DRT PROBLEMS AND SOLUTIONS
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Legal Tips
FEW LEGAL TIPS:
1. The applicant bank files original application in the DRT for recovery
of debts due
to the bank. The OA filed by the bank contains the following defects:
The original application does not contain the statement of accounts from
the date loan is sanctioned, and it does not
specify the interest (rate and amount) charged on the loan accounts.
The bank files application in DRT even with interest rate charts, it was
found
from the actual vouchers/statement of accounts that the interest rates
charged in
practice was almost more than 2% to 8% p.a over the contracted rates/RBI
rates:
2. In the case of bills purchased/discounted loan accounts, it is found
that none of the instruction the drawer of the
bill gives to the bank is complied with, resulting in great loss to the
borrower:
At present,always banks have upper hand in all the matters., as they are
able to submit to the DRT the legal documents,which
has to be upheld by DRT, by virtue of the fact that they are legally
valid documents.For e-g promissory
notes/agreements/letter of revival/debit confirmation of balance which
are duly stamped as per stamp act.But whereas, the
borrower do not have any such legal documents available with them. They
are left Vouchers/statement of accounts etc., and
if the respondent have to prove the violations then they have to produce
RBI circulars and pages and pages of statement
of accounts/vouchers etc., which is a very tough task, involving time
delay which once again may result in losing the
defense.It is precisely this kind of weaker defense and also unaware of
the law, prevents the respondents from getting
proper justice from DRT. DRT presiding officers, even if they want to
render justice,and/or able to observe that great
injustice has been done by the applicant bank to a respondent
firm/company, they have very limited legal solution at
their disposal.
By virtue of Appeal provisions, where respondents have to pay 75% of
decreed amount,for appealing against the recovery
certificates the doors are once and for all shut for the respondents.,
eventhough they have good legal defense available
at their disposal.
It is this kind of extra constitutional powers available for the banks,
kill the industries in one stroke of pen and the
respondents who have been doing business for over three decades and
more, are thrown into streets left with no
alternative , but to either commit suicide, or sell all the properties
and come to streets. Thousands of entrepreneurs
were thrown to streets by banks.
We do not mean that wilfull defaulters should be protected. We are not
for such kind of respondents and at DRT PROBLEMS AND
SOLUTIONS, THE DOORS ARE ALWAYS SHUT FOR THEM.
KNOW YOUR LEGAL DEFENSE: |
| Know Your Legal Defense Borrower must know that all the banking transactions are covered under various laws of the land namely : Negotible Instruments Act Banking Regulation Act RBI Act Contracts Act Evidence Act Sale of Goods Act Indian Stamp Act. Legal Experts having in depth knowledge in all the above laws shall be able to apply the same for an effective legal defense for the borrowers. |
| SECTION 21 OF THE B.R ACT: Under this section, sub section (1) , RBI has powers to issue policy directions to the bank regarding the loans and advances to be granted by the banks and under sub section (2) regarding the interest rate chargeble for loans and advances. All the banks are bound to follow the RBI guidelines. � The Apex court has also held that RBI guidelines are mandatory in nature and should be followed by banks, and any violation will result in imposing penalty by RBI�. Cleverly, the banks in order to satisfy this condition, they declare in DRT OA that they have complied with RBI directions from time to time. But in almost all the cases there is enough evidence to prove that bank has blatantly violated RBI guidelines issued from time to time. There are evidences to prove that the banks have misguided the DRT, in this regard. SECTION 21 A OF B.R.ACT: �No court can reopen the accounts of the banks just because interest charged is high or excessive� It looks prima facie that both acts are contrary to each other. But in practice, the section 21A was inserted in 1985, due to the following facts: 1. The state government acts with regard to interest charged by banks was contrary to RBI guidelines, in some of the cases; This amendment is only to ensure that RBI is the authority to give directions to banks and that it should not be questioned by courts. But the section 21A was silent about violations even in the directions given by RBI. It is this loophole which is used by the Applicant banks in DRT for defending banks. For extending natural justice to the respondents, it is necessary that a clear directions are given to DRT�s on the folowing lines, if at all the courts feel that respondent request has merits: �DRT�s must look into the evidences of the respondent�s and the defense argument, and if it is established by the respondents that there is definitely violation of RBI guidelines, then presiding officers should order for recalculation and /or refund of the amount or reducing the claim of the banks. If the DRT finds that, because of the violations, the banks claim is wrong, then DRT should be able to decide on the counter claim of the respondents� If such a direction is issued then, the cases can be decided faster, many of the industries can be saved, and over and above many entrpreneurs will live in peace.
The following other violations
of RBI guidelines, by banks are also not taken into account by DRT�s:
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