NON-PERFORMING ASSETS

COMMON CAUSE had filed a Writ Petition NO. 291 of 1998 in the Supreme Court of India highlighting the need for the Ministry of Finance and RBI to undertake a thorough and comprehensive review of the existing rules and regulations to the avoidance of mass-scale generation of Non-performing Assets (NPAs) so that banks and financial institutions and tax-payers are not taken for a ride by manipulators who get away with their defaults through various means. Detailed remedial measures were also suggested in our Petition. A number of hearings were held. The Government of India also enacted Securitization and the Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The Government claimed that NPAs have come down after effective enforcement of its provisions, and since January, 2005 around Rs.6,376 crores were reported to have been recovered by public sector banks.

However, the progress was not of desired level and we found that the NPAs were still very high. This was brought to the notice of the apex court during the hearing held on 9 th August, 2005. The Hon'ble Court advised our Advocate, Mr. Prashant Bhushan to submit suggestions in the matter in writing to the Additional Solicitor General of India so that these could be considered by the Respondents for the formulation of binding guidelines so as to check ever-growing NPA's of the Nationalized Banks and Financial Institutions of the country. In pursuance of these orders our Advocate had sent his suggestions in writing to the Additional Solicitor General of India vide his letter dated 25 th August, 2005. However, no meeting could be held between the Petitioner and the Respondents as ordered by the Supreme Court of India. Ultimately, the Court directed that the meeting must be held on 10 th August, 2006. The meeting was accordingly held and attended by our Advocate and President, COMMON CAUSE. Our Advocate also gave some additional suggestions to the Solicitor General of India vide his letter dated 10 th August, 2006.

The Government filed their Counter-affidavit on the various suggestions, and we have filed and the Apex Court has sought response from the Government within two weeks for evolving an independent mechanism to investigate frauds in State-owned banks and Financial institutions. The Rejoinder filed by COMMON CAUSE enumerating the merits of various suggestions made is produced below: .

IN THE SUPREME COURT OF INDIA
EXTRAORDINARY CIVIL JURISDICTION
WRIT PETITION (CIVIL) No. 291 OF 1998

IN THE MATTER OF

SUPPLEMENTARY AFFIDAVIT ON BEHALF OF THE PETITIONER

IN RESPONSE TO THE AFFIDAVIT FILED BY THE UNION OF INDIA

I, Vikram Lal S/o Mr. M. M. Lal, aged 64 years, Common Cause House, 5 Institutional Area, Nelson Mandela Road, Vasant Kunj, New Delhi-110070, do hereby solemnly state and affirm as under :

1. That I am the President of the Petitioner Society and being familiar with the facts and circumstances of the case. I am competent and authorized to swear this affidavit on behalf of the Petitioner.

2. That I have read and understood the affidavit filed dated August 2006 by the Union of India and my reply to it is as under:

3. That the Union of India has stated that in the meeting held in the office of the Solicitor General on 10,8.2006 all the suggestions given by the Petitioner's counsel on 25.8.2005 and 10.8.2006 were discussed and on some suggestions the persons present in the meeting could not arrive at a consensus. It appears that there was a consensus only on the first suggestion given by the Petitioner's counsel in his letter dated 25.8.2005. The Petitioner in the present affidavit proposes to deal with only those suggestions on which the consensus could not emerge so that this Hon'ble Court after considering the same may issue necessary directions to the Respondents.