The Hindu : National : Supreme Court orders creation of Rs. 723 cr. corpus for physically challenged

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Wednesday, Apr 21, 2004

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National

Supreme Court orders creation of Rs. 723 cr. corpus for physically challenged

By Our Legal Correspondent

NEW DELHI, APRIL 20. The Supreme Court has ordered the creation of a Rs. 723 crore-corpus fund for the welfare of the 100 million physically challenged persons in the country from the excess amount realised by the Government by way of rounding off the interest tax and interest by the banks and other financial institutions from the borrowers for the last several years. A three-judge Bench, comprising the Chief Justice V.N. Khare, Justice S.B. Sinha and Justice S.H. Kapadia, directed the Comptroller and Auditor-General of India (CAG) to effect the recoveries of the entire excess amount and create the fund therefrom. It directed the Indian Banks Association (IBA) and other institutions concerned to contribute Rs. 50 lakhs each.

The Bench said: "The CAG would be the Chairman of the said Trust and the Finance Secretary and the Law Secretary of the Union of India would be the ex-officio members thereof." The corpus so created might be invested in such a manner to enable the trustees to apply the same for the purpose of giving effect to the provisions of the Persons with Disabilities (Equal Opportunities, protection of Rights and Full Participation) Act, 1995. The Bench was passing orders while dismissing an appeal filed by the Indian Banks Association, Mumbai, against a December 1998 order of the Karnataka High Court which asked the banks to deposit such money with Reserve Bank to be debited in the accounts of the Centre.

M/s Devkala Consultancy Service filed a petition in the High Court challenging the authority of the bankers to round up the existing interest rates to 0.25 per cent if such rates were less than 0.25 per cent. Such rounding up was allegedly found necessary on account of the grossing up involved in calculating the incidence of tax. Reserve Bank purportedly gave its approval to the proposal in April 1993. As a result, the banks illegally collected Rs. 723.79 crores every year, it said. The High Court held that the action of the bankers was illegal and directed that the excess amount be collected by the Union of India from the banks and deposited in the Government funds. The IBA filed the present special leave petition against the impugned High Court order. Upholding the judgment, the Supreme Court Bench held that the Reserve Bank could not have empowered the banks to charge something more from the borrowers by the process of rounding up of interest. RBI and the IBA and the banks, with a view to touching the end of their own shadows in the guise of exercise of their contractual powers vis-à-vis Banking Regulation Act, had exceeded their jurisdiction in recovering the tax imposed on them by way of interest. Considering the fact that more than five crore of borrowers were involved and directions for refund of the amount due to them would take a long time, the Bench directed that the amount accrued so far should be put in the corpus for the welfare of the physically challenged.

The Bench said that as the number of physically challenged was around 100 million, the national and international efforts to combat this situation could not suffice, as the task was a gigantic one. The Bench, while ordering creation of the trust, directed the Centre, RBI, banks and financial institutions to render all cooperation and assistance to the trustees for giving effect to the provisions of the Disabilities Act.

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