Citizens' Issues
Defaulters cannot claim a share in the mortgaged property that bank has acquired, used and sold: SC
Bank defaulters have no right to make any claim for share on the sale proceeds or rent earned by the lender, ruled the Supreme Court. Kollam-based PK Thampi Raj took a loan of Rs15,000 from State Bank of Travancore (SBT) on 4 July 1981 by creating an equitable mortgage by deposit of title deeds in respect of 1.800 sq. links (one link= 0.66 feet) in Survey No.1073 of 2001 of Vanchiyoor village in Thiruvananthapuram district. However, he defaulted on repayment. In 1983, the Bank filed suit for recovery of Rs19,500 together with an interest at 13.5% per annum. On 25 August 1994, the suit was decreed and the property was put to auction by the Bank. However, since nobody came forward, the Bank itself bought the property and obtained a sale certificate from the Court on 22 February 1994. 
In 2007, the Bank, by inviting tenders, sold the property for Rs10.10 lakh. At this time, Thampi Raj and his wife R Sobhana approached the Bank with a request to return the excess amount, which the Bank secured by way of sale of the property. They also sought for payment of rent that the Bank earned by letting out the property for during 8 July 1996 to May 2006. It was quantified at Rs1.41 lakh. The Bank denied sharing the sale proceeds as well as rental income. 
The couple then approached Kerala HC seeking a mandamus to the Bank to return the excess sale amount in respect of the property along with the rent collected. In its counter affidavit, the Bank said, it became absolute owner of the property after obtaining a sale certificate on 22 February 1994. The Bank relied upon Section 65 of the Code of Civil Procedure to plead that it had perfected its right, title, interest and possession over the property covered by the sale certificate. The Bank also pleaded that the Writ Petitioners did not have any right over the property, which was purchased by it in the auction conducted by Court.
On 28 February 2012, the single Judge of HC dismissed the petition by holding that Thampi Raj and his wife, have no right in the property after the title had passed on to the Bank in 1994 and they cannot have any claim in respect of the rent received for the property or the proceeds of the sale conducted by the Bank.
The couple, aggrieved by the judgement, filed a writ before a Division Bench. During the pendency of the appeal, Thampi Raj died and the children of the couple were impleaded as appellants. The Division Bench took note of the fact that the Sobhana was paralyzed because of meningitis, one daughter was mentally retarded and another son was a psychiatric patient. The Bench on 15 June 2012, ordered the Managing Director of State Bank of Travancore to consider sharing of a substantial amount of profit accrued to the Bank by way of sale of the property with the respondents. The Bank refused to share the proceeds.
Again, on 19 July 2012, the Division Bench asked Board of Directors of SBT to consider directions given by the Court by its earlier order on 15 July 2012. The Board of SBT in its meeting on 10 September 2012 decided that the respondents are not entitled for any payment from the proceeds of the sale of the property. Allowing the writ petition, on 25 September 2012, the Division Bench of Justice CN Ramachandran Nair and Justice PS Gopinathan of the Kerala HC directed State Bank of Travancore to refund within two weeks, Rs6.5 lakh to R Sobhana and her children from the profit earned from the sale of their mortgaged property. The Bank then approached the apex court. 
Senior Advocate RP Bhatt appearing on behalf of SBT submitted that the High Court erred in allowing the writ appeal after recording a finding that the Bank did not indulge in any illegality. According to him, the High Court ought not to have made adverse remarks against the Bank in the matter of its business transactions. He also submitted that the entire transaction could not have been dubbed as unfair. In any event, according to the Bank counsel, R Sobhana and her children cannot assert any legal right to claim a share in the proceeds of sale of the property by the Bank.
Advocate Renjith B Marar, appearing for Sobhana submitted that the family is not only in financial distress but also suffering from serious illness. He also submitted that though the family is not claiming any legal right over the property, but are entitled for some payment by taking into account the fact that they took a loan of Rs15,000 and their property was sold by the Bank for Rs10 lakh.
After hearing both the sides, the apex court Bench said, "It is clear from the facts narrated above that the Bank has not indulged in any illegality either in purchasing the property in the auction conducted by the Court in 1992 or in the sale of the property in the year 2007. The respondents have no right in claiming any share in the proceeds of the sale of the property after the Bank became the owner of the property in 1992," a Bench of Justices Anil R Dave and L Nageswara Rao said in a recent judgement.
While expunging comments made by the Division Bench of Kerala High Court against SBT, the apex court said, the comments are 'unwarranted and deserve to be expunged'. "The High Court erred in directing payment of Rs6.5 lakhs to the respondents towards their share in the proceeds of sale of property by the Bank in 2007."
However, the SC was of the opinion that in the peculiar facts of the case the respondents are entitled to some relief. "They (the family) have availed a loan of Rs15,000 and due to the non-payment of the loan they have lost a property which was sold by the Bank for Rs10 lakh in 2007. It is clear from the record that the family is suffering from acute illness apart from severe financial distress. Taking into account the extreme adversity which the family is facing, we are of the opinion that the respondents are entitled for a payment of Rs5 lakh as ex-gratia," the Bench said while disposing off the appeal.



B. Yerram Raju

2 weeks ago

Passionate pleas favoured compassion to the declared delinquent borrowers. The moot question that still remains unaddressed is why the Bank should have taken equitable mortgage for a small loan of Rs.15000/- in the first place? It is not clear from the narration the purpose of the loan - whether it was a mortgage loan or a loan for a small business? If it is for mortgage then the Bank's claim to redeem the property has full merit. If it is small business and the borrowers failed to run the business, the business risks need to be hedged differently from the mortgage recourse. Riskiness of the asset that the banks finance has to be assessed independent of collateral securities and prudent decision has to be taken for financing a particular client.


3 weeks ago

India is turning slowly into a judicio-cracy (maybe the term does not exist today, but warrants a creation!).
While I whole-heartedly sympathize with the family's circumstance, they need executive support.

The judiciary of the day can interpret the law and even pass the equivalent of what is an executive order...

Let's say I sold a piece of property for a song... due to financial circumstance. The property drastically appreciates and the buyer, who's already wealthy becomes wealthier - I guess I could get intervention to provide me ex-gratia from the wealthy buyer!!!

God bless India!



In Reply to Srinivasan 3 weeks ago

So true !! :-)


4 weeks ago

This can only happen in India... a bunch of defaulters who are apparently under "financial distress" are able to hire lawyers for HC and SC, which even well to do people can't. I wonder if the same people would have gone to Court if the value of the property had declined to make good the losses to the banks. On one hand, the "honorable" SC says that comments of the HC are "unwarranted" and the respondents have no rights, but at the same time it awards them Rs. 5 lakh on humanitarian grounds... wow, only criminals and defaulters have humanitarian rights in this country... no ones cares that this is a government owned bank which is often bailed out for its bad debt problem. Effectively, people of India are paying 5 lac to a defaulter family. There are many families in financial distress and suffering from illness. Is State bank supposed to distribute 5 lac to each of them? When did courts start considering these factors? Or did the lawyer of the defaulters make special arrangements with the judges ???


Ashish Pradhan

In Reply to Gupta 3 weeks ago

Absolutely agree with all the points you have made. But just one question out of curiosity.

If the loan amount was Rs.15000 plus whatever interest was due at the time of auction, shouldn't the Bank have refunded the excess money (if any, coz the price at which the Bank bought the property in auction is not mentioned).

I am assuming here that the Bank normally refunds recovery over and above its dues.

If a third party had bought the property at a higher price, would the refund have been made by the Bank?

Is no rights available to the defaulter because the Bank itself became the owner?

Just curious to know..



In Reply to Ashish Pradhan 3 weeks ago

By the way, it is also interesting to note in this case that the loan was given in 1981 and a suit had already been filed in 1983. In those good old days, hardly any banks gave housing loans. HDFC was formed in 1977 and had a virtual monopoly till 1999. Public sector banks were never heard of in this market till 2005 or 2006. In all probability and I'm guessing now, this loan was "managed" in 1981 by giving a property worth probably only 5000 as mortgage and taking a loan of 15000 by managing valuation reports and the branch manager. Other than that, there was no incentive for PSU bank to give housing loan in 1981. Also possibly the reason why the loan immediately went in default. If suit was filed in 1983, it is almost certain that default would have occurred in 1981 or 1982 itself as bank would not file a suit so quickly. Just putting the pieces together gives obvious possibilities about what transpired. I have done mortgage business for many years and other than fraud, no housing loan defaults so soon after it is given.

Contrast this judgment with the US legal system. Let's not talk about a bunch of mentally retarded or sick "poor" people. Let's deal with a whole country and that too a big one. Argentina defaulted on its international bonds in 2001 aggregating to $95 Billion! Subsequently, it negotiated a deal with most of those bondholders to waive 70% of the debt and settle at 30%, that too not payable immediately but over a period of time. Obviously, some small group of bondholders refused the deal and decided to go to court in US. Over a period of years, they tried various ways to recover including trying to arrest a warship belonging to Argentina and even confiscating the President's airplane! Finally, they succeeded in 2014 by getting a judgment from US court that Argentina can pay any other international lender only after they have repaid the debt of these small group of bondholders in full. Since foreign lenders have to be paid in US Dollar and that is only possible through the US banking system, Argentina was forced to default again in 2014 on the other bonds despite having the money! No respite was given to the country despite repeated pleas even after the new default. The whole country was held to ransom which eventually forced them to pay 75% to those small group of bondholders with agreement from those bondholders at that level of payment (not a court imposed waiver of 25%). This 75% was of the total claim amount i.e. not only the principal, but interest for another 12 years at penal rate, all costs incurred by lenders for litigation over the years, etc. In effect, Argentina ended up paying 2.5 times the original principal due despite getting a 25% waiver as against its original offer of paying only 30% of principal. And to pay such a large sum, they had to borrow again from international markets @ 8-9% p.a. interest rate on USD, which is equal to paying 15-16% if we were to compare it to a rupee loan (just for perspective). Imagine a "poor" country borrowing at 15% to pay 2.5 times the sum it borrowed to a small group of bondholders!

Now if you are an entrepreneur and you see these 2 cases and you want to open a bank, where would you go - to India or USA? Answer is obvious. That is true for all businesses. The cheats stay back because they know how to use the system by using all their intelligence in gaming the system. The more productive folks who use their mind on productive innovation rather than gaming the system go elsewhere... simple !


In Reply to Ashish Pradhan 3 weeks ago

Good point. It would be true of the bank got a Buyer in the auction. In that case the bank was selling the flat "on behalf of the owner i.e. the defaulter" to protect its interest. Any excess realized would belong to the defaulter as owner. But no bids were received and the bank transferred title to itself in settlement of its claims. Note that if the defaulter really didn't have money and felt the bank's price was too cheap in the auction, then he could find a Buyer at the "right" price and help the bank to recover its money and keep the rest. He did none of this. That implies that the loan recoverable was more than market value of the house in 1994 and effectively the bank overpaid to recover whatever it could. Now bank is an absolute owner and the borrower has no right to suddenly appear 25 years after the default in 2007 to claim from the bank. What was he doing for 10 years when bank had not sold the flat till 1994? These are clear cases of malafide intent and abuse of legal system. Sad. Believe it or not, this rotten mentality is the only reason why our country is in abyss

SC enhances to 25 years jail terms of Nitish Katara killers
The killers of Nitish Katara -- Vikas Yadav, Vishal Yadav and their accomplice Sukhdev Pahalwan -- will undergo enhanced jail term of 25 years as the Supreme Court on Monday held that the courts have the power to impose the punishment of 25 years or even more.
While upholding the 2014 Delhi High Court's sentence of 25 years imposed on Vikas Yadav and two others, the bench of Justice Dipak Misra and Justice C. Nagappan said, "We have powers to impose such special sentences".
The apex court ruled thus in a verdict while examining the question whether courts could impose special sentences which are not provided under the statute.
The Supreme Court in August 2015 upheld the Delhi High Court's conviction of Vikas Yadav, Vishal Yadav and Sukhdev Pahalwan, and said it would later examine the question of quantum of sentence. 
Vikas Yadav, his cousin Vishal Yadav and Sukhdev Pahalwan were convicted by the trial court in May 2008 and were awarded life imprisonment. However, the Delhi High Court, while upholding the trial court conviction in April 2014, enhanced the sentence to 25 years with no remission. 
Vikas Yadav and two others had moved the Supreme Court challenging the Delhi High Court ruling, their conviction and award of special sentence to them. 
Nitish Katara was done to death as his relationship with Bharti Yadav was not liked by her brother Vikas Yadav. Bharti and Vikas are children of criminal-turned-politician D.P. Yadav. 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.


Climate math and forgotten sums
A brilliant and amusing mathematician of our times, Joseph Keller, was known for his playful indulgence in mathematical explanations of everyday puzzling facts. For example, he mathematically enlightened why the ponytail of female jogger swings from side to side and not in any other way.
Joseph Keller died recently but he probably would have stumbled over the most significant numerical question of the recent times: Why the entry into force of the Paris Climate Agreement has embedded the cryptic numerical condition of at least "55 countries accounting for 55 per cent of the global emissions ratifying the agreement".
There indeed is no pure mathematical logic to this prerequisite. This condition is transplanted into the Paris Climate Agreement of 2015 from the 18-year-old Kyoto Protocol.
The Kyoto Protocol stated that it would enter into force on the 90th day after the date on which not less than 55 Parties to the Convention, incorporating Parties included in annexure I (developed nations) which accounted for at least 55 per cent of the total carbon dioxide emissions for 1990 of the developed countries.
During the transplantation of this condition into the Paris Climate Agreement, the countries made historic welcome and even fudgy improvements.
Historic, because the voluntary commitments made for GHG reductions -- called Intended Nationally Determined Contribution (INDCs) -- by each and every country are now global in nature, without distinction between developed or industrialized and developing countries.
Welcome, because the time between fulfilling the 55-55 conditions globally and the entry into force of the agreement is reduced from 90 days to 30 days -- probably a baby step to show urgency.
Fudgy, because while Kyoto Protocol clearly spelled out 1990 as the baseline for measuring the percentage of carbon dioxide emissions of the country as part of 55 per cent of GHG emissions, the Paris Agreement will use the latest GHG emissions communicated by the country to the Secretariat of United Nations Framework Convention on Climate Change (UNFCCC).
Interestingly the year of latest communication of GHGs among 195 countries varied to a great degree. For 16 countries it is 1994, for 38 countries it is 2013 and for the rest it is in between. India's latest communication is for 2000, the USA's for 2013 and China's for 2005. The base line of important condition for entry into force is, therefore, embedded into the assorted stack of apples, oranges and even mangoes.
The fudgy logic, however, did not deter the determination of the countries to get the Paris Agreement operational with amazingly good speed. While the Kyoto Protocol entered into force nearly 86 months after its scripture was agreed to in December 1997, it is now evident that the Paris Agreement would enter into force in less than 86 weeks from December 2015. The time period provided in the agreement till 2020 for the entry into force may now prove to be redundant.
So, how does this 55-55 math add up from now on?
As of September 23, 2016, 61 countries representing nearly 48 per cent of GHG emissions have ratified the Paris Agreement, including China (20.09 per cent), the US (17.89 per cent) and Brazil (2.48 per cent). The rest are mainly small countries.
India's 4.1 per cent of global GHG emissions were added on October 2 when the total GHG emissions from 62 countries that ratified would be 52.1 per cent, just 2.9 per cent short for meeting the full requirement for entry into force. Ratification by Russia (7.53 per cent) or Japan (3.79 per cent) would be sufficient to meet the finish line of 55 per cent. But both the countries have declared that they are not in a hurry to do it.
That brings the onus on the EU countries, representing nearly 10 percent of GHGs, or on both Australia (1.46 per cent) and Canada (1.95 per cent) or on both Mexico (1.7 per cent) and South Africa (1.85 per cent) together. The EU, though in negotiations showed urgency in taking actions on climate change, is battered by Brexit and in fix. A large number of remaining small countries or individual EU countries ratifying the agreement would however add up the climate-math to operationalize the Paris Agreement.
Climate-math is now reaching the finishing line; it is time to reflect on the sum total of real and urgent climate actions.
The Paris Agreement very rightly highlights that countries need not wait to operationalise it. The singularly important and foremost action indicated in it is to jump-start the goal of limiting global warming to 2 degrees C by continuing the efforts by the developed countries to meet the commitments under the Kyoto Protocol, whose life has been extended from 2012 to 2020 as per the Doha Amendment. The legally binding commitments taken by the developed countries under Kyoto would have to continue till the extended deadline.
Pre-2020 actions are at the heart of the Doha Amendment that pins down the developed countries to their binding commitments for reduction in emission of GHGs undertaken under the Kyoto Protocol and their contributions towards the Green Climate Fund established in 2010 for climate-actions in developing countries.
As of July 2016, of the 37 developed countries with binding commitments under Kyoto, only seven have ratified the Doha Amendment that has not yet entered into force. Canada, Japan and Russia have clearly stated that they would not ratify the Doha Amendment and will not take any continued commitment under Kyoto before 2020. Canada was committed under Kyoto to cutting its greenhouse emissions to six per cent below 1990 levels by 2012, but in 2009, emissions were 17 per cent higher than in 1990. Canada has withdrawn from the Kyoto Protocol.
The Green Climate Fund set up in 2009 was to contribute $30 billion from 2010 to 2012 by the developed countries to help developing countries for action on climate, reaching up to $100 billion per year by 2020. This pre-2020 financial commitment is also in doldrums as the total funding contributed by the developed countries as of July 2016 is just about $10 billion.
Obviously the climate-sums are not adding up as regards past commitments and definitely not in tandem with the enthusiasm demonstrated by the countries for the entry into force of the Paris Climate agreement. 
We indeed need Joseph Keller to make us understand these numbers in a practical way. He had famously said: "First of all, I have to understand the phenomenon; so that limits me right away. The time has come to limit the world right away in dealing with climate change."
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.



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