Page 25 - Banking Finance July 2023

LEGAL UPDATE

Legal

Record 180 resolution Forceful seizure of vehicles The court passed the judgment on
May 19 while hearing five cases of
plans get nod in FY23 by recovery agents is ille-
forceful seizure of vehicles by recovery
Insolvency tribunal NCLT approved 180 gal: HC agents. The erring banks/financial
resolution plans in FY23, the highest- companies were fined Rs 50,000 each.
Patna high court has held that force-
ever number so far, resulting in a total
ful seizure of vehicles from owners In his 53-page judgment, Justice Ranjan
realisation of Rs 51,424 crore from
who default on loans, through referred to more than 25 decisions of
stressed assets. In terms of the
musclemen, is sheer violation of the the Supreme Court, and also one by
realisation for creditors, this is the sec-
fundamental right to life and livelihood South Africa's apex court, and held that
ond highest after FY19, when the to-
as guaranteed by the Constitution and the high court can hear a writ petition
tal realisation was Rs 1. 11 lakh crore
that such bullying actions attract lodg- against any "private actor" whose ac-
after completing 77 insolvency pro-
ing of FIRs. tions under the "government's nose
ceedings including some bigticket mat-
deprive a citizen of his fundamental
ters such as Essar Steel and Monnet The court observed that vehicle loans
right to life and livelihood as envisaged
Ispat. should be recovered by following pro-
under Article 21 of the Constitution".
visions of securitisation that empower
This has helped creditors of debt-ridden
banks and equivalent financial institu-
firms in FY23 to realise 36% of their
tions to recover bad debts by acquir- Tax dept to act on specific
total admitted claims of Rs 1,42,543
ing physical possession of the mort- evasion data
crore for the year ended March 31,
gaged properties of defaulting borrow-
2023. Income tax authorities have been
ers with the aid of the district asked to compulsorily pick up cases,
The combined total liquidation value of
administration and getting them auc- where there is specific information of
the assets of 180 corporate debtors
tioned in order to enforce their secu- tax evasion on returns, for complete
(CDs) was at Rs 39,110 crore and the
rity interest. scrutiny during the current financial
creditors received 131% higher than it,
year, as part of the guidelines issued by
according to data released by the A single bench of Justice Rajeev Ranjan
the Central Board of Direct Taxes
Insolvencyand Bankruptcy Board of Prasad, while disposing a batch of writ
(CBDT).
India (IBBI). Moreover in FY23, the petitions, lambasted banks and finance
National Company Law Tribunal (NCLT) companies that rope in musclemen to In addition, cases where there was an
admitted 1,255 applications from forcefully seize hypothecated vehicles addition and have been taken up un-
creditors for initiation of the Corporate (even at gunpoint). The court directed der section 148 - which empowers as-
Insolvency Resolution Process (CIRP), all police superintendents in Bihar to sessing officers to estimate someone's
which is also one of the highest num- ensure that no vehicle is seized force- income based on available information
ber since 2019. fully by any recovery agent. - will also be taken up.
BANKING FINANCE | JULY | 2023 | 23