CIVIL COURTS CAN NOW TRY DERIVATIVES CASES

The Supreme Court has cleared the way for civil courts to decide cases related to derivative instruments sold by banks to exporters and others. A supreme Court Bench headed by Justice SB Sinha has set aside the Punjab and Haryana High Court judgment that transferred Ludhiana-based exporter Nahar Industrial Enterprises' plea on derivatives pending before a Ludhiana Civil court to the Debt Recovery Tribunal (DRT), Mumbai. While allowing civil courts to decide the legality of such contracts, the apex court said these courts were competent to try issues like fraud and misrepresentation, as alleged by exporters. However, the Bench also allowed the banks to continue
their debt recovery suits in tribunals.