Mechanism For Refunding Money To Investors: When Solicitor General is Ignorant. 

Supreme Court of India should decentralize (Federalize) Justice System:

Justice delivery system as originally created by Constitution of India was also Federal in nature. According to the Constitution, every District has to have District Court, Every State has to have a High Court and One Supreme Court for whole country. Constitution also provided an extra ordinary remedy called:

Writ Jurisdiction:

High Court and Supreme Courts have been armed with power to issue prerogative Writs as issued by English Courts but not limited to traditional writs only. Any citizen can directly approach Supreme Court and any person can directly approach High Court to seek relief. Constitution left it to the court to decide when to invoke this power. In practice however this remedy has been hijacked by corporate world. Big and bigger companies get attention of the court claiming involvement of large sums of money hence big read important matter. Individuals are often side lined. 

Another writ petition declined:

Recently Supreme Court said that government must take care to ensure that small investors get back their hard earned money invested in chit funds and NBFCs while reconciling the multi-crore chit-fund scam in West Bengal, Odisha, Assam and Tripura as an “eye opener” for the Centre
A bench of Justices T S Thakur and C Nagappan said “There should be some institutional mechanism in terms of tribunal which can intervene and refund the money to investors by attaching and selling the properties of the company. Some mechanism is urgently required and it has to be evolved by the government.”

Solicitor general assured the court that he would convey court’s concern to the government for putting in place a mechanism for refunding investors’ money by attaching and seeking the properties of erring companies.

Wrong wrong wrong:

Solicitor General was wrong. There exists a remedy but it is not functional rather out of practice. The name is “Provincial Insolvency Act, 1920.” Under this law every creditor has power to approach Insolvency Court if debt is over due. Court will attach and liquidate the assets. 

Provincial Insolvency Act, 1920:

Insolvency Court has to be established by Judiciary. High Court and above has to see that they do not interfere with day to day orders of Insolvency Courts and let it function freely. It also needs a panel of liquidators. 

The law is 100 years old but workable. It may be desirable to amend it to bring it upto speed with technology and changed financial situation but that is another matter. 

About Sandeep Bhalla

A lawyer, thinker, author, Linux/Ubuntu power user and sometime an economist or gardener or philosopher or cook or photographer depending upon the current thought and environment. View all posts by Sandeep Bhalla

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