It is respectfully submitted that the recovery proceedings against the Guarantor before hon’ble Debts Recovery Tribunal under section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter ‘the Act’) are absolutely unlawful. DRT has no jurisdiction to proceed against the Guarantor as he has not taken any debt, which he has to repay.

Narendra Sharma, Consultant (Legal) Introduction – Recently, after going through my Articles on the website {namely (1) Director’s Personal Guarantee-A Void Agreement and (2) Personal Guarantee-A Void Agreement), one visitor informed me that, on the contrary, commenting on his case regarding enforcement of his personal guarantee by the Bank, a well known Supreme Court Advocate [...]

The banks which are running on the orders of the Reserve Bank publish the defaulter list of the common people but they don’t have the list of the defaulters of the corporate families. According to the bankers, in the Bank Director’s meeting also this list is never mentioned, because of which till today the list have not come into existence. Some specialists blame the government for this. For the common man there are norms to return the money in a given time whereas there are no norms for the corporate families. There are laws of recovery but it is only implemented on the common man.” (emphasis supplied)

The constitutional validity has been challenged of Chapters 1B and 1C of the Companies Act, 1956 inserted by Companies (Second Amendment) Act 2002, providing for the constitution of National Company Law Tribunal (`NCLT’ or `Tribunal’) and National Company Law Appellate Tribunal (`NCLAT’ or `Appellate Tribunal’) by raising, inter alia, the following contentions:

I don’t want to comment about other judges but I became a judge in the Supreme Court in 2006 and shortly after, I gave a judgment in which I said that the judges must know their limits and not behave like emperors. They must not try to run the government; judges must not ordinarily encroach into the domain of the legislature or the executive. Judges must know their limits, they must be restrained, particularly in economic and social matters. When it comes to civil liberties and fundamental rights, then a judge must be an activist

If the provisions of the DRT Act and Securitisation Act are interpreted keeping in view the background and context in which these legislations were enacted and the purpose sought to be achieved by their enactment, it becomes clear that the two legislations, are intended to create a new dispensation for expeditious recovery of dues of banks, financial institutions and secured creditors and adjudication of the grievance made by any aggrieved person qua the procedure adopted by the banks, financial institutions and other secured creditors, but the provisions contained therein cannot be read as creating first charge in favour of banks, etc.

(1) The main enforcing provision is Section 13 in Chapter III of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter called the Act). Section 13 provides that a secured creditor may enforce any security interest without intervention of the court or Tribunal irrespective of Section 69 or Section 69A of the Transfer of Property Act where according to sub-section (2) of Section 13, the borrower is a defaulter in repayment of the secured debt or any installment of repayment and further the debt standing against him has been classified as a non-performing asset by the secured creditor.

Since sending of notice from Delhi to Raipur does not confer jurisdiction on Delhi Court in view of the decision of the Hon’ble Supreme Court in the case of Harman Electronics Private Limited (supra) and the deposit of cheque with the banker of respondent No. 2 in Delhi also does not confer jurisdiction of Delhi court when the cheque is presented to a bank outside Delhi, and there is no other ground which would confer jurisdiction on Delhi Court, it cannot be said that the Delhi Court has the jurisdiction to try this complaint.

Recently, hon’ble Supreme Court in Gangadhara Palo Vs The Revenue Divisional Officer & Another {(2011) 4 SCC 602; Decided on 08.03.2011} has held that there can be no review of a judgment, if appeal has already been decided. The Court observed the principles as follows.

It is a prevalent belief that section 17 of the Arbitration and Conciliation Act, 1996 (‘the Act’) does not confer any power on the Arbitral tribunal to enforce its order for interim measure of protection, nor does it provide for judicial enforcement of any such interim order passed by the Arbitral tribunal. Consequently, it appears that section 17 of the Act is REDUNDANT; however, THIS COULD NOT HAVE BEEN THE LEGISLATIVE INTENT. Therefore, I have made some research and humbly submit my views as follows.