The Banking Ombudsman Scheme, 2002

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Date : Jun 14, 2002

The Banking Ombudsman Scheme, 2002

CONTENTSChapter I - Preliminary Chapter II - Establishment Of Office Of Banking Ombudsman Chapter III - Jurisdiction, Powers And Duties Of Banking Ombudsman Chapter IV - Procedure For Redressal Of Grievance Chapter V - Arbitration And Conciliation Procedure Chapter VI - Miscellaneous Annexures (Download) The Banking Ombudsman Scheme, 1995 Deputy Governor Reserve Bank of India Central Office Mumbai NOTIFICATION Ref.RPCD.BOS.No. 750 /13.01.01/2001-02 14th June 2002 In exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949 (10 of 1949) and in partial modification of its Notification Ref.RPCD.No. 1070/BOS-94/95 dated 14th June 1995 and being satisfied that it is necessary in public interest and in the interest of banking policy to enlarge the extent and scope of the authority and functions of Banking Ombudsman for redressal of grievances against deficiency in banking services, concerning loans and advances and other specified matters and also to empower him to act as an Arbitrator for specified disputes, the Reserve Bank hereby directs that all commercial banks, regional rural banks and scheduled primary co-operative banks should comply with the Banking Ombudsman Scheme, 1995 and the Banking Ombudsman Scheme, 2002 annexed hereto. 2. The Banking Ombudsman Scheme 2002 will come into force with immediate effect. Sd/- (Vepa Kamesam) THE BANKING OMBUDSMAN SCHEME 2002 The Scheme is introduced with the object of : (1) enabling resolution of complaints relating to provision of banking services and to facilitate the satisfaction or settlement of such complaints; and (2) resolving disputes between a bank and its constituent as well as between one bank and another bank through the process of conciliation, mediation and arbitration. CHAPTER I PRELIMINARY SHORT TITLE, COMMENCEMENT, EXTENT AND APPLICATION (1) This Scheme may be called the Banking Ombudsman Scheme, 2002.  (2) It shall come into force on such date as the Reserve Bank may specify.  (3) It shall extend to the whole of India. (4) The Scheme shall apply to the business in India of a bank as defined under the Scheme. SUSPENSION OF THE SCHEME (1) The Reserve Bank, if it is satisfied that it is expedient so to do, may by order suspend for such period as may be specified in the order, the operation of all or any of the provisions of the Scheme, either generally or in relation to any specified banking company.  (2) The Reserve Bank may, by order, extend from time to time, the period of any suspension ordered as aforesaid by such period, as it thinks fit. 3.DEFINITIONS  (1) ‘award’ means an award passed by the Banking Ombudsman in accordance with the Scheme. (2) ‘authorised representative’ means a person duly appointed and authorised by, a complainant or a party to an arbitration proceeding, as the case may be, to act on his behalf and represent him, in the proceedings under the Scheme before a Banking Ombudsman for consideration of his complaint, claim or counter claim. (3) ‘Banking Ombudsman’ means any person appointed under Clause 4 of the Scheme. (4) ‘ bank’ means a banking company and includes a ‘corresponding new bank’, ‘Regional Rural Bank’, ‘State Bank of India’, ‘Subsidiary Bank’ as defined in Part I of the Banking Regulation Act, 1949 (Act 10 of 1949) and also includes a ‘Scheduled Primary Co-operative Bank’ as included in the Second Schedule of the Reserve Bank of India Act, 1934 (Act 2 of 1934) , having a place of business in India whether such bank is incorporated in India or outside India. (5) ‘claim’ will have the same meaning as is provided in Chapter V of the Scheme. (6) ‘complaint’ means a representation in writing containing a grievance alleging deficiency in banking service as mentioned in clause 12 of the Scheme. (7) ‘Review Authority’ is the Deputy Governor in charge of Rural Planning and Credit Department of the Reserve Bank, who shall review the award of a Banking Ombudsman subject to satisfaction of the issues raised before him and shall also be responsible for implementing such Award as per the Scheme. (8) ‘Reserve Bank’ means the Reserve Bank of India constituted under Section 3 of the Reserve Bank of India Act, 1934 (2 of 1934) . (9) ‘the scheme’ means the Banking Ombudsman Scheme, 2002.  (10) ‘secretariat’ means the office constituted as per sub-clause (1) of clause 9 of the Scheme. (11) ‘settlement’ means an agreement reached by the parties either by conciliation or mediation by the Banking Ombudsman under clause 15 of the Scheme. CHAPTER II ESTABLISHMENT OF OFFICE OF BANKING OMBUDSMAN 4.APPOINTMENT & TENURE(1) The Reserve Bank may on the recommendation of a Selection Committee of four persons constituted by its Governor appoint one or more persons to be known as Banking Ombudsman to carry out the functions entrusted to him by or under the Scheme. (2) The Committee referred to in sub-clause (1) of this Clause shall consist of; all the three Deputy Governors of the Reserve Bank; and the Additional Secretary (Financial Sector) , Department of Economic Affairs as a Special Invitee. (3) The minimum age of the person to be considered by the said Committee for appointment, as Banking Ombudsman shall be 55 years. (4) The appointment of Banking Ombudsman under this Clause may be made for a period not exceeding three years. Provided that the tenure of a Banking Ombudsman, may subject to the recommendation of the Committee referred to in sub-clause (1) , be extended for further period not exceeding two years subject to an overall age limit of 65 years. (5) The Banking Ombudsman appointed under sub-clause (1) shall devote his whole-time to the affairs of his office, provided that the Reserve Bank may, if in its opinion it is considered to be necessary so to do, permit the Banking Ombudsman to undertake such part-time honorary work, as is not likely to interfere with his duties under the Scheme. (6) Where the Governor is satisfied that in the public interest or for the reason of incapacity of the Banking Ombudsman, it is necessary so to do, he may for reasons to be recorded in writing and by giving him three months’ notice or by paying three months’ consolidated emoluments in lieu of the notice period, remove any Banking Ombudsman from his office. 5. TERRITORIAL JURISDICTION The Reserve Bank shall specify the territorial limits, to which the authority of each of the Banking Ombudsman appointed under Clause 4 of the Scheme shall extend. 6. LOCATION OF OFFICE AND TEMPORARY HEADQUARTERS The office of the Banking Ombudsman will be located at such places as may be specified by the Reserve Bank. In order to expedite disposal of complaints, or conduct of arbitral proceedings, the Banking Ombudsman may hold sittings at such places within his area of jurisdiction as may be considered necessary and proper by him in respect of a complaint or reference, as the case may be, before him. 7. QUALIFICATION The Banking Ombudsman shall be a person of repute and having experience in the legal, banking, financial services, public administration or management sectors and if such person is a civil servant he should be in the rank of Joint Secretary or above in the Government of India and in case of such person being from banking sector, he should have had the experience of working as a whole time director in a public sector or equivalent position. 8. REMUNERATIONThe remuneration and other perquisites payable to a Banking Ombudsman will be determined by the Reserve Bank from time to time and shall be borne by the banks in such proportion and in such manner as may be determined by the Reserve Bank. 9. SECRETARIAT The Banking Ombudsman shall be provided with a Secretariat drawn from banks, Reserve Bank, etc., who will be placed on duty with the Office of the Banking Ombudsman. The cost of the Secretariat will be shared by banks in such proportion as may be determined by the Reserve Bank.  CHAPTER IIIJURISDICTION, POWERS AND DUTIES OF BANKING OMBUDSMAN 10. GENERAL The Banking Ombudsman shall have the following powers and duties: (a) to receive complaints relating to provision of banking services; (b) to consider such complaints and facilitate their satisfaction or settlement by agreement, through conciliation and mediation between the bank and the aggrieved parties or by passing an Award in accordance with the Scheme; and (c) to resolve by way of arbitration such disputes between banks or between a bank and its constituents as may be agreed upon by the contesting parties in accordance with the provisions of the Scheme and the Arbitration and Conciliation Act,1996.  11. OTHER POWERS AND DUTIES (1) The Banking Ombudsman shall exercise general powers of superintendence and control over his Office and shall be responsible for the conduct of business thereat. (2) The Banking Ombudsman shall have the power to incur expenditure on behalf of the Office. In order to exercise such power, the Banking Ombudsman will draw up an annual budget for his Office in consultation with Reserve Bank and shall exercise the powers of expenditure within the approved budget. The Reserve Bank will indicate the share of expenditure to be borne by the concerned banks. (3) The Banking Ombudsman shall send to the Governor, Reserve Bank, by 31st May every year, a report containing a general review of the activities of his Office during the preceding financial year and shall furnish such other information as the Reserve Bank may direct. (4) The Reserve Bank may, if it considers necessary in the public interest so to do, publish the report and the information received from the Banking Ombudsman in such consolidated form or otherwise as it deems fit. CHAPTER IV PROCEDURE FOR REDRESSAL OF GRIEVANCE 12. GROUNDS OF COMPLAINT A complaint on any one of the following grounds alleging deficiency in banking service may be filed with the Banking Ombudsman having the jurisdiction: non-payment/inordinate delay in the payment or collection of cheques, drafts, bills etc.; non-acceptance, without sufficient cause, of small denomination notes tendered for any purpose, and for charging of commission in respect thereof; non-issue of drafts to customers and others; non-adherence to prescribed working hours by branches; failure to honour guarantee/letter of credit commitments by banks; claims in respect of unauthorised or fraudulent withdrawals from deposit accounts, or fraudulent encashment of a cheque or a bank draft etc., complaints pertaining to the operations in any savings, current or any other account maintained with a bank, such as delays, non-credit of proceeds to parties' accounts, non-payment of deposit or non-observance of the Reserve Bank directives, if any, applicable to rate of interest on deposits. complaints from exporters in India such as delays in receipt of export proceeds, handling of export bills, collection of bills etc., provided the said complaints pertain to the bank's operations in India; complaints from Non-Resident Indians having accounts in India in relation to their remittances from abroad, deposits and other bank-related matters. Complaints pertaining to refusal to open deposit accounts without any valid reason for refusal and Any other matter relating to the violation of the directives issued by the Reserve Bank in relation to banking service. Complaints concerning loans and advances only in so far as they relate to the following may also be filed with the Banking Ombudsman having the jurisdiction. (a) non-observance of Reserve Bank Directives on interest rates; (b) delays in sanction, disbursement or non-observance of prescribed time schedule for disposal of loan applications; (c) non-acceptance of application for loans without furnishing valid reasons to the applicant; and (d) non-observance of any other directions or instructions of the Reserve Bank, as may be specified by the Reserve Bank for this purpose, from time to time.  The Banking Ombudsman may also deal with any such other matter as may be specified by the Reserve Bank from time to time in this behalf. 13. PROCEDURE OF FILING COMPLAINT Any person who has a grievance against a bank relating to the banking services as enumerated under Clause 12 of the Scheme, may himself or through his authorised representative make a complaint to the Banking Ombudsman within whose jurisdiction the branch or office of the bank complained against is located. The complaint shall be in writing duly signed by the complainant or his authorised representative (other than an advocate) in a form specified in Annexure-A of the Scheme and shall state clearly the name and address of the complainant, the name and address of the branch or office of the bank against which the complaint is made, the facts giving rise to the complaint supported by documents, if any, that are desired to be relied upon by the complainant, the nature and extent of the loss caused to the complainant, the relief sought from the Banking Ombudsman and a declaration about the compliance of the conditions referred to in sub-clause (3) of this clause. No complaint to the Banking Ombudsman shall lie unless:- (a) the complainant had before making a complaint to the Banking Ombudsman made a written representation to the bank named in the complaint and either the bank had rejected the complaint or the complainant had not received any reply within a period of one month after the bank concerned received his representation or the complainant is not satisfied with the reply given to him by the bank; (b) the complaint is made not later than one year after the cause of action has arisen as per clause (a) above; (c) the complaint is not in respect of the same subject matter which was settled through the Office of the Banking Ombudsman in any previous proceedings whether or not received from the same complainant or along with any one or more complainants or any one or more of the parties concerned with the subject matter; (d) the complaint does not pertain to the same subject matter, for which any proceedings before any court, tribunal or arbitrator or any other forum is pending or a decree or Award or a final order has already been passed by any such competent court, tribunal, arbitrator or forum; and (e) the complaint is not frivolous or vexatious in nature. Notwithstanding the provisions of sub-clause 3(d) of this clause, it would be open to the Banking Ombudsman to entertain a complaint falling under the Scheme provided the Banking Ombudsman is satisfied with the documentary evidence produced before him by the complainant that; the interests of the complainant has suffered adversely on account of lapse or inaction on the part of the bank or due to connivance on the part of any employee of the bank facilitating the unauthorised or fraudulent withdrawal from the bank account of the complainant; or encashment, as the case may be; no interim injunction or stay order or any other direction, either restraining, the bank from making payment of the amount of claim as made by the complainant or the complainant from agitating his claim simultaneously, before any other forum, has been passed by any court, tribunal or arbitrator or any other such forum before whom the claim of the complainant is pending adjudication and in the opinion of the Banking Ombudsman the disposal of such pending proceeding is likely to take longer time. POWER TO CALL FOR INFORMATION For the purpose of carrying out his duties under this Scheme, a Banking Ombudsman may require the bank named in the complaint or any other related bank to provide any information or furnish certified copies of any document relating to the subject matter of the complaint which is or is alleged to be in its possession. Provided that in the event of the failure of a bank to comply the requisition without any sufficient cause made under sub-clause (1) the Banking Ombudsman may, if he deems fit, draw the inference that the information, if provided or copies if furnished, would be unfavourable to the bank. The Banking Ombudsman shall maintain confidentiality of any information or document coming into his knowledge or possession in the course of discharging his duties and shall not disclose such information or document to any person except with the consent of the person furnishing such information or document. Provided that nothing in this clause shall prevent the Banking Ombudsman from disclosing information or document furnished by a party in a complaint to the other party or parties, to the extent considered by him to be reasonably required to comply with the principles of natural justice and fair play in the proceedings. SETTLEMENT OF COMPLAINT BY AGREEMENT (1) As soon as it may be practicable to do, the Banking Ombudsman shall cause a notice of the receipt of any complaint along with a copy of the complaint to the branch or office of the bank named in the complaint and endeavour to promote a settlement of the complaint by agreement between the complainant and the bank named in the complaint through conciliation or mediation; (2) For the purpose of promoting a settlement of the complaint, the Banking Ombudsman may follow such procedures as he may consider appropriate and he shall not be bound by any legal rule of evidence. 16. AWARD BY THE BANKING OMBUDSMAN (1) If a complaint is not settled by agreement within a period of one month from the date of receipt of the complaint or such further period as the Banking Ombudsman may consider necessary, he may pass an Award after affording the parties reasonable opportunity to present their case. He shall be guided by the evidence placed before him by the parties, the principles of banking law and practice, directions, instructions and guidelines issued by the Reserve Bank from time to time and such other factors which in his opinion are necessary in the interest of justice. (2) The Award passed under sub-clause (1) above shall state the direction/s, if any, to the bank for specific performance of its obligations in addition to the amount to be paid by the bank to the complainant by way of compensation for the loss suffered by him along with the summary of the reasons for passing the Award. Provided that the Banking Ombudsman shall not give any direction/s in the Award under sub-clause (1) above regarding payment of compensation in excess of that which is necessary to cover the loss suffered by the complainant as a direct consequence of the commission or omission of the bank, or for an amount exceeding rupees ten lakhs whichever is lower. (3) The Banking Ombudsman may while passing an Award under sub-clause (1) above, in respect of a complaint as stipulated under Clause 13(4) of the Scheme, may direct the complainant to furnish an indemnity, on the lines as per sub-clause (4) . (4) The indemnity referred to in Sub-clause (3) shall be in favour of the bank whereby the complainant should undertake to refund to the bank such amount as the bank would pay to him in implementation of the Award, together with interest accrued thereon at the rate as applicable for deposit in savings account, in the event of the decision of the Court in a criminal proceeding or civil proceeding, or tribunal or arbitrator or any other forum as the case may be, against the complainant leading to the conclusion that there was no such omission or commission on the part of the bank or its employee which could be considered as an act with wrong intention and motive on the part of the bank or its employee to facilitate the commission of fraud or unauthorised withdrawal from the bank account of the complainant and in such cases it shall be open to the bank to invoke the indemnity against the complainant. (5) In the event of the complainant refusing to honour the indemnity given by him in favour of the bank it shall be open to the bank to approach a court of law for invoking its claim based on the indemnity against the complainant. (6) A copy of the Award shall be sent to the complainant and the bank named in the complaint. (7) An Award shall not be binding on a bank against which it is passed unless the complainant furnishes to it, within a period of 15 days from the date of receipt of copy of the Award, a letter of acceptance of the award in full and final settlement of his claim in the matter. If the complainant does not accept the Award passed by the Banking Ombudsman and fails to furnish his letter of acceptance within such time without making any request for extension of time to comply with such requirements his complaint shall be rejected by the Banking Ombudsman . Provided that in the event of the complainant making a written request for extension of time, the Banking Ombudsman may subject to his being satisfied with the explanation as furnished by the complainant about his inability to consider the Award and furnish his letter of acceptance, grant extension of time up to further period of fifteen days for such compliance. (8) The bank shall within one month from the date of receipt by it, of the acceptance in writing of the Award by the complainant as per sub-clause ( 7 ) above comply with the Award and intimate the compliance to the Banking Ombudsman. (9) If in the opinion of the bank the Award passed against it is : (i) based on wrong appreciation of facts, law, banking practice, or general directions, if any, issued by the Reserve Bank ; or (ii) implementation of the Award is likely to create a bad precedent for the bank or banking companies , or banking system in general; the bank may file a review application as per provisions of the clause 17 of the Scheme. The bank shall in relation to such Award intimate to the Banking Ombudsman within one month from the date of receipt of copy of the Award its decision to file the review petition. (10) The Banking Ombudsman shall report to the Reserve Bank the non-compliance by any bank of an Award which became binding on it and on receipt of such report the Review Authority shall pass necessary order. Provided that in the event of the bank failing to implement the Award within the prescribed time limit, the complainant may also, if he so desires, approach the Review Authority with a prayer to pass an appropriate direction to the bank for immediate compliance of the Award. 17.PROCEEDINGS BEFORE THE REVIEW AUTHORITY A bank not agreeing to accept the Award as referred to in sub-clause (1) of Clause 16 of the Scheme may file a review application before the Review Authority within one month from the date of receiving copy of the Award or within such further time as may be allowed by the Review Authority in special circumstances of the case where the bank justifies the reason for not being able to file the petition within the prescribed time. Provided a review application filed by a bank shall lie only if the application has the approval of the Chairman or in his absence the Managing Director or the Chief Executive Officer or any other officer of equal rank, of the bank, as the case may be. The Review Authority shall not receive any such additional or new material from any party, which was not produced before the Banking Ombudsman. The Review Authority on receiving such application shall serve a copy of the review application as soon as possible, to the other party, requiring his reply to the review application within a period of two weeks or such further time as the Review Authority may allow. The Review Authority may call for the comments of the Banking Ombudsman in a review application filed before him provided he is satisfied that such comments of the Banking Ombudsman are necessary in the exigencies of the case. 18. DIRECTIONS ISSUED BY THE REVIEW AUTHORITY The Review Authority on consideration of the review application and being satisfied that the Award requires review by the Banking Ombudsman shall remand the matter to the Banking Ombudsman for reviewing the Award in the light of observation made by the Review Authority. The remand of the matter as per sub-clause (1) by the Review Authority shall be made within a period of six weeks from the date of submission of the review application or within such reasonable time as the Review Authority may consider necessary. If on consideration of the review application filed by the bank the Review Authority is satisfied that there is no ground for review of the Award it shall issue an appropriate direction to the bank for the implementation of the Award, within six weeks from the date of submission of the review application or within such reasonable time as the Review Authority may consider necessary. 19. REJECTION OF THE COMPLAINT (1) The Banking Ombudsman may reject the complaint at any stage if it appears to him that the complaint made is; frivolous, vexatious, malafide ; or without any sufficient cause or; that it is not pursued by the complainant with reasonable diligence or; prima facie, there is no loss or damage or inconvenience caused to the complainant. (2) The Banking Ombudsman may reject a complaint at any stage, if after consideration of the complaint and evidence produced before him the Banking Ombudsman is of the opinion that the complicated nature of the complaint requires consideration of elaborate documentary and oral evidence and the proceedings before the Banking Ombudsman are not appropriate for adjudication of such complaint. The decision of the Banking Ombudsman in this regard shall be final and binding on the complainant and the bank. 20. BANKS TO DISPLAY SALIENT FEATURES OF THE BO SCHEME FOR COMMON KNOWLEDGE OF PUBLIC. The banks covered by the Scheme shall ensure that the purpose of the Scheme and the name and address of the Banking Ombudsman to whom the complaints are to be made by the aggrieved party are displayed in all of the office premises in such a manner and at such place, so that it is put to notice of common public visiting the respective office premises of the bank. The banks covered by the Scheme shall ensure that a copy of the Scheme is made available with the designated officer of the bank for perusal in the office premises of the bank if anyone desires to do so and common notice to such effect about the availability of the Scheme with such designated officer is displayed along with the notice to be displayed by the banks as per sub-clause (1) of this clause. CHAPTER VARBITRATION AND CONCILIATION PROCEDURE BANKING OMBUDSMAN TO ACT AS ARBITRATOR  (1) Any dispute between a bank and its constituents or between a bank and another bank may be referred to a Banking Ombudsman for arbitration if both the parties agree for such a reference provided that the value of the claim in such dispute does not exceed Rupees Ten Lakhs. (2) The Banking Ombudsman shall assume the office of an arbitrator on such reference of a dispute for arbitration to him, either between a bank and its constituent or between a bank and another bank, provided that the parties submit the disputes to the Banking ombudsman giving their consent by way of an affidavit of undertaking duly stamped and notarised in accordance with Annexure B of the Scheme. (3) After assuming charge as an arbitrator, in any dispute, if the Banking Ombudsman considers at any stage that he is unable to perform his function independently without having any personal interest, then he shall decline to continue as an arbitrator. (4) The Banking Ombudsman assuming the charge of an arbitrator shall follow the procedure as laid down under the Scheme read with the provisions of the Arbitration and Conciliation Act, 1996. ARBITRAL PROCEEDINGS (1) On reference of a dispute for arbitration as in Clause 21 above, the Banking Ombudsman shall direct his Secretariat to complete the procedural formalities preliminary to arbitration proceedings, as laid down hereunder, within a period not exceeding three months in any case. (2) The Secretariat of the Banking Ombudsman shall, on being directed as in sub-clause (1) above, call upon the claimant to submit his statements of claims along with the list of documents and list of witnesses, within the period as may be stipulated by the Secretariat subject to the overall period as stipulated by the Banking Ombudsman for completion of the procedural formalities preliminary to arbitration proceedings. (3) The secretariat shall send a copy of the claim and the documents annexed thereto to the opposite party as mentioned in the claim for his reply. THE CLAIM The claim will include interalia the following information, the claimant’s name and his full address, statement of claimant’s case, the names of the opposite party and his full address, the relevant documentation or information as will serve clearly to establish the circumstances of the case and which the claimant may desire to rely upon. THE REPLY  (1) The opposite party shall within 15 days from the receipt of the claim and the documents referred to in clause 22 above, submit a reply setting out his defence supported by relevant documents. (2) If the opposite party wishes to make a counter- claim, he shall include the same in his reply and file the same within the time as stipulated under sub-clause (1) . (3) It shall be open to the Claimant to file a reply to the counter claim within 15 days from the date after the receipt of the copy of the counter-claim. 25. NOTIFICATION OF THE FIRST HEARING On receipt of documents as stipulated in Clauses 22 (2) and 24 above, the Secretariat shall prepare the case for the hearing of the arbitration and seek orders of the Banking Ombudsman for the date of first hearing of the case which shall be intimated to the parties.  PLEADINGS, NOTIFICATIONS OR COMMUNICATIONS: All pleadings submitted by the parties, as well as all documents annexed thereto, shall be supplied in triplicate. All notifications or communications from the Secretariat shall be deemed to have been validly made if they are delivered against receipt or forwarded by registered post to the address disclosed in the pleadings or last known address of the party for whom the same are intended, as notified by the party in question or by the other party as appropriate. Notification or communication shall be deemed to have been effected on the day when it was received or should, if made in accordance with the preceding paragraph, have been received by the party itself or by its representative.  TERMS OF REFERENCE  Before proceeding with the preparation of the case, the Banking Ombudsman shall draw up, on the basis of the documents or in the presence of the parties and in the light of their submissions, a document defining his Terms of Reference. This document shall include the following particulars: a) the full names and description of the parties. b) the addresses of the parties to which notifications of communications arising in the course of the arbitration may validly be made. c) a summary of the respective claims of the parties. d) definition of the issues to be determined e) such other particulars as the Banking Ombudsman may think necessary. CONDUCT OF ARBITRAL PROCEEDINGS  For the conduct of arbitral proceedings, the procedure laid down in Chapter V of the Arbitration and Conciliation Act, 1996 shall apply insofar as it is deemed necessary and appropriate in the opinion of the Banking Ombudsman for the purposes of the Scheme. 29. NEW CLAIMS The parties may make new claims or counter- claims before the Banking Ombudsman provided that such new claim or counter-claims remain within the limits of the Terms of Reference. 30. AWARD BY CONSENT  If the parties reach a settlement, the Banking Ombudsman shall in accordance with the provisions of the Scheme, record it in the form of an arbitral award made by consent of the parties. 31. TIME-LIMIT FOR AWARD  (1) The time limit within which the Banking Ombudsman must render his award is fixed at six months, from the date of the first hearing under Clause 25 of the Scheme. (2) The Banking Ombudsman, if need be, on its own initiative or at the instance of the parties, may extend this time-limit if it is necessary so to do, in the interest of justice. 32. MAKING OF AWARDThe arbitral award shall be deemed to be made at the place of the arbitration proceedings and on the date when it is signed by the Banking Ombudsman. 33. NOTIFICATION AND ENFORCEABILITY OF THE AWARD (1) After signing the award the Banking Ombudsman shall forward the same to the Secretariat to notify the same to the parties concerned and make certified copies of the award available to the parties. (2) For the enforcement of the arbitral Award, the procedure laid down in Chapter VIII of the Arbitration and Conciliation Act, 1996 shall apply. CHAPTER VI MISCELLANEOUS 34. REMOVAL OF DIFFICULTIES If any difficulty arises in giving effect to the provisions of this Scheme, the Reserve Bank may make such provisions not inconsistent with the Banking Regulation Act, 1949 or the Scheme, as it appears to it to be necessary or expedient for removing the difficulty. 35. APPLICATION OF THE BANKING OMBUDSMAN SCHEME, 1995 The adjudication of pending complaints and execution of the Awards already passed, before coming into force of the Banking Ombudsman Scheme 2002, shall continue to be governed by the provisions of the Banking Ombudsman Scheme 1995 and instructions of the Reserve Bank issued thereunder.

Whether bank can refuse to make payment to nominee?

Whether bank can refuse to make payment to nominee?

Nomination made by a depositor/account holder is the reflection of his wish upon identification by him of the recipient of the deposit lying in an account in the event of death of such depositor/account holder and to hold the same in his (recipient's) custody for being distributed according to the law of succession. Nomination, which is made without any coercion, undue influence or misrepresentation and is accepted by a banking company upon a satisfaction that the nomination does not suffer from any of the vitiating factors and clothes the nominee to receive the amount, ought to be acted upon after the death of the depositor/account holder, for, that would result in honouring his wish. If at all the nomination is, at a subsequent stage, found to suffer from any technical defect precluding the banking company to act on such nomination, it ought to be the bounden duty of the officials of the bank to get the nomination rectified/altered so as to bring it in conformity with the statutory requirements provided the depositor/account holder is alive. Once the opportunity to get the nomination rectified/altered is lost by the tardy and indolent acts of the officials of the bank, it would not be in the interest of justice to allow the banking officials to refuse to honour the wish expressed by the depositor/account holder.

IN THE HIGH COURT OF CALCUTTA
W.P. No. 983 of 2015
Decided On: 30.03.2016
Communist Party of India (Marxist)
Vs.
United Bank of India and Ors.

Hon'ble Judges/Coram:
Dipankar Datta, J.

Citation: AIR 2017(NOC)15 Cal

1. Although the dispute that this Bench is called upon to examine is between a political party on the one hand and a nationalized bank on the other, the basic question that would engage the attention of this Bench is, whether the wish of a person, who is no longer alive in this mortal world, should be allowed to prevail over a technical objection.
2. The aforesaid question emerges in view of the facts narrated hereafter.
3. Tushar Kanti Das Purakayastha (since deceased), during his lifetime, maintained a savings bank account (hereafter the said account) with the Syed Amir Ali Avenue Branch (hereafter the said branch) of the United Bank of India (hereafter UBI). Being a member of the Communist Party of India (Marxist) [hereafter the petitioner], late Tushar Kanti Das Purakayastha [hereafter the customer] had nominated the Secretary, Kolkata District Committee of the petitioner to whom the amount lying in deposit in such account may be returned by the said branch in the event of his death. After his death on January 20, 2014, the petitioner by its letter dated February 17, 2014 requested the Manager of the said branch, the respondent No. 2, to release and disburse the available credit balance in its favour since it was the lawful nominee. The respondent No. 2 by his letter dated March 28, 2014 informed the petitioner that the nomination made by the customer is not a valid one under section 45ZA of the Banking Regulation Act, 1949 (hereafter the Act) and rule 2(1) of the Banking Companies (Nomination) Rules, 1985 (hereafter the Rules) and consequently, did not accept the petitioner's request. This was followed by a notice dated August 18, 2015 issued by the petitioner's learned advocate demanding justice from the respondent No. 2. The same did not yield any result, leading to presentation of this writ petition before this Court on August 5, 2015.
4. Mr. Sen, learned senior advocate for the petitioner, by referring to the statutory provisions having a bearing on the question noted above and upon placing reliance on numerous authorities, contended that the action of the respondent No. 2 is arbitrary, illegal and unauthorised and, hence, unsustainable in law.
5. According to Mr. Sen, in the absence of a definition of the expression "person" in a statutory provision, section 3(42) of the General Clauses Act, 1897 (hereafter the G.C. Act) has been made applicable to the following statutes:--
"(i) Excess Profits Tax Act 1940 MANU/TN/0449/1954 : AIR 1954 Madras 1049 (A.G. Pandu Rao & anr. v. Collector of Madras & anr.);
(ii) Displaced Persons (Debts Adjustment) Act 1951 MANU/PH/0018/1958 : AIR 1958 Punjab 57 (Punjab National Bank Ltd. v. Punjab Property Development Co. & ors.);
(iii) Right to Information Act, 2005 MANU/DE/4461/2011 : AIR 2012 Delhi 39 (Jamia Millia Islamia v. Sh. Ikramuddin);
(iv) A.P. Charitable & Hindu Religious Institutions & Endowments Act 1966 MANU/AP/0112/1979 : AIR 1979 AP 173 (Kanyakaparameswari Varthaka Sangham v. Commissioner of Endowments, Andhra Pradesh);
(v) Jammu & Kashmir State Lands (Vesting of Ownership of Occupants) Act 2001 MANU/JK/0122/2008 : AIR 2009 J&K 12 (Ghulam Qadir Wagay v. State & ors.);
(vi) C.P. Village & Sanitation & Public Management Act 1920 MANU/NA/0077/1935 : AIR 1935 Nagpur 242 (Nathmal & anr. v. Sanitation Panchayat Committee, Bramhapuri);
(vii) Civil Procedure Code - (Or. 30 Rule 10) MANU/BH/0097/1962 : AIR 1962 Patna 360 (Rameshwar Prasad Golwara & ors. v. Keshab Prasad Bhagat & ors.); (Or. 33 Rule 1) MANU/TN/0164/1917 : AIR 1918 Madras 362 (Perumal Koundan v. Tirumalrayapuram Jananukoola Dhanasekhara Sanka Nidhi Ltd.); AIR 1955 NOC 4030 (Rajasthan)[Motilal v. Kistoorchand & ors.]; MANU/TN/0021/1937 : AIR 1937 Madras 549 (FB) (Swaminathan v. Official Receiver, Ramnad & anr.); MANU/KE/0065/1961 : AIR 1961 Kerala 180 (Mathew v. Kerala United Corporation Ltd.); and
(viii) Income Tax Act 1922 MANU/SC/0060/1958 : AIR 1959 SC 213 (Y. Narayana Chetty & anr. v. The Income Tax Officer, Nellore & ors.); and MANU/SC/0219/1962 : AIR 1962 SC 970 (Commissioner of Income Tax, Madras & anr. v. S.V. Angidi Chettair)."
6. It was, therefore, contended by him that there could be no valid reason for not looking at the G.C. Act for ascertaining the meaning of the expression "person" in section 45ZA(1) of the Act, and since the petitioner is covered by the expression "person" appearing in section 45ZA(1) of the Act with the aid of the G.C. Act, the impugned action of the respondents in refusing to accede to the petitioner's request is indefensible.
7. Mr. Sen further contended that the respondents' must be held to have waived their right to declare the nomination made by the customer as invalid, after his death. Reliance was placed by him on the decision reported in AIR 1988 Andhra Pradesh 289(Chandramma and another v. The General Manager, State Bank of Hyderabad and another) wherein, in more or less similar circumstances, a learned judge of the Andhra Pradesh High Court overruled the objection raised by the banking company and held that the banking company having accepted the nomination, it had waived its right to object at a later stage.
8. Mr. Sen also cited the decision reported in MANU/SC/0158/1964 : AIR 1965 SC 1387 (Banarasi Dass v. Wealth Tax Officer, Spl. Circle, Meerut), wherein the word "individual" in Entry 86, List I of Schedule VII of the Constitution was construed and it was held that the word must receive the widest interpretation.
9. It was, accordingly, prayed that the petitioner is entitled to relief as claimed in the writ petition.
10. Per contra, Mr. Mukherjee, learned advocate for UBI and its officers contended that the respondent No. 2 did not act illegally in informing the petitioner that the nomination made in its favour was not valid and hence it was not entitled to receive the credit balance in the savings bank account of the customer. He also referred to a Master Circular issued by the Reserve Bank of India in 2013 and invited the attention of this Bench to clause 19.7.1 thereof to buttress his contention that the impugned action of the respondents is unexceptionable. He, thus, prayed for dismissal of the writ petition.
11. In reply, Mr. Sen contended that since nomination in the present case was made in 2009, the master circular of 2013 would not apply. In any event, since the customer was alive till January 20, 2014, the respondent No. 2 ought to have communicated to him that in terms of the master circular of 2013, the nomination made by him was invalid and that he could change the nomination. That not having been done, he argued that it is too late in the day for the respondents to deny the petitioner the benefit flowing from the nomination made in its favour by the customer.
12. The parties have been heard.
13. At the outset, the relevant statutory provisions need to be read along with the master circular to assess the worth of the contention raised by the respondents.
14. Section 45-ZA of the Act provides for "nomination" for payment of depositors' money and reads thus:
"45-ZA. Nomination for payment of depositors' money.- (1) Where a deposit is held by a banking company to the credit of one or more persons, the depositor or, as the case may be, all the depositors together may nominate in the prescribed manner, one person to whom in the event of the death of the sole depositor or the death of all the depositors, the amount of deposit may be returned by the banking company.
(2) Notwithstanding anything contained in any other law for the time being in force or in any disposition, whether testamentary or otherwise, in respect of such deposit, where a nomination made in the prescribed manner purports to confer on any person the right to receive the amount of deposit from the banking company, the nominee shall, on the death of the sole depositor or, as the case may be, on the death of all the depositors, become entitled to all the rights of the sole depositor or, as the case may be, of the depositors, in relation to such deposit to the exclusion of all other persons, unless the nomination is varied or cancelled in the prescribed manner.
(3) ***
(4) Payment by a banking company in accordance with the provisions of this section shall constitute a full discharge to the banking company of its liability in respect of the deposit:
Provided that nothing contained in this sub-section shall effect the right or claim which any person may have against the person to whom any payment is made under this section."
(underlining for emphasis)
15. Rule 2 of the Rules provides, inter alia, as follows:
"2. Nomination in respect of deposits. - (1) The nomination to be made by the depositor, or, as the case may be, all the depositors together in respect of a deposit held by a banking company to the credit of one or more individual shall be in Form DA 1.
(2) The said nomination may be made only in respect of a deposit which is held in the individual capacity of the depositor and not in any representative capacity as the holder of an office or otherwise.
(3) ***
(4) ***
(5) The cancellation of the said nomination to be made by the depositor or, as the case may be, all the depositors together, shall be in Form DA 2.
(6) A variation of the said nomination to be made by the depositor or, as the case may be, all the depositors together, shall be in Form DA 3.
(7) The said nomination shall be made in favour of only one individual.
(8) (a) A nomination, cancellation of nomination or variation of nomination may be made as aforesaid at any time during which the deposit is held by a banking company to the credit of the depositor or depositors, as the case may be.
****"
16. Form DA-1, which is part of the Rules, is extracted below:
"FORM DA - 1
Nomination under section 45ZA of the Banking Regulation Act, 1949, and
rule 2(1) of the Banking Companies (Nomination)
Rules, 1985, in respect of bank deposits

I/We, ........................................, [name(s) and address(es)], nominate the following person to whom in the event of my/our/minor's death the amount of the deposit, particulars whereof are given below, may be returned by .................................................(name and address of branch/office in which deposit is held):
2. As the nominee is a minor on this date, I/We appoint Shri/Smt./Kum...................... .................... (name, address and age) to receive the amount of the deposit on behalf of the nominee in the event of my/our/minor's death during the minority of the nominee.
Place..............
Date...............
..................................................
Signature (s)/Thumb impression(s)
of depositor(s).

Name(s), signature(s) and
Address(es) of witness(es)****"
17. Relevant part of clause 19.7.1 of the master circular reads as follows:
"19.7.1 Nomination facility in respect of deposits
(i) Nomination facility is intended for individuals including a sole proprietary concern.
(ii) Rules stipulate that nomination shall be made only in favour of individuals. As such, a nominee cannot be an Association, Trust, Society or any other Organisation or any office-bearer thereof in his official capacity. In view thereof any nomination other than in favour of an individual will not be valid.
***"
18. What follows from the above is that a nomination is open to be made by the depositor of money in a banking company in favour of a person i.e. the nominee, by filling up Form DA-1, which is the appropriate form which has to be used for nomination under section 45-ZA of the Act read with rule 2(1) of the Rules, and in the event of the death of the depositor, the banking company would be under an obligation to return the amount of deposit to such person, i.e. the nominee.
19. The word "person" in section 45-ZA(1) of the Act (who may be nominated by a depositor for receiving the amount of deposit in the event of his death) has not been defined in the Act. It would, therefore, be useful to refer to the definition of "person" in the G.C. Act. Section 3(42) defines "person" as:
"3. Definitions.--In this Act, and in all General Acts and Regulations made after the commencement of this Act, unless there is anything repugnant in the subject or context,-
(42) "person" shall include any company or association or body of individuals, whether incorporated or not;"
It is clear on reading of the above definition that unless the context requires otherwise, the inclusive definition of "person" would cover a body, whether incorporated or not.
20. Perusal of the contents of Form DA-1 also reveals that it refers to the "person" nominated by the depositor who would be entitled to return of the amount of deposit by the banking company.
21. There is no legal bar in construing the word "person" in section 45ZA(1) of the Act bearing in mind its definition in the G.C. Act and having regard to the decisions cited by Mr. Sen, there is no real difficulty in construing the word "person" to include a political party. So far so good.
22. The problem, if at all, seems to have arisen because firstly, rule 2 of the Rules and the master circular do not refer to "person" but to an "individual" who can be nominated by the depositor to receive the amount of deposit in the event of his death and secondly, the master circular expressly prohibits nomination for such purpose in favour of any association, trust, society or any other organisation or any office-bearer thereof in his official capacity.
23. This Bench is of the considered view that mindless framing of rules and issuance of circulars, which are at variance with the enactment conferring power to the executive to frame rules/issue circulars, is the root of all problems. When the Act in section 45ZA(1) and the Rules in Form DA-1 have used the word "person", it is open to question as to whether in rule 2 or in paragraph 19.7.1, the word "individual" could be used and thereby restrict the operation of the Act. It is well known that a rule framed under an enactment can only supplement such enactment and not supplant it; likewise, a circular cannot supplant a rule, it can only supplement. Bearing in mind the contours of the Act, it seems to be wrong in principle to interpret the rule/circular in such manner that would result in the amplitude of the word "person" in section 45ZA(1) being abridged, abrogated or cut down to mean an "individual". As the stream can rise no higher than its source, a rule/circular cannot rise above the enactment that is its source. The word "individual" cannot thus be construed in a narrow manner so as not to cover a body, which is covered by the meaning of the word "person", and it must receive the same meaning as "person".
24. That apart, Mr. Sen is right in his contention that the master circular cannot have any application in a case where Form DA-1 has been filled up prior to its birth. A party cannot ordinarily be denied of a vested right that has accrued to it in terms of the laws in force at the relevant point of time. The circular has no retrospective application. Form DA-1 is part of the counter affidavit of the respondents whereby on December 1, 2009, the customer had made the relevant nomination for receiving the amount of deposit, and such form was duly accepted by the branch without any demur. If at all any rectification/alteration were required, it was the duty of the respondent No. 2 to have the same effected by informing the customer. Admittedly, no such effort was made.
25. There is a presumption that official acts have been regularly performed. When the nomination was made by the customer in Form DA-1 on December 1, 2009, the respondent No. 2 must be presumed to be well and truly aware of the implications of the statutory provisions or else, the nomination in the manner the same was made would not have been allowed. The respondent No. 2 could not have declined to accept the request of the petitioner merely because of introduction of the master circular of 2013 in the interregnum. If indeed the master circular was binding on the UBI, it was the duty of the respondent No. 2 to check up the records to find out as to whether any nomination had been made by any depositor which is inconsistent with such master circular. As has been noted above, the customer was alive and if approached could have rectified/altered the nomination according to his free will. The respondent No. 2 not having so done, it must be held to have waived any right of objection based either on the rules or the master circular.
26. This Bench is inspired to hold so being in full agreement with the pronouncement in Chandramma (supra). There, two individuals were nominated by the depositor to receive the amount of deposit in the event of his death although the law permitted nomination only in respect of one individual. Repelling the contention of the banking company that the nomination was invalid, the Bench proceeded to observe as follows:
"In my opinion this is mistaken contention of the Bank and that in any event, such a contention is not open for the Bank to be advanced. A sum of money as large as ten lakhs of rupees had been deposited by late Adivappa with the Bank. On the same date i.e. on 14-2-1987 when he was making the deposit, late Adivappa nominated the present two petitioners as his nominees. The Bank, having accepted the deposit and having made use of that amount for all these years, cannot now be permitted to say that it will not allow withdrawal of the deposit by the petitioners who are admittedly the nominees of the depositor, on the ground that late Adivappa ought not to have nominated two persons instead of one person. Such a plea could have been taken only at the time of accepting the deposit. Having raised no such objection and having accepted the deposit, the Bank must be deemed to have waived its objection to the making of two nominees. The above Section does not relate to the legal validity of the deposit or nomination. It is merely a direction to the Bank to refuse to accept a deposit made with names of two nominees. It is not intended by the Section that in case the Bank disregards the said direction, the whole transaction of deposit together with the nomination should be treated illegal. The Bank today cannot go back on the conditions subject to which the deposit has been made by Adivappa and accepted by it.I, therefore, hold that the action of the Bank refusing to pay the nominees of the depositor the deposited money is unjustified. Further S. 45-ZA has nothing to do with the question of withdrawal of the deposit by the nominees. That Section only deals with the question of depositing the moneys with the Bank at the time of withdrawal of deposited money, the question of validity of nomination does not arise. Having accepted two nominations, the Bank cannot be permitted to take advantage of its own mistake."
27. Any other aspect apart, the nomination made by the customer appears to have been made in favour of the Secretary, Kolkata District Committee of the petitioner. It is the Secretary who had filled up the claim form. In the absence of any doubt having been raised in regard to such claim form being submitted before the respondent No. 2 by such Secretary, refusal to settle the claim appears to be arbitrary and unreasonable. The word 'individual' has been defined in Black's Law Dictionary to mean: 1. Existing as an indivisible entity; 2. Of or relating to a single person or thing, as opposed to a group. The Secretary, Kolkata District Committee of the petitioner does come within the comparatively narrow meaning of "individual" and, therefore, in terms of even rule 2 of the Rules, he is entitled to receive the amount of deposit lying in credit in the said account.
28.Nomination made by a depositor/account holder is the reflection of his wish upon identification by him of the recipient of the deposit lying in an account in the event of death of such depositor/account holder and to hold the same in his (recipient's) custody for being distributed according to the law of succession. Nomination, which is made without any coercion, undue influence or misrepresentation and is accepted by a banking company upon a satisfaction that the nomination does not suffer from any of the vitiating factors and clothes the nominee to receive the amount, ought to be acted upon after the death of the depositor/account holder, for, that would result in honouring his wish. If at all the nomination is, at a subsequent stage, found to suffer from any technical defect precluding the banking company to act on such nomination, it ought to be the bounden duty of the officials of the bank to get the nomination rectified/altered so as to bring it in conformity with the statutory requirements provided the depositor/account holder is alive. Once the opportunity to get the nomination rectified/altered is lost by the tardy and indolent acts of the officials of the bank, it would not be in the interest of justice to allow the banking officials to refuse to honour the wish expressed by the depositor/account holder.
29. For the reasons aforesaid, the refusal of the respondents to release and disburse the amount of credit balance in the savings bank account of the customer cannot be upheld. The impugned communication dated March 28, 2014 stands quashed. The petitioner is entitled to an order in terms of prayer 'a' of the writ petition. Let the amount of deposit with 10% interest be released and disbursed by the respondents in favour of the petitioner as early as possible but not later than 4 (four) weeks of receipt of a certified copy of this judgment and order.
30. The writ petition, thus, stands allowed without any order as to costs.
Urgent photostat copy of this judgment and order, if applied for, be furnished to the applicant at an early date.

one of the first substantive rulings of the Supreme Court under the Insolvency and Bankruptcy Code:

Understand; HON'ble ~SC ruling in ICICI vs Innoventive, dated 31st August, 2017, one of the first substantive rulings of the Supreme Court under the Insolvency and Bankruptcy Code:

The important principles held by the Supreme Court are as follows:

1. ICICI’s insolvency application against Innoventive has been upheld by the Supreme Court. The insolvency declaration was being challenged on the ground that Innoventive was   a “relief undertaking” under the Maharashtra law for relief in case of industrial undertakings.

2. Supreme Court held that there was a conflict between the Maharashtra Relief law and the Bankruptcy Code, but citing well settled rulings in the past, the SC held that in case of a conflict between a state law and a Central Law, the Central Law will prevail. The Insolvency and Bankruptcy Code is a law that codifies the existing law on bankruptcy, enacted under the powers given to the Central Govt under Part I of Seventh Schedule of the Constitution, and therefore, overrides any contrary state law.

3. In several remarks through the ruling, the SC has highlighted the fact that time is of essence in bankruptcy proceedings.

4. In case of financial debt, the question of a dispute does not arise. All that the financial creditor is required to produce is evidence of non-payment through records of information utility or otherwise.

5. The SC also hinted at a very important principle – which may actually become a sad spot if the existing directors of companies under insolvency matters try to challenge the insolvency filings – that once the  Insolvency has been ordered, the Board of Directors ceases to have the power to represent the company.

6. SC also remarked: “Entrenched managements are no longer allowed to continue in management if they cannot pay their debts.”
This is one of the first substantive rulings on the Insolvency law, and settles some nagging issues.

*Actively watching NCLT & SARFARESI Act too;*

UdayPrabhu@Activist.com

Car dash board symbols

Secured Creditor Cannot Invoke Section 14 Of SARFAESI Act After Sale Of Secured Asset: Calcutta HC

Secured Creditor Cannot Invoke Section 14 Of SARFAESI Act After Sale Of Secured Asset: Calcutta HC [Read Judgment]

Read more at: http://www.livelaw.in/secured-creditor-cannot-invoke-section-14-sarfaesi-act-sale-secured-asset-calcutta-hc-read-judgment/

തിയതിക്കകം ബില്ല് അടച്ചില്ലെങ്കില്‍ ഇനി മുതല്‍ ഒറ്റയടിക്ക് കെ.എസ്.ഇ.ബിക്ക് വൈദ്യുതി വിച്ഛേദിക്കാനാകില്ല. 15 ദിവസത്തെ മുന്‍കൂര്‍ നോട്ടീസ് നല്‍കിയ ശേഷം മാത്രമെ

. KSEB യുടെ ഫീസൂരലിന് ഉപഭോക്തൃ കോടതി കടിഞ്ഞാണിട്ടു.

ഉപഭോക്താവ് നിശ്ചിത തിയതിക്കകം ബില്ല് അടച്ചില്ലെങ്കില്‍ ഇനി മുതല്‍ ഒറ്റയടിക്ക് കെ.എസ്.ഇ.ബിക്ക് വൈദ്യുതി വിച്ഛേദിക്കാനാകില്ല. 15 ദിവസത്തെ മുന്‍കൂര്‍ നോട്ടീസ് നല്‍കിയ ശേഷം മാത്രമെ വൈദ്യുതി വിച്ഛേദിക്കാവൂയെന്ന് സംസ്ഥാന ഉപഭോക്ത്യ പ്രശ്നപരിഹാര ഫോറം ഉത്തരവിട്ടു. മുന്നറിയിപ്പ് നല്‍കാതെ വൈദ്യതി വിച്ഛേദിക്കുന്നത് കെ.എസ്.ഇ.ബി ആക്ടിന്റെ ലംഘനമാണെന്നാണ് ഉപഭോക്ത്യ പ്രശ്ന പരിഹാര ഫോറത്തിന്റെ വിലയിരുത്തല്‍

പൊതു സമൂഹത്തിന്റെ അറിവിലേക്കായി ഷെയർ ചെയുക.

Secured Creditor Cannot Invoke Section 14 Of SARFAESI Act After Sale Of Secured Asset: Calcutta HC

Secured Creditor Cannot Invoke Section 14 Of SARFAESI Act After Sale Of Secured Asset: Calcutta HC [Read Judgment]

Read more at: http://www.livelaw.in/secured-creditor-cannot-invoke-section-14-sarfaesi-act-sale-secured-asset-calcutta-hc-read-judgment/

one of the first substantive rulings of the Supreme Court under the Insolvency and Bankruptcy Code:

Understand; HON'ble ~SC ruling in ICICI vs Innoventive, dated 31st August, 2017, one of the first substantive rulings of the Supreme Court under the Insolvency and Bankruptcy Code:

The important principles held by the Supreme Court are as follows:

1. ICICI’s insolvency application against Innoventive has been upheld by the Supreme Court. The insolvency declaration was being challenged on the ground that Innoventive was   a “relief undertaking” under the Maharashtra law for relief in case of industrial undertakings.

2. Supreme Court held that there was a conflict between the Maharashtra Relief law and the Bankruptcy Code, but citing well settled rulings in the past, the SC held that in case of a conflict between a state law and a Central Law, the Central Law will prevail. The Insolvency and Bankruptcy Code is a law that codifies the existing law on bankruptcy, enacted under the powers given to the Central Govt under Part I of Seventh Schedule of the Constitution, and therefore, overrides any contrary state law.

3. In several remarks through the ruling, the SC has highlighted the fact that time is of essence in bankruptcy proceedings.

4. In case of financial debt, the question of a dispute does not arise. All that the financial creditor is required to produce is evidence of non-payment through records of information utility or otherwise.

5. The SC also hinted at a very important principle – which may actually become a sad spot if the existing directors of companies under insolvency matters try to challenge the insolvency filings – that once the  Insolvency has been ordered, the Board of Directors ceases to have the power to represent the company.

6. SC also remarked: “Entrenched managements are no longer allowed to continue in management if they cannot pay their debts.”
This is one of the first substantive rulings on the Insolvency law, and settles some nagging issues.

*Actively watching NCLT & SARFARESI Act too;*

UdayPrabhu@Activist.com

You should approach a court after you have raised the matter with your bank and with the ombudsman.

Approaching a court

Consumers have the right to fight it out in court if there is any dispute. “You should approach a court after you have raised the matter with your bank and with the ombudsman. In case you don’t make a grievance with the bank, your case may not be entertained as it may be considered as premature,” said Harsh Pathak, a Delhi-based lawyer who works on cases related to banking and consumer rights.

There is a hierarchy in place when you approach a consumer court depending on the financial damage in dispute. For instance, if you are fighting a case for a financial damage of up to Rs.20 lakh, you can file a complaint before the district consumer disputes redressal forum. If it is above Rs.20 lakh but below Rs.1 crore, then you will have to take it to the state consumer disputes redressal commission. If it is above Rs.1 crore, you need to approach the National Consumer Disputes Redressal Commission. “You have the right to bypass the internal redressal mechanism and complaint to consumer forum,” said Jehangir Gai, a Mumbai-based consumer activist.

Documents, jurisdiction

If you decide to approach a court, it is important to build evidence against the bank. Always save bills, receipts or any document as a proof. If you have raised the matter with the bank, keep the documents. If you have approached the ombudsman, keep a copy of the complaint. Once you decide to approach a court and have the documents in place, next is to file the case in the right jurisdiction. “Usually, you have to file the case where the home branch or the bank headquarters is depending on the agreement between you and your bank,” said Gai.

How to file a complaint

Your complaint should be brief, clear and precise. If you have hired a lawyer, she will take care of the writing. But if you don’t have a lawyer and want to fight the case on your own, keep in mind that the format is subjective. “The complaint must mention the names of the parties, details of the transactions, nature of the dispute, and the relief being sought. The pages have to be numbered, and filed along with an index. An affidavit, and supporting documents, should be attached,” said Gai.

Three copies should be filed and one should be set aside for the party against whom the complaint is filed. One identical set should be kept with the complainant to argue the case. “If you don’t have a lawyer and are unable to write a complaint yourself, you can approach legal aid cell in the court premises,” said Pathak

Costs and time frame

Fighting a case in court may take time, and also money. You need to be persistent and determined. “The time taken to get a verdict on a case depends on the complexities of the case,” said Pathak. Some cases get resolved within six months while some go on for years. Besides time, court cases come with costs attached.

Complaint fee for filing a case for a financial damage is limited to Rs.100-9,000 depending up on the damage you are seeking.

Also, you will have to pay a lawyer if you are hiring one. But you can claim cost of your complaint.