The Securitisation Ordinance - 2002

(By Devan Ramachandran, Advocate, Ernakulam)

Preface

If there is one prominent concern voiced by every Finance Minister tabling the successive Budgets before Parliament is the escalating amount of Bad Debts and its catastrophic impact on the economy of the Country.

The total amount of Bad debts in India is estimated to be anywhere between Rs. 1,00,000 and 1,20,000 crores. Rather disturbing piece of statistic, of course, for a developing economy. Various Committees set up by the Governments at various times have tried to address this problem. The Narasimham Committee reports and the Andhyarujina Committee report have made various recommendations to attempt and bring down the amounts tied up in such bad debts. The Financial Sector have also been lobbying hard for imperative changes in the system for immediate and expeditious recovery of these debts.

It was always thought that the delay in the legal system was one of the primary reasons that hampered speedy recovery of the debts. The Narasimham Committee reports therefore, recommended the setting up of Special Tribunals with special powers for adjudication of the cases and for speedy recovery of the bad debts. It was with this object that the "'Recovery of Debts Due to Banks and Financial Institutions Act, 1993" was enacted. The Act provided for much more simplified and uncomplicated methods for adjudication and recovery of the debts. To add to the momentum, the Government announced various Amnesty and "One Time Settlement" Schemes for repayment of the defaulted debts.

Though the above measures worked to a certain extend, it was still felt that in spite of these measures, the Banks and Financial Institutions were still reeling from lack of liquidity on account of the locking up of large amounts of money in bad debts. It was therefore, necessary to provide liquidity by somehow converting the bad debts into something more productive. This process is defined as "Asset Reconstruction" in the Ordinance. The Ordinance also seeks to arm the Banks and Financial Institutions with sufficient power to enforce their Security interest. Thus on the one side the Ordinance aims at providing Securitisation and Reconstruction of the Assets (bad debts) and on the other to provide for the effective enforcement of the Security interest by the secured creditor.

Securitisation and Asset Reconstruction

The Ordinance provides for this by setting up a Securitisation Company or a Reconstruction Company as per the provisions of Ss. 3 and 4 of the Ordinance. Such a company is required to obtain a registration certificate as per S. 3 of the Ordinance. Such a company may then acquire any right or interest of any Bank or Financial Institution in any financial assistance for the purpose of realisation of such financial assistance. This is called "Asset Reconstruction". Simply put the bad debts are thus acquired by a Securitisation Company or a Reconstruction Company for a consideration to be fixed mutually. The bank is thus able to convert the bad debt into valuable resources so as to enable it to use the same for more productive purposes. This is made possible by allowing the banks and other financial institutions to convert their assets into "Securities" in the form of Debentures or Bonds for valuable consideration, which may then be acquired by a Securitisation Company or Reconstruction Company (S. 5 of the Ordinance).

The Ordinance further provides that once the Securitisation Company or a Reconstruction Company acquires the assets as stated above, they would be deemed to be the lender and would be entitled to all the rights of the Bank. It is further provided that the acquisition of the asset by a Securitisation Company or a Reconstruction Company would not in any manner abate or discontinue any suit or other legal proceeding and that the same will be continued prosecuted and enforced by the acquiring company.

Methods for Asset Reconstruction

S. 9 of the Ordinance details the methods that could be adopted by the Securitisation Company or a Reconstruction Company for the purpose of asset reconstruction. These include the power:

(a) to ensure proper management of the business of the borrower by change in, or take-over of, the management of the business;

(b) the power to sell or lease the whole or part of the business of the borrower;

(c) the power to reschedule the payment of debts by the borrower;

(d) the power to settle the dues by the borrower and

(e) taking possession of the assets in accordance with the provisions of the Ordinance.

Enforcement of Security Interest

Chapter III, S. 13 of the Ordinance provide for far reaching powers to the secured creditor to enforce a security interest. The secured creditors have been empowered by the Ordinance to enforce any security interest created in their favour, without the intervention of the Courts or Tribunals in accordance with the provisions of the Ordinance.

i) Methods for enforcing security interest

The section provides that where a borrower, under a liability to a secured creditor under a security agreement, makes default of the payment of the debt and such debt is classified as a Non Performing Asset, such creditor may issue a notice to the borrower directing him to discharge the liability in full within a period of sixty days from the date of receipt of the notice. If the borrower fails to do so, the creditor has been empowered by the Ordinance to exercise any of the powers detailed in the section. These include:

(a) the power to take possession of the secured assets including the right to take possession of the assets of the borrower including to transfer by way of lease, assignment or sale;

(b) the power to take over management of the secured assets of the borrower including to transfer by way of lease, assignment or sale;

(c) the power to appoint any person as a Manager to manage the secured assets taken over by the secured creditor;

(d) the power to require at any time by notice in writing, a person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay to the secured creditor, so much money as is sufficient to pay off the secured debt.

(ii) Power of Secured Creditor to seek assistance of Chief Metropolitan or District Magistrate to take possession

S. 14 of the Ordinance provides that where the possession of the secured asset is required to be taken by the secured creditor or the same is required to be sold or transferred, the secured creditor may for this purpose request in writing the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction the asset or other documents is situated to take possession thereof. On receipt of such a request, the said Magistrate shall take possession of the said asset or documents and forward such asset to the secured creditor. The section also empowers for this purpose, the Chief Metropolitan Magistrate or the District Magistrate to take, or cause to be taken, such steps and also to use, and cause to used, such force, as may, in his opinion, be necessary. The Ordinance also make it clear that any act done by such Magistrate in pursuance of this section shall be called in question in any Court or before any authority.

iii) Manner and effect of take over of management:

S. 15 of the Ordinance provides that when the management of the business of the borrower is taken over by a secured creditor, the secured creditor may by publishing a notice in a newspaper appoint as many persons as it may think fit as Administrator to administer the business of the borrower and if the borrower is a company as defined under the Companies Act, 1956, as Directors of such company in accordance with the provisions of the Companies Act. On the publication of the above notice, all the Directors of the company, if the borrower is a company and all persons holding any office of superintendence, direction or control of the business of the borrower in other cases, shall immediately be deemed to have vacated their offices as such. The Directors and Administrators appointed as above shall take all steps necessary to take into their custody or into their control all the property, effects and actionable claims of the business of the borrower. The ordinance further provides that once the management is taken over as above, no proceeding for winding up of the company or appointment of receiver shall lie in any Court, except with the consent of the secured creditor. Finally when the debt is realised in full, the secured creditor shall restore the management of the business of the borrower to him.

iv) Appeals

S. 17 provides that any person including the borrower, who is aggrieved by the measures taken by the Secured Creditor to enforce his secured interest may prefer an appeal to the Debt Recovery Tribunal of relevant jurisdiction within fourty five days. However, the Tribunal can entertain the appeal only if the appellant deposits seventy five percent of the amount claimed in the notice. This amount may be waived or reduced by the Tribunal for reasons to be recorded in writing. A further appeal to the Appellate Tribunal is provided under S. 18 of the Ordinance within thirty days from the date of receipt of the order of the Tribunal.

Other salient provisions

i) Ordinance to override other laws:S. 35 of the Ordinance states that the provisions of the Ordinance shall have effect, notwithstanding anything inconsistent therewith contained in any other law in force.

ii) Application of other Laws not barred :S. 37 provides that the provisions of the Ordinance and Rules shall be in addition to, and not in derogation of, the Companies Act. The Securities Contracts (Regulation) Act. The Securities and Exchange Board of India Act, The Recovery of Debts Due to Banks and Financial Institutions Act and such other laws.

iii) Civil Courts to have no jurisdiction:S. 34 of the Ordinance provides that no Civil Court shall have the jurisdiction to entertain any suit or proceeding in respect to any of the matters which the DRT or the Appellate Tribunal is empowered to determine. It also provides that no injunction shall be granted by any Court or Authority in respect of any action taken or to be taken under the Ordinance.

iv) Register of Securitisation. Central Registry etc :S. 20 of the Ordinance provides for the establishment of a Central Registry to maintain a record of all transactions. Ss. 21 and 22 provides for the appointment of a Central Registrar and for the setting up of a Central Register under his control. Particulars of every transaction of securitisation, assets reconstruction or creation of security are to be filed with the Central Registrar within thirty days after the date of such transaction or creation of security. The particulars entered in the Register would be open for inspection by any person on the payment of a fee.

The impact and effect

The Ordinance is definitely a step in the right direction. The objectives are certainly laudable and right in earnest. The provisions for Securitisation of assets would inject the Financial Sector with immediate liquidity, since the Banks and other Financial Institutions would be able to convert their bad debts into securities which can be returned to the system without having to wait for years to realise the debts. The idea behind the Ordinance is to ensure that the Banks and Financial Institutions are given an impetus to lend money to worthy persons and causes without the fear of having to deal with the large amounts of "Non Performing assets". The Ordinance aims to specifically deal with the problem of "Non Performing Assets" and aims to convert the same into "Performing Assets" in the form of securities.

The Ordinance has addressed the problem of the Banks and Financial Institutions having to wait for years to exercise their right to sell the mortgaged property. S. 13 of the Ordinance, which permits the banks to enforce their security interest in the manner specified therein, expressly overrides the provisions of S. 69 the Transfer of Property Act, which restricts the rights of the mortgagee to sell the mortgaged property. The endeavour in the Ordinance is to instill hope and courage in the banks and financial institutions to lend.

There are however reasons for concern also. The provisions of the Ordinance would make it impossible for even for non willful defaulters to make a proper defense. The Ordinance does not deal with a situation where an account becomes non performing for no default of the borrower or where the borrower is facing actual financial precariousness. There is also the danger of the Banks or Financial Institutions turning sanguinary and exercising the powers under the Ordinance to enforce their security by selling the same in haste and without offering the borrower an opportunity to state his case. Added to this is the rigorous S. 17(2) of the Ordinance, which makes an appeal to the Debt Recovery Tribunal virtually impossible, since this section mandates that the Tribunal may not entertain the appeal unless the borrower deposits seventy five percent of the amount claimed by the Bank or the Financial Institution as the case may be. These concerns may perhaps have to be reconciled by the Hon'ble Court when the Ordinance is pressed into service in the days to come.

There cannot be any ambivalence for the need for implementation of a strong law for recovery of bad debts. The insalubrious escalation of non performing assets needed to be addressed urgently. In such focus, the Ordinance is on the right direction. Much would now depend on the manner in which it is put into use.

Pre-Cogntzance Investigation V. Post Cognizance Enquiry

(By Devan Ramachandran, Advocate, Ernakulam)

"Just as it is essential that every one accused of a crime should have free access to a Court of Justice,..........so it is of the utmost importance that the judiciary should not interfere with the police in matters which are within their province and into which the law imposes on them the duty of enquiry" (Privy Council in (1944) 71 Ind App 202)

Apropos the judgment of the Hon'ble High Court of Kerala in Joisy v. Sub Inspector of Police reported in 2002 (3) KLT 172:

The question of law which came up for consideration before the Hon'ble Court was whether a Magistrate who had taken cognizance of an offence has the power to then direct the Police to conduct further investigation into the allegations under S. 173(8) of the Code of Criminal Procedure. The Hon'ble High Court has answered this in the affirmative holding that"......... there is no reason for saying that after taking cognizance of the offence, a court cannot ask the investigating agency to exercise jurisdiction which has been conferred on that agency under S. 173(8) of the Code". The Hon'ble Court has relied on the judgment of the Hon'ble Supreme Court in Sri. B.S.S.V.V. Vishwandadha Maharaj v. State of A.P., reported in AIR 1999 SC 2332. I beg to submit that a contrary view, long settled by the Hon'ble Supreme Court in various cases, has perhaps escaped attention of the Hon'ble Court.

The issue whether the Magistrate has the power to order fresh investigation after taking cognizance of an offence has been dealt with by our High Court as well as the Hon'ble Supreme Court in various cases. The judicial opinion voiced in a number of cases no doubt goes to emphasise that a Magistrate can direct the police to conduct further investigation even after the Court had taken cognizance of the offence. However, the point of controversy is as to the scope and nature of investigation the Magistrate is empowered to direct and the provision of law under which such an investigation can be ordered.

The powers of the Police to investigate into the alleged commission of an offence or offences upon receipt of information are governed by Chapter XII of the Code of Criminal Procedure. The police officer's power to investigate a cognizable offence is as mandated in S. 156 of the Code. The power of the Court to order investigation under S. 156(3) of the Code has been summed up by the Hon'ble Supreme Court in Devarapalli Lakshminarayana Reddy v. Narayana Reddy (reported in AIR 1976 SC 1672). The Hon'ble Court opined:

"It may be noted that an order made under sub-s. 3 of S. 156 is in the nature of a peremptory reminder or intimation to the Police to exercise theirplenary powers of investigation under S. 156(3). Such an investigation embraces the entire continuous process which begins with the collection of evidence under S. 156 and ends with a report or chargesheet under S. 173".

The question then was whether a report under S. 173 would put an end to the power of the Police to conduct any further investigation into the matter. Some High Courts took the vie that it would cease since any further investigation by the Police would trench upon the magisterial cognizance of the offence. However, the Law Commission in its 41st report recognized the position and recommended that the right of the Police to conduct further investigation should be statutorily affirmed. The Law Commission said:

"A report under S. 173 is normally the end of the investigation. Sometimes, however, the police officer submitting the report under S. 173 comes upon evidence bearing on the guilt or innocence of the accused. We should have thought that the police officer can collect that evidence and send it to the Magistrate concerned. It appears, however, that the courts have sometimes taken the narrow view that once a final report under S. J 73 has been sent, the police cannot touch the case again and cannot reopen the investigation. This view places a hindrance in the way of the investigating agency, which can be very unfair to the prosecution and, for that matter, even to the accused. It should be made clear in S. J 73 that the competent police officer can examine such evidence and send a report to the Magistrate ".        (See AIR 1976 SC 1672)

It is thus that S. 173(8) of the Criminal Procedure Code was introduced by the Code of Criminal Procedure, 1973. This power of the Police now statutorily recognised under S. 173(8) to conduct fresh investigation as and when new and fresh facts come into light has however been circumscribed by the Hon'ble Supreme Court in the judgment in Ram Lai Narang v. State reported in AIR 1979 SC 1791. The Hon'ble Court stated:

" We should not, however, be understood to say that the Police Officer should ignore the pendency of a proceeding before a Court and investigate every fresh fact that comes into light as if no cognizance has been taken by the Court of any offence. We think that in the interests of the independence of the magistracy and the judiciary, in the interests of the purity of the administration of criminal justice and in the interests of the comity of the various agencies and institutions entrusted with different stages of such administration, it would be desirable that the police should inform the court and seek formal permission to make further investigation when fresh facts come into light". (See also 1993 (2) KIT 49 and 1999(1) KIT 184)

The law having been thus laid, the question remains as to whether a Magistrate can direct the Police to conduct fresh investigation under S. 156(2) or 173(8) of the Code of Criminal Procedure after the Court had taken cognizance of the offence.

In the judgment of Tula Ram v. Kishore Singh reported in AIR 1977 SC 2401, the Hon'ble Supreme Court laid down certain legal propositions as to the course of action a Magistrate could take once he took cognizance of an offence. The discretion of the Magistrate to order further investigation after taking cognizance of an offence was laid down by the Hon'ble Court as under:

"The Magistrate can order investigation under S. 156(3) only at the pre-cognizance stage, that is to say, before taking cognizance under Ss. 190, 200 and 204 and where a Magistrate decides to take cognizance under the provisions of Chapter XIV he is not entitled in law to order any investigation under S. 156(3) though in cases not falling within the proviso to S. 202, he can order an investigation by the police which would be in the nature of an enquiry as contemplated by S. 202 of the Code".

The power of the Magistrate to order further post cognizance investigation is therefore, beyond much doubt, but the question is under which provision and in what manner.

From the above discussion, it is beyond dispute that the Chapters XII and XV of the Code have been intended to deal with different scenarios. The former dealing with pre-cognizance action and the latter dealing with post-cognizance action (See AIR 1976 SC 1672). The Hon'ble Supreme Court had reiterated the position in the Devarapalli Lakshminarayana Reddy case (supra). The Hon'ble Court stated as follows:

"S. 156(3) occurs in Chapter XII under the caption "Information to the Police and their power to investigate". While 5.202 is in Chapter XV which bears the heading of "Of complaints to Magistrates". The power to order police investigation under S. 156(3) is different from the power to direct investigation conferred by S. 202(1). The two operate in distinct spheres at different stages. The first is exercisable at the pre-cognizance stage the second at the post-cognizance stage when the Magistrate is in the seisin of the case. That is to say in the case of a complaint regarding the commission of a cognizable offence, the power under S. 156(3) can be invoked by the Magistrate before he takes cognizance of the offence under S. 190(1 )(a). But if he once takes such cognizance and embarks upon the procedure embodied in Chapter XV. he is not competent to switch back to the pre-cognizance stage and avail of S. 156(3)".   (emphasis supplied)

It is true that the Supreme Court was dealing with the powers of investigation under S. 156(3) of the Code. However, since S. 173 is also included in Chapter XII of the Code, it is trite that the above proposition applies to S. 173(8) also. Moreover as stated earlier, the process of investigation under Chapter XII of the Code has been defined by the Hon'ble Supreme Court as the "continuous process which begins with the collection of evidence under S. 156 and ends with the report or chargesheet under S. 173". (see AIR 1976 SC 1672)

Thus once the Magistrate takes cognizance of an offence, the next stage, namely the post cognizance stage comes into being. This stage comes in at a stage when some evidence has already been collected by the Police or otherwise and the same is deemed insufficient to make a decision. In such situation the Magistrate is empowered under S. 202 to direct, within the powers circumscribed by the section, an investigation for the purpose of deciding whether or not there is sufficient ground for proceeding. Thus the object of investigation at this stage is not to initiate a fresh case but to assist the Magistrate in completing proceedings already instituted upon a complaint before him.

Hence 1 submit for consideration that once a Magistrate, who takes cognizance of an offence under Chapter XIV of the Code, cannot thereafter revert to the pre-cognizance stage and order an investigation under S. 156(3) or 173(8) of the Code. The only power by which he can direct investigation after taking cognizance is under Chapter XV of the Code and this investigation would only be in the nature of an enquiry as contemplated by S. 202 of the Code.

Hasten Slowly, My Lord!

(A Critique of Madhavan V. Narayana Das, 2002 (3) KLT 493)

(By S. Parameswaran, Advocate, High Court of Kerala)

I. This article is intended to drive home with force that although these sorts of cases may involve distinct substantive issues before courts, these implicate fundamental notions of rights of remedy in civil litigation and, therefore, these cases cannot be treated as isolated as one is normally prone to do. If the decisions are seriously flawed, replete with contradictory assumptions and inferences as in the present case, the impact will be far reaching and damaging. There is nothing wrong in the lawyers and the litigants expecting and it is realistic for both to do so the Judges to develop a coherent and integrated theory of interpretation to the extent to which the doctrine of interpretation adequately solved legal problems. By playing in this over­arching legal area, with respect, the decision under comment does not steer the lawyers and the litigants towards a particular answer or a plausible response. Whether one agrees with the opinion of Justice Basant or not, it is to be candidly admitted that the fodder this judgment gives the lawyers to chew as they confront the difficult, yet critical, question civil disputes raise, is, indeed, very valuable. It lays out the sorts of disputes they will, in all likelihood, eventually, confront, though it does not disclose the options available for resolving them. Despite the fact that the court can and, indeed, does use legal interpretation and current scholarship in various fields to broaden and expand the law, it is still a judicial body, not a think-tank. It lacks the capacity to seek out problems, the time or the venues to engage in any full scholarly analysis, and the authority to simply pronounce on questions as it sees fit. What the court can accomplish in initiating a discernible theory of interpretation must be judged in the context of the nature and the scope of its authority and the practical constraints under which it functions.

II.  In the welter of communication technologies, and unrestrained market place and post­modern ideals, law is increasingly becoming a spectacle, mimicking the style, techniques and logic of advertising and public relations, creating a dilemma as to how law will continue to function when interpretation of law at judicial hands results in a disconcerting unpredictability of litigation. American critics are merciless and pungent in their observation and reaction to the crafting of law by the Courts. In "Crafting Law on the Supreme Court; The Collegial Game" by Forrest Matzman, James F. Spriggs II and Paul J. Wehlbeck (Cambridge University Press 2000), the authors argue that at the heart of the process of crafting the law are policy seeking justices who are constrained by the choices made by the other justices. The authors argues by strategically using threats, signals and persuasion, Justice attempt to influence the behaviour of their colleagues on the Bench. Evidence derived from the recently released papers of the United States Supreme Court Justices Brennan, Douglas, Marshall and Powell is used to test the authors' theory of opinion writing. As a result, the portrait of the United States Supreme Court stands in sharp contrast to the conventional portrait where justices act solely on the basis of law or their personal policy preferences. Though it is true that the Indian Judicially crafts the law not exactly in the same manner as the United States Supreme Court, one has to be watchful that it does not ship into that shoddy path.

III. This writer also respectfully feels that the judgment does not even reflect what in American political theory is called 'offensive realism' which is that each one seeks to ensure his survival by maximising his share of power. At a time when, unfortunately, judicial functioning appears to have become a spectator sport often viewed with a cynical eye by the people, it is needful to be reminded that judicial freedom entails a civic responsibility to preserve the legal documents that confer jurisdiction on the judiciary. The litigant public as much as the lawyers have the right to protect themselves from interpretation, that go unreasonably beyond the original intent of the Legislature. We cannot forget that in the past, interpretation of statutes has been abused or at least carelessly used, to justify decisions made by the Legislature and the Judicial Branches of Government that have since been overturned. Decisions that extend the powers of the Courts beyond the expressly stated limits declared in and under the Constitution and the laws of the country remain the subject of intensely debated contentions even now. When a newly brought in amendment is inteipreted the frames and foundations of the principles of interpretation of statutes should be preserved.

IV. In good old days, it was permissible for the Judges to write to the Legislature and enquire what it meant where the language of an Act was ambiguous or contradictory. But happily enough, the practice is dead and gone and there is no chance of its revival. A Legislature cannot be asked to sit to resolve the difficulties (M/s. Girdharilal v. B.N. Mathur (AIR 1986 SC 1099). After Parliament has enacted the legislation, only the court may say what it meant to say; none else (M/s. Doypac Systems Pvt. Ltd. v. Union of India (AIR 1988 SC 782).

V. "The first and primary rule of construction is that the intention of the Legislature must be found in the words used by the Legislature itself [Justice P.B. Gajendragadkar in Kannailal Surv. Paramnidhi Sadhukhan (AIR 1957 SC 907). As Justice Holmes of the American Supreme Court said in a letter "I only want to know what the words mean........their (Judges) function is merely academic, to begin with to read English intelligently. (Northern Securities Company v. United States (193 U.S. 197 at page 400). As the Privy Council observed in Pakkala Narayanaswamy v. Emperor (AIR 1939 PC 47) and the Supreme Court observed in Gurmeja Singh v. Sardar Pratap Singh (AIR 1960 SC 122) undoubtedly to the extent "the referent is clearly indicated and the words have a 'plain' meaning, the courts are not to busy themselves with 'supposed intention' or with "the policy underlying the statute".

VI. It was with excessive eagerness and intellectual curiosity that I watched for the first judgment by a new recruit of great promise and potentiality to the High Bench of Kerala. My expectation of delight descended into disappointment on reading Madhavan v. Narayana Das (2002 (3) KLT 493) delivered by Justice R. Basant. The amended provisions of the CPC, which amendment just got the Presidential assent, came in handy for the learned Judge for his adventurous incursion (or excursion) in an area, which has to be trodden with care, caution and circumspection. Interpretation of statutes, great legal minds have said, is a slippery slope, negotiating which has to be done slowly, sedately and soberly, for, you are handing down a judgment which may have a lethal effect on litigation, present or future. By a clever, but. not so correct, sleight of hand, Juslice Basant gave an interpretation of the amendment of the CPC by the 1999 and 2002 Amendment Acts, which dealt a coup de grace to attempts of getting judicial correction by the High Courts of the illegal intermediate orders of the Subordinate Judiciary.

VII. Whatever may have been the legislative intention in bringing about the amendment, which according to Justice Basant, is a reduction in the delayed delivery of justice, remember, neither the Legislature nor the Law Commission did or could make even a modicum of change in O. XXI of the Code of Civil Procedure with the result that the wailing of the Privy Council more than half a century ago that the headache of a litigant in India starts when he obtains a decree, rings with reverberating resonance even now.

VIII. The learned Judge observes in para 8 of his judgment, "between the category of interlocutory orders pure and simple and final orders stricto sensu lie a class of orders which can be termed as quasi final or intermediate orders. The Hon'ble Supreme Court has settled the controversy and has held that such intermediate - quasi-final orders are revisable notwithstanding the bar under S. 397(2) of the Criminal Procedure Code, they being not interlocutory orders. Decisions of moment affecting the rights of parties substantially cannot be reckoned as interlocutory orders so as to be beyond the Revisional Jurisdiction of the superior courts, it is now trite." Without batting an eye-lid and with bated breath as it were, the learned Judge says in para 12 of his order, "Borrowing terminology from the precedents laid down under S. 397(2) of the Code of Criminal Procedure, not only interlocutory orders but also intermediate orders are not amenable to the Revisional correction under the amended S. 115 of the Code of Civil Procedure. All available indications compellingly point to that conclusion -that only final orders siriclo sensu will be revisable."

IX. When one considers that the learned Judge admittedly takes his cue from the position of Revisional Jurisdiction under S. 397 of the Code of Criminal Procedure, 1973, the mutually contradictory approach in the judgment looms large demonstrating that logic runs helter-skelter making confusion worse confounded. If, as Justice Basant observes in the earlier part of his judgment referred to supra - and rightly so, intermediate orders are amenable to revisional jurisdiction in Criminal Law, by parity of reasoning, it should be so in Civil Law as well.

X. I am not forgetful of the rule in Haydon 's case reported by Lord Coke as far back as in 1584 or the words of the illustrious American Judge Learned Hand, "statutes should be construed not as theorems of Euclid, but with some imagination of the purpose that lies behind them" (Lehivalley Coal Co. v. Yensavate, 235 US 705 (1915)), or the words of Justice Krishna Iyer "the interpretative efforts must be illumined by the goal though guided by the word." (Smt. Kama Goyel v. B.G. Palhak, AIR 1977 SC 1599 at 1661), but these external aids do not have to be employed at the outset but have to be summoned when absolutely necessary into service by widening the concept of context.

XI. It is equally true that as Justice O. Chinnappa Reddy of the Apex Court observed in Reserve Bank of India v. Peerless General Finance & Investment Co. (AIR 1987 SC 1023), "Interpretation must depend on the text and the context. They are basis of interpretation. One may well say if the text is the texture, context is what gives colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when we know why it was enacted". To quote Justice Holmes once again "You construe a particular clause or expression by construing the whole instrument and any dominant purpose that it may express. In fact intention is a residuary clause intended to gather up whatever other aids there may be to interpretation, beside the particular words and the dictionary (Cases and Other Materials on Legislation by Reid, Mac Donald and Fordham - Second Edition, page 1005).

XII. To put it pithily in the inimitable words of Justice Iyer, "to be literal in meaning is to see the skin and miss the soul. The judicial key to construction is the composite perception of the deha and clehi of the provision (Chairman, Board of Mining Examinations etc. v. Ramji, AIR 1977 SC 965 at 968). The correct interpretation is to harmonize the words of a statute with the object of a statute

XIII. Justice Basant seems to follow American Justice Scalia's theory of originalism which limits interpretation of statutes to the rights clearly in its mind at the lime of making it and leave all other questions to the Legislature, which is a double edged sword. This theory consigns all matters beyond a very limited few to decisions by the peoples representatives rather than by the Court. This interpretation sits uneasily, however, with Justice Scalia's elaborate apologia for the institution in his dissenting opinions. Justice Basant has repeatedly referred lo Legislative wisdom presumably on account of the longevity of the Legislature and the Civil Procedure Code. The dominant perception of the learned Judge appears to be the docket explosion in the Courts rather than the grievances of the litigants. It should have been borne in mind by the learned Judge that by monitoring and calibrating the functioning of the lower courts and also of the High Courts it will be possible to avoid a docket explosion. The judiciary's levelling of the litigant's playing field could be achieved that way rather than by bulldozing the avenues of approach of the litigants seeking redressal of their grievances.

XIV. I hope that this article will generate a very holistic debate with the cognizance of the big picture and the inter relatedness of the issues involved. Variances in the assessment of the courts opinions in this field may be attributable to differences in the perspective of the legal practitioners, academics and social scientists. For lawyers and Judges, the Court's task is to decide the particular dispute before it in a way that establishes sound precedent and provides sufficient guidance for lower courts. Quite unfortunately, the contradictory positions and postures adopted by the Court in the case under comment will not achieve this goal. The legal mind-set seeks workable adjudicatory standards, fair process, "bright live" principles which alone will be useful in guiding the lower courts decision making process.

XV. Legislation in modern State is actuated by some policy to curb some public evil; or to effectuate some public benefit and directed to the problems before the Legislature, based on the information derived from past and present experiences. In the words of Gray "The fact is that the difficulties of so-called interpretation arise when the Legislature has had no meaning at all; when the question which is raised on the statute never occurred to it; when what the Judge have to do is not to determine what the Legislature did mean on a point which was present in mind, but to guess what it would have intended on a point not present in its mind, if the point had been present". (Gray, Nature and Source of Law, 2nd Edition, Page 171). The 'guess' "must be informed by the wording of the Act and arrived at in accordance with the recognized guides to legislative intention" (Bennion, Statutory Interpretation, page 235). It is true that by a process of interpretation Judges do make a lot of law, but it is only the Legislature that can create law and therefore, judicial discretion cannot be unlimited. If it has no limits then the anomaly pointed out by Lord Atkin in Liversidge v. Anderson (1942 AC 206, 299) would arise. He said, "In this case I have listened to arguments which might have been addressed acceptably to the Court of King's Bench in the time of Charles I".

XVI. Perhaps unwittingly, the judgment under review demonstrates an excessive, and not so deserving, deference of the judiciary to the elected branches of the Government, forgetting that the most lasting legacy of the Court is expansion of the protected rights of the litigants.

XVII. One wishes that in the spirit of the teaching left by Benjamin Cardozo, the Judges would provide facilitative reasoning that helps to ensure that the laws remain consistent with the times and advance the welfare of the society. It is necessary to .underline the importance of having a legal system that is attuned to the "reason and passion" of the day. Passion is best accommodated by freedom from subservience to an obsession with docket explosion. Appeals to the "Original intentions" of the authors of legislation can easily end up restraining the pursuit of current desires. The potentially corrosive effect of the decision on the fate of litigation in the court below is yet to be seen and realised.

XVIII. A careful, though critical, review of judicial opinion tendered by the High Bench will not only result in heightened appreciation of the dignity of the courts, but should supply some important insights into the impulses that define the modem judicial psyche. It is impossible to read the judgment of Justice Basant without being struck by the analytical bend of mind of the newly appointed Judge and his judgment appears to be free from the shackles of judicial restraint. The fact that the Judges of the higher rung actively participate or seek to participate in the process of establishing the way of life of the community cannot be under-emphasized and Justice Basant's decision attempts to make a provocative contribution to such an exercise. As Justice Brennan of the US Supreme Court said (Brennan, Modernising The Courts, 4-5 (1957) quoted in Jurisprudence of Justice - William J. Brennan Jr. Edited by David E. Marion Rowmand - Little Field Publishers Incorporated, Lanham 1997) "the sublime mission of the legal profession required that the Judges in the legal'field should not rest until we have done everything within our power" to ensure that the judicial system does not purview to the denial of rights or perpetuate suffering due to unredressed injuries. By placing a gloss of legislative intention on the statutory provision, the learned Judge has rendered the provision useless and indefensible; one expected from the Judge and desired to legitimate judicial action that accommodated the rights oriented interpretation and import. Indeed, incombatant judicial vigilance in the service of mitigating dangers to the litigant is the only acceptable posture consistent with the judicial oath. The judiciary on its faithful judicial oath will not be neutral in the vision of preferences and practices that impose disability on the litigants and expose them needlessly to action that threatened their interests. Even if unintentional, the judgment constitutes a harm that is incompatiable with the judicial objective of libertarian dignity.

XIX. It would be unfair and even mean-minded to belittle Justice Basant's efforts or to attribute motives to his interpretation. Indeed, his opinions were painstakingly crafted to advance a jurisprudential philosophy that underlines the doctrine of audi alteram partem. The judgment combines the theme of ambitious judicial review and the legitimacy of loose constructionism which one associated with Marbury v. Madison. What is needed in the modern context is a rights-oriented jurisprudence that legitimates broad-ranging decision-making by judicial officers.

                   To My Beloved Brother Mr. Justice B.N. Srikrishna, Judge, Supreme Court

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e£van, Imbn¡c

Hon”ble Mr Justice T.M. Hassan Pillai

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                                                                   JUSTICE A. LEKSHMIKUTTY