Divesting DRTs of their pecuniary jurisdiction without any amendment to RDB Act 1993 is unsustainable; Bombay HC stays notification changing DRT jurisdiction in matters above ₹100 crores

Bombay High Court

   

Bombay High Court: While hearing a challenge to the Government Notification dated 04/10/2022 changing the jurisdiction of Dept Recovery Tribunals in matters above ₹100 crores, the Division Bench of Sanjay A. Deshmukh and Ravindra V. Ghuge, JJ., held that divesting the Debts Recovery Tribunals of their pecuniary jurisdiction without any amendment to the Recovery of Debts and Bankruptcy Act 1993 (the RDB Act) is unsustainable in law.

The case of the petitioner was that the matters pertaining to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the SARFAESI Act) and the RDB Act, are within the jurisdiction of the Debts Recovery Tribunals established at various places in each State. He submitted that there are five Debts Recovery Appellate Tribunals (DRATs)—the DRAT Allahabad, DRAT Delhi, DRAT Mumbai, DRAT Chennai, and DRAT Kolkata. The DRAT is considered to be an appellate jurisdiction and depending upon the territorial jurisdiction, demarcated areas have been subjected to the jurisdiction of the different Debts Recovery Tribunals.

The petitioner contended that all the matters amenable to the jurisdiction of the Debts Recovery Tribunals are further amenable to the Appellate jurisdiction of the DRATs. By the impugned Notification dated 04/10/2022, all matters valued above Rs.100 Crores and which were amenable to the jurisdiction of the various Debts Recovery Tribunals under the Debts Recovery Appellate Tribunal, Chennai, have been transferred to the Debts Recovery Tribunal-1, Chennai. Similarly, the Debts Recovery Tribunals amenable to the Debts Recovery Appellate Tribunal, Delhi have been subjected to the same Notification, and matters valued above Rs.100 Crores have been shifted from all Debts Recovery Tribunals to the Debts Recovery Tribunal-1, Delhi. The same is applicable to the Debts Recovery Appellate Tribunal, Mumbai jurisdiction, and the matters above Rs.100 Crores are directed to be transferred from the Debts Recovery Tribunals to the Debts Recovery Tribunal-1, Mumbai.

Therefore, the petitioner asserted that if the notification dated 04/10/2022 is made applicable to the RDB Act, it would also be made applicable to the SARFAESI Act and the very purpose of establishing the Debts Recovery Tribunals at various locations in each State, would be defeated. Further, the petitioner alleged that the DRAT Kolkata and the DRAT Allahabad have been selectively kept outside the Notification dated 04/10/2022.

The Court noted that prima facie, the impugned notification would divest the jurisdiction of Debts Recovery Tribunals established at various locations on the ground of pecuniary limitation created by Notification, without any amendment to the RDB Act.

The Court further observed that if the matters are transferred from various Debts Recovery Tribunals to a particular Debts Recovery Tribunal as per the impugned Notification, and subsequently, if the Notification is held to be unsustainable, all the transferred matters, which could be in several thousand, will have to be transferred back to the Debts Recovery Tribunals, which originally had the jurisdiction. Hence, the Court stayed the impugned notification dated 04/10/2022.

Considering the seriousness of the issue and the urgency involved, the Court directed the Union government to file an affidavit at least 10 days prior to the returnable date and be ready on the returnable date for a final hearing at the admission stage. Accordingly, a notice returnable on 04-01-2023 was sent to the Union government.

[Ishwarlal Shankarlal Lalwani v. Union of India, 2022 SCC OnLine Bom 6723, decided on 17-11-2022]


Advocates who appeared in this case :

Mr A.A. Yadkikar, Advocate for Petitioner;

Mr A.G. Talhar, DSGI for the Union of India.


*Kamini Sharma, Editorial Assistant has put this report together.

One comment

  • Thousands of recovery cases are in hold in all the Tribunals. More than 50% recovery procedures are in hold. No one talked about this. 60days backlog is a serious impact.

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