Bombay High Court stays notification changing DRT jurisdiction in matters above ₹100 crores

The Aurangabad Bench of the Bombay High Court on Thursday stayed an October 4 notification issued by the Central government transferring all matters involving debt amount of ₹100 crores and above to the Debt Recovery Tribunals (DRT) benches at Mumbai, Chennai and Delhi. [Ishwarlal Lalwani v. UOI].A bench of Justices Ravindra Ghuge and Sanjay Deshmukh observed that without any amendment to the Recovery of Debts and Bankruptcy Act (RDB Act), taking away jurisdiction of various DRTs appeared to be prima facie unsustainable. If the notification is finally found to be unsustainable, then all the transferred matters to the DRTs of Mumbai, Chennai and Delhi will have to be returned back to the original DRTs, the bench reasoned. deeming it fit to stay the effect of the notification. "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 thousands, will have to be transferred back to the Debts Recovery Tribunals, which originally had the jurisdiction. It is in these circumstances, that we are staying the Notification dated 04/10/2022," the Bench held. .The Bench was approached by one Ishwar Lalwani seeking to quash the notification and for an interim stay on the notification.Advocate AA Yadkikar on his behalf contended that if the notification is made applicable, then all matters valued above ₹100 crores will have to be heard by one of the three DRTs based on the territorial jurisdiction, thereby defeating the purpose of having multiple DRTs."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 and the very purpose of establishing the Debts Recovery Tribunals at various locations in each State, would be defeated," the lawyer argued. .The Court also came to a prima facie conclusion that the DRTs established at various locations, would now be divested of their jurisdiction, on the ground of pecuniary limitation created by a notification. Without any amendment to the RDB Act, this appeared to be unsustainable to the Court. .While the Court stayed the notification, it also directed the Union of India to file a reply to the petition at the earliest considering the seriousness and urgency involved in the issue. Deputy Solicitor General AG Talhar sought 8 weeks to file a reply which was granted. The matter will be heard again on January 4, 2023. .Incidentally, a similar plea is pending before the Gujarat High Court in which issued notice on Thursday though no stay was granted.[Read order]