Lessons from Pokarna Engineered Stone exiting Corporate Debts Restructuring Scheme
Pokarna Engineered Stone (PES) is reported to have exited the Corporate Debts Restructuring (CDR) Scheme ahead of the schedule as it has been able to generate enough revenues to throw of the yolk set up by the banks. And herein lies a lesson for other units who have to deal with banks and cash crunch situations.
Electrotherm takes OTS route to come out of its banking woes
Electrotherm has opted for the One Time Settlement (OTS) route to come out of its pernicious litigations with ICICI Bank. It paid out a sum of Rs.12.50 Crores against an outstanding amount of Rs.55.97 Crores against full and final settlement of all issues.
Non Banking Finance Companies (NBFC) have long been clamouring for access to Debts Recovery Tribunal (DRT) as well as powers to use provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002 (SRFAESI Act) Act for recovery of their dues. A recent “study” only adds to their demand.
Tenants cannot be evicted from a property under the SRFAESI Act
The Delhi High Court has held banks cannot use SRFAFESI Act to evict lawful tenants from a property. The bank can take over the property and auction it off subject to rights of Lawful tenants.
The DRTs cannot enlarge the demand from what was sought in the S. 13(2) Notice
The notice under section (u/s) 13(2) of the SRFAESI Act is the corner stone of initiating recovery proceedings against a borrower. The DRTs must scrupulously follow what was intended in the original S. 13(2) notice and not enlarge it by adding other accounts.
The RBI has powers to define the parameters of NPA
The Supreme Court of India has held that the Reserve Bank (RBI) of India is competent to define what constitutes Non Performing Assets and that is there is nothing un Constitutional in Parliament delegating this power to the RBI.
SARFAESI Act is not superior to State Rent Control Acts
SARFAESI Act cannot be used to bulldoze a tenant out of a mortgaged property without the due process of law under the local rent control Laws.
Tenancy created even after mortgage is entitled to same protection as a tenancy before the mortgage.; Tenancy under un-registered agreement is equally valid;
KSL & INDUSTRIES LTD. Versus M/S ARIHANT THREADS LTD. & ORS.
Every Act has to be interpreted in the context in which it is being sought to be examined.
When the question of revival of sick industries, then SICA in general and Section 22 thereof will prevail over the RDDBFI Act, even though the RDDBFI Act is the latter Act.
Where recovery of debt is the question, then the RDDBFI Act will prevail SICA
Where the signatures are disputed it is necessary to get them examined with the help of experts.
The judges must not venture to examine and compare the signatures between those of disputed and admitted ones.
1. To which category of Banks is CDR applicable?
2. What is the aim of the CDR scheme?
3. Is it mandatory for the Banks to comply with the CDR scheme?
4. What is CDR standing forum?
5. What is CDR Empowered Group?
Non Banking Finance Companies (NBFC) have long been clamouring for access to Debts Recovery Tribunal (DRT) as well as powers to use provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002 (SRFAESI Act) Act for recovery of their dues. A recent “study” only adds to their demand.
The Delhi High Court has held banks cannot use SRFAFESI Act to evict lawful tenants from a property. The bank can take over the property and auction it off subject to rights of Lawful tenants.