New RBI rules to spur debt recast, recovery

B S Somasroy Chakraborty & Abhijit Lele  |  Kolkata/Mumbai  

February 1, 2014 

Also, feel bank heads, the changed guidelines on stressed assets will encourage the business of asset reconstructio

n

The Reserve Bank of India's new guidelines on revitalising distressed assets is expected to cut the time taken by lendersin preparing the schedule for recovering bad and doubtful loans.

The central bank has promised incentives for lenders to agree collectively and quickly to a resolution and bankers feel this will encourage them to reach an agreement on resolving non-performing asset (NPA) issues.

The measures should also revive business for asset reconstruction companies (ARCs), as banks can now sell standard assets having signs of stress. This will encourage the asset recast firms to revive stressed units, as opposed to only recovering the money.

"We have already created a GM (general manager) post for credit monitoring. From day two of irregularity of an account, it comes under the ambit of this GM. So, we start following up the moment we detect stress in an account. The new rules will motivate banks to find an early resolution. The dialogues with customers will start as soon as stress is detected, to work out a plan. I expect the turnaround time to shorten, following these guidelines," Shubhalakshmi Panse, chairperson and managing director (CMD) of Allahabad Bank, told Business Standard.

RBI has said there will be better regulatory treatment of stressed assets if a resolution plan is underway, while provisioning requirements will be higher if no agreement is reached. Bankers feel this will help lenders in arriving at a consensus while discussing corporate loan restructuring (CDR) packages.

"Sometimes, the CDR process takes time because of the lack of consensus. RBI's new rule will encourage banks to take a common approach in resolving these cases without delay, to take advantage of the regulatory concessions," said M Narendra, the CMD of Indian Overseas Bank.

Bankers felt the decision to make future borrowing more expensive for customers which do not cooperate with lenders in a resolution will also help reduce the turnaround time. "Customers will now be worried that if they do not cooperate, they might not get loans in future at affordable rates. This will also help improve credit discipline," said an executive director of a state-run bank in Kolkata, requesting anonymity.

RBI's measures are also expected to increase the participation of private entities in the business of asset reconstruction. The central bank has proposed steps to enable better functioning of ARCs and introduced a more liberal regulatory treatment to banks for selling their bad assets to these companies.

P Rudran, managing director and chief executive of ARCIL, the country’s largest ARC, said the focus would now be on reconstruction of companies. ARCIL will bring in operation experts to assist in reviving units which are a part of their portfolio. ARCIL is understood to be in talks with banks, insurance companies and foreign institutional investors to raise money under a fresh fund (about Rs 500 crore).

Banks has also said they will now be open to asset sales to ARCs in case the restructuring mechanism fails to take off. "We expect the number of ARCs to increase. There are many instances where ARCs have been able to recover the money successfully," said IOB’s Narendra.

Nikhil Shah, a senior director with Alvarez & Marsal, a turnaround management company, said the new framework will allow easier change of management in stressed companies. The stressed asset management space will see a rise in activity (deals) in 2014-15, he felt.

SC asks Sahara India to submit bank statements

BS Reporter  |  New Delhi  

January 29, 2014 Last Updated at 00:40 IST

SIRECL claims sold realty assets to Sahara Q shop, stake in Amby Valley to Co-operative Society

The Supreme Court on Tuesday directed Sahara India, the nodal partnership firm that controls businesses of the Sahara group, to give bank statements and ledger records to show the source of the Rs 20,000 crore of refunds to the group’s investors. A bench of judges K S Radhakrishnan and J S Khehar refused to grant relief to group chief Subrata Roy till the source of these funds was established.

This follows a hearing on a contempt petition filed by the Securities and Exchange Board of India (Sebi) against two Sahara group firms — Sahara India Real Estate Corp Ltd (SIRECL) and Sahara Housing Investment Corp(SHICL) — for allegedly not complying with the court’s orders. On August 31, 2012, the court had ordered the two companies to pay Rs 24,029 crore to Sebi; the amount was to be refunded to 29.6 million investors of the group. The firms have paid Sebi only Rs 5,120 crore. They claim the rest of the amount has been refunded to investors directly, resulting in the contempt petition. The matter was adjourned to February 11.

MISSING MONEY

Supreme Court has directed Sahara India, the nodal partnership firm that controls the group's businesses, to give bank statements and ledger records to show the source of refunds of Rs 20,000 crore made to the group's investors The apex court had earlier ordered Sahara India Real Estate and Sahara Housing Investment to pay Rs 24,029 crore to the Securities and Exchange Board of India (Sebi), to be refunded to 29.6 million investors The two firms have paid Sebi only Rs 5,120 crore, claiming the rest had been refunded directly

After securing title deeds and property documents claimed to be worth Rs 20,000 crore, the court had directed the Sahara firms to explain the source of these funds. Following this, the Sahara group sent three truckloads of documents to Sebi earlier this month. Sebi counsel Arvind Datar said, “The most important (piece of) information is not there.” He added the companies had provided documents showing they had sold assets worth thousands of crores to other group entities and had directed payments be made to Sahara India. “Did these companies actually pay to Sahara India? There is no evidence,” he said.

According to the submissions made by SIRECL to the court, it had sold 40% stake in Amby Valley to Sahara Credit Cooperative Society (SCSS) for Rs 13, 366 crore in May 2012, valuing each share at Rs 606. The company directed the proceeds to be paid to Sahara India.

Similarly, Sahara Q shop is said to have paid Rs 2,258 crore to the partnership firm and Sahara India Commercial Corp (SICCL) Rs 4,384 crore. The partnership firm acted as an agency and disbursed the sum to investors, Sahara claimed.

Datar submitted that he found were several discrepancies on preliminary scrutiny of these records. He said the regulator does not need daybooks pertaining to thousands of pages running into lakhs of pages but it needed a consolidated statement of the ledger. “They say the ledger account is being assimilated. The ledger account is never in the assimilation. It is there,” he said.

He also pointed out how annual return filed by Amby Valley with the Ministry of Corporate Affairs showed that the SIRECL had transferred its 220 million shares to Sahara Q Shop in September 2012. The Sebi counsel wondered how this was possible when SIRECL was telling the court that the Amby Valley shares were sold to SCSS in May 2012 itself.

Ram Jethmalani, the counsel for SIRECL, said he understood there was some lacunae in the details submitted and would get these rectified. When he expressed concerns over how Sebi was earning interest on the sum already submitted by Sahara and not making efforts to refund, judge JS Khehar intervened saying, “You have put the money in one pocket and taking it and putting in another pocket. The assets are sold to one group firm, then another. Since the beginning, we are going in circles.”

The bench also dismissed plea by Roy’s lawyer CA Sundaram seeking relief for going abroad saying, “It has been two months. No details have been given. We are not satisfied.”

Sahara Group chief Subrata Roy can't leave country: S C

PTI 28 Jan 2014 6.54pm

NEW DELHI: Sahara Group chief Subrata Roy will not be allowed to leave the country with the Supreme Court today refusing to relax its order restraining him from going abroad till his company furnishes details of refunding Rs 20,000 crore of investorsmoney.

A bench of justices K S Radhakrishnan and J S Khehar said that it will allow him to leave the country only when the Sahara group furnishes all the documents to reveal the source of Rs 22,885 crore which it claimed to have refunded to its investors.

It said that if the company failed to show the source of the money then it would direct "further probe" against the group and brushed aside an impassioned plea of Roy's counsel who submitted that his client be allowed to go abroad for business purposes and he will return before the next date of hearing.

"Everything is going in a circle. We want to finish this aspect of the case on the next date of hearing," the bench said adding "If you give the source then a day after we would allow you to go abroad".

The bench said that delay is on the part of the company to furnish details and directed the group the place all the documents including the bank statements sought by SEBI before February 11 when it would take up the case for further hearings.

Tightening the noose around Sahara group for not refunding Rs 20,000 crore investors money, the Supreme Court had on November 21 last year barred Roy from leaving the country and also restrained it from selling any of its properties.

Redeeming the Supreme Court

BL Anup Surenranath 28 Jan 2014

The Supreme Court has taken the position that it cannot be expected to abandon its role of being the guardian of the fundamental rights of all persons within the territory of India

In a span of about 45 days, the Supreme Court of India has delivered two judgments that have received diametrically opposite reactions — one will count among the Court’s most poorly reasoned judgments while the other is likely to be heralded as one of its finest for its clarity and fidelity to earlier decisions. The contrast between Justice Singhvi’s judgment upholding the criminalisation of homosexuality and that of Chief Justice Sathasivam affirming the rights of mercy-rejected death row prisoners could not be starker. After Justices Singhvi and Mukhopadhaya upheld the constitutionality of Section 377 of the IPC in Suresh Kumar Koushal, the credibility of the Court as a counter-majoritarian institution had suffered a serious setback. However, the Chief Justice, along with Justices Ranjan Gogoi and Shiva Kirti Singh, has done a remarkable job in partly restoring the credibility of the Court through a thoroughly reasoned judgment in Shatrughan Chauhan v Union of India. InChauhan, the Court has concluded that inordinate delay in the rejection of mercy petitions of death row convicts amounted to torture and that it is a sufficient basis, in and of itself, to commute a sentence of death to life imprisonment. It is not just about the contrast in outcomes in these two cases but the processes adopted by these two judgments will go a long way in determining the position they will occupy in the judicial history of this country.

The similarities

Any comparison between the two judgments must begin by acknowledging complexities involved in both cases. The legal response to homosexuality in India through Section 377 has been on the statute books for over 150 years. Though attitudes towards homosexuality have undergone significant changes, it would only be fair to acknowledge that it is nonetheless a deeply divisive issue in India. It would also be a fair assessment that the death penalty and treatment that must be accorded to those sentenced to death are extremely polarising issues. The case before the Supreme Court in Chauhan was particularly delicate because the President had rejected mercy to all 15 prisoners before the Court. However, all 15 prisoners had returned to the Supreme Court seeking enforcement of their right to life on the ground that their suffering on death row due to the inordinate delay by the executive (ranging between 11 to 1.5 years) entitled them to commutation of their death sentence. It must also be noted that the Supreme Court in both cases was being asked to intervene in situations where other organs of the state had already made certain determinations. In Koushal, the legislature had made the political determination that homosexuality would be criminalised by not repealing Section 377. Similarly, in Chauhan, the executive, through the President of India, had rejected all the mercy petitions.

Differences

Though the challenges were similar in many ways, there is an unbelievable contrast in the manner in which the Supreme Court responded. In Koushal, the judgment authored by Justice Singhvi does not address the legal issues that were at the heart of the constitutional challenges to Section 377. There are the poorly argued sections on equality under Article 14 and the right to life under Article 21 while completely ignoring the arguments on the protection against discrimination under Article 15. The shortcomings of Koushal are evident when it is compared to the judgment of the Delhi High Court on Section 377 in Naz Foundation. There are established constitutional doctrines to test whether a provision of law is discriminatory and violates the right to equality under Articles 14 and 15 of the Constitution, none of which finds any serious engagement in Koushal. None of this is about whether one supports Section 377 or not. It is about adopting a sound judicial technique — it is about identifying precise and relevant questions; it is about applying constitutional doctrines to those questions in a rigorous manner; it is about reasoned conclusions. Rights adjudication is not about judges merely taking a decision and that is what distinguishes them from politicians. Unfortunately, the judgment in Koushalfails on all these grounds. More than the unacceptable outcome, what must worry us more is that the judgment in Koushal reads like a thinly veiled political decision.

However, the judgment in Chauhan articulates a very difficult legal issue precisely and clarifies the decision of a five-judge bench in Triveniben (1989) on it. While clarifying and relying on Triveniben, there is thorough constitutional reasoning in Chauhan that led the Court to come to the conclusion that inordinate delay in disposing of mercy petitions amounts to torture and that the nature of the crime must have no relevance in that determination. The issue about the nature of the crime was particularly important in the context of the Supreme Court’s decision in Bhullar. In Bhullar, the Supreme Court had concluded that those sentenced to death for terrorist offences could not invoke the argument about inordinate delay in disposing of mercy petitions due to the nature of crimes. While relying on Trivenibento come to the conclusion that the classification of terrorist and non-terrorist offences in the context of inordinate delay in disposing of mercy petitions is constitutionally invalid, the judges, in Chauhan,have not created new jurisprudence and have only clarified the content and application of earlier judgments. There is tremendous judicial skill in the manner in which they have analysed earlier judgments and applied constitutional doctrines.

Challenges and responses

The most obvious difference in the two judgments is the approach to the target groups concerned. InKoushal, the perception that only very few homosexuals have been prosecuted under Section 377 was of tremendous significance to the judges. A numerical approach to rights enforcement is rather baffling and quite alien to the jurisprudence developed by the Indian Supreme Court. In Chauhan, despite dealing with a very small group of individuals (those death row prisoners whose mercy petitions have been rejected) and in particular a group which is often hated and reviled, the judges emphatically held that the protections in the Constitution are available to every individual, without exception. Perhaps the greatest merit of the decision in Chauhan is the rejection of the argument that retribution or strong moral disapproval of actions by death row prisoners can be used to deny them constitutionally protected rights.

As far as institutional relations between different organs of the State are concerned, the Supreme Court, in Koushal, ruled that Parliament was free to amend Section 377 and decriminalise homosexuality. However, if the law were to stand, the judges felt there was no constitutional infirmity. There is a palpable reluctance to meaningfully scrutinise a law on a divisive issue where the political class has made a choice. However, in Chauhan, the Supreme Court squarely addresses the warning that the Court might be overstepping its jurisdiction because the President had already rejected the mercy petitions of all 15 prisoners. The Court is clear that it is not questioning the power of the President to reject mercy petitions but is rather interested and competent to go into the issue of whether the executive violated the rights of the death row convicts due to the inordinate delay. The Supreme Court has taken the position that it cannot be expected to abandon its role of being the guardian of the fundamental rights of all persons within the territory of India, whoever they might be.

The Supreme Court, in Chauhan, had the courage to undertake significant course correction by clarifying the ruling in Triveniben. As efforts to decriminalise homosexuality gather pace again with the scheduled review of Koushal this week, the Supreme Court must see the fact that critical questions about the constitutionality of Section 377 have not been addressed in Koushal. If the review petition does not result in correction of the errors in Koushal, the Chief Justice of India (due to retire in April 2014) will find himself in an interesting position. After having delivered a judgment that has gone a long way to restore the credibility of the Court after Koushal, the Chief Justice will have to decide if he wants to refer the constitutionality of Section 377 to a larger bench. Given the intensity of his commitment to the rule of law as displayed in Chauhan, it would be surprising if Chief Justice Sathasivam lets the poorly reasoned judgment in Koushal be a blot on his tenure as Chief Justice of India. He only needs to look as far as the Delhi High Court’s judgment on Section 377 in Naz Foundation to realise what an alternative legacy could look like.

(Anup Surendranath is an assistant professor of law and director of the Death Penalty Research Project at the National Law University, Delhi.)

ஏலத்திற்கு வரும் வீட்டை வாங்கலாமா?

 
டி.கார்த்திக் தி இந்து ஜனவரி 25 , 2014

வங்கிகளில் கடன் வாங்கி வீடு வாங்குவோரின் எண்ணிக்கை அதிகரிக்கும் அளவுக்கு, வாங்கிய கடனைத் திருப்பிச் செலுத்த முடியாதவர்களின் எண்ணிக்கையும் அதிகரிப்பதாகக் கூறுகின்றன புள்ளி விவரங்கள். அப்படித் திருப்பிச் செலுத்த முடியாதவர்களின் வீடுகளை வங்கிகள் திருப்பி எடுத்துக்கொண்டு ஏலம் விட்டுத் தங்களுக்குச் செலுத்த வேண்டிய கடன் தொகையை வசூலித்துக் கொள்கின்றன. ஆனால், விஷயம் அதுவல்ல. வங்கிகள் திருப்பி எடுத்துக் கொண்டு ஏலம் விடும் வீடுகளை வாங்கலாமா? இதில் உள்ள நன்மை, தீமைகள் என்னென்ன? வழிகாட்டுகிறார் சென்ட்ரல் பாங்க் ஆஃப் இந்தியாவின் ஓய்வு பெற்ற துணைப் பொது மேலாளர் கோபாலகிருஷ்ணன்.

நன்மைகள் :

வீடு ஏலத்திற்கு வரும் போது வங்கி சட்ட வல்லுநர்கள் துருவி துருவி விசாரிப்பார்கள். பத்திரங்களை ஆய்வு செய்வார்கள். பத்திரங்களில் எந்தவிதக் குறைபாடோ, வில்லங்கமோ இல்லை என்பதை உறுதி செய்த பிறகே வீடு ஏலத்திற்குக் கொண்டு வரப்படும்.

எனவே வங்கி விடும் ஏலம் மூலம் பெறும் வீட்டை வாங்குவதில் சட்ட ரீதியாக எந்தப் பிரச்சினையும் எழாது.

வீட்டைப் பொது ஏலத்திற்கு வங்கியிடம் இருந்து எடுப்பதால் விலை நியாயமாக இருக்கும். வியாபார நோக்கம் மற்றும் லாப நோக்கம் ஆகியவற்றை வங்கிகள் பார்ப்பதில்லை.

வீடு ஏல விற்பனை விதிமுறைகளுக்கு உட்பட்டதாக இருக்கும். இதேபோல ஏல விற்பனை சர்ஃபாசி சட்டத்துக்கு உட்பட்டதாக இருக்கும்.

தீமைகள்:

ஏலத்தில் வாங்கிய வீட்டில் அதன் உரிமையாளரே குடி இருந்தால், அவர் உடனே வீட்டைக் காலி செய்துவிடுவார். ஒருவேளை மாத வாடகைக்கோ, லீசுக்கோ வீட்டை விட்டிருந்தால், அதில் குடியிருப்பவர்கள் அந்த ஒப்பந்தத்தைக் காட்டி வீட்டை உடனே காலி செய்ய மறுக்கலாம். ஒருவேளை தீர்க்கமாக மறுத்து விட்டால், ஒப்பந்தம் காலாவதி ஆகும் வரை அவர்கள் குடியிருக்கலாம்.

ஏலத்தில் வாங்கிய வீட்டில் அதன் உரிமையாளரே குடி இருந்தால், அவர் உடனே வீட்டைக் காலி செய்துவிடுவார். ஒருவேளை மாத வாடகைக்கோ, லீசுக்கோ வீட்டை விட்டிருந்தால், அதில் குடியிருப்பவர்கள் அந்த ஒப்பந்தத்தைக் காட்டி வீட்டை உடனே காலி செய்ய மறுக்கலாம். ஒருவேளை தீர்க்கமாக மறுத்து விட்டால், ஒப்பந்தம் காலாவதி ஆகும் வரை அவர்கள் குடியிருக்கலாம்.

ஏல நடைமுறை:

வீட்டை வங்கிகள் ஏலம் விட்டால், அதை ஏலத்தில் எடுக்க யார் வேண்டுமானாலும் கலந்து கொள்ளலாம்.

ஏலத்தில் வீட்டை எடுத்தவுடன் முன் பணம் கட்டச் சொல்வார்கள்.

பிறகு குறிப்பிட்ட காலக் கெடுவுக்குள் எஞ்சிய பணத்தைக் கட்டி விட வேண்டும். காலக் கெடுவுக்குள் பணம் செலுத்தாமல் போனாலோ, பணம் இல்லை என்று கைவிரித்தாலோ தானாகவே ஏலத்தில் எடுத்த வீடு ரத்தாகிவிடும். பிறகு மீண்டும் ஏலம் விடப்படும்.

தரகர்கள் உஷார்

ஏலத்தில் கலந்து கொள்ளும் தரகர்கள் ஒன்றுகூடி ஏற்கனவே பேசி வைத்து ஏலத் தொகையை கூட்டவோ, குறைக்கவோ செய்து விடுவார்கள்.

ஏலத்தைத் தாறுமாறாக ஏற்றிவிட்டுக் கடைசியில் யார் தலையிலாவது கட்டி விடவும் வாய்ப்புகள் அதிகம். யாராவது ஏல விலையைத் தாறுமாறாக உயர்த்தினால் உன்னிப்பாகக் கவனித்துச் செயல்பட வேண்டும்.