Firm failing to pay derivative liabilities can be branded ‘willful defaulter’: SC
- If Pakistan has sympathy for Kashmiri youth, they shouldn’t provoke them to attack army camps: Mehbooba Mufti
- Dhaka cafe attack mastermind, 2 others killed in police encounter
- Rio 2016 review: What they did at home, what in Olympics
- Buzz of change in Maldives, Mohammed Nasheed flies secretly to Lanka
- Kashmir: Police constable shot dead by terrorists
Strengthening the hands of the Reserve Bank in ushering in financial discipline with respect to "credit policy and credit system of the country," the Supreme Court on Tuesday ruled that a company that fails to pay up its derivative liabilities can be branded as a "willful defaulter."
Settling the controversy over the scope of RBI's powers and interpreting its 2008 master circular on foreign exchange derivatives contracts, a Bench led by Justice AK Patnaik held that a contextual interpretation of the relevant terms in the circular made it clear that it covered not only willful defaults of dues by a borrower to the bank but also willful defaults of dues by a client of the bank under other banking transactions, such as bank guarantees and derivative transactions. Derivative transactions involve hedging in foreign exchange transactions and covers fluctuations in currency rates on which contracts are signed.
"Keeping in mind the mischief that the master circular seeks to remedy and its purpose, we interpret the words used in the definition of 'willful default' in clause 2.1 of the circular to mean not only a willful default by a unit which has defaulted in meeting its repayment obligations to the lender, but also to mean a unit which has defaulted in meeting its payment obligations to the bank under facilities such as a bank guarantee," noted the Bench.
- In Kashmir, so-called solutions are riddled with contradictions and divisions
- Why personal, social and political self-identification of Dalits must count more than legal nomenclature.
- The draft surrogacy bill violates the fundamental right of people to choose modes of parenthood
- Realpolitik drives Myanmar’s outreach to India and China
- Epidemics in India are seldom followed by a long-term response
- Pakistan army has a battle to win: The corruption within