The preamble lays down the ideals and the Directive Principles elaborates the manner in which these ideals are to be achieved. One of the principles proclaimed by the preamble is to secure for all citizens “Justice, social, economic and political;” to fulfill this ideal the Directive Principles mentioned in articles 38 and 39 mandates that:
“The State shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political, shall inform all the institutions of the national life. [Article 38 (1)]
The State shall, in particular, strive to minimise the inequalities in income, and endeavour to eliminate inequalities in status, facilities and opportunities, not only amongst individuals but also amongst groups of people residing in different areas or engaged in different vocations. [Article 39 (2)].”
It was to achieve these ideals and objectives that the then Indian government nationalised 14 major banks in the year 1969 followed by others later in 1980 and thereafter. To ensure release of huge amounts held by the Private Banks by way of deposits from the general public for the equitable and inclusive growth of the country’s economy and facilitate easy access to credit, for the common people for their various productive needs. This was more a Social Objective than an Economic Imperative. Before nationalisation, the major banks in India were either directly or indirectly owned or controlled by big business houses, which were using the huge sums collected from the general public by these banks by way of deposits as captive funds to cater to their own business needs. These banks generally used to ignore the credit needs of the common people in sensitive segments like agriculture, small scale industries and other small business enterprises
No doubt after nationalisation these banks began catering to the needs of the poor and rural people to some extent but the stranglehold of the rich and powerful continued. For the rich it became a means of easy credit for them and often the rules of security were floated due to political interferences or their financial clout.
Thus with nationalisation large business houses and big corporate found abundance of funds and many using it to set up industries but some misusing it, like the now declared absconder Vijay Mallya and people like Subrata Roy of Sahara group, Ramalinga Raju of Satyam computers and many others. Bank officials often compromised on security because of personal favours and other interferences, often landing these banks with unrealizable real estate security.
These securities/properties are so huge than when auctioned the creditor banks are unable to find buyers, one reason that these costs huge sums, so that many cannot even attempt to participate in the auction and secondly those who have the resources would not like to come forward because they will have to expose their wealth which is often held in black or as unaccounted funds.
These huge and prime properties often remained with the government and due to lack of care deteriorate and get wasted. Thus instead of realising the debts they become liabilities on the creditor banks often causing them to spend funds for their upkeep or security. Vijay Mallya’s Candolim property is a typical illustration.
Situations like this calls for new thinking and new remedies. An out of the box suggestion would be if the enforcement authority could float a lottery with target collection amount to meet the debt and tickets priced accordingly, may be Rs 100 to 500 range, some lucky person would win the property, by which the property would become useful and someone will enjoy the benefit. It is also important that the authorities built in the cost of registration and other formalities into the ticket cost so that the person who wins will not be deprived because of his financial depravity to carry out the governmental formalities or the government should exempt from all government duties of such transfer. Having thus satisfied the loan amount debtors like Mallya or all such persons will be free to fly around and reside in any country.
Alternatively , if the government has a sense of generosity it could take over the property , and satisfy the debt and use the property as an old age home or home for destitute women or children thus at least partly fulfilling the social justice mandate of the Indian state ,
A financial default may involve a crime as well as a civil breach, actions needs to be taken on both the fronts. It is of course the responsibility of the creditor banks and the enforcement agencies to ensure that the debt amount is realised and also that the attached property is not made to deteriorate in its value. Any excuse on the ground of insufficient law or procedure will be abdication of their responsibility and would amount to an act of cowardice towards the nation.
(The writer is a Professor of Law and former Dean of Faculty of Law, Goa University)
