IBC and the development of credit market in India - The Daily Guardian
Connect with us

Legally Speaking

IBC and the development of credit market in India

Financial instruments are in-principle designed to mitigate the risks pertaining to repayment of debt. By mitigating such risks, the regime aims to furnish more assurance among the investors and expanding resources for the beneficiary of borrowers.

Published

on

Economic development of a country is channelized by reforms brought in the legal and financial sector. Time and again deliberate reforms are brought in the country with an aim to bring higher economic growth in the country. Major factor contributing to the growth of India’s Index of Economic Freedom since 1990s is attributed to the supportive governmental policies and institution. These policy decisions range from lowering key policy rates, increasing, or decreasing the rate of interests on different types of loans and cash transfers and, various types of fiscal stimulus measures. Annual Financial Statement, 2021-22 considered persistent problems of the banking and financial sector. For instilling confidence in Corporate Bond Market in India and improve secondary market liquidity, an announcement was made regarding the creation of a permanent institutional framework to invest in investment-grade securities.

There is a strong causal relationship between the development of credit market and economic growth. An established credit market effectively relocates the resources aiming higher economic growth and fuels the growth of credit market. Time bound successful resolution of the stressed assets will reinstate the trust of investor, which is paramount in credit market. The present article seeks to discuss the nexus between IBC and development of Credit Market. The article will also draw a comparative analysis between the Pre-IBC and IBC Regime and how the latter has been better fostering the credit market in the Country.

Historically, the laws relating to corporate insolvency and creditor protection proved to be a significant obstacle to the growth of the credit markets in India. The Sick Industrial Companies (Special Provisions) Act, 1985 (‘SICA’), enacted to rescue sick companies, turned out to be inefficient due to delays and other systemic problems leading to its failure. Several committees appointed by the government critiqued and sought to introduce new legislation. The Bankruptcy Law Reform Committee, which issued its report in 2015, that resulted in a concrete change in the form of the Insolvency and Bankruptcy Code, 2016 (the ‘Code’).

The Code signifies a paradigm shift in Indian corporate insolvency law. It involves an approach where creditors lead a time-bound process that is intended to revive and rehabilitate companies and stands in stark contrast to the experience with SICA where most companies were wound up. By taking the process of corporate resolution out of the hands of the company’s board and management, the Code seeks to avoid problems of moral hazard. In terms of the institutional set up, the Code assigns the oversight responsibility to the NCLT (and the NCLAT).

IBC AND CREDIT MARKET

Credit Culture provides a unique blend that keeps the credit method united and forms the crucial foundation of Credit discipline. A county’s credit culture wields a strong influence on the bank’s lending and credit risk management system. Credit culture of a bank is defined by the policies set out by the bank which influences practices and management attitude of the bank. The impugned polices further categorically set out the lending environment and determines the lending behaviour of the bank. The ultimate goal of credit culture is to build a risk management system that in a way foster a good banking system and build right foundation for fostering the economy as well. Considering the complex and extensive banking regime, credit culture plays an indispensable role in the lending institution. IBC fosters an environment where credits can be generated from the domestic market and investments can be drawn from the international market.

Enactment of the Code aimed at enforcing discipline in the country’s credit culture. There is a well planted notion in the defaulter’s mind that in case there is a financial default, Corporate debtor will not be provided with an “automatic-rescue package”. There is a notion of security in the mind of creditors that in case of a default in payment, the dispute does not ends by dragging the debtors to court for the repayment of loan and get struck in the shackles of litigation with unimaginable set of issues. The Resolution proceedings in IBC were designed by bypassing the cumbersome, inefficient, subjective and debtor-friendly model. IBC has ushered a simple and creditor friendly model which has certainty and ensures value maximization of the assets for the benefit of stakeholders in Time bound manner. The present framework ensures that the lenders are paid on time, imbibing a credit culture in the mind of investors. This in turn is a contributing factor in the rise of India’s ranking in Ease of Doing Business Index from lowly 42 in 2014 to 63 in 2019. Thus, making India a favourable destination for Foreign Investment. IBC makes efforts to bring best out of a situation of a financial default with a creditor friendly approach.

INCLUSION OF PERSONAL GUARANTORS AND CORPORATE GUARANTORS

Jurisprudence of any legislation evolves over a period of time and IBC was no exception. Since the inception of the code, it has been exposed to prolific legislative and judicial reforms. The latest and perhaps the most significant development was driven by the Notification dated 15th November 2019, wherein the Central Government enacted part III of the Insolvency and Bankruptcy Code. Thus, bringing Personal Guarantors to Corporate Debtors, Insolvency and Bankruptcy proceedings of Individuals within the sweep of IBC. The notification explicitly mentions that the provisions of part-III of the Code have been enforced as far as they are applicable to the Guarantors. The validity of this notification was upheld by the apex court in the case of Lalit Kumar Jain v. Union of India.

Financial instruments are in-principle designed to mitigate the risks pertaining to repayment of debt. By mitigating such risks, the regime aims to furnish more assurance among the investors and expanding resources for the beneficiary of borrowers. The customary practices involved in such credit enhancement scheme is by providing sureties against the risk to qualifying borrowers. This not only schematize introduction of large-scale lending operations but also introduces new borrowers to the market. Further ensuring a steady flow of liquidity in the market.

As a pre-requisite for banks to provide loans it requires guarantees to be given by the Guarantors. Historically, India is the economy where a large part of Companies (listed/unlisted) are run by the Owners/Promoters. Generally, Banks ensure the guarantee of the Promoters to ensure their skin in the game. In absence of any efficacious forum to enforce personal guarantees which comes like a shadow with insolvency of the corporate debtor for which the guarantee has been given. It was a prolific step to enable rehabilitation and bankruptcy proceedings against personal guarantors. This will allow the creditors to run recovery proceedings against creditors and guarantors simultaneously before the same Adjudicating Authority of the NCLT having territorial jurisdiction.

IBC: SATISFACTORY EXIT ROUTE FOR BUSINESS

Any entity in the market requires freedom at three instances namely, a hassle-free entry, free competition ensuring a level playing field for all the players, and a smooth exit. Entities must have freedom to indulge in the business till they remain resourceful. On accounting several losses, they can vacate the field for newer and more efficient entities. Thus, ensuring the proper allocation and redirection of resources. For proper allocation of resources, it is crucial for a mechanism to exist wherein the defunct firms can leave the space and relocate the idle resources in orderly manner for newer players. At the same time, India being an Economy supporting Start-ups it brings a sense of security within the newly established entities that their withdrawal from the business will not leave them with tons of obligations taking a lifetime to repay. Such a mechanism is envisaged in the form of Insolvency and Bankruptcy Code, 2016. The pre-IBC regime neither had an efficient rescue mechanism nor a satisfactory exit route for business.

CREDITOR-FRIENDLY NATURE

The present insolvency framework has experienced a move from a “Debtor-in-possession” model to “Creditor in Control” model. At the time of admission of insolvency petition, juncture at which the control and management of the defaulting company is transferred to the Committee of Creditors depicts the model of “Creditor in Control”.

Supreme Court in the case of Innovative Industries Ltd. v. ICICI Bank rejected a challenge to the insolvency proceedings mounted by the corporate debtor (Innovative Industries Ltd) and ruled in favour of the Financial Creditor (ICICI Bank), emphasizing the creditor friendly nature of the Code. By rejecting the time barred claim of the debtor, Court not only endorsed the creditor centric approach of the court, but also the time bound structure of the Code. The slant of the court ruling clearly demonstrates the need for a stringent corporate insolvency framework in India, which was answered by enactment of the Code.

The BLRC Report recognized that it is not a company’s ‘divine right’ to control the affairs of the firm. In case of any default in payment of debt, the control of the company must shift from the debtor to creditors. The erstwhile Code promoted a debtor-friendly regime, allowing defaulting debtors to secure a moratorium order and force write-downs on debt repayment. At the same time keeping the management of the defaulting company in the hands of the debtor, frustrating the efforts of the creditors including banks to realize their payment of dues by indulging in serial litigation.

Before the enactment of the Code, the non-adjudicatory forms of dispute resolution suffered high rates of failure. Which in turn resulted into continuing defaults committed by the borrowing entities. The management of the company continued to stay in the hands of the defaulting debtors which in turn became another reason for defaulters to continue to thwart the system. The Code was enacted focusing on finding a resolution and recognition of distressed financial assets which would otherwise face liquidation. This behavioural change has instilled a significantly increased sense of fiscal and credit discipline to better preserve economic value.

INCLUSION OF BANKS

IBC regime brings within its sweep not only guarantors and promoters but also keep a check on the Banks. It acts as an instrument which drives bank to refer specific cases of default against large borrowers for resolution.

With the legislation coming into force, an immediate step was taken by the government for the execution of the same. Subsequently, the Banking Regulation (Amendment) Ordinance, 2017 was promulgated, now passed by Parliament, which introduced new clauses into the Banking Regulation Act, 1949 permitting the RBI to initiate action requiring banks to launch proceedings to resolve bad assets with specifically identified clients. In an attempt to resolve the crisis due to the ballooning Non-Performing Assets of Indian Banks, the Reserve Bank of India directed the concerned banks to initiate insolvency proceedings against such NPAs under the Code. The 12 selected stressed companies constituting 25% of the total NPAs, effectively constituted the test cases for implementation of the Code.

Thereinafter, creditors and on several other occasions corporate debtors had initiated proceedings for the resolution of the corporate debts though the procedure envisaged under the Code. Unpaid loans are only the tip of the iceberg of an ailing banking sector which pose a risk to the nation’s economic growth. The Code was effectively considered a panacea for the NPA problem that had distressed India’s banking sector.

Statistically, the economic survey report, 2020-2021 has reiterated the same view. Data reported by Reserve Bank of India has indicated a hike of 45.4% in the recovery of percentage of claims for scheduled commercial banks through IBC for the financial year 2019-20. This recovery number is the highest as compared to recovery through any other means and under any other legislations. The report further mentions the amount recovered by the scheduled commercial banks in IBC regime was 1.73 Lakh Crore. The amount being more than all the amounts recovered by all the other possible alternative mechanism available for the year 2019-20.

It is noteworthy to mention that inclusion of the Non-Banking Finance Institution is credit positive for India’s banks that are NBFI’s largest lenders. Until the enforcement of the IBC Regime, the only resolution framework for NBFIs was through liquidation.

ADJUDICATION VERSUS RESOLUTION

Within the IBC Regime, both creditors and debtors are empowered to initiate insolvency proceedings. The characteristic attribute of IBC lies to confirm the commercial feasibility of insolvency resolution. The Code also demarcates the commercial aspect from the judicial aspect. In turn it narrows down the role of adjudicating authority to facilitate the process envisaged under the Code rather than adjudicating on merits of the resolution.

The significant changes brought by the Code in the equation of Creditors and Debtors has redefined the fashion in which the credit market functions. The fear of the slipping away of control and management of the firm from the existing promoters and Corporate Debtor to the Committee of Creditors acts as a deterrence in the minds of the corporate debtor. This inevitable consequence of an Insolvency proceedings acts as deterrence mechanism and refrain the firm from operating below the optimum level of efficiency. Additionally, in case of defaults, it encourages the corporate debtor(s) to settle the dispute expeditiously with the creditor at the earliest, preferably outside the court.

There has been catena of instances wherein the corporate debtors have resolved their dispute and repaid the debts immediately on the filing of the application before the concerned National Company Law Tribunal and sometimes even before the application is admitted for further proceedings.

Regarding the withdrawal of application, statistically since the inception of the Code 18,892 applications have been filed before the concerned NCLT. As many as 14,884 cases involving defaults of 5.15 lakh crore were withdrawn by September 2020 before these applications were admitted by the Adjudicating Authority and 897 processes were closed mid-way by December 2020. These statistics were reported by the Economic Survey Report, 2020-2021. It indicates that almost 83% of the cases of financial default by the Corporate Debtor are resolved even before the lis enters the very first stage of CIRP. This accounts for the behavioural shift among the defaulting parties. It is been four years since the inception of the Code, only 7% of the defaults have undergone the entire procedure envisaged under the Code resulting into Liquidation or Resolution.

In account of these statistics a likely option in future for resolving stressed assets is a pre-packaged insolvency resolution process. A proposal regarding the same is floated by the Ministry of Corporate Affairs for the public views. The proposed regime enables the stressed companies to enter into negotiation of restructuring plans with creditors prior to the formal institution of insolvency proceedings. ‘Pre-Packs’ are existing mechanism in U.S. and U.K. jurisdiction ad recently notified in India. Such negotiations result in completion of resolution process quickly and discreetly. Enforcement of a statutory pre-pack regime will go a long way in resolution of stressed assets of the creditors.

WATERFALL MECHANISM WITHIN THE CODE

The conundrum of distribution prescribed within the Code follows a waterfall mechanism which essentially delineates the order in which the liquidation proceeds will be distributed within the different categories of shareholders. As per the principles for effective insolvency and Creditor/Debtor regime by World Bank, Insolvency regime of a country must provide for an equitable treatment of similarly situated creditors.

In a pool of creditors, secured creditors are given the preference in resolving their dues. Secured Credit is an essential part of the credit system, it drives economy and encourage entrepreneurship. Preferring Secured Creditor’s right and their claims and taxation dues promotes secured lending. IBC regime protects the Secured Creditor’s right in liquidation by permitting it to enforce its security (Security against which the credit is extended) by staying out in the liquidation process. Vide section 52 of the Code, the Secured Creditor need not to give up its security to the liquidation estate and can reinforce the same on its own for the realization of its dues. For realization of the credit owed to the Secured Creditors, they have two options provided upon the commencement of the liquidation proceedings. Firstly, either to relinquish the security interest and receive their share after the sale of the assets. Secondly, to stay outside the liquidation proceedings, and to recover the due credit by the exercising the right owed to the Secured Creditor in section 52 of the Code.

CONCLUSION

Taking an insight in the credit industry, India’s insolvency regime continues to achieve and surpass its objectives, assist in strengthening India’s credit environment, and further entrepreneurship in the country.

The Pre-IBC regime discouraged the lenders from lending their assets due to the inefficient resolution system. The lenders were also unsure of their recovery of debt which in a way reduced finance availability. There was a need of legislation which stops the practice of not-paying back the loan and getting away without penalty.

In the case of Binani cement, the NCLAT observed “Resolution of stressed assets” to be the first and foremost objective of the Code. The second being the “Maximization of the value of the assets of the Corporate Debtor”. The third objective being “promoting entrepreneurship, availability of credit and balancing interests”. This order of objective is sacrosanct. The code was enacted to foster the credit regime of the country.

The factors such as, passing the management of the debtor company in the hands of the company has always fostered the credit culture in the country. The Economic Survey Report, 2020-2021 has reiterated these factors as indispensable for bringing confidence within the investors.

IBC envisages certain provisions which ensures protection of the creditors, but not at the cost of causing damage to the debtors. In addition to the creditor centric approach of the Code, it can also be seen to protect debtors against the wilful frivolous petition brought by the Creditors just for the sake of pushing the debtor company in insolvency proceedings. Suspension of IBC for the stipulated duration once in a century crisis is one such move. Additionally, in the light of recently promulgated IBC Amendment Ordinance which came in force on 28th December, 2019 a corporate insolvency resolution plan (CIRP) application can only be filed jointly by 100 allottees under the same real estate project or 10 per cent of the total number of allottees under the same real estate project, whichever is less. The said move was brought in to ensure that creditors or stakeholders who have inordinate leverage over the real estate companies by being at par with the financial Creditors do not abuse the IBC Provisions. The code seeks to strike a balance between the creditors and debtors to foster the credit market in the Country.

The Daily Guardian is now on Telegram. Click here to join our channel (@thedailyguardian) and stay updated with the latest headlines.

For the latest news Download The Daily Guardian App.

Legally Speaking

SUPREME COURT CRITICISES HIGH COURT: POSTING ANTICIPATORY BAIL PLEA AFTER TWO MONTHS CAN’T BE APPRECIATED

Published

on

The Supreme Court in the case Sanjay versus The State (NCT of Delhi) & ANR observed and stated that in the case where personal liberty is involved, the court is expected to pass orders at the earliest while taking into account the merits of the matter in one way or other. Further, the top court observed that posting of an application for anticipatory bail after a couple of months cannot be appreciated by the court.

The bench comprising of Justice C. T. Ravikumar and the Justice Sudhanshu Dhulia was hearing a June 2 SLP against the Delhi High Court in a petition filed under section 420, 467, 468, 471, 120-B, 34 of the Indian Penal Code, 1860 for seeking anticipatory bail in a 2022 FIR, a notice is issued. It was stated that the learned APP for the state is present and accepts the notice and seeks time to file status report. The High Court in the impugned order stated that Let the status report be filed by the state prior to the next date with an advance copy to the learned counsel for the petitioner. The matter is to be list on 31.08.2022.

It was noted by the bench comprising of Justice Ravikumar and the Justice Dhulia that in the captioned Special Leave Petition, the grievance of the petitioner is that the application for anticipatory bail moved by the petitioner, being Crl. M.A. No. 11480 of 2022 in Bail Application No. 1751 of 2022 without granting any interim protection, was posted to 31.08.2022. on 24.05.2022, the bail application was moved on.

However, the bench asserted that the bench is of the considered view that in a matter involving personal liberty, the Court is expected to to pass orders at the earliest while taking into account the merits of the matter in one way or other.

It was declared by the bench that at any rate posting an application for anticipatory bail after a couple of months cannot be appreciated by the court.

Further, the bench requested to the High Court to dispose off the application for anticipatory bail on its own merits and in accordance with law expeditiously, preferably within a period of three weeks after reopening of the Court. Adding to it, the bench stated that if the main application could not be disposed off, for any reason, within the stipulated time, relief sought for in the interlocutory and on and on its own merits, the application shall be considered.

While disposing of the SLP, the bench directed in its order that we grant interim protection from arrest to the petitioner herein, Till such time.

Continue Reading

Legally Speaking

IN THE CIRP OF BOMBAY RAYON FASHIONS LTD, NATIONAL COMPANY APPELLATE TRIBUNAL (NCLT) STAYS THE CONSTITUTION OF COC

Published

on

The National Company Appellate Tribunal (NCLT) in the case National Company Appellate Tribunal (NCLT), comprising of the bench of Justice M. Venugopal (Judicial Member) and the technical member, Shri Kanthi Narahari observed while adjudicating an appeal filed in Prashant Agarwal v Vikash Parasprampuria, has stayed in the Corporate Insolvency Resolution Process (CIRP) the constitution of the Committee of Creditors (COC) of Bombay Rayon Fashions Ltd. on 15.06.2022, the order was passed.

FACTS OF THE CASE:

The Operational Creditor or the Respondent, Vikash Parasprampuria is the sole Proprietor of Chiranjilal Yarn Traders and the respondent had supplied goods to a public listed company i.e., Bombay Rayon Fashions Limited (“Corporate Debtor”). The Operational Creditor raised nine invoices which was accepted by the Corporate Debtor without any demur and it was noted that the dispute, protest and part payments were also made towards certain invoices.

The reminder letter was sent by the Operational Creditor when the Corporate Debtor failed to release balance payments letters followed by a Demand Notice under Section 8 of the IBC dated 05.11.2020, which was delivered to the Corporate Debtor but no response was received from the Corporate Debtor.

MUMBAI NCLT PROCEEDINGS

An application under section 9 of the Insolvency & Bankruptcy Code, 2016 was filled by the Operational Creditor before the NCLT Mumbai Bench, seeking to initiation of CIRP against the Corporate Debtor, for defaulting in payment of Rs.1,60,87,838/-, wherein the principal amount was Rs. 97,87,220/- and remaining was interest. 01.11.2020, was the default date.

the Operational Creditor placed reliance so as to justify the compliance of Rs. 1 Crore threshold for initiating CIRP of the NCLT judgement in the case Pavan Enterprises v. Gammon India, it was held in the case that interest is payable to the Operational of Financial Creditor then the debt will include interest, in terms of any agreement. However, by including the interest component the threshold of Rs. 1 Crore was being me and no reply has been filled by the Corporate Debtor.

NCLT DECISION:

An order dated 07.06.2022, the NCLT Mumbai Bench observed that the Corporate Debtor had time and again by its letter, invoices and by making part payment acknowledged its liability.

It was stated by the bench that the application under Section 9 was complete in all respects as required by law and there was a default in the payment of debt amount by the Corporate Debtor. The bench accepted the application and the CIRP was initiated against the Corporate Debtor, Mr. Santanu T Ray, Interim Resolution Professional was appointed.

NCLT PROCEEDINGS:

An application was filled by the appellant, Prashant Agarwal before the NCLT against the order dated 07.06.2022.

The settlement was proposed by the Respondent by submitting that if it would be satisfied if the Appellant pays the principal amount along with the CIRP cost towards settlement and on the settlement proposal, the appellant is yet to seek instructions.

Accordingly, the bench in the CIRP of the Corporate Debtor stayed the constitution of CoC and the CIRP process would otherwise continue.

The Appellant to accept or reject the settlement proposal of the Respondent, the bench listed the matter on 07.07.2022.

Continue Reading

Legally Speaking

ESTOPPEL CANNOT OVERRIDE LAW: SUPREME COURT ACCEPTS UNSUCCESSFUL CANDIDATES’ CHALLENGES TO SELECTION PROCESS HELD AGAINST REGULATIONS

Published

on

The Supreme Court in the case Krishna Rai (Dead) Through LRs versus The Benarus Hindu University & Others observed and held that the principle of estoppel or acquiescence would not be applied in a selection process when the principle of estoppel is held contrary to the relevant rules.

The bench comprising of Justices Dinesh Maheshwari and Justice Vikram Nath observed and reiterated that that the procedure in the relevant service manual will prevail over the principle of estoppel and the principle of estoppel cannot override in the eye of law.

An appeal was considered by bench relating to the filling up of 14 posts in Class III (Junior Clerk) in the Benarus Hindu University by way of promotion. However, the notification inviting the applications from Class IV employees for promotion to Class III had not prescribed that interview will be conducted in addition to the typing test. It was also stated that the The service rules also did not mention interview for promotion to Class III. However, it finalized 14 candidates, the Board of Examiners conducted an interview as well.

Before the Allahabad High Court, some of the candidates challenged the selection process by some candidates, who did not get selected. The candidates alleging that through the manual did not prescribe an interview and the Board of Examiners conducted the interview by “changing the rules of the game”. The Selection process was set aside by the Single bench of the High Court by holding that a grave error was committed by preparing the merit list on the basis of the interview as well.

on appeal by the BHU, the division bench of the High Court set aside the judgement of the Single bench on the ground that the petitioners without protest after having participated in the interview, the petitioners are estopped from challenging the selection process after becoming unsuccessful. The appellants approached the Supreme Court challenging the order of division bench.

The Court noted that the Supreme Court held that the division bench fell in error by applying the principle of estoppel. the Manual duly approved by the Executive Council, According to para 6.4, all Class-IV employees who had put in five years’ service and passed matriculation examination or equivalent, those employees were eligible for the promotion to the post of Junior Clerk Grade.

the departmental written test of simple English, Hindi, and Arithmetic, but could not pass the typing test, was passed by the eligible candidates and still the candidates would be eligible for promotion.

It was observed by the Court that the Board on their own changed the criteria and by introducing an interview it made it purely merit based and the merit list was also prepared on the basis of marks awarded in the type test, the written test and interview.

The Top Court said that it is settled principle that the principle of estoppel cannot override the law and the manual duly approved by the Executive Council will prevail over any such principle of estoppel or acquiescence.

The Court remarked, while referring to the precents that If the law requires something to be done in a particular manner, there can be no estoppel against law, then it must be done in that particular manner, and if it is not done in that particular manner, then in the eye of the law, it would have no existence.

It was stated that the case laws relied upon by the Division bench had no application in the facts of the present case as none of those judgments laid down states that the principle of estoppel would be above in the eye of law.

Accordingly, The judgement of the Single bench was restored and the appeal was allowed, the judgement of the division bench was set aside.

Continue Reading

Legally Speaking

PRIMARY TEACHER RECRUITMENT SCAM: CALCUTTA HIGH COURT ORDERS REMOVAL OF CHAIRMAN OF WB BOARD OF PRIMARY EDUCATION

Published

on

On Monday, the Calcutta High Court removed Trinamool MLA Manik Bhattacharya from the post of Chairman of the Board of Primary Education, in connection with the alleging irregularities in the recruitment of the teachers in the State government-sponsored and aided primary schools.

Earlier, the bench comprising of Justice Abhijit Gangopadhyay observed and ordered that a court-monitored probe by a special investigation team of the CBI into the alleged illegal appointments of at least 269 primary teachers.

It was contended that such a direction was passed on the basis of the recommendation put forward by the CBI additional director Upendranath Biswas.

The additional director Upendranath Biswas headed the probe into the Bihar fodder scam that led to the conviction of that state’s former chief minister Lalu Prasad Yadav.

From 2011 to 2016, A minister in the first Mamata Banerjee government. additional director Upendranath Biswas had named one Chandan Mondal of Bagda, North 24 Parganas for allegedly giving jobs of primary school teachers in lieu of money.

The Court ordered that the Secretary of the Board, Ratna Chakraborty Bagchi, would remain in the charge till the new appointment is made to the Chairman of the Board. Thereafter, it was intstructed to Bhattacharya to appear in person before the court for further investigation.

It was further ordered by Justice Gangopadhyay that the CBI Joint Director N. Venugopal shall head the SIT and supervise the whole investigation as the counsel appearing for the Court about the constitution of the SIT in accordance with his earlier order.

Six SIT members name have been submitted by the CBI, who will be investigating the cases under the supervision of its anti-corruption branch’s superintendent of police, and its joint director.

Appearing for the petitioner, senior counsel Bikash Ranjan Bhattacharya had requested requested CBI counsel Billwadal Bhattacharyya to reconsider the name of K.C. Risinamol for replacing her by some other officer of similar rank, during the course of proceedings.

Accordingly, It was stated that the Counsel for the CBI had averred that he would talk to senior counsel Bikash Ranjan Bhattacharya as well as his client in this regard and apprise the Court about the appropriate decision taken in this regard.

Continue Reading

Legally Speaking

‘PUBLIC EMPLOYMENT CANNOT BE OBTAINED BY PAYING BRIBE’: MADRAS HC REJECTS PETITION OF ACCUSED FOR INTERIM CUSTODY OF RS 10 LAKH SEIZED DURING JOB RACKET CASE PROBE

Published

on

The Madras High Court in the case K.Sadagopan v. State Rep.by, Inspector of Police and ors observed and dismissed a petition seeking to provide an interim custody of Rs 10 lakh, which is seized in a job racketing case. The Madras High Court bench comprising of Justice D Bharatha Chakravarthy expressed his displeasure at the way people of how they were willing to pay huge amount of money for getting a job. The bench enunciated those public appointments were made through a selection procedure and it cannot be obtained by paying bribes. The bench further highlighted that such persons does not realise that it took years of work to earn such salaries and gave no though to the plight of persons who scored more marks than them.

The Court in its order stated:

Through all the concerns it is to be understood that the public appointments is only done through selection process and no job can be obtained by giving bribe. But the present case, it is it is seen that the petitioner with his full knowledge has given a huge amount of Rs.78 Lakhs for the purpose of securing job under Class -I and without any thought about that how many years a person has to work and earn that much of salary and the accused without any guilt as to what will happen to the person, who has scored much more marks. However, the court inclined to pass any order expediting the trial and hence, the Court concluded that the petition is liable to be dismissed.

Facts of the Case:

The petitioner was a victim of Job racketing and the police in the course of investigation has seized some amounts and had frozen the accounts of the accused. An application was filled by the petitioner under section 451 and section 457 for a return of Rs. 10 lakh as interim custody of Code of Criminal Procedure, 1973. Therefore, the application was rejected by the Magistrate who held that the investigation was at the nascent stage and that the matter could be decided only during trial. However, the petitioner approached the high court seeking to quash this impugned order and to direct interim custody of Rs. 10 lakhs, the return of money in the account of the accused.

The Court remarked while dismissing the petition that the petitioner appeared to be a greedy person who paid a sum of Rs.78 lakh for getting a Class-I job. Furthermore, the petitioner approached the court for the return of money without even waiting for the trial to be completed as only then a clear finding could be arrived at.

Continue Reading

Legally Speaking

Plea in Supreme Court to direct Centre to reconsider Agnipath recruitment scheme for Armed forces

Published

on

In the case Harsh Ajay Singh v Union of India, a writ petition is filed before the Supreme Court seeking issuance of directions to the Centre to reconsider its “Agnipath” recruitment scheme for armed forces.

The Writ petition is filled by Advocate Harsh Singh, It is stated in the writ petition that the announcement of scheme had caused nation-wide protest in Haryana, Uttarakhand, Telangana, Uttar Pradesh, Bihar, West Bengal and various other states due to the short- term duration of the scheme in the Indian Army for Four years coupled with future uncertainties of the trained “Agniveers”.

It was further contended by Advocate Harsh Singh in his petition that the Agniveers, would not be matured so as to retain self-discipline with the realization to become a better version of himself or herself both professionally as also personally, on completion of the four-year tenure in the prime of their youth.

Against the Scheme backdrop, Advocate Harsh Singh has also sought for implementation of scheme from June 24, 2022.

It was contended in the petition filled that there is a great possibility for the Agniveers trained under the scheme to go stray. The petition filled by Advocate Kumud Lata Das stated that making up the fighting sinews of its armed forces, the nation should never compromise with the army personnel’s. They shouldn’t be looked upon as a burden to the exchequer, but as rough diamonds, to be cut and polished to their maximum capabilities and then deployed in the defence of the nation

The petitioner has also served the petition to the Union, as a result of caveat filed by the Centre.

A plea has already been filled in the Supreme Court challenging the Centre’s “Agnipath” recruitment scheme for armed forces.

It may be noted that another Public Interest Litigation has been filled in the Supreme Court for setting up a Special Investigation Team (SIT) to enquire into the mass violence and the damage to the public properties which include that of railways, during the widespread protests against the Centre’s “Agnipath” recruitment scheme.

Continue Reading

Trending