MODERN ONAM*

(By T.P. Kelu Nambiar)

In absentia though, it is only appropriate that I start by extending hearty and warm wishes to the Hon'ble Chief Justice Sri Rajiv Gupta for a happy "Kanni”/primary Onam, in Kerala.

On the eve of the happy Onam, let us look beyond the past end forward to the future.

Maharaja Mahabali, son of Virochana, grandson of Prahlada and great-grand-son of Hiranya, whom we have never met, but feel we know, was the demon King who ruled narans, not Rakshasas as Ravana did; who disappeared leaving his fame and name behind for all time to come. Malayalis were happy and prosperous from Friday to Friday, under the rule of Mahabali, unlike the Lankans. During Mahabali's rule, everybody was happy and safe; it is said, no lion was in distress, no tiger was in trouble; and everybody enjoyed the right to become old. Everybody climbed without being lifted from above. There was no Tsunami, no earthquake, no Katrina, no whirlpool, no whirlwind, because Devendra, Varuna and Vayu, had been subjugated by Raja Mahabali. There was no collective madness, an there is now-a-days. Nobody had occasion to seek anticipatory bail. If only Mahabali had heeded to, and accepted, the advice of his mentor, and enlivener, Sri Sukracharya, Malayalis would never have lost their great King for over, except a day a year. Voltaire's declaration that history is nothing more than a picture of crimes and misfortunes, is proved wrong by Mahabali's rule.

Onam started as an annual rural festival, celebrated with perfect harmony and traditional favour; an annual feature started from time immemorial and persisted, since; an event of imagination, not memory. But, now-a-days, it has assumed the character of urban commercial competition. Even 'Onasadya' is purchased, not made. Onam has become a season of rebates, discounts, margin-free offers, concessions, bumper/mega reductions, etc. in every branch of activity. The only institution which does not make these 'reduction offers' is the legal profession, the judiciary included.

It is doubtful whether there was any community other than the Hindu in the days of Mahabali. But Onam is celebrated without any difference in caste and religion. Let it be virtuous to be so. If we make a combined and comparative study of the Vedas, the holy Koran and the Bible, we will find several similarities.

By its very conception, Onam is now an occasion for Malayalis to greet one another.

I should never speak wide at a function like this, as, ought I know, all your eyes and mind are fixated on the ‘Palada’.

So, let us celebrate and enjoy Onam, with the glitter of Kashikodokoro, if I may give employment to an unemployed word.

___________________________________________________________________

*Felicitation Address delivered on 8.9.2005, at the Bar Council Hall, Ernakulam, on the occasion of "Onam Celebrations - 2005" by the Kerala High Court Advocates Association.

HIRE PURCHASE ACT, 1972 -- R.I.P.

(By V.K. Babu Prakash, Judicial Magistrate of I Class, Kollam)

In one of my articles published in 2003 (3) KLT page 17 (Journal) captioned ‘Hire Purchase Act, 1972 - An Act suffered death after birth’, in which I lamented that though Parliament had enacted Hire Purchase Act, 1972, a self contained and self sufficient enactment to meet the menace perpetrated by Hire Purchase Agreements and allied activities, it never has come into operation as the Ministry of Justice and Law from time to time extended its period of operation. Thus the Act was just like an Act put into suspended animation as to neither dead or alive. At last now, the victim Act is saved from the tentacles of its ill fate. Parliament passed the latest Hire Purchase Act (Repeal) 2005 (Act 31 of 2005) which got the assent of the Indian President on 23.6.2005 thereby the Hire Purchase Act, 1972 is repealed for ever. Thus the pristine Hire Purchase Act, 1972 shall R.I.P. with no more hopes for resurrection. 

Some Thoughts on Hindu Succession Act

(By K.G. Balasubramanian, Advocate, Ernakulam)

1. Everyone takes pride in being legitimate. But, does law confer legitimacy on all? The sad plight of a Hindu who was labelled "illegitimate" and hence not entitled to succeed to his father's estate attracted my attention.

2. Vide Section 3(1)(f) Hindu Succession Act (HSA), heir means any person, male or female. who is entitled to succeed to the property of an intestate under the Act. One has to look to other provisions of the Act to ascertain who is so entitled. We find such entitlement as per Sections 8, 15 and 17. Section 8 speaks of "— heirs, being the relatives - ", which takes us to Section 3(1)(j), where we find that related means related by legitimate kinship, provided that illegitimate children shall be deemed to be related to their mother... accordingly. Considering the definition of agnate, cognate, full blood etc., the definition of 'heir' appears clumsy, or, to say the least, slipshod.

3. Let us take the following case: A marries B and has, say children, C₁, C₂. During the subsistence of that marriage, A marries C in whom he sirs 2 children - C₃ & C₄. By virtue of Section 16 Hindu Marriage Act (HMA) read with Section 3(1)(e) HSA, the two become halfblooded relatives. Only because C was fortunate to be a wife and not a mistress. But for the void marriage between A and C, C₃ & C₄ would have been illegitimate. A void marriage is no marriage in the eye of law. Section 16 HMA confers a right on the illegitimate, but not on his unfortunate mother. The second wife's status is only that of a mistress or concubine. Is it not odd that children born in a void marriage can succeed to the property of their father, but not children born in an extramarital union? Legally, is there any difference between them? More piquant, when we consider the case of an unfortunate illegitimate whose father acknowledged his/her paternity during his lifetime.

4. We may gainfully refer to explanation to Section 2(1) Hindu Adoptions & Maintenance Act, Section 2(1) Hindu Minority & Guardianship Act, Section 2(1) HSA and Section 2(1) HMA. Hindu Adoption & Maintenance Act entitles illegitimates to maintenance from his/her parents and their estate. These provisions categorically establish that illegitimacy is accepted by the Parliament. Interpretation clauses in these enactments open with the words 'In this Act, unless the context otherwise requires'. Section 26 Special Marriages Act (SMA) is similar to Section 16 HMA. Curious, that one hand of law recognises illegitimacy, while the other does not. Does law create two classes of illegitimate Hindu children? One who can claim legitimacy because of Section 16 HMA or Section 26 SMA and the other who cannot?

5. Rule 2(k) Kerala Motor Vehicles Rules, 1989 defines legal representative to mean a person, who in law, is entitled to inherit the estate of the deceased if he had left any estate at the time of his death and also includes "any" legal heir of the deceased. The first part of the definition contemplates personal law of the deceased. Can that be said about the "any" legal heir? When HSA attempts to distinguish "legitimate” from "illegitimate” by incorporating Section 3(1)(j), the motor vehicle man does not accept that. Otherwise, why did he stray from personal, law and include "any"? Rule 2(k) cannot be said to be contrary to Section 4 HSA for various reasons.

6. Sections 24 to 27 HSA deal with disqualification to inherit. Section 28 HSA provides that "No person shall be disqualified on the ground of any disease, defect or deformity or save as provided in this Act, on any other ground whatsoever. Illegitimacy does not bar succession to the estate of a Hindu female, because of the proviso to Section 3(1)(j) read with Section 15 HSA. HSA does not expressly exclude illegitimate children from succession to the estate of a Hindu male, except may be by Section 3(1)(j). Illegitimacy cannot be "any other ground" within the meaning of Section 28 HSA. Section 3(1)(j) cannot be used as an aid to include the word “illegitimacy” in Section 28. If Parliament had felt that illegitimacy should be a disqualification, that would have definitely found a specific place in HSA. The Parliament did not think it necessary to amend HSA while amending Section 16 HMA. The omission appears to be deliberate. Section 16 HMA (as amended) trespasses upon Sections 3(1)(e) & (j) HSA and nullifies its effect/intend.

7. So, why cannot an illegitimate Hindu child be entitled to the estate of his father? The lack of clarity in HSA in the matter will continue to hound many an illegitimate person. Section 3(1)(j) is contradictory to Section 28 HSA and Section 16 HMA. Right of succession to father's estate is indeed conferred on illegitimate children. But for the indiscreet union of a man and woman, illegitimacy will not arise. The illegitimate has no say in the matter. Illegitimacy should be frowned upon not because of illegitimacy, but because of the need for moral purity of society. Both parents should be liable for their indiscretion. Not the mother alone (Of course, after her death). Looking from another angle, does not the exception made in the case of a male have the effect of whetting his libido with wild abandon? If illegitimacy was to be a bar to succession to father's estate, the relevant provisions should have been more precise. To be tolerant, has not Section 3(1)(j) become obsolete and superseded? Does not modern medical science provides safeguards against false claims?

8. I understand that Sections 6 and 30 HSA are about to be amended and Section 23 is about to be omitted, vide Hindu Succession (Amendment) Bill, 2004 with the object of conferring equality on females. Hindu law recognised coparceners because they were obliged and entitled to offer pinda. This was the male's prerogative and not of the female. Will the Parliament make that obligatory to females? In Kerala, the position was drastically altered in 1976. Hence, the proposed amendment to HSA may not have any real impact.

9. Section 24 excludes certain widows who have remarried and their heirs from succession. A widower does not appear to be so deprived. Take this instance: W, a woman marries Man I. She marries Man II in violation of Section 5(i) HMA. On her death, Man I and Man II are alive. As between them, who can claim her estate u/S.15 HSA? Both? Can you rope in Section 3(1)(j) here and say that Man II is not entitled? Is not the situation incompatible with Section 10 Rule 1 HSA, which provides for 1 share to all widows together? When a man marries in contravention of Section 5(1) HMA, the second wife (?) cannot succeed to his estate on his death. Definitely this is discriminatory, as it violates equality of gender, though of a deceased. Do not Sections 3(1)(j) and 24 HSA violate Article 14? (Quaere). The proposed amendment to Sections 6 and 30 might be in the direction of Article 44, but not in its spirit.

10. Could the Parliament think of doing this to all of "WE, THE PEOPLE OF INDIA"?

I mean, like waking up Article 44, to make it vibrant, having been a Rip Wan Winkle all these decades! May be, it is a beginning. Or, is it a political charade?

Tailpiece:Overkill is by Section 29 HSA. Suppose a Hindu male dies without leaving behind any legal heir as per Section 8, but only illegitimate issues and a wife in a void marriage. Can they be deprived of his estate by applying Sections 3(1)(j) and 29?

Ideas Cannot be Chained

(By K. Ramakumar, Sr. Advocate, High Court of Kerala)

Close on the heels of Shreya Singhal (2015(2) KLT 1 (SC)) the High Court of Kerala has rendered a bold judgment (Shyam Balakrishnan v. State of Kerala - 2015 (2) KLT 927)  in sync with the psyche of lovers of liberty by declaring that merely subscribing to what is generally known as Maoist doctrine is not objectionable and cannot warrant curbing of freedom by the State executive. The State was also ordered to pay compensation to the victim who was harassed solely for entertaining what the police call Maoist ideas.

The Hon’ble Mr. Justice Muhamed Mustaque who made the judgment had indeed sent a signal that freedom of expression, freedom of thought, freedom of belief, freedom to have a conscience, etc are part of the natural and integral right of an Indian citizen and are not negotiable. Just as an Indian citizen can canvass for a capitalist society where the rich exploits the poor, other citizens are free to impress upon the people that there is exploitation all round by the rich and powerful of the less fortunate Indians, particularly the Adivasis of Andhra Pradesh, Bastar, Chhattisgarh, Jharkhand and Odyssa. What is the sin they have committed ?

To exhort the exploited Adivasis to voice their protest against multi-nationals like Vedanta, Posco etc robbing Adivasis of their land and rich mineral resources in that area ? Can you call it a sin even if it is often combative ? Is it a sacrilege to sound sceptical that the affluent and influential enjoy undue advantages in all institutions of power including those where they should not count ? It is not only not a sin but only amounts to raising the voice of the under privileged, the oppressed and the suppressed. Look at our own Adivasis in Attapadi and Wayanad. Monies earmarked for their welfare are drained out and siphoned off by unscrupulous officials, unmindful of the miseries of the people for whom those benevolent programmes are evolved. Though they have started raising their torpid voice, it is silenced and stifled. Any wonder why selfless people who are not interested even in contesting a Municipal election for self aggrandizement by corruption unlimited come forward to help them sacrificing their entire life throwing themselves in the cauldron of torment, torture and trauma. Remember they include highly qualified IT Personnel, brilliant Engineers, Doctors and technocrats. Noted journalists and writers like Ms Arundathi Roy also lend their voices which are listened to by the people of the country. Are they not preferable and far more patriotic than those who hanker after power by forming cliques, coteries, caucuses and the like around centers of power survive by shameless sycophancy even in noble professions and corner unethical and unmerited favours subverting systems from within.

Is it a sin in this country to side oneself with a hapless section of the society who even after the independence has not attained any opportunity to live as dignified Indians ? Doctors like Venketesh Rao who used to supply free medicines to them were shot down, their hands tied behind. Dr. Mehmood Nayyar Azam who chose to share his life with the unfortunate Adivasis in Chhattisgarh, was harassed and humiliated and had to approach the Apex Court, which allowed him a compensation of `5 lakhs from the Chhattisgarh Government(See Mehmood Nayyar Azam v. State of Chhattisgarh (2012 (3) KLT Suppl. 41 (SC) =(2012) 8 SCC 1)).

How then helping the poor, the downtrodden and the marginalized section of the society becomes objectionable, culpable or illegal ? Not in a country where an ordinary washer-man had the right to criticize the Rajapatni and it was the Rajapatni who had to subject herself to the Agnipariksha. Not in a country in which the Upanishads and the Geetha proclaim the right to freedom of expression, right to criticize and the right to be heard.

No doubt one cannot agree with the protagonists of violence or exterminating the “enemies” or what in their terminology is called ‘action’. Violence is no answer to injustice, particularly in the country of the Buddha, the Ashoka, the Mahaveer and the Gandhi.

The propagation of ideas of equal rights to the Adivasis, stopping the unscrupulous exploitation indulged in by those in power, the fight against multi nationals fleecing the rich resources of the forest with an eye on huge profits, the clamour for protecting the culture of those who live in the lap of nature cannot any longer be even imagined as objectionable as much as Prime Ministers proclaiming the identity of Naga culture and the need to preserve and protect it, do no wrong, which anti-nationals and traitorous elements fully exploit.

The High Court of Kerala therefore, deserves a hearty accolade and respectful commendation.

Banking Law:  Classification of Accounts of Borrowers as Non

Performing Assets — Relevance of the Judgment of Supreme Court in
Keshavlal  Khemchand  and  Sons  Pvt. Ltd v.  Union  of  India & Others
(2015 (2) KLT 577 (SC)

(By Syamjith P., Ph.d Scholar (Part-time) Dr. Ambedkar Law University, Chennai)

Recently, the classification of the account of the borrowers as ‘NPA’ by Banks under the SARFAESI Act has been taken up as an issue of dispute between the Bank and the borrowers in various Courts/Judicial Forums. Several rounds of litigation has happened on this issue at various courts across the country. Ultimately, now the Hon’ble Supreme Court of India settled this issue in its latest judgment delivered on 28th January, 2015 in Keshavlal Khemchand and Sons Pvt. Ltd v. Union of India & Ors. (2015 (2) KLT 577 (SC), by upholding the constitutional validity of the amended definition of the expression ‘NPA’ under Section 2(1)(o) of the SARFAESI Act.

The original definition of N.P.A. as given under the provisions of the SARFAESI Act, 2002 and the amended definition of N.P.A. after the amendment Act passed in 2004, which is now under challenge are given below for better understanding of the issue:-

Definition of N.P.A. as under SARFAESI Act, 2002                    

Section 2(1)(o) -“non-performing asset” means an asset or account of a borrower, which has been classified by a bank or financial institution as sub-standard, doubtful or loss asset in accordance with the directions or under guidelines relating to assets classifications issued by the Reserve Bank.

Definition of NPA after SARFAESI Amendment Act, 2004

Section 2(1)(o) -“non-performing asset” means an asset or account of a borrower, which has been classified by a bank or financial institution as sub-standard, doubtful or loss asset -

(a) in case such bank or financial institution is administered or regulated by any authority or body established, constituted or appointed by any law for the time being in force, in accordance with the directions or guidelines relating to assets classifications issued by such authority or body;

(b) in any other case, in accordance with the (directions or guidelines relating to assets classifications issued by the Reserve Bank.

While challenging the constitutionality of the amended definition of the expression ‘NPA’ under Section 2(1)(o) of the SARFAESI Act, the borrowers raised inter alia the following contentions before the Hon’ble Supreme Court of India:-

1. The Parliament abdicated its essential legislative function by authorising the various bodies to frame guidelines in accordance with which the account of the borrower could be classified as NPA.

2. The amended definition of NPA enables different Creditors to adopt different guidelines which prescribe different standards for arriving at a conclusion that the account of a borrower is NPA.

3. The SARFAESI Act does not provide for a reasonable opportunity to demonstrate that the classification of the borrower’s account as NPA is untenable, the power to make such a classification itself becomes arbitrary and violative of Article 14 of the Constitution.

In responding to these contentions, the Union of India, R.B.I. and Bankers have taken the following stand before the Hon’ble Supreme Court of India:-

1. Since the assessment of an account of borrower as N.P.A. depends upon innumerable factors which constantly keep changing, Parliament thought it fit to stipulate that the assessment be made in the light of the guidelines made by either the R.B.I. or various other Regulators regulating the activities of various creditors. Hence, there is no delegation of any essential legislative functions.

2. The classification of N.P.A. on the basis of the guidelines framed by different bodies regulating the different creditors is a constitutionally permissible classification having regard to the nature of the different credit facilities extended by various creditors to different categories of borrowers and on different terms and conditions.

In this connection, the Gujarat High Court held that the amended definition of the expression “N.P.A.” creates two classes of borrowers. While, one class of borrowers are governed by the guidelines issued by the Reserve Bank of India, the other class of borrowers are governed by the guidelines issued by different authorities. Based on these findings, the Hon’ble High Court concluded that the Parliament deviated from the original aims and objectives propounded by it and it would be considered as violative of Article 14 of the Constitution of India.

On the other hand the High Court of Madras rejected the submission of the petitioners that the impugned provision suffers from the vires of excessive delegation. The Hon’ble High Court took note of the fact that the R.B.I. in exercise of the statutory authority under Section 21 and Section 35A of the Banking Regulation Act, 1949 prescribes norms for the various aspect of banking specified under the Act. The Hon’ble High Court held that the Parliament, while defining a non-performing asset under Section 2(1)(o) of the Act, only adopted the norms prescribed from time to time by the Reserve Bank of India for the purpose of identifying the Non-Performing Asset.

During the course of arguments, the Reserve Bank of India submitted that prior to the amendments in 2004, N.P.A. was defined as sub-standard, doubtful or loss asset in accordance with the directions or under guidelines relating to assets classification issued by the Reserve Bank. Irrespective of whether the financial entity was regulated by R.B.I. or not, for the purposes of SARFAESI Act, the asset classification stipulated by R.B.I. was applicable. Though the regulator concerned of the financial entity had stipulated different standards for regulatory purposes, the entities had to apply the criteria stipulated by R.B.I. for asset classification so far as SARFAESI Act was concerned. The amendment brought in 2004, addresses this issue and brings in uniformity in the classification of assets by financial entities, both for the purposes of complying with the directions issued by their own regulations and for the purposes of SARFAESI Act. Thus, the amendment in 2004, ruled out a situation where an asset is not an N.P.A. as per the specifications of the regulator but the same asset is an N.P.A. for the purposes of SARFAESI Act or vice versa.

The Department of Financial Services, Ministry of Finance also submitted before the Hon’ble Court that the amendments were made in 2004 to ensure that the guidelines issued by the concerned regulator are covered for the purpose of recovery under the SARFAESI Act. It is further submitted that there are financial institutions such as Housing Finance Corporations, which are regulated by National Housing Bank. The non-performing assets of these institutions are classified as per the guidelines prescribed by National Housing Bank. The amendment covered the entities regulated by different regulators such as R.B.I., National Housing Bank, Asian Development Bank. Therefore, the amendments were necessary to cover the deficiencies noticed in the SARFAESI Act.

Taking into account of the arguments extended on behalf of R.B.I., Ministry of Finance and the Bankers, the Hon’ble Supreme Court of India held that the allegations of the borrowers that the SARFAESI Act does not provide for a reasonable opportunity to demonstrate that the classification of the borrower’s account as N.P.A. fail on the express language of Section 13(3A), which obligates the Secured Creditors (Banks) to examine the representation/objection made by the borrower and communicate the reasons for non-acceptance of the representation or objections to the borrowers. In view of the aforesaid observations, the Hon’ble Supreme Court upheld that the amended definition of the expression “N.P.A.” under Section 2(1)(o) of the Act as constitutionally valid. Accordingly, the Hon’ble Supreme Court allowed the appeals filed by the Creditors/Banks and also directed each petitioner/borrower to pay costs to the respective Creditors/Banks calculated at 1% of the amount outstanding on the date of notice under Section 13(2) of the Act in each of the cases.

This judgment is relevant in the context of growing Non-Performing Assets (NPA) of the Bank’s/FI’s vis-a-vis delay in disposal of cases due to the non-adjudication of various legal issues including the classification of Non-Performing Assets. This will definitely facilitate in early disposal of many cases pertaining to the recovery of dues of the Banks. This will ease the pressure faced by Banks in tackling the declining quality of assets. However, this will not deprive the genuine borrowers as the redressal mechanism as envisaged under Section 3(3A) of the SARFAESI Act will act as a protective mechanism to prevent any misuse in classification of account as N.P.A. This poses larger responsibility on the Bankers to be fair & transparent in following the correct process & procedures for classifying the account and also giving due credits to all payments made by the borrower and guarantors. The Banks/FI’s must doubly ensure that they are following the guidelines of the R.B.I. in true spirit and sense.

This judgment also calls for more careful and cautious approach on the part of the Bank’s/FI’s in following the correct procedures in classification of account of the borrower’s and guarantor’s. This will not only avoid litigation but also give relief to the borrowers who are genuine in their repayment. This judgment will pave way for more resolution of N.P.A. accounts of Bank’s/FI’s and will improve the prospect of recovery of Non Performing Assets by Bank’s/FI’s. This will also create an environment conducive for the borrowers/guarantors to submit their objections/representations against the misuse of the provisions of the SARFAESI Act. The Authorised Officers who are discharging the quasi-judicial duties under the provisions of the SARFAESI Act shall also have responsibility to follow the principles of natural justice, while disposing the objections/representations under Section 13(3A) of the SARFAESI Act.