each of
such incidents in a standard format is to be sent to the NHRC by the DGP of the
State. <o:p></o:p></span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The Supreme Court
also stated that if the family member of a victim finds that these guidelines
are not followed, then he can make a complaint before the Sessions Judge of the
district having the territorial jurisdiction over the place of incident and the
Sessions Judge must accordingly deal with the merits of the case and proceed
further. The Court also stated that these guidelines are to be adhered to both
in cases of death and grievous injury. <o:p></o:p></span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">On July 8, a
Supreme Court bench, comprising justices Madan B. Lokur and Uday Umesh Lalit,
gave a detailed judgment in Extra Judicial Execution Victim Families
Association (EEVFAM) v Union of India explaining why even in a disturbed area
in the State of Manipur under Armed Forces Special Powers Act, armed personnel
including Indian Army and Manipur Police cannot claim any immunity from
prosecution against the allegation of extra judicial killings. The Court has
decided to look into the allegations of extra judicial killings in 1590 such
cases as alleged by the petitioner in the State of Manipur.<o:p></o:p></span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The gulf between
the law and reality could not have been starker in the aftermath of the Bhopal
Police encounter. Till date we have only heard about the constitution of a one
member inquiry commission headed by Justice (Retd.) S. K Pande under the
Commissions of Inquiry Act. Earlier, the Chief Minister had prematurely
announced that the Home Minister of India has agreed for an investigation by
the National Investigation Agency and therefore NIA will now be investigating
this matter. The Police officer involved in the encounter have been publicly
praised and felicitated by no less than the Chief Minister of Madhya Pradesh.
The Chief Minister even announced a cash award of rupees two lakh for each of
the Police officers involved and one lakh for those involved in tracking the
location of the prisoners who escaped from the Bhopal jail, which thankfully has
now been withheld after the constitution of the inquiry commission. The
portrayal of those demanding investigation into this incident as terrorist
sympathizers is a sinister campaign to stop those voices. We must not allow
these voices to be drowned in the din of this ostensible show of perverted
nationalism.<o:p></o:p></span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="text-align: center;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><span style="color: magenta;">[Source: Livelaw]</span></span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div align="center" class="MsoListParagraphCxSpMiddle" style="text-align: center;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">*****<o:p></o:p></span></div>
<br />
<div align="center" class="MsoListParagraphCxSpLast" style="text-align: center;">
<br /></div>
</div>
kpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.com0tag:blogger.com,1999:blog-6816737388948619195.post-91575474922271301622016-11-18T09:04:00.002-08:002016-11-18T09:04:26.343-08:00THE CURIOUS CASE OF CRITICISM, CONFLICT & CONTEMPT <div dir="ltr" style="text-align: left;" trbidi="on">
<div align="center" class="MsoNormal" style="text-align: center;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">THE
CURIOUS CASE OF CRITICISM, CONFLICT & CONTEMPT<o:p></o:p></span></b></div>
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<br /></div>
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<b><i><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">“There is no doubt that if
there were a super-Supreme Court, a substantial proportion of our reversals of
state courts would also be reversed. We
are not final because we are infallible, but we are infallible only because we
are final.”<o:p></o:p></span></i></b></div>
<div align="right" class="MsoNormal" style="text-align: right;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">-Justice
Robert Jackson<o:p></o:p></span></b></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Hearing in Courtroom No. 6 of the
Supreme Court on 11/11/2016 displayed a series of interesting events
reverberating with judicial thunder when the Supreme Court issued contempt
notice to a retired yet vocal veteran of the same court. In my view the Justice
Katju calling order was violative of Article 124(7) and the only provision
permitting the Court to do so was Section 32 of the Advocates Act, 1961. <o:p></o:p></span></b></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">In a nutshell, the Supreme Court’s bench
speaking through Justices Gogoi, Pant & Lalit had requested Justice Katju
in review petitions filed by the State and deceased girl’s mother after hearing
the Attorney General and Siddarth Luthra on merits, to appear in person before
it and participate in the proceedings to debate upon whether the Judgment
passed by the bench suffered from any fundamental flaw. After the hearing, the
Supreme Court converted it into a suomotu criminal review petition on the Blog
written by Justice Katju criticizing the judgment. The case was consequently
numbered as a Suo Motu Review (SMR) petition titled as In Re blog published by
Justice Markandey Katju in Facebook. The bench on 11/11/2016 allowed Justice
Katju to argue on merits and gave him an hour to represent his case. Justice
Katju finished his arguments and the Review petition was dismissed. Justice
Gogoi took out 2 blogs written by Justice Katju and asked if he had authored
the contents therein, on his nod and after the Attorney General called it
scandalous and later intemperate, the bench issued contempt notice to Justice
Katju.<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> Among so many interesting questions this
curious case has created, the chief are; Whether the previous order of the
court breached Article 124(7), Whether Article 129 has supremacy over Article
19(1)(a) and Whether what Justice Katju wrote was a scurrilous attack intended
to scandalise the court and can he be held liable for contempt. <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">I had opined that the order breached
the mandate in Article 124(7) and that in fact the article created a
surrounding of immunity for retired Supreme Court judges. Coming to the second
question; Article 19(1)(a) gives every citizen the freedom of speech and
expression which can be reasonably restricted by the state by enacting a
suitable legislation for 8 reasons including contempt of court. Further,
Article 129 grants a power to the Supreme Court to punish for contempt of
itself. Section 2(c) of the Contempt of Courts Act, 1971 defines criminal
contempt to mean and include publication of any matter which scandalises or
tends to scandalise, or lowers or tends to lower the authority of any court. A
2006 amendment to the Contempt of Courts Act, 1971 clarifies that the Court may
impose punishment for contempt only when it is satisfied that substantially
interferes, or tends to substantially interfere with the due course of justice.
It is trite law that Article 19(1)(a) is subject to Articles 19(2) and 129 (Dr
D.C.Saxena v CJI – 1996 5 SCC 216). Contempt of Court was a later addition in
Article 19(2).There are plethora of cases dealing with the subject of fair
criticism, power of Supreme Court to punish for contempt and permissible use of
contemptuous language. However, here I make an attempt to dwell into whether
what Justice Katju wrote was scandalous in nature. <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Alexander Hamilton in Federalist
Papers pointed out that the weakest or the least dangerous branch of the
Government was Judiciary as they depend upon voluntary compliance and can’t
generally compel obedience. Justice Robert Jackson famously wrote – “There is
no doubt that if there were a super-Supreme Court, a substantial proportion of
our reversals of state courts would also be reversed. We are not final because we are infallible,
but we are infallible only because we are final.” The width and scope of
Supreme Court’s power on contempt can be seen from the SEBI-Sahara saga wherein
for disobeying Court’s Order a massive penalty of Rs 10,000/- Crore was crafted
for bailing him out. The Writ petition filed against this order was dismissed
as not maintainable as the Supreme Court cannot issue a writ to itself under
Article 32. In the present case, however, if one reads what Justice Katju wrote
in the two blogs criticizing the Saumya Rape-Murder judgment, there is nothing
scandalous enough so as to constitute the offence of criminal contempt. It is
his view that the judgment suffers from grave error and the accused should have
been convicted for murder, the bench disagreed and dismissed the review.
However, commenting upon intellectual level of judges and specifically Justice
Gogoi, who in the order has extended that comment to other 2 members of the
bench as well, may not be totally correct for a retired judge to say, if not
scandalous prima facie. <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Firstly, the Supreme Court ought to
have refrained from asking justice Katju to come in person and participate in
the proceedings. <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Secondly, there is absolutely nothing
in the blog criticizing the judgment for which Justice Katju may be tried for
criminal contempt of the Court but the other blog commenting upon intellectual
level of judges and specific comment on Justice Gogoi cannot be termed as
correct. <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The Supreme Court need not be over
sensitive and must look out of the window to have a bigger picture on one hand,
whereas on the other hand, it must make sure that the dignity of the
institution remains intact and the prestige our judiciary has earned does not
gets flushed away by anybody, be it a retired Supreme Court Judge.<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> In a classic case of conflict, I hope law
prevails. Nevertheless, Justice Katju has 6 weeks to reply. <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: center;">
<b><span style="background-color: white; font-family: "Book Antiqua", serif; font-size: 12pt; line-height: 115%;"><span style="color: magenta;">[Source: Livelaw]</span></span></b></div>
<br />
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">*****<o:p></o:p></span></div>
</div>
kpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.com0tag:blogger.com,1999:blog-6816737388948619195.post-13125525392150159642016-11-18T09:02:00.000-08:002016-11-18T09:02:01.689-08:00SC DISMISSES REVIEW PETITIONS: ISSUES CONTEMPT NOTICE TO JUSTICE KATJU AMIDST AN UGLY SPAT BETWEEN HIM AND JUSTICE GOGOI<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">SC DISMISSES REVIEW PETITIONS: ISSUES
CONTEMPT NOTICE TO JUSTICE KATJU AMIDST AN UGLY SPAT BETWEEN HIM AND JUSTICE
GOGOI<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Supreme
Court issues contempt notice to Justice Katju, after hearing him on the
Govindasamy sentencing case, amidst an ugly spat between him and Justice Gogoi<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> Former Judge of the Supreme Court, Justice
Markandey Katju, created history today, by appearing in the Court and arguing
himself, in defence of the blog post he had written on the judgment in the Govindasamy case.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> The Supreme
Court, however, appeared to be on the wrong side of history, by issuing
a contempt notice to him at the end of the proceedings -ignoring his protests –
for writing the blog post critical of the judgment, in a language, which the
Attorney General, Mukul Rohatgi, said was intemperate. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">When
the ugly spat between Justice Gogoi and Justice Katju appeared to cross all
norms of decency, Justice Gogoi asked
whether there was anyone in the court room to escort Katju out of the
court. This led to loud protests among
the lawyers that ‘this is all wrong, this is all wrong’.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> The unexpected notice to Justice Katju came
after two hour-long proceedings, in which Justice Katju, Rohatgi, and the bench put forth their contentions. With
occasional and repetitive barbs from
Justice Katju, that the bench lacked “common sense”, it appeared as if the
bench, by not getting provoked by such comments, was taking them lightly.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> Once Justice Gogoi began to dictate his order,
he separated the arguments on whether Govindasamy was guilty of murder, from
whether Justice Katju was prima facie guilty of contempt of court, by making
intemperate remarks in his blog post, which the bench had underlined, and sought
the AG’s response. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Rohatgi
first said the post was scandalous.
However, when he sensed that the bench was likely to issue contempt
notice, he revised his view, and said the underlined portion only suggested he
was intemperate, and nothing beyond. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Justice
Katju told Justice Gogoi: “Mr.Gogoi, You are provoking me. This is not the way to treat me. Don’t try to threaten me. Don’t act
funny. I came here because of your
request, out of respect. Am I to be
treated like this?”<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> Justice Gogoi to Justice Katju: “You are
provoking us. Your blog post is an assault, not only on me, but on the other
Judges on the bench.” <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">How it all began <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
proceedings in the packed court room No.6 of the Supreme Court began at 2.10
p.m. with a lot of excitement and suspense, with Justice Katju entering the
court room like any other litigant, and taking his seat among others. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
bench comprising justices Ranjan Gogoi, Prafulla C Pant and U.U.Lalit, first
gave Justice Katju 30 minutes to make his submissions. But when he insisted an hour, the bench
readily granted it. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">When
Justice Katju began to talk on the fallibility of Judges, and how he himself
admitted to errors in his judgments, Justice Gogoi told him the bench reads his
judgments every day, and it knew that it is not infallible. Therefore, he could well confine himself to
the arguments on the case, and why he thinks the bench was erroneous in its
judgment, holding Govindaswamy not guilty of murdering Soumya.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> Justice Katju then explained that the bench
ignored the relevance of the third and fourth
parts of Section 300 IPC, which do not require an intention on the part
of the accused to murder the victim. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">On
the doctor’s evidence that her first injury was not fatal, and therefore, her
second injury was not a consequence of her first injury, Justice Katju said,
there was something like common sense, which would explain this seeming
inconsistency.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> Justice Katju said that the accused was
responsible for her jumping, because of the mortal fear created by him. Does it
make a difference whether she fell on her own or thrown out?, he asked the
bench repeatedly. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">On
the statement of the bystander, and the exception to hearsay evidence in
Section 6 of the Indian Evidence Act, Justice Katju said the bystander
evidence, is no doubt, admissible, but the bench has to decide whether it is
also credible.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> Disagreeing with Justice Lalit, he said the
bystander evidence can be partly credible and partly not credible. Justice
Lalit, however, maintained that once it is an admissible evidence, it cannot be
discarded.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> Justice Katju said that part of the bystander
statement that she jumped and she escaped, can be disbelieved. There is no such thing that if you believe
one part of the statement, you have to believe the other part also. “I believe
you make a grave error”, he told the bench.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> Justice Lalit expressed the difficulty that
the bench cannot improve upon the case of the prosecution. Justice Katju said she had no choice, but to
jump or fall. Therefore, the accused was
responsible for her first and second injuries, he explained.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> Rohatgi took objection to the use of the word
‘dazed’ by Justice Lalit to describe Soumya’s condition after her first injury,
and brought to the notice that she had suffered the fracture of her brain in
the first injury. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">When
Justice Lalit began to refer to dowry deaths, and the presumption of abetment
in Section 113A of the Evidence Act in dowry deaths, and how Section 300 does
not have similar presumption, Justice Katju asked him not to mix up suicide
with this, and use common sense. “It was
a desperate situation of dire death”, he told the bench.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> Justice Katju said there are two types of
jumping from the train, and Soumya’s was not ordinary jumping. The onus is on us to use our common sense to
understand this distinction, he told the bench. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
Katju story, which is a by-product of Govindaswamy review case, is likely to
trouble the Supreme Court’s conscience for long: Did it go too far by inviting
him to assist the bench first on the nuances of the Soumya case, and deliver a
surprise contempt notice to him at the end by keeping him in the dark is the
question which will be debated in the coming weeks.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: center;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">*****</span></div>
</div>
kpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.com0tag:blogger.com,1999:blog-6816737388948619195.post-78284406764019804912016-11-18T08:59:00.002-08:002016-11-18T08:59:36.062-08:00SUPREME COURT ISSUES CONTEMPT NOTICE TO KATJU<div dir="ltr" style="text-align: left;" trbidi="on">
<div align="center" class="MsoNormal" style="text-align: center;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">SUPREME
COURT ISSUES CONTEMPT NOTICE TO KATJU<o:p></o:p></span></b></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">[Published in Livelaw]</span></b></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Notice
issued for his blog, in which he allegedly used intemperate language against
judges of the apex court.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">"Don't
give me threats, Mr. Gogoi. Don't try to be funny with me," former judge
Markandey Katju shouted out loud as a Supreme Court Bench led by Justice Ranjan
Gogoi issued him contempt of court notice for his remarks made in his Facebook
blogs.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Dressed
in a dark blue suit and red tie, Justice Katju protested at the Bench as he
firmly gripped the folded photocopies of his blogs Justice Gogoi had just
handed over to him to read.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
courtroom was the very one Justice Katju had once held sway and dispensed
justice.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">He
had come on an invite from the Bench to debate the several "fundamental
flaws" he claimed Justice Gogoi's Bench had committed by sparing a
condemned man the noose in the sensational Soumya murder and rape case in
Kerala.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Trouble
started immediately after the Bench dismissed the review petitions in the
Soumya case. The court had already heard Justice Katju's submissions against
the September 15 judgment of the court which acquitted the convict,
Govindaswamy, of murder and set aside his death penalty.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">After
dictating the dismissal order, Justice Gogoi asked Justice Katju, who was
sitting in the front row, to get up.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Then
the judge handed over photocopies of the blogs to both Justice Katju and
Attorney-General Mukul Rohatgi to read.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">As
soon as Justice Katju took a cursory glance at them, Justice Gogoi asked him
what he had to say.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">"This
is a free country. I have a right to say what I want," Justice Katju
replied.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">The
photocopies contained certain underlined portions. Justice Gogoi then asked Mr.
Rohatgi to give his opinion on the underlined portions.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">"They
are scandalous," Mr. Rohatgi reacted.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">"Well,
we are issuing contempt notice agains Jusrice Katju," Justice Gogoi said.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Justice
Gogoi said the underlined portions were personal remarks made against the
judges on the Bench and not an opinion on the Soumya case judgment.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">At
this moment, Justice Katju intervened and addressed Justice Gogoi: "First
learn to be modest. This is not the way Supreme Court judges should behave.
Don't provoke me."<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">"You
are provoking us... Is there nobody here who will escort Justice Katju out of
this courtroom?" Justice Gogoi said as the security personnel homed in on
the retired judge.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">Lawyers
in the courtroom started chanting "wrong, wrong, wrong".<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">"I
came here on your invite and I am sorry it has come to this," Justice
Katju said.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;">"We
are sorry too," Justice Gogoi said before passing a short order initiating
contempt action against the former Supreme Court judge.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: center;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%;"> *****</span></div>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
</div>
kpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.com0tag:blogger.com,1999:blog-6816737388948619195.post-40233090044545304812016-11-18T08:56:00.004-08:002016-11-18T08:56:58.078-08:00 Prevention of Corruption or Permission for Corruption<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<b><span style="background: white; color: #333333; font-family: "Book Antiqua","serif"; font-size: 14.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";">Govt servants may get 'shield' from
prosecution, agencies will need approval to probe<o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="background: white; font-family: "Book Antiqua","serif"; font-size: 12.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";">All government</span><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";"> servants <span style="background: white;">may get a 'shield' from</span> prosecution <span style="background: white;">as the Centre has okayed changes in the</span> Prevention
of Corruption Act <span style="background: white;">to make it mandatory for
investigating agencies like CBI to take its prior</span> approval <span style="background: white;">before initiating an</span> investigation<span style="background: white;">against them.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";"><br />
<br />
<span style="background: white;">Union minister of state for personnel</span> </span><a href="http://timesofindia.indiatimes.com/topic/Jitendra-Singh"><span style="color: windowtext; font-family: "Book Antiqua","serif"; font-size: 12.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; text-decoration: none; text-underline: none;">Jitendra Singh</span></a><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";"> <span style="background: white;">on Thursday
said the purpose behind mandating prosecution sanction for government officers
under the anti-graft law was to protect honest officers.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";"><br />
<br />
<span style="background: white;">"We have decided to introduce the
anti-corruption amendment bill in winter session of Parliament starting on
November 16. A provision for safeguarding all categories of government
employees is being offered in the Bill. The changes are to ensure that honest
employees are not harassed," said Singh.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";"><br />
<br />
<span style="background: white;">The MoS told reporters here that the decision
was necessary as the government wanted to ensure that the bureaucracy, 'an
essential tool of good governance,' continued to work without any fear or
favour.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";"><br />
<br />
<span style="background: white;">Prime Minister Narendra Modi had recently said
that the government's job is to ensure safety of honest employees.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";"><br />
<br />
<span style="background: white;">The latest move is based on the recommendation
by a parliamentary committee favouring a</span> shield <span style="background: white;">of prior prosecution sanction for public servants by
making it a mandatory condition for probe agencies like CBI and police to take
"previous approval" of competent authority before conducting any
inquiry or investigation against the public servant concerned, be it peon or
secretary to the Government of India.</span></span><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";"><br />
<span style="background: white;">Such approval will not be necessary for cases
involving 'arrest of a person on the spot on the charge of accepting or
attempting to accept any undue advantage for himself or for any other person,'
the panel said.</span></span><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";"><br />
<span style="background: white;">The committee, that examined changes in the
Prevention of Corruption Act, 1988, gave its report in August this year.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";"><br />
<span style="background: white;">The Prevention of Corruption (Amendment) Bill
was introduced in the Rajya Sabha on August 19, 2013 during the UPA rule.
However, it was referred to the parliamentary standing committee, which
submitted its report to the Rajya Sabha on February 6, 2014. The Bill, however,
could not be passed then.</span></span><span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";"><br />
<span style="background: white;">On April 29 last year, the Union Cabinet
approved amendments to the Prevention of Corruption Act and pursued the
amendment bill after moving official amendments. On December 7, the Bill was
sent to the Select Committee for examination.<o:p></o:p></span></span></div>
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<b><span style="background-color: white; font-family: "Book Antiqua", serif; font-size: 14pt; line-height: 115%;"><span style="color: magenta;">Prevention
of Corruption or Permission for Corruption !!! Crony Capitalist Government is
troubling only poor people... Helping Corporates and Babus </span></span></b></div>
kpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.com0tag:blogger.com,1999:blog-6816737388948619195.post-36809362809143003792016-11-18T08:54:00.003-08:002016-11-18T08:54:44.090-08:00Punjab in turmoil after Supreme Court strikes down SYL state law<div dir="ltr" style="text-align: left;" trbidi="on">
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Punjab
in turmoil after Supreme Court strikes down SYL state law<o:p></o:p></span></b></div>
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 10.0pt; line-height: 115%;">10th
November 2016 06:03 PM<o:p></o:p></span></b></div>
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<span style="font-family: "Book Antiqua", serif; font-size: 11pt; letter-spacing: 0.1pt;">CHANDIGARH: Punjab was thrown into
turmoil on Thursday with the Supreme Court striking down a 2004 law passed by
the then state government terminating the Sutlej-Yamuna Link [SYL] canal water
sharing agreement with neighbouring states.<o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua", serif; font-size: 11pt; letter-spacing: 0.1pt;">Both the Congress and the ruling
Shiromani Akali Dal reacted strontly against the verdict, and vowed not to
release “a single drop of water“ to Haryana. Punjab Congress president Capt
Amarinder Singh resigned his Lok Sabha seat [Amritsar], and the party’s MLAs
also put in their papers.<o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua", serif; font-size: 11pt; letter-spacing: 0.1pt;">Chief minister Parkash Singh Badal of
the Shiromani Akali Dal [SAD] called an emergency meeting of his cabinet, which
passed a resolution against any sharing of water. A special session of the
state Assembly has been called on November 16.<o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua", serif; font-size: 11pt; letter-spacing: 0.1pt;">The law held unconstitutional by the
Supreme Court was passed by the Punjab government, then headed by Capt.
Amarinder Singh, in 2004. Called the Punjab Termination of Agreements Act, it
sought to nullify a Supreme Court ruling and proceeded to stop construction of
the remaining part of the SYL canal, which would affect Haryana, Himachal
Pradesh, Rajasthan, Jammu & Kashmir, Delhi and Chandigarh.<o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua", serif; font-size: 11pt; letter-spacing: 0.1pt;">However, a five-judge Constitutional
bench of the apex court ruled that Punjab cannot take any such
"unilateral" decision.<o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua", serif; font-size: 11pt; letter-spacing: 0.1pt;">The verdict was a response to a
presidential reference from the Centre containing five queries. The bench,
which included justices A R Dave, P C Ghose, Shiva Kirti Singh, A K Goel and
Amitava Roy, unanimously held that its answer to all five questions was
negative.<o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua", serif; font-size: 11pt; letter-spacing: 0.1pt;">"All the questions have been
answered in the negative," a five-judge bench headed by Justice A R Dave
said, pronouncing the court’s decision on a presidential reference.<o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua", serif; font-size: 11pt; letter-spacing: 0.1pt;">Chief minister Parkash Singh Badal made
it clear that the state government is set on another collision course with the
apex court. “In a nutshell, all I can say is Punjab ka paani nahin jaayega,
nahin jaayega, nahin jaayega . Punjab does not have a single drop of water to
spare,” he said after the emergency cabinet meeting.<o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua", serif; font-size: 11pt; letter-spacing: 0.1pt;">He said the Cabinet would call on the
President and request him not to accept the advice of the Supreme Court.
Deputy chief minister and SAD chief Sukhbir Singh Badal said, ``The SYL
canal will not be built at any cost. Not a single brick will be laid.’’<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Book Antiqua", serif; font-size: 11pt; letter-spacing: 0.1pt;">Capt. Amarinder Singh described the
Supreme Court judgment as a “major blow to the people of Punjab,” and blamed
the Akali Dal for failing to present Punjab’s stance in court. Claiming that
his government of 2004 tried to protect Punjab’s interests by enacting the
Punjab Termination of Agreements Act, Amarinder said the Akalis failed to
defend the law in the court. On the contrary, a preposterous idea was floated
by chief minister Badal to seek royalty from the other states that use the
Sutlej water. This was aimed at helping out Haryana, he said. “After helping
out Haryana, it seems Badal is now trying to help Himachal Pradesh too, by
suggesting that it should demand royalty from Punjab,” said Amarinder.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Book Antiqua", serif; font-size: 11pt; letter-spacing: 0.1pt;">Haryana chief minister Manohar Lal
Khattar hailed the Supreme Court verdict and said the Supreme Court has
given its decision on a vital issue after 12 years and brought smiles to the
faces of every Haryanvi because the state would now get its legitimate share of
the surplus Ravi-Beas waters, some 3.5 million acre feet (MAF).<o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua", serif; font-size: 11pt; letter-spacing: 0.1pt;">*****</span></div>
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kpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.com0tag:blogger.com,1999:blog-6816737388948619195.post-90064787240764853252016-11-18T08:53:00.001-08:002016-11-18T08:53:15.609-08:00SUTLEJ-YAMUNA CANAL PUNJAB ACT TERMINATING WATER SHARING WITH OTHER STATES UNCONSTITUTIONAL – SUPREME COURT<div dir="ltr" style="text-align: left;" trbidi="on">
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">SUTLEJ-YAMUNA
CANAL<o:p></o:p></span></b></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">PUNJAB
ACT TERMINATING WATER SHARING WITH OTHER STATES UNCONSTITUTIONAL – SUPREME
COURT<o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">A
Constitution Bench of Supreme Court of India Today unanimously held that Punjab
Termination of Agreement Act, 2004 which terminated the Sutlej-Yamuna Link
(SYL) canal water sharing agreement with Haryana and other neighbouring states
is unconstitutional. <o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">The
Supreme Court was pronouncing its verdict on the presidential reference of 2004
on the controversy relating to sharing of water from the Sutlej-Yamuna Link
(SYL) canal by states including Punjab and Haryana.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">The
Bench comprising of Justices Anil R Dave, Pinaki Chandra Ghose, Shiva Kirti
Singh, Adarsh Kumar Goel and Amitava Roy
held that Punjab Act cannot be said to be in accordance with the provisions of
the Constitution of India and by virtue of the said Act the State of Punjab
cannot nullify the judgment and decree and terminate the Agreement dated 31st
December, 1981.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">It
is pertinent to note that the water dispute, which the State of Punjab and
State of Haryana had, had been referred to the Tribunal as per the provisions
of Section 14 of the Inter State Water Disputes Act, 1956. After considering
the relevant provisions, even with regard to Section 78 of the Punjab
Reorganization Act, 1966, the Tribunal had taken a judicial decision and the
said decision is also sought to be disturbed by virtue of enactment of the
Punjab Act. The Agreement dated 31st December, 1981 is about sharing of waters
of Ravi and Beas rivers. The said Agreement could not have been unilaterally
terminated by one of the parties to the Agreement by exercising its legislative
power and if any party or any State does so, looking at the law laid down by
this Court in the case of State of Tamil Nadu, such unilateral action of a
particular State has to be declared contrary to the Constitution of India as
well as the provisions of the Inter State Water Disputes Act, 1956. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">“
It is also observed that once a conclusion is arrived at to the effect that one
State, which is a party to the litigation or an Agreement, cannot unilaterally
terminate the Agreement or nullify the decree of the highest Court of the
country, the State of Punjab cannot discharge itself from its obligation which
arises from the judgment and decree dated 15th January, 2002 and the judgment
and order dated 4th January, 2004 of the apex Court. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">The
apex court had been asked to decide on the validity of the Punjab Termination
of Agreement Act, 2004 as per which then chief minister Captain Amarinder Singh
terminated the contracts for water sharing with the neighboring states-
Rajasthan, Himachal Pradesh, Delhi and Jammu and Kashmir.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">The
bench headed by justice AR Dave, who is demitting office on November 18 had
reserved the verdict on May 12 after the Centre maintained its earlier stand of
2004, that the states concerned should settle their disputes on the matter by
themselves. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">The
Centre had said it was not taking sides and was maintaining a neutral stand in
the matter in which the court has recorded the stand of other states —
Rajasthan, Himachal Pradesh, Delhi and Jammu and Kashmir. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">During
the hearing of the case –on March 21 this year — Punjab assembly passed a law
(Punjab SYL Canal ( Rehabilitation and Re-Visiting of Proprietary Rights) Bill
2016 to return the land acquired on its side for the construction of SYL canal.
The Haryana government then approached the apex court which directed the status
quo to maintained. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">PUNJAB
SOUGHT FRESH TRIBUNAL <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Punjab
has earlier said the apex court was not bound to answer the presidential
reference made at the instance of the Centre which had no power to resolve the
dispute. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Appearing
for Punjab, senior advocate Ram Jethmalani said the apex court was not bound to
answer the Presidential reference on the validity of the Punjab Termination of
Agreements, 2004.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"> “Though it is a Presidential reference, it had
been done at the instance of the Centre which had no power to decide the water
dispute. The reference had been made under Article 143 (1) of the Constitution
which clearly stated that the Supreme Court ‘may’ answer it. This was quite
contrary to references made under Article 143(2) which shall be answerable by
the Supreme Court,” <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">The
Parkash Singh Badal government has submitted that a fresh tribunal be set up to
resolve all disputes with other states including Haryana on all aspects, which
will also cover the riparian rights and the dwindling flow of water. It had
said a fresh tribunal was sought in 2003, about 18 months before the 2004 law
that annulled all inter-state pacts, to review the 1981 Longowal Accord on
river water-sharing in view of depleting flow and other changed circumstances. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">The
water-sharing agreement was among Punjab, Haryana, Rajasthan, Himachal Pradesh,
Delhi and Jammu and Kashmir. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">BRIEF
HISTORY OF CASE <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: Wingdings; font-size: 14.0pt; line-height: 115%; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;">Ø<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Satluj
Yamuna link is a canal that is built between river Sutlej and Yamuna to provide
water for the farmers of Haryana from
the Punjab side. It is about 122 km long and total length is about 495 km which
includes the sub-canals. Then prime minister Indira Gandhi laid the foundation
when Darbara Singh was the chief minister of Punjab.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: Wingdings; font-size: 14.0pt; line-height: 115%; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;">Ø<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">In
Jan 29, 1955 Punjab, PEPSU, Rajasthan, Kashmir sign agreement for water
utilisation of Ravi and Beas. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: Wingdings; font-size: 14.0pt; line-height: 115%; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;">Ø<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">In
September 1960, India and Pakistan agrees on sharing of water of Satlej , Ravi
and Beas and thus signs Indus water treaty.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: Wingdings; font-size: 14.0pt; line-height: 115%; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;">Ø<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">In
1966, Haryana was carved out of Punjab and in 1971, Centre’s high level panel
recommends to share Punjab’s water with Haryana and proposes providing 3,78 MAF
to Haryana and 3.07 to Punjab.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: Wingdings; font-size: 14.0pt; line-height: 115%; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;">Ø<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">After
few years , Center issues notifications to build Sutlej-Yamuna link canal (SYL)
to be constructed which was earlier proposed by Haryana. Haryana constructed
the canal on their part but Punjab was not ready to construct it .Despite the
pressure from the central government and Haryana , construction did not began
as it was against the interests of Punjab. In 1985, Prime Minister Rajiv Gandhi
and Akali Dal president Sant Harchand Singh Longowal signed “Settlement
Accord”.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: Wingdings; font-size: 14.0pt; line-height: 115%; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;">Ø<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Construction
began but it was slow and delayed frequently and later there were regular
orders from Water Tribunal to to complete canal construction expeditiously. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: Wingdings; font-size: 14.0pt; line-height: 115%; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;">Ø<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">This
mater heated up in 2004 when then chief minister Captain Amarinder Singh
terminated the contracts for water sharing with the neighboring states . <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<br />
<div class="MsoListParagraphCxSpLast" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: Wingdings; font-size: 14.0pt; line-height: 115%; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;">Ø<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">On
21st March 2016, the Punjab Assembly passed the Punjab SYL Canal
(Rehabilitation and Re-vesting of Proprietary Rights) Bill 2016, seeking to
return land acquired for the canal’s construction to the original owners free
of cost.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoListParagraphCxSpLast" style="text-align: center; text-indent: -0.25in;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">******</span></div>
</div>
kpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.com0tag:blogger.com,1999:blog-6816737388948619195.post-81652027350341583642016-11-18T08:50:00.003-08:002016-11-18T08:50:39.698-08:00“POST-1980S, THE JUDICIARY, RATHER THAN THE LEGISLATURE, HAS HELD OUR NATION AND THE PEOPLE IN BETTER STEAD”<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">“POST-1980S,
THE JUDICIARY, RATHER THAN THE LEGISLATURE, HAS HELD OUR NATION AND THE PEOPLE
IN BETTER STEAD”<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">[By
Krishna Ananth]<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Dr.
V.Krishna Ananth teaches history at Sikkim University, Gangtok. He did his PhD
from the Jawaharlal Nehru University, New Delhi and was associated with The
Hindu newspaper in various capacities, reporting and commenting on national
politics, until 2003. Alongside he taught at the Asian College of Journalism,
Chennai, lecturing on contemporary Indian politics and constitutional history
and practiced at the Madras High Court for a brief while. Dr. Ananth continues
to contribute to various newspapers and journals as a freelance journalist. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">He
is author of India Since Independence: Making Sense of Indian Politics (Pearson
Longman, 2009), Politics in the Times of Churning (Daya, 2014) and The Indian
Constitution and Social Revolution: Right to Property Since Independence (Sage,
2015) apart from chapters in edited volumes. Dr. Ananth has been a fellow
traveler and sympathizer of the many shades of the Left movement in India and
an active participant in campaigns against war and jingoism. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">In
this interview with LiveLaw, Krishna Ananth, shares his views on the recent
Supreme Court judgment quashing the land acquisition in Singur for the Tata
Motors Limited [TML] by the erstwhile Left Front Government in West Bengal.<o:p></o:p></span></div>
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<br /></div>
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<i><span style="color: #0070c0; font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Q: In your recent
article on the Singur judgment, you have said that The Land Acquisition Act,
1894 remained valid, because it was protected by Article 31(5) and because
there was ambiguity in the Constituent Assembly over the status of the right to
property in independent India. Do you infer this ambiguity from the Constituent
Assembly Debates? Can you elaborate? <o:p></o:p></span></i></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Ans:
Well. When we look at the history of Article 31 of the Constitution (which was
Article 24 in the draft), one thing that strikes us is the substantive changes
to the draft brought about by Jawaharlal Nehru through amendments in the CA. A
reading of this and the debate in the CA reveals that there was a conflict
between the idea of egalitarianism in property relations and that of the right
to property and the difficulties in reconciling the two led to Article 31(5)
being brought into the Fundamental Rights; this was not there in the draft
Article 24 as it was. If you see, Article 31(5) was meant to render the right
to property as NOT a fundamental right… rather it was a ‘restriction’ and thus
the concept of eminent domain was smuggled into where it was not there. This,
indeed, persisted throughout Nehru’s years as Prime Minister and reflected in
the Constitution First, Fifth and Seventeenth amendments. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<i><span style="color: #0070c0; font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Q: Another observation
you have made in that article, is that the scrapping of the right to property
under the 44th Amendment Act, resulted in reviving the problematic aspects of
the 1894 Act. How did this go against the small and middle peasants, as you
suggest? Can you explain? <o:p></o:p></span></i></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Ans:
My argument is that post-Keshavananda, particularly with Justice H.R.Khanna’s
explicit statement that the Right to Property was not part of the Basic
Structure of the constitution and also the majority upholding the Constitution
24th amendment Act, acquisition of land for the purpose of land
reforms/redistribution of land for serving the ends of Article 39 (b) and (c)
was no longer a problem. Article 31 being deleted thereafter meant that the
Right to Property was no longer a fundamental right though the 44th amendment
then had another implication too: dispossession of land to achieve the goals
mentioned in Article 39 (b) and (c) was now made possible and that helped
dispossession of the small and middle peasants. This is not what Keshavananda
implied in my view. It was a fraud on the Constitutional direction in my view,
though couched in radical garb.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<i><span style="color: #0070c0; font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"> Q: If the right to property remained as a
fundamental right, what difference it would have made to citizens dispossessed
of their land through eminent domain? In retrospect, was the decision to scrap
the right flawed? <o:p></o:p></span></i></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Ans:
I will prefer to use the word fraud rather than flawed. The Singur farmer could
have stopped acquisition then with the kind of Public Interest Lawyers he had
now. Many acts of dispossession in other parts of the country also could have
been prevented. <o:p></o:p></span></div>
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<br /></div>
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<i><span style="color: #0070c0; font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Q: Procedural lapses by
the state coming to the aid of people dispossessed of their rights. — is not
the law just then? <o:p></o:p></span></i></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Ans:
My argument is that the poor cannot rest their case only on procedural
infirmities. The Singur case is one instance where it is revealed that if the
Left Front government was not all that brazen about its ways, the farmers would
have suffered injustice. <o:p></o:p></span></div>
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<br /></div>
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<i><span style="color: #0070c0; font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Q: On the contrary, a
state with the intent to dispossess land, if it is careful to avoid such
procedural lapses, at least just for the record, will it be just? <o:p></o:p></span></i></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Ans:
That’s exactly the point. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<i><span style="color: #0070c0; font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Q: The land returned by
TML, is now unsuitable for agriculture, because it has been ravaged with
cement, steel and other material. How will those who have now got back their
lands use it, and what difference it will make to their livelihood? <o:p></o:p></span></i></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Ans;
This is where the delay matters. I must say that the judiciary in this case
decided faster than usual and yet the problem of what use is the land is
relevant. But then, I think here are ways to de-ravage the land in question and
the one who was responsible for the ravaging must be asked to pay too. I am not
ignorant of the UCC case in Bhopal in this context and the power of the
corporates in denying justice by delaying tactics here; notwithstanding the
apex court’s pronouncements, once in a while, on the need for speedy justice!<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<i><span style="color: #0070c0; font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"> Q: Two Judges of the Supreme Court, Justices V
Gopal Gowda and Arun Mishra reached the same conclusion, but adopted different
reasoning. Which reasoning is correct? <o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Ans:
I will not get into which one is correct or incorrect. However, I will insist
that there were more substantial bases that they could have relied upon to
reach the same decision. I think the NOIDA cases as decided in 2011 and the
Mukesh Hans case earlier would have served a larger purpose than what the
learned judges relied upon here. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<i><span style="color: #0070c0; font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Q: The CPI(M) has
responded to the Singur judgment saying that the 1894 Act was to be blamed, not
the Left Front Government, which had no alternative but to use that outdated
Act. Your comments. <o:p></o:p></span></i></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Ans:
It is ridiculous. But if I stretch the argument of the ridicule, I will then
wonder as to whether they decided to brazenly un-follow the procedure, even by
the 1894 Act, to grab land from the farmer and hand it over to TML anticipating
that the acquisition will be struck down by the courts? I am surprised that
someone there in the party is not speaking this way. The fact is that the party
simply turned against the people who were its backbone to serve whom it called
the class enemy and fell between the two stools. Someone there should be told
that they should realise that the people are not dumb as they think. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<i><span style="color: #0070c0; font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Q: You made a subtle
distinction between procedure established by law and the due process of law and
there is evidence of a shift to the latter in our history of constitutional
law. Does the Singur judgment suffer from its inability to recognise the due
process of law? Can you also briefly explain how the shift took place? <o:p></o:p></span></i></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Ans:
I have dealt with this in some detail in my book on the land acquisition laws
and the constitution. I see the beginning of this shift marked in R.C.Cooper
case (insofar as property is concerned) and further evident in Olga Tellis. I
will also hold that Keshavananda (which happened between the two cases
mentioned above) was where the firm foundations were laid for this shift when
the majority upheld the first leg of Article 31 C of the Constitution. This,
indeed, was also pronounced in the NOIDA cases in my view. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<i><span style="color: #0070c0; font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Q: How does Justice
Mishra reconcile the inconsistency between his reliance on Justice Krishna Iyer,
and his conclusion that the test of public purpose is fulfilled in Singur? <o:p></o:p></span></i></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Ans:
Well. I am at a loss over the fact that Justice Justice Mishra chose not to
rely on Justice Iyer’s exposition even after citing that in his judgment. I do
not know why he skirted that. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<i><span style="color: #0070c0; font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Q: You are suggesting
that the 2013 Act is in fact worse than the 1894 Act as it further
illegitimises struggles against land acquisition. You cited the instance of
tourism as a ground for acquisition in recent times, and how the new Act legitimises
it. Has there been an example of tourism-related acquisitions of land failing
to overcome the challenges under the old Act? <o:p></o:p></span></i></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Ans:
Well. It’s too early given the course that the 2013 Act has taken since May
2014, with the coming to power of the Narendra Modi government. But given the
nature of ‘industries’ I will not be surprised if disaster tourism too
qualifies for acquisition of land in the guise of public purpose! I wish I am
proved wrong.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<i><span style="color: #0070c0; font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"> Q: Your article appears to show the procedure
established by law and the due process of law in binary terms. Are they to be
understood as being inconsistent with each other, or in harmony? <o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Ans:
If I had conveyed it in a way that the two are binary opposites, I did not
intend that way. But then, these are two distinct positions in jurisprudence
and understood as different. The preference, in the CA, for the
procedure-established-by-law principle was for reasons that the judiciary, at
that stage, was not seen as conducive to be vested with the future of the
country and its people. While that may have been true, I will argue that
post-1980s, the judiciary has held our nation and the people in better stead
than the legislature. Hence, I will argue that the shift is legitimate. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<i><span style="color: #0070c0; font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Q. You have suggested
that higher compensation to the dispossessed under the new Act has only reduced
the scope for stalling indiscriminate acquisition of farmlands in the name of
development. Is it because those who receive compensation are happier, and
therefore, give a damn to the question whether there was any public purpose or
proper procedure followed etc. <o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Ans:
In a sense, this is turning real with the neglect of agriculture and the
preference for industries in our budgets. The terms are heavily loaded against
agriculture. It is a reality that has ominous portents for the food security of
the nation. But then, nobody seems to be bothered about this. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<i><span style="color: #0070c0; font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Q: You have referred to
Section 40 of the new Act, and compared it with Section 17 of the old Act. The
courts can still examine whether what is officially claimed as emergency, to
justify short-circuiting all the safeguards, was indeed an emergency. <o:p></o:p></span></i></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Ans:
Yes. But then, it takes many years between the dispossession and when the land
thus taken is ravaged and rendered unfit for farming. Also consider that Singur
happened to draw national attention and the involvement of public spirited
lawyers of repute reaching out to the farmers. My point is what you call as a
better law and one that has taken care of all the infirmities is not all that
great. It’s in some sense, worse than the other one. One brand of noodles or one
MNC-manufactured cola is not a substitute for another’! <o:p></o:p></span></div>
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<br /></div>
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<i><span style="color: #0070c0; font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Q. Why you are critical
of freeing the peasantry as against the bondage of the peasant class to the
land? <o:p></o:p></span></i></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Ans:
Well. I presume this question is with reference to my brief discussion on the
Enclosure Acts in England and Marx’s reference to that as the original sin. The
point is that the peasants were told they were free to move away from their
lands; but then, they were left with no possession except their bodies and
labour to sell and stay alive. That, indeed, is NOT freedom. It’s another form
of slavery and that is what freeing the peasantry has meant in history. <o:p></o:p></span></div>
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<br /></div>
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<i><span style="color: #0070c0; font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Q: You are critical of
fair compensation as the only requirement for compulsory acquisition. Can you
identify other requirements, which may be just? What are the consequences of
treating land as a commodity? <o:p></o:p></span></i></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Ans:
Well. Let us interrogate against the commoditization of any human activity. I
say interrogate. <o:p></o:p></span></div>
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<br /></div>
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<i><span style="color: #0070c0; font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Q: You infer a ray of
hope from the political class’ failure to scrap Section 3(za) of the new Act,
which requires prior consent of the 80 per cent of the dispossessed. Are
Niyamgiri and Bhatta Parsaul exceptions, rather than the rule? <o:p></o:p></span></i></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Ans: My argument is that when mighty
leaders get involved with an agitation, they do not end up in jail charged
under punitive and draconian laws so easily. It happens with those who are not
mighty. This, moreover, is the best option in a democracy; and the second best
being the judiciary.<o:p></o:p></span></div>
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kpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.com0tag:blogger.com,1999:blog-6816737388948619195.post-77031722113522335042016-11-18T08:48:00.003-08:002016-11-18T08:48:40.939-08:00THE LIFE AND TIMES OF JUSTICE V R KRISHNA IYER<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">THE
LIFE AND TIMES OF JUSTICE V R KRISHNA IYER<o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><span style="color: magenta;">[Published
in Livelaw | November 8, 2016]<o:p></o:p></span></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Justice
V R Krishna Iyer (1915-2014) had it all that takes to be the cream of the crop
among his contemporaries in terms of judgeship, statesmanship, leadership and
much more that shaped him up as a dynamic legal practitioner, prominent
legislator, minister for key portfolios in Kerala, member of Indian Law
Commission, Judge of High Court and later of Supreme Court. He who began his
legal practice as an advocate in 1937 at Taluk level subordinate court in
Telliserry, Kerala beseeched, defended and argued in the trial and appellate
courts and engaged in debates in the matter of legislation processes at Madras
Presidency and Kerala Legislative Assembly. Having acquired training in the art
of drafting recommendations and reports while serving as a member of Law
Commission (1971-1973), he also had the privilege to witness the pre and post
constitutional courts, adjudicatory process and legal developments. He stands
distinguished among his contemporaries for his versatile knowledge coupled with
considerable experience in litigating, legislating and adjudicating multi
phases and procedures of law. With this worldly exposure, he decided cases and
rendered justice to the deserving. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">There
were times when this multi-faceted genius had been bowled over by adversaries
as in the early days of his public life, he was imprisoned for one month for a
political cause and his speech rendered during his post-retirement life held
him in contempt followed by a proceeding in the High Court. On a striking note,
the court did not punish him for the latter but conferred encomium and the
speech was declared an extensively well informative academic exercise within
the contours of permissible criticism.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">He
adorned the Bench of High Court, Kerala and also served as the Judge of Supreme
Court for three years and seven and a half years respectively. He administered
an equal number of years as a legislator (MLA) and as minister. Yet, people
calls him with the haloed prefix ‘Justice’ and his hard earned fame made it an
integral part of his real name. In his tenure of less than eight years in the
Supreme Court, Justice Krishna Iyer pronounced more than 700 judgments of which
a greater number were progressive and had set a new trend in the judicial
governance. Interestingly, he had never delivered dissenting verdicts and had
not struck down any of the major provisions of law as null and void. Even in
the promulgation of Muthamma case, a legal literature on misogyny, he raised a
question Him can – Her Cannot How? And thus removed the gender inequality and
declared Rule 18(4) of the Indian Foreign Service as void and unconstitutional.
<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">The
pro-poor prolific pronouncements he penned while in the Bench have opened the
doors of apex court to commonalty and the grave hurdle of financial disability
to pay the court fee has been removed. Prior to the amendment in the Motor
Vehicles Act (MVA), the legal heirs and dependents of road accident victims had
to pay the court fee to claim compensation, like a litigant seeking recovery of
amount due under a negotiable instrument. If not affordable they have to sue as
paupers under the Code of Civil Procedure. When the High courts have denied the
road accident victims to sue as indigent litigant on the ground that the
relevant provision would not be applicable for tribunals, he rejected those
arguments and held that ‘the poor shall not be priced out of the justice market
by insistence of court fee by refusing to apply the provisions of exemption’.
He suggested that a high level government body monitor the process of
automobile manufacturing and creation of Highway Ombudsman with plenary powers
of from nuts and bolts to blood and bones of accident relives and punitive
counts as preventive and curative reliefs to the road traffic victims. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Unequivocally
and equitably, he exercised his onerous responsibility of adjudication of cases
and interpretation of laws. Though there has been a flimsy criticism that his
judgments had partial influence of his political and non-legal ideologies, a
conjoint reading would prove that the perceptions incorporated were convincing
enough and had enlightening aspects deriving a logical conclusion. In the
Maneka Gandhi case which dealt with Right to Travel under Article 21 of
constitution, Iyer journeyed further and highlighted the importance of
travelling abroad. He propounded a philosophy that travel is not a casual
facility but a core liberty. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">When
a warrant for civil arrest and detention was issued against Jolly George
Varghese, an impecunious debtor who had already suffered two money decrees
against him knocked the doors of apex court, Justice Iyer spoke on behalf of
the Bench and laid foundation for poverty jurisprudence. He invoked the
International Covenant (ICCPR) in the Indian legal parlance and upheld that no
one should be imprisoned merely on the ground of inability to fulfil a
contractual obligation. His innovative interpretations of Section 51 and Order
21 Rule 37 of Code of Civil Procedure paved way for postulating the theory of
‘economic justice’, a mandatory mantra in the preamble of the constitution.
Justice Iyer drafted the judgments using unusual words in an uncustomary style
for which he had been grimly criticised but he never acceded to any and
progressed his way. He received bouquets rather than brickbats from the Bench
and Bar in India and abroad, appreciating the precise narration of facts and
laws, quoting relevant literature from non-legal text books. In 1974, he penned
a separate but concurring judgment in Shamesher Singh case which dealt with the
powers and duties of President, governors and the cabinet system. Even after
four decades of myriad changes and upheavals in politics and governance, this
remains as a report sketching clearest exposition of the cabinet government in
Indian polity. For the beautifully crafted verdict in Shamsher Singh case, Iyer
received appreciation from an unexpected corner. It was from his wife, who
heard the dictation. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Justice
Iyer’s judicial pronouncements caused an indelible impact in the prison
administration as well. Perhaps, for the first time in the annals of history,
he along with two other Judges of Supreme Court visited Tihar Jail, the largest
prison complex in India, also in South Asia. Abolition of the practice of
hand-cuffing and foot-cuffing the prisoners and solitary confinement are two
tremendous achievements that humanized the Indian prison jurisprudence by dint
of their decisive efforts. The segregation of under trail and convicted prisoners
and directions for expeditious disposal of cases of the pre-trial prisoners are
the greatest reforms introduced by his landmark decisions. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">In
both the cases of Ediga Annamma and Rajendra Prasad, Iyer delivered that death
penalty be dissolved and substituted the same with life sentence. The
pronouncement weaved a heated debate in the legal fraternity and the then Chief
Justice sought an informal explanation from him. These verdicts have re-written
the sentencing policy, an underdeveloped branch of criminal jurisprudence in
India.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">No
red carpet was rolled out and instead a tempest awaited him when he was
elevated as the Judge of Supreme Court on 17th July, 1973. The leaders of
political parties opposed the move. Another unanticipated step was when a section
of the Bar routed a complaint to the President stating apprehensions concerning
Justice Iyer’s post in the Supreme Court. Justice Iyer’s unbiased adjudication
of cases, unaffected by the political ideologies he followed as a public
representative, humane approach, creative interpretation of laws, propounding
of theories for the welfare of people and to safe guard their rights have
falsified the apprehensions as futile and baseless. As assessed by Prof.
Upendra Baxi, the landmark decisions rendered in Justice Iyer’s tenure have
metamorphosed the Supreme Court of India to Supreme Court for Indians. The
Supreme Court Bar Association (SCBA) judged the valuable contributions of Iyer
and handed down a unanimous declaratory verdict on the day of his retirement on
superannuation. It reflects the love, respect and admiration they had saved for
a distinguished judge of the nation. The judgment on a judgment-maker by the
lawyers reads that on Thursday, 15th November, 1980, when the weather was crisp
and bright in Delhi but the Court Hall No.3 where Justice Iyer sat was loaded
with humid air, viewed by moisturizing eyes of great lawyers and leaders of the
Bar, because a great intellectual was sitting in the court for the last time.
The erstwhile foes who opposed his elevation with institutional inclination had
become his friends and admirers and celebrated him as an asset of the supreme
constitutional institution.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">His
judicial decisions raised curtains, changed the old scene and set a new trend
in the justice dispensation. Above all, even after four decades none of them
overruled. Still, they serve as primary tools for legal profession, help the
lawyers and judges to breathe a fresh air in the legal arena and provide
reliefs to the litigant public. This is the power, magic and effect of the
value added verdicts of Justice V.R. Krishna Iyer. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">The
superannuation fixed by the constitution precluded him from pronouncing de jure
orders but promoted the contribution of voluminous extra –judicial writings
running more than ninety books. These legal texts are recognized as de facto
precedents and luminous guiding stars for judicial governance by scholars
around the world. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">However,
He did not accept any post-retirement assignments from the governments and
lived as a committed activist for good cause. The candidature for the high
office of President of India gave him the estimable opportunity to meet and
interact with leaders of various political parties. It was yet another rare
electoral battling experience he lived through after retirement.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Justice
Iyer breathed his last on 4th December 2014. Perhaps, he was the first retired
Judge of the Supreme Court of India who received a ceremonial cremation with
State honours. To sum up, his life was an anthology of noble vision, committed
to the cause of justice to common man, cultured with rich and versatile
experiences, a career that still beams in colours noted for his valuable
contributions to the nation and humanity. It is indeed unique and laudable in
all ages.<o:p></o:p></span></div>
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">*****<o:p></o:p></span></b></div>
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kpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.com0tag:blogger.com,1999:blog-6816737388948619195.post-72666271078854360472016-11-18T08:46:00.001-08:002016-11-18T08:46:59.164-08:00SELECTING JUDGES FOR A DEMOCRATIC INDIA<div dir="ltr" style="text-align: left;" trbidi="on">
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">SELECTING
JUDGES FOR A DEMOCRATIC INDIA<o:p></o:p></span></b></div>
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></b></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">It
is an honour to be present here and interact with the scholars and students of
this great university. I was told that I could choose a topic that interests me
most; it was, though, with a suggestion that the topic could be “Selecting
Judges for a Democratic India” – a topic now widely debated in the academic
circles of not only India but also other countries. It is, perhaps, because of
the events that took place in the last two years in India. I readily agreed
with the suggestion for three reasons: (i) it is a topic of great relevance for
any civilized society; (ii) it is a topic now debated very vigorously in India;
and (iii) that it makes my assignment a little easier for I was a member of the
Bench of the Indian Supreme Court, which recently examined the validity of the
Constitution 99th Amendment. Therefore, I had an occasion to examine the matter
in some depth.<o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">THE DEMOCRACY AND THE JUDGES:<o:p></o:p></span></b></div>
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></b></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"> No two democracies are identical. The only
common feature across the board is that lawmakers and law’s executors (the
political executive) are chosen periodically by a process of election.
Adjudication of the disputes – whether they are among subjects or between the
subjects and the Sovereign – has always been an aspect of governance in every
form of Government, be it democratic or otherwise. Democracies generally prefer
to appoint rather than elect Judges. They are chosen though making that choice
varies from country to country. One of the primary reasons for not choosing the
process of electing judges is that adjudication is a complex function. A
certain degree of knowledge of law and skill in its application is essential
for the person who is entrusted with the responsibility of the adjudicatory
process. The existence of such knowledge and skill is a matter of assessment to
be made by applying some objective tests. The general belief is that such
assessment cannot be made dependent upon the views of transient majorities, for
they consist largely of minds with no interaction with the discipline of law –
either as law makers or enforcers. <o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">SELECTING JUDGES: <o:p></o:p></span></b></div>
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></b></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Different
democracies choose different modes for making such assessment as electing
judges. In a legal system, which recognizes the judiciary’s authority to
adjudicate the correctness of the administrative action, the adjudicator must
obviously be insulated from the possible interference from the executive to
ensure an impartial adjudicatory process. Legal systems of countries like US
and India, which authorize judicial review – to be more explicit, the judicial
invalidation of legislation – a higher degree of insulation is required. These
various layers of insulation are provided by certain constitutional norms
express or implied. The system of selecting judges, which is not wholly
controlled either by the legislative or the executive wing of the State is one
of the devices designed to ensure the judiciary’s independence and political
neutrality. <o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">BEFORE INDEPENDENCE:<o:p></o:p></span></b></div>
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></b></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"> The judicial system as it exists today in
India is inherited from British. For the record, I may say, the British
Parliament in 1861 enacted the Indian High Courts Act authorizing the Crown “by
letters patent under the great seal of the United Kingdom” to set up the High
Courts of Calcutta, Madras and Bombay. Other High Courts were established in
different parts of the country from time to time. They were courts of appeal
with jurisdictions over civil and criminal matters to determine the rights and
obligations created by various statutes or personal laws etc. Some of the High
Courts also had original jurisdiction limited either by territory or subject
matter. It is only to be noted that the jurisdiction of the High Courts in the
area of public law was very limited. Though an appeal to the Privy Council
against the judgments of the High Court was possible in theory, the stringency
with which the Privy Council permitted the invocation of its appellate
jurisdiction, coupled with the enormous expenditure involved in approaching the
Privy Council, made the High Courts effectively the final courts. A Federal
Court came to be established under the Government of India Act 1935. It was
essentially an appellate court for deciding the correctness of the High Courts’
judgments. It was an institution with a very short life span, for soon it was
replaced by the Supreme Court in 1950. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">AFTER INDEPENDENCE: <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">After
the attainment of independence and the formation of the Republic of India under
a new Constitution, most of the old High Courts continued with some
modifications in their respective territorial jurisdiction. Some new High Courts
came to be established from time to time. The Constitution of India contains a
Chapter incorporating certain fundamental rights. Some are rights guaranteed to
individuals; some to citizens; and others to groups of citizens. Article 13(2)
of the Constitution declares that the State shall not make any law which takes
away or abridges the fundamental rights and any contravening law shall be void.
One major change brought about by the Constitution concerning the High Courts’
jurisdiction is that the High Courts are vested with an extraordinary original
jurisdiction under Article 226. The jurisdiction is to issue directions, orders
or writs including writs of habeas corpus, mandamus, prohibition, quo warranto
and certiorari. The writs are to enforce of any of the rights conferred by
Part-III of the Constitution and for any other purpose, too. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">THE SUPREME COURT: <o:p></o:p></span></b></div>
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">The
Supreme Court came to be established under the Constitution virtually
amalgamating the jurisdictions of the Privy Council and the Federal Court under
the Government of India Act, 1935. One distinguishing feature of the Supreme
Court is that under Article 32 jurisdiction is conferred on the Supreme Court
to issue various writs to enforce various fundamental rights conferred by the
Constitution and the right to move the Supreme Court is in itself a fundamental
right. The Supreme Court and the High Courts became Constitutional Courts. The
declaration under Article 13(2) coupled with the jurisdiction under Articles 32
and 226 confers enormous power both on the Supreme Court and the High Courts.
The power enables these constitutional courts to examine the constitutionality
of any legislation made either by the Parliament or the State Legislatures,
besides the power to examine the legality of any administrative action. <o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">HEDGING THE JUDGES:<o:p></o:p></span></b></div>
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"> One of the elementary requirements of a
judicial office in any civilized legal system is that a Judge must be
impartial. So long as the duties of a Judge are confined only to examining
private parties’ rights and obligations, the appointing authority’s assessment
of the proposed judge’s impartiality suffices. This process presumes that the
appointing authority acts in good faith. But the moment the judge’s duty takes
within its sweep the authority to adjudicate the State’s actions (encompassing
all its branches), reliance upon the good sense of the appointing authority
(the executive) becomes perilous. Because State also turns out to be a litigant
– a leading litigant, at that – before the Judge appointed by it. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">THE CONSULTATION: <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">The
framers have realized the need to eliminate the possibility of the executive
gaining absolute control over the appointment process. The Constitution,
therefore, incorporated provisions introducing the consultative process. It
mandates that the Head of the Executive shall consult the Chief Justice of
India and other constitutional functionaries while he appoints Judges to the
Constitutional Courts. The Constituent Assembly believed that this requirement
would ensure the judiciary’s efficiency and the independence. Article 124
mandates, further, that the President of India shall appoint judges of the
Supreme Court after consulting certain High Court judges, too. Article 217
mandates that the President shall appoint judges of the High Courts after his
consulting the Chief Justice of India and the Governor of the State concerned.
It further mandates that if the President is to appoint a Judge other than the
Chief Justice of a High Court, he shall consult the Chief Justice of that High
Court as well. The purpose of such consultation was explained by Dr. B.R.
Ambedkar, Chairman of the Constitution Drafting Committee in the Constituent
Assembly. “… There can be no difference of opinion in the House that our
judiciary must both be independent of the executive and must also be competent
in itself. And the question is how these two objects could be secured. There
are two different ways in which this matter is governed in other countries. In
Great Britain the appointments are made by the Crown, without any kind of
limitation whatsoever, which means by the executive of the day. There is the
opposite system in the United States where, for instance, officers of the
Supreme Court as well as other offices of the State shall be made only with the
concurrence of the Senate in the United States. It seems to me, in the
circumstances in which we live today, where the sense of responsibility has not
grown to the same extent to which we find it in the United States, it would be
dangerous to leave the appointments to be made by the President, without any
kind of reservation or limitation, that is to say, merely on the advice of the
executive of the day. Similarly, it seems to me that to make every appointment
which the executive wishes to make subject to the concurrence of the
legislature is also not a very suitable provision. Apart from its being
cumbrous, it also involves the possibility of the appointment being influenced
by political pressure and political considerations. The draft article,
therefore, steers a middle course. It does not make the President the supreme
and the absolute authority in the matter of making appointments. It does not
also import the influence of the legislature. The provision in the article is
that there should be consultation of persons who are ex hypothesi, well
qualified to give proper advice in matters of this sort, and my judgment is
that this sort of provision may be regarded as sufficient for the moment.”
There were suggestions in the Constituent Assembly that the Constitution
provisions dealing with the appointment of Judges of the Supreme Court and the
High Court should enjoin the President to make the appointments only with the
concurrence of the Chief Justice of India. Dr. Ambedkar strongly approved the
proposal. He was of the opinion:- “With regard to the question of the
concurrence of the Chief Justice, it seems to me that those who advocate that
proposition seem to rely implicitly both on the impartiality of the Chief
Justice and the soundness of his judgment. I personally feel no doubt that the
Chief Justice is a very eminent person. But after all, the Chief Justice is a
man with all the failings, all the sentiments and all the prejudices which we
as common people have; and I think, to allow the Chief Justice practically a
veto upon the appointment of Judges is really to transfer the authority to the
Chief Justice which we are not prepared to vest in the President or the
Government of the day. I therefore, think that that is also a dangerous
proposition [Constituent Assembly Debates, 24-5-1949 (Vol. 8, p. 258)]”.
(emphasis added) The Constituent Assembly agreed with the views of Dr. Ambedkar.
So Articles 124 and 217 contemplate that the President shall make the
appointments in consultation with the Chief Justice of India and other
constitutional functionaries mentioned in Articles 124 and 217. The semantic
significance of the expression “consultation” in the appointment of Judges to
the constitutional courts never troubled either the executive branch or the
judicial branch of the Government of India till 1977. <o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">THE FIRST JUDGES’ CASE: <o:p></o:p></span></b></div>
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">In
Union of India v. Sankalchand Himatlal Sheth & Another, (1977) 4 SCC 193
(the First Judges’ Case), the Supreme Court examined the capacious
‘consultation’ in the transfer of High Court Judges. The Court held that though
the expression ‘consultation’ does not mean concurrence of the Chief Justice of
India, the opinion of the Chief Justice is entitled to great weight and “in
practice the last word in such sensitive subject must belong to the Chief
Justice of India”. 3 of the 5 Judges opined that “if the Government departs
from the opinion of the Chief Justice of India, it has to justify its action by
giving cogent and convincing reasons for the same”. Taking undue advantage of
the decision in the First Judges’ case that consultation does not mean
concurrence, the Executive, it is believed, made attempts between 1980 to 1993
to reduce the consultative process to a mere formality with no substance.
Though direct evidence is scanty, such an inference flows from the news reports
and gets strengthened from the Supreme Court’s judgment in Supreme Court
Advocates-on-Record Association v. Union of India, (1993) 4 SCC 441 (the Second
Judges’ Case). <o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">THE SECOND JUDGES’ CASE: <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">The
only inference that can be drawn from the decision in the Second Judges’ case
is that the Executive had not accorded the deference to the Chief Justice’s
views in the matter of appointing judges to the constitutional courts. By a
strange process of logic, though, Indian judiciary always believed that it
would be detrimental to the judiciary’s image and interest to place in the
public domain the material connected with the consultative process. The details
of the consultative process are always beyond the reach of not only the civil
society but also the members of the judiciary, too; strange but true! A
Nine-Judge Bench of the Supreme Court in the Second Judges’ Case however
reconsidered its earlier view in the First Judges’ case. It was held that the
consultation must be real and effective. The majority of the Bench has also
held that the Chief Justice of India’s opinion is entitled to primacy in the consultative
process. In substance, the judgment has laid down that the Chief Justice’s
opinion is final and binding on the executive. It also held that the Chief
Justice’s opinion meant the Collegium’s opinion. Justice Verma, the architect
of the doctrine of ‘primacy’ and the concept of ‘Collegium’ prophetically
cautioned that the consultation process must be undertaken not in the spirit
that ‘the winner takes all’ but that an efficient and independent judiciary is
appointed. History bears out that judiciary in any democratic country is never
completely disconnected from the pulls and pressures of the political process.
The Supreme Court’s judgment in the First and the Second Judges’ cases came in
two phases of the Republic of India’s history. The first of the two judgments
came to be delivered immediately after the end of a proclamation of emergency.
It must be remembered that during the emergency (25th June 1975 to 21st March
1977), 16 judges were transferred from their parent High Courts. Most were
outstanding judges – judged by their scholarship and integrity. The public
perception was that they were independent and therefore inconvenient to the
Executive. One of the 16 judges (Justice Sankalchand Himatlal Sheth) challenged
his transfer. By the time, the matter came to be heard by the Supreme Court,
the emergency came to an end, and the government run by the political party
which imposed emergency lost power. Its successor, a popularly elected
government formed by another short-lived political party, was perceived to be
more liberal in its views. As the irony would have it, the new government
itself comprised a good number of persons imprisoned during the Emergency for
their political views were believed to be unacceptable to the Government/the
political party which imposed emergency. There was a great deal of goodwill the
new Government in office enjoyed with the judiciary that dealt with the First
Judges’ case. It is worthwhile to mention that even before the judgment was
delivered, the Government conceded before the Supreme Court that it saw no
constitutionally justifiable reason for transferring either Justice Sankalchand
or the other 15 judges. It had already issued orders retransferring the 16
Judges to their parent High Courts. <o:p></o:p></span></div>
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<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">CONSULTATION: <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">It
is in this background that the Supreme Court laid down that consultation did
not mean concurrence. However, the Court was circumspect enough to indicate
that though normally the Government should give the greatest weight to the
Chief Justice’s views, it must record cogent reasons if it disagreed with the
Chief Justice’s views. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">COMPULSIVE COALITIONS: <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">On
the other hand, in the decade that preceded the Second Judges’ Case (1980 to
1990), the government was run by a political party which commanded almost a
mammoth majority in Parliament. Such political strength – coupled with the
interpretation placed by the Supreme Court in the First Judges’ case on the
expression “consultation” – led to a situation where the Executive started
conveniently ignoring the judiciary’s views in the matter of judges’
appointment to the constitutional courts. It annoyed the judiciary and proved
detrimental to the public interest. An efficient and independent judiciary was
believed to be a causality. As a result, political loyalties did play a role in
the choice of the judges to the constitutional courts. The decade during which
the Second Judges’ case came to be decided was a decade of political
uncertainty. The Government of India was run by coalitions of various political
parties. The governments were fragile, and the coalitions volatile. Though
legal scholars and political pundits doubted the jurisprudential correctness of
the Second Judges’ case, the Government of India never really attempted to seek
the judgment’s reconsideration. There was, at a later point, a Presidential
reference on the Second Judges’ case: The government sought the Supreme Court
to throw light on certain grey areas of the judgment. In that reference (the
Third Judges’ case), the Government conceded that it was not seeking a review
of the Second Judges’ case. In the first decade of the new millennium, though
the political atmosphere continued to be fragile and volatile, not infrequent
were the allegations of inappropriate exercise of the power (both at the levels
of the Supreme Court and the High Courts) by the Collegia concerned in
recommending names for elevation to the constitutional courts. The demand for a
more transparent mechanism for choosing judges to the constitutional courts
steadily increased from the civil society. The political class saw the demands
of the civil society as an opportunity to demolish the system of collegium
created by the Second Judges’ case. It explored various politically feasible
options to replace the collegium system. On more than one occasion, Parliament
sought to amend the Constitution to displace the collegium system and to
replace it with a Judicial Appointments Commission. But its efforts did not
fructify owing to lack of political will. It was an era of coalition politics. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">THE AMENDMENT: <o:p></o:p></span></b></div>
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<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">In
the year 2014, the Government of India amended the Constitution – it wanted a
National Judicial Appointments Commission (NJAC) to advise the President in the
matter of appointment of Judges to the constitutional courts. By the
Constitution 99th Amendment Act, Articles 124 and 217 were amended; Article
124-A & B were added. The requirement of the President of India consulting
the Chief Justice of India and other constitutional functionaries was replaced
with his consulting the NJAC. The relevant portion of Article 124A reads thus:
“Article 124A . National Judicial Appointments Commission.— (1) There shall be
a Commission to be known as the National Judicial Appointments Commission
consisting of the following, namely:- (a) the Chief Justice of India,
Chairperson, ex officio; (b) two other senior Judges of the Supreme Court next
to the Chief Justice of India – Members, ex officio; (c) the Union Minister in
charge of Law and Justice – Member, ex officio (d) two eminent persons to be
nominated by the committee consisting of the Prime Minister, the Chief Justice
of India and the Leader of Opposition in the House of the People or where there
is no such Leader of Opposition, then, the Leader of single largest Opposition
Party in the House of the People – Members: Provided that one of the eminent
person shall be nominated from amongst the persons belonging to the Scheduled
Castes, the Scheduled Tribes, Other Backward Classes, Minorities or Women;
Provided further that an eminent person shall be nominated for a period of
three years and shall not be eligible for renomination.” The duties of the
Commission were mentioned in Article 124-B, which was also introduced by the
99th Amendment, the relevant portion of which reads thus: “Article 124-B.
Functions of Commission.— It shall be the duty of the National Judicial
Appointments Commission to – (a) recommend persons for appointment as Chief
Justice of India, Judges of the Supreme Court, Chief Justices of High Courts
and other Judges of High Courts; (b) recommend transfer of Chief Justices and
other Judges of High Courts from one High Court to any other High Court; and
(c) ensure that the person recommended is of ability and integrity.” <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">AN OPPORTUNITY: <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">The
amendment – for the first time in the history of the Republic of India –
created an opportunity for the civil society to have a say in the matter of
judicial appointments: A slot for two members of the civil society was provided
in the NJAC. Interestingly – or if you please, ironically, too – that is the only
instance in the parliamentary history of India where all political parties
unified in their opinion that the Constitution required an amendment.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"> <b>STRIKING
BACK:<o:p></o:p></b></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><b><br /></b></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"> The Supreme Court, however, found the
amendment unconstitutional. In the opinion of the majority of the Bench that
heard the matter, such an amendment violated the basic structure of the
Constitution. After declaring the 99th Amendment unconstitutional, the Supreme
Court thought it necessary “to hear the matter further to consider introduction
of appropriate measures, if any, for an improved working of the Collegium
System”. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">THE AMENDS: <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">The
Court invited suggestions from the Society at large for the improved working of
the Collegium System. The suggestions were, infact, received; running into 11500
pages. A Two-Member Committee was constituted by the Court to analyze the
various suggestions received and summarize them. The summary placed before it,
the Court passed a further order calling upon the Government of India to
prepare a Memorandum of Procedure in consultation with the Chief Justice of
India to appreciate the various suggestions made by the civil society. The
Chief Justice of India had to base his opinion on the unanimous views of the
Collegium comprising the four senior-most puisne Judges of the Supreme Court.
The Court directed that while preparing a Memorandum of Procedure, the
Government should address the following concerns: “ <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">1.
<b>Eligibility criteria:</b> The Memorandum
of Procedure may indicate the eligibility criteria, such as the minimum age,
for the guidance of the Collegium (both at the level of the High Court and the
Supreme Court) for the appointment of Judges, after inviting and taking into
consideration the views of the State Government and the Government of India (as
the case may be) from time to time. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">2.
<b>Transparency in the appointment process:</b>
The eligibility criteria and the procedure as detailed in the Memorandum of
Procedure for the appointment of Judges ought to be made available on the
website of the Court concerned and on the website of the Department of Justice
of the Government of India. The Memorandum of Procedure may provide for an
appropriate procedure for minuting the discussions including recording the
dissenting opinion of the Judges in the Collegium while making provision for
the confidentiality of the minutes consistent with the requirement of
transparency in the system of appointment of Judges. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">3.
<b>Secretariat:</b> In the interest of
better management of the system of appointment of Judges, the Memorandum of
Procedure may provide for the establishment of a Secretariat for each High
Court and the Supreme Court and prescribe its functions, duties and
responsibilities. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">4.
<b>Complaints:</b> The Memorandum of
Procedure may provide for an appropriate mechanism and procedure for dealing
with complaints against anyone who is being considered for appointment as a
Judge. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">5.
<b>Miscellaneous:</b> The Memorandum of
Procedure may provide for any other matter considered appropriate for ensuring
transparency and accountability including interaction with the recommendee(s)
by the Collegium of the Supreme Court, without sacrificing the confidentiality
of the appointment process. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">It
is made clear that the guidelines mentioned above are only broad suggestions
for consideration and supplementing the Memorandum of Procedure for the
faithful implementation of the principles laid down in the Second Judges
case[Supreme Court Advocates-on-Record Assn. v. Union of India, (1993) 4 SCC
441] and the Third Judges case [Special Reference No. 1 of 1998, In re, (1998)
7 SCC 739].” The deliberations on the content of the Memorandum of Procedure
are still going on. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">THE FERMENT: <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">I
believe that the entire episode leading to the judgment of the Supreme Court in
the NJAC case is one of the phases in the constitutional history of India. I am
only reminded of Prof. Laurence Tribe’s words: “Such passing finality as
judicial pronouncements possess is an essential compromise between
constitutional order and chaos, the constitution is an intentionally incomplete
and often deliberately indeterminate structure for the participatory evolution
of political ideals and governmental practices.” Indian Democracy’s date with
the judicial appointments in an uneasy courtship, between the executive and the
judiciary. The Executive looks to Parliament to legitimize its claim; the Court
to the Constitution –as it understands; each accusing the other of being
‘undemocratic’. The Civil Society believes that both are right. The common man
– waits, patiently. But he cannot be taken for granted. For he knows when to
strike. Strike he will, if his patience is stretched too long. In the ultimate
analysis it is for his benefits that any democratic constitution should work. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">THE FALL-OUT: <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Profound
is the problem; pragmatic should be the approach; truly democratic ought to be
the solution. As a dissenting judge in the last of the judgments on judicial
appointments, I shall be all too happy to see a happy ending to this tangle.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<br />
<div style="border-bottom: solid windowtext 1.0pt; border: none; mso-border-bottom-alt: solid windowtext .75pt; mso-element: para-border-div; padding: 0in 0in 1.0pt 0in;">
<div class="MsoNormal" style="border: none; mso-border-bottom-alt: solid windowtext .75pt; mso-padding-alt: 0in 0in 1.0pt 0in; padding: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><span style="color: magenta;">[This is the full text of speech
delivered by Justice Chelameswar at University of Wisconsin]</span><o:p></o:p></span></div>
</div>
</div>
kpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.com0tag:blogger.com,1999:blog-6816737388948619195.post-67865656649954747512016-11-18T08:38:00.000-08:002016-11-18T08:38:29.056-08:00PIL SEEKING ESTABLISHMENT OF INDIAN JUDICIAL SERVICE IN DELHI HC <div dir="ltr" style="text-align: left;" trbidi="on">
<div align="center" class="MsoNormal" style="text-align: center;">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">A
Public Interest Litigation seeking establishment of Indian Judicial Services in
the lines of Indian Administrative Service has been filed by Supreme Court
Lawyer and BJP leader Ashwini Kumar Upadhyay before the Delhi High Court.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">In
his PIL, Ashwini Upadhyay, who is also a BJP Spokesperson, contends that,
establishment of IJS under the Article 312 of the Constitution of India, is not
only necessary to provide equal opportunity to all prospective Advocates in
spirit of the Article 16 but also essential to secure fundamental right of fair
trial and speedy justice to all the citizens in spirit of Article 21. IJS has
not been established in spite of constitutional provision and despite the Apex
Court strongly endorsed it, he states in his petition.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">He
further states that, while most government department has ‘All India Service’
recruits, the Judiciary is the only setup that does not have a national level
selection process to attract the best prospective Advocates. “When IAS officers
can be allotted State cadres and adjust to local requirements, why can’t IJS
officers? Every organ of the State including the judiciary needs to be
accountable to the public. People need to know how judges are appointed, what
criteria they have been evaluated on. Many judges appointed by the collegiums
or by political intervention may have been brilliant, yet their recruitment
process is questionable. Judiciary should reflect social reality and the
country’s diversity,” the petition reads.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">Ashwini
Upadhyay also ‘feels’ that retirement age of the High Court Judges should be 65
years and retirement age of the Supreme Court Judges should be 70 years. Delhi
High Court will hear the matter on Tuesday. The Delhi High Court, in an earlier
petition by Ashwini Upadhyay had
directed the Government to take a decision on the establishment of All
India Judicial Service (AIJS), on lines of the Administrative and Police
Services.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: center;">
<span style="font-family: "Book Antiqua","serif"; font-size: 14.0pt; line-height: 115%;">*****</span></div>
</div>
kpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.com0tag:blogger.com,1999:blog-6816737388948619195.post-50816058822942506392015-05-05T03:07:00.000-07:002015-05-05T03:09:11.839-07:00CHEQUE BOUNCING CASES - CONTROVERSY OVER TERRITORIAL JURISDICTION OF COURTS<div dir="ltr" style="text-align: left;" trbidi="on">
<br />
<div style="border-color: currentColor currentColor windowtext; border-style: none none solid; border-width: medium medium 1pt; mso-border-bottom-alt: solid windowtext .5pt; mso-element: para-border-div; padding: 0in 0in 1pt;">
<div class="MsoNormal" style="border: currentColor; margin: 0in 0in 10pt; mso-border-bottom-alt: solid windowtext .5pt; mso-padding-alt: 0in 0in 1.0pt 0in; padding: 0in; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">CHEQUE BOUNCING CASES - CONTROVERSY
OVER TERRITORIAL JURISDICTION OF COURTS<o:p></o:p></span></b></div>
</div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-layout-grid-align: none; text-align: left;">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "Times New Roman","serif"; font-size: 13pt;"> By K P C Rao.</span></i></b></div>
<div style="text-align: center;">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><span style="mso-spacerun: yes;"> </span>LL.B., FCS., FICWA</span></i></b></div>
<div style="text-align: center;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: "Times New Roman","serif"; font-size: 13pt;"> Practicing Company Secretary</span></i></div>
<div style="text-align: center;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: "Times New Roman","serif"; font-size: 13pt;"> <a href="mailto:kpcrao.india@gmail.com">kpcrao.india@gmail.com</a><o:p></o:p></span></i></div>
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">BACKGROUND<o:p></o:p></span></b><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">The Negotiable
Instruments Act 1881 was passed in 1882 and was amended in 1989 and 2002,
Before 1988 there was no provision in the Act to restrain the person issuing
the Cheque without having sufficient funds in his account. The only remedy
against a Dishonoured cheque was a civil liability accrued. In order to ensure
promptitude and remedy against the defaulters of the Negotiable Instrument a
criminal remedy of penalty was inserted in Negotiable Instruments Act, 1881 by
amending it with Negotiable Instruments Act, 1988. The second noteworthy
amendment was when the parliament enacted the Negotiable Instruments (Amendment
and Miscellaneous Provisions) Act, 2002 which is intended to plug the
loopholes. This amendment Act inserts five new sections from 143 to 147
touching various limbs of the parent Act. This act is applicable to the whole
of India including the state of Jammu and Kashmir, which was brought under the
purview of the Act in 1956.<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">The objective of the
act is to define the various negotiable instruments such as promissory notes,
bills of exchange, cheque etc. Also to prescribe the liability in case of a
failure of the instrument to fulfill its debt due to the default on the part of
the payer or to curb scrupulous practices adopted to escape liability in
respect of negotiable instruments. <o:p></o:p></span></div>
<div style="text-align: justify;">
</div>
<div class="MsoNormal" style="margin: 0in 0in 10pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">Section 138 of the NI
Act deals with the offence pertaining to dishonour of cheque for insufficiency
of funds in the drawer's account and attracts criminal liability. <o:p></o:p></span></div>
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">Ingredients Required to
be Fulfilled Under Section 138 to attract Criminal Liability<o:p></o:p></span></i></b><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">To constitute an offense
under Section 138 of the Act, the following ingredients are required to be
fulfilled.<o:p></o:p></span></div>
<span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;"> 1)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">A person must have drawn a cheque on an
account maintained by him in a bank for payment of a certain amount of money to
another person from out of that account;<o:p></o:p></span><br />
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; mso-list: l1 level1 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">2)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">The cheque should have been issued for
the discharge, in whole or in part, of any debt or other liability;<o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; mso-list: l1 level1 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">3)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">That cheque has been presented to bank
within a period of three months from the date on which it is drawn or within
the period of its validity whichever is earlier;<o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; mso-list: l1 level1 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">4)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">That cheque is returned by the bank
unpaid, either because of the amount of money standing to the credit of the
account is insufficient to honour the cheque or that it exceeds the amount
arranged to be paid from that account by an agreement made with the bank;<o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; mso-list: l1 level1 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">5)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">The payee or the holder in due course of
the cheque makes a demand for the payment of the said amount of money by giving
a notice in writing, to the drawer of the cheque, within 30 days of the receipt
of information by him from the bank regarding the return of the cheque as
unpaid;<o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpLast" style="margin: 0in 0in 10pt 0.5in; mso-list: l1 level1 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">6)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">The drawer of such cheque fails to make
payment of the said amount of money to the payee or the holder in due course of
the cheque within 15 days of the receipt of the said notice;<o:p></o:p></span></div>
<span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">To put it in simpler
terms the law states that the person must owe some amount of money to another
and draws a cheque in that regard to fulfill that liability, the cheque be
drawn on an account in a bank by him. The cheque was then presented to the bank
within 3 months of the date on which it is drawn. However due to insufficiency
of funds the cheque is returned by the bank unpaid. The payee (the bank) makes
a demand for payment of said amount which the person owed within 30 days of the
information received by him (the person who owed the money) that the cheque was
returned unpaid; and thereafter the person fails to pay the amount within 15
days of the notice by the bank.<o:p></o:p></span><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">CONFUSION
OVER THE TERRITORIAL JURISDICTION<o:p></o:p></span></b></div>
<div style="text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">There was a lot of
confusion surrounding the territorial jurisdiction concerning criminal
complaints filed under section 138 of the Negotiable Instruments Act, 1881 in
case of dishonor of cheques in India prior to 2014. However, the issue of territorial
jurisdiction<span style="color: red;"> </span>has been resolved by a Three Judge
Bench of the Hon’ble Supreme Court of India in the case of <i style="mso-bidi-font-style: normal;">Dashrath Rupsingh Rathod vs State of Maharashtra</i> [2014(9) SCALE97].
In this case, the Court held that return of the cheque by the drawee bank alone
constitutes the commission of the offence under section 138 of the Act and
indicates the place where the offence is committed. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">JURISDISCTION
OF COURTS REDEFINED<o:p></o:p></span></b></div>
<div style="text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">The aforementioned
judgment took a contrary view from what was laid down by a two Judges bench of
the same court in <i style="mso-bidi-font-style: normal;">K. Bhaskaran Vs.Sankaran
Vaidhyan Balan and Anr</i> [(1999)7SCC510]. K. Bhaskaran observed that the
offence under Section 138 of the NI Act, 1881 can be completed only with the
concatenation of a number of acts. Following are the acts which are components
of the said offence: (1) Drawing of the cheque, (2) Presentation of the cheque
to the bank, (3) Returning the cheque unpaid by the drawee bank, (4) Giving
notice in writing to the drawer of the cheque demanding payment of the cheque
amount, (5) failure of the drawer to make payment within 15 days of the receipt
of the notice. It is not necessary that all the five acts should have been perpetrated
at the same locality. It is possible that each of those five acts could be done
at five different localities. But concatenation of all the above five is a '<i style="mso-bidi-font-style: normal;">sine qua non'</i> for the completion of the
offence under Sec. 138 of the NI Act. Referring Section 178(d) of the Code of
Criminal Procedure, 1973 it is clear that if the five different acts were done
in five different localities any one of the courts exercising jurisdiction in
one of the five local areas can become the place of trial for the offence under
Section 138 of the NI Act. In other words, the complainant can choose any one
of those courts having jurisdiction over any one of the local' areas within the
territorial limits of which any one of those five acts was done.<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">But the Hon'ble Supreme
Court in Dashrath Rupsingh Rathod disagreed with the Bhaskaran judgment and
observed that Bhaskaran allows multiple venues to the Complainant which runs
counter to the Apex Court's preference for simplifying the law. Courts are
enjoined to interpret the law so as to eradicate ambiguity or nebulousness, and
to ensure that legal proceedings are not used as a device for harassment, even
of an apparent transgressor of the law. Law's endeavour is to bring the culprit
to book and to provide succour for the aggrieved party but not to harass the
former through vexatious proceedings. Therefore, precision and exactitude are
necessary especially where the location of litigation is concerned. The Court
further observed that a reading of Section 138 of the NI Act in conjunction
with Section 177 of Code of Criminal Procedure leaves no manner of doubt that
the return of the cheque by the drawee bank alone constitutes the commission of
the offence and indicates the place where the offence is committed. In this
analysis the Hon'ble Supreme Court held that the place, situs or venue of
judicial inquiry and trial of the offence must logically be restricted to where
the drawee bank, is located.<o:p></o:p></span></div>
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">IMPACT
OF APEX COURT RULING ON PENDING CASES - DIRECTIVES TO AVOID LEGAL IMPLICATIONS<o:p></o:p></span></b><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">Keeping in mind the
fact that the decision in '<i style="mso-bidi-font-style: normal;">Dashrath'</i>
will have a massive impact on the cases already pending in various Courts if
the same is applied prospectively, the Supreme Court thought it to be expedient
to direct that only those cases where, post the summoning and appearance of the
alleged accused, the recording of evidence has commenced as envisaged in
Section 145(2) of the Negotiable Instruments Act, 1881, will proceed to
continue at that place. To obviate and eradicate any legal complications, the
category of Complaint cases where proceedings have gone to the stage of Section
145(2) or beyond shall be deemed to have been transferred by the Apex Court
from the Court ordinarily possessing territorial jurisdiction, as now clarified
in Dashrath's case, to the Court where it is presently pending. All other Complaints,
including the ones where the Accused/ Respondent has not been properly served
shall be returned to the Complainant for filing in the proper Court. If such
Complaints are filed /refiled within thirty days of their return, they shall be
deemed to have been filed within the time prescribed by law, unless the initial
or prior filing was itself time barred.<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">It was also observed by
the Hon'ble Supreme Court that the relief introduced by Section 138 of the NI
Act is in addition to the contemplations in the Indian Penal Code. It is still
open to such a payee recipient of a dishonoured cheque to lodge a First
Information Report with the Police or file a Complaint directly before the
concerned Magistrate. If the payee succeeds in establishing that the inducement
for accepting a cheque which subsequently bounced had occurred where he resides
or ordinarily transacts business, he will not have to suffer the travails of
journeying to the place where the cheque has been dishonoured. All remedies
under the Indian Penal Code and Code of Criminal Procedure are available to
such a payee if he chooses to pursue this course of action, rather than a
Complaint under Section 138 of the NI Act. And of course, he can always file a
suit for recovery wherever the cause of action arises dependent on his
choosing.<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">POSITION
AFTER DASHRATH'S CASE<o:p></o:p></span></b></div>
<span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">The Hon'ble Supreme
Court by way of the afore judgment in <i style="mso-bidi-font-style: normal;">Dashrath's
</i>case<i style="mso-bidi-font-style: normal;"> </i>has put an end to the
perplexity of territorial jurisdiction in cases under 138 of NI Act by clearly
laying down that only return of the Cheque by the drawee bank constitutes the
commission of the offence under section 138 of the Negotiable Instruments Act,
1881 and also indicates the place where the offence has actually been
committed. Hence according to this judgment it is that place, situs or venue
where the drawee bank is located, is the place where judicial inquiry and trial
of the offence must logically be restricted.<o:p></o:p></span><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">WHAT
ABOUT 'MULTI-CITY AT PAR' CHEQUES?<o:p></o:p></span></b></div>
<div style="text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">Nowadays, most of the
cheques are multi-city cheques that can be encashed at par in any branch of the
bank on which it is drawn. The question in such a case would be: <o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0pt 45pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -27pt;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">(a)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">if a multi-city cheque can be presented
in any branch of the bank and if it can be cleared / encashed by that branch
without sending it to the local branch where the drawer of the cheque actually
has his account, does it not mean that dishonour of the cheque can also take
place in the branch of the bank where it was actually presented and which
dishonoured it without referring it to the local branch where the drawer of the
cheque has his account? So where does the dishonour take place? Is it at the
branch where the cheque is presented for clearing (but which cannot clear it
due to non-availability of sufficient funds, etc.), or <o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 45pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -27pt;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">(b)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">is it at the branch where the drawer has
his account (though the cheque is not referred to this branch for clearing)?<o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">However, the Apex Court in Dashrath case did not
clarify its view on the territorial jurisdictions of courts in respect of “AT
PAR” cheques. <span style="mso-spacerun: yes;"> </span>But, within one month
after the<span style="mso-spacerun: yes;"> </span>decision of the Apex Court in <i style="mso-bidi-font-style: normal;">Dashrath's </i>case, a decision of the
Bombay High Court in the case of <i style="mso-bidi-font-style: normal;">Ramanbhai
Mathurbhai Patel v. State of Maharashtra</i> had created the same uncertainty
again in respect of <i style="mso-bidi-font-style: normal;">'multi-city cheques'</i>
payable at par in all branches of the bank. The above decision of the Bombay
High Court was challenged in the Supreme Court vide SLP. This SLP has now been
dismissed by the Supreme Court as withdrawn on 20 March 2015. This means that
the Bombay High Court decision has become final.<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">In its judgment in <i style="mso-bidi-font-style: normal;">Ramanbhai Mathurbhai Patel case,</i> the
Bombay High Court specifically dealt with “AT PAR’ issue. It was held that the
payee of a multi-city cheque, which is payable ‘AT PAR’ in all branches of the
bank, can choose the place where he wants to present the cheque, and thereafter
when it is sent for clearing to the nearest branch of the bank in that city,
the court having jurisdiction over that clearing branch has the territorial
jurisdiction of the cheque bouncing case.<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">The relevant
observations of the Bombay High Court are as under:<o:p></o:p></span></div>
<div style="text-align: justify;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">“It
is thus clear that in the present case by issuing cheques payable at all
branches, the drawer of the cheques had given an option to the banker of payee
to get the cheques cleared from the nearest available branch of bank of the
drawer. It, therefore, follows that the cheques have been dishonoured within
the territorial jurisdiction of Court of Metropolitan Magistrate at Kurla. In
view of judgment of Hon’ble Supreme Court in the matter of Dashrath v. State of
Maharashtra, the learned Metropolitan Magistrate of Kurla Court has
jurisdiction to entertain and decide the complaint in question.”<o:p></o:p></span></i></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">Pursuant to these two
verdicts, there was a lot of confusion surrounding the jurisdiction of court in
case of dishonor of “AT PAR” cheques. The confusion over jurisdiction of courts
in dishonor of 'AT PAR' cheque cases has settled, for the time being by
dismissal of the SLP petition.<o:p></o:p></span></div>
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">CONCLUSION<o:p></o:p></span></b><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">To check piling up of
cheque bounce cases in various courts, the Union Cabinet on 22nd April, 2015
has approved changes in Negotiable Instruments Act to provide for filing of
such cases only in places where cheque is presented. The move is aimed at fast
tracking of resolution of cheque bounce cases while removing the ambiguities on
jurisdictional issues. It is expected that the proposed <span style="mso-spacerun: yes;"> </span>would help trade and commerce in general and
allow lending institutions, including banks, to continue to extend financing to
the economy, without the apprehension of the loan default on account of
bouncing of a cheques.</span><span style="font-family: Calibri;"> </span><span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">The main amendment included is the
stipulation that the offence of rejection/return of cheque <i style="mso-bidi-font-style: normal;">'will be enquired into and tried only by a court'</i> within whose
local jurisdiction the bank branch of the payee, where the payee presents the
cheque for payment is situated. (PIB dated 22/04/2015)<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">The amendments have
been proposed in the backdrop of difficulties expressed by various stakeholders
arising out of the recent legal interpretation of the place of jurisdiction for
filing cases under Section 138 of the NI Act to be the place of drawers' bank
by the Supreme Court.<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;">---------------------------------------------------------------------------------------------------------<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13pt; line-height: 115%;"><o:p> </o:p></span></div>
</div>
kpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.com0Hyderabad, Telangana, India17.385044 78.48667116.9002155 77.841224 17.8698725 79.132118tag:blogger.com,1999:blog-6816737388948619195.post-46658405120202579482014-12-02T22:04:00.000-08:002014-12-02T22:04:31.839-08:00COMPANIES (AMENDMENT) BILL, 2014<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";"> </span></b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="margin-bottom: 13.5pt; text-align: center;">
<b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";">COMPANIES (AMENDMENT) BILL, 2014<a href="file:///C:/Documents%20and%20Settings/Administrator/Desktop/New%20Microsoft%20Office%20Word%20Document%20(4).docx#_ftn1" name="_ftnref1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[1]</span></b></span><!--[endif]--></span></a> <o:p></o:p></span></b></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";">The Union Cabinet, chaired by the Prime Minister Shri
Narendra Modi, on 2<sup>nd</sup> December. 2014 approved the introduction of
the Companies (Amendment) Bill, 2014 in Parliament to make certain amendments
in the Companies Act, 2013. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";"><br />
The Companies Act, 2013 (Act) was notified on 29.8.2013. Out of 470 sections in
the Act, 283 sections and 22 sets of Rules corresponding to such sections have
so far been brought into force. In order to address some issues raised by
stakeholders such as Chartered Accountants and professionals, following
amendments in the Act have been proposed:<br />
<br />
1. Omitting requirement for minimum paid up share capital, and consequential
changes. (For ease of doing business) <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";"><br />
2. Making common seal optional, and consequential changes for authorization for
execution of documents. (For ease of doing business) <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";"><br />
3. Prescribing specific punishment for deposits accepted under the new Act.
This was left out in the Act inadvertently. (To remove an omission) <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";"><br />
4. Prohibiting public inspection of Board resolutions filed in the Registry.
(To meet corporate demand) <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";"><br />
5. Including provision for writing off past losses/depreciation before
declaring dividend for the year. This was missed in the Act but included in the
Rules. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";"><br />
6. Rectifying the requirement of transferring equity shares for which
unclaimed/unpaid dividend has been transferred to the IEPF even though
subsequent dividend(s) has been claimed. (To meet corporate demand) <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";"><br />
7. Enabling provisions to prescribe thresholds beyond which fraud shall be
reported to the Central Government (below the threshold, it will be reported to
the Audit Committee). Disclosures for the latter category also to be made in
the Board’s Report. (Demand of auditors)<br />
<br />
8. Exemption u/s 185 (Loans to Directors) provided for loans to wholly owned
subsidiaries and guarantees/securities on loans taken from banks by
subsidiaries. (This was provided under the Rules but being included in the Act
as a matter of abundant caution).<br />
<br />
9. Empowering Audit Committee to give omnibus approvals for related party transactions
on annual basis. (Align with SEBI policy and increase ease of doing business)<br />
<br />
10. Replacing ‘special resolution’ with ‘ordinary resolution’ for approval of
related party transactions by non-related shareholders. (Meet problems faced by
large stakeholders who are related parties)<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";"><br />
11. Exempt related party transactions between holding companies and wholly
owned subsidiaries from the requirement of approval of non-related
shareholders. (corporate demand)<br />
<br />
12. Bail restrictions to apply only for offence relating to fraud u/s 447.
(Though earlier provision is mitigated, concession is made to Law Ministry
& ED) <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";"><br />
13. Winding Up cases to be heard by 2-member Bench instead of a 3-member Bench.
(Removal of an inadvertent error) <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";"><br />
14. Special Courts to try only offences carrying imprisonment of two years or
more. (To let magistrate try minor violations). <o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";">***<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<br />
<div>
<!--[if !supportFootnotes]--><br clear="all" />
<hr align="left" size="1" width="33%" />
<!--[endif]-->
<div id="ftn1">
<div class="MsoFootnoteText">
<a href="file:///C:/Documents%20and%20Settings/Administrator/Desktop/New%20Microsoft%20Office%20Word%20Document%20(4).docx#_ftnref1" name="_ftn1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></a> <i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;">Press
Information Bureau, Government of India dated
02-December-2014</span></i></div>
</div>
</div>
</div>
kpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.com0Hyderabad, Telangana, India17.385044 78.48667116.9002155 77.841224 17.8698725 79.132118tag:blogger.com,1999:blog-6816737388948619195.post-3787834520419338162014-12-02T01:26:00.000-08:002014-12-02T01:26:18.971-08:00INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) – AN OVERVIEW<div dir="ltr" style="text-align: left;" trbidi="on">
<div align="right" class="MsoNormalCxSpMiddle" style="margin-bottom: 5.0pt; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-layout-grid-align: none; text-align: right; text-autospace: none;">
<b><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;">By K P C Rao, LLB,
FCMA, FCS.,<o:p></o:p></span></i></b></div>
<div align="right" class="MsoNormalCxSpMiddle" style="margin-bottom: 5.0pt; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-layout-grid-align: none; text-align: right; text-autospace: none;">
<b><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;">CMA (USA)., FIPA
(Australia)<o:p></o:p></span></i></b></div>
<div align="right" class="MsoNormalCxSpMiddle" style="margin-bottom: 5.0pt; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-layout-grid-align: none; text-align: right; text-autospace: none;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;">Practicing
Company Secretary<o:p></o:p></span></i></div>
<div align="right" class="MsoNormalCxSpLast" style="margin-bottom: 5.0pt; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-layout-grid-align: none; text-align: right; text-autospace: none;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;">kpcrao.india@gmail.com<o:p></o:p></span></i></div>
<div class="MsoListParagraph" style="background: white; margin-bottom: 5.0pt; margin-left: 22.5pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; tab-stops: 22.5pt; text-align: justify; text-indent: -22.5pt; text-justify: inter-ideograph;">
<!--[if !supportLists]--><b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">I<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal; line-height: normal;">
</span></span></b><!--[endif]--><b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">What is International Financial
Reporting Standards (IFRS)?<o:p></o:p></span></b></div>
<div class="MsoListParagraph" style="background: white; margin-bottom: 5.0pt; margin-left: 22.5pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; tab-stops: 22.5pt; text-align: justify; text-indent: -22.5pt; text-justify: inter-ideograph;">
<b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";"><br /></span></b></div>
<div class="MsoNormalCxSpFirst" style="background: white; margin-bottom: 5pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";">International Financial Reporting
Standards (IFRS) is a set of accounting standards developed by an independent,
not-for-profit organization called the International Accounting Standards Board
(IASB). The goal of IFRS is to provide a global framework for how public
companies prepare and disclose their financial statements. IFRS provides
general guidance for the preparation of financial statements, rather than
setting rules for industry-specific reporting. Having an international standard is especially
important for large companies that have subsidiaries in different countries.
Adopting a single set of world-wide standards will simplify accounting
procedures by allowing a company to use one reporting language throughout. A
single standard will also provide investors and auditors with a cohesive view
of finances. <o:p></o:p></span></div>
<div class="MsoNormalCxSpMiddle" style="background: white; margin-bottom: 5pt; text-align: justify;">
<br /></div>
<div class="MsoNormalCxSpLast" style="background: white; margin-bottom: 5pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";">Currently, over 120 countries permit
or require IFRS for public companies, with more countries expected to
transition to IFRS by 2015. Proponents of IFRS as an international standard
maintain that the cost of implementing IFRS could be offset by the potential
for compliance to improve credit ratings. IFRS is sometimes confused with IAS
(International Accounting Standards), which are older standards that IFRS has
replaced.<o:p></o:p></span></div>
<div class="MsoNormalCxSpLast" style="background: white; margin-bottom: 5pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";"><br /></span></div>
<div class="MsoListParagraph" style="background: white; margin: 0in 0in 5pt 22.5pt; text-align: justify; text-indent: -22.5pt;">
<!--[if !supportLists]--><b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";">II<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;">
</span></span></b><!--[endif]--><b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";">IFRS reporting in India – Proposed Timelines<o:p></o:p></span></b></div>
<div class="MsoListParagraph" style="background: white; margin: 0in 0in 5pt 22.5pt; text-align: justify; text-indent: -22.5pt;">
<b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";"><br /></span></b></div>
<div class="MsoNormalCxSpFirst" style="background: white; margin-bottom: 5pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";">As per pronouncements made by the
Ministry of Corporate Affairs (the ‘Ministry’ or the ‘MCA’) large companies
will be required to start preparing their financial statements under accounting
standards that are converged with International Financial Reporting Standards
(IFRS). IFRSs are increasingly being
viewed as the single set of accounting standards for global capital market
participants. It is still too early to tell whether non-profits, private
companies and governmental entities will eventually adopt IFRS. However, it is
clear that IFRS will play an increasing role in the global business community.<o:p></o:p></span></div>
<div class="MsoNormalCxSpMiddle" style="background: white; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormalCxSpMiddle" style="background: white; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">The Ministry issued a roadmap on
India’s convergence to IFRS. As per this roadmap, there will be two separate
sets of Accounting Standards under Section 211(3C) of the Companies Act, 1956/
Section 133 of the Companies Act, 2013<a href="file:///E:/New%20Projects/ARTICLES%20PUBLISHED-2014/International%20Financial%20Reporting%20Standards%20(IFRS)-%20DECEMBER,%20%202014.docx#_ftn1" name="_ftnref1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-size: 13pt; line-height: 115%;">[1]</span></span><!--[endif]--></span></a>.
The first set would comprise Indian Accounting Standards which are converged
with the IFRSs (‘Converged Standards’) and will be applicable to the specified
class of companies. The second set would comprise existing Indian Accounting
Standards and will be applicable to other companies, including Small and Medium
Companies (SMCs). The Converged Standards would apply in a Phased manner as
indicated below:<o:p></o:p></span></div>
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<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: .95in;" valign="top" width="91">
<div align="center" class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Phase<o:p></o:p></span></i></div>
</td>
<td style="border-left: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-themecolor: text1; mso-border-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 274.5pt;" valign="top" width="366">
<div align="center" class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Companies covered<o:p></o:p></span></i></div>
</td>
<td style="border-left: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-themecolor: text1; mso-border-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 99.9pt;" valign="top" width="133">
<div align="center" class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Opening balance sheet<o:p></o:p></span></i></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: .95in;" valign="top" width="91">
<div class="MsoNormalCxSpLast" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Phase I<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 274.5pt;" valign="top" width="366">
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 115%; margin-bottom: 5.0pt; margin-left: 12.6pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -13.5pt; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">-<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Companies that are part of NSE –
Nifty 50 Index<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 115%; margin-bottom: 5.0pt; margin-left: 12.6pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -13.5pt; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">-<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Companies that are part of BSE
Sensex 30 Index<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 115%; margin-bottom: 5.0pt; margin-left: 12.6pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -13.5pt; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">-<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Companies that have shares or
other securities listed in overseas stock exchanges ; and<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="background: white; line-height: 115%; margin-bottom: 5.0pt; margin-left: 12.6pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -13.5pt; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">-<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Listed and Unlisted Companies with
net worth in excess of Rs 1000 Crores<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 99.9pt;" valign="top" width="133">
<div class="MsoNormalCxSpFirst" style="background: white; line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormalCxSpMiddle" style="background: white; line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormalCxSpMiddle" style="background: white; line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormalCxSpMiddle" style="background: white; line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">1 April; 2011<o:p></o:p></span></div>
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: .95in;" valign="top" width="91">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Phase II<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 274.5pt;" valign="top" width="366">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Listed & Unlisted Companies
with networth in excess of Rs 500 Crores but not exceeding Rs. 1000 Crores.<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 99.9pt;" valign="top" width="133">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">1 April; 2013<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: .95in;" valign="top" width="91">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Phase III<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 274.5pt;" valign="top" width="366">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Listed entities with networth of
Rs 500 Crores or less<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 99.9pt;" valign="top" width="133">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">1 April; 2014<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="3" style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 6.15in;" valign="top" width="590">
<div class="MsoNormalCxSpMiddle" style="background: white; line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Unlisted Companies with net worth
lesser than Rs 500 Crores and Small and Medium sized Companies are exempt.<o:p></o:p></span></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormalCxSpMiddle" style="background: white; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormalCxSpMiddle" style="background: white; margin-bottom: 5.0pt; margin-left: -4.5pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">The
Ministry also issued a separate roadmap for companies in the financial services
sector as below:<o:p></o:p></span></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="4" style="border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 347.4pt;" valign="top" width="463">
<div align="center" class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Class of companies<o:p></o:p></span></i></div>
</td>
<td style="border-left: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-themecolor: text1; mso-border-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 95.4pt;" valign="top" width="127">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Opening
balance sheet<o:p></o:p></span></i></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 347.4pt;" valign="top" width="463">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Insurance Companies<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 95.4pt;" valign="top" width="127">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">April 1, 2012<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td rowspan="5" style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 77.4pt;" valign="top" width="103">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Banking Companies<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 3.75in;" valign="top" width="360">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Scheduled Commercial Banks<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 95.4pt;" valign="top" width="127">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">April 1, 2013<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 14.5pt; mso-yfti-irow: 3;">
<td colspan="2" rowspan="3" style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; height: 14.5pt; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 2.0in;" valign="top" width="192">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Urban Co-operative Banks (USB)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; height: 14.5pt; mso-border-alt: solid black .5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 1.75in;" valign="top" width="168">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Net worth in excess of Rs. 300
crores<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; height: 14.5pt; mso-border-alt: solid black .5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 95.4pt;" valign="top" width="127">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">April 1, 2013<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.55pt; mso-yfti-irow: 4;">
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; height: 15.55pt; mso-border-bottom-alt: windowtext; mso-border-left-alt: black; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-left-themecolor: text1; mso-border-right-alt: black; mso-border-right-themecolor: text1; mso-border-right-themecolor: text1; mso-border-style-alt: solid; mso-border-top-alt: solid windowtext .5pt; mso-border-top-alt: windowtext; mso-border-width-alt: .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.75in;" valign="top" width="168">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Net worth in excess of Rs. 200
crores but not exceeding Rs. 300 crores<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; height: 15.55pt; mso-border-bottom-alt: windowtext; mso-border-left-alt: black; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-left-themecolor: text1; mso-border-right-alt: black; mso-border-right-themecolor: text1; mso-border-right-themecolor: text1; mso-border-style-alt: solid; mso-border-top-alt: solid windowtext .5pt; mso-border-top-alt: windowtext; mso-border-width-alt: .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.4pt;" valign="top" width="127">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">April 1, 2014<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 14.0pt; mso-yfti-irow: 5;">
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; height: 14.0pt; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.75in;" valign="top" width="168">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Net worth not exceeding Rs. 200
crores<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; height: 14.0pt; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.4pt;" valign="top" width="127">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Optional<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="3" style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 3.75in;" valign="top" width="360">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Regional Rular Banks (RRB)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 95.4pt;" valign="top" width="127">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Optional<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td rowspan="6" style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 77.4pt;" valign="top" width="103">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Non-Banking Financial Companies
(NBFC)<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 3.75in;" valign="top" width="360">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Companies which are a part of NSE
– Nifty 50<o:p></o:p></span></div>
</td>
<td rowspan="3" style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 95.4pt;" valign="top" width="127">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">April 1, 2013<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 29.65pt; mso-yfti-irow: 8;">
<td colspan="3" style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; height: 29.65pt; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 3.75in;" valign="top" width="360">
<div class="MsoNormalCxSpMiddle" style="background: white; line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Companies which are a part of BSE
– Sensex 30<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="3" style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 3.75in;" valign="top" width="360">
<div class="MsoNormalCxSpMiddle" style="background: white; line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Companies, whether listed or not,
which have a net worth in excess of Rs. 1,000 crores<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td rowspan="3" style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-alt: solid windowtext .5pt; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 138.1pt;" valign="top" width="184">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">All NBFCs that do not fall in the
above categories<o:p></o:p></span></div>
</td>
<td colspan="2" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-bottom-alt: windowtext; mso-border-left-alt: solid windowtext .5pt; mso-border-left-alt: windowtext; mso-border-right-alt: black; mso-border-right-themecolor: text1; mso-border-right-themecolor: text1; mso-border-style-alt: solid; mso-border-top-alt: black; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; mso-border-top-themecolor: text1; mso-border-width-alt: .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 131.9pt;" valign="top" width="176">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Listed<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 95.4pt;" valign="top" width="127">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">April 1, 2014<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid black .5pt; mso-border-right-themecolor: text1; mso-border-right-themecolor: text1; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 131.9pt;" valign="top" width="176">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Non-listed, which have a net worth
in excess of Rs. 500 crores<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.4pt;" valign="top" width="127">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">April 1, 2014<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-bottom-alt: black; mso-border-bottom-themecolor: text1; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid windowtext .5pt; mso-border-left-alt: windowtext; mso-border-right-alt: black; mso-border-right-themecolor: text1; mso-border-right-themecolor: text1; mso-border-style-alt: solid; mso-border-top-alt: solid windowtext .5pt; mso-border-top-alt: windowtext; mso-border-width-alt: .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 131.9pt;" valign="top" width="176">
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Non-listed, which have a net worth
not exceeding Rs. 500 crores<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 95.4pt;" valign="top" width="127">
<div class="MsoNormalCxSpMiddle" style="background: white; line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Optional<o:p></o:p></span></div>
<div class="MsoNormalCxSpMiddle" style="line-height: 115%; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
</td>
</tr>
<!--[if !supportMisalignedColumns]-->
<tr height="0">
<td style="border: none;" width="103"></td>
<td style="border: none;" width="184"></td>
<td style="border: none;" width="8"></td>
<td style="border: none;" width="168"></td>
<td style="border: none;" width="127"></td>
</tr>
<!--[endif]-->
</tbody></table>
<div class="MsoListParagraph" style="background: white; margin-bottom: 5.0pt; margin-left: 22.5pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -22.5pt; text-justify: inter-ideograph;">
<b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";"><br /></span></b></div>
<div class="MsoListParagraph" style="background: white; margin-bottom: 5.0pt; margin-left: 22.5pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -22.5pt; text-justify: inter-ideograph;">
<!--[if !supportLists]--><b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">III<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal; line-height: normal;">
</span></span></b><!--[endif]--><b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Current Status<o:p></o:p></span></b></div>
<div class="MsoNormal" style="background: white; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">As of date, thirty five Indian Accounting Standards
converged with International Financial Reporting Standards (called ‘IND-AS’)
have been notified by the Ministry and placed on the MCA website. In addition,
the Ministry announced that it would implement the IFRS converged Indian
Accounting Standards in a phased manner after various issues, including tax
related issues, were resolved with the concerned Departments. In February 2011,
the Ministry announced that the date of implementation of the IND AS will be
notified at a later date.<o:p></o:p></span></div>
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<b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";"><br /></span></b></div>
<div class="MsoListParagraph" style="background: white; margin: 0in 0in 5pt 22.5pt; text-align: justify; text-indent: -22.5pt;">
<!--[if !supportLists]--><b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";">IV<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;">
</span></span></b><!--[endif]--><b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";">Conclusion<o:p></o:p></span></b></div>
<div class="MsoNormalCxSpFirst" style="background: white; margin-bottom: 5pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";">Convergence with IFRS has strategic
implications and will require harmonization of internal and external reporting.
Business plans, earnings estimates and management remuneration plans that have
reported earnings as the basis will require revisiting as these are expected to
undergo change due to the impact of IFRS convergence. Managing investor and
market expectations will also be of paramount importance for the management and
would form a critical component of the convergence process.<o:p></o:p></span></div>
<div class="MsoNormalCxSpMiddle" style="background: white; margin-bottom: 5pt; text-align: justify;">
<br /></div>
<div class="MsoNormalCxSpMiddle" style="background: white; margin-bottom: 5pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";">The key to successfully managing
this change is by preparing for it. It is important that companies plan the
transition process and anticipate issues that the business will face on using
the IFRS converged standards.<o:p></o:p></span></div>
<div align="center" class="MsoNormalCxSpMiddle" style="background: white; margin-bottom: 5pt; text-align: center;">
<b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman";">*****<o:p></o:p></span></b></div>
<div class="MsoNormalCxSpMiddle" style="background: white; margin-bottom: 5.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";"> <o:p></o:p></span></div>
<br />
<div>
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<div id="ftn1">
<div class="Sh">
<a href="file:///E:/New%20Projects/ARTICLES%20PUBLISHED-2014/International%20Financial%20Reporting%20Standards%20(IFRS)-%20DECEMBER,%20%202014.docx#_ftnref1" name="_ftn1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-family: "Palatino Linotype","serif"; font-size: 9.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-bidi-font-family: "Palatino Linotype"; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[1]</span></b></span><!--[endif]--></span></a>
Section 133 : <i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><b>Central Government to prescribe
accounting standards:—</b></span></i><!--[if supportFields]><i style='mso-bidi-font-style:
normal'><span style='font-size:11.0pt;font-family:"Times New Roman","serif"'><span
style='mso-element:field-begin'></span>tc " 133. Central Government to
prescribe accounting standards\:—"</span></i><![endif]--><!--[if supportFields]><i
style='mso-bidi-font-style:normal'><span style='font-size:11.0pt;font-family:
"Times New Roman","serif"'><span style='mso-element:field-end'></span></span></i><![endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><o:p></o:p></span></i></div>
<div class="Gn-9-Lead-Ex" style="text-indent: 0in;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;">The
Central Government may prescribe the standards of accounting or any addendum
thereto, as recommended by the Institute of Chartered Accountants of India,
constituted under Section 3 of the Chartered Accountants Act, 1949 (38 of
1949), in consultation with and after examination of the recommendations made
by the National Financial Reporting Authority.<o:p></o:p></span></i></div>
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kpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.com0Hyderabad, Telangana, India17.385044 78.48667116.9002155 77.841224 17.8698725 79.132118tag:blogger.com,1999:blog-6816737388948619195.post-86438423358860290642014-10-03T04:24:00.003-07:002014-10-03T04:24:41.974-07:00CREATION OF CHARGES - CONFLICTING PRIORITIES BETWEEN STATUTORY PAYMENTS & SECURED LENDERS - A CRITIQUE<div dir="ltr" style="text-align: left;" trbidi="on">
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<b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">By K P C Rao, LLB,
FCMA, FCS.,<o:p></o:p></span></i></b></div>
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<b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">CMA (USA), FIPA
(Australia)<o:p></o:p></span></i></b></div>
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<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Practicing
Company Secretary<o:p></o:p></span></i></div>
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<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">kpcrao.india@gmail.com<o:p></o:p></span></i></div>
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<b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Registration of Charges <o:p></o:p></span></i></b></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Part V of the Companies Act 1956
contains provisions related to Registration of the charges (Section 142 to 145)<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftn1" name="_ftnref1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-size: 13pt; line-height: 115%;">[1]</span></span><!--[endif]--></span></a>.
These contain provisions of charge including mortgage, date of notice of
charge, registration of charges, registration in case of debentures,
certificate of registration, register of charges, inspection, penalties, etc. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">These provisions prescribe for the
registration of charges with the Registrar of the Companies and also provide a
list of assets and separate them from the unencumbered assets. Registration of
charge acts as protection to the lenders and creditors, banks and liquidators.
Register of charges is to be maintained by Registrar of Companies as well as the
companies concerned.<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftn2" name="_ftnref2" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-size: 13pt; line-height: 115%;">[2]</span></span><!--[endif]--></span></a><o:p></o:p></span></div>
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<br /></div>
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<b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;"> <i>Consequences
of Non-registration <o:p></o:p></i></span></b></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Non-registration would not prejudice
any contract or obligation for payment of money secured by the charge and where
the charge becomes void for registration, the debt secured becomes immediately
payable. Also a charge on becoming void, no right of lien can be claimed on the
documents of title as they were only ancillary to the charge and were delivered
in pursuant to the charge.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">If a registerable charge is not
registered, the transaction does not become void or debt does not become
irrecoverable but the security created by the charge or mortgage becomes void
against liquidator and creditors.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">It is mandatory for a company to
file the particulars of charge and failure to do so or contravene the
provisions of section 125 is punishable under Section 142 with fine extending
up to rupees Five Thousand for every day
of default.<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftn3" name="_ftnref3" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-size: 13pt; line-height: 115%;">[3]</span></span><!--[endif]--></span></a> <o:p></o:p></span></div>
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<b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Conflicting
Priorities<o:p></o:p></span></i></b></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">There has not been any concerted,
cohesive effort either to think or to codify the law of priorities over last
several decades. Therefore, there are fragments of laws scattered over
different enactments, each of which seems to assert its own preponderance
disregarding other claims or interests. It is rather unfortunate that such a
significant area on secured lending is left to be settled by case law rather
than by well-knit policy of the government. Law-making in this very serious
area has been sporadic and ad-hoc – just limited to achieving a limited result,
rather than comprehensive review of the matter.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">There are several enactments
currently competing for super-priority – Sec. 529A of the Companies Act creates
a pari passu interest between secured lenders and workmen<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftn4" name="_ftnref4" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-size: 13pt; line-height: 115%;">[4]</span></span><!--[endif]--></span></a>.
Sec 11 of Employees' Provident Funds and Miscellaneous Provisions Act, 1952,
provides that in case of insolvency of the employer or winding up of the
company, the amount so due from the employer shall be deemed to be the first
charge on the assets and shall be paid in<o:p></o:p></span></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">priority to other debts. Sales tax
laws of most states, for instance, Sec 38C of Bombay Sales Tax Act, 1959,
provides that subject to the provisions regarding first charge in any Central
Act, any sum of money due under this Act shall be the first charge on the
property. Likewise Sec 14A of Workmen’s Compensation Act, 1923 provides that
any liability accrued with respect of any compensation to be paid by the employer
shall have first charge on the assets, on the other hand, Sec 11 of the Central
Excise Act, 1944 read with Sec142 of the Customs Act 1962 says that the amount
of duty may be recovered by attachment and sale of excisable goods.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">While these are the different laws
that provide for stacking order of priorities, there are several “special
recovery” laws enacted from time to time, such as Recovery of Debt due to Banks
and Financial Institutions Act, 1993, SARFAESI Act, SFC Acts, IDBI Act, IFCI Act,
etc. These special recovery laws either provide the secured lender direct right
to sell (for instance, SARFAESI Act, SFC Acts, IDBI Act, IFCI Act, SIDBI Act),
or empower a DRT to order the sale of assets to meet the claims of the secured
lender.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The question of priority order of
different claims will arise (a) in the event of distribution of liquidation
proceeds in liquidation proceedings; (b) on recovery orders of a body like</span>
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">DRT;
(c) self-help repossession and sale of assets by secured lenders under SARFAESI
Act, IFCI Act, and SFC Act etc.<o:p></o:p></span></div>
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<br /></div>
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<b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Ruling in Central Bank of India vs.
State of Kerala<o:p></o:p></span></i></b></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">In the case of <i>Central Bank of India vs. State of Kerala & others<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftn5" name="_ftnref5" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[5]</span></b></span><!--[endif]--></span></a>,
</i>the Supreme Court in its judgment dated February 27, 2009, in the matter of
priorities between statutory first charges and secured lenders makes the
landscape of conflicting priorities of charges over assets even more complex.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">In this case, the Supreme Court was
concerned with the significant question whether the statutory first charges
created by various central and state laws will prevail over the claims of the
secured lender even while disposing of assets under the DRT law or the SARFAESI
Act. After considering a series of rulings given in the past, such as <i>Bank of Bihar vs. State of Bihar<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftn6" name="_ftnref6" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[6]</span></b></span><!--[endif]--></span></a></i>,
<i>Dena Bank vs. Bhikhabhai Prabhudas Parekh
& Co. and </i>others<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftn7" name="_ftnref7" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-size: 13pt; line-height: 115%;">[7]</span></span><!--[endif]--></span></a>, <i>Central Bank of India vs. Siriguppa Sugars
& Chemicals Ltd<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftn8" name="_ftnref8" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[8]</span></b></span><!--[endif]--></span></a></i>,
<i>State Bank of Bikaner & Jaipur vs.
National Iron & Steel Rolling Corporation and others</i> <a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftn9" name="_ftnref9" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-size: 13pt; line-height: 115%;">[9]</span></span><!--[endif]--></span></a>,
the Supreme Court came to the conclusion that the primacy of statutory first
charges prevails even in case of recovery under the DRT law and the SARFAESI
Act. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Some important principles to decide
the stacking order of priorities that emerge out of the SC ruling are as
follows:<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraph" style="margin-bottom: 6.0pt; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level3 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">a)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;">
</span></span></i><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Central Law prevails over a State Law
– Hence, if a Central Law provides for a statutory first charge, it has to gain
primacy over a conflicting State Law. Sec 38C of the Bombay Sales Tax Act,
clearly states that;<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">“…if any Central Act provides for
first charge, the charge created under Section 38C of Bombay Sales Tax Act is
overridden”<o:p></o:p></span></i></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: 6.0pt; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level3 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">b)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;">
</span></span></i><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">As usual, the doctrine that a later
law prevails over an earlier law applies here too. So, if there are several
central laws providing for priority, the later law will prevail over the
earlier one.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 6.0pt; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level3 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">c)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;">
</span></span></i><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Unless the law clearly provides for
a “first charge”, a mere provision for attachment or recovery as land revenue
does not by itself create a first charge. Based on analysis of the provisions
of the Central Excise Act, in the case of <i>SICOM
vs. Union of India <a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftn10" name="_ftnref10" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[10]</span></b></span><!--[endif]--></span></a></i>
the Supreme Court came to a conclusion that the Excise dues rank only above the
claims of ordinary creditors, and not secured creditors.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level3 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">d)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;"> </span></span></i><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">If
the law creates a first charge, the date of creation of the charge is
irrelevant - that is, the normal rule of priorities based on the date of
creation of the charge is not relevant in case of statutory first charges. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Position of unpaid Government dues
under SARFAESI Act<o:p></o:p></span></i></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">An important provision of the
SARFAESI Act [Sec13(9)] is that in case there are multiple security interests
on an asset, no secured lender may take an action against such asset without
the consent, in writing, of at least 75% of the secured lenders. As per the principles
of statutory first charges, obviously, the government becomes a security interest
holder over an asset to the extent of unpaid taxes. This is automatic, and
without any need for registration of charges or any similar act of creation or
perfection of security <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">interests. The question is, if such
a security interest exists, is a bank or financial institution, as secured
lender, entitled to take action against an asset without consulting the
government as a security interest holder? The word “secured creditor” is
defined in Sec 2(zd) of the Act to mean only such persons who have extended
financial facility against an asset. An unpaid Government is certainly a
security interest holder, but not a secured lender. Hence, Sec. 13(9) does not
seem applicable to need the consent of the government before taking of any
action under sec 13(4). However, surely enough, in light of the statutory first
charge, the distribution of assets upon sale by the secured lender will have to
be first towards the statutory first charge holders, and thereafter, to other
secured lenders.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Illustration<o:p></o:p></span></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Assuming the value of assets of an
entity is </span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">` </span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">10
crores, and the entity has the following<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">out standings:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level2 lfo2; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Courier New"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Dues to banks, holding charges over the
assets: </span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;"> 15 crores<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level2 lfo2; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Courier New"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Excise dues: </span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">1 crore<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level2 lfo2; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Courier New"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Sales-tax dues </span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">1 crore<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level2 lfo2; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Courier New"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">EPF dues </span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">1 crore<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level2 lfo2; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Courier New"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Workmen’s Compensation dues </span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">1 crore<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level2 lfo2; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Courier New"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Workmen’s dues </span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">3 crore<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Assuming the company is not under liquidation, the
order of priorities will run as follows:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Workmen’s Compensation Dues – </span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">1 crores<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Sales
Tax Dues – </span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">1
crores<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Dues to Banks – </span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;"> 8 crores<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Assuming the company is under liquidation, the order
of priorities will run as follows:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l3 level1 lfo4; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">EPF dues –</span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">` </span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">1 crores<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l3 level1 lfo4; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Workmen’s
Compensation Dues – </span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">1
crores<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l3 level1 lfo4; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Sales
Tax Dues – </span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">1
crores<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l3 level1 lfo4; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">4.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Dues
to Banks (pari passu with Workmen’s Dues) – </span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">5.83 crores<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l3 level1 lfo4; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">5.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Workmen’s Dues (pari passu with Bank
Dues) –</span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">1.17 crores<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Ruling in EPF Commissioner Vs
Official Liquidator <o:p></o:p></span></i></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">In another significant judgment (November
8, 2011) in the case of <i>Employees
Provident Fund Commissioner Vs. O.L. of Esskay Pharmaceuticals Limited<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftn11" name="_ftnref11" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[11]</span></b></span><!--[endif]--></span></a></i>, the Supreme Court while allowing the applications
filed by the appellant held that in
terms of Section 530(1), all revenues, taxes, cesses and rates due from the
company to the Central or State Government or to a local authority, all wages
or salary or any employee, in respect of the services rendered to the company
and due for a period not exceeding 4 months, all accrued holiday remuneration,
etc. and all sums due to any employee from provident fund, a pension fund, a
gratuity fund or any other fund for the welfare of the employees maintained by
the company are payable in priority to all other debts. The court also directed
the Official Liquidator appointed by the High Court to deposit the dues of
provident fund payable by the employer within a period of 3 months.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 0in; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">An interesting question
was resolved by the Supreme Court in this case. This sprang up a rather unusual
situation where the Court was required to decide between <i>non obstante</i> clauses contained in two different legislations that
ran somewhat contrary to each other. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Section 529-A of the
Companies Act provides that “notwithstanding anything contained in any other
provision of this Act or any other law for the time being in force”, in case of
a winding up, the workmen’s dues and debts due to secured creditors shall be
paid in priority to all debts<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftn12" name="_ftnref12" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-size: 13pt; line-height: 115%;">[12]</span></span><!--[endif]--></span></a>.
On the other hand, section 11(2) of the Employees Provident Fund and
Miscellaneous Provisions Act, 1952 (EPF Act) provides that amounts due under
that Act from an insolvent employer shall be deemed to be a first charge and be
paid in priority to all other debts “notwithstanding anything contained in any
other law for the time being in force”. The argument made by the company was
that since section 529-A was introduced by an amendment to the Companies Act
and was later in point of time, that should prevail. However, the court refused
to accept that contention.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Of course, after the
amount due from an employer under the EPF Act is paid, the other dues of the
workers will be treated at par with the debts due to secured creditors and
payment thereof will be regulated by the provisions contained in Section 529(1)
read with Section 529(3), 529A and 530 of the Companies Act.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The
Supreme Court’s reasoning was based on principles of statutory interpretation,
and the court was also persuaded by the fact that the EPF Act is a welfare
legislation that must be given importance. <o:p></o:p></span></div>
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<div class="MsoFootnoteText" style="margin-left: 9.0pt; text-align: justify; text-indent: -9.0pt; text-justify: inter-ideograph;">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftnref1" name="_ftn1" title=""><span class="MsoFootnoteReference"><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-size: 11pt; line-height: 115%;">[1]</span></span><!--[endif]--></span></span></a><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> <i>Under The Compnies Act, 2013, Chapter VI
(Sections 77 to 87) deals with the Registration of Charges.These provisions are
yet to be enforced. The New Act specifically provides that any subsequent
registration of a charge shall not prejudice any rights acquired in respect of
any property before the charge is actually registered [Section 77(1)]. <o:p></o:p></i></span></div>
<div class="MsoFootnoteText" style="margin-left: 9.0pt; text-align: justify; text-justify: inter-ideograph;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;">Under this
section the additional period for registration of charge has been increased
from 30 to 300 days. Wherein the charge is not registered within extended days,
then application will be required to be made to the Central Government for extension
in terms of section 87 of the Act as to rectification in register of charges.</span></i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><o:p></o:p></span></div>
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<div class="MsoFootnoteText" style="margin-left: 9.0pt; text-align: justify; text-indent: -9.0pt; text-justify: inter-ideograph;">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftnref2" name="_ftn2" title=""><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><b><span style="font-size: 11pt; line-height: 115%;">[2]</span></b><!--[endif]--></span></i></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> The provisions as to registration of charge and by
whom this application is to be made Under The Compnies Act, 2013 have been made
more clear to indicate that registration of charge may also be allowed if filed
by charge holder, in case debtor company fails to get the same
registered.[Section 78]<o:p></o:p></span></i></div>
</div>
<div id="ftn3">
<div class="MsoFootnoteText" style="margin-left: 9.0pt; text-align: justify; text-indent: -9.0pt; text-justify: inter-ideograph;">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftnref3" name="_ftn3" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[3]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> Under the New Act, 2013 Punishment for
contravention of any provision of
ChapterVI, shall be with fine which shall not be less than one lakh rupees but
which may extend to ten lakh rupees and every officer of the company who is in
default shall be punishable with imprisonment for a term which may extend to
six months or with fine which shall not be less than twenty-five thousand
rupees but which may extend to one lakh rupees, or with both.<o:p></o:p></span></i></div>
</div>
<div id="ftn4">
<div class="MsoFootnoteText" style="margin-left: 9.0pt; text-align: justify; text-indent: -9.0pt; text-justify: inter-ideograph;">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftnref4" name="_ftn4" title=""><span class="MsoFootnoteReference"><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-size: 11pt; line-height: 115%;">[4]</span></span><!--[endif]--></span></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> Section 326 is having the similar provisions dealing
with the </span></i><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt; mso-fareast-font-family: Calibri;">Overriding preferential payments</span></i><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;">
under The Compnies Act, 2013.<o:p></o:p></span></i></div>
</div>
<div id="ftn5">
<div class="MsoFootnoteText" style="line-height: 115%; margin-left: 9.35pt; text-align: justify; text-indent: -9.35pt; text-justify: inter-ideograph;">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftnref5" name="_ftn5" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt; line-height: 115%;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[5]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt; line-height: 115%;"> Central Bank of India vs. State of
Kerala & others ; (2009)4 SCC 94<o:p></o:p></span></i></div>
</div>
<div id="ftn6">
<div class="MsoFootnoteText" style="line-height: 115%; margin-left: 9.35pt; text-align: justify; text-indent: -9.35pt; text-justify: inter-ideograph;">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftnref6" name="_ftn6" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt; line-height: 115%;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[6]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt; line-height: 115%;"> Bank of Bihar vs. State of Bihar;
[(1972) 3 SCC 196]<o:p></o:p></span></i></div>
</div>
<div id="ftn7">
<div class="MsoFootnoteText" style="line-height: 115%; margin-left: 9.35pt; text-align: justify; text-indent: -9.35pt; text-justify: inter-ideograph;">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftnref7" name="_ftn7" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt; line-height: 115%;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[7]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt; line-height: 115%;"> Dena Bank vs. Bhikhabhai Prabhudas
Parekh & Co. and others; [(2000) 5 SCC 694]<o:p></o:p></span></i></div>
</div>
<div id="ftn8">
<div class="MsoFootnoteText" style="line-height: 115%; margin-left: 9.35pt; text-align: justify; text-indent: -9.35pt; text-justify: inter-ideograph;">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftnref8" name="_ftn8" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt; line-height: 115%;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[8]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt; line-height: 115%;"> Central Bank of India vs. Siriguppa
Sugars & Chemicals Ltd; [(2007) 8 SCC 353]<o:p></o:p></span></i></div>
</div>
<div id="ftn9">
<div class="MsoFootnoteText" style="line-height: 115%; margin-left: 9.35pt; text-align: justify; text-indent: -9.35pt; text-justify: inter-ideograph;">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftnref9" name="_ftn9" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt; line-height: 115%;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[9]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt; line-height: 115%;"> State Bank of Bikaner & Jaipur
vs. National Iron & Steel Rolling Corporation and others;[(1995) 2 SCC 19]<o:p></o:p></span></i></div>
</div>
<div id="ftn10">
<div class="MsoFootnoteText" style="line-height: 115%; margin-left: 9.35pt; text-align: justify; text-indent: -9.35pt; text-justify: inter-ideograph;">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftnref10" name="_ftn10" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt; line-height: 115%;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[10]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt; line-height: 115%;"> SICOM vs Union of India; Bom 1, I
(2007) BC 82; 2006 (6) Bom CR 159<o:p></o:p></span></i></div>
</div>
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<div class="MsoFootnoteText" style="line-height: 115%; margin-left: 9.35pt; text-align: justify; text-indent: -9.35pt; text-justify: inter-ideograph;">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftnref11" name="_ftn11" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt; line-height: 115%;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[11]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt; line-height: 115%;"> Employees Provident Fund
Commissioner Vs. O.L. of Esskay Pharmaceuticals Limited; (2011) 10 SCC 727<o:p></o:p></span></i></div>
</div>
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<div class="MsoFootnoteText">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftnref12" name="_ftn12" title=""><span class="MsoFootnoteReference"><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-size: 11pt; line-height: 115%;">[12]</span></span><!--[endif]--></span></span></a><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> <i>Section 326 is having the similar provisions
dealing with the Overriding preferential payments under The Compnies Act, 2013.</i><o:p></o:p></span></div>
</div>
</div>
<!--EndFragment-->
style='> �-- i �� X � ;font-family:
"Times New Roman","serif"'> Jagannath
Ganeshram Agarwala v. Shivnarayan Bhagirath and Ors; AIR 1940 Bombay 247<o:p></o:p><br />
<br />
<div id="ftn11">
<div class="MsoFootnoteText">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftnref11" name="_ftn11" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[11]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> Lachhman Joharimal v. Bapu Khandu and Tukaram
Khandoji (1869) 6 Bombay High Court Reports 241<o:p></o:p></span></i></div>
</div>
<div id="ftn12">
<div class="MsoFootnoteText">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftnref12" name="_ftn12" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[12]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> State Bank of India v. M/s. Indexport Registered ;
1992 AIR 1740, 1992 SCR (2)1031<o:p></o:p></span></i></div>
</div>
<div id="ftn13">
<div class="MsoFootnoteText">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftnref13" name="_ftn13" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[13]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> Jagannath Ganeshram Agarwala v. Shivnarayan
Bhagirath and Ors; AIR 1940 Bombay 247<o:p></o:p></span></i></div>
</div>
<div id="ftn14">
<div class="MsoFootnoteText">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftnref14" name="_ftn14" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[14]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> The Hukumchand Insurance Co. Ltd. v. The Bank of
Baroda & Others; AIR 1977 Kant 204<o:p></o:p></span></i></div>
</div>
<div id="ftn15">
<div class="MsoFootnoteText">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftnref15" name="_ftn15" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[15]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> Transcore v. Union of India & Another; (2008) 1
SCC 125<o:p></o:p></span></i></div>
</div>
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<div id="ftn16">
<div class="MsoFootnoteText">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/CREATION%20OF%20CHARGES%20-%20CONFLICTING%20PRIORITIES%20-%2009-03-2014.docx#_ftnref16" name="_ftn16" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[16]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> A.P. State Financial Corporation v. M/s Gar Re-
Rolling Mills & Another; (1994) 2 SCC 647<o:p></o:p></span></i></div>
</div>
</div>
kpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.com0tag:blogger.com,1999:blog-6816737388948619195.post-24864789216866426752014-10-03T04:21:00.001-07:002014-10-03T04:21:45.088-07:00HOW FAR THE RECOVERY OF DEBTS DUE TO BANKS AND FINANCIAL INSTITUTIONS ACT, 1993 HAS CONTRIBUTED IN DEBT RECOVERY MANAGEMENT IN INDIA- AN OVERVIEW<div dir="ltr" style="text-align: left;" trbidi="on">
<div align="right" class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: right;">
<b><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></i></b></div>
<div align="right" class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: right;">
<b><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;">By Dr. T. Padma<o:p></o:p></span></i></b></div>
<div align="right" class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: right;">
<b><i><span style="font-family: "Times New Roman","serif"; font-size: 9.0pt; line-height: 115%;">MA (Economics), MA (Lit), MA (J
& MC), <o:p></o:p></span></i></b></div>
<div align="right" class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: right;">
<b><i><span style="font-family: "Times New Roman","serif"; font-size: 9.0pt; line-height: 115%;">MSc (Psychology), MBA, PGDCL,
PGADR, <o:p></o:p></span></i></b></div>
<div align="right" class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: right;">
<b><i><span style="font-family: "Times New Roman","serif"; font-size: 9.0pt; line-height: 115%;">PGDHR, LLM, PhD (Law), (LLD)<o:p></o:p></span></i></b></div>
<div align="right" class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: right;">
<b><i><span style="font-family: "Times New Roman","serif";">kethepadma@gmail.com<o:p></o:p></span></i></b></div>
<h1 style="line-height: 115%; margin-left: .25in; mso-list: l3 level1 lfo6; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: windowtext; font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-weight: normal;">I.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-weight: normal; line-height: normal;"> </span></span><!--[endif]--><span style="color: windowtext; font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">BACKGROUND</span><span style="color: windowtext; font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-weight: normal;"><o:p></o:p></span></h1>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: -4.5pt; margin-right: 0in; margin-top: 0in; text-align: justify; text-indent: 22.5pt;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">The 1990s witnessed several
financial and economic crises worldwide, crippling the economies of the
affected countries. In most cases, crises in the financial sector culminate
into non-performing Loans (NPL)). A high level of NPAs in the banking system can
severely affect the economy in many ways: Management and financial resources of
the banking system are diverted to resolution of NPA problems causing an
opportunity loss for more productive use of resources. The banks tend to become
risk averse in making new loans, particularly to small and medium sized
companies. Thus, large scale NPAs when left unattended cause continued economic
and financial degradation in the country. This results in a credit crunch and
generally signals adverse investment climate. This explains why most countries
in the grip of systemic financial and economic crisis have attempted system-wide
clean up of NPAs as a part of restructuring of their banking system. ARCs have
been used worldwide, particularly in Asia, to resolve bad-loan problems, and
have had a varying degree of success. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<br /></div>
<div class="sectionintropara" style="line-height: 115%; margin-left: -4.5pt; text-align: justify; text-indent: 22.5pt;">
<span style="color: windowtext; font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The problem of
recovery from NPA’s, in the Indian banking system, was recognized by the
Government of India (GOI) as far back as in 1997. The Narasimhan Committee
Report mentioned that an important aspect of the continuing reform process was
to reduce the high level of NPA’s as a means of banking sector reform. It was
expected that with a combination of policy and institutional development, new
NPAs in future could be lower. However, the problem of a huge backlog of
existing NPAs remained. This impinged severely on banks performance and their
profitability. The Report envisaged the creation of an "Asset
Reconstitution Fund" to take the NPAs off the lender's books at a
discount. Unlike in some countries where ARCs have been set up post financial
crises and for the purpose of bailout, in India, the GOI proactively initiated
certain measures to control NPAs. In order to regulate and control the NPAs and
quicken recovery, the GOI set up Debt Recovery Tribunals and Debt Appellate
Tribunals under the "<i>Recovery of
Debts Due to Banks and Financial Institutions Act, 1993</i>". As a
corollary to this and to speed up the process of recovery from NPAs, the
SARFAESI Act (<i>Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002</i>) was enacted for regulation of securitization and reconstruction of
financial assets and enforcement of security interest by secured creditors,
including Securitization or Reconstruction Companies (SC/RC). <o:p></o:p></span></div>
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<!--[if !supportLists]--><b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">II.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-weight: normal; line-height: normal;">
</span></span></b><!--[endif]--><b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">CONSTITUTION
AND FUNCTIONING OF THE TRIBUNALS</span></b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;"><o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Recovery of Debts Due to Banks and Financial
Institutions Act, 1993 (hence forth the “Act”) was passed by the Parliament of
India to provide for the Speedy Adjudication of matters relating to recovery of
debts due to banks and Financial
Institutions. The Act provides a
procedure that is distinct from the existing code of Civil Procedure in order
to ensure a Speedy Adjudication. The Act
also provides for the setting up of a separate set of tribunals to hear such
matters and these tribunals are termed as Debt Recovery Tribunals (DRTs). The provisions of the Act do not apply where
the amount of debt due to any bank or financial institution or to a consortium
of banks or financial institution is
less than ten lakh rupees or such other amount, being not less than one lakh
rupees, as the Central Government may, by notification, specify.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">With a view to help financial institutions recover
their bad debts quickly and efficiently, the Government of India has
constituted thirty three Debts Recovery Tribunals and five Debt Recovery
Appellate Tribunals all over the country at Allahabad, Chennai, Delhi, Kolkata
and Mumbai.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">An Appellate Tribunal shall consist of one person to
be called as the Presiding Officer of the Appellate Tribunal. Any person, who is, or has been, or is
qualified to be, a Judge of a High Court; or has been a member of the Indian
Legal Service and has held a post in Grade I of that Service for at least three
years; or has held office as the Presiding Officer of a Tribunal for at least
three years, shall be qualified for appointment as the Presiding Officer of an
Appellate Tribunal.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Presiding Officer of an Appellate Tribunal shall
hold office for a term of five years from the date on which he enters his
office or until he attains the age of sixty five years, whichever is earlier.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Each Debts Recovery Tribunal is presided over by a Presiding
Officer. The Presiding Officer is
generally a judge of the rank of District and Sessions Judge. A Presiding Officer of a Debts Recovery
Tribunal is assisted by a number of officers of other ranks, but none of them
need necessarily have a judicial background.
Therefore, the presiding officer of a Debt Recovery Tribunal is the sole
judicial authority to hear and pass any judicial order.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Each Debts Recovery Tribunal has two Recovery
Officers. The work amongst the Recovery
Officers is allocated by the presiding officer.
Though a recovery officer need not be a judicial Officers, but the order
passed by a Recovery Officer are judicial in nature, and are appealable before
the Presiding Officer of the Tribunal.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">After the enactment of the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interests Act (SARFAESI
Act) borrowers could become first applicants before the Debt Recovery Tribunal. Earlier only lenders could be applicants.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Debts Recovery Tribunals are fully empowered to
pass comprehensive orders like in Civil Courts.
The Tribunals can hear cross suits, counter claims and allow set
offs. However, they cannot hear claims
of damages or deficiency of services or breach of contract or criminal
negligence on the part of the lenders.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Debts Recovery Tribunals can appoint Receivers,
Commissioners, pass exparte orders, ad-interim orders, interim orders apart
from powers to review its own decision and hear appeals against orders passed
by the Recovery Officers of the Tribunals. The recording of evidence by Debts
Recovery Tribunals is somewhat unique.
All evidences are taken by way of an affidavit. Cross examination is allowed only on request
by the defense and that too if the Tribunal feels that such a cross examination
is in the interest of justice. Frivolous
cross examination may be denied. There
are a number of other unique features in the proceedings before the Debts
Recovery Tribunals all aimed at expediting the proceedings.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">As per Section 2(g) of the Act, “Debt” means any
liability (inclusive of interest) which is claimed alleged as due from any
person by a bank or a financial institution or by a consortium of banks or
financial institutions during the course of any business activity undertaken by
the bank or the financial institution or the consortium under any law for the
time being in force, in cash or otherwise, whether secured or unsecured, or
assigned or whether payable under a decree or order of any civil court or any
arbitration award or otherwise or under a mortgagee and subsisting on, and
legally recoverable on, the date of the application.<o:p></o:p></span></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Under
Section 2(h) “Financial Institution” means:<o:p></o:p></span></div>
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<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;">
</span>i)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;">
</span></span></i><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">A
public financial institution within the meaning of Section 4A of the Companies
Act, 1956;<o:p></o:p></span></i></div>
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<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;">
</span>ii)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;">
</span></span></i><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Such
other institution as the Central Government may, having regard to its business
activity and the area of its operation in India, by notification, specify.<o:p></o:p></span></i></div>
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<br /></div>
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<b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">III.
RECOVERY PROCESS <i><o:p></o:p></i></span></b></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Section 19 of the Act
provides that 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 the defendant, or each of the defendants where
there are more than one, at the time of making the application, actually and
voluntarily resides, or carries on business or personally works for gain; or
any of the defendants, where there are more than one, at the time of making the
application, actually and voluntarily resides, or carries on business, or
personally works for gain; or the cause of action, wholly or in part, arises.<o:p></o:p></span></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Further, When a Bank or
financial institution, which has to recover its debt from any person, has filed
an application to the Tribunal and against the same person and another bank or
financial institution also has a claim to recover its debt, then, the later
bank or financial institution may join the applicant bank or financial
institution at any stage of the proceedings, before the final order is passed
by making an application to that Tribunal.
<o:p></o:p></span></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Every application has
to be made in such form and be accompanied by such documents or other evidence
and by such fee has may be prescribed. <o:p></o:p></span></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">On receipt of application,
the Tribunal shall issue summons requiring the defendant to show cause within
30 days of the service of summons as to why the relief prayed for should not be
granted. The defendant shall, at or
before the first hearing or within such time as the Tribunal may permit, present
a written statement of his defence.
Where the defendant claims to set off against the applicant’s demand any
ascertained sum of money legally recoverable by him from such applicant the
defendant may, at the first hearing of the application, but not afterwards
unless permitted by the Tribunal, present a written statement containing the
particulars of the debt sought to be set- off.
The written statement shall have the same effect as a plaint in a cross
suit so as to enable the Tribunal to pass a final order in respect of both the
original claim and of the set off. The
defendant in an application may, in addition to his right of pleading a set
off, set up, by way of counter-claim against claim of the applicant, any right
or claim in respect of a cause of action accruing to the defendant against
applicant either before or after the filling of the application but before the
defendant has delivered his defense or before the time limit for delivering his
defence has expired, whether such counter-claim is in the nature of a claim for
damages or not.<o:p></o:p></span></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Tribunal may, after
giving the applicant and the defendant an opportunity of being heard, pass such
orders on the application as it deems fit to meet the ends of justice. A counter claim shall have the same effect as
a cross suit so as to enable the Tribunal to pass a final order on the same
application, both on the original claim and on the counter-claim. The applicant
shall be at liberty to file a written statement in answer to the counterclaim
of the defendant within such period as may be fixed by the Tribunal.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Where a defendant sets
up a counterclaim and the applicant contents that the claim thereby raised
ought not be disposed of by way of a counter-claim but in an independent action,
the applicant may, at any time before issues are settled in relation to the
counterclaim, apply to the Tribunal for an order that such counter-claim may be
excluded, and the Tribunal may, on hearing of such application, make such order
has it thinks fit. <o:p></o:p></span></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Tribunal may make
an interim order (whether by way of injunction or stay or attachment) against
the defendant to debar him from
transferring, alienating or otherwise dealing with, or disposing of, any
property and assets belonging to him without the prior permission of the
Tribunal.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The objective behind
empowering the Tribunals for issuing such a wide verity of interim orders is to
prevent unscrupulous persons from stripping the properties and/or encumbering
them in such a manner so as to defeat the lenders attempt at recovering the
amounts advanced by them. The Tribunals
can get the property vacated, attach rents, and appoint Commissioner to take
inventory of the property and the stocks.
The Tribunals can go ahead and attach Bank Accounts, seal lockers and
much more.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">However, there are a
number of judgments of the Supreme Court and the High Court which have laid
down conditions which must be followed by the Tribunals before passing orders
which have pernicious effects on current and running business
establishments. Therefore, even though
the Tribunals can pass orders of wide variety, they are slow and cautious while
passing such orders. Generally, they
would first listen to the defendants before the orders are passed.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Where at any stage of
the proceedings, the Tribunal is satisfied by affidavit or otherwise, that the
defendant, with intent to obstruct or delay or frustrate the execution of any
order for recovery of the debt that may be passed against him,<o:p></o:p></span></div>
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<br /></div>
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<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span>i)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">is
about to dispose of the whole or any part of his property, or<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span>ii)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">is
about to remove the whole or any part of his property from the local limits of
the jurisdiction of the Tribunal; or<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span>iii)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">is
likely to cause any damage or mischief to the property or effect its value by
misuse or creating third party interest.<o:p></o:p></span></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Tribunal may direct
the defendant, within a time fixed by the Tribunal, either to furnish security,
in such sum as may be specified in the order, or to appear and show-cause why
he should not furnish security.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify; text-indent: .25in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify; text-indent: .25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Where the defendant fails
to show cause why he should not furnish security, or fails to furnish the security required, within the time
fixed by the Tribunal, the Tribunal may order the attachment of the whole or
such portion of the properties claimed by the applicant as the properties
secured is his favour or otherwise owned by the defendant as appears sufficient
to satisfy any certificate for the recovery of debt. The applicant shall,
unless the Tribunal otherwise directs, specify the property required to be
attached and estimate the value thereof.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify; text-indent: .25in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify; text-indent: .25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Tribunal may also
in the order direct the conditional attachment of the whole or any portion of
the property. In case of disobedience of
an order made by the Tribunal or breach of any of the terms on which the order
was made, the Tribunal may order the properties of the person to be attached
and may also order such person guilty of such disobedience or breach be
detained in the civil prison for a term not exceeding three months, unless in
the meantime the Tribunal directs his release.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Where it appears to the Tribunal to be
just and convenient, it may, by order-<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify; text-indent: .5in;">
<br /></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l5 level1 lfo8; tab-stops: 209.25pt; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(a)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Appoint a receiver of any property,
whether before or after the grant of certificate for recovery of debt;<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l5 level1 lfo8; tab-stops: 209.25pt; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(b)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Remove any person from the possession or
custody of the property.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l5 level1 lfo8; tab-stops: 209.25pt; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(c)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Commit the same property to the
possession, custody or management of the receiver;<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l5 level1 lfo8; tab-stops: 209.25pt; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(d)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Confer upon the receiver all such
powers, as to bringing and defending suits in the courts, or filing and
defending applications before the Tribunal and for the realization, management,
protection, preservation and improvement of the property, the collection of
rents and profits thereof, the application and disposal of such rents and
profits, and the execution of documents as the owner himself has, or such of those
powers as the Tribunal thinks fir; and<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l5 level1 lfo8; tab-stops: 209.25pt; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(e)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Appoint a Commissioner for preparation
of an inventory of the properties of the defendant or for the sale thereof.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .75in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; tab-stops: 209.25pt; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Embargo on High Courts
not to interfere with Debt recovery proceedings <o:p></o:p></span></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">In order to give relief to the Banks and
Financial Institutions, the Supreme Court has asked the high courts not to
interfere with the debt recovery proceedings initiated against defaulters,
upholding the right of lenders to recover their dues in the case of <i>United
Bank of India Vs. Satyawati Tondon<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/Debt%20Recovery%20Management-Corporate%20Lender-11.03.2014.docx#_ftn1" name="_ftnref1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[1]</span></b></span><!--[endif]--></span></a>
<o:p></o:p></i></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;"><br />
<i>“All alternatives available to the
borrowers should be exercised before the high courts exercise their discretion
to interfere with recovery proceedings”</i>, said a bench comprising justices
GS Singhvi and AK Ganguly, setting aside an Allahabad High Court order.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The high court had, in its interim
order, stayed the recovery proceedings initiated by the United Bank of India on
the plea of the guarantor of a loan. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;"><br />
<i> “It is a matter of serious concern
that despite repeated pronouncement of this court (the Supreme Court), the high
courts continue to ignore the availability of statutory remedies under the DRT
Act (Recovery of Debts Due to Banks and Financial Institutions Act, 1993) and
SARFAESI Act (Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002) and exercise jurisdiction under
Article 226 for passing orders, which have serious adverse impact on the right
of banks and other financial institutions to recover their dues,”</i> the court
said. <br />
<br />
<i>“We hope and trust that in future the
high courts will exercise their discretion in such matters with greater
caution, care and circumspection,” </i>it said. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;"><br />
<i>“In cases relating to recovery of the
dues of banks, financial institutions and secured creditors, stay granted by
the high court would have serious adverse impact on the financial health of
such bodies/institutions, which ultimately prove detrimental to the economy of
the nation. Therefore, the high court should be extremely careful and
circumspect in exercising its discretion to grant stay in such matters,</i>”
the court further said. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: -4.5pt; margin-right: 0in; margin-top: 0in; text-align: justify; text-indent: 22.5pt;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Stay
of an action initiated by the state and its agencies for recovery of taxes,
seriously impedes execution of projects of public importance and disables them
from discharging their constitutional and legal obligations towards the
citizens, the order said. <br />
<!--[if !supportLineBreakNewLine]--><br />
<!--[endif]--><o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; text-align: justify;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">“We are conscious that the powers
conferred upon the high court under Article 226 of the Constitution to issue to
any person or authority, including in appropriate cases, any government,
directions, orders or writs including the five prerogative writs for the
enforcement of any of the rights conferred by Part III or for any other purpose
are very wide and there is no express limitation on exercise of that power but,
at the same time, we cannot be oblivious of the rules of self-imposed restraint
evolved by apex court which every High Court is bound to keep in view while
exercising power under article 226 of the constitution,” the judges said. <o:p></o:p></span></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">In this case, the Union Bank had
extended a term loan of </span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`
</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">22,50,000
to Pawan Color Lab in November 2004. Satyawati Tondon had furnished a guarantee
for repayment of the loan and mortgaged her property situated in Allahabad in
UP by deposit of title deeds. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">After one year and six months, the bank
sent a letter to the company and the guarantor pointing out that repayment of
loan was highly irregular. It issued notices to both the borrower and the
guarantor under section 13(4) of the SARFAESI Act. <br />
Faced with the imminent threat of losing her mortgaged property, Ms Tondon
challenged the decision of the bank. Turning down the plea of the bank that the
alternative remedy was available to the petitioner under section 17 of the
SARFAESI Act, the high court passed the order restraining the lender from
taking action. The order was challenged by the bank in the Supreme Court. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Ruling in favour of the bank’s plea, the
apex court said the high court order had the effect of defeating the very
object of the legislation enacted by Parliament for ensuring that there are no
unwarranted impediments in the recovery of the debts due to banks, financial
institutions and secured creditors.<span style="color: red;"><o:p></o:p></span></span></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .75in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; tab-stops: 209.25pt; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; tab-stops: 209.25pt; text-align: justify; text-indent: -.25in;">
<b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">VI.
MODES OF RECOVERY</span></b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;"><o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify; text-indent: .25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">As per the provisions
of section 25, the Recovery Officer shall, on receipt of the copy of the
certificate under sub-section (7) of Section 19, proceed to recover the amount
of debt specified in the certificate by one or more of the following modes,
namely.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify;">
<br /></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l4 level1 lfo2; tab-stops: 209.25pt; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(a)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Attachment and sale of the movable or
immovable property of the defendant;<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l4 level1 lfo2; tab-stops: 209.25pt; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(b)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Arrest of the defendant and his
detention in prison;<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l4 level1 lfo2; tab-stops: 209.25pt; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(c)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Appointing a receiver for the management
of the movable or immovable properties of the defendant.<span style="color: red;"><o:p></o:p></span></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .75in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; tab-stops: 209.25pt; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify; text-indent: .25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Where the certificate
of recovery is issued against a company registered under the Companies Act,
1956, the Tribunal may order the sale proceeds of the company to be distributed
among its secured creditors in accordance with the provisions of Section 529A
of the Companies Act, 1956 and to pay the surplus, if any to the company.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify; text-indent: .25in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify; text-indent: .25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The defendant cannot
dispute before the Recovery Officer the correctness of the amount specified in
the certificate, and no objection to the certificate on any other ground, shall
also be entertained by the Recovery Officer.
However, the Presiding Officer shall have power to withdraw the
certificate or correct any clerical or arithmetical mistake in the certificate
by sending an intimation to the Recovery Officer. The Presiding Officer shall intimate to the
Recovery Officer any order withdrawing or cancelling a certificate or any
correction made by him.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify; text-indent: .25in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify; text-indent: .25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Tribunal may, after
giving the applicant and the defendant an opportunity of being heard, pass such
interim or final order, including the order for payment of interest from date
on or before which payment of the amount is found due upto the date of
realization or actual payment, on the application as it thinks fit to meet the
ends of justice.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify; text-indent: .25in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify; text-indent: .25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Tribunal shall send
a copy of every order passed by it to the applicant and the defendant. The presiding Officer shall issue a
certificate under his signature on the basis of the order of the Tribunal, to
the Recovery Officer for recovery of the amount of debt specified in the
certificate. Where the Tribunal, which
has issued a certificate of recovery, is satisfied that the property is
situated within the local limits of the jurisdiction two or more Tribunals, it
may send the copies of the certificate of recovery for execution to such other
Tribunals where the property is situated.
Provided that in case where the Tribunal to which the certificate of
recovery is sent for execution finds that it has no jurisdiction to comply with
the certificate of recovery, it shall return the same to the Tribunal which has
issued it.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify; text-indent: .25in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify; text-indent: .25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The application made to
the Tribunal shall be dealt with by it as expeditiously as possible and
Endeavour shall be made by it to dispose of the application finally within one
hundred and eighty days from the date or receipt of the application. The Tribunal may make such orders and give
such direction as may be necessary or expedient to give effect to its orders or
to prevent abuse of its process or to secure the ends of justice. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify; text-indent: .25in;">
<br /></div>
<div class="MsoNormal" style="background: white; margin: 0in 0in 0.0001pt 0.25in; text-align: justify;">
<b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; mso-fareast-font-family: "Times New Roman"; mso-font-kerning: 18.0pt;">“Banks can't use cops to evict
defaulters- use of police force can only be authorized by a magistrate”<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/Debt%20Recovery%20Management-Corporate%20Lender-11.03.2014.docx#_ftn2" name="_ftnref2" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[2]</span></b></span><!--[endif]--></span></a><o:p></o:p></span></i></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in;">
<span style="font-family: 'Times New Roman', serif; font-size: 13pt; line-height: 115%;">In a landmark ruling that
will prevent banks from forcefully dispossessing a flat owner who has mortgaged
the property, the Bombay high court (a bench of Justices D Y Chandrachud and
Anoop Mohta) has ruled that "secured" creditors, like banks, cannot
unilaterally use police machinery to evict the defaulting borrower. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in;">
<span style="font-family: 'Times New Roman', serif; font-size: 13pt; line-height: 115%;">In a case where State Bank
of India had, taken possession of residential premises in Suneeta Apartments on
Ridge Road, Malabar Hill, the bench said: "<i>No secured creditor can, by seeking assistance of police machinery,
unilaterally carry out the eviction of the borrower and take over forcible
possession of the secured asset."</i> The high court did not hold that the
SBI had acted unlawfully, but remanded the matter to a tribunal which would decide
this point based on evidence. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-indent: .25in;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-indent: .25in;">
<span style="font-family: 'Times New Roman', serif; font-size: 13pt; line-height: 115%;">"<i>Our legal system is
governed by the rule of law,"</i> reminded the court tersely in the
judgment dictated by Justice Chandrachud. The law governing the interests of
creditors and borrowers has several checks in place. One provision states that
the bank may request the chief metropolitan magistrate in writing to take
possession. Section 14 of the Securitization and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002, stipulates that the
magistrate takes or <i>"authorizes the
use of police force if, in his opinion, it is necessary"</i>. The HC said
that "<i>though Section 14 is an
enabling provision, it will be wholly impermissible for a secured creditor to
take the law into his own hands..."</i>. "If the borrower does not
hand over possession voluntarily after a notice to recover possession has been
served on him, the only remedy open to the bank is to seek an appropriate order
from the chief metropolitan magistrate or the district magistrate,"
observed the judges. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span style="font-family: 'Times New Roman', serif; font-size: 13pt; line-height: 115%;">Facts of the Case<o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify; text-indent: .25in;">
<span style="font-family: 'Times New Roman', serif; font-size: 13pt; line-height: 115%;">A privately held company Clarity Gold was the borrower. Its
director, Ganga Gupta, was the guarantor of her Malabar Hill flat. The SBI had
in July 2010, served a possession notice to the company which was received by
its accounts manager. Gupta said 20 policemen had barged in, along with bank
officers, to take forcible possession of the flat without court orders and
after an "invalid" notice. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-indent: .25in;">
<span style="font-family: 'Times New Roman', serif; font-size: 13pt; line-height: 115%;">But SBI denied the possession was forcibly taken. It argued that
"the mere fact that the bank had addressed letters to the police
authorities and sought police assistance does not give rise to the conclusion
that possession was forcibly taken". <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-indent: .25in;">
<span style="font-family: 'Times New Roman', serif; font-size: 13pt; line-height: 115%;">The debt recovery tribunal, before which the dispute first landed,
held the bank had used unlawful force to take possession of the flat. It
directed the bank to return the flat, but only after holding that the bank
notice was "improperly issued". When the bank went in appeal, the
appellate tribunal held that the bank's notice was valid. The high court agreed
with the appellate tribunal. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-indent: .25in;">
<span style="font-family: 'Times New Roman', serif; font-size: 13pt; line-height: 115%;">However, the appellate tribunal had given no finding on whether
the possession was taken forcefully. The HC has now remanded the matter to the
appellate tribunal to verify, after hearing both the sides again, if the bank had
used police force unlawfully. The bank, which made an inventory of all the
objects in the flat, said it was open for the Guptas to collect them any time. <o:p></o:p></span></div>
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<br /></div>
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<b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">V<i>. </i>RIGHT OF APPEAL<i><o:p></o:p></i></span></b></div>
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<br /></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l7 level1 lfo7; tab-stops: 209.25pt; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(1)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-weight: normal; line-height: normal;"> </span></span></i></b><!--[endif]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Power
of the Tribunal / Appellate Tribunal under code of civil procedure, 1908:<o:p></o:p></span></i></b></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Tribunal and the<b> </b>Appellate<b> </b>Tribunal shall not be bound by the procedure laid down by the code
of Civil Procedure, 1908, but shall be guided by the principles of nature
justice. The proceedings before the Debt Recovery Appellate Tribunal Is governed
by Debt Recovery Appellate Tribunal (procedure) Rules, 1993. In addition, Section 22 of the Act permits
the Tribunal and the Appellate Tribunal to regulate their own procedure
including the places at which they shall have their sittings.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Tribunal and
Appellate Tribunal shall have, for the purposes of discharging their functions
under this Act, the same powers as are vested in a civil court under the code
of Civil Procedure, 1908, while trying a suit, in respect of the following
matters, namely:<o:p></o:p></span></div>
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<br /></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .75in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l9 level1 lfo3; tab-stops: 209.25pt; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">a)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Summoning
and enforcing the attendance of any person and examining him on oath.<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">b)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Requiring
the discovery and production of documents;<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">c)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Receiving
evidence on affidavits;<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">d)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Issuing
commissions for the examination of witnesses of documents,<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">e)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Reviewing
its decisions;<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">f)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Dismissing
an application for default or deciding it ex parte;<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">g)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Setting
aside any order of dismissal of any application for default or any order passed
by it ex parte;<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">h)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Any
other matter which may be prescribed.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Any proceeding before
the Tribunal or the Appellate Tribunal shall be deemed to be a judicial
proceeding within the meaning of sections 193 and 228, and for the purposes of
Section 196, of the India Penal Code, 1860 and the Tribunal or the Appellate
Tribunal shall be deemed to be a civil court for all the purposes of section
195 and Chapter XXVI of the Code of Criminal Procedure, 1973.<o:p></o:p></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: .25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">The
expression authority is often synonymous with power. It is the right to command
or act. While discharging the duties, the Tribunal can exercise its implied
authority to meet the ends of justice. The tribunal can exercise the inherent
power to make such orders and give such directions as may be necessary to give
effects to the orders or to prevent the abuse of its process. In the case <i>of
Rama Lakshman Glass Pvt. Ltd v/s State of Bihar<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/Debt%20Recovery%20Management-Corporate%20Lender-11.03.2014.docx#_ftn3" name="_ftnref3" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[3]</span></b></span><!--[endif]--></span></a></i>,
it was held that having submitted to the jurisdiction of the tribunal and
having taken the chance of judgment later on the jurisdiction of the tribunal
can not be challenged in the writ petition. The High Court of Andhra Pradesh
held in the case of <i>Singareni Collieries Ltd. v/s State of Hyderabad and
Others<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/Debt%20Recovery%20Management-Corporate%20Lender-11.03.2014.docx#_ftn4" name="_ftnref4" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[4]</span></b></span><!--[endif]--></span></a></i>,
that the tribunal can pass any appropriate order including garnishee order
though it is specifically not provided in the Act. And in the same way the
Supreme Court in <i>ICICI Ltd. v/s Grapco </i></span><a href="http://www.articlesbase.com/bankruptcy-articles/debt-recovery-act-of-india-2060850.html" target="_new"><i><span style="color: windowtext; font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman"; text-decoration: none; text-underline: none;">Industries</span></i></a><a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/Debt%20Recovery%20Management-Corporate%20Lender-11.03.2014.docx#_ftn5" name="_ftnref5" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[5]</span></span><!--[endif]--></span></a><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">, held that depending on the
circumstances of each case the tribunal can grant an interim ex parte order of
injunction or a stay for a short duration but such order can not be granted as
a matter of routine.<o:p></o:p></span></div>
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<!--[if !supportLists]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(2)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-weight: normal; line-height: normal;"> </span></span></i></b><!--[endif]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Who
can Approach the DRAT <o:p></o:p></span></i></b></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Section 20 of the Act
provides that any person aggrieved by an order made, or deemed to have been
made, by a Tribunal under this Act, may prefer an appeal to an Appellate
Tribunal having jurisdiction in the matter. Every appeal shall be filed within
a period of forty-five days from the date on which a copy of the order made, or
deemed to have been made, by the Tribunal is received by him and it shall be in
such form and accompanied by such fee as may be prescribed. Provided that the Appellate Tribunal may
entertain an appeal after the expiry if the side period of forty-five days if
it satisfied that there was sufficient cause for not filling it within that
period. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify; text-indent: .25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">On receipt of an
appeal, the Appellate<b> </b>Tribunal may,
after giving the parties to the appeal, an opportunity of being heard, pass
such orders thereon as it think fit, confirming, modifying or setting aside the
order appealed against.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;"> The Appellate<b> </b>Tribunal shall send a copy of every order, made by it to the
parties to the appeal and to the concerned Tribunal. The appeal filed before the Appellate<b> </b>Tribunal shall be dealt with by it as
expeditiously as possible and Endeavour shall be made by it to dispose of the
appeal finally within six months from the date of receipt of the appeal.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Where an appeal is
preferred by any person from whom the amount of debt is due to a Bank or a
Financial Institution or a consortium of Banks or Financial Institution, such
appeal shall not be entertained by the Appellate<b> </b>Tribunal unless such person has deposited with the Appellate<b> </b>Tribunal seventy-five percent of the
amount of debt so due from him as determined by the Tribunal. Provided that the Appellate<b> </b>Tribunal may, for reasons to be
recorded in writing, waive or reduce the amount to be deposited.<o:p></o:p></span></div>
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<br /></div>
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<b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">VII.
NON-LEGAL REMEDIES<o:p></o:p></span></b></div>
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<br /></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo9; tab-stops: 209.25pt; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(1)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-weight: normal; line-height: normal;"> </span></span></i></b><!--[endif]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Compromise
through Negotiations<o:p></o:p></span></i></b></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify; text-indent: .25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Reduction of
non-performing assets in banks can be achieved through a compromise strategy
where the objective of the genuine borrower is to optimise his gain having
suffered a loss in the Unit’s working, and that of the banker to minimise his
loss. The ultimate strike-point is
possible only through negotiation. Compromise, has a bad-debt reduction
strategy needs to be wielded deftly. When a compromise is arrived at, certain
amount of sacrifice in the form of write off and/or waiver of uncharged
interest would be inevitable. Some feel
that in a compromise, if one can recover
the book outstanding, it would be adequate because it would not entail a write-off
but would only involve waiver of the uncharged interest component, which is
after all notional. This is one
extreme. While others feel that
sacrificing a claim is more akin to sin and therefore, one has to stay hard and
fast in negotiations. This is the other
extreme. While others feel that
sacrificing a claim is more akin to sin and therefore, one has to stay hard and
fast in negotiations. This is the other
extreme.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify; text-indent: .25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Compromise should be
wielded as a strategy and not sold as a product. However, compromise can be marketed as a
product prudently in cases where the asset back-up is questionable and
prospects for recovery out of the borrower’s own means are remote.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify; text-indent: .25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Thus, it is necessary
to determine the approach in the light of analysis of factors connected to each
case. There are only two approaches
relevant:<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify;">
<br /></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l6 level1 lfo5; tab-stops: 209.25pt; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(a)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Recovering as much as possible by
negotiation (or in other words recovery
optimization) – this is possible when the banker can negotiate from a
position of strength, and<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l6 level1 lfo5; tab-stops: 209.25pt; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(b)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Clearing the problem loan in order to
cleanse the portfolio – this is essential when the banker does not negotiate
from a position of strength.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify;">
<br /></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo9; tab-stops: 209.25pt; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(2)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-weight: normal; line-height: normal;"> </span></span></i></b><!--[endif]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Compromise
through Lok Adalats<o:p></o:p></span></i></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify; text-indent: .25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Reserve Bank has
advised all scheduled commercial banks and all India financial institutions
that they can take up the matter where out standings are </span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">.10 lakhs and above
with Lok Adalats organized by the Debt Recovery Tribunal/Debt Recovery
Appellate<b> </b>Tribunals. The advice was issued to clarify the doubt
raised by banks whether, in view of the limitation of ceiling of </span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;"> 5 lakhs for disposal
by Lok Adalats, they should participate in the Lok Adalats convened by various
DRTs/DRTs for resolving cases involving </span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">10 lakhs and above. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; tab-stops: 209.25pt; text-align: justify;">
<br /></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: .25in; mso-add-space: auto; mso-list: l1 level1 lfo9; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(3)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-weight: normal; line-height: normal;"> </span></span></i></b><!--[endif]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Corporate
Debt Restructuring (CDR)<o:p></o:p></span></i></b></div>
<div class="MsoListParagraphCxSpMiddle" style="text-align: justify;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; mso-add-space: auto; text-align: justify; text-indent: .25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Based on the experience in
countries like the UK, Thailand, Korea, Malaysia, etc. of putting in place an
institutional mechanism for restructuring of corporate debt and need for a
similar mechanism in India, a Corporate Debt Restructuring (CDR) System was
evolved and detailed guidelines were issued by Reserve bank of India (RBI) on
August 23, 2001 for implementation by financial institutions and banks. The
objectives of the CDR mechanism as enunciated in the scheme evolved by RBI, the
Central Bank of the Country, are given below:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="text-align: justify;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l2 level1 lfo11; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(a)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">To ensure timely and transparent
mechanism for restructuring corporate debts viable entities facing problems,
for the benefit of all concerned.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l2 level1 lfo11; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(b)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">To aim at preserving viable corporates
that are affected by certain internal and external factors; and<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l2 level1 lfo11; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(c)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">To minimise the losses to the creditors
and other stake holders through an orderly and co-ordinated restructuring
programme.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="text-align: justify;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; mso-add-space: auto; text-align: justify; text-indent: .25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Corporate Debt Restructuring
(CDR) Mechanism is a voluntary non-statutory system based on Debtor-Creditor
Agreement (DCA) and Inter-Creditor Agreement (ICA) and the principle of
approvals by super-majority of 75% creditors (by value) which makes it binding
on the remaining 25% to fall in line with the majority decision. The CDR
Mechanism covers only multiple banking accounts, syndication/consortium
accounts, where all banks and institutions together have an outstanding
aggregate exposure of Rs.100 million and above. It covers all categories of
assets in the books of member-creditors classified in terms of RBI's prudential
asset classification standards. Even cases filed in Debt Recovery
Tribunals/Bureau of Industrial and Financial Reconstruction/and other
suit-filed cases are eligible for restructuring under CDR. The cases of
restructuring of standard and sub-standard class of assets are covered in
Category-I, while cases of doubtful assets are covered under Category-II.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; mso-add-space: auto; text-align: justify;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; mso-add-space: auto; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Reference to CDR Mechanism may be triggered by:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="text-align: justify;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l10 level1 lfo10; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(a)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Any or more of the creditors having
minimum 20% share in either working capital or term finance, or<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l10 level1 lfo10; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(b)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">By the concerned corporate, if supported
by a bank/FI having minimum 20% share as above.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 0in; mso-add-space: auto; text-align: justify; text-indent: .25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">It may be emphasized here that, in
no case, the requests of any corporate indulging in fraud or misfeasance, even
in a single bank, can be considered for restructuring under CDR System.
However, Core Group, after reviewing the reasons for classification of the
borrower as wilful defaulter, may consider admission of exceptional cases for
restructuring after satisfying itself that the borrower would be in a position
to rectify the wilful default provided he is granted an opportunity under CDR
mechanism.<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: center; text-indent: .25in;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Status
of Corporate Debt Restructuring as on December 31, 2013<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/Debt%20Recovery%20Management-Corporate%20Lender-11.03.2014.docx#_ftn6" name="_ftnref6" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[6]</span></b></span><!--[endif]--></span></a><o:p></o:p></span></i></div>
<div align="center" class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: center; text-indent: .25in;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">(Overall
Status since inception) <o:p></o:p></span></i></div>
<div align="right" class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: right; text-indent: .25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;"> (</span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;"> crore)<o:p></o:p></span></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="2" style="border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 124.1pt;" valign="top" width="165">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center; text-indent: 0.25in;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">Total
References Received by CDR Cell<o:p></o:p></span></i></div>
</td>
<td colspan="2" style="border-left: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-themecolor: text1; mso-border-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 118.15pt;" valign="top" width="158">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center; text-indent: 0.25in;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">Cases
Rejected before Admission or Approval<o:p></o:p></span></i></div>
</td>
<td colspan="2" style="border-left: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-themecolor: text1; mso-border-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 118.55pt;" valign="top" width="158">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center; text-indent: 0.25in;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">Cases
under consideration of CDR EG<o:p></o:p></span></i></div>
</td>
<td colspan="2" style="border-left: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-themecolor: text1; mso-border-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 118.0pt;" valign="top" width="157">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center; text-indent: 0.25in;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">Total
Cases Approved<o:p></o:p></span></i></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 124.1pt;" valign="top" width="165">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center; text-indent: 0.25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">(1)<o:p></o:p></span></div>
</td>
<td colspan="2" style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 118.15pt;" valign="top" width="158">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center; text-indent: 0.25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">(2)<o:p></o:p></span></div>
</td>
<td colspan="2" style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 118.55pt;" valign="top" width="158">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center; text-indent: 0.25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">(3)<o:p></o:p></span></div>
</td>
<td colspan="2" style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 118.0pt;" valign="top" width="157">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center; text-indent: 0.25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">(4)<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 59.15pt;" valign="top" width="79">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">No. of cases<o:p></o:p></span></i></div>
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<br /></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 64.95pt;" valign="top" width="87">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">Aggregate Debt<o:p></o:p></span></i></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 59.25pt;" valign="top" width="79">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">No. of cases<o:p></o:p></span></i></div>
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<br /></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 58.9pt;" valign="top" width="79">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">Aggregate Debt<o:p></o:p></span></i></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 59.5pt;" valign="top" width="79">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">No. of cases<o:p></o:p></span></i></div>
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<br /></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 59.05pt;" valign="top" width="79">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">Aggregate Debt<o:p></o:p></span></i></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 59.15pt;" valign="top" width="79">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">No. of cases<o:p></o:p></span></i></div>
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<br /></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 58.85pt;" valign="top" width="78">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">Aggregate Debt<o:p></o:p></span></i></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 59.15pt;" valign="top" width="79">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">605<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 64.95pt;" valign="top" width="87">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">407656<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 59.25pt;" valign="top" width="79">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">105<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 58.9pt;" valign="top" width="79">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">52866<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 59.5pt;" valign="top" width="79">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">57<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 59.05pt;" valign="top" width="79">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">65492<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 59.15pt;" valign="top" width="79">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">443<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 58.85pt;" valign="top" width="78">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">289298<o:p></o:p></span></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .95in; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="2" style="border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 119.6pt;" valign="top" width="159">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">Cases Withdrawn
on account of package failure<o:p></o:p></span></i></div>
</td>
<td colspan="2" style="border-left: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-themecolor: text1; mso-border-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 119.7pt;" valign="top" width="160">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">Cases exited
successfully<o:p></o:p></span></i></div>
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<br /></div>
</td>
<td colspan="2" style="border-left: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-themecolor: text1; mso-border-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 119.9pt;" valign="top" width="160">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">Live cases in
CDR<o:p></o:p></span></i></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 119.6pt;" valign="top" width="159">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">(5)<o:p></o:p></span></div>
</td>
<td colspan="2" style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 119.7pt;" valign="top" width="160">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">(6)<o:p></o:p></span></div>
</td>
<td colspan="2" style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 119.9pt;" valign="top" width="160">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">(7)<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 54.6pt;" valign="top" width="73">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">No. of cases<o:p></o:p></span></i></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 65.0pt;" valign="top" width="87">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">Aggregate Debt<o:p></o:p></span></i></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 54.7pt;" valign="top" width="73">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">No. of cases<o:p></o:p></span></i></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 65.0pt;" valign="top" width="87">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">Aggregate Debt<o:p></o:p></span></i></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 54.9pt;" valign="top" width="73">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">No. of cases<o:p></o:p></span></i></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 65.0pt;" valign="top" width="87">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">Aggregate Debt<o:p></o:p></span></i></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 54.6pt;" valign="top" width="73">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">115<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 65.0pt;" valign="top" width="87">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">29038<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 54.7pt;" valign="top" width="73">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">69<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 65.0pt;" valign="top" width="87">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">52625<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 54.9pt;" valign="top" width="73">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">259<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 65.0pt;" valign="top" width="87">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">207635<o:p></o:p></span></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in;">
<b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">CONCLUSION<o:p></o:p></span></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; text-align: justify;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">“The Recovery of Debts due to Banks
and Financial Institutions Act, 1993”</span></i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";"> not only helps the banks on fast track debt recovery but
also contributes to improve the quality of their assets. Similarly, the Act
also helps the non banking finance companies to improve the quality of their
assets as well as loans. As per the </span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">RBI’s Report on Trend and Progress of Banking in
India, 2012-13<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/Debt%20Recovery%20Management-Corporate%20Lender-11.03.2014.docx#_ftn7" name="_ftnref7" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-size: 13pt; line-height: 115%;">[7]</span></span><!--[endif]--></span></a>, the latest available
information as to the recovery of NPA’s is tabled below: </span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div align="center" class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; tab-stops: 209.25pt; text-align: center;">
<br /></div>
<div align="center" class="MsoListParagraphCxSpLast" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; tab-stops: 209.25pt; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Table showing the Recovery of NPAs
during 2012-13<o:p></o:p></span></i></div>
<div align="right" class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: right;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">(Amount in </span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;"> crores) <o:p></o:p></span></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 41.4pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 121.5pt;" valign="top" width="162">
<div class="MsoNormal" style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify;">
<br /></div>
</td>
<td colspan="4" style="border-left: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-themecolor: text1; mso-border-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 301.5pt;" valign="top" width="402">
<div align="center" class="MsoNormal" style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">2012-13<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 121.5pt;" valign="top" width="162">
<div align="center" class="MsoNormal" style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Recovery
Channel<o:p></o:p></span></i></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 81.0pt;" valign="top" width="108">
<div align="center" class="MsoNormal" style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">No.
of cases Referred<o:p></o:p></span></i></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102">
<div align="center" class="MsoNormal" style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Amount
Involved<o:p></o:p></span></i></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="center" class="MsoNormal" style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Amount
Recovered*<o:p></o:p></span></i></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="center" class="MsoNormal" style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: center;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">as
% of Amount Involved<o:p></o:p></span></i></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 121.5pt;" valign="top" width="162">
<div class="MsoNormal" style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">i) Lok Adalats<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 81.0pt;" valign="top" width="108">
<div align="center" class="MsoNormal" style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">8,40,691<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">66<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">4<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: center;">
<br /></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">6.1<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: center;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 121.5pt;" valign="top" width="162">
<div class="MsoNormal" style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify;">
<b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">ii)
DRTs<sup>#</sup><o:p></o:p></span></b></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 81.0pt;" valign="top" width="108">
<div align="center" class="MsoNormal" style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: center;">
<b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">13,408<o:p></o:p></span></b></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">310<o:p></o:p></span></b></div>
<div align="center" class="MsoNormal" style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: center;">
<br /></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">44<o:p></o:p></span></b></div>
<div align="center" class="MsoNormal" style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: center;">
<br /></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">14.0<o:p></o:p></span></b></div>
<div align="center" class="MsoNormal" style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: center;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 121.5pt;" valign="top" width="162">
<div class="MsoNormal" style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">iii) SARFAESI Act<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 81.0pt;" valign="top" width="108">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">1,90,537<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: center;">
<br /></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">681<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: center;">
<br /></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">185<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: center;">
<br /></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">27.1<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 209.25pt; text-align: center;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 121.5pt;" valign="top" width="162">
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">Total<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 81.0pt;" valign="top" width="108">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">10,44,636<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">1,058<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">232<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt;">21.9<o:p></o:p></span></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin: 0in 0in 0.0001pt 81pt; text-align: justify; text-indent: -63pt;">
<span style="color: #231f20; font-family: "Times New Roman","serif"; font-size: 10.0pt;">Note:
<o:p></o:p></span></div>
<div class="MsoNormal" style="margin: 0in 0in 0.0001pt 27pt; text-align: justify; text-indent: -9pt;">
<span style="color: #231f20; font-family: "Times New Roman","serif"; font-size: 10.0pt;">*:
Refers to amount recovered during the given year, which could be with reference
to cases referred during the given year as well as during the earlier years.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin: 0in 0in 0.0001pt 27pt; text-align: justify; text-indent: -9pt;">
<span style="color: #231f20; font-family: "Times New Roman","serif"; font-size: 10.0pt;">#: DRTs- Debt Recovery Tribunals.</span><span style="font-family: 'Times New Roman', serif; font-size: 10pt;"><o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">From the above table, it can be seen
that the </span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Banks have
been able to recover over 14.0 % of the bad debts for which proceedings were
initiated under the Act by 2012-13. The Act has been responsible for the bulk
of the bad loan recovery, and contributed significantly in helping the banks to
improve their non-performing assets (NPAs) ratio to total assets.</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;"><o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in;">
<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">The Act also enabled the creation of asset reconstruction
companies, which helped the banks to clean up their balance sheets. Asset reconstruction
companies buy NPAs from banks and specialize in recovery of bad loans either
through resolution or selling assets. While the Act helped lift the deadweight
of large corporate bad loans from their books, banks have been able to get rid
of lakhs of small default cases through Lok Adalats, people's courts
established by the government for settlement of disputes through conciliation
and compromise. A</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">mong the various channels of recovery available
to banks for dealing with bad loans, the SARFAESI Act and the Debt Recovery Tribunals
(DRTs) have been the most effective in terms of amount recovered. The amount recovered
as percentage of amount involved was the highest under the DRTs, followed by SARFAESI
Act.<o:p></o:p></span></div>
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<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/Debt%20Recovery%20Management-Corporate%20Lender-11.03.2014.docx#_ftnref1" name="_ftn1" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[1]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> United Bank of India Vs. Satyawati Tondon ; 2010
STPL(Web) 546 SC<o:p></o:p></span></i></div>
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<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/Debt%20Recovery%20Management-Corporate%20Lender-11.03.2014.docx#_ftnref2" name="_ftn2" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[2]</span></span><!--[endif]--></span></a>
<span style="font-family: "Times New Roman","serif"; font-size: 11.0pt; mso-bidi-font-size: 13.0pt;">M/S.Clarity
Gold Pvt.Ltd vs State Bank of India on 20 January, 2011 decided by Bombay High
Court in W P NO. 8893 of 2010 reported
in <span class="byline">Times of India, Jan 30, 2011.</span></span></div>
</div>
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<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/Debt%20Recovery%20Management-Corporate%20Lender-11.03.2014.docx#_ftnref3" name="_ftn3" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[3]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> <span style="color: #333333;">AIR 2000, Pat. 210</span><o:p></o:p></span></i></div>
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<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/Debt%20Recovery%20Management-Corporate%20Lender-11.03.2014.docx#_ftnref4" name="_ftn4" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[4]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> <span style="color: #333333;">1998(2) ALD 440: 1998(1) APLJ 369.</span><o:p></o:p></span></i></div>
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<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/Debt%20Recovery%20Management-Corporate%20Lender-11.03.2014.docx#_ftnref5" name="_ftn5" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[5]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> <span style="color: #333333;">1999(4) SCC. 710</span><o:p></o:p></span></i></div>
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<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/Debt%20Recovery%20Management-Corporate%20Lender-11.03.2014.docx#_ftnref6" name="_ftn6" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[6]</span></span><!--[endif]--></span></a> <i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt; mso-bidi-font-weight: bold;">As per the Corporate Debt
Restructuring (CDR) Cell Progress Report (As On December 31, 2013)</span></i> </div>
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<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/Debt%20Recovery%20Management-Corporate%20Lender-11.03.2014.docx#_ftnref7" name="_ftn7" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[7]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> RBI’s Report on Trend and Progress of Banking in
India, 2012-13 <b>(</b>Table IV.17:<strong>:
NPAs of SCBs recovered through various Channels )</strong><b><o:p></o:p></b></span></i></div>
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kpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.com0tag:blogger.com,1999:blog-6816737388948619195.post-14946856755824042022014-10-03T04:19:00.000-07:002014-10-03T04:19:30.412-07:00THE LIABILITY OF THE GUARANTOR / SURETY AND PRINCIPAL DEBTOR IS CO-EXTENSIVE BUT NOT IN THE ALTERNATIVE – A CRITIQUE<div dir="ltr" style="text-align: left;" trbidi="on">
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<b><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></i></b></div>
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<b><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;">By Dr. T. Padma<o:p></o:p></span></i></b></div>
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<b><i><span style="font-family: "Times New Roman","serif"; font-size: 9.0pt; line-height: 115%;">MA (Economics), MA (Lit), MA (J
& MC), <o:p></o:p></span></i></b></div>
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<b><i><span style="font-family: "Times New Roman","serif"; font-size: 9.0pt; line-height: 115%;">MSc (Psychology), MBA, PGDCL,
PGADR, <o:p></o:p></span></i></b></div>
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<b><i><span style="font-family: "Times New Roman","serif"; font-size: 9.0pt; line-height: 115%;">PGDHR, LLM, PhD (Law), (LLD)<o:p></o:p></span></i></b></div>
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<b><i><span style="font-family: "Times New Roman","serif";">kethepadma@gmail.com<o:p></o:p></span></i></b></div>
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<b><i><span style="font-size: 13.0pt; line-height: 115%;">Meaning of Contract of Guarantee <o:p></o:p></span></i></b></div>
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<span style="font-size: 13.0pt; line-height: 115%;">A contract of guarantee is a contract to perform the promise, or
discharge the liability, of a third person (principal debtor) in case of his
default. It is a trilateral contract, that is, among three persons — the
surety, the principal debtor and the creditor.
The person who gives the guarantee is called the surety/guarantor. The
person in respect of whose default the guarantee is given is called the
principal debtor. The person to whom the guarantee is given is called the
creditor.<o:p></o:p></span></div>
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<b><i><span style="font-size: 13.0pt; line-height: 115%;">The liability is Co-extensive<o:p></o:p></span></i></b></div>
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<span style="font-size: 13.0pt; line-height: 115%;">The liability of the surety towards the creditor is co-extensive with
that of the principal debtor, unless it is otherwise provided in the contract
of guarantee. A guarantor, in common law, is in no better footing than the
principal debtor. It is open to the creditor to proceed legally against the
guarantor first for remedy. <o:p></o:p></span></div>
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<span style="font-size: 13.0pt; line-height: 115%;">In the case of a loan, if a guarantor binds himself to a maximum limit of
the principal debt, his liability towards the creditor would not be beyond
that. A guarantee which extends to a series of transactions between the
creditor and principal debtor is called continuing guarantee. It may at any
time be revoked by the surety, as to future transactions between the creditor
and principal debtor, by notice to the creditor. <o:p></o:p></span></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">A
surety's liability to pay the debt is not removed by reason of the creditor's
omission to sue the principal debtor. The creditor is not bound to exhaust his
remedy against the principal before suing the surety, and a suit may be
maintained against the surety though the principal has not been sued<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftn1" name="_ftnref1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-size: 13pt; line-height: 115%;">[1]</span></span><!--[endif]--></span></a>.
<o:p></o:p></span></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";"><br />
It is not necessary for the creditor, before proceeding against the surety, to
request the principal debtor to pay, or to sue him, although solvent, unless
this is expressly stipulated for<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftn2" name="_ftnref2" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-size: 13pt; line-height: 115%;">[2]</span></span><!--[endif]--></span></a>.<o:p></o:p></span></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">The
term “co-extensive” has been defined in the celebrated book of Polock &
Mulla on Indian Contract and Specific Relief Act, Tenth Edition, at page 728 as
under: <o:p></o:p></span></div>
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<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">“Co - extensive. Surety's liability
is co-extensive with that of the principal debtor. A surety's liability to pay
the debt is not removed by reason of the creditor's omission to sure the
principal debtor. The creditor is not bound to exhaust his remedy against the
principal before suing the surety, and a suit may be maintained against the
surely though the principal has not been sued.”<o:p></o:p></span></i></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">In
Chitty on Contracts, 24th Edition, Volume 2 at page 1031 paragraph 4831 it is
stated as under, <o:p></o:p></span></div>
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<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">“Conditions precedent to liability
of surety. Prima facie the surety may be proceeded against without demand
against him, and without first proceeding against the principal debtor.”<o:p></o:p></span></i></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">In
Halsbury's Laws of England, Fourth Edition,Vol. 20, paragraph 159 at page 87 it
has been observed that "it is not necessary for the creditor, before
proceeding against the surety, to request the principal debtor to pay, or to
sue him, although solvent, unless this is expressly stipulated for”.<o:p></o:p></span></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";"><br />
</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The
question as to liability of a surety, its extent and the manner of its
enforcement has always been a highly controversial issue in India. The Supreme
Court, in the case of <i>Industrial Investment Bank of India Ltd v. Biswanth
Jhunjhunwala<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftn3" name="_ftnref3" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[3]</span></b></span><!--[endif]--></span></a>,
</i>has discussed the issue elaborately and reiterated that the liability of
the guarantor / surety and principal debtor is co-extensive and not in the
alternative. <o:p></o:p></span></div>
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<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-weight: bold;">Facts of the Case<o:p></o:p></span></i></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Appellant <i>Industrial
Investment Bank of India Ltd </i>sanctioned the first short term working
capital loan of </span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">
3 Crores in favour of <i>Modern Malleables
Limited</i> (“<i>Borrower Company</i>”) on September 27, 1994. This loan agreement
was signed by the Director of the Borrower Company, the Respondent herein, on
behalf of the Borrower Company. The Respondent executed a demand promissory
note for </span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">
3 Crores drawn in favour of the Appellant along with a deed of undertaking to
create mortgage in respect of the immovable properties of the Borrower Company.
Following this, a deed of personal guarantee was also executed by the
Respondent in respect of the said loan. <o:p></o:p></span></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Appellant further sanctioned a
second term working capital loan of </span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;"> 3 Crores on March 15, 1995 in favour of the
Borrower Company, in respect of which the Respondent again executed a
promissory note and a deed of undertaking to create mortgage in respect of the
immovable properties of the Borrower Company. <o:p></o:p></span></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Thereafter, the Borrower Company
committed defaults in the repayment of the principal amount of the loan, the
accrued interest and the liquidated damages arising thereof. Some of the
cheques issued on behalf of the Borrower Company by the Respondent were
dishonored for want of funds. Consequently proceedings were initiated against
the Respondent under section 138 of the Negotiable Instruments Act, 1881.<o:p></o:p></span></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">In view of the defaults committed
by the Borrower Company, the Appellant issued a demand notice to the Borrower
Company and subsequently filed an application in the High Court of Calcutta
under Section 40 of the Industrial Reconstruction Bank of India Act, 1984<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftn4" name="_ftnref4" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-size: 13pt; line-height: 115%;">[4]</span></span><!--[endif]--></span></a>
for attachment and sale of the assets of the Borrower Company. Pursuant to the
above, the High Court of Calcutta issued an injunction restraining the Borrower
Company from parting with any possession, disposing of or alienating or
encumbering any of its said assets in any manner. The Respondent was not made
party to these proceedings.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Appellant thereafter invoked
the personal guarantee given by the Respondent and served a notice upon the
Respondent, calling upon him to pay a sum of </span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;"> 5.4 Crores
together with further interest and liquidated damages and also filed an
application against the Respondent in the Debts Recovery Tribunal<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftn5" name="_ftnref5" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-size: 13pt; line-height: 115%;">[5]</span></span><!--[endif]--></span></a>,
Calcutta for a certificate against the Respondent for a sum of </span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;"> 5.4 Crores along with
further interest and liquidated damages. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">While rejecting the plea of the
Respondent that the rights of the Appellant against the Respondent as guarantor
did not crystallize till the rights of the Appellant against the Borrower
Company are established, the Presiding Officer of the Tribunal held that the
Appellant cannot be forced to exhaust remedies elsewhere before proceeding
against the guarantor and clarified that the liability of the guarantor is
co-extensive with that of the principal debtor.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Aggrieved by this order, the
Respondent filed an application under Article 227 of the Constitution of India
in the High Court of Calcutta against the order, which was allowed and stay of
proceedings before the Debt Recovery Tribunal was granted. Subsequently,
the Appellant preferred an appeal to the Supreme Court.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-weight: bold;">Judgment of the Apex Court</span></i><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;"><o:p></o:p></span></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The counsel on behalf of the
Appellant, <i>inter alia</i>, relied upon the earlier decision of the Supreme
Court in the case of <i>Bank of Bihar vs. Damodar Prasad & Another<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftn6" name="_ftnref6" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[6]</span></b></span><!--[endif]--></span></a>
</i>in which case it was held by the Supreme Court that a creditor is not bound
to exhaust his remedy against the principal debtor before suing the surety and
that when a decree is obtained against a surety, it may be enforced in the same
manner as a decree for any other debt. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The decision of the Division Bench
of the Bombay High Court in the case of <i>Jagannath Ganeshram Agarwala vs.
Shivnarayan Bhagirath and Ors<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftn7" name="_ftnref7" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[7]</span></b></span><!--[endif]--></span></a>.
</i>was also relied upon wherein it was held that both the principal debtor and
the surety are liable to the creditor at the same time.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">In view of the arguments advanced
and authorities cited, it was held by the Supreme Court that the liability of
the guarantor and the principal debtor is co-extensive and not in the
alternative. Notwithstanding the fact that they stem out from the same
transaction, the two liabilities are separate and distinct. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Supreme Court, therefore, set
aside the impugned order of the High Court of Calcutta and awarded costs
of </span><span style="font-family: "Rupee Foradian","sans-serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman";">`</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;"> 50,000 to the Appellant.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Some
Judicial Pronouncements on same issue </span></i></b><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;"><o:p></o:p></span></i></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">In
a series of decisions the Supreme Court has restated the law relating to the
extent and proportion of liability of a guarantor/surety. Referring to a wide
array of decisions on the issue, the Supreme Court reiterated the legal
position that the liability of the surety/guarantor is co-extensive with the
principal debtor, unless it is otherwise provided by the contract and that a
creditor is not bound to exhaust his remedy against the principal debtor before
suing the surety/guarantor. The Supreme Court discussed these decisions as
under:<o:p></o:p></span></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">1)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">In
<i>Bank of Bihar Ltd. v. Damodar Prasad
& Another<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftn8" name="_ftnref8" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[8]</span></b></span><!--[endif]--></span></a></i>, the court referred to a judgment in <i>Lachhman Joharimal v. Bapu Khandu and
Tukaram Khandoji<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftn9" name="_ftnref9" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[9]</span></b></span><!--[endif]--></span></a></i>,
in which the Division Bench of the Bombay High Court held as under:<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">"The court is of opinion that
a creditor is not bound to exhaust his remedy against the principal debtor
before suing the surety and that when a decree is obtained against a surety, it
may be enforced in the same manner as a decree for any other debt."<o:p></o:p></span></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Apex Court, while approving the
said judgment, observed that, <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 31.5pt; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">“the very object of the guarantee
is defeated if the creditor is asked to postpone his remedies against the
surety. In the present case the creditor is a banking company. A guarantee is a
collateral security usually taken by a banker. The security will become useless
if his rights against the surety can be so easily cut down.”<o:p></o:p></span></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">2)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif";">A</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;"> Division Bench
of the Bombay High Court in <i>Jagannath
Ganeshram Agarwala v. Shivnarayan Bhagirath </i>and Ors<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftn10" name="_ftnref10" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-size: 13pt; line-height: 115%;">[10]</span></span><!--[endif]--></span></a>
held that the liability of the surety is co-extensive, but is not in the
alternative. Both the principal debtor and the surety are liable at the same
time to the creditors.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">3)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">In
the case of <i>Lachhman Joharimal v. Bapu
Khandu and Tukaram Khandoji<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftn11" name="_ftnref11" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[11]</span></b></span><!--[endif]--></span></a></i>,
in which the Division Bench of the Bombay High Court held as under: <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";"><br />
"<i>The court is of opinion that a
creditor is not bound to exhaust his remedy against the principal debtor before
suing the surety and that when a decree is obtained against a surety, it may be
enforced in the same manner as a decree for any other debt." <o:p></o:p></i></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; text-align: justify; text-indent: -27.0pt; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";"><br />
The Apex Court, while approving the said judgment, observed that, "<i>the very object of the guarantee is defeated
if the creditor is asked to postpone his remedies against the surety. In the
present case the creditor is a banking company. A guarantee is a collateral
security usually taken by a banker. The security will become useless if his
rights against the surety can be so easily cut down." <o:p></o:p></i></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; text-align: justify; text-indent: -27.0pt; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">4)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;"> </span></span></i><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">In <i>State Bank of India v. M/s. Indexport Registered<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftn12" name="_ftnref12" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[12]</span></b></span><!--[endif]--></span></a></i>,
the Apex Court held that the decree holder bank can execute the decree against
the guarantor without proceeding against the principal borrower. Guarantor's
liability is co- extensive with that of the principal debtor. In that case,
this court further observed that, <i>"the
execution of the money decree is not made dependent on first applying for
execution of the mortgage decree. The choice is left entirely with the decree-
holder. The question arises, whether a decree which is framed as a composite
decree as a matter of law, must be executed against the mortgage property first
or can a money decree, which covers whole or part of the decretal amount
covering mortgage decree can be executed earlier. There is nothing in law which
provides such a composite decree to be first executed only against the
principal debtor. The court further observed that "the liability of the
surety is co-extensive with the principal debtor, unless it is otherwise provided
by the contract".<o:p></o:p></i></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">5)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">In
the case of <i>Jagannath Ganeshram Agarwala
v. Shivnarayan Bhagirath and Ors<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftn13" name="_ftnref13" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[13]</span></b></span><!--[endif]--></span></a>,</i>
a Division Bench of the Bombay High Court held that the liability of the surety
is co-extensive, but is not in the alternative. Both the principal debtor and the
surety are liable at the same time to the creditors. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">6)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">In
<i>The Hukumchand Insurance Co. Ltd. v. The
Bank of Baroda & Others<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftn14" name="_ftnref14" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[14]</span></b></span><!--[endif]--></span></a></i>,
a Division Bench of the High Court of Karnataka had an occasion to consider the
question of liability of the surety vis-a-vis the principal debtor. The court
held as under:- <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">"The question as to the
liability of the surety, its extent and the manner of its enforcement have to
be decided on first principles as to the nature and incidents of suretyship.
The liability of a principal debtor and the liability of a surety which is co-
extensive with that of the former are really separate liabilities, although arising
out of the same transaction. Notwithstanding the fact that they may stem from
the same transaction, the two liabilities are distinct. The liability of the
surety does not also, in all cases, arise simultaneously." <o:p></o:p></span></i></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";"><br />
</span></i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">The case of the respondent has never
been that the liability of the guarantor is only contingent and if remedies
against the principal debtor failed to satisfy the dues of the decree holder,
then only the bank can proceed against the guarantor. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
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<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">7)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">In
<i>Transcore v. Union of India & Another<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftn15" name="_ftnref15" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[15]</span></b></span><!--[endif]--></span></a></i>,
the Apex Court in great detail examined whether withdrawal of suit pending
before the Debts Recovery Tribunal under DRT Act is not a pre-condition for
taking recourse to the Securitisation and Reconstruction of Financial Assets
and Enforcement of Security Interest Act, 2002 and held that it is for the bank
or the financial institution to exercise its discretion. <o:p></o:p></span></div>
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<div class="MsoListParagraphCxSpLast" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">8)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">In
<i>A.P. State Financial Corporation v. M/s
Gar Re- Rolling Mills & Another<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftn16" name="_ftnref16" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[16]</span></b></span><!--[endif]--></span></a></i> the Apex
Court observed that the right vested in the corporation under section 29
of the Act is besides the right already possessed at common law to institute a
suit or the right available to it under section 31 of the Act. In that case, it
was further observed that on a conjoint reading of sections 29 and 31 of the
said Act, it appears that in case of default in repayment of loan or any
installment or any advance or breach of an agreement, the Corporation has two
remedies available to it against the defaulting industrial concern, one under
section 29 and another under section 31. Since, the corporation must be held
entitled and given full protection by the court to recover its dues it cannot
be bound down to adopt only one of the two remedies provided under the Act. The
Court further held that the doctrine of election is not applicable to this
case.</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;"><o:p></o:p></span></div>
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<b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Conclusion<o:p></o:p></span></i></b></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Now, the legal position with regard to the liability
of a guarantor or a surety, is crystallized by a series of judicial
pronouncements as discussed above. Thus, the liability of the guarantor and a
principal debtor is co-extensive and not in alternative. A creditor is not
bound to exhaust his remedy against the principal debtor before suing the
surety and that when a decree is obtained against a surety, it may be enforced
in the same manner as a decree for any other debt. The surety has no right to
restrain execution of the decree against him until the creditor has exhausted
his remedy against the principal debtor for the reason that it is the business
of the surety/guarantor to see whether the principal debtor has paid or not. Therefore
a guarantor’s liability to pay the debt is not dissolved simply due to the
creditor’s omission to sue the principal debtor and a suit may be maintained
against the guarantor even though the principal debtor has not been sued at
all. Summarising the law on the issue of recovery of loan from its guarantors
in the light of various earlier judgments, the Apex Court said recovery of
public dues must be made strictly in accordance with the procedure prescribed
by law.<o:p></o:p></span></div>
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<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftnref1" name="_ftn1" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[1]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> Polock & Mulla on Indian Contract and Specific
Relief Act, Tenth Edition, at page 728<o:p></o:p></span></i></div>
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<div class="MsoFootnoteText">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftnref2" name="_ftn2" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[2]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> Halsbury's Laws of England, Fourth Edition,Vol. 20,
paragraph 159 at page 87<o:p></o:p></span></i></div>
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<div class="Default" style="text-align: justify; text-justify: inter-ideograph;">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftnref3" name="_ftn3" title=""><span class="MsoFootnoteReference"><i><span style="color: windowtext; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast;">[3]</span></b></span><!--[endif]--></span></i></span></a><i><span style="color: windowtext; font-size: 11.0pt;">
Industrial Investment Bank of India
Ltd v. Biswanth Jhunjhunwala ; (2009)
9 SCC 478<b> </b><o:p></o:p></span></i></div>
</div>
<div id="ftn4">
<div class="MsoFootnoteText" style="margin-left: 9.0pt; text-align: justify; text-indent: -9.0pt; text-justify: inter-ideograph;">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftnref4" name="_ftn4" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[4]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> Section 40 of the IRBI, 1984 states in detail the
procedure for “Enforcement of claims by the Reconstruction Bank”.<o:p></o:p></span></i></div>
</div>
<div id="ftn5">
<div class="MsoFootnoteText">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftnref5" name="_ftn5" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[5]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> Under section 19 of the Recovery of Debts Due to
Bank and Financial Institutions Act, 1993<o:p></o:p></span></i></div>
</div>
<div id="ftn6">
<div class="MsoFootnoteText">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftnref6" name="_ftn6" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[6]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> Bank of
Bihar vs. Damodar Prasad & Another ; (1969) 1 SCR 620<o:p></o:p></span></i></div>
</div>
<div id="ftn7">
<div class="MsoFootnoteText" style="margin-left: 9.0pt; text-align: justify; text-indent: -9.0pt; text-justify: inter-ideograph;">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftnref7" name="_ftn7" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[7]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> Jagannath
Ganeshram Agarwala vs. Shivnarayan Bhagirath and Ors; AIR 1940 Bombay
247<o:p></o:p></span></i></div>
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<div id="ftn8">
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<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftnref8" name="_ftn8" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[8]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> Bank of Bihar Ltd. v. Damodar Prasad & Another;
(1969) 1 SCR 620<o:p></o:p></span></i></div>
</div>
<div id="ftn9">
<div class="MsoFootnoteText">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftnref9" name="_ftn9" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[9]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> Joharimal v. Bapu Khandu and Tukaram Khandoji;
(1869) 6 Bombay High Court Reports 241<o:p></o:p></span></i></div>
</div>
<div id="ftn10">
<div class="MsoFootnoteText">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftnref10" name="_ftn10" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[10]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> Jagannath
Ganeshram Agarwala v. Shivnarayan Bhagirath and Ors; AIR 1940 Bombay 247<o:p></o:p></span></i></div>
</div>
<div id="ftn11">
<div class="MsoFootnoteText">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftnref11" name="_ftn11" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[11]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> Lachhman Joharimal v. Bapu Khandu and Tukaram
Khandoji (1869) 6 Bombay High Court Reports 241<o:p></o:p></span></i></div>
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<div class="MsoFootnoteText">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftnref12" name="_ftn12" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[12]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> State Bank of India v. M/s. Indexport Registered ;
1992 AIR 1740, 1992 SCR (2)1031<o:p></o:p></span></i></div>
</div>
<div id="ftn13">
<div class="MsoFootnoteText">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftnref13" name="_ftn13" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[13]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> Jagannath Ganeshram Agarwala v. Shivnarayan
Bhagirath and Ors; AIR 1940 Bombay 247<o:p></o:p></span></i></div>
</div>
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<div class="MsoFootnoteText">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftnref14" name="_ftn14" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[14]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> The Hukumchand Insurance Co. Ltd. v. The Bank of
Baroda & Others; AIR 1977 Kant 204<o:p></o:p></span></i></div>
</div>
<div id="ftn15">
<div class="MsoFootnoteText">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftnref15" name="_ftn15" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[15]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> Transcore v. Union of India & Another; (2008) 1
SCC 125<o:p></o:p></span></i></div>
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<div id="ftn16">
<div class="MsoFootnoteText">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/LIABILITY%20OF%20THE%20SURETY%20CO-EXTENSIVE-10-06-2014%20(1).docx#_ftnref16" name="_ftn16" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[16]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> A.P. State Financial Corporation v. M/s Gar Re-
Rolling Mills & Another; (1994) 2 SCC 647<o:p></o:p></span></i></div>
</div>
</div>
</div>
kpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.com1tag:blogger.com,1999:blog-6816737388948619195.post-60100503112932686672014-10-03T04:13:00.000-07:002014-10-03T04:13:17.979-07:00CONSUMER ACTIVISM IN AN ERA OF GLOBALISATION – FSLRC AIMS AT MORE INTRUSIVE APPROACH IN INDIA TO PROTECT THE FINANCIAL CONSUMERS – A CRITIQUE<div dir="ltr" style="text-align: left;" trbidi="on">
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<b><i><span style="font-family: "Times New Roman","serif";">By
K P C Rao., </span></i></b><b><i><span style="font-family: "Times New Roman","serif"; font-size: 9.0pt; line-height: 115%;">LLB., FCMA., FCS.,<o:p></o:p></span></i></b></div>
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<b><i><span style="font-family: "Times New Roman","serif"; font-size: 9.0pt; line-height: 115%;">CMA (USA)., FIPA
(Australia)<o:p></o:p></span></i></b></div>
<div align="right" class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-layout-grid-align: none; text-align: right; text-autospace: none;">
<i><span style="font-family: "Times New Roman","serif";">Practicing Company
Secretary<o:p></o:p></span></i></div>
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<i><span style="font-family: "Times New Roman","serif";">kpcrao.india@gmail.com<o:p></o:p></span></i></div>
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<!--[if !supportLists]--><b><span style="font-size: 13.0pt; line-height: 115%;">I.<span style="font-size: 7pt; font-weight: normal; line-height: normal;"> </span></span></b><!--[endif]--><b><span style="font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman"; mso-fareast-theme-font: minor-fareast;">CONSUMERISM</span></b><b><span style="font-size: 13.0pt; line-height: 115%;"><o:p></o:p></span></b></div>
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<div style="line-height: 115%; margin-bottom: .0001pt; margin: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 13.0pt; line-height: 115%; mso-bidi-font-weight: bold;">‘<i>Consumerism</i>’</span><span style="font-size: 13.0pt; line-height: 115%;"> is a social and economic order that
is based on the systematic creation and fostering of a desire to purchase goods
or services in ever greater amounts. It
also may refer to a movement seeking to protect and inform consumers by
requiring such practices as honest packaging and advertising, product
guarantees, and improved safety standards. In this sense it is a movement or a
set of policies aimed at regulating the products, services, methods, and
standards of manufacturers, sellers, and advertisers in interests of the buyer.
In </span><a href="http://en.wikipedia.org/wiki/Economics" title="Economics"><span style="color: windowtext; font-size: 13.0pt; line-height: 115%; mso-ascii-font-family: "Times New Roman"; mso-bidi-font-family: "Times New Roman"; mso-hansi-font-family: "Times New Roman";">economics</span></a><span style="font-size: 13.0pt; line-height: 115%;">, consumerism refers to economic policies placing emphasis on
consumption. In an abstract sense, it is the belief that the free choice of
consumers should dictate the economic structure of a society.<o:p></o:p></span></div>
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<div style="line-height: 115%; margin-bottom: .0001pt; margin: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 13.0pt; line-height: 115%;">Due to globalization and opening of Indian markets to foreign players
Indian consumers today have an access to innumerable brands. In every
industry whether it is fast moving consumer goods (FMCG) or durable goods or
service industry there are more than twenty brands at national level catering
to the needs of the consumers. This situation of plenty is giving the consumer
an opportunity to choose goods and services from a wide spectrum. But is the
consumer getting value for money? Why is consumer protection
becoming more important in today’s scenario? Is the concept ‘let the buyer
beware’ still exists? or Are we moving towards consumer sovereignty?<i> <o:p></o:p></i></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
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<!--[if !supportLists]--><b><span style="font-size: 13.0pt; line-height: 115%;">II.<span style="font-size: 7pt; font-weight: normal; line-height: normal;"> </span></span></b><!--[endif]--><b><span style="font-size: 13.0pt; line-height: 115%;">THE DOCTRINE OF ‘CAVEAT EMPTOR’<i> </i></span></b><b><span style="font-size: 13.0pt; line-height: 115%;">(‘<i>Let the Buyer Beware’</i>)<i><o:p></o:p></i></span></b></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">The philosophy behind the rule of ‘<i>caveat emptor’</i> was basically the reliance placed by the buyer on
his own skill or judgment. It is based on the fundamental premise that once a
buyer satisfies himself as to the suitability of the product for his use, he
would subsequently have no right to reject the same. <o:p></o:p></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Concepts like ‘fitness of goods’ and ‘merchantability’,
which could be used to shift the burden as to quality and fitness on the
seller, were not encouraged and the buyer could not reject the goods on any ground.
The rule of ‘<i>caveat emptor’</i>, as it
prevailed at the times of its origin, was quite rigid.<o:p></o:p></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Thus it can be noted that the law being bent in the favor of
the seller, and in those times, one could not even contemplate a corresponding
rule, which would put the burden on the seller (<i>caveat venditor</i>).<o:p></o:p></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-justify: inter-ideograph;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-weight: bold; mso-fareast-font-family: "Times New Roman";">A
misconception and need for change <o:p></o:p></span></i></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Approach, which was being adapted when the rule of ‘<i>caveat emptor’</i> prevailed in its absolute
form, was later characterized as one detrimental to the development of trade
and commerce. Therefore a scenario wherein a buyer would not have any recourse
against a seller who has in spite of being aware of a latent defect (one which
cannot be detected by reasonable examination) not informed the buyer about the
same, would certainly not encourage commercial transactions.<o:p></o:p></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">In order to provide adequate protection to the buyer who
buys the good in good faith, which case laws put as, <i>‘reliance on the skill and judgment of the seller’</i>. Thus in order
to give proper recognition to the relationship between the buyer and the seller
and to generate a scenario wherein commercial transactions are encouraged by
the means of proper checks, the rule was subsequently diluted.<o:p></o:p></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-justify: inter-ideograph;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-bidi-font-weight: bold; mso-fareast-font-family: "Times New Roman";">Shift in
Conceptual Thinking <o:p></o:p></span></i></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">The rule of caveat emptor, as far as judicial precedents
goes, for the first time suffered a blow by the case of <i>Priest v. Last<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/ARTICLE%20ON%20FSLRC%20-ICSI%20HYDERABAD%20CHAPTER-06-03-2014.docx#_ftn1" name="_ftnref1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[1]</span></b></span><!--[endif]--></span></a></i>
wherein for the first time, the reliance placed by the seller for the purposes
of buying a <i>‘hot water bottle’</i> was
taken into account for the purposes of allowing the buyer to reject the goods.
This decision was the first traceable decision in common law which gave
importance to the reliance placed by the buyer on the seller’s skill and
judgment. This proposition of law, however is a settled principle of law today.<o:p></o:p></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">The Priest decision however, was just a beginning of what
could certainly be termed as the diminishing process of the rule of ‘<i>caveat emptor’</i>. Where in this decision,
the purpose was expressly mentioned and then taken into account, the courts in
subsequent cases, opined that the need/purpose of the contract would be evident
from the nature of the contract, or might be known to the seller from the
course of negotiations between the parties. Thus express mention of the purpose
behind a purchase of goods was no longer considered a requisite for proving
reliance on the skill and judgment of the seller, which signified a further
shift of law in favour of the buyer.<o:p></o:p></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">This imposition of obligations upon the seller was also not
a smooth process in itself. The House of Lords in the case of <i>Ashington Piggeries Ltd v. Christopher Hill
Ltd<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/ARTICLE%20ON%20FSLRC%20-ICSI%20HYDERABAD%20CHAPTER-06-03-2014.docx#_ftn2" name="_ftnref2" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[2]</span></b></span><!--[endif]--></span></a></i>
, where on one hand the majority opined that a generalized purpose should be
shoehorned within the meaning of a particular purpose thereby meaning that when
the buyer purchases food-stuff meant for animals, he need not mention
specifically the type of animals he would feed with the food-stuff. On the
other hand the dissenting opinion of Justice Diplock, while rejecting the
majority opinion, clearly said that <i>‘the
swing from caveat emptor to caveat venditor had gone too far.’</i> Another
decision, which goes with the opinion of Justice Diplock, is the decision of
New Zealand Court of Appeal in the case of <i>Hamilton
v. Paparika</i> wherein the court refused to accept the contention that a water
supplier supplying water to horticulture farms should ensure that its water
would not harm a specific crop i.e soil less cherry tomato. The court opined
that since the water was serving the generalized purpose in the given case, so
any particular purpose should have been communicated to the seller and he could
not have known the same by implication.<o:p></o:p></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Thus, the valid argument which can be construed out of these
case laws is that concerning the variation between the nature of the
particularized purpose and the generalized purpose.’ But this has an equally
sound counter-argument, which is that it should be incumbent upon the seller to
specify that his product, which is sold for a generalized purpose would not suit
a particular purpose. Or that the product would have to be used in a particular
manner in order to serve a particular purpose. This counter-argument is where
one can trace the origin of caveat venditor i.e. the need for disclosure on the
seller’s part.<o:p></o:p></span></div>
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<!--[if !supportLists]--><b><span style="font-size: 13.0pt; line-height: 115%;">III.<span style="font-size: 7pt; font-weight: normal; line-height: normal;"> </span></span></b><!--[endif]--><b><span style="font-size: 13.0pt; line-height: 115%;">THE DOCTRINE OF ‘CAVEAT VENDITOR’<i>(‘Let the Seller Beware’)<o:p></o:p></i></span></b></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">With its origin being traced in the need for disclosure of
information for the purposes of facilitating the reason for purchase of the
buyer, gradually this rule has gained prominence and the obligations of the
seller have been given proper shape along with various statutes and case laws
limiting the rule of caveat emptor to ‘reasonable examination’. Examples like
beer contaminated with arsenic, milk-containing typhoid germs are good enough
to establish that courts have been generous enough to exempt the buyer from the
duty to examine the goods where the defects could not have been traced in
ordinary circumstances.<o:p></o:p></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Another major debate which arises from the above obligation
of the seller to make proper disclosure is concerning cases where the seller
himself does not come to know of the defect. Where on one hand a learned
scholar on sale of goods Benjamin has opined that the seller cannot take the
excuse of himself not being aware of the defect in goods, case laws like <i>Harlingdon & Leinster Enterprises Ltd v.
Christopher Hull Fine Art Ltd<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/ARTICLE%20ON%20FSLRC%20-ICSI%20HYDERABAD%20CHAPTER-06-03-2014.docx#_ftn3" name="_ftnref3" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 13pt; line-height: 115%;">[3]</span></b></span><!--[endif]--></span></a>
</i>on the other hand suggest that where the buyer himself has more expertise
in a given field than the seller, it would be wrong to suggest that the buyer
could have the right to reject the painting sold to him on account of not being
of the original painter.<o:p></o:p></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">It is however submitted that Benjamin’s opinion in this
regard should be taken as over and above the mandate of judicial precedents,
because when the buyer places reliance on the skill and judgment of the seller,
the fact that the seller does not possess the same can nowhere be held as a
justifiable excuse. Therefore a duty does lie by law on the seller to be aware
of the conditions of the goods being sold and making the buyer aware of the
same. The various tests for merchantable quality of goods also go on to
indicate the same when they emphasize on the ‘full knowledge’ of the buyer as
to the quality of the goods.<o:p></o:p></span></div>
<div style="line-height: 115%; margin-bottom: .0001pt; margin: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 13.0pt; line-height: 115%;">Therefore the rule of ‘<i>caveat
emptor’</i> is dying a slow death and is being taken over by the subsequent
rule of ‘<i>caveat venditor’</i>, the change
being attributed to a more consumer oriented market wherein commercial
transactions are being encouraged. Such a change, no doubt would help to create
an appropriate balance between the rights and obligations of the seller and the
buyer. In this context the comments of Lord Wright which are relevant
reproduced here: <i>The "old rule" of caveat emptor had been superseded by caveat
venditor, such change being "rendered necessary by the conditions of
modern commerce and trade" Let
the buyer beware</i>’ is not a phrase that judges use very often
nowadays. The age-old rule of caveat emptor rule, which has its origin in
common law, has over the times undergone major changes. As the rule was being
given a concrete shape, its exceptions also grew with time. Therefore this
conceptual change would center around the balancing point of the necessity of
disclosure of information by the seller on one side and implications of
reasonable inspections done by the buyer on the other.<o:p></o:p></span></div>
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<br /></div>
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<!--[if !supportLists]--><b><span style="font-size: 13.0pt; line-height: 115%;">IV.<span style="font-size: 7pt; font-weight: normal; line-height: normal;"> </span></span></b><!--[endif]--><b><span style="font-size: 13.0pt; line-height: 115%;">CONSUMER PROTECTION</span></b><span style="font-size: 13.0pt; line-height: 115%;"> - <b>GLOBAL SCENARIO<o:p></o:p></b></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Consumer
protection consists of laws and organizations designed to ensure the rights of
consumers as well as fair trade competition and the free flow of truthful
information in the marketplace. The laws are designed to prevent businesses
that engage in fraud or specified unfair practices from gaining an advantage
over competitors; they may also provide additional protection for the weak and
those unable to take care of themselves. Consumer protection laws are a form of
government regulation, which aim to protect the rights of consumers.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Consumer
interests can also be protected by promoting competition in the markets which
directly and indirectly serve consumers, consistent with economic efficiency,
but this topic is treated in competition law. Consumer protection can also be
asserted via non-government organizations and individuals as consumer activism.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Consumer
protection law or consumer law is considered an area of law that regulates
private law relationships between individual consumers and the businesses that
sell those goods and services. Consumer protection covers a wide range of
topics, including but not necessarily limited to product liability, privacy
rights, unfair business practices, fraud, misrepresentation, and other
consumer/business interactions.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Position in US<o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The
Consumer Movement in United States of America has grown from a minor component
at the turn of the century’s progressive movement into fixture on the current
American Political Scene. The growth of
consumerism in US can be better understood by briefly discussing three areas of
consumer activism in United States of America. This followed the application of
rules like Caveat emptor or buyer beware and the law of supply and demand.
Consequently certain degree of quality assurance and convenience has been
introduced. Combined with advertising it induced consumers to ask for particular
versions of goods rather than generic goods.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">In
the United States a variety of laws at both the Federal and State levels
regulate consumer affairs. Among them are the Federal Fair Debt Collection
Practices Act (FDCPA), the Fair Credit Reporting Act (FCRA), Truth in Lending
Act (TILA), Fair Credit Billing Act (FCBA), and the Gramm-Leach-Bliley Act
(GLBA). Federal consumer protection laws are mainly enforced by the Federal
Trade Commission and the U.S. Department of Justice. At the State level, many
states have adopted the Uniform Deceptive Trade Practices Act.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Position in UK<o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The
United Kingdom, as member state of the European Union, is bound by the consumer
protection directives of the EU. Domestic (UK) laws originated within the ambit
of contract and tort but, with the influence of EU law, it is emerging as an
independent area of law. In many circumstances, where domestic law is in
question, the matter judicially treated as tort, contract, restitution or even
criminal law. Consumer Protection issues are dealt with when complaints are
made to the Director-General of Fair Trade.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Republic of China (Taiwan)<o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Modern
Chinese law has been heavily influenced by European civil law systems,
particularly German and Swiss law.</span> <span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Consumer Protection
Law (CPL) in the Republic of China (Taiwan), as promulgated on January 11, 1994
and effective on January 13, 1994, specifically protects the interests and
safety of customers using the products or services provided by business
operators. The Consumer Protection Commission of Executive Yuan serves as an
ombudsman supervising, coordinating, reporting any unsafe products/services and
periodically reviewing the legislation.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Position in Australia<o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">In
Australia, the corresponding agency is the Australian Competition and Consumer
Commission or the individual State Consumer Affairs agencies. The Australian
Securities and Investments Commission have responsibility for consumer
protection regulation of financial services and products.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Position in Germany<o:p></o:p></span></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">A minister of the federal cabinet
is responsible for consumer rights and protection.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 9.0pt; margin-right: 0in; margin-top: 0in; mso-list: l10 level1 lfo17; mso-text-indent-alt: -9.0pt; text-align: justify; text-indent: -9.0pt; text-justify: inter-ideograph;">
<!--[if !supportLists]--><b><span style="font-size: 13.0pt; line-height: 115%;">V.<span style="font-size: 7pt; font-weight: normal; line-height: normal;"> </span></span></b><!--[endif]--><b><span style="font-size: 13.0pt; line-height: 115%;">CONSUMER PROTECTION</span></b><span style="font-size: 13.0pt; line-height: 115%;"> - <b>INDIAN SCENARIO<o:p></o:p></b></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">On
April 9, 1985 the General Assembly of the United Nations passed a Resolution
adopting a set of guidelines for consumer protection and authorized Secretary
General, United Nations to persuade the member countries, especially the
developing ones to adopt policies and laws for better protection of the
interests of the consumers.</span> <span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">India being one of the signatory to
the Resolution enacted the Consumer Protection Act, 1986 to fulfill its
obligation. The Parliament enacted the
legislation in December 1986, which came into force on April 15, 1987. The main objectives of the Act are to provide
for better protection of the interests of the consumers and for that purpose to
make provision for the establishment of consumer councils and other authorities
for the settlement of consumers’ disputes.</span> <span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Act also provides
for quasi-judicial adjudicatory machinery at three levels i.e. District, State
and National levels called District Forum, State Consumer Disputes Redressal
Commission and National Consumer Disputes Redressal Commission. <o:p></o:p></span></div>
<div style="line-height: 115%; margin-bottom: .0001pt; margin: 0in; text-align: justify; text-indent: .25in; text-justify: inter-ideograph;">
<br /></div>
<div style="line-height: 115%; margin-bottom: .0001pt; margin: 0in; text-align: justify; text-justify: inter-ideograph;">
<em><span style="font-size: 13.0pt; line-height: 115%; mso-bidi-font-weight: bold;">Importance of Consumer Welfare </span></em><span style="font-size: 13.0pt; line-height: 115%;"><o:p></o:p></span></div>
<div style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div style="line-height: 115%; margin-bottom: .0001pt; margin: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 13.0pt; line-height: 115%;">Consumerism, importance of consumers in the market, increasing awareness
among consumers are some of the important milestones in the development of
consumer affairs in India. A country’s economy revolves around its markets.
When it is a seller’s market the consumer exploitation is the maximum. When
there are large number of buyers and sellers, consumers enjoy a
number of choices. Before enactment of the Consumer Protection Act,
1986 India had a sellers’ market. <o:p></o:p></span></div>
<div style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div style="line-height: 115%; margin-bottom: .0001pt; margin: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 13.0pt; line-height: 115%;">Further liberalization of our economy in 1991 gave opportunity to Indian
consumers to get quality products at competitive prices. Earlier in order to
protect our own industries government restricted foreign competition. This led
to a situation where consumers were getting very few choices and quality wise
also our products were inferior. For purchase of car there used to be a huge
booking and there were only two brands available. Nobody bothered about
consumer interests and the attitude was towards protecting our own industry.<o:p></o:p></span></div>
<div style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div style="line-height: 115%; margin-bottom: .0001pt; margin: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 13.0pt; line-height: 115%;">Thus, the need for consumer satisfaction and consumer protection was
recognized. A consumer is considered as an inevitable part of a socio-economic
political system, where the exchange initiated and
transaction realised between two parties, namely buyers and sellers
has an impact on a third party i.e, society. However, the inherent profit
motive in mass production and sales also offers the opportunity to many
manufacturers and dealers to exploit consumers. Problems of defective goods,
deficiency in service, spurious and duplicate brands and misleading advertisements
are rampant and often the gullible consumer falls prey to it.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div style="line-height: 115%; margin-bottom: .0001pt; margin: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 13.0pt; line-height: 115%;">This paved the way for enactment of the Consumer Protection Act in 1986.
The provisions of this Act cover ‘goods’ as well as ‘services’. The goods
are those which are manufactured or produced and sold to consumers through
wholesalers and retailers. The services are in the nature of transport,
telephone, electricity, housing, banking, insurance, medical treatment,
etc. To make the Act more effective and meaningful, necessary changes
have been brought by Consumer Protection (Amendment) Act, 2002, which came into
force w.e.f March, 15, 2003. This is based on the basic rights of consumers as
defined by the International Organisation of Consumer Unions (IOCU) viz the
Rights to Safety, to information of Choice, to be Heard, to Redressal, to
Consumer Education, to Healthy Environment and to Basic needs. <o:p></o:p></span></div>
<div style="line-height: 115%; margin-bottom: .0001pt; margin: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 9.0pt; margin-right: 0in; margin-top: 0in; mso-list: l10 level1 lfo17; mso-text-indent-alt: -9.0pt; text-align: justify; text-indent: -9.0pt; text-justify: inter-ideograph;">
<!--[if !supportLists]--><b><span style="font-size: 13.0pt; line-height: 115%;">VI.<span style="font-size: 7pt; font-weight: normal; line-height: normal;"> </span></span></b><!--[endif]--><b><span style="font-size: 13.0pt; line-height: 115%;">FSLRC APPROACH TO CONSUMER PROTECTION<o:p></o:p></span></b></div>
<div class="MsoListParagraph" style="margin-left: .25in; mso-add-space: auto; mso-list: l8 level1 lfo16; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">a)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-weight: normal; line-height: normal;"> </span></span></i></b><!--[endif]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Background<o:p></o:p></span></i></b></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">The Finance Minister announced the formation of the
Financial Sector Legislative Reforms Commission (FSLRC) during his Budget
speech of 2011-2012 to rewrite and harmonize financial sector legislations,
rules and regulations. This had become necessary as the institutional framework
governing India's financial sector was built over a century. After a detailed
study, the FSLRC submitted its Report to the Government of India on 22/03/2013.
The Report is in two parts.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Volume
I – Text of the findings and recommendations and <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">Volume
II – Basic framework of a draft law. <o:p></o:p></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">The Report dealt at length the aspect of the protection of
financial consumer. </span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The terms “<i>consumer</i>”, “<i>retail consumer</i>”
and “<i>eligible enterprise</i>” are defined
in the draft Code to mean:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l15 level1 lfo3; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";">(1)<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Consumer:</span></i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">
A person who has availed, avails, or intends to avail a financial service or
has a right or interest in a financial product. </span><span style="font-family: "Times New Roman","serif";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif";">[Whereas under
section 2(d) of the Consumer Protection Act, 1986 a consumer is defined as
follows:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif";">Consumer
means any person who—<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l15 level2 lfo3; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";">(i)<span style="font-family: 'Times New Roman'; font-size: 7pt;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif";">buys any goods for a
consideration which has been paid or promised or partly paid and partly
promised, or under any system of deferred payment and includes any user of such
goods other than the person who buys such goods for consideration paid or
promised or partly paid or partly promised, or under any system of deferred
payment when such use is made with the approval of such person, but does not
include a person who obtains such goods for resale or for any commercial
purpose<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/ARTICLE%20ON%20FSLRC%20-ICSI%20HYDERABAD%20CHAPTER-06-03-2014.docx#_ftn4" name="_ftnref4" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-size: 11pt; line-height: 115%;">[4]</span></span><!--[endif]--></span></a>;
or<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l15 level2 lfo3; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";">(ii)<span style="font-family: 'Times New Roman'; font-size: 7pt;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif";">hires or avails of any services
for a consideration which has been paid or promised or partly paid and partly
promised, or under any system of deferred payment and includes any beneficiary
of such services other than the person who 'hires or avails of the services for
consideration paid or promised, or partly paid and partly promised, or under
any system of deferred payment, when such services are availed of with the
approval of the first mentioned person but does</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;"> </span><span style="font-family: "Times New Roman","serif";">not include a person who avails
of such services for any commercial purposes]. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Therefore, the Consumer Protection Act, 1986 covers
‘goods’ as well as ‘services’. The goods are those which are manufactured or
produced and sold to consumers through wholesalers and retailers. The services are in the nature of transport,
telephone, electricity, housing, banking, insurance, medical treatment,
etc. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l15 level1 lfo3; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(2)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Retail consumer</span></i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">:
A consumer that is an individual or an eligible enterprise, if the value of the
financial product or service does not exceed the limit specified by the
regulator in relation to that product or service. The regulator may specify
different limits for different categories of financial products and services.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l15 level1 lfo3; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(3)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Eligible enterprise</span></i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">:
An enterprise that has less than a specified level of net asset value or has
less than a specified level of turnover. Each of these caps will be specified
by the regulator.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: .25in; mso-add-space: auto; mso-list: l8 level1 lfo16; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">b)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-weight: normal; line-height: normal;"> </span></span></i></b><!--[endif]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Key
Components of the Financial Legal Framework<o:p></o:p></span></i></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Commission has envisaged
certain key components of the financial legal framework. Each of these
components is guided by a clear understanding of market failures. From this
perspective, the Commission envisioned tasks of financial law as the following
nine components:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l4 level1 lfo4; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(1)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Consumer protection<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-add-space: auto; mso-list: l4 level1 lfo4; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(2)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Micro-prudential
regulation<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-add-space: auto; mso-list: l4 level1 lfo4; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(3)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Resolution<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-add-space: auto; mso-list: l4 level1 lfo4; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(4)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Capital
controls<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-add-space: auto; mso-list: l4 level1 lfo4; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(5)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Systemic
risk<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-add-space: auto; mso-list: l4 level1 lfo4; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(6)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Development
and redistribution<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-add-space: auto; mso-list: l4 level1 lfo4; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(7)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Monetary
policy<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-add-space: auto; mso-list: l4 level1 lfo4; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(8)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Public
debt management<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-add-space: auto; mso-list: l4 level1 lfo4; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(9)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Foundations
of contracts and property</span><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-add-space: auto; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: .0001pt; margin: 0in; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">As
regards the Consumer protection the commission remarked that a prime motivation
of all financial regulation is to protect consumers. The relationship between
financial firms and their customers is one where, many times, the outcomes may
harm customers. These problems are not sporadic or accidental; but are often
rooted in basic problems of information and incentives and will not be
alleviated through financial literacy campaigns. The central purpose of
financial regulation is to intervene in the relationship between financial
firms and their customers, and address market failures. This requires a
comprehensive consumer protection framework that covers both the problem of
prevention (interventions that induce financial firms towards fair play) and
cure (addressing consumer grievances).<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Commission in its Report has observed
that the vulnerability of consumers reflects a major gap in Indian financial
regulation, which needs to be addressed. As such, the Commission recommends the
adoption of a consolidated, non-sector-specific, consumer protection framework
for the entire financial system that will empower and require regulators to
pursue consumer protection for the financial activities regulated by them. In
this context, the draft Code approaches the problems of consumer protection on
two fronts: (1) prevention and (2) cure.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l11 level1 lfo5; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(1)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Prevention: </span></i></b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Prevention
requires regulation-making and enforcement across the entire financial system
from the viewpoint of consumer interests. For example, looking at questions of
remuneration and conflicts of interest, when a sales agent sells a financial
product to a household, and gets paid a fee by the producer of this financial
product, is there a problem with conflicts of interest? How do we evolve a
structure where the provider acts in the best interest of the consumer?
Regulators should be obliged to grapple with questions such as these.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The
consumer protection part of the draft Code has three components: <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 58.5pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l11 level2 lfo5; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(1)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">an
enumerated set of rights and protections for consumers, <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 58.5pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l11 level2 lfo5; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(2)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">an
enumerated set of powers in the hands of the regulator, and <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 58.5pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l11 level2 lfo5; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(3)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">principles
that guide what power should be used under what circumstances. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The
details of consumer protection would, of course, lie in the subordinated
legislation to be drafted by financial regulators. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The
Commission further observed that in India, so far, the financial regulatory
structure has been defined by sector, with multiple laws and often multiple
agencies covering various sectors. This has led to inconsistent treatment, and
regulatory arbitrage. Regulators have sometimes been lax in developing required
protections out of notions of facilitating growth in the industry. These
problems would be reduced by having a single principles-based law which would
cover the entire financial system. It seems the Commission believes that an
overarching principles-based body of law would allow regulatory flexibility,
consistent treatment of consumers across all aspects of their engagement with
the financial system, fairness and ultimately a more stable financial system.<o:p></o:p></span></div>
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<br /></div>
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<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Preventive tools<o:p></o:p></span></i></div>
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<br /></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 53.1pt; margin-right: 0in; margin-top: 0in; mso-list: l13 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(a)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Certain
protections are provided to all financial consumers.<o:p></o:p></span></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 53.1pt; margin-right: 0in; margin-top: 0in; mso-list: l13 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(b)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">An
additional set of protections are provided to unsophisticated or retail
consumers.<o:p></o:p></span></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 53.1pt; margin-right: 0in; margin-top: 0in; mso-list: l13 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(c)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The
regulator is given a list of enumerated powers which it can use in order to
implement these protections.<o:p></o:p></span></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 53.1pt; margin-right: 0in; margin-top: 0in; mso-list: l13 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(d)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The
regulator will be guided by a list of principles that should inform the
exercise of its powers.<o:p></o:p></span></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 53.1pt; margin-right: 0in; margin-top: 0in; mso-list: l13 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(e)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The
regulator has been given the power to supervise financial service providers and
initiate enforcement and disciplinary actions.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l11 level1 lfo5; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(2)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Cure</span></i></b><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">:
The Commission proposes the creation of a unified financial redress agency. The
redress agency is expected to have front-ends in every district of India, where
consumers of all financial products will be able to submit complaints. Modern
technology will be used to connect these front-ends into a centralized
light-weight adjudication process. A well structured work-flow process will
support speedy and fair handling of cases. Consumers will deal only with the
redress agency when they have grievances in any financial activity: they will
not have to deal with multiple agencies.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The
complaints brought before the redress agency will shed light on where the
problems of consumer protection are being found, and thus suggest areas for
improvement in subordinated legislation. As such, a key feature of the redress
agency will be the creation of a feedback loop through which the computerised
case database of the redress agency will be utilised by the regulator to make
better regulations on a systematic basis.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-indent: .25in; text-justify: inter-ideograph;">
<br /></div>
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<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Curative
tools<o:p></o:p></span></i></div>
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<br /></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 53.1pt; margin-right: 0in; margin-top: 0in; mso-list: l7 level1 lfo2; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(a)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Creation
of an independent financial redress agency to redress complaints of retail
consumers against all financial service providers.<o:p></o:p></span></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 53.1pt; margin-right: 0in; margin-top: 0in; mso-list: l7 level1 lfo2; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(b)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">A
research program, applied to the data emanating from the redress agency, will
feed back to the regulator and thus enable improvements in its work.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: .25in; mso-add-space: auto; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: .25in; mso-add-space: auto; mso-list: l8 level1 lfo16; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">c)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-weight: normal; line-height: normal;"> </span></span></i></b><!--[endif]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Objectives
and Principles<o:p></o:p></span></i></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The objectives of consumer
protection are to guard consumer interests and to promote public awareness.
While pursuing these objectives, the regulator will be empowered to make
regulations to determine the manner and extent to which the protections under
the law will apply to the users of different financial products and services.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo9; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(a)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;"> </span></span></i><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Objectives</span></i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;"><o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The consumer protection part of the
draft Code will direct the regulator to pursue the twin objectives of:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l2 level1 lfo8; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(1)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Protecting
and furthering the interests of consumers of financial products and services;
and<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l2 level1 lfo8; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(2)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Promoting
public awareness in financial matters.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: .25in; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: .25in; mso-add-space: auto; mso-list: l0 level1 lfo9; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(b)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;"> </span></span></i><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Principles to guide the regulators</span></i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">
<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The
regulator must consider the following principles while carrying out any
functions or exercising any powers relating to consumer protection:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l12 level1 lfo7; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(1)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The
level of protection given to a consumer and the level of responsibility on the
financial service provider should vary depending on:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l16 level1 lfo6; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(a)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">the level of sophistication of the
consumer;<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l16 level1 lfo6; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(b)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">the nature and degree of risk embodied
in a financial product or service; and<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l16 level1 lfo6; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(c)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">the extent of dependence of the consumer
on the financial service provider.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l12 level1 lfo7; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(2)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Consumers
should take reasonable responsibility for their decisions.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l12 level1 lfo7; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(3)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Any
obligation imposed on a financial service provider should be consistent with
the benefits expected from such obligation.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l12 level1 lfo7; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(4)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Barriers
to competition owing to adverse effects of regulatory actions should be
minimized and there should be competitive neutrality in the treatment of
financial service providers.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l12 level1 lfo7; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(5)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The
need to promote, and not hamper, innovation and access to financial products
and services.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: .25in; mso-add-space: auto; mso-list: l0 level1 lfo9; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(c)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;"> </span></span></i><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Protections available to consumers<o:p></o:p></span></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">To
be able to confidently participate in the financial markets, all consumers
should be provided with certain basic protections. In addition, a wider set of
protections need to be available only to retail consumers. The Commission
suggests six types of protections for all consumers and additional protections
for retail consumers as explained below:<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l9 level1 lfo10; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(1)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;"> </span></span></i><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Right to professional diligence<o:p></o:p></span></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Consumers
should be assured that any interaction that they have with a financial service
provider will be carried out in good faith and in line with honest market
practices. The level of diligence expected from a provider will vary depending
on the honest practices followed in that line of business, the consumer’s
knowledge and expertise level and the nature of risk involved in the financial
service.<o:p></o:p></span></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l9 level1 lfo10; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(2)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;"> </span></span></i><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Protection against unfair contract
terms<o:p></o:p></span></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Due
to differences in the bargaining power of consumers and financial intermediaries,
consumers are often forced to accept unreasonable contractual terms that are
not in their best interests. To prevent this, the draft Code declares unfair
terms in financial contracts that have not been explicitly negotiated between
the parties to be void.<o:p></o:p></span></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l9 level1 lfo10; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(3)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;"> </span></span></i><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Protection against unfair conduct<o:p></o:p></span></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">A
consumer’s decision on whether or not to enter into a financial contract or the
manner in which to exercise any rights under a contract should be taken in a
fully informed environment, free of any undue influence. The draft Code
therefore protects the consumer from any unfair conduct that is geared towards
unfairly influencing the consumer’s transactional decisions. This includes
situations where a consumer’s transactional decision is affected by:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .75in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l3 level1 lfo11; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(a)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Misleading conduct</span></i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">:
Knowingly providing consumers with false information or information that is
correct but is provided in a deceptive manner. Any failure to correct an
evident and important misapprehension on the part of the consumer will also be
covered under the law.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .75in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l3 level1 lfo11; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(b)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Abusive conduct:</span></i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">
Use of coercion or undue influence to influence a consumer’s transactional
decisions.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l9 level1 lfo10; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(4)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;"> </span></span></i><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Protection of personal information<o:p></o:p></span></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Any
information relating to an identifiable person belongs to that person and
should be protected from un-authorised use. Financial service providers will
therefore be restrained from collecting, using or disclosing any personal
information belonging to consumers, except to the extent required for the
purposes of carrying out their business or expressly permitted under the draft
Code.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The
draft Code also provides safeguards for consumers to be able to access their
personal information held by service providers and ensure that the information
is accurate and complete.<o:p></o:p></span></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l9 level1 lfo10; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(5)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;"> </span></span></i><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Requirement of fair disclosure<o:p></o:p></span></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Information
asymmetry between consumers and financial firms affects the quality of
financial decisions made by consumers. This asymmetry needs to be addressed by
imposing a positive obligation on financial service providers to provide
consumers with all the information that is relevant for them to make informed
decisions. This includes disclosures required to be made prior to entering a
financial contract and continuing disclosures regarding material changes to
previously provided information or the status or performance of a financial product.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Given
the wide array of financial services being covered under the draft Code, the
regulator may find it useful to specify different disclosure requirements for
various financial products and services. With this objective, the draft Code
empowers the regulator to make differing provisions regarding the types of
information required to be disclosed, the manner in which disclosures must be
made and the appropriate time-periods for making required disclosures.<o:p></o:p></span></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l9 level1 lfo10; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(6)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;"> </span></span></i><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Redress of complaints<o:p></o:p></span></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The
Commission envisages a two-tier approach for the redress of consumer
complaints: first at the level of the financial service provider and
subsequently at the level of the redress agency (for retail consumers).<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">If
a consumer is dissatisfied with a financial product or service, the consumer
should first take up the issue with the relevant financial service provider.
For this purpose, the draft Code requires all financial service providers to
have in place an effective mechanism to redress complaints from consumers. They
will also be obliged to inform consumers about their right to seek redress and
the process to be followed for it. The regulator may supplement these
requirements by laying down specific details of the process to be followed by
financial service providers to receive and redress complaints.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">In
certain cases the regulator may also envisage an additional layer of grievance
assessment to take place appear, or instead of, the service provider’s own
grievance redress mechanism and before the complaint goes to the redress
agency. The stock exchange arbitration process would be an example of such an
arrangement.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Additional
protections for retail consumers<o:p></o:p></span></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Commission believes that the
following rights and protections should be available to retail consumers over
and above the protections available to consumers generally. These protections
are needed due to the generally low levels of knowledge and experience of
retail consumers.<o:p></o:p></span></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l5 level1 lfo12; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(1)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;"> </span></span></i><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Assessment of suitability<o:p></o:p></span></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Retail
consumers may often be in a situation where they are not able to fully
appreciate the features or implications of a financial product, even with full
disclosure of information to them. This makes a strong case for a thorough
suitability assessment of the products being sold to them.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The
draft Code provides this protection by requiring that any person who advises a
retail consumer in relation to the purchase of a financial product or service
must obtain relevant information about the needs and circumstances of the
consumer before making a recommendation to the consumer.<o:p></o:p></span></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l5 level1 lfo12; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(2)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;"> </span></span></i><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Dealing with conflict of interests<o:p></o:p></span></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">One
of the best ways to ensure good consumer protection is to align the incentives
of financial service providers with those of consumers and ensure that in case
of a conflict, the interests of consumers take precedence. The draft Code
incorporates this principle of prioritising the interests of retail consumers
over those of the provider. It also requires advisors to inform retail
consumers about any conflicted remuneration they stand to receive, which may influence
the advice being given to the retail consumer. The regulator may, in addition,
specify the nature, type and structure of benefits permitted to be received by
an advisor for a particular financial product or service.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l8 level1 lfo16; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">d)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-weight: normal; line-height: normal;">
</span></span></i></b><!--[endif]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Functions
and powers of the Regulator</span></i><o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Commission recommends the
creation of a single consumer protection framework which will apply to all
parts of the financial system. The consumer protection framework may be
implemented by one or more regulators, depending on the views of lawmakers
about financial regulatory architecture. While the financial regulatory
architecture may change, it is expected that the consumer protection framework
would not.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The general functions of a
regulator include: making regulations to carry out the purposes of the law;
issuing guidance to financial service providers; supervising the conduct of
financial service providers to ensure compliance with the law; and taking
appropriate enforcement actions to deal with any violations.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The regulator will also be responsible
for the existence of financial awareness programmes in order to meet the
objective of promoting public awareness in financial matters. This will involve
spreading awareness about the benefits of financial planning, protections
available to consumers, and features and functions of financial products and
services. If required, the regulator may also choose to establish a separate
financial awareness body to pursue this function.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">In exercise of its supervisory
functions, the regulator will need to put in place appropriate arrangements for
seeking relevant information from financial service providers, imposing
record-keeping requirements, conducting investigations, inspecting premises and
holding meetings with the officers of financial service providers. If the
regulator has reasonable grounds to suspect a violation of the law, it may
initiate appropriate enforcement actions.<o:p></o:p></span></div>
<div class="MsoListParagraph" style="margin-left: .25in; mso-add-space: auto; mso-list: l8 level1 lfo16; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">e)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-weight: normal; line-height: normal;">
</span></span></i></b><!--[endif]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Advisory
Council on Consumer Protection<o:p></o:p></span></i></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">In order to monitor and contribute
towards the regulator’s consumer protection objectives, the Commission
recommends the creation of an advisory council on consumer protection. The
advisory council will be responsible for:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l1 level1 lfo13; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(1)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Making representations, in the form of
advice, comments or recommendations, on the regulator’s policies and practices;<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l1 level1 lfo13; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(2)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Reviewing,
monitoring, and reporting to the regulator on the effectiveness of its policies
and practices; and<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l1 level1 lfo13; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(3)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Creating
reports stating its views on all draft regulations published by the regulator.
The regulator must take into account any representations or reports received by
it from the advisory council and provide a written response in cases where the
regulator disagrees with the views or proposals made by the council.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: .25in; mso-add-space: auto; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: .25in; mso-add-space: auto; mso-list: l8 level1 lfo16; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">f)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-weight: normal; line-height: normal;">
</span></span></i></b><!--[endif]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Financial
Redress Agency<o:p></o:p></span></i></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Commission recommends the
creation of a new statutory body to redress complaints of retail consumers
through a process of mediation and adjudication. The redress agency will
function as a unified grievance redress system for all financial services. To
ensure complete fairness and avoid any conflicts of interest, the redress
agency will function independently from the regulators.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The financial redress mechanism
proposed by the Commission will replace the existing financial sector-specific
ombudsman systems such as the banking ombudsman and the insurance ombudsman
although retail consumers will continue to have the option to approach other
available forums, such as the consumer courts established under the Consumer
Protection Act, 1986 and regular courts. In the future, if the Government is of
the view that the redress agency has acquired sufficient scale and expertise to
be able to efficiently address all complaints from retail consumers, it will
have the power to exclude the applicability of the Consumer Protection Act,
1986 to retail consumers covered by the redress agency.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">In any case, once a retail consumer
opts for a remedy before the redress agency, it will not be permitted to
institute fresh proceedings before another forum, either simultaneously or
after a final order has been issued by the redress agency. Similarly, action
initiated before any other forum will bar any action before the redress agency.
The redress agency will be managed by a board of directors. The agency will be
funded through a combination of allocations from the Central Government, standard
fees payable by all financial service providers and a complaint-based fee that
will be collected as and when a complaint is brought against a financial
service provider.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">An effective dispute resolution
body needs to be designed in a manner that ensures access, convenience,
efficiency and speedy remedies. It needs to address two kinds of difficulties:
a scenario where a genuine consumer is not able to obtain redress, and one
where multiple cases are filed against a financial firm as a strategy of harassment.
The Commission envisages the redress agency to function as a technologically
modern organisation that will carry out video hearings, digital handling of
documents, telephonic/online registration of complaints, maintenance of a high
quality electronic database and online tracking of compensation payments. To
ensure that the processes designed by the redress agency are in line with these
requirements, the draft Code expressly requires the redress agency to put in
place adequate systems, processes, technology and infrastructure to enable it
to efficiently discharge its functions. The draft Code also empowers the
regulators to impose service level requirements on the redress agency with
measurable targets on matters such as the total cost to parties for proceedings
before it, compliance cost for financial firms and time-periods for each step
of the redress process. The redress agency will be accountable for meeting
these targets with a requirement to explain any failure to do so. These
measures will compel the redress agency to strive towards maximum efficiency in
its processes and functioning.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The draft Code allows the redress
agency the discretion to open offices anywhere in the country. The Commission
intends that the redress agency will use this power to set up Front-end offices
throughout the country where retail consumers of all financial products and
services will be able to submit their complaints. Modern technology would then
be used to connect these front-ends into a centralised mediation and adjudication
system.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The redress agency will endeavour
to arrive at an amicable settlement in a majority of the complaints through its
mediation process. In cases where a settlement is not achieved, the consumer
may choose to withdraw the complaint from the redress agency, failing which, it
will be referred for adjudication. The adjudicator will hear the parties,
examine the claim and pass a final order on the complaint aeter taking into
account:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l14 level1 lfo14; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(a)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">the provisions of the draft Code on
consumer protection and regulations made under it;<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l14 level1 lfo14; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(b)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">the
terms of the financial contract between the parties;<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l14 level1 lfo14; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(c)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">any
code of conduct applicable to the financial service provider; and<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l14 level1 lfo14; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(d)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Prior determinations made by the redress
agency on similar matters.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">An order made by the adjudicator
may provide for an award of compensation to the retail consumer, subject to
limits that will be specified by the regulators, or issue any other directions
that the adjudicator considers just and appropriate. A party that is
dissatisfied with the adjudicator’s orders will have the right to bring an
appeal before the FSAT and appeals FSAT will lie before the Supreme Court.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Commission sees strong
complementarities in the roles of the redress agency (curing grievances) and
the regulators (preventing grievances). The complaints received by the redress
agency will shed light on areas where the problems of consumer protection are
most prominent, and thus suggest areas for improvement in subordinated
legislations. Hence, the draft Code seeks to ensure a feedback loop through
which the redress agency will use the FDMC to share information on complaints
with the regulators on an ongoing basis and the regulators will analyse the
information received from the redress agency and utilise it for improved
regulation-making and systemic improvement.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Specifically, the information
technology systems within the redress agency must create a high quality
database about all aspects of all complaints that are filed with it. This
database must be analysed in order to shed light on the areas where there are difficulties
and thus feed back into better regulation and supervision. The research program
which studies this database should be a joint effort between the redress
agency, regulators and academic scholars, with release of datasets and research
into the public domain. Over the years, there should be a visible feedback loop
where the hot spots of grievance that are identified lead to modifications of
regulation and supervision.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Several provisions of the draft
Code, specifically those relating to the creation and Operation of the redress
agency, require co-ordination and co-operation between multiple regulators. In
the event that the regulators are unable to arrive at a consensus on such
matters, within a reasonable period, the matter will be addressed through the
FSDC<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/ARTICLE%20ON%20FSLRC%20-ICSI%20HYDERABAD%20CHAPTER-06-03-2014.docx#_ftn5" name="_ftnref5" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-size: 13pt; line-height: 115%;">[5]</span></span><!--[endif]--></span></a>. <o:p></o:p></span></div>
<div class="MsoListParagraph" style="margin-left: .25in; mso-add-space: auto; mso-list: l8 level1 lfo16; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">g)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-weight: normal; line-height: normal;">
</span></span></i></b><!--[endif]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Competition
Law and Policy <o:p></o:p></span></i></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Competition Commission of India
(CCI) recognises the major role of healthy competition in financial markets for
ensuring the best interests of consumers. While perfect competition alone will
not protect the interests of consumers, greater competition, in tandem with a
sound and well functioning consumer protection framework, is undoubtedly a
powerful tool to enhance consumer welfare. The CCI is the leading, non-sectoral
authority responsible for competition policy issues in India. The CCI has
overlapping jurisdiction with many independent regulators as it is charged with
the duty of fostering greater competition in all areas of the economy.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The Commission recommends a
structured mechanism for interaction and co-operation between the CCI and
financial regulators in the following ways:<o:p></o:p></span></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l6 level1 lfo15; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(1)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;"> </span></span></i><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Consultation for draft regulations<o:p></o:p></span></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The
CCI should review draft regulations issued by the regulator for public comments
and provide its inputs on the potential competition implications, if any. The
regulator must consider the representation made by CCI before finalising the
regulations. If the regulator disagrees with CCI’s views, it must provide
written reasons.<o:p></o:p></span></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l6 level1 lfo15; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(2)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;"> </span></span></i><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Review of regulatory provisions<o:p></o:p></span></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">CCI
must be empowered to monitor the effects on competition of any regulatory
actions and practices on an ongoing basis. If it determines that a regulatory
action is unduly detrimental to competition in a financial market, the CCI must
submit a report on the issue to the regulator. The regulator will be obliged to
consider and respond to the report.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">If
the regulator and the CCI disagree on the course of action to be taken, the CCI
will have the power to direct the regulator to take specified actions to
address the negative effects on competition identified by the CCI<o:p></o:p></span></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l6 level1 lfo15; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(3)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;"> </span></span></i><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Reference by CCI<o:p></o:p></span></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The
CCI must make a reference to the regulator if it initiates any proceedings
involving a financial service provider, and the regulator must respond with its
views on the referred issue, within an agreed period. In such cases, if the
regulator believes that an action taken by the CCI may interfere with the
regulator’s objectives, the regulator may choose to nominate one non-voting
member on to the CCI’s board to participate in proceedings relating to that
matter.<o:p></o:p></span></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l6 level1 lfo15; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(4)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;"> </span></span></i><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Reference by the regulator<o:p></o:p></span></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The
regulator must report to the CCI about any conduct of financial service
providers that appears to it to be in violation the Competition Act, 2002 so
that appropriate proceedings may be initiated under that law.<o:p></o:p></span></div>
<div class="MsoListParagraph" style="margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-list: l6 level1 lfo15; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(5)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; line-height: normal;"> </span></span></i><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">Memorandum of understanding<o:p></o:p></span></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The
draft Code requires the CCI and the regulator to enter into a memorandum of
understanding to establish the procedures for co-operation between them, which
may be modified by them from time to time.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">There
is also a need for organised interaction between the CCI and the resolution
corporation in the context of non-voluntary mergers and acquisitions. The
mechanisms to address the likely effects of the resolution corporation’s
actions on competition in the relevant market is addressed in the draft Code
under the part on resolution of financial service providers.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div style="line-height: 115%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 9.0pt; margin-right: 0in; margin-top: 0in; mso-list: l10 level1 lfo17; mso-text-indent-alt: -9.0pt; text-align: justify; text-indent: -9.0pt; text-justify: inter-ideograph;">
<!--[if !supportLists]--><b><span style="font-size: 13.0pt; line-height: 115%;">VII.<span style="font-size: 7pt; font-weight: normal; line-height: normal;"> </span></span></b><!--[endif]--><b><span style="font-size: 13.0pt; line-height: 115%;">CONCLUSION<o:p></o:p></span></b></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 13.0pt; line-height: 115%;">The
Global Financial Crisis has significantly curtailed consumer confidence in the
financial services sector. It is becoming evident that consumer protection is a
core prudential issue, part of the process of creating a fair market
infrastructure. India needs a capable
financial system, with sophisticated private financial firms. However, the
emergence of this financial system should not become a ‘<i>carte blanche’</i> for clever financial firms who achieve undue
influence with their regulators, to take unfair advantage of customers. The
present financial laws in India are vulnerable to such a prospect. Therefore,
there is an immenent need to make consumer protection an integral part of
legal, regulatory and supervisory frameworks in India. Regulation may be the principal driver to meet
this challenge. <o:p></o:p></span></div>
<div style="border-bottom: solid windowtext 1.0pt; border: none; mso-border-bottom-alt: solid windowtext .5pt; mso-element: para-border-div; padding: 0in 0in 1.0pt 0in;">
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<br /></div>
</div>
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<br /></div>
<br />
<div>
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<div id="ftn1">
<div class="MsoFootnoteText" style="margin-left: 9.0pt; text-align: justify; text-indent: -9.0pt; text-justify: inter-ideograph;">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/ARTICLE%20ON%20FSLRC%20-ICSI%20HYDERABAD%20CHAPTER-06-03-2014.docx#_ftnref1" name="_ftn1" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[1]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> </span></i><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt; mso-fareast-font-family: "Times New Roman";">Priest v. Last; (1903) 2 K B 148</span></i><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><o:p></o:p></span></i></div>
</div>
<div id="ftn2">
<div class="MsoFootnoteText" style="margin-left: 9.0pt; text-align: justify; text-indent: -9.0pt; text-justify: inter-ideograph;">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/ARTICLE%20ON%20FSLRC%20-ICSI%20HYDERABAD%20CHAPTER-06-03-2014.docx#_ftnref2" name="_ftn2" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[2]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> </span></i><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt; mso-fareast-font-family: "Times New Roman";">Ashington Piggeries Ltd v. Christopher Hill Ltd; (1972) AC
441</span></i><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><o:p></o:p></span></i></div>
</div>
<div id="ftn3">
<div class="MsoFootnoteText" style="margin-left: 9.0pt; text-align: justify; text-indent: -9.0pt; text-justify: inter-ideograph;">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/ARTICLE%20ON%20FSLRC%20-ICSI%20HYDERABAD%20CHAPTER-06-03-2014.docx#_ftnref3" name="_ftn3" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[3]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> </span></i><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt; mso-fareast-font-family: "Times New Roman";">Harlingdon & Leinster Enterprises Ltd v. Christopher
Hull Fine Art Ltd; (1990) 3 WLR 13; (1990) 1 All <o:p></o:p></span></i></div>
<div class="MsoFootnoteText" style="margin-left: 9.0pt; text-align: justify; text-indent: -9.0pt; text-justify: inter-ideograph;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt; mso-fareast-font-family: "Times New Roman";">
ER 737</span></i><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><o:p></o:p></span></i></div>
</div>
<div id="ftn4">
<div class="MsoFootnoteText" style="margin-left: 9.0pt; text-align: justify; text-indent: -9.0pt; text-justify: inter-ideograph;">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/ARTICLE%20ON%20FSLRC%20-ICSI%20HYDERABAD%20CHAPTER-06-03-2014.docx#_ftnref4" name="_ftn4" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[4]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> As per the Explanation given under section 2(d) of
the Consumer Protection Act, 1986 “commercial purpose” does not include use by
a person of goods bought and used by him and services availed by him
exclusively for the purposes of earning his livelihood by means of
self-employment.<o:p></o:p></span></i></div>
</div>
<div id="ftn5">
<div class="MsoFootnoteText" style="margin-left: 9.0pt; text-align: justify; text-indent: -9.0pt; text-justify: inter-ideograph;">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/ARTICLE%20ON%20FSLRC%20-ICSI%20HYDERABAD%20CHAPTER-06-03-2014.docx#_ftnref5" name="_ftn5" title=""><span class="MsoFootnoteReference"><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[5]</span></b></span><!--[endif]--></span></i></span></a><i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;"> Financial Stability and Development Council<o:p></o:p></span></i></div>
</div>
</div>
</div>
kpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.com0tag:blogger.com,1999:blog-6816737388948619195.post-23855896975990310322014-10-03T04:08:00.000-07:002014-10-03T04:08:16.597-07:00NEW DRAFT DIRECT TAXES CODE 2013 RELEASED FOR COMMENTS<div dir="ltr" style="text-align: left;" trbidi="on">
<div align="right" class="MsoNormal" style="margin: 0in 0in 0.0001pt 0.5in; text-align: right;">
<div align="right" class="MsoNormal" style="margin: 0in 0in 0.0001pt 0.5in;">
<b><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;">By K P C Rao, LLB,
FCMA, FCS.,<o:p></o:p></span></i></b></div>
<div align="right" class="MsoNormal" style="margin: 0in 0in 0.0001pt 0.5in;">
<b><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;">CMA (USA)., FIPA
(Australia)<o:p></o:p></span></i></b></div>
<div align="right" class="MsoNormal" style="margin: 0in 0in 0.0001pt 0.5in;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;">Practicing
Company Secretary<o:p></o:p></span></i></div>
<br />
<div align="right" class="MsoNormal" style="margin: 0in 0in 0.0001pt 0.5in;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;">kpcrao.india@gmail.com<o:p></o:p></span></i></div>
</div>
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<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;">The
draft Direct Taxes Code, 2013 was released on the Department of Income Tax
website for comments on April 1, 2014. This is a revised version of the Direct
Taxes Code Bill, 2010, which was introduced in Parliament on August 31, 2010,
and thereafter, was referred to the Standing Committee on Finance. The Direct
Taxes Code proposes to consolidate and amend the laws relating to direct taxes.
Consequently, it replaces the Income Tax Act 1961 and the Wealth Tax Act, 1957.
<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;">The
Direct Taxes Code, 2010 (DTC 2010) had proposed to widen tax slabs for
individuals, and increase tax on companies. In addition, it had proposed to
remove several deductions currently allowed for companies and retain deductions
available to individuals. The Bill had also proposed the General Anti-Avoidance
Rules (GAAR) to allow tax authorities to classify any arrangement as one
entered into for evading taxes. The Bill will lapse with the dissolution of the
15<sup>th</sup> Lok Sabha. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;"> In Direct Taxes Code, 2013 (DTC 2013), various
recommendations of the Standing Committee, as well as recommendations of the
Kelkar Committee on fiscal consolidation have been incorporated. Some of the changes
made in the DTC 2013 are:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(1)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;">The
age of senior citizens is proposed to be relaxed from 65 years in DTC 2010 to 60
years in DTC 2013. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(2)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;">GAAR
in the DTC 2010 was discussed as one of the rules regarding avoidance of
tax. However, in DTC 2013, more clarity
and precision has been brought to the provisions. DTC 2013 includes the applicability of the
GAAR, the impermissible avoidance agreements and the treatment of connected
person etc. Importantly, the onus of proof is to rest with the tax authority invoking
GAAR. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(3)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;">For
the purpose of wealth tax determination, DTC 2013 includes all assets as the
base for wealth tax. The 2010 version had included only the unproductive assets
for the levy of wealth tax. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(4)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;">An
additional tax of 10% (over the 15% dividend distribution tax) is proposed to be
levied on recipients of dividend exceeding Rs one crore. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: "Times New Roman";">(5)<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;">A
fourth slab for income tax may be introduced. Currently, the highest slab is for
incomes in excess of Rs 10 lakh, which is taxed at 30%. The new slab will tax total
income in excess of Rs 10 crore at 35%. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
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</div>
<div align="center" class="MsoListParagraphCxSpLast" style="text-align: center;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;"><o:p></o:p></span></div>
<br />
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;">*****</span></b><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;">
<o:p></o:p></span></div>
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kpcraohttp://www.blogger.com/profile/17198321654704717337noreply@blogger.com0tag:blogger.com,1999:blog-6816737388948619195.post-23196946220781395522014-10-03T04:03:00.001-07:002014-10-03T04:03:51.009-07:00ONE PERSON COMPANY (OPC) - A NEW BUSINESS CONCEPT IN INDIA<div dir="ltr" style="text-align: left;" trbidi="on">
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<b><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt;"><br /></span></i></b></div>
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<b><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;">By K P C Rao, LLB,
FCMA, FCS.,<o:p></o:p></span></i></b></div>
<div align="right" class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-layout-grid-align: none; text-align: right; text-autospace: none;">
<b><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;">CMA (USA)., FIPA
(Australia)<o:p></o:p></span></i></b></div>
<div align="right" class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-layout-grid-align: none; text-align: right; text-autospace: none;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;">Practicing
Company Secretary<o:p></o:p></span></i></div>
<div align="right" class="MsoNormal" style="margin: 0in 0in 0.0001pt 0.5in; text-align: right;">
</div>
<div align="right" class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-layout-grid-align: none; text-align: right; text-autospace: none;">
<i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 115%;">kpcrao.india@gmail.com<o:p></o:p></span></i></div>
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<br /></div>
<div class="MsoListParagraph" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-line-height-alt: 11.25pt; mso-list: l1 level1 lfo5; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">I<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-weight: normal;">
</span></span></i></b><!--[endif]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">What is
One Person Company (OPC)?<o:p></o:p></span></i></b></div>
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<br /></div>
<div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-line-height-alt: 11.25pt; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">The concept of One Person Company
(OPC) has now been introduced in India, through Section 2(62) of Companies Act
2013 thereby enabling Entrepreneur(s) carrying on the business in the
Sole-Proprietor form of business to enter into a Corporate Framework. Though
this concept is new in India but is already a part of many other countries like
China, Australia, Pakistan and UK etc.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-line-height-alt: 11.25pt; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">According to Section 2(62) of
the Companies Act, 2013 ‘<b><i>One Person Company’</i></b> means a company
which has only one person as a member. A company formed under one person
company may be either:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-line-height-alt: 11.25pt; mso-list: l4 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">(a)<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">A company limited by shares or<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-line-height-alt: 11.25pt; mso-list: l4 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">(b)<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">A company limited by guarantee or<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-line-height-alt: 11.25pt; mso-list: l4 level1 lfo1; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">(c)<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">An unlimited company.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-line-height-alt: 11.25pt; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">One Person Company is a hybrid of
Sole-Proprietor and Company form of business, and has been provided with
concessional/relaxed requirements under the Act.<o:p></o:p></span></div>
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<br /></div>
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<!--[if !supportLists]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">II<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-weight: normal;">
</span></span></i></b><!--[endif]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Features
of One Person Company (OPC)<o:p></o:p></span></i></b></div>
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<br /></div>
<div class="MsoListParagraph" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-line-height-alt: 11.25pt; mso-list: l2 level1 lfo2; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">(a)<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Only One Shareholder:</span></i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-line-height-alt: 11.25pt; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Only a natural person, who is an
Indian citizen and resident in India<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/ONE%20PERSON%20COMPANY%20(OPC)%20-%2005-06-2014.docx#_ftn1" name="_ftnref1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-size: 12pt; line-height: 115%;">[1]</span></span><!--[endif]--></span></a>
shall be eligible to incorporate a One Person Company. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoListParagraph" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-add-space: auto; mso-line-height-alt: 11.25pt; mso-list: l2 level1 lfo2; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">(b)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal;">
</span></span></i><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"> <i>Nominee
for the Shareholder:<o:p></o:p></i></span></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">The Shareholder shall nominate
another person who shall become the shareholders in case of death/incapacity of
the original shareholder. Such nominee
shall give his/her consent and such consent for being appointed as the Nominee
for the sole Shareholder. Only a
natural person, who is an Indian citizen and resident in India, shall be a
nominee for the sole member of a One Person Company.<o:p></o:p></span></div>
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<!--[if !supportLists]--><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">(c)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal;">
</span></span></i><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Director: <o:p></o:p></span></i></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Must have a minimum of One Director,
the Sole Shareholder can himself be the Sole Director. The Company may have a
maximum number of 15 directors.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoListParagraph" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-line-height-alt: 11.25pt; mso-list: l1 level1 lfo5; text-align: justify; text-indent: -27.0pt; text-justify: inter-ideograph;">
<!--[if !supportLists]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">III<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-weight: normal;">
</span></span></i></b><!--[endif]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Terms and
Restrictions of One Person Company (OPC)<o:p></o:p></span></i></b></div>
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<br /></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-line-height-alt: 11.25pt; mso-list: l3 level1 lfo3; text-align: justify; text-indent: -27.0pt; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">(a)<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">A person shall not be eligible to
incorporate more than a One Person Company or become nominee in more than one
such company.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-line-height-alt: 11.25pt; mso-list: l3 level1 lfo3; text-align: justify; text-indent: -27.0pt; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">(b)<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">A Minor cannot become member or nominee
of the One Person Company or can hold share with beneficial interest.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-line-height-alt: 11.25pt; mso-list: l3 level1 lfo3; text-align: justify; text-indent: -27.0pt; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">(c)<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">An OPC cannot be incorporated or
converted into a company under Section 8 of the Act. [Company not for Profit].<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-line-height-alt: 11.25pt; mso-list: l3 level1 lfo3; text-align: justify; text-indent: -27.0pt; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">(d)<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">An OPC cannot carry out Non-Banking
Financial Investment activities including investment in securities of any body
corporate. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-line-height-alt: 11.25pt; mso-list: l3 level1 lfo3; text-align: justify; text-indent: -27.0pt; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">(e)<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">An OPC cannot convert voluntarily
into any kind of company unless two years have expired from the date of
incorporation of One Person Company, except threshold limit (paid up share
capital) is increased beyond Rs.50 Lakhs or its average annual turnover during
the relevant period exceeds Rs.2 Crores i.e., if the Paid-up capital of the
Company crosses Rs.50 Lakhs or the average annual turnover during the relevant
period exceeds Rs.2 Crores, then the OPC has to invariably file forms with the
ROC for conversion in to a Private or Public Company, with in a period of Six
Months on breaching the above threshold limits.<o:p></o:p></span></div>
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<br /></div>
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<!--[if !supportLists]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">IV<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-weight: normal;">
</span></span></i></b><!--[endif]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">The Advantages
& Disadvantages of Registration of One Person Company (OPC)<o:p></o:p></span></i></b></div>
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<br /></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-line-height-alt: 11.25pt; mso-list: l0 level2 lfo4; text-align: justify; text-indent: -27.0pt; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">(a)<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-bidi-font-weight: bold; mso-fareast-font-family: "Times New Roman";">Acceptance of One Person Company</span></i><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">:</span></i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"> In the Indian business environment the joint stock forms of
organization or registered organization rules the market and are given high
credibility that attracts easier capital availability and high growth. However, one person company will be compared
on the same ground as that of Sole proprietor because of its characteristics.<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">(b)<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><b><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"> </span></b><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-bidi-font-weight: bold; mso-fareast-font-family: "Times New Roman";">Limited Liability</span></i><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">:</span></i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"> The most important characteristic of the company form of
organization is limited liability. In the concept of OPC, if the limited
liability concept is taken seriously, it will be dangerous for investors to
invest the fund because it may lead to fraudulent business practices on the
other hand if the court comes in between and asks for lifting of corporate veil
then it would be useless to form the one person company.<o:p></o:p></span></div>
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<br /></div>
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<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">(c)<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-bidi-font-weight: bold; mso-fareast-font-family: "Times New Roman";">Compliance cost</span></i><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">:</span></i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"> The main advantage of OPC is limited liability; one main
disadvantage would be compliance cost which is of recurring nature. The
compliance cost of a company is higher than that of a proprietorship form. A
proprietorship form is easy to form and easy to wind up without much compliance
cost or procedure.<o:p></o:p></span></div>
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<br /></div>
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<!--[if !supportLists]--><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">(d)<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-bidi-font-weight: bold; mso-fareast-font-family: "Times New Roman";">Taxation of One Person Company:</span></i><b><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"> </span></b><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">A one
person company would be taxed at same rates as that of all other companies.
This is also a disadvantage as compared to sole proprietorship business as they
enjoy the tax rates applicable to individuals. An OPC will have to sacrifice
all the advantages which a sole proprietorship business enjoys over
the company.<o:p></o:p></span></div>
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<br /></div>
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<br /></div>
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<!--[if !supportLists]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">V<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-weight: normal;">
</span></span></i></b><!--[endif]--><b><i><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Conclusion:<o:p></o:p></span></i></b></div>
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<br /></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">The concept of OPC is expected to
give big impetus to Corporatization in India. The only care to be taken is that
there should be no regulatory mess ups like the ones which hampered the growth
of Limited Liability Partnerships in India. <o:p></o:p></span></div>
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<b><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">*****</span></b><b><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></b></div>
<div align="center" class="MsoListParagraphCxSpLast" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-line-height-alt: 11.25pt; text-align: center;">
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<div id="ftn1">
<div class="MsoFootnoteText" style="text-align: justify; text-justify: inter-ideograph;">
<a href="file:///C:/Documents%20and%20Settings/Administrator/My%20Documents/Downloads/ONE%20PERSON%20COMPANY%20(OPC)%20-%2005-06-2014.docx#_ftnref1" name="_ftn1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></a> <i><span style="font-family: "Times New Roman","serif"; font-size: 11.0pt;">The term
"Resident in India" means a person who has stayed in India for a
period of not less than 182 days during
the immediately preceding one calendar year.</span></i></div>
</div>
</div>
</div>
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