DEBT RECOVERY TRIBUNALS

Debt Recovery Tribunals have been constituted under the provisions of DRT Act. It facilitates the speedy debt recovery including banks and other financial institutions with their customers. It was set up after the passing of Recovery of debts due to Banks and Financial Institutions Act, 1993. The main objective of DRT is to recover the funds from borrowers which are payable to banks and other financial institutions. Jurisdiction of Debt Recovery Tribunals:

• Apart from Supreme Court and High Court the Act bars all other courts for adjudicating the matters related to debt recovery.

• Within the local limits the bank may make an application to the Tribunals of whose jurisdiction the defendant resides or carries on the business.

• From Banks and Financial Institutions the DRT’s can entertain their application for the recovery of debt which are due on them.In the recent case, Kerela Fashion Jewellery v. Union of India:

The Kerala High Court has ruled that the presiding officer of a DRT situated outside the state cannot be given the charge of a Debt Recovery Tribunals.The court held that the central cannot rely the charge of Debt Recovery Tribunal to any other DRT outside the state. The only course which is open to it is to authorize a presiding officer of any other Tribunal within the State to discharge the function of the DRT.The Bench, while reverse the order by single-judge, it was observed that single-judge had failed to note that the purpose of the amendment to Section 4(2) of RDB Act, 1993 is toprovidesafeguard the interest of the litigants, so that they would be entitled to access justice and get their case adjudicated at the same place they reside and where the cause of action has arisen.”Going by the provisions of the Amended Act, 1993 and consequent to the substitution of sub-section (2) of Section 4, it is clear that when there is a vacancy, the Central Government is vested with the powers only toauthorizea Presiding Officer of any other Tribunal constituted by the Central Government in the State under any other law for the time being in force to dischargethe functions of the Presiding Officer of a Debt Recovery Tribunal under the Act, 1993,” the Court said.By quashing the notification, the bench observed that the single bench was not correct because, if and when the office of the tribunal under Recovery of Debts and Bankruptcy Act 1993 falls vacant. The course open to the Centre is to only authorize the presiding officer of any other tribunal constituted under any other law within the jurisdictional state, to discharge the functions of the presiding officer, which will be more beneficial and accessible to the litigant public.

A Division Bench of Chief Justice SManikumar and Justice Shaji P Chaly, quashed the notification issued by the Centre which had entrusted the charge of the Debt Recovery Tribunal – 2, Ernakulam to the presiding officer of DRT-2 Bangalore after the post of presiding officer at DRT-2 Ernakulam fell vacant.“If and when the office of the Tribunal under the (Recovery of Debts and Bankruptcy) Actfalls vacant, the course open to the Central Government is only toauthorizethe Presiding Officer of any other Tribunal constituted under any other law within the jurisdictional State, to discharge the functions of the Presiding Officer of a DRT, which would be more beneficial and accessible to the litigant public,” the High Court ruled.

Therefore, the Division Bench set aside the order by single-judge and left it open to the Central government to issue a fresh notification in accordance with law according to the provisions of the Recovery of Debts and Bankruptcy Act, 1993, at the earliest.The post of presiding officer of DRT-2, Ernakulam continues to be vacant as of June 2021.

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