Saturday, October 6, 2012

Smt.Kalpana Masur V/S KSFC and anr





A.IR:914/2009


Record of proceedings on 5.10.2012 in  IA 41/2012(waiver): 

 Ld. Counsel Shri K.A.Ramakrishnanappearing on behalf of the petitioner stated that the petitioner has complied with the conditional order of this Tribunal and also obeyed the order of theHon’ble High Court of Karnataka and that the respondent bank has issued a fresh sale notice and that in view of the pendency of this IA and that in view of the  compliance of the conditional order of this Tribunal and the order of the Hon’ble High Court of Karnataka the bank should be restrained from proceeding further with the sale.  Ld. Counsel prayed that interim order may be passed restraining the Authorized officer from proceeding further under the provisions of the SARFAESI Act. 

Ld. Counsel ShriBalasburamaniam appearing on behalf of the respondent bank stated that nothing survives in this matter and that the petitioner did not comply with the conditional order of this Tribunal dt 26.3.2010 and that the Hon’bleHigh Court of Karnataka was pleased to quash the sale notice dt20.3.2010 and that this petition warrants only a dismissal as the petitioner has not complied with the conditional order dt23.10.2010. Heard both sides.

 It is seen that this Tribunal by order dt26.3.2010 in IA No.41/2010 in AIR No.914/2009 directed the petitioner to deposit a sum of Rs.7.00 lakhsinto this Tribunal on or before 29.3.2010 and a further deposit of Rs.30.00 lakhs into this Tribunal on or befoe29.4.2010. 

 It is also seen that the petitioner has deposited Rs.7.00lakhs on 29.3.2010 and that thereafter the petitioner approached the Hon’bleHigh Court of Karnataka and that the Hon’bleHigh Court of Karnataka by order dt 30.3.2010 in WP No.10632/10 directed the petitioner to pay a sum of Rs.5.00lakhs into this Tribunal within 8 weeks and that the petitioner accordingly deposited the said amount of Rs.5.00 lakhs into this tribunal.  

It is further seen that later theHon’ble High Court of Karnataka was pleased to allow WP No.10632/2010 and quashed the sale noticedt 20.3.2010.    It is also seen that the petitioner has not complied with the conditional order of this Tribunal dt26.3.2010  and that theHon’ble High Court of Karnataka was also pleased not to stay the said order of this Tribunal.  Therefore in view of the fact that the conditional order passed in this IA on 26.3.2010 has not been complied with by the petitioner this tribunal is driven to dismiss this IA. 

 Accordingly this IA is dismissed for non compliance of the conditional order of this Tribunal dt 26.3.2010.  It is further directed that the Registry shall send whatever sums of money that have been deposited into this Tribunal in this case along with accrued interest to the first respondent viz. the KSFC on or before 6.11.2012 for appropriation into the loan account of the petitioner. IA 42/2010 (stay);  IA 41/2010 is dismissed.

  Hence this IA is also dismissed. IA 1011/2012(stay); R2 has been given up.   R1 has filed its counter. However IA 41/2010 is dismissed for non compliance of the conditional order dt26.3.2010.  Hence this IA is also dismissed.

The above Order was passed by the Hon''ble Chair Person of DRAT ,Chennai on5th Oct 2012

M/s.MOH Leathers P ltd and ors V/S Indian bank



A.IR:967/2010

Record of proceedings on 5.10.2012 in IA 1590/2010 (waiver):  No representation for the petitioners.  Petitioners are called absent.  

Ld. Counsel ShriBalasubramaniam appearing on behalf of the respondent bank stated that the conditional order of this Tribunal dt 17.8.2012 has not been complied with by the petitioners and that therefore this IA has to be dismissed for non compliance of the conditional order dt17.8.2012. 

 This IA is dismissed for non compliance of the orderdt 17.8.2012. IA 1591/2010 (stay);  IA1590/10 is dismissed. Hence this IA is also dismissed.

The above Order was passed by the Hon''ble Chair Person of DRAT ,Chennai on5 th Oct 2012

Dr.Zubaida Begum and anr V/S Indian Bank & anr




A.IR:779/2009

Record of proceedings on 5.10.2012 in IA 1378/2009 (delay):

  Ld. Counsel Shri  Balasubramaniam  appearing on behalf of the respondent bank stated that the delay cannot be condoned in cases of appeals filed under Sec.18 of the SARFAESI Act as per the orders of the Hon’bleHigh Court of Madras passed on 28.8.2012 in WP Nos. 13456/2012, 8381/2012 and 12970/2012 and that this IA should be dismissed in obedience to the orders of theHon’ble High Court of Madras.

  Ld. CounselShri A. Periasamy  appears on behalf of the petitioner.

 Heard the Ld. Counsel for the respondent bank. It is seen that the Hon’bleHigh Court of Madras has held on 28.8.2012 in WP Nos. 13456/2012, 8381/2012 and 12970/2012 thatcondonation of delay does not arise in  cases of  appeals filed under Sec.18 of the SARFAESI Act.  

 This tribunal being bound by the orders of the Hon’bleHigh Court of Madras is therefore driven to dismiss this IA.

 Accordingly this IA is dismissed. IA 1215/2009 (stay) :  IA 1378/09 is dismissed. Hence this IA is also dismissed.

The above Order was passed by the Hon''ble Chair Person of DRAT ,Chennai on5th Oct 2012

Friday, October 5, 2012

Banks to release funds to KFA on humanitarian grounds: SBI




Money Control :Fri, Oct 05, 2012 at 18:41




State Bank of India today said Kingfisher lenders have decided to release funds to the debt-ridden airline on "humanitarian grounds" considering that its employees have not been paid for the past seven months.


State Bank of India  today said Kingfisher lenders have decided to release funds to the debt-ridden airline on "humanitarian grounds" considering that its employees have not been paid for the past seven months.

"The money that has been released by the tax authorities, 80 percent of that will be made available to the company on humanitarian grounds, specifically to pay salaries of the employees," SBI Chairman Pratip Chaudhuri told reporters here.

     
Sources had said bankers after an emergency meeting yesterday had agreed to release funds from escrow accounts, which is likely to fetch up to Rs 60 crore for the carrier. SBI heads the consortium of 17 lenders to the crippled
carrier. Chaudhuri, however, did not divulge the total quantum of the money banks were having.
     
Collectively, the 17-bank consortium has Rs 7,000-crore outstanding to the Vijay Mallya-promoted airline. The SBI chief said that he does not know how much of a solace this would offer. "I don't know how adequate that (the
release of money) would be."

The wife of a Delhi-based technician of the airline, which has been grounded since Sunday following a strike by its engineers and a section of pilots, allegedly committed suicide yesterday due to the financial troubles in the family and blamed the airline for it in a suicide note.

The Aviation Ministry and the sector regulator DGCA have been insisting to keep the fleet grounded unless concerns around safety and wages are solved.

The striking employees have been asking for an immediate payment of salary for three months out of the total seven months outstanding for resuming duties.

Chaudhuri said the only way forward for the banks is to be patient and wait for Mallya to get an investor. "Banks are still giving time to Mallya to get an investor. Because if we pull the plug it would be irretrievable. And if we are
patient with him, possibly there is a chance he would revive."

"If we pull the plug now then all possible investors would also walk away. Having waited for so long we might as well wait some more time," Chaudhuri said.

Export Import Bank of India V/S Vintage Foods & Industries ltd & ors




M.A:316/2008


Ld. Counsel Shri Srinivasan appearing on behalf of M/s NVS Associates for the appellant bank  drew the attention of this Tribunal to the order of the Ld. Presiding officer, DRT, Bangalore dt 3.11.2008 passed in IA no.1746/2008 and stated that the order is liable to be set aside as the order is passed based on assumptions and presumptions of the Ld. Presiding Officer and that grave injustice has been done to the bank which is entitled to get about more than Rs.21.00 crores by the dismissal of this IA. 

 Ld. Counsel further stated that whatever is found in paragraph 3 of the order is not based on any material on record  and that the order is perverse and that the same is liable to be set aside.  Ld. Counsel emphasized the need for an opportunity to be given to the bank to put forth its case in  OA No.326/2002 and added that the Ld. Presiding officer has erred in shutting out the bank from establishing its case in the said OA and that the order dt 5.8.2008 dismissing OA No.326/2002 is equally bad.  

Ld. Counsel prayed that the order passed in IA No.1746/2008 be set aside and that the bank be provided with the opportunity to put forth its case in OA No.326/2002 and also prayed that the order of the Ld. Presiding officer imposing a cost of Rs.5000/- may also be set aside.

Ld. Counsel Shri Dhanraj appears on behalf of respondents 1 to 3.  R4 is already called absent.  There is no representation for R5. R5 is  called absent.

Heard the Ld. Counsel for the appellant and the Ld. Counsel for R1, R2 and R3.  R3 and R5 have chosen not to be present.

In view of the fact that the appellant bank has to be afforded a proper opportunity to put forth its case in OA No.326/2002 and establish the liability of the defendants it would be appropriate if the following order is passed.

“The order of the Ld. Presiding officer, DRT, Bangalore dt3.11.2008 passed in IA No.1746/2008 in OA No.326/2002 is hereby set aside and OA No.326/2002 is directed to be restored to file. The imposition of cost of Rs.5000/- is also hereby set aside. The Ld. Presiding officer is directed to take up OA No.326/2002  and proceed with the OA and dispose of the same in accordance with law within a period of three months from today.”

This MA is disposed of accordingly.

The above Order was passed by the Hon''ble Chair Person of DRAT ,Chennai on27th Sep 2012

N.Anandraj rep by Power agent T.G.Nagarajan V/S Standard Chartered Bank & ors




M.A(S.A):43/2012


Ld. Counsel Shri Swaminathan appearing on behalf of the transfer petitioner stated that whatever allegations that have been made in the affidavit are being withdrawn and prayed that this Tribunal may transfer the SA from DRT-II, Chennai to any other tribunal of competent jurisdiction to enable him to do the case effectively.

Ld. Counsel Shri Sheik Ismail appearing on behalf of the respondent bank drew the attention of this Tribunal to the allegations made in the affidavit and stated that it is unbecoming on the part of the litigant to make such allegations against the Ld. Presiding officer, DRT-II, Chennai and that the litigant has made such allegations just for the purpose of delaying the recovery process.

Heard both sides.  R2 and R3 are given up.

In view of the facts and circumstances of the case more particularly in view of the fact that the allegations made in the affidavit have been withdrawn by the Ld. Counsel ShriSwaminathan appearing for the transfer petitioner and in view of the fact that the SA has to be disposed of at the earliest the following order is passed.

“1)  SA No.117/2011 on the file of DRT-II, Chennai is hereby transferred to DRT-I, Chennai.

2)      The Ld. Presiding Officer, DRT-I, Chennai shall take up the proceedings in the said SA No.117/2011 at the stage where it was lying i.e. at the stage of arguments and shall fix the arguments within the first two weeks of October, 2012 and hear the arguments.

3)      After hearing the arguments within the time specified above the Ld. Presiding Officer shall proceed to pass final orders on or before 31.10.2012.

4)      Ld. Counsel Shri Swaminathan appearing on behalf of the transfer petitioner is requested to cooperate with the tribunal below and not to take any adjournment for the purpose of arguments which is to be scheduled on or before 15.10.2012.

5)      The Authorised officer shall stand restrained from in any way proceeding any further under the provisions of the SARFAESI Act in any manner till 31.10.2012.

6)      The Registry, DRT-II, Chennai is directed to transmit the records to DRT-I, Chennai on or before 4.10.2012.”

This MA(SA) is disposed of accordingly.


The above Order was passed by the Hon''ble Chair Person of DRAT ,Chennai on27th Sep 2012

Thursday, October 4, 2012

Overdue NPA provisions to hit banks hard in Q2





BS /Manojit Saha & Abhijit Lele / Mumbai Oct 04, 2012, 00:44 IST

Many banks face erosion of entire quarterly profit as the Reserve Bank of India wants immediate cover for last years bad loans




Several large public sector banks may see their profits in the quarter ended September being eroded, with the Reserve Bank of India (RBI) asking banks to provide for last financial year’s bad loans in that quarter. During the annual inspection of banks’ books, RBI had found many banks had under-provided for bad loans in the last financial year.

According to banking sources, some banks may record Rs 500-600 crore of additional provisioning. In the quarter ended June, large public sector banks had reported net profits of Rs 500-Rs 1,250 crore. With a profit of Rs 3,752 crore, State Bank of India (SBI) was the only exception. The impact of the RBI move on SBI would be limited, as the bank has already made stringent provisioning. 

A senior SBI official said the bank, as well as its associate banks, was scheduled to make overdue provisions in the second quarter. “But the gap between what is provided and what RBI has pointed out is small,” the official added.

Though RBI carries out financial inspection every year, the process has been expedited from this year. Earlier, these inspections were carried out with a lag of 12-18 months. However, to ensure banks take corrective measures immediately, the banking regulator has now decided to complete the report of the previous year in the current year.

According to RBI data, non-performing assets (NPAs) have hit public sector banks the most, as these banks carried out the most debt recasts. Net NPAs of public sector banks rose from 1.09 per cent of net advances in 2010-11 to 1.53 per cent in 2011-12. For private banks, the ratio fell from 0.56 per cent to 0.46 per cent. For foreign banks, the it fell to 0.61 per cent in 2011-12.


Latest data shows the ratio of restructured standard advances to gross advances was highest for public sector banks. Till March, this ratio stood at 5.73 per cent for public sector banks, while for private and foreign banks, the ratios were 1.61 per cent and 0.22 per cent, respectively.

Compiled by BS Research Bureau

Lenders again fail to admit Deccan Chronicle case at CDR



BS Reporter / Mumbai Sep 26, 2012, 00:19 IST



Wait for Canara Bank's forensic report



Lenders with exposure to Deccan Chronicle Holdings Ltd (DCHL) on Tuesday postponed a decision on admitting the cash-strapped company’s proposal to recast its loans under the corporate debt restructuring (CDR) route, saying they would wait for an audit report by Canara Bank.

DCHL is the parent company of the Deccan Chronicle newspaper and Indian Premier League (IPL) cricket team Deccan Chargers.


The decision regarding loan recast was put on hold,” said a senior bank executive after on Tuesday’s CDR meeting. This is the second time banks postponed the decision. Earlier, they had discussed the case on September 12.


CHRONICLE OF DEBT RESTRUCTURING

  • According to the terms and conditions which govern the corporate debt restructuring (CDR) process, consent of at least three-fourth of the lenders is required to draw a debt restructuring programme for a particular company
  • Another public sector bank associated with the CDR for Deccan said most lenders would convey their view after studying the forensic report
  • Top lenders whose exposure to Deccan Chronicle Holdings Ltd is being considered by the CDR cell are ICICI Bank, Axis Bank, Canara Bank, IDBI Bank and Andhra Bank
CHRONICLE OF
 DEBT RESTRUCTURINGCanara Bank is conducting the forensic audit for DCHL. A top Canara Bank official said it would take at least one month to complete the work (on a forensic audit report).

According to the terms and conditions that govern the CDR process, consent of at least three-fourth of the lenders is required to draw a debt restructuring programme for a particular company. Total debt to be admitted by the CDR cell is about Rs 2,300 crore, while the banks’ total exposure to DCHL is Rs 5,000 crore.

Another public sector bank associated with CDR for the company said most lenders would convey their view only after studying the forensic report. “If the audit establishes the fraud in the company, then it won’t be considered for the CDR,” an official with the bank said.


Top lenders whose exposure to DCHL is considered by CDR cell are ICICI Bank, Axis Bank, Canara Bank, IDBI Bank and Andhra Bank.


Banks want NPA norms relaxed for housing project loans



BS:Manojit Saha / Mumbai Sep 24, 2012, 00:13 IST



Banks want the Reserve Bank of India (RBI) to relax the norms on asset classification in the real estate sector to facilitate credit flow.

The request comes after the finance ministry had asked banks to increase lending to residential housing projects.

In a meeting last week with bankers and the Confederation of Real Estate Developer’s Associations of India (Credai), D K Mittal, secretary, financial services, had reviewed the issues pertaining to credit flow to the housing sector and discussed remedies.


Credai representatives told the ministry many projects could not be completed due to lack of funds. Most of these unfinished projects were in Tier-II and Tier-III cities.

REALTY REALITY
  • Finance ministry had asked banks to increase lending to residential housing projects
  • Bank wants relaxed asset classification norms in the sector 
  • Ministry has asked CREDAI to survey unsold housing stock to take remedial steps
  • CREDAI says projects could not be completed due to lack of funds
  • Most such projects in tier-II and tier-III cities



“We have noted that a developer starts the project by availing finance from non-banking sources, mainly non-banking housing companies, at a high interest. Later, they realise that servicing such loans become unviable,” said a senior executive of a public sector bank.

To add to the woes of real estate developers, RBI guidelines do not allow banks to take out that exposure from the non-banking finance company (NBFC) if the project has not commenced.

Now, bankers have requested the finance ministry to take up the matter with the banking regulator so that favourable policies could be framed to boost bank loans to real estate projects.

Banks also want asset classification norms to be relaxed on real estate projects.

According to RBI norms, if a project fails to be operational two years after the commercial operation date (as scheduled while loan sanctioning), banks have to classify the project as non-perfoming. “We have noticed there are issues beyond the control of the developer, like land acquisition and other clearances. These are genuine issues and the developer cannot do much in such a case. As a result, the commercial operation date of the project is delayed,” said a banker who attended the meeting.

Banks have requested the finance ministry to take up the matter with the central bank, so that there could be some relaxation in terms of extending the asset classification norms over two years.

The finance ministry has also asked Credai to conduct a survey of unsold housing stock so that a decision could be taken on unlocking its value.

RBI Deputy Governor Anand Sinha had on Friday said banks' asset quality had deteriorated due to the gloomy economic conditions but noted that there was enough capital with the lenders to take care of the situation.




Tuesday, October 2, 2012

Non-performing assets (NPAs) in the banking system were highest in last five years




BS Reporter / Mumbai Oct 01, 2012, 21:48 IST


Non-performing assets (NPAs) in the banking system were highest in last five years, according to the Reserve Bank of India (RBI) data.

Net NPA levels in the year 2011-12 were at 1.28% in the banking system. Net NPA ratio of the nationalised banks (excluding SBI and associates) crossed 1% mark in the net NPA ratio for the first time in last five years at 1.43% in 2011-12. The ratio was lowest at 0.68% in 2008-09. Including SBI and its associates it stood at 1.53% for all public sector banks.


Though the net loan loss ratio is at highest in the past five years for the banking system, for private sector banks, it has declining continuously for the past three years. In 2011-12, the private banks reported net NPA ratio of 0.46% compared to 0.56% reported last year.

Country's largest lender State Bank of India reported net NPA ratio of 1.82% in 2011-12 compared to 1.63% reported a year back. SBI advances are about 17% of the total banking system.

“The overall economy is slowing down and the cash flows of corporates have been affected which has had cascading effect on NPA levels” said one senior public sector bank executive.

RBI today published a profile of Indian banks for 2011-12. RBI in its report said that profitability in terms of return on assets (RoA) declined in 2011-12 compared to previous financial years while cost of funds (CoF) increased for the banks.

Also profit per employee remained static for the nationalized (excluding SBI group) banks in 2011-12 and increased for the other bank groups. Capital adequacy ratio (CAR) declined in 2011-12 for all banks excluding SBI group.

SBI group reported CAR of 13.70% in 2011-12 an increase of 145 basis points over last year. This increase helped overall banking system to post an increased CAR in 2011-12 though the CAR for other groups of banks declined compared to last year.

Monday, October 1, 2012

Debt Recovery Tribunal may sell property of borrowers, guarantors: Allahabad High Court



Sep 25, 2012, 05.52AM IST TNNR N Pandey ]

ALLAHABAD: The Allahabad High Court on Monday ruled that the Debt Recovery Tribunal (DRT) is an authority empowered under the law to sell the property of borrowers or guarantors of a loan through recovery officers.

The High Court further ruled that the sale certificate granted by the recovery officer is fully covered under Article-18 of Schedule I-B of Stamp Act and the stamp duty is chargeable on the amount of sale certificate.

The court turned down the plea that the sale certificate issued by the recovery officer of DRT is chargeable under Article-23 of Schedule I-B of Stamp Act on the market value of the property determined by the Collector under the Stamp Act.

Passing the order on a writ petition filed by Avdhesh Tyagi & others, Justice Sabhajeet Yadav remarked that in view of the statements of law contained in various provisions of the Act, 1993, it is clear that since by virtue of Section-18, read with Section-31 of the Act, the jurisdiction of court and other authority is barred from exercising the jurisdiction and powers conferred on the tribunals constituted and established under the said Act from the appointed date and the tribunal alone is entitled to recover the debts due to the banks and financial institutions.

Therefore, there can be no scope for doubt to hold that the Debt Recovery Tribunal is an authority or body empowered under law for time being in force under the Act 1993 to sell the property of defendants before the tribunal, who are borrowers and/or guarantor of the loan through recovery officers as such recovery officers are authorized to sell property of such defendants by public auction for recovery of debts specified in the certificate issued by the tribunal and to grant sale certificate to the purchaser of the property, the court stated.

As such, in my considered opinion, such sale certificate granted by the recovery officer is fully covered by Article-18 of Schedule I-B of Stamp Act.

It is immaterial that the aforesaid sale certificate was not granted by the civil or Revenue court, Collector or Revenue Officer, the judge added.

Allowing the writ petition, the court said that the petitioners are liable to pay stamp duty on the basis on a sale certificate and they are not liable to pay stamp duty under Article-23 of Schedule I-B on the market value of the property determined/fixed by the collector under the Stamp Act.

The issue before the court for consideration was that sale certificate issued to the petitioners by an officer of the Debt Recovery Tribunal was a body empowered under any law for time being in force to sell such property by public auction and also the payment of stamp duty on such sale certificate.

The borrower had failed to pay the money to the bank and therefore in pursuance of the recovery certificate, the recovery officer auctioned the property of the borrower in which highest bid of the petitioners was accepted by the recovery officer and a sale certificate was issued by the recovery officer of the DRT.

In pursuance of the sale certificate of Rs 2,60,000, the petitioners paid a sum of Rs 26,000 as stamp duty.

The matter came up before the high court as the additional collector (F&R) Ghaziabad was not satisfied to the stamp duty and had passed an order saying that there was a shortage of stamp to the tune of Rs 4,03,500, as per the market value of the property determined by the collector under the Stamp Act.