INTRODUCTION:
(1)The Statement of Objects and Reasons to the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act, 2004 (hereinafter called “the Amending Act 2004”), inter alia, has described background of the Amendment Act, 2004 thus “In view of the judgment of the Hon'ble Supreme Court in the case of Mardia Chemicals Ltd. and Others v. Union of India and Others, it had become necessary to amend the provisions of the Securitisation Act, 2002. Since the Parliament was not in session and it was necessary to take immediate action to amend the said Securitisation Act for the above reasons, the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Ordinance, 2004 was promulgated on the 11th November, 2004. The said Ordinance amends the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter called “the DRT Act”) and the Companies Act, 1956”.
(1.1) The Statement of Objects and Reasons further states thus “Chapter III of the Ordinance amends the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 so as to enable the bank or financial institution to withdraw, with the permission of the Debts Recovery Tribunal, the application made to it and thereafter take action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.” (emphasis supplied). It is pertinent to note here that the object of insertion of the three provisos to Section 19(1) of DRT Act, vide the Amending Act, 2004, is to enable the secured creditors to take fresh action, rather a more effective action to speedily recover their debts, if required, by enforcement of security or other measures specified in sub-section (4) of section 13 of the Securitisation Act, however, not to take multiple actions under the DRT Act, as well as the Securitisation Act.
(2) Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 has, inter alia, provided as follows.
Section 19. Application to the Tribunal.—
(1) Where a bank or a financial institution has to recover any debt from any person, it may make an application to the Tribunal within the local limits of whose jurisdiction—………..x……….x……….x……..x……….x…….
Provided that the bank or financial institution may, with the permission of the Debts Recovery Tribunal, on an application made by it, withdraw the application, whether made before or after the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act, 2004 for the purpose of taking action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002), if no such action had been taken earlier under that Act:
Provided further that any application made under the first proviso for seeking permission from the Debts Recovery Tribunal to withdraw the application made under sub‑section (1) shall be dealt with by it as expeditiously as possible and disposed of within thirty days from the date of such application:
Provided also that in case the Debts Recovery Tribunal refuses to grant permission for withdrawal of the application filed under this sub‑section, it shall pass such orders after recording the reasons therefor.” (emphasis mine in all above paras)
(2.1) Notwithstanding the mandatory language of the three Provisos inserted by the Amendment Act, 2004 to section 19 of DRT Act (especially keeping in view the Statement of Objects and Reasons), hon’ble Supreme Court in M/s Transcore Vs Union of India & Anr {(2008) 1 SCC 125; Date of Judgment: 29/11/2006}, has held, inter alia, as follows.
“For the above reasons, we hold that withdrawal of the O.A. pending before the DRT under the DRT Act is not a pre-condition for taking recourse to NPA Act. It is for the bank/FI to exercise its discretion as to cases in which it may apply for leave and in cases where they may not apply for leave to withdraw. We do not wish to spell out those circumstances because the said first proviso to Section 19(1) is an enabling provision, which provision may deal with myriad circumstances which we do not wish to spell out herein.” (emphasis supplied).
(2.2) With respect, it is humbly submitted that even hon’ble Supreme Court can not put an interpretation, which is wholly inconsistent with a statutory provision and thus can not violate the well settled ‘Literal Rule of Interpretation’. Further, now a days, a good majority of the creditors are taking undue advantage of the misconception created by the ‘Transcore SC judgment’ (supra) and, as a matter of right, filing the Original Application (hereinafter called ‘O.A.’) before the DRT under the DRT Act, even after taking recourse to the Securitisation Act, which has not at all been authorized even by the ‘Transcore SC judgment’ (supra).
Literal Rule of Interpretation of Statutes
(3) Recently, hon’ble Supreme Court in B. Premanand & Ors. Vs. Mohan Koikal & Ors. (Civil Appeal No. 2684 of 2007; Decided on 16 March, 2011) has explained the literal rule of interpretation of statutes. The rule provides that the meaning has to be ascertained from the text of the law itself. The essence of the judgment is given below.
(3.1) The Court explained the concept that if there is a conflict between equity and the law, it is the law which must prevail. It may be mentioned in this connection that the first and foremost principle of interpretation of a statute in every system of interpretation is the literal rule of interpretation. The other rules of interpretation e.g. the mischief rule, purposive interpretation etc. can only be resorted to when the plain words of a statute are ambiguous or lead to no intelligible results or if read literally would nullify the very object of the statute. Where the words of a statute are absolutely clear and unambiguous, recourse cannot be had to the principles of interpretation other than the literal rule, vide Swedish Match AB vs. Securities and Exchange Board,
(3.2) The legislature is presumed to have made no mistake. The presumption is that it intended to say what it has said. Assuming there is a defect or an omission in the words used by the legislature, the Court cannot correct or make up the deficiency, vide Delhi Financial Corporation vs. Rajiv Anand 2004 (11) SCC 625. Where the legislative intent is clear from the language, the Court should give effect to it, vide Government of Andhra Pradesh vs. Road Rollers Owners Welfare Association 2004(6) SCC 210, and the Court should not seek to amend the law in the garb of interpretation.
(3.3) Ordinarily, it is not proper for the Court to depart from the literal rule as that would really be amending the law in the garb of interpretation, which is not permissible vide J.P. Bansal vs. State of Rajasthan & Anr. AIR 2003 SC 1405, State of
(3.4) Hence, there should be judicial restraint in this connection, and the temptation to do judicial legislation should be eschewed by the Courts. In fact, judicial legislation is an oxymoron (Author’s Note-“oxymoron” means a phrase in which two words of contradictory meaning are used together for special effect, e.g. "wise fool" or "legal murder").
(3.5) The function of the Court is only to expound the law and not to legislate vide District Mining Officer vs. Tata Iron and Steel Company 2002 (7) SCC 358. If we accept the interpretation canvassed by the learned counsel for the private respondents, we will really be legislating because in the guise of interpretation we will be really amending Rule 27(c) of the Rules.
(3.6) The literal rule of interpretation really means that there should be no interpretation. In other words, we should read the statute as it is, without distorting or twisting its language.
(4) Further, hon’ble Supreme Court in Narayan Chandra Ghosh Vs UCO Bank & Ors. {(2011) 4 SCC 548; 2011 STPL (Web) 310 SC; Decided on 18.03.2011} has held, inter alia, as follows (SCC pp 550, para 8).
“8……………Bearing in mind the object of the Act, the conditions hedged in the said proviso cannot be said to be onerous. Thus, we hold that the requirement of pre-deposit under sub-section (1) of Section 18 of the Act is mandatory and there is no reason whatsoever for not giving full effect to the provisions contained in Section 18 of the Act. In that view of the matter, no court, much less the Appellate Tribunal, a creature of the Act itself, can refuse to give full effect to the provisions of the Statute. We have no hesitation in holding that deposit under the second proviso to Section 18(1) of the Act being a condition precedent for preferring an appeal under the said Section, the Appellate Tribunal had erred in law in entertaining the appeal without directing the appellant to comply with the said mandatory requirement.”
Admittedly, the term “no court” includes the Supreme Court of India. Consequently, with respect, it is humbly submitted that even hon’ble Supreme Court can not refuse to give full effect to the provisions of the three provisos to section 19 of the DRT Act, and therefore, can not put an interpretation in the ‘Transcore SC judgment’ (supra), which is wholly inconsistent with the statutory provision.
Banks/FIs are not settling even simple problems of the borrowers relating to revival and rehabilitation.
(5) Bureaucracy in Banks/FIs is not deciding and settling even simple problems of the borrowers relating to revival and rehabilitation. During our working we have experienced that due to artificial fear of being questioned by higher management, the bureaucracy in Banks/FIs is deliberately neglecting statutory ‘RBI guidelines’ and not deciding and settling even simple problems of the borrowers relating to revival and rehabilitation, consequently, forcing them to become 'NPA'. Being generally ignorant of this attitude of Banks/FIs the majority of public is crying for non recovery of so called ‘Public Money’, losing sight of the fact that the borrowers are also a very important section of public, and intelligent persons running an industry, which generates employment and revenue through various Govt taxes and payment of huge interest and service charges to the Bank/FI. Instead, the matter is passed on to the court of law under DRT Act, 1993 and/or Securitisation Act, 2002. The Supreme Court has criticized this attitude on several occasions, but there is no outcome. In author’s view, only after few cases of counter-claim for loss and damages, for wrongdoings committed by the Banks/FIs, would be decided against the Banks/FIs, then only one can expect any change in the said non-cooperative attitude of the Banks/FIs. Needless to mention that the legal battle is long drawn, time consuming and expensive. For further details, the readers interested may kindly refer my another exhaustive Article titled- “Lies Vs Truth Regarding Recovery of ‘Industrial Loan” at http://taxguru.in/corporate-law/lies-truth-recovery-industrial-loan.html (and also at http://www.lawyersclubindia.com/articles/Lies-Vs-Truth-Regarding-Recovery-Of-Industrial-Loan--3725.asp)
Analysis of the DRT Act, 1993 in the ‘
(6) Extracts taken from records of DRT Legal Solutions: The following extracts have been taken by the author, with permission, from the records of DRT Legal Solutions,
“Analysis of the DRT Act, 1993:
The DRT Act, 1993 has been enacted to provide for the establishment of Tribunals for expeditious adjudication and recovery of debts due to banks/ FIs.
Section 2(g) defines a 'debt' to mean any liability which is claimed as dues from any person by a bank, FI or by a consortium of banks. It covers secured, unsecured and assigned debts. It also covers debts payable under a decree, arbitration award or under a mortgage.
Chapter III deals with jurisdiction, powers and authority of DRT. Section 17 refers to jurisdiction of DRT. Section 17 states that DRT shall exercise the jurisdiction, powers and authority to entertain and decide applications from the banks and FIs. for recovery of debts due to such banks/ FIs. (emphasis supplied). Section 19 of the Act inter alia states that where a bank or FI has to recover any debt, it may make an application to the DRT. By amending Act 30 of 2004, the three provisos were inserted in Section 19(1). Under the first proviso, the bank or FI may, with the permission of the DRT, on an application made by it, withdraw the O.A. for the purpose of taking action under the NPA Act, if no such action has been taken earlier under that Act. Under the second proviso, it is further provided that, any application made for withdrawal to the DRT under the first proviso shall be dealt with expeditiously and shall be disposed of within thirty days from the date of such application. The reason is obvious. Under Section 36 of the NPA Act the bank of FI is entitled to take steps under section 13(4) in respect of the financial asset provided it is made within the period of limitation prescribed under the Limitation Act, 1963. Therefore, the second proviso to Section 19(1) states that the DRT shall decide the withdrawal application as far as possible within thirty days from the date of application by the bank or FI. The third proviso to Section 19(1) states that in case the DRT refuses to grant permission/ leave for withdrawal, it shall give reasons thereof. Section 19(6) provides for the defendant's claim to set-off against the bank's demand for a certain sum of money. Similarly, Section 19(8) gives right to the defendant to set a counter claim. Section 19(12) empowers the DRT to make an interim order by way of injunction, stay or attachment before judgment debarring the defendant from transferring, alienating or otherwise deal with, or disposing of, his properties and assets. This can be done only with the prior permission of the DRT. Under Section 19(13), the DRT is empowered to direct the defendant to furnish security in cases where the DRT is satisfied that the defendant is likely to dispose of the property or cause damage to the property in order to defeat the decree which may ultimately be passed in favour of the bank or FI. Under Section 19(18) the DRT is also empowered on grounds of equity to appoint a receiver of any property, before or after grant of certificate for recovery of debt. Under Section 19(19), a recovery certificate issued against a company can be enforced by the DRT which can order the property to be sold and the sale proceeds to be distributed amongst the secured creditors in accordance with the provisions of Section 529-A of the Companies Act, 1956 and pay the balance/ surplus, if any, to the debtor-company. Section 20 of the DRT Act provides for appeal to the Appellate Tribunal. Section 21 deals with the necessity of the applicant to pre-deposit seventy-five per cent of the amount of debt due from him as determined by the DRT under Section 19. Section 25 refers to modes of recovery of debts. It provides for three modes, namely, (a) attachment and sale; (b) arrest of the defendant; and (c) appointment of a receiver for the management of the properties of the defendant. There are other modes of recovery contemplated by Section 28 which states that where a certificate has been issued by the DRT to the Recovery Officer under Section 19(7), the Recovery Officer may, without prejudice to the modes of recovery specified in Section 25, recover the amount of debt by any one or more of the modes mentioned in Section 28. Section 29 of the DRT Act incorporates provisions of the Second and Third Schedules to the Income Tax Act, 1961.
On analysing the above provisions of the DRT Act, we find that the said Act is a complete Code by itself as far as recovery of debt is concerned. It provides for various modes of recovery. It incorporates even the provisions of the Second and Third Schedules to the Income Tax Act, 1961. Therefore, the debt due under the recovery certificate can be recovered in various ways. The remedies mentioned therein are complementary to each other. The DRT Act provides for adjudication. It provides for adjudication of disputes as far as the debt due is concerned. It covers secured as well as unsecured debts. However, it does not rule out applicability of the provisions of the TP Act, in particular Sections 69 and 69A of that Act. Further in cases where the debt is secured by pledge of shares or immovable properties, with the passage of time and delay in the DRT proceedings, the value of the pledged assets or mortgaged properties invariably falls. On account of inflation, value of the assets in the hands of the bank/FI invariably depletes which, in turn, leads to asset liability mis-match. These contingencies are not taken care of by the DRT Act and, therefore, Parliament had to enact the NPA Act, 2002.” (emphasis supplied).
(6.1) A combined reading of the said provisos under Sec 19 of the DRT Act and, the said law laid down by the Apex Court, appears to conclude that the secured creditor may invoke Securitisation Act during the pendency of proceedings under the DRT Act. However, this conclusion merits to be differentiated keeping in view the facts and circumstances of that particular case. The Author, therefore, feels that the impact of the continuance of such proceedings under the DRT Act must be considered by all concerned keeping in view the repercussions, consequences and cost impact.
(6.2) The Securitisation Act, 2002 (hereinafter called ‘the Act’) is a complete code in itself. Apart from being the latest enactment as well as having much wider powers compared with the DRT Act, proceedings under the same alone should continue. In the scheme of this Act, the debt is already crystallized by the secured creditor and the notice under Section 13(2) of the Act is an action taken and not show cause notice. The secured creditor is legally armed with powers for recovery action without going to court of law. The interest of the borrower is safeguarded with the right to approach the trial court of DRT by filing an Securitization Application (‘SA’) u/s 17 of the Act, which is held to be in lieu of a civil suit by a three judge bench of hon’ble Supreme Court in the matter of Mardia Chemicals Ltd.. Vs U.O.I. & Ors. {A.I.R 2004 SC 2371; (2004) 4 SCC 311; (2004) 59 CLA 380 (SC); Date of Judgment: 08/04/2004}.
(6.3) As aforesaid, now a days, a good majority of the creditors are taking undue advantage of the misconstruction created by the ‘Transcore SC judgment’ (supra) and, as a matter of right, filing the O.A. before the DRT under the DRT Act, even after already having taken recourse to the Securitisation Act, which has not at all been authorized even by the ‘Transcore SC judgment’ (supra). During these securitization proceedings the recovery is intended out of the secured assets, contested by the borrower before the court of law i.e. DRT by way of SA filed by the borrower. On the other hand in the scheme of the DRT Act, the OA is filed by the creditor requesting the DRT to determine the debt due culminating into issue of the Recovery Certificate followed by the execution against the said Recovery Certificate.
(6.4) In view of above, in a given case, having already issued Notice u/s 13(2) and filing of the SA u/s 17 of the Securitisation Act before hon’ble Debts Recovery Tribunal, the earlier proceedings initiated under the O.A. become virtually infructuous. If, the proceedings are further carried out, it would be nothing but additional and duplicate adjudication to determine the debt due. Considerable time and costs are involved to come to the stage of issue of the Recovery Certificate as well as the execution thereof. If the O.A. is dismissed, immediately after taking recourse to the Securitisation Act, on account of such infructuous proceedings, the rights and liabilities of the secured creditor are not affected at all. Further no additional advantage or rights accrue to the secured creditor if the said proceedings initiated under the O.A. are carried out.
(6.5) In such a case, we have already started making application to hon’ble DRT for the dismissal of the O.A., which would result in reducing the pendency and burden on the DRT. On the other hand, it adds to the disposal performance of the DRT which will be in line with the objectives of formation of the DRTs i.e. expeditious disposal of bank litigations. It is needless to mention that there is tremendous increase in pendency in Indian Courts so much so that there are more than three crore cases pending vide news item dated 07.03.2010 (copy attached ANNEXURE ‘A’) in which it is mentioned that Justice V.V. Rao, a sitting judge of Hon’ble Andhra Pradesh High Court has said that it will take 320 years to clear the pendency. Hence, due application of mind should be used at every stage of pending matters. If a virtually duplicate matter like, if in a given case the OA is allowed to proceed and at any stage if the matter goes to High Court and Supreme Court, it will unnecessarily add to the said pendency of three crore cases.
(6.6) On one hand, the creditor shall not at all be affected by the proposed dismissal of the O.A., the borrower would be unnecessarily subjected to extra avoidable time and costs due to continuance of the O.A.. Hon’ble Debts Recovery Tribunal has full powers, authority and jurisdiction to consider these aspects due to the three provisos under Sec 19(1) of the DRT Act, 1993. Further, in this connection, kind attention of all concerned is drawn to the leading SC Judgment in the matter of SP Gupta vs Union of India vide citation 1982 AIR (SC) 149, extract from para 27 is reproduced below. Accordingly, also Hon’ble Debts Recovery Tribunal is fully empowered to consider the said aspects relating to cost impacts and avoidable work load of continuing the infructuous O.A.:-
“(27) . . . . . . we would therefore prefer to begin the discussion by making a few prefatory remarks highlighting what the true function of the judiciary should be in a country like India which is marching along the road to social justice with the banner of democracy and the rule of law, for the principle of independence of the judiciary is not an abstract conception but it is a living faith which must derive its inspiration from the constitutional charter and its nourishment and sustenance from the constitutional values. It is necessary for every Judge to remember constantly and continually that our Constitution is not a non- aligned national charter. It is a document of social revolution which casts an obligation on every instrumentality including the judiciary, which is a separate but equal branch of the State, to transform the status quo ante into a new human order in which justice, social, economic and political will inform all institutions of national life and there will be equality of status and opportunity for all. The judiciary has therefore a socio economic destination and a creative function. It has to use the words of Glanville Austin, to become an arm of the socio-economic revolution and perform an active role calculated to bring social justice within the reach of the common man. It cannot remain content to act merely as an umpire but it must be functionally involved in the goal of socio-economic justice. The British concept of justicing, which to quote Justice Krishna Iyer, is still "bugged by the heirs of our colonial legal culture and shared by many on the bench" is that "the business of a Judge is to hold his tongue until the last possible moment and to try to be as wise as he is paid to look" and in the same strain are the words quoted by Professor Gordon Reid from 'a memorandum to the Victorian government by Irvin, C. J. in 1923 where the judicial function was idealized in the following words :
THE duty of His Majesty's Judges is to hear and determine issues of fact and of law arising between the king and the subject or between a subject and a subject presented in a form enabling judgment to be passed upon them, and when passed, to be enforced by a process of law. There begins and ends the function of the judiciary.
Now this approach to the judicial function may be alright for a stable and static society but not for a society pulsating with urges of gender justice, worker justice, minorities justice, dalit justice and equal justice, between chronic unequals. Where the contest is between those who are socially or economically unequal, the judicial process may prove disastrous from the point of view of social justice, if the Judge adopts a merely passive or negative role and does not adopt a positive and creative approach. The judiciary cannot remain a mere bystander or spectator but it must become an active participant in the judicial process ready to use law in the service of social justice through a proactive goal-oriented approach. But this cannot be achieved unless we have judicial cadres who share the fighting faith of the Constitution and who are imbued with the constitutional values. The necessity of a judiciary which is in tune with the social philosophy of the Constitution has nowhere been better emphasised than in the words of Justice Krishna Iyer which we quote: APPOINTMENT of Judges is a serious process where judicial expertise, legal learning, life's experience and high integrity are components, but above all are two indispensables - social philosophy in active unison with the socialistic articles of the Constitution, and second, but equally important, built-in resistance to pushes and pressures by class interests, private prejudices, government threats and blandishments, party loyalties and contrary economic and politicial ideologies projecting into pronouncements.
Justice Krishna lyer goes on to say in his inimitable style :
JUSTICE Cardozo approvingly quoted President Theodore Roosevelt's stress on the social philosophy of the Judges, which shakes and shapes the course of a nation and, therefore, the choice of Judges for the higher Courts which makes and declares the law of the land, must be in tune with the social philosophy of the Constitution. Not mastery of the law alone, but social vision and creative craftsmanship are important inputs in successful justicing.
What is necessary is to have Judges who are prepared to fashion new tools, forge new methods, innovate new strategies and evolve a new jurisprudence, who are judicial statesmen with a social vision and a creative faculty and who have, above all, a deep sense of commitment to the Constitution with an activist approach and obligation for accountability, not to any party in power nor to the opposition nor to the classes which are vociferous but to the half- hungry millions of India who are continually denied their basic human rights. We need Judges who are alive to the socio-economic realities of Indian life, who are anxious to wipe every tear from every eye, who have faith in the constitutional values and who are ready to use law as an instrument for achieving the constitutional objectives. This has to be the broad blueprint of the appointment project for the higher echelons of judicial service. It is only if appointments of Judges are made with these considerations weighing predominantly with the appointing authority that we can have a truly independent judiciary committed only to the Constitution and to the people of
The tycoon, the communalist, the parochialist, the faddist, the extremist and radical reactionary lying coiled up and subconsciously shaping judicial mentations are menaces to judicial independence when they are at variance with Parts III and IV of the Paramount Parchment. Judges should be of stern stuff and tough fibre, unbending before power, economic or political, and they must uphold the core principle of the rule of law which says, "Be you ever so high, the law is above you." This is the principle of independence of the judiciary which is vital for the establishment of real participatory. democracy, maintenance of the rule of law as a dynamic concept and delivery of social justice to the vulnerable S. of the community. It is this principle of independence of the judiciary which we must keep in mind while interpreting the relevant provisions of the Constitution” (emphasis supplied)
(7) It is no wonder that such an approach will be vehemently opposed by the creditors and, the concerned Bank/FI authorities will fight up to the Supreme Court. In this connection it is relevant to submit that this attitude of the statutory authorities like banks and financial institutions, has been criticized by the Supreme Court vide following extracts from its famous judgment decided on 30.10.2009 in the matter of Urban Improvement Trust, Bikaner vs Mohan Lal , citation being (2010) 1 SCC 512; 2009 AIOL 1235 :-
“4. It is a matter of concern that such frivolous and unjust litigation by governments and statutory authorities are on the increase. Statutory Authorities exist to discharge statutory functions in public interest. They should be responsible litigants. They cannot raise frivolous and unjust objections, nor act in a callous and highhanded manner. They can not behave like some private litigants with profiteering motives. Nor can they resort to unjust enrichment. They are expected to show remorse or regret when their officers act negligently or in an overbearing manner. When glaring wrong acts by their officers is brought to their notice, for which there is no explanation or excuse, the least that is expected is restitution/restoration to the extent possible with appropriate compensation. Their harsh attitude in regard to genuine grievances of the public and their indulgence in unwarranted litigation requires to be corrected.
5. This Court has repeatedly expressed the view that the governments and statutory authorities should be model or ideal litigants and should not put forth false, frivolous, vexatious, technical (but unjust) contentions to obstruct the path of justice. We may refer to some of the decisions in this behalf.
5.1 In Dilbagh Rai Jarry v. Union of India [1973 (3) SCC 554] where this Court extracted with approval, the following statement (from an earlier decision of the Kerala High Court):
“The State, under our Constitution, undertakes economic activities in a vast and widening public sector and inevitably gets involved in disputes with private individuals. But it must be remembered that the State is no ordinary party trying to win a case against one of its own citizens by hook or by crook; for the State's interest is to meet honest claims, vindicate a substantial defence and never to score a technical point or overreach a weaker party to avoid a just liability or secure an unfair advantage, simply because legal devices provide such an opportunity. The State is a virtuous litigant and looks with unconcern on immoral forensic successes so that if on the merits the case is weak, government shows a willingness to settle the dispute regardless of prestige and other lesser motivations which move private parties to fight in court. The lay-out on litigation costs and executive time by the State and its agencies is so staggering these days because of the large amount of litigation in which it is involved that a positive and wholesome policy of cutting back on the volume of law suits by the twin methods of not being tempted into forensic show-downs where a reasonable adjustment is feasible and ever offering to extinguish a pending proceeding on just terms, giving the legal mentors of government some initiative and authority in this behalf. I am not indulging in any judicial homily but only echoing the dynamic national policy on State litigation evolved at a Conference of Law Ministers of India way back in 1957.
5.3 In a three Judge Bench judgment of Bhag Singh & Ors. v.
“3... The State Government must do what is fair and just to the citizen and should not, as far as possible, except in cases where tax or revenue is received or recovered without protest or where the State Government would otherwise be irretrievably be prejudiced, take up a technical plea to defeat the legitimate and just claim of the citizen.”
6. Unwarranted litigation by governments and statutory authorities basically stem from the two general baseless assumptions by their officers. They are:
(i) All claims against the government/statutory authorities should be viewed as illegal and should be resisted and fought up to the highest court of the land.
(ii) If taking a decision on an issue could be avoided, then it is prudent not to decide the issue and let the aggrieved party approach the Court and secures a decision.
The reluctance to take decisions, or tendency to challenge all orders against them, is not the policy of the governments or statutory authorities, but is attributable to some officers who are responsible for taking decisions and/or officers in charge of litigation. Their reluctance arises from an instinctive tendency to protect themselves against any future accusations of wrong decision making, or worse, of improper motives for any decision making.”
(7.1) On account of the above attitude of the statutory authorities like banks and financial institutions, so long as the business is going all right, they even take the credit, but the moment business goes through a rough phase, these authorities, instead of helping, rush to court of law for recovery even indulging into multiple legal actions. In court of law also they oppose everything and fight up to the Supreme Court. It is also important to note here that at present many DRTs in the country are not having regular POs. As a result, pendency is going up day by day.
(8) Still further, in support of my above contentions, kindly have a look at the following news item and then decide yourself, who is the real culprit.
“ONE LAKH CRORE CREDITS ON INDUSTRIALIST FAMILIES
http://jaipur.co/one-lakh-crore-credits-on-industrialist-families/
Jaipur: The reputation of the government bank is losing its credibility because of Industrialist families. The loan of 1.5 lakh crore taken by the government bank is still missing, out of which more than 70 percent loan is taken by the industrialist families.
On Sunday (30.10.2011), All India Bank Officers Association’s two day conference being here in which this issue was brought in to light. The National President Alok Khare and General Secretary R.J. Sridharan said in the meeting that private banks earned around 45 thousand crore in the year 2011, but because of centre’s leniency around 20 thousand crore rupees is being distributed like corporate loan.
The banks which are running on the orders of the Reserve Bank publish the defaulter list of the common people but they don’t have the list of the defaulters of the corporate families. According to the bankers, in the Bank Director’s meeting also this list is never mentioned, because of which till today the list have not come into existence. Some specialists blame the government for this. For the common man there are norms to return the money in a given time whereas there are no norms for the corporate families. There are laws of recovery but it is only implemented on the common man.” (emphasis supplied)
CONCLUSION
(9) The impugned concept may be explained in the following terms;
(a)The literal rule of interpretation really means that there should be no interpretation. In other words, we should read the statute as it is, without distorting or twisting its language.
(b) Consequently, in author’s view, the three Provisos inserted by the Amendment Act, 2004 to section 19 of DRT Act are plain and clear. Hence, the literal rule of interpretation will apply to it. Further, even if there is a conflict between equity and the law, it is the law which must prevail. The law, which is contained in the three Provisos, is clearly in favour of my aforesaid contentions.
(c) The language of the three Provisos inserted by the Amendment Act, 2004 to section 19 of DRT Act is clear and hence all concerned would have to follow that language.
(d) The function of the Court is only to expound the law and not to legislate. If, we accept the interpretation put in ‘Transcore SC judgment’, the Supreme Court will really be legislating because in the guise of interpretation the Court will be really amending the three Provisos inserted by the Amendment Act, 2004 to section 19 of DRT Act.(END)
Note: The views expressed are my personal and a view point only.
Author:
Narendra Sharma,
Consultant (Corporate Legal)
E-mail: nkdewas@yahoo.co.in
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Tags :Constitutional Law
