Surprising lessons

This refers to the report “Guarantor of a ‘wilful defaulter’ liable too” (September 10). The RBI’s clarification on the guarantor’s liability is nothing but invoking the “first lessons” of law. Section 128 of the Indian Contract Act has specific provisions on the guarantor’s liability being co-extensive with the borrower.

Even the lender’s guarantee documents have similar provisions. It is surprising why the RBI should shoot off “first lessons” on guarantor’s liability to the lenders.

Further, unwittingly, the RBI has made the provisions applicable on a prospective basis. The Indian Contract Act may be silent on the ‘wilful defaulter’ label but there is no confusion about guarantor’s liability. The lenders’ guarantee document empowers them to proceed against the borrower or lender or both in the event of default. Natural justice, however, demands that borrowers be proceeded against first and after exhausting all means of recovery, the guarantor can be asked to repay the dues. However, in legal suits, lenders make both borrowers and guarantors as parties.

Further, it should be known that the guarantor has only personal liability and his assets cannot be tagged in the event of default by the borrower. If the lender wants to proceed against the guarantor's assets, such assets should be obtained as collateral security.

KV Rao

Bangalore

At face value

This refers to the news item, “ICICI Bank Board approves 5 for 1 stock splits” of its shares presently carrying face value of ₹10 trading at above ₹1,500 (September 9). In the old days, the face value of equity shares were kept at the nominal amount of ₹10. There is no sanctity for the face value and varying face value of ₹1, ₹2, ₹5, ₹10 and ₹100. They are really confusing. In any discussion or analysis of market value, the face value is hardly noticed..

When the market price is quoted, generally no reference is made to the face value of the shares and this creates some sort of confusion. As the number of stocks being listed in the stock exchanges is around 6,000 it may be difficult to track the same in relation to varying face value.

Considering the DP mechanism in vogue and for clearerunderstanding of shares, market value in relation to face value, it may be advisable to have uniform share value of all the shares at ₹1 across the company.

Why don’t the authorities at the Ministry of Company Affairs and SEBI take a considered view of this suggestion?

RS Raghavan

Bangalore

Draconian Act

The IT Act 2000 must be scrapped before creating a “super regulatory” for telecom and internet and others. This Act was passed in Parliament without discussion and Section 66A is so draconian that it gives power to ministers to arrest anyone they wish, which itself is a violation of the Constitution.

Regulators in India, whether the IRDA or TRAI, have become so corrupt that instead of working in the interest of consumers they work for the companies or service providers as they keep receiving rewards from them. There have been several instances of policy renewals being denied or premium increased several times.Unless the appointments in the regulator are transparent and debated in public, the regulators will do more harm than good.

Arnab Ghosh

Email

Powerful weapon

This refers to your editorial, “Primary concerns” (September10). The BusinessLine is one of the few newspapers to run an editorial on Prime Minister Narendra Modi’s interaction with students on Teachers’ Day. Modi was sincere, witty and quite candid. His appeal to professionals to teach one class a week in the neighbourhood school is imaginative. His address should serve as a launching pad for qualitative and result-oriented reforms in our education sector. Education should become the most powerful weapon to change India for the better.

CG Kuriakose

Kothamangalam, Kerala

Rein Rao in

The Telangana chief minister’s reported insulting remarks on the media are only unfortunate, to say the least. Of late, through his irresponsible and provocative talks, Chandrasekhar Rao has created an impression that he heads an independent nation, not a State in India, which is bound by a Constitution. Rao seems to have lost his sense of balance. Does he think he can do whatever he wants disregarding the rule of law and public ethics? It is high time such people are reined in by taking proper action as his remarks are insulting the very fabric and basic rights enshrined in our constitution.

VS Ganeshan

Bangalore

Expedite justice

It is learnt that the Centre wants to simplify laws and reduce the number of rules and regulations in the country. One is reminded of jurist late Nani Palkhivala’s words: “We have too many laws, but too little justice.” But at the same time, lawmakers must not lose sight of the fact that crimes and lawlessness are increasing and hence it is imperative that they frame effective laws with no loopholes and ensure that they help get speedy justice.

S Ramakrishnasayee

Ranipet

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