HOW FAR “THE
RECOVERY OF DEBTS DUE TO BANKS AND FINANCIAL INSTITUTIONS ACT, 1993”
CONTRIBUTED IN DEBT RECOVERY MANAGEMENT IN INDIA- AN OVERVIEW
By Dr.
T. Padma., LLM., Ph.D
I. BACKGROUND
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.
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 "Recovery of Debts Due to Banks and Financial
Institutions Act, 1993". As a corollary to this and to speed up the
process of recovery from NPAs, the SARFAESI Act (Securitization and Reconstruction of Financial Assets and Enforcement
of Security Interest Act, 2002) 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).
II.
CONSISTUTION
AND FUNCTIONING OF THE TRIBUNALS
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Under
Section 2(h) “Financial Institution” means—
i.
A
public financial institution within the meaning of Section 4A of the Companies
Act, 1956;
ii.
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.
III.
RECOVERY
PROCESS
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.
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.
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.
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.
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.
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.
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.
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, 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.
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.
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,
i.
is about to dispose of the whole or any
part of his property, or
ii.
is about to remove the whole or any part
of his property from the local limits of the jurisdiction of the Tribunal; or
iii.
is likely to cause any damage or
mischief to the property or effect its value by misuse or creating third party
interest.
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.
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.
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.
Where
it appears to the Tribunal to be just and convenient, it may, by order----
(a) Appoint
a receiver of any property, whether before or after the grant of certificate
for recovery of debt;
(b) Remove
any person from the possession or custody of the property.
(c) Commit
the same property to the possession, custody or management of the receiver;
(d) 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
(e) Appoint
a Commissioner for preparation of an inventory of the properties of the
defendant or for the sale thereof.
Embargo
on High Courts not to interfere with Debt recovery proceedings
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 United
Bank of India Vs. Satyawati Tondon[1]
“All alternatives available to the borrowers should be exercised before the high courts exercise their discretion to interfere with recovery proceedings”, said a bench comprising justices GS Singhvi and AK Ganguly, setting aside an Allahabad High Court order.
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.
“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,” the court said.
“We hope and trust that in future the high courts will exercise their discretion in such matters with greater caution, care and circumspection,” it said.
“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,” the court further said.
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.
“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.
In this case, the Union Bank had extended a term loan of 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. 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.
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.
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.
IV.
MODES
OF RECOVERY
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.
a.
Attachment and sale of the movable or
immovable property of the defendant;
b.
Arrest of the defendant and his
detention in prison;
c.
Appointing a receiver for the management
of the movable or immovable properties of the defendant.
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.
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.
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.
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.
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.
V.
RIGHT
OF APPEAL
A.
Power of the Tribunal / Appellate
Tribunal under code of civil procedure, 1908:
The Tribunal and the Appellate 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.
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:
a.
Summoning and enforcing the attendance
of any person and examining him on oath.
b.
Requiring the discovery and production
of documents;
c.
Receiving evidence on affidavits;
d.
Issuing commissions for the examination
of witnesses of documents,
e.
Reviewing its decisions;
f.
Dismissing an application for default or
deciding it ex parte;
g.
Setting aside any order of dismissal of
any application for default or any order passed by it ex parte;
h.
Any other matter which may be
prescribed.
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.
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 of Rama Lakshman Glass Pvt.
Ltd v/s State of Bihar[2],
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
cannot be challenged in the writ petition. The High Court of Andhra Pradesh
held in the case of Singareni Collieries Ltd. v/s State of Hyderabad and
Others[3],
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 ICICI Ltd. v/s Grapco Industries[4], 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 cannot be granted as a
matter of routine.
B.
Who can Approach the DRAT
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.
On receipt of an appeal, the Appellate 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.
The Appellate 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 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.
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 Tribunal unless such
person has deposited with the Appellate Tribunal
seventy-five percent of the amount of debt so due from him as determined by the
Tribunal. Provided that the Appellate Tribunal may, for reasons to be
recorded in writing, waive or reduce the amount to be deposited.
VI.
NON-LEGAL
REMEDIES
A)
Compromise through Negotiations:
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.
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.
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:
(a) 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
(b) Clearing
the problem loan in order to cleanse the portfolio – this is essential when the
banker does not negotiate from a position of strength.
B)
Compromise through Lok Adalats:
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 `10
lakhs and above with Lok Adalats organized by the Debt Recovery Tribunal/Debt
Recovery Appellate Tribunals. The advice was issued to clarify the doubt
raised by banks whether, in view of the limitation of ceiling of ` 5 lakhs for disposal
by Lok Adalats, they should participate in the Lok Adalats convened by various
DRTs/DRTs for resolving cases involving `10 lakhs and above.
CONCLUSION
“The
Recovery of Debts due to Banks and Financial Institutions Act, 1993” 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 RBI’s
Report on Trend and Progress of Banking
in India, 2008-09[5], the
latest available information as to the recovery of NPA’s is tabled below:
Table showing the Recovery of NPAs
during 2008-09
(Amount in ` crore)
2008-09
|
||||
Recovery
Channel
|
No. of cases Referred
|
Amount Involved
|
Amount Recovered
|
as % of Amount Involved
|
i)
Lok Adalats
|
5,48,308
|
4,023
|
96
|
5.4
|
ii)
DRTs
|
2,004
|
4,130
|
3,348
|
81.1
|
iii)
SARFAESI Act
|
61,760
|
12,067
|
3,982
|
33.0
|
From the above table, it can be
seen that the Banks have
been able to recover over 81% of the bad debts for which proceedings were
initiated under the Act by 2008-09. 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.
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. Among
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.
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[Published in Supreme Court Journal
/ Weekly
August 2010, Part – 32&33]
I would want to know the case of a person who claims she has a right to sell a land and she has sold the land. she is not the owner. she claims from her husband, a deceased. her husband is the only son when in fact there are 7 other siblings. the land now occuppied by another. what right do I have against the seller, purchaser and the occuppier
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