BankDRT

Contempt proceedings – Limitation starts from the day the contemptuous act became known

BankDRT.com — Mon, 25 Mar 2013 06:30:49 +0000

Giving an undertaking to a Court and then going back on it amounts to contempt of that Court. Offering a property as security to a Court with the undertaking not to encumber it any manner, and then going to another Court and once again placing the same property as security is a contemptuous act. A Bank becomes aware of such a trick only due to fortuitous circumstances, but by that time the limitation period for filing a contempt of Court proceedings gets lapsed long past. It has been held that in such circumstances the limitation period for filing contempt of Court proceedings starts from the day the Bank (petitioner) becomes aware of the contemptuous act.

Crooked borrowers helped lenders coin the adjective and noun “defaulters” by what they did to defraud the Banks of public money.

The most common trick was to give the same property as security to a number of banks and borrow money. Each Bank would be unaware that some other bank is also holding the same property as security. Each Bank keeps thinking pretty much the same way that its advances are secured. In the meanwhile the borrowers gets away with money many times the value of the property on one hand, and on the other, continues to enjoy benefits of the property, as no one comes forward to buy such an property for fear of getting entangled in endless litigations. Now that is called ‘having the cake and eating it’ too.

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Is defaulting Bank loans a criminal issue as well ?

BankDRT.com — Tue, 19 Mar 2013 13:00:11 +0000

Is defaulting Bank loans a criminal issue as well ? This would be the topic in the coming days as Canara Bank has filed a criminal complaint to the CBI against Deccan Chronicle Holdings (DCHL).

Briefly, for the benefit of those who are new to this weird loan saga, more weird than the Kingfisher loan drama, and as weird as it can get: any body who was in the business of lending bent over backwards to be a lender to DHCL. DHCL obliged them smilingly pocketing who ever was prepared to lend them, and perhaps dipped its hands into pockets of those where were not very obliging. The end effect is that a group of 24 lenders have ended up with an exposure of around R4,300 crore to DCHL.

The break up of Bank’s exposure is even more stunning. As per sketchy information available in the media, the exposures are as follows: ICICI Bank Rs 490 crore, Axis Bank Rs. 400 crore, Canara Bank Rs. 330 crore, Andhra Bank Rs. 200 crore, Yes Bank Rs. 175 crore, IndusInd Bank Rs. 100 crore, Kotak Mahindra Bank Rs. 100 crore, Indian Overseas Bank Rs. 74 crore and Corporation Bank Rs. 100 crore. And apparently some banks are keeping their exposure a secrete because it may result in some egg muck on their face.

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FREQUENTLY ASKED QUESTIONS on AMENDMENTS Before DRTs

BankDRT.com — Fri, 15 Mar 2013 12:33:55 +0000

1. What is/are amendments before Debts Recovery Tribunal?
After filing applications and replies before the Debts Recovery Tribunal, occasions may arise where some changes, corrections, additions, deletions may become necessary. These changes in the applications and statements filed in the Debts Recovery Tribunal cannot be done in a mere clerical manner. A proper procedure has been prescribed for the same. This is called amendments before Tribunal.

2. How is an application for amendment moved before the Debts Recovery Tribunal?
An application for amendment is moved before the Debts Recovery Tribunal in the form of an Interlocutory / Miscellaneous Application. It should be supported by an affidavit.

3. Is there any particular format of the application for seeking amendments to be filed in the Debts Recovery Tribunal?
No. There is no prescribed format in the Debts Recovery Tribunal for seeking amendments to the applications etc. However, the application for amendment must state the grounds and reasons why the discrepancy has come about, and what corrections and insertions are to be carried out in lieu of which previous entries and in which places.

You can check out a format of the amending application from our forms menu.

4. Is it necessary to hear the opposite party before any amendment can be permitted by the Debts Recovery Tribunal?
If copies of the earlier documents have been served on the opposite party the Debts Recovery Tribunal will insist on (sending a) notice, or, notifying (to) the opposite party.

Limitation for enforcing foreign judgments before DRTs is 3 years

BankDRT.com — Sat, 09 Mar 2013 10:10:24 +0000

The Debts Recovery Tribunals can enforce orders and judgments issued by foreign Courts for the recovery of debts due between a Bank and its borrower in that country. On the basis of such a judgment the DRT can issue a Recovery Certificate. However, the applicant or judgment creditor bank has to file an application before the DRT within a period of three years from the date of judgment. The period of limitation cannot be extended irrespective of the conduct of the parties during the period.

Disputes between Indian nationals and foreign banks on foreign shores is not uncommon. If the borrower does not have assets or actionable assets in those countries, such banks can move an application before the DRTs in the country seeking an Recovery Certificate on the basis of judgments/ decree issued by the Courts in that country. Period of limitation for seeking execution of judgments and decrees issued by foreign courts has been stipulated under Article 101 of the Limitation Act. This Article prescribes a period of three years from the date of judgment within which an application for its execution should be filed before an competent court. The Article does not speak of any other grounds that could have the effect of extending the period of limitation. The limitation clock starts to tick immediately from the date of judgment.

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Jurisdiction of a Recovery Officer – cannot transgress that of the DRT

BankDRT.com — Fri, 22 Feb 2013 11:54:47 +0000

The territorial jurisdiction of a Recovery Officer of a Debt Recovery Tribunal (DRT) cannot go beyond the territorial jurisdiction of the DRT. The Recovery Officer of a DRT should limit his operations within the territorial limits of the DRT with which he is attached. In case the Recovery Certificate entrusted to him refers to a property that is outside the territorial jurisdiction of the DRT, then the Recovery Officer should return the Recovery Certificate to the Presiding Officer for passing suitable orders.

A Recovery Officer of a DRT functions under Chapter-V of the Recovery of Debts Due to Banks & Financial Institutions Act (RDB Act). Apart from the provisions mentioned in the RDB Act, the Recovery Officer is also empowered to utilize the provisions of the II Schedule and a III Schedule of the Income Tax Act, as well as the The Income Tax (Certificate Proceedings) Rules 1965. . However in none of these provisions it has clearly been spelt out the jurisdiction of a Recovery Officer.

Therefore the territorial jurisdiction of a Recovery Officer of a DRT can be inferred from the language of the RDB Act itself.

Sub-Section (1) of Section 7 of the RDB Act relating to the appointment of a Recovery Officer reads as under :

“The Central Government shall provide the Tribunal with one or more Recovery Officers and ……”

Therefore, the Recovery Officer is part and parcel of the Tribunal. Unless the Act itself specifies any special provisions for the Recovery Officer, or excludes any provision as being un-applicable to a Recovery Officer, then all the provisions of the Act are applicable to the Recovery Officer as if they were specifically mentioned in respect of his post or duties.

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Frequently Asked Questions on Amendment before DRTs

BankDRT.com — Mon, 18 Feb 2013 12:48:19 +0000

What is/are amendments before Debts Recovery Tribunal?
After filing applications and replies before the Debts Recovery Tribunal, occasions may arise where some changes, corrections, additions, deletions may become necessary. These changes in the applications and statements filed in the Debts Recovery Tribunal cannot be done in a mere clerical manner. A proper procedure has been prescribed for the same. This is called amendments before Tribunal.

How is an application for amendment moved before the Debts Recovery Tribunal?
An application for amendment is moved before the Debts Recovery Tribunal in the form of an Interlocutory / Miscellaneous Application. It should be supported by an affidavit.

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