Savvy Thakur
Published on: 19 November 2022 at 21:40 IST
The Bombay High Court’s Aurangabad Bench stayed a notification that the central government had issued on October 4 transferring all matters involving debts exceeding 100 crores to the Debt Recovery Tribunals (DRT) benches in Mumbai, Chennai, and Delhi.
A seat of Judges Ravindra Ghuge and Sanjay Deshmukh saw that with next to no correction to the Recovery of Debts and Bankruptcy Act (RDB Act), removing the locale of different DRTs gave off an impression of being at first sight impractical.
The bench reasoned that all transferred matters to the DRTs of Mumbai, Chennai, and Delhi will need to be returned to the original DRTs if the notification is ultimately found to be unsustainable. deciding that the notification should remain in effect.
“All the transferred matters, which could number in the thousands, will have to be transferred back to the Debts Recovery Tribunals that originally had the jurisdiction if the matters are transferred from various Debts Recovery Tribunals to a specific Debts Recovery Tribunal as per the impugned Notification and subsequently if the Notification is held to be unsustainable.”
The Bench stated, “In these circumstances, we are staying the Notification dated 04/10/2022.”
Ishwar Lalwani sought a temporary stay of the notification and a stay of the notification from the Bench. On his behalf, Advocate AA Yadkikar argued that if the notification is made law, all cases worth more than 100 crores will have to be heard by one of the three DRTs based on territorial jurisdiction, which would be counterproductive to the purpose of having multiple DRTs.
The Counsel argues that, “The very purpose of establishing the Debts Recovery Tribunals at various locations in each State would be defeated if the notification dated 04/10/2022 is made applicable to the RDB Act,”
“If the notification dated 04/10/2022 is made applicable to the RDB Act, it would also be made applicable to the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) Act.”
Based on a notification’s pecuniary limitation, the Court also arrived at the prima facie conclusion that the DRTs established at various locations would now be stripped of their jurisdiction.
The Court found this to be unsustainable in the absence of any changes to the RDB Act.
Given the seriousness and urgency of the situation, the Court stayed the notification and ordered the Union of India to respond to the petition as soon as possible.
AG Talhar, Deputy Solicitor General, requested eight weeks to respond, which was granted.
On January 4, 2023, the matter will be heard once more.
A similar plea is also pending before the Gujarat High Court, which issued notice on Thursday but did not grant a stay.