Banks to assist debt recovery tribunals

DRTS: NUTS & BOLTS

There are 33 DRTs and 5 debt recovery appellate tribunals in India Banks approach DRTs for disputed loans above Rs 10 lakh DRTs are expected to resolve the cases within 6 months Bankers say, Rs 2 lakh crore of loans are stuck in DRTs Of the Rs 2 lakh crore of suits filed, Rs 1.29 lakh-crore loan recovery certificates are yet to be issued

Source :BS:Parnika Sokhi / Mumbai November 3, 2011, 0:01 IST

Public sector banks are busy deputing manpower to under-staffed debt recovery tribunals (DRTs), after the finance ministry asked them to temporarily fill positions vacant since a few months. 

According to bankers, Rs 2 lakh crore of loans are stuck in DRTs, which were once established to provide banks with speedy resolution and recovery of disputed loans.

There are 33 DRTs and five debt recovery appellate tribunals in India. 

Currently, seven DRTs, including one of the three in Mumbai, are functioning without a presiding officer. 

There are vacancies for recovery officers and assistant staff as well.

We are in a process of deputing officers with legal background till the government completes fresh recruitment,” said a senior official of a public sector bank.

The finance ministry had called for a meeting with government-owned banks, after they failed to promptly respond to the directive given at the State Level Bankers Committee a month before, after which the bankers assured the postings would be made without further delay. The meeting was chaired by Financial Services Secretary D K Mittal.




Banks approach DRTs for disputed loans above Rs 10 lakh and for loans for which agricultural land was the underlying security. 
DRTs are expected to resolve the cases within six months. 


However, it takes much longer for them, given the insufficient staff and the rising number of cases.


Bankers who attended the meeting said of the Rs 2 lakh crore of suits filed in DRTs, recovery certificates are yet to be issued for loans worth Rs 1.29 lakh crore.


Lenders are banking heavily on recoveries, since the need for higher provisioning against rising non-performing assets is eating into their profits. Most public sector banks have reported lower net profits in the second quarter of the current financial year.


“We will dedicate this quarter to recoveries and cleaning up the balance sheet,” said M V Tanksale, chairman and managing director, Central Bank of India. The bank recorded a decline of 35 per cent in net profit, owing to high provisioning in the second quarter of the current financial year. Allahabad Bank, which announced its quarterly results today, said it had targeted Rs 1,000 crore of recovery for the current financial year.


“We have started a recovery drive and have collected around Rs 450 crore of dues in the first half of the current financial year,” said J P Dua, chairman and managing director, Allahabad Bank.

Kingfisher seeks switch to foreign currency debt

Source :BL:Nov3,2011

BANGALORE, NOV. 2: 

Debt-ridden private carrier Kingfisher Airlines has sought assistance from its banks to substitute high-cost rupee borrowings with lower-cost foreign currency debt.

The Vijay-Mallya owned airline hopes to support foreign currency debt by its international operations, which would provide with a natural hedge against currency movement, according to Mr Ravi Nedungadi, President and CFO, UB Group, in a press statement issued by the company.

He said that the company has sought the banks' help to release cash deposits held with lessors against maintenance reserves by providing bank guarantees in lieu.

Kingfisher Airlines has a total debt of Rs 7,000 crore, and currently a consortium of 13 banks, including State Bank of India and ICICI Bank, hold about 23 per cent stake in the company as part of the debt restructuring plans implemented last fiscal.

Mr Nedungadi also said that the company would seek banks' help to “appraise working capital requirements in the usual course to account for changes in the international prices of fuel and the change in rupee-dollar parity”.

He added that the banks were actively considering these requests, and ruled out another debt recast plan.

With the Government favouring 25 per cent foreign direct investment in private airlines, Kingfisher Airlines expects to reduce its debt burden. However, an aviation analyst with a domestic brokerage firm said that even if the company managed to raise funds through stake-sale to foreign investors it would find it difficult to repay its debt.

“Its first priority would be to make payments to employees and towards fuel, and the funds would be insufficient to repay its debt,” he pointed out. With the third quarter, which is supposed to be a good period for the aviation industry, not looking too bright for Kingfisher Airlines, the company could be faced with mounting losses in the coming months, he added.

Lenders reject Kingfisher Airlines debt recast plan

Source :Sidhartha, TNN | Nov 2, 2011, 03.08AM IST


NEW DELHI: Vijay Mallya-promoted Kingfisher Airlines is back with a debt restructuring plea but banks are unwilling to take a fresh haircut this time citing the company's weak finances and the loss they incurred on converting a part of their loans into equity. In addition, they fear that a fresh recast will force them to treat the loans as a non-performing asset (NPA), in line with the Reserve Bank of India norms. 

Further, they pointed out that Kingfisher was yet to fulfill a part of its commitment which included filing of the assignment agreement for the brand. This agreement with the Registrar of Trademarks would transfer the ownership of the brand to the lenders which will help banks trigger the default clause. 

While Kingfisher has not formally approached lenders with a proposal, bankers said the private airline which has been incurring losses, is looking to raise additional short-term loans, issue lines of credit in lieu of cash deposits lying interest free with lessors, substituting high-cost rupee debt with low-cost foreign currency loans and also raise Rs 2,000 crore via a rights issue. 


Airline executives have, however, raised the issue with government functionaries who have swung into action to see if fresh support from lenders is possible. Kingfisher Airlines CFO A Raghunathan did not respond to a text message and calls. UB Group's head of finance Ravi Nedungadi said he could not speak as he was tied up in meetings. 

Lenders said the biggest stumbling block will be RBI since loans have been restructured more than once and the regulator will now demand downgrading of the asset to NPA category if banks provide fresh succour. In the absence of compliance with earlier stipulated conditions, the task is going to get tougher, they added. Further, they pointed to the loss incurred on conversion of debt into equity. Against the prevailing market price of Rs 40 a share, on March 31 this year, there was preferential allotment to SBI and ICICI Bank due to conversion of compulsorily convertible preference shares into equity shares at a price of Rs 64.48 each, which represented a 60% premium over the prevailing market price. Since the end of March, Kingfisher's share price has declined 40% and closed at Rs 24.10 on Tuesday. "Given the impaired financial position and low security cover, taking additional exposure in the airline is not advisable," said a bank chief. "It is going to be very difficult to convince my board once again," added the head of another bank.

Panasonic sees $5.5 bln annual loss, worst in a decade

 
Head Office in Kadoma,Osaka


Source :REUTERS 31,Oct,2011


TOKYO: Japanese electronics maker Panasonic Corp forecast an annual net loss of 420 billion yen ($5.5 billion), its biggest in a decade, as it cut unprofitable businesses deeper and faster than first planned, while battling a soaring yen and weak demand in the United States and Europe. 


Panasonic accelerated the pace of restructuring as it races to shake off losses at its TV unit -- a problem it shares with rival Sony -- and strips out overlapping businesses after its buyout of subsidiary Sanyo. 


In April, Panasonic said it would cut 17,000 jobs by March 2013, but the maker of Viera televisions and Lumix cameras announced on Monday it now expects to reach its goal of slimming its work force to 350,000 or fewer a year ahead of schedule. 


Panasonic said it will stop liquid-crystal panel production at its Mobara plant near Tokyo and is canceling its plans to ship plasma-panel manufacturing equipment from another mothballed plant to Shanghai to start production there, as it aims to turn a profit on TVs in its next fiscal year. 


One analyst said the dramatic slide in profits might not lead to a sell-off of Panasonic's stock. 


"The net loss of 420 billion yen includes an increase in the cost of restructuring. It has lowered the assumed exchange rates to 76 yen, which gives the company some buffer even if the dollar slips from the current level after today's intervention," said Hiroyuki Fukunaga, CEO of Investrust. 


"So even though it is reporting a loss, the market may think all the negative factors have been priced in, especially given that its share price has fallen about a third from around 1,200 yen at the beginning of this year." 


Panasonic said it would incur 514 billion yen in restructuring costs, about half of it in the TV business, for the year to March, compared with an earlier forecast of 110 billion yen. 


The Japanese government intervened in the currency market for the second time in less than three months after the yen hit another record high against the dollar on Monday, selling yen to counter speculative trading that officials say is hurting the world's No.3 economy. 


Panasonic's annual loss, which will be its second biggest ever, compares with the company's previous forecast for a net profit of 30 billion yen in the year to March 2012 and last year's net profit of 74 billion yen. 


Shares of the company closed 2.1 per cent lower before the results. They have fallen 31 per cent so far this year, compared with a 13 per cent decline in the broader market .

'Big-time infra loans may turn NPA due to regulatory hurdles'

Source :23 OCT, 2011, 10.36AM IST, PTI 

NEW DELHI: Delay in regulatory approvals for infrastructure projects worth Rs 1.18 lakh crore poses a serious risk of huge loans disbursed by banks becoming non- performing assets, says an internal note of the Finance Ministry.

According to a list of big infrastructure projects, whose progress was reviewed by the Finance Ministry recently, 13 including 4,000 MW Sasan UMPP and Hindalco's Mahan are facing regulatory hurdles, mainly delay in getting clearances from the Environment Ministry for coal blocks.

"There is an increased risk of already disbursed loans turning into non-performing assets ( NPA)," the Finance Ministry has cautioned. The public sector banks have sanctioned around Rs 61,000 crore to the 13 projects.

This defeats the government's focus on infrastructure sector where it has envisaged an investment of over USD 1 trillion in the next five years. Of the total investment, private sector is likely to contribute nearly 60 per cent.

The 13 mega projects are a part of the 142 such schemes across the country that are stuck due to regulatory delays despite sanctioning of loans by the public sector banks, as per an official document.

"...disbursement in 142 large projects where loans of Rs 100 crore or more has been sanctioned by the public sector banks is held up as certain regulatory approvals are awaited. This...is impacting resultant benefits to the economy," the note said.

Of the 13 mega projects, nine are awaiting environmental clearances. Two are the projects of the mines and the urban development sectors. Eleven of the 13 mega projects pertain to capacity addition in the power sector by players like Reliance Power, Lanco Power, Jindal Power and Essar Power Gujarat Ltd.

Among the projects, Hindalco Industries' Rs 10,500-crore new aluminium smelter project at Singrauli in Madhya Pradesh is awaiting clearance from MoEF. The coal block which falls in the 'no go' mining zone as categorised by the MoEF was referred to a ministerial panel after clearance was rejected.

The Ministry has expressed concerns that the project is being delayed despite banks sanctioning loans to the tune of Rs 7,875 crore.

As far as Reliance Power's Sasan Project is concerned, its Chhatrasal coal block is awaiting green nod. The company is executing the 4,000 MW Sasan Ultra Mega Power Project in Madhya Pradesh and is also developing a project in the nearby Chitrangi district.

The document says that Rs 14,550 crore loan for the Rs 19,400 crore project has already been sanctioned and Rs 527 crore has been disbursed.

Last week, rating agency Crisil had said, "There is an urgent need for strong policy actions to reform the power sector ....we estimate around Rs 56,000 crore or 12 per cent of the lenders' total advances to the sector as potentially risky, if there is no meaningful progress on reforms in the next 18 months." 

New Debt collection Opration support System for banks

Source :Kochi, October 26, 2011 /India PrwirePress Relese/ -- Nexabion Solutions,

Nexabion Solution Kochi/Cochin kerala released a debt collection operation support system for HDFC Bajaj FinServ Bank's Collection Agencies. FinNex Support almost any indian banks data which are using finnOne as Lending System.

 Nexabion Solutions, a leading supplier of web-based automation softwares, today announced release of FinNex, India's first office automation solution for banking associates with a comprehensive integrated feature set and reporting tools. FinNex is unique software which helps collection agencies to automate allocations, define business flow, mange employee payroll, and analyze business performance.

FinNex has a Cloud based architecture for better usability that can be accessed from any corner of the globe, FinNex has been designed keeping in mind the intricacies that would otherwise have to be overcome in a manual process of maintaining records of outstanding dues, agent's incentives, report generation etc. Apart from these advantages, FinNex provides associates with accurate performance analysis and supports decision making in a better way. With FinNex, a banking agencies day-to-day management of debtor accounts is no longer complicated. This simplistic, yet thorough software is expected to improve the efficiency and effectiveness of all collection agencies.

A debt collection agency software like FinNex has been launched in a time when the rising interest rates, high inflation, high crude and energy prices and the Euro zone financial downturn are expected to keep the slippages elevated, and the margins for almost all commercial banks placed under pressure. With SBI already started recovering their NPAs and the other banks expected to follow the same route, debt recovery agencies can expect larger defaulters list every month.

Finnex is the first of its kind in India, said Abdul Rasheed project manager - FinNex. "It will be the first step in taking Indian collection agencies globally competitive. At present, FinNex is expected to help HDFC and Bajaj auto finance collectors in cutting there back office burden and reducing human efforts there. Nexabion is looking to expand FinNex by adding services to more banks that use FinnOne as their loan management system", he added.

A key capability of FinNex is its cloud based architecture. Users can automatically upload bank schedules via Internet, providing a user-friendly, built-in interface for complete analyzing and reporting. Users also can browse reports, review performance, generate reports on demand, configure each user account, save reports locally, calculate salaries and even export reports to MS excel. And, as an added convenience, no local installation of software is required on the user side making the application really platform independent. 
"We have set an ambitious goal of automating collection of all Indian banks those use FinnOne as their loan management system, by 2014. And we expect FinNex to help collection agencies to build a culture of innovation and entrepreneurship as well as making better decisions, collection networks, and revenue-generating customer support." Irshad MD, Nexabion said.

M.S.Gnanasoundari vs Indian Bank

M.S.Gnanasoundari vs Indian Bank on 21 February, 2008



DATED: 21.02.2008
C O R A M
THE HONOURABLE Mr.JUSTICE P.JYOTHIMANI
W.P.No.35859 of 2007 and M.P.No.1 of 2007
M.S.Gnanasoundari ... Petitioner
vs.
1. Indian Bank,
No.31, Rajaji Salai,
Chennai - 1,
through its Asset Recovery
Management Branch - 1,
No.55, Ethiraj Salai,
Chennai - 8.
2. The Debts Recovery Tribunal - II,
through its Registrar,
4th Floor, Spencers Towers Annexe,
Chennai - 2. ... Respondents
Petition under Article 226 of The Constitution of India praying for the issuance of a Writ of Mandamus, directing the respondents to give effect to the Award dt.07.02.04 by condoning the delay in payment of the Award amount and consequently direct them to record full satisfaction with consequential reliefs.
For Petitioner : Mr.Benjamin
for B.Thilak Narayanan
For Respondent 1: Mr.Jayesh B.Dolia
- - - - -
O R D E R
This writ petition is for direction against the respondents to give effect to the award dated 7.2.2004 by condoning the delay in payment of award amount and consequently, direct the Debts Recovery Tribunal to record the full satisfaction.


2. One M/s.Adams Barter World owned by its proprietor late M.J.Durairaj, availed a term loan of Rs.72,00,000/- and cash credit of Rs.25,00,000/- from the first respondent bank on 30.4.1991. The said Durairaj, husband of the petitioner herein died on 16.10.1993 and according to the petitioner, after the death of her husband, the bank has obtained her signature in various papers. Five years after the death of her husband, the first respondent filed O.A.No.85 of 1998 on the file of Debts Recovery Tribunal, Chennai for recovery of a sum of Rs.3,59,86,583.07. 


According to the petitioner, even now the first respondent bank has failed to furnish the statement of accounts since the said account is classified as NPA. On formation of the second respondent, the case was transferred and the same was renumbered as O.A.No.474 of 2001. During the pendency of the said case, the matter was referred to the Lok Adalat for conciliation and the petitioner has agreed to pay Rs.150 lakhs in full and final settlement of the entire claim amount out of which the petitioner agreed to pay a sum of Rs.38.5 lakhs on or before 31.3.2004 and the balance amount of Rs.111.5 lakhs in September, 2004 with interest at the rate of 11.5% per annum on running balance amount from 7.2.2004. Since the claim is not enforceable against other defendants, the first respondent did not insist for the consent of other defendants in the Lok Adalat. Hence, an award was passed by consent against the petitioner and it was recorded by the second respondent on 7.2.2004 itself and final order was passed in terms of the said award. 2(a). The petitioner has paid the amount of Rs.38.5 lakhs within the time and she has paid the said amount through instalments, the last instalment being paid on 27.3.2004. However, the balance amount which had to be paid on or before the end of September, 2004 could not be paid due to various financial difficulties since the petitioner being the widow has to look after her minor children and her health condition has also become bad and she is living with her daughter in the United States of America. Therefore, the present writ petition is filed through her son being the Power Agent.


2(b). It is also stated that subsequently, on 15.6.2006, the petitioner has paid the balance amount of Rs.111.5 lakhs and the entire amount of Rs.150 lakhs as agreed by the petitioner before the Lok Adalat has been paid however not before the agreed date, viz., September, 2004, but on 15.2.2006. The first respondent contending that since the petitioner has not paid the amount in time, filed I.A.No.37 of 2005 for passing an order determining the liability at Rs.111.50 lakhs with interest at the rate of 11.5% per annum. However, subsequently, the first respondent filed a memo to correct the claim amount as Rs.13,55,99,185.05 with further interest at 20.40% and costs.


2(c). The second respondent has not only allowed the first respondent to file such a memorandum rejecting the claim in respect of other defendants, but also passed a final order as prayed for on the said memorandum however as against the petitioner alone. It is also stated that while the claim made in O.A. itself is Rs.3,59,86,583.07, the amount of Rs.13,55,99,185.05 has been directed to be paid in spite of the fact that the petitioner has paid Rs.150 lakhs as agreed and awarded in the Lok Adalat. The first respondent has filed an appeal in Appeal No.9 of 2007 on the file of Debts Recovery Appellate Tribunal challenging the order of the second respondent dated 12.9.2005 in respect of the portion rejecting the claim against other defendants and the said appeal was dismissed on merits on 11.4.2007. The petitioner has also filed a review against the said order of the Debts Recovery Tribunal dated 12.9.2005 passed in I.A.No.37 of 2005 and that was also dismissed by the second respondent. Since the petitioner has paid the entire amount payable as per the award dated 7.02.2004, the order dated 12.9.2005 passed in I.A.No.37 of 2005 has become infructuous. There was some delay in the payment of award amount and the petitioner has come forward to pay interest for the delayed payment and also paid another sum of Rs.24 lakhs on 2.7.2006 and 5.7.2006 towards interest on the said Rs.111.50 lakhs for delayed payment. The amount was remitted in furtherance to the discussion with the Senior Manager of the first respondent. After remittance of the said sum, the first respondent has gone back from its commitment and insisted the petitioner to give a revised offer for settlement.


2(d). The petitioner and other defendants in O.A.No.474 of 2001 received notice on 24.8.2007 under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,2002 (in short, "SARFESI Act"). The said notice states that the proceedings before the Debts Recovery Tribunal is still pending. In fact, the claim against other defendants in the Debts Recovery Tribunal was rejected which has also been confirmed in appeal. O.A.No.474 of 2001 has been disposed of in terms of the award. In these circumstances, the present writ petition is filed for direction as stated above on the basis that the delay in payment of the balance amount of Rs.111.5 lakhs on 15.2.2006 instead of 30.9.2004 is due to various reasons beyond the control of the petitioner.


3. The first respondent has filed the counter affidavit. According to the first respondent, the writ petition is not maintainable since it is filed against the notice issued under section 13(2) of the SARFASI Act. According to the first respondent, OTS (One Time Settlement) proposal got lapsed when the petitioner failed to pay the amount as per the schedule agreed in the Lok Adalat. Whatever payment made by the petitioner would be adjusted against the loan amount of Rs.12.36 crores as on 30.6.2007. It is also admitted that 1.50 crores has been adjusted towards the amount payable to the respondent bank and the balance amount of Rs.0.24 crores paid by the petitioner is kept in suspense account. The respondent bank reserves its right to file a writ petition against the order of the Debts Recovery Appellate Tribunal dated 12.09.2005. According to the respondent bank, the petitioner is not having any bona fide attempt.


4. Mr.Benjamin, learned counsel for the petitioner would submit that the petitioner has paid the balance amount of Rs.111.50 lakhs on 15.2.2006 even though as per the award passed in the Lok Adalat the said balance amount has to be paid by 30.9.2004. He would submit that for the period from 30.9.2004 to 15.2.2006, the petitioner has also paid Rs.24 lakhs towards interest and the same has been received by the bank. The learned counsel for the petitioner would rely upon the judgement of the Supreme Court in State Bank of India v. Vijay Kumar [(2007) AIR SCW 2600: 2007 (4) MLJ 117] and submit that under similar circumstances, the Supreme Court considered the bona fide on the part of the borrower and dismissed the appeal filed by the appellant bank.
4(a). He would also rely upon the latest judgement of the Division Bench of this Court dated 5.10.2007 in W.P.No.22170 of 2007 [M/s.Canara Bank vs. M/s.Coromandel Indag Products and others], wherein also under similar circumstances, the Division Bench dismissed the writ petition filed by the bank confirming the order of the Debts Recovery Appellate Tribunal in extending the time for depositing the amount accepted.
4(b). He would rely upon the judgement of the Supreme Court in Smt.Periyakkal and others vs. Smt.Dakshyani [AIR 1983 SC 428] to contend that after the compromise between the parties was accepted and in terms of compromise an order was passed by the Court, it gives jurisdiction to the Court to extend the time for payment as per the terms of compromise.
5. On the other hand, Mr.Jayesh B.Dolia, learned counsel appearing for the respondent bank would submit that the settlement in the Lok Adalat and the award passed based on it has worked itself out and as per the terms if the amount is not paid, the bank is entitled to claim the entire amount. He would submit that it is not as if the bank has received Rs.24 lakhs as interest for the default period and the amount is kept in suspense account.


6. I have heard the learned counsel for the petitioner and the learned counsel for the respondent bank and perused the entire records.


7. It is not in dispute that the petitioner's husband had borrowed the amount from the first respondent and the first respondent bank has filed O.A.No.474 of 2001 on the file of the second respondent Tribunal for recovery of Rs.3,59,86,583.04. Pending the said O.A., in the Lok Adalat, settlement was arrived at between the parties, viz., the applicant bank and the first respondent who is the petitioner herein in the following terms:
" Both parties agreed for one time settlement of Rs.150 lakhs (Rupees one hundred and fifty lakhs only). The matter is settled between both the parties. The defendant shall pay Rs.38.5 lakhs on or before 31st March,2004 and the balance amount of Rs.111.5 lakhs on or before September,2004 with interest at 11.5% on running balance amount from 7.2.2004. In case of any default, the Bank is at the liberty to claim the amount as per O.A. Court fee is ordered to be refunded u/s 21(1) of Legal Services Authority's Act. The Award is passed accordingly."
8. By the said terms, the petitioner has agreed to pay a total amount of Rs.150 lakhs in full and final settlement of the entire claim by the first respondent and she has also agreed to pay a sum of Rs.38.5 lakhs out of the said amount on or before 31.3.2004 and the balance amount of Rs.111.5 lakhs on or before 30.9.2004 with interest at 11.5% p.a. on running balance from 7.2.2004. The terms entered into in the Lok Adalat were recorded by the second respondent Tribunal and an award was passed on 26.2.2004.


9. It is also not in dispute that the amount of Rs.38.5 lakhs agreed as per the award has been paid by the petitioner before time, however, the balance amount of Rs.111.5 lakhs was not paid before 30.9.2004 and admittedly, the said amount was paid by the petitioner on 15.2.2006. However, it is the case of the petitioner that in respect of the delay from 30.9.2004 till 15.2.2006, she has paid the interest amount of Rs.24 lakhs which has admittedly been received by the first respondent, but, according to the first respondent, the amount is kept in suspense account. In fact, it is admitted that the said amount has not been returned to the petitioner by the bank. At this stage, it is relevant to consider the judgement of the Supreme Court in Smt.Periyakkal and others vs. Smt.Dakshyani[AIR 1983 SC 428]. In that decision, the Supreme Court has dealt with a case wherein the parties entered compromise pending second appeal and the appellant has agreed to deposit and the respondent has agreed to receive a sum of Rs.60,000/- in full and final settlement of the decree and orders were passed to the effect that on deposit of such amount, the sale which was confirmed by the trial Court and set aside by the first appellate Court, should stand set aside and the second appeal should stand dismissed and if the amount of Rs.60,000/- was not deposited on or before 30.11.1976, the second appeal stood allowed and the sale should stand confirmed. In the memorandum of compromise it was also stated that the time was the essence of contract between the parties. When the breach was committed in respect of payment, the question arose whether the Court which recorded the compromise would lose its jurisdiction to extend the time for payment. In those circumstances, the Supreme Court has held that when a memorandum of compromise was recorded by the Court and in terms of the compromise, if a decree was passed grating time as per the memorandum of compromise for payment, it gives jurisdiction to the Court to extend the time in appropriate cases. The relevant portion of the judgement is as follows:
" 4. ...... The Court would have then decided the appeal arising out of the application on the merits. The parties, however, entered into a compromise and invited the Court to make an order in terms of the compromise, which the Court did. The time for deposit stipulated by the parties became the time allowed by the Court and this gave the Court the jurisdiction to extend time in appropriate cases. Of course, time would not be extended ordinarily, nor for the mere asking. It would be granted in rare cases to prevent manifest injustice. True, the Court would not rewrite a contract between the parties but the Court would relieve against a forfeiture clause; And, where the contract of the parties has merged in the order of the Court, the Court's freedom to act to further the ends of justice would surely not stand curtailed. ......."


10. In a recent judgement of the Supreme Court in State Bank of India v. Vijay Kumar (2007(4) MLJ 117 (SC): 2007 AIR SCW 2600) the facts are almost similar to that of the present case. That was a case where the bank filed a suit for recovery of Rs.14,92,295.99 and decree was passed and in the revision petition filed by the bank, a compromise deed was filed at the Lok Adalat containing various terms including that the respondent was to deposit 20% of the compromise/settlement amount within 30 days i.e., on or before 28.12.2003 and the remaining amount of 80% was to be paid in equal monthly/quarterly/half yearly instalments on or before 31.3.2004 and there was a failure clause setting out the consequences of default in payment according to the time schedule. The Debts Recovery Tribunal recorded the settlement arrived in the Lok Adalat and passed an order in terms thereof. Since there was some default in payment, the bank took the stand that it is entitled to recover the entire decretal amount. The writ petition was filed in the High Court and the High Court found that there was default on the part of the respondent and directed the respondent to pay the amount within 12.7.2004 [as in the facts and circumstances of the present case] along with interest amount of Rs.45,000/- for the default period. It was held that the difficulties were genuine since the respondent has proved the bona fide by making payment of whole amount. It was, as against the order, the bank filed an appeal before the Supreme Court. The Supreme Court, while dismissing the appeal, has found that even though there was some error on the part of the High Court in recording the amount, the bona fide of the respondent has been proved and held as follows:
" 5. The High Court was of the view that the first instalment was paid in time. Therefore, it accepted the stand of the writ petitioner and held that the compromise should be acted upon but directed the bank to charge interest for the defaulted period @ 10.4% p.a. A sum of Rs.20,000/- which was deposited pursuant to the Order of the High Court was directed to be adjusted for publication charges etc.


6. In support of the appeal learned counsel for the appellant-bank submitted that the High Court has stated that the first instalment was made in time. Additionally, when the amounts had not been paid according to the fixed schedule the default clause operated arid the High Court could not have come to the aid of a defaulter.


7. Learned counsel for the respondent submitted that High Court took note of all the relevant factors, the bona fides of the respondent and even had directed charging of interest which in fact has been charged by the appellant bank and has been paid. Normally, when there is failure of the terms of the settlement the default clause, if provided, operates. Therefore, in the peculiar features appellant-bank agreed to settle the claim taking into account various factors. It is true that the High Court has erroneously recorded that Rs.2,00,000/- has been paid within the stipulated time. 


The details of the payment are as follows:
Sr.No.
Date of payment
Amount(Rs.)
Mode of Payment
1
122803
90000
Cash deposited with the Respondent bank
2
1204
20000
Cash deposited with the Respondent bank
3
1504
10000
Cash deposited with the Respondent bank
4
42504
3,80,000
Cash deposited with the Respondent bank
5
71204
5,00,000
Vide bank draft deposited with the Recovery Officer.
Total
10,00,000
8. Additionally, we find that the respondent had paid Rs.45,000/- as interest for the defaulted period. Interestingly, pursuant to the order of the High Court the appellant-bank had charged interest of Rs.29,353/-. There into arrangements with third party for selling the property but the payment in respect of the sale was to be made directly to the bank.


9. It is noted that Bank at no point of time before the final payment was made, appear to have indicated that settlement failed because of failure to stick to the time schedule.
10. Above being the position, we do not find this to be a fit case where jurisdiction under Article 136 of the Constitution of India, 1950 exercised. The appeal is dismissed." (Emphasis supplied)


11. The said judgement of the Supreme Court was relied upon by a Division Bench of this Court in almost similar circumstances in M/s.Canara Bank vs. M/s.Coromandel Indag Products and others (W.P.No.22170 of 2007 dated 5.10.2007). That was a case relating to the compromise entered into before the Debts Recovery Tribunal agreeing to pay the amount and there was a default. When the matter was pending before the Debts Recovery Appellate Tribunal, it has extended the time. The review petition filed by the bank before the Debts Recovery Appellate Tribunal was dismissed against which the bank has filed the writ petition stating that against the order of Debts Recovery Tribunal which has dismissed the petition for extension of time for payment of amount, no appeal can be filed and the Debts Recovery Appellate Tribunal has no jurisdiction to extend the period. In the writ petition, considering the said arguments, and relying upon the judgement in State Bank of India vs. Vijay Kumar [AIR 2007 SCW 2600 : 2007 (4) MLJ (SC) 117], it was held that the Tribunal on the principles of natural justice can extend the time, if reasonable grounds are shown by the defendants and the writ petition was dismissed. The Division Bench has held that the order of Debts Recovery Appellate Tribunal in extending the time for depositing the amount does not warrant interference.
12. It is seen that the petitioner's husband borrowed the amount as early as in 1991 and he subsequently died on 16.10.1993 and the case of the petitioner is that she was not aware of any proceedings till the claim petition was filed in 1998 before the Debts Recovery Tribunal at Chennai in O.A.No.85 of 1998 which stood transferred to the file of second respondent as O.A.No.474 of 2001. She has paid the first instalment of agreed amount as per the award passed by the Tribunal on the basis of the settlement entered into in the Lok Adalat viz., Rs.38.5 lakhs on or before 31.3.1004 and in respect of the remaining amount she has given the reason that after the death of her husband she was unable to raise any income and her children were minors and in fact, she has been hospitalised with so many ailments and she has been living with her daughter and due to that reason, she was unable to pay the balance amount. The balance amount of Rs.111.5 lakhs has been paid on 15.2.2006 and she has also paid an additional amount of Rs.24 lakhs towards interest for the delay in payment which has been received by the bank. In view of the factual situation, I am of the view that it is the bona fide situation which she has made out. In any event, the Debts Recovery Tribunal has to take the same into consideration while considering the delay in payment of amount as stated above and it cannot be stated that the Debts Recovery Tribunal has no jurisdiction to pass any such order in condoning the delay in the payment of balance amount as per the award passed by the Tribunal based on the compromise entered into at the Lok Adalat.


13. In the present case, it is seen that on an application filed by the Bank before the DRT in I.A.No.37 of 2005 in O.A.No.474 of 2001 for the purpose of making the other defendants 2 to 9 also liable since the property stands in their name, by an order dated 12.09.05, the Tribunal has rejected the claim of the Bank implicating the defendants 2 to 9, however, directed the first respondent, who is the petitioner herein to pay a sum of Rs.13,55,99,185.05 with future interest @ 11.5% p.a. From 01.12.04 till the date of realisation along with costs.


14. It is also relevant to point out at this stage that the said order of the Tribunal was passed on 12.09.05, and the petitioner had paid the balance amount of Rs.111.5 lakhs after the above said order was passed by the Tribunal, and in addition to that, the petitioner had also paid the amount of Rs.24 lakhs towards interest for the belated payment and that amount was also paid during July 2006, after the said order of the Tribunal.


15. It is also further relevant to reiterate that the appeal filed by the Bank against the order of the Debts Recovery Tribunal dated 12.09.05, before the Debts Recovery Appellate Tribunal has been rejected and the said application against the defendants 2 to 9 was dismissed. Admittedly, as on date no further proceedings has been initiated and therefore the order of the Debts Recovery Appellate Tribunal has become final. Again it is relevant to note that after all these happenings the petitioner has filed a Memo/Application No.82of 2007 before the Debts Recovery Tribunal on 19.05.06 for the purpose of condoning the delay in payment of the balance outstanding amount and to direct to record that the said payment Rs.150.00 lakhs as to the full satisfaction of the entire claim. The Tribunal has not passed any orders in the said application.


16. In view of the above said factual and legal position and the peculiar circumstances in this case, especially when it is the settled legal position that once the Tribunal has recorded the Award of the Lok Adalat, it has inherent power to extend time and in the present case, it is seen that the petitioner has paid the entire amount along with the further interest of Rs.24 lakhs, I am of the considered view that the Debts Recovery Tribunal should be directed to pass orders in the Memo/Application No.82 of 2007 by taking into consideration the above said legal position and peculiar situation of the case. It is made clear that the Debts Recovery Tribunal shall pass orders on the above terms within a period of four weeks from the date of receipt of a copy of this Order. It is further made clear that this order is passed only in respect of the present case taking into consideration of the facts and circumstances and the peculiar situation of the case and this order cannot be taken as a precedent.


17. The writ petition is disposed of on the above terms. No costs. Consequently, the connected M.P. is closed.
kh/kk
To
1. Indian Bank,
No.31, Rajaji Salai,
Chennai - 1,
through its Asset Recovery Management Branch - 1,
No.55, Ethiraj Salai,
Chennai - 8.
2. The Registrar,
Debts Recovery Tribunal - II,
4th Floor, Spencers Towers Annexe,
Chennai 2.