Delhi High Court Grants Six Weeks Time To Centre To Frame Rules To Deal With High Value Cases In Debt Recovery Tribunals

The Delhi High Court has granted six weeks time to the Central Government for coming up with the Rules to deal with high value cases, where the recovery is in excess of Rs. 100 crores in relation to the Debt Recovery Tribunals.

Justice Vipin Sanghi and Justice Jasmeet Singh also directed the Secretary, Department of Financial Services to communicate to all the Non Banking Financial Compnies, Asset Reconstruction companies, DRTs, DRATs, Indian Bank Association and RBI, the suggestions and objections uploaded on the Ministry's website in order to enable them to access the same and to contribute in the process.

"We also direct all DRTs and DRATs, IBA and RBI to provide links on their respective websites for the url of the respondent No.1-Ministry to be able to access the suggestions and objections. This exercise be completed within the next two weeks," the Court ordered.

The Bench was hearing a plea raising the issue of delay in disposal of high-value recovery cases pending before the Debt Recovery Tribunals. In one of the earlier hearings in the matter, the Court had directed the respondents to constitute a Committee to examine this situation.

According to the affidavit filed by the Centre, the Search cum Selection committee headed by a Supreme Court Judge had held interaction with the eligible candidates and that the process of filing up of vacancies of Presiding Officers in the Debt Recovery Tribunals was underway.

During the course of hearing, Centre also assured the Court that as soon as recommendations from the Search cum Selection committee are received for the post of Presiding Officers of DRTs and DRATs, the Ministry shall process the same without any delay so that the existing vacancies can be filled up at the earliest.

The Court was also given a suggestion that till the time the fresh appointments are made, the Centre must restore the pre-existing arrangement of empowering Presiding Officers of the other DRTs in the country to virtually hear and dispose of cases of the three Debt Recovery Tribunals in Delhi.

Accordingly, the Court observed this:

"We may note that until recently DRT Jaipur, DRT Siliguri and DRT Allahabad were given additional charge of hearing cases of the three DRTs in Delhi. That practice has been discontinued without appointments being made to the posts of Presiding Officers in the three DRTs in Delhi."

"We fail to understand the reason for this Act/Omission on the part of the respondent No.1. The result of there being no Presiding Officers in any of the DRTs in Delhi is that banks and financial institutions, as well as the defendants/debtors and persons against whom proceedings under the SARFAESI Act are initiated are having to rush to the High Court to seek interim protection and relief. The progress of original applications before the DRTs involving thousands of crores of rupees of public money which have to be recovered is held up. It is completely opposed to public interest that the DRTs should not function."

The Court therefore directed the Centre to examine the aforesaid aspect.

Further noting that since the tenure of the Chairperson, DRAT Delhi had curtailed, the Court asked the Centre to examine the feasibility of granting additional charge to one of the existing DRATs, so that the functioning of DRAT in Delhi can be restored without any delay.

"In this regard, status report should be filed within the next 10 days. To consider this aspect, the matter shall be taken up on 02.12.2021," the Court ordered.

Earlier, the Court had directed the Centre to ensure appointment of Recovery Officers in Debt Recovery Tribunals across India without any delay.

It had also condemned the delay by Central Government in appointing Presiding officers to Debt Recovery Tribunals across the country.

The Court also noticed that despite the Supreme Court directing for lawyers with 10 years standing or more being qualified to offer their candidature for appointment to the DRT, the respondent had till date not implemented the said decision.

Case Title: Edelweiss Asset Reconstruction Co. Ltd. v. Secretary, Department of Financial Services & Ors. 

Click Here To Read Order