Page 18 - Intl. Review (Draft 1.3)

SHIVAJI INTERNATIONAL REVIEW

were mounting all the way even uation in filed cases in FY/2015, ment, 2001
in the 80s & the 90s (being a only about Rs. 32,237 crores A further simplified and
contributing factor in the severe were disposed of. Followed by specialized legal framework
crunch of ’91, though far from a Rs. 88,974 crore worth of cases for dealing with cases below 10
definitive one). In their present in FY16 of which only, again, only crores, but again right back to
state, DRTs (and DRATs, Debt Re- Rs. 31,215 crores of cases were DRTs only, which as discussed,
covery Appellate Tribunals) take disposed of. Unable to cope up had serious frailties.
on cases with disputed loan with the full onslaught of incom-
amounts crossing the pecuniary ing cases by hardly a third, in- “The history of ARCs
limit of a 20-lakh threshold from creasing the discrete number of meanwhile, can only be
2018 onwards (up from 10 lakhs DRTs also provided barely mak- described as rocky at
previously). ing any further inroads. best, cyclical in their
Furthermore, the Securiti- They were further ineffec- progression with an ear-
zation and Reconstruction of Fi- tive in dealing with stalling tac- ly 2010s boom barrelling
nancial Assets and Enforcement tics or even the legal complex- into 2015 regulation
of Security Interest Act (SARFAE- ities of dealing with extended slowing down NPA con-
SI, two syllables only) covered cases of fraud and misrepresen- version for good”.
later on in this report, also flows tation, aspects all to prevalent
into this platform. The DRT struc- in debt non-repayment cases. D. SARFAESI Act, 2002
ture usually consists of a “Presid- All these chinks in their armor A landmark instrument.
ing Officer” appointed straight culminated in the passover of SARFAESI aimed to revolutionize
by the central govt. Which makes outstanding litigation over to the the debt resolution system, and
their judgements via “Order and freshly formed Direct Tax Vivaad it did so, in two dimensions.
Recovery Certificates” specify- se Vishwas Bill, of early 2020. First was through the en-
ing the owed amount and pass- Another martyr in the hall ablement of the creditor to
ing it on the recovery officers to of infamy of a struggling judicia- rightfully confiscate in usurpa-
follow their protocols. ry. tion of the security asset of the
Fraught with bureaucrat- delinquent borrower, auctioning
ic extensions, the DRTs needed B. Lok Adalats it off even before judicial ap-
reinforcement time and time These “People’s Courts” proaches. Followed by the his-
again. The SARFAESI Act dealt function at a pre-litigation lev- torical establishment of the very
with liquidity problems by en- el on a panchayati level, settling first Asset Reconstruction Com-
abling the creditor the right to remote cases of debt recov- pany (ARC) of India, namely, AR-
take control of secured assets ery with a broad prerogative to CIL.
before turning towards the judi- deal with cases at their volition ARCs as is widely under-
ciary. And the IBC of 2016 gave with a fully legally-binding force. stood, are in the business of
further prerogative and muscle Though an effective mechanism buying up bad loans. They are
to swing in bankruptcy cases as in rural jurisdictions, still, Lok specialists in handling the bid-
well as unlimited liability part- Adalats are simply too wide for ding of undercut “fair” prices at
nerships’ equations. Even so, like their own good, overly broad in an arm’s length for recovered
with every other cog of the ju- their agenda with the responsi- security assets as well as secu-
diciary machine, DRTs too were bility to handle cases as far and ritizations which are then repur-
simply overburdened with logis- wide as an matrimonial, fami- posed and sold off for profit in a
tical and manpower terms, with ly law and even criminal cases; bid to recover the sunk amount,
exactly just 39 present-day DRTs functioning as alternate dispute and then some. Even assets like
in operation, as well as exact- settlement platforms. Too wide land & building aren’t beyond
ly 5 DRATs. Making urban DRTs to have any teeth in extensive the ARC gamut.
fast overfilling through the brim, cases of debt settlement of any The history of ARCs mean-
dragging their success rates significant prominence, which while, can only be described as
through the mud. Failed statis- then get elevated to the packed rocky at best, cyclical in their
tics then pop up illustrating the courts anyhow. progression with an early 2010s
full breadth of failures, with Rs. boom barrelling into 2015 reg-
93,477 crores of total debt-val- C. Compromise Settle- ulation slowing down NPA con-

17 SPRING 2021