The Hindu Business Line : Don't be ignorant of the `stagnant laws that aren't toothless'

MOST of us have lent money and seen it never come back. There are a few among creditors who take law in their hands (at times with the help of the underworld!) in getting the debtors cough up the dues.

For the rest, however, Anupam Srivastava helps with a handbook on Legal Ways of Money Recovery, from LexisNexis (www.lexisnexis.co.in).

The preface states that the legal process has two portions, viz. adjudication of disputes by way of ascertainment of dues, and realisation of dues by way of execution.

The author is not happy that creditors have to beg for their dues and debtors find ways to evade payment, all because of "stagnant laws and ignorance of even those stagnant laws, which are not toothless".

For instance `arrest and detention' is available as means of money recovery for more than a century, as Srivastava informs in a chapter. "Be it Section 51 of Code of Civil Procedure, 1908, or Section 25 of RDDBFI (Recovery of Debts Due to Banks and Financial Institutions) Act, 1993, or Rule 73 of the Second Schedule, Income Tax Act, 1961, arrest and detention is a recognised mode of execution of money decree," states the author.

A popular form of money recovery is through attachment and sale of immovable property. Section 3(26) of the General Clauses Act defines `immovable property', as including land, benefits to arise out of land and things attached to earth, or permanently fastened to anything attached to the earth.

The phrase `attached to earth' finds explanation in Section 3 of the Transfer of Property Act, as what is rooted in the earth such as trees and shrubs; what is imbedded, such as walls or buildings, and those attached to what is so imbedded.

If you've become so tired of running behind your debtors that you have started singing in your dreams a distorted Robert Frost, "Loans are deadly, dark and deep/ But borrowers have promises to keep/ There're dues to collect before I sleep/ Dues to collect before I weep," this is a book you may like to be imbedded in!

Byte bank

YOU are the manager of a model bank that has decided to install a bill payment and touch-tone telephone system for its customers. The system will allow the customers to call a number to enter the system, record the bill payment transactions that they wish to make within the following 30 days, and transfer funds between savings and checking accounts. A voice feedback system will instruct the customers on how to complete each step of the transaction. For example, `record the date of payment and the amount to be paid'. Because you are the Information Systems Auditor of the bank, the manager of the IS department has asked you to advise her on the access control that you think should exist in the system.

Thus reads an exercise in Information System Audit and Assurance by D. P. Dube and V. P. Gulati, from Tata McGraw-Hill (www.tatamcgrawhill.com). The authors are both from IDRBT (Institute for Development and Research in Banking Technology) and, therefore, the book should appeal to bankers who undergo IT training. CAs taking up post-qualification course ISA may also find textbook-like inputs, though I would've been happier if the authors had filled the book with examples and cases concerning the financial world rather than restrict such exposure only to a few questions appended at the end of each chapter.

An exception, however, is the case of the fictitious Progressive Bank (`a government-owned legacy bank') given under the caption `to audit or not to audit'. It acquired four different TBA (total branch automation) application software packages. Auditors reviewed the system and said that the software was not fit for use. "The bank should take immediate care to rectify the problems in the software; otherwise they will be exposed to grave risks, which will prove detrimental to the interest of the depositors."

Equally detrimental if one is not aware of the issues raised in the book!

China study

ONE of the largest lawsuits filed under the 1990 Administrative Litigation Law (ALL) of China was when 2,164 poor and powerless peasants took the local authorities to the court, informs Yuen Yuen Tang in a paper published in the March 2005 issue of China: An International Journal from the East Asian Institute of National University of Singapore (www.nus.edu.sg).

"While a large group may present certain advantages, group size may not always relate positively to successful collective action, as more important factors like group solidarity and leadership structure could take precedence," opines the author. Another paper in the journal is on foreign trade law and its revision, by Gao Yongfu. One learns that the new law has two new chapters, on `foreign trade investigation' and `foreign trade remedy'. The former draws upon the practices of the US, the EU and other trading powers in laying down investigation measures; and the latter is about anti-dumping, anti-subsidy and so on. "One of the very important and attractive articles included in this chapter in the new Law, is the so-called trade diversion clause," writes Yongfu.

Good read, if you remember that China merits attention without any diversion!

BooksOfAccount@TheHindu.co.in

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Wrinkles that need ironing out

A new fusion

Sticking-plaster attitude that gives law additional layers of complexity

The Eastern shift in Europe — India, China have much to gain from trade with new EU members

Monetary Policy making — Transparency under the scanner

Independent directors, key to corporate governance

Power of small shareholders

Don't be ignorant of the `stagnant laws that aren't toothless'

Unnecessary expenditure

India-US talks