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Access sought for DRT route
This refers to the news item ‘NBFCs seek access to DRT route
to recover NPAs’ (Oct 12). The tribunals are required to be
guided by the principles of natural justice with due regard
to equity, justice and good conscience. Keeping these aspects
in view, the apex court has rightly emphasised the inclusion
of counterclaims and setoffs, which were incorporated by the
government since January 2000.
All these provisions do not preclude the application and operation
of the law of torts. The defendant/borrowers are free to exercise
their right of defence by pleading the relevant facts, circumstances
and consequences leading to their adverse situation of non-payment
or delayed payment of dues alongwith injury, damages or impact
of wrong doings, if any. The defence includes wrong appraisals,
breach of statutory duties like violations of RBI guidelines,
breach of duty of care, negligence, infringements of rights,
misfeasance, non-feasance and other torts.
The seemingly expeditious process should be utilised by the
consumers of public finance to put across their point of view
particularly in the absence of no-fault insurance and the existence
of an irresponsible and unaccountable bureaucracy. Perhaps the
changed judicial scenario will highlight the real reasons for
the generation of non-performing assets. The conduct and culture
of lenders and borrowers both are expected to undergo a salutary
transformation with a clear impact on the judicial process.
The non-bank financial institution should not be under the impression
that its debt recovery would be a cake walk. Or that the appointment
of nodal officers can mask the wrong doings, if any, of the
bank bureaucracy.
— Ram Kishan, on e-mail
Misleading comparisons
Our media continues to follow the beaten path while reporting
about the performance of companies. In today’s environment —
when the product life, especially for hi-tech products, has
become very short and factors that impact business undergo sharp
changes in a short duration — there is no point comparing the
current performance of a company with the corresponding quarter
of the previous financial year. Twelve months is a very long
period and such comparisons invariably mislead investors.
Take the example of Infosys. When one compares its performance
with the corresponding quarter of the last financial year, the
improvement in the sale and net profit looks very impressive,
but if one compares it with the previous quarter, it shows flat
growth. But newspapers still report results in the former way.
Such reporting is bound to lure investors into making purchases
— in fact, there was a rush at the counter after the announcement
of the quarterly results and the price of the scrip zoomed by
40 per cent in four trading sessions.
There should not be any cause for euphoria. The company is going
to report flat, if not negative, sales and profit growth figures
in the next quarter. By no logic does the scrip deserve a 40
per cent appreciation. The price of Rs five paid up share at
Rs 3,000 is abnormally high when one considers that the next
year will be very tough for all tech companies. It is here that
even mutual funds and institutions like ICICI and UTI land themselves
in trouble.
— Bhartendu Sood, on e-mail |
