When a FIR can be quashed?

In the exercise of the extra-ordinary power under Article 226 or the inherent powers under Section 482 of the Code of Criminal Procedure, the High Court under the following categories of cases are given by way of illustration wherein such power could be exercised either to prevent abuse of the process of any Court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guide- framed the kinds of cases wherein such power should be exercised:

(a) where the allegations made in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused;

(b) where the allegations in the First Information Report and other materials, if any, accompanying the F.I.R. do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code;

(c) where the uncontroverted allegations made in the FIR or 'complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused;

(d) where the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code;

(e) where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused;

(f) where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party;

(g) where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.

In cases where, the allegations made in the complaint, do clearly constitute a cognizable offence justified on the High court can quash the FIR.

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Govt starts to ammend the debt laws

The Banking industry is passing through the phase of rising NPAs, interest rates and mounting cases of debt restructuring. The government has on various occasions shown its concerns on this sector. Thus, the government has introduced an Amendment Bill in Parliament to enable banks and financial firms to effectively deal with bad loan recovery.

It will help to bring down lending rates for home and corporate loans, experts said. Enforcement of Security Interest And Recovery of Debts Laws (Amendment) Bill, 2011, which was introduced by minister of state for finance Namo Narain Meena in the Lok Sabha, seeks to strengthen recovery process of secured loans.

It seeks to amend the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002 and Recovery of Debts due to Banks and Financial Institutions (RDBF) Act 1993.

To ensure expeditious adjudication and recovery of dues of banks and financial institutions, remove legal anomalies and strengthen the Recovery Tribunal, the RDBF Act was amended in the years 1995, 2000 and 2004.

The amendment in SARFAESI Act will "provide for conversion of any part of the debt into shares of a borrower company and such conversion shall be deemed always to have been valid as if the provisions of said conversion were in force at all material times."

It also seeks "to permit the multi State Cooperative banks, with respect to debts due before or after the commencement of the proposed legislation, to opt either to initiate proceedings under the Multi-State Co-operative Societies Act 2002 or to initiate proceedings before the Debt Recovery Tribunal."

It will also enable in increasing the period of response to be sent by the banks or financial institutions to the representation of the borrowers to 15 days from 7 days.

The bill will empower banks or financial institutions to accept the immovable property in full or partial satisfaction of the claims of the bank against the defaulting borrower.

The amendment will allow district magistrate or the chief metropolitan magistrate to authorize any subordinate officer to take possession of assets or forward assets to the secured creditors.

The Bill has also proposed to amend the RDBF Act 1993 that among other things would "enable the banks and financial institutions to enter into settlement or compromise with the borrowers and also to empower Debts Recovery Tribunals to pass an order acknowledging such settlement or compromise."

From TEAM Daniel & Boaz
Chennai Law firm
Helpline:- 9962999008
email: myadvocate@rocketmail.com

Govt asks PSU banks to follow common strategy for troubled sectors

The Government has been concerned about the exposure of banks to the four troubled sectors of aviation, power, telecom and textiles. In a recently held meeting, the financial services secretary met with the heads of top public sector banks. The meeting was held with the intention of asking all the PSU banks to follow a common strategy while dealing with these sectors.

Banks on their part are also taking necessary steps to deal with this problem. They have restructured their loans to power companies or even stopped lending to the sector. For textiles, they have made provision for a debt recast package.

"It is important that there is better coordination between these banks even if they are not part of the same consortium that lends," the official said.

The move comes at a time when several banks have restructured their loans to power companies and state utilities , or have stopped lending, and a debt recast package for the textiles sector is in the works. Similarly, in case of aviation, loans to Air India have been restructured, while a request for fresh funding assistance from Vijay Mallya-promoted Kingfisher Airlines has been submitted to lenders led by State Bank of India.

The Reserve Bank of India too stuck a note of caution on non-performing assets of banks, which are rising three times faster than the five-year average. It had made a special mention of the power sector and said: "With losses among state electricity boards and coal supply issues faced power projects, high concentration of bank credit in power generation is a matter of concern," the regulator had said in the Financial Stability Report.

RBI's stress test showed that if bad loans were to increase 150%, 20 banks representing 46% of bank lending in India would be forced to seek capital support as their core capital adequacy would fall below the prescribed 6%. Considering that gross NPAs of banks were at 2.01% in March 2011, a 150% increase would translate to a gross NPA ratio of 5.02%.

TEAM Daniel & Boaz
Chennai Law Firm
Ph:- 9962999008
email:- advocatechennai@gmail.com

Audit firms involved in scams face heavy fines

Jail up to 10 years and fines up to three times the scam amount await chartered accountants and audit firms found guilty in corporate frauds. Audit firms, including the global Big 4 - Pricewaterhouse, KPMG, Deloitte and Ernst & Young - for the first time face punitive action, closure of business and stiff penalties for financial frauds as the government proposes a stricter regime to check scams and irregularities.

Mindful of the multi-crore Satyam scam and other corporate frauds, the Companies Bill 2011, tabled in the Lok Sabha last week, has proposed to give powers to the National Company Law Tribunal to take stern action against erring audit firms. A firm found guilty by the Tribunal will be ineligible for audit assignment of "any company" for a period of five years. The action includes stiff penalties, mandatorily running higher than the amount of fraud committed.

The Companies Bill proposes that the fine "shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved." Fraud, the bill says, includes "any act, omission, concealment of any fact or abuse of position committed by any person or any other person with the connivance in any manner, with intent to deceive, to gain undue advantage from, or to injure the interests of, the company or its shareholders or its creditors or any other person, whether or not there is any wrongful gain or wrongful loss".

TEAM Daniel & Boaz
Chennai Corporate Law Firm
Helpline:- 9962999008
emai:- myadvocate@rocketmail.com

RBI expands Scope of Banking Ombudsman Scheme; Includes Fair Banking Practices

The Reserve Bank of India today announced the revised Banking Ombudsman Scheme with enlarged scope to include customer complaints on certain new areas, such as, credit card complaints, deficiencies in providing the promised services even by banks’ sales agents, levying service charges without prior notice to the customer and non adherence to the fair practices code as adopted by individual banks. Applicable to all commercial banks, regional rural banks and scheduled primary cooperative banks having business in India, the revised scheme will come into effect from January 1, 2006.

In order to increase its effectiveness, the revised Banking Ombudsman Scheme will be fully staffed and funded by the Reserve Bank instead of the banks. Under the revised Banking Ombudsman Scheme, the complainants will be able to file their complaints in any form, including online. The bank customers would also be able to appeal to the Reserve Bank against the awards given by the Banking Ombudsmen.

The new scheme provides a forum to bank customers to seek redressal of their most common complaints against banks, including those relating to credit cards, service charges, promises given by the sales agents of banks, but not kept by banks, as also, delays in delivery of bank services. The bank customers would now be able to complain about non-payment or any inordinate delay in payments or collection of cheques towards bills or remittances by banks, as also non-acceptance of small denomination notes and coins or charging of commission for acceptance of small denomination notes and coins by banks.

The Reserve Bank had first introduced the Banking Ombudsman Scheme in 1995 to provide expeditious and inexpensive forum to bank customers for resolution of their complaints relating to deficiency in banking services. The Scheme was revised in 2002 mainly to cover Regional Rural Banks and to permit review of the Banking Ombudsmens’ awards against banks by the Reserve Bank. The Banking Ombudsmen currently have their offices in 15 centres.

The Reserve Bank is also in an advanced stage of setting up an independent Banking Codes and Standards Board of India to ensure that comprehensive code of conduct for fair treatment to customers are formulated by banks and adhered to.

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