Promoters like Pramod Mittal exemplify how banks and RBI allow Indian industrialists to get away easily
The Reserve Bank of India (RBI) frowns on bad loans; the All-India Bank Employees Union (AIBEA) says deliberate defaults are weakening banks. But, we, the ordinary people, find it hard to believe that banks are serious about recovery because of the lavish display of wealth by habitual defaulters. Consider the 60 million Euros that Pramod Mittal spent on his daughter’s lavish wedding in Barcelona.
Why is it a problem if Pramod Mittal decides give his daughter one of the most expensive weddings ever? For nearly 15 years now, Mr Mittal has made news mainly because of his perpetually high debts, loan restructuring and, eventually, selling out his steel plant supposedly for a pittance. This, too, happened only after a two-time corporate debt restructuring (CDR) involving massive write-offs. Although the Mittals have been defaulters even in the 1990s, Pramod Mittal’s Ispat group was bank-rolled for a series of global adventures after 2003 that have all run into trouble. These include contracts and major acquisitions in Bulgaria (including a football club), Nigeria and the Philippines, which are all mired in controversy. Employees of Ispat’s Nigerian business have reportedly remained unpaid shortly after 2006 and have been left high and dry.
The group also owes over Rs630 crore to the State Trading Corporation (STC) which STC is now trying to recover from JSW Steel of the Sajjan Jindal group (which acquired the beleaguered Ispat Industries in 2010). A Central Bureau of Investigation (CBI) probe into this has also gone nowhere. Pramod Mittal paid off some of his Indian debts with the sale of Ispat Industries; but, even today, the Nigerians threaten to agitate should he return. In India, Ispat Profiles, which owes more than Rs1,000 crore, is facing liquidation.
Everywhere, allegations against the Mittals are similar—building huge debt, often through collusive deals, diverting funds to other ventures leading to defaults. Yet, the Mittals’ personal wealth, and the lavishness of their lifestyle and spending, has only grown due to the benevolence of our banks.
While most people know about bank fixed deposits, there is a lack of awareness on floating...
If you are married the traditional way, but plan to go overseas, make sure your marriage is registered. And in order to do that you need to know the law and its intricacies
A long, long time ago, a young damsel met her prince charming, an army officer. They got married, had children, and a grandchild, now 21. Their prosperous progeny settled down abroad. The officer, who had retired a much-decorated general, was a gentleman-about-town and with his better half, had the world at his feet.
Suddenly, our picture of roses and pink galore gets a Grisham-like twist. They are asked to get their marriage registered. The visa authorities are not quiet convinced about the genuineness of their marriage. Greater scrutiny, more paperwork, and delays ensue. In comes agent 007, the general’s advocate schoolmate, and also the Registrar of Marriages—a Kafkaesque official— putting the lovely Hindu couple through the travails of official registration. For a septuagenarian, even a simple application for registration of his marriage can be a bit tiresome. The pundit who officiated the wedding, and would therefore be the best bet for confirmation, is so very much forgotten that he is presumed to be dead. Alternatively affidavits are notarised and filed along with other documents.
All this just to ensure a timely visa and a happy trip. But the general was not alone; there were others, mainly Hindus, at the Registrar of Marriages, married for eons and in queue to get a registration certificate.
There is no such thing as a compulsory registration of marriages under the Hindu Marriage Act, which sets it apart from other enactments. A religious ceremony, well announced is deemed to be sufficient. Within India, it may be difficult to get documents processed without a registration certificate; whilst dealing with authorities operating in foreign jurisdictions the confusion can only get compounded. It is here that the Special Marriage Act comes into play. Hindu couples have to look to the provisions of the Special Marriage Act, 1954, to obtain a Marriage Certificate.
Registration of marriages under the Special Marriage Act, 1954 is often recommended to all those who plan to stay overseas, or even visit for a considerable period. Mere registration of marriage under the Special Marriage Act can make all its provisions applicable to the couple. Obviously the Hindu Marriage Act and the Special Marriage Act are not identical. The differences between the two acts may not be radical but, nevertheless, they exist even though they may, at times be just plain quirky.
Let us take the quirky ones first: husbands cannot seek alimony/ maintenance against the wife under Special Act; they can under Hindu law. Apostasy is a ground for divorce under the Hindu Act, not under the Special Act. In any case, divorce under the two acts is a topic complicated enough to demand a separate column, and which is in the offing.
Moving on to the radical differences, the real knock-out punches are to be found in Chapter IV of the Special Marriage Act. A member of a Hindu Undivided Family (HUF), marrying under the Special Marriage Act, is deemed to have effected his severance from the family. If the spouse is engaged in the joint family business and no partition has so far taken place, this provision can put a young couple to great difficulties. Further, the succession of the couple is no longer governed by the Hindu Succession Act, but by the Indian Succession Act; this is tantamount to replacing one law with another. The intricacies will have to be laboriously elaborated deserving of a whopping docket for an advocate.
How jolting this could be can be gauged by a stray instance. If X dies issueless and intestate, leaving behind him his father and widow, then in case X was married under the Special Act his estate would be divided between his widow and father. If, however, X is married under the Hindu Act, the whole of his estate would devolve on his widow.
Interestingly, a Hindu father is a class II relative. However, according to section 21A of the Special Marriage Act there would be no such deemed severance from the HUF or the substitution of succession statues if one Hindu marries another. One might feel that inter-faith unions are being targeted rather than helped by the Act. But so far, in its working, it has been so good.
Registration of marriages is still advisable. But, one ought to know what’s rightfully theirs and what isn’t so that the best choice can be made.
Going back to our original fairy tale ......., “What did the general do?” He simply said, ‘I do’. Once more.
(Divya Malcolm is a senior associate with Kochhar & Co. The views expressed are her own and not to be construed as legal advice)