Debt Recovery Tribunal cannot exercise suo motu powers,Delhi HC

Debt Recovery Tribunal cannot exercise suo motu powers,Delhi HC

Aditi Singh

The Delhi High Court has held that the Debt Recovery Tribunal (DRT) and the Debt Recovery Appellate Tribunal (DRAT) do not have suo motu powers under the Recovery of Debts and Bankruptcy Act, 1993.

The Court observed that although Section 22 of the Act declares that the two Tribunals are free to regulate their own proceedings, the provision cannot be interpreted to say that the Tribunals have suo motu powers.

A Division Bench of the Court comprising Chief Justice Rajendra Menon and Justice V Kameswar Rao was hearing a petition by one Padam Singhee against a suo motu order passed by the DRAT on July 24, 2018

The Petitioners had moved DRAT after being aggrieved by an initial order by the DRT. Subsequently, the said appeal was withdrawn by the Petitioner and an application for vacating the said interim order was preferred before the DRT itself.

DRAT, however, continued the proceedings with respect to the show cause notice issued vide order dated July 24, 2018, for passing appropriate orders under Sections 19(13)(A) and 19(18) and 19(25) of the Act.

DRT on the other hand, while hearing the application for vacation of the interim order, held that the same would be decided at the time of final arguments.

The High Court observed that the DRT and DRAT do not have inherent powers and are required to decide the lis that comes within their domain.

It clarified that even Section 19 (25) confers only limited power on the Tribunals.

The power of the Tribunal / DRAT under Section 19(25) is limited to pass such other orders and give such directions to give effect to the orders or to prevent abuse of its process or to secure the ends of justice.”, it said.

It further observed that since Tribunals are established under a statute to adjudicate upon specific disputes, DRT and DRAT are required to function within the statutory parameters of their Act.

The Court stated that DRAT can only exercise jurisdiction, powers and authority to entertain appeals against any order made or deemed to have been made by a Tribunal under the Act, and not in any other manner. It also said that the power of the Chairperson of Appellate Tribunal is “of general superintendence over the Tribunals and power to transfer of cases from one Tribunal to the other and nothing more“.

DRT is not vested with a general power to direct a defendant to furnish security or in case of default on his part to order attachment of his property before the claim is adjudicated upon.

It observed,

“(T)he DRT may not be strictly bound by the procedure laid down in the Code of Civil Procedure or may have been vested with the power to regulate its own procedure. But there is nothing in the statutory provisions to indicate that the procedure which DRT adopts may be what it fancies.”

The Court also held that when an application seeking vacation of an order which is to the prejudice of the Petitioner is filed, the same is to be decided at the earliest in accordance with law.

To say that the said application shall be decided at the time of final arguments, is to frustrate the application, having the effect of rejecting the same.”, it said.

It was, therefore, held,

“Accordingly, the proceedings before the DRAT arising from the show cause notice issued on July 24, 2018, for passing appropriate orders as contemplated under Section 19(13)(A) and 19(18)(25) of the Act of 1993 in purported exercise of suo motu power in public interest are quashed. The order dated April 28, 2018 of the DRT to the extent that the DRT has directed that the IA 284/2018 shall be heard at the time of final arguments is set aside.”

Petitioner was represented by Senior Advocate Rajeeve Mehra, assisted by Advocates Ashish VirmaniNiti A Sachar, Himanshu Dhuper and Akshay Abrol.  

Advocates RP AggarwalManish Aggarwal and Sunny Verma appeared for Respondents Ms/ Edelweiss Asset Reconstruction Company Ltd,  SVOGL Oil Gas and Energy Ltd.

Read the order below. 

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