Supreme Court of India
UNION OF INDIA & ORS.versusDEBTS RECOVERY TRIBUNAL BAR ASSOCIATION & ANR.
- Citation
- 2013 INSC 48
- Decided
- 22 January 2013
- Disposal
- Disposed off
Holding
High Courts have jurisdiction of superintendence under Article 227 over DRTs and DRATs, and Section 18 of the RDDBFI Act confirms that only the Supreme Court and High Courts may exercise jurisdiction over matters specified therein.
Summary
The Union of India appealed against a Punjab & Haryana High Court order that directed the government to provide adequate premises for the Debt Recovery Tribunals (DRTs) at Chandigarh and to consider various administrative reforms. The Supreme Court examined the statutory framework of the Recovery of Debts Due to Banking and Financial Institutions Act, 1993 and the constitutional power of High Courts under Article 227 to supervise tribunals. It held that High Courts indeed possess superintendence over DRTs and Debt Recovery Appellate Tribunals (DRATs), and that Section 18 of the Act expressly reserves jurisdiction to the Supreme Court and High Courts. The Court accepted the Union’s proposals for improving infrastructure, increasing the number of tribunals, and reforming recruitment, and directed their expeditious implementation. It further instructed High Courts to monitor the functioning of DRTs/DRATs within their jurisdictions. The appeals were disposed of, effectively upholding the High Court’s supervisory role while mandating the suggested reforms.
Issues considered
- The scope of High Courts' jurisdiction of superintendence under Article 227 over Debt Recovery Tribunals and Debt Recovery Appellate Tribunals.
- Whether Section 18 of the Recovery of Debts Due to Banking and Financial Institutions Act, 1993 limits jurisdiction over DRT matters to the Supreme Court and High Courts.
- The adequacy of infrastructure and administrative arrangements for DRTs/DRATs and the need for statutory or executive measures.
Legislation cited
Subjects
Debt Recovery TribunalDRTDebt Recovery Appellate TribunalDRATArticle 227SuperintendenceRDDBFI ActInfrastructureRecovery OfficersJudicial independence
Judgment
[2013] 1 S. C.R. 480
A UNION OF INDIA & ORS.
v.
DEBTS RECOVERY TRIBUNAL BAR ASSOCIATION &
ANR.
(Civil Appeal Nos.617-618 of 2013)
B JANUARY 22, 2013
[D.K. JAIN AND H.L. DATTU, JJ.]
Recovery of Debts Due to Banks and Financial
C Institutions Act, 1993:
Debt Recovery Tribunal (ORTS) and Debt Recovery
Appellate Tribunals (ORA Ts) - Suggestions made for
adequate space and infrastructure, smooth functioning,
0 Information Technology, Computerization, increase in number
of DRTs and ORA Ts, eligibility criteria and appointment of
Recovery Officers, vacancies and status of senior officers -
Suggestions approved - Directions given to implement the
suggestions expeditiously - High Courts shall keep a close
E watch on the functioning of DRTs and ORA Ts which fell in
their respective jurisdiction and ensure a smooth, efficient and
transparent working of the said Tribunals - Constitution of
India, 1950 - Art.227.
Constitution of India, 1950:
F
Art. 227 - Superintendence over DRTs and ORA Ts -
Held: High Courts are empowered to exercise their jurisdiction
of superintendence under Art. 227 in order to oversee the
functioning of DRTs and ORA Ts - This power also extends
G to administrative functioning of courts/tribunals - Recovery of
Debts Due to Banking and Financial Institutions Act, 1993 -
s.18.
Shalini Shyam Sheffy & Anr. Vs. Rajendra Shanker Patil
2010 (8) SCR 836 =
2010 (8) sec 329 - relied on.
H 480
UNION OF INDIA & ORS. v. DEBTS RECOVERY 481
TRIBUNAL BAR ASSOCIATION
Case Law Reference: A
2010 (8) SCR 836 relied on para 11
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.
617-618 of 2013.
B
From the Judgment & Orders dated 18.09.2008 in CWP
No. 11742 of 2007 and dated 21.08.2009 in Review
Application No. 161 of 2009 in CWP No. 11742 of 2007 of the
High Court of Punjab and Haryana at Chandigarh.
Siddharth Luthra, ASG, Rajeev Mehra, (A.C.), Ashish C
Virmani, Supriya Juneja, Rashmi Malhotra, Gurmohan Singh
Bedi, Sushma Suri (for Shreekant N. Terdal) for the Appearing
parties.
The following Order of the Court was delivered D
ORDER
1. Leave granted.
2. These appeals arise out of judgment dated 18th E
September 2008 in CWP No. 11742 of 2007, and order dated
21st August 2009 in Review Application 161 of 2009, rendered
by the High Court of Punjab & Haryana, whereby certain
directions relating to provision for adequate space for the
smooth functioning of the Debts Recovery Tribunals (for short F
"the DRTs") at Chandigarh, have been issued. The
circumstances that have led to the filing of these appeals are
succinctly stated below. ·
3. A Bench of the ORT was established at Chandigarh by
the Union of India (for short "the UOI"), vide notification dated G
24th March 2000, in a rented building. Subsequently, a second
Bench of the ORT was established, which was supposed to
function from another premises. However, both the Benches
continued to function from the same premises where the earlier
H
482 SUPREME COURT REPORTS [2013) 1 S.C.R.
A Bench was functioning. By a communication dated 20th July,
2007, the UOI directed that the second Bench would function
from the premises acquired for it. Thereupon, the respondent
Bar Association made a representation to the Presiding
Officers of both the Benches, requesting them to inter a/ia,
B continue to function from the premises from where the first ORT
was functioning. However, in light of the aforesaid
communication issued by the UOI, the request of the Bar
Association was not acceded to.
C 4. Aggrieved, the Bar Association filed a Civil Writ Petition
in the High Court of Punjab & Haryana, seeking directions to
the UOI, to inter a/ia provide adequate accommodation for the
functioning of both the DRTs; and to frame Rules for recruitment/
appointment of the Presiding Officer & the Recovery Officers.
In light of the assurance on behalf of the UOI that adequate
D space would be taken on lease for the smooth functioning of
both the Benches at the same place, and that further, land was
also being acquired for housing the DRTs, the writ petition was
disposed of with a direction that the construction of the building
shall be completed within three years from the date of its order.
E However, the High Court did not examine the other issues
referred to above on the ground that they were unrelated to the
inadequacy of office space needed by the DRTs.
5. Having failed to get the said order reviewed, the UOI is
F before us in these appeals. In order to appreciate the issue
involved in the matter before us, it would be useful to have a
bird's eye view of the constitution of DRTs and their functioning.
6. Prior to the promulgation of the Recovery of Debts Due
to Banking and Financial Institutions Act, 1993 (for short "the
G RDDBFI Act"), all banks and financial institutions were required
to file their recovery cases in the form of suits before the civil
courts, on the basis of their territorial and pecuniary
jurisdictions. Due to delays in the disposal of such suits by civil
courts on account of heavy dockets, the recovery of loans and
H enforcement of securities suffered. Thus, an urgent need was
UNION OF INDIA & ORS. v. DEBTS RECOVERY 483
TRIBUNAL BAR ASSOCIATION
felt to work out a suitable mechanism through which, the dues A
of the banks and financial institutions could be realized ' 1
expeditiously. This led to the establishment of DRTs and the
Debts Recovery Appellate Tribunals (for short "DRATs") under
the RDDBFI Act for expeditious adjudication and recovery of
debts due to banks and financial institutions. B
7. As per the information available, there are all in all 33
DRTs established in the entire country out of which Delhi,
Mumbai, Chennai, Kolkata, Chandigarh and Ahmedabad have
two or more DRTs each. However, there are only five DRATs,
established in Allahabad, Chennai, Delhi, Kolkata and Mumbai, C
each covering multiple DRTs of a particular geographical zone.
As a result, DRATs are overburdened and are also facing an
acute shortage of infrastructure and staff.
8. Given the poor state of affairs as highlighted by the Bar D
Association, we were constrained to take cognizance and
hence, vide order dated 15th November 2010, directed the
learned Addi. Solicitor General to file an affidavit suggesting
measures for improving the working of the said Tribunals._
Subsequently, on 7th April 2011, this Court appointed Mr. E
Rajeeve Mehra, Senior Advocate, as amicus curiae to assist
the Court. Consequently, having considered the views of all
DRTs, DRATs as well as the Bar Associations, the learned
Addi. Solicitor General and the learned amicus curiae have
filed their responses, highlighting the core issues and F
respective suggestions to address the same. In light of the
above, the UOI was directed to place on record their response
on the issues so raised, in particular, on the criteria being
adopted for appointment of the members, Recovery Officers
etc. In pursuance thereof, the UOI has filed status reports, G
indicating the measures agreed upon by the Government to
address the aforementioned issues. Before we proceed to list
the same, it would be helpful to discuss the core issues in
respect of which the suggestions have been made.
9._At present, DRTs and DRATs suffer from severe H
484 SUPREME COURT REPORTS [2013] 1 S.C.R.
A infrastructural constraints. Most of the DRTs are being run from
rented premises and face acute shortage of space, exorbitant
rents, limitations on non-renewal/extension of leases etc. It has
been brought to our notice that where the DRTs have been
allotted space of about 5000 sq. ft., the actual requirement is
B not less than 7,500 sq. ft. Similarly, the learned amicus curiae
brought to the fore several other issues plaguing the smooth
functioning of the Tribunals, the most significant being: that there
is a need to increase the number of DRATs in the country to
reduce the workload of the existing DRATs; that many serving
c Recovery Officers lack a judicial background or are appointed
on deputation from those very banks or financial institutions
which are filing recovery cases in DRTs, thereby raising serious
questions about their independence, impartiality and fairness;
that the time taken in filling up vacancies for the posts of senior
D officials of DRTs and DRATs is extremely long; and that the
presence of modern and technological systems of
administration continues to be elusive in the administration of
justice in as much as many DRTs and DRATs do not even have
websites or computerized systems.
E Suggestions made by the learned Addi. Solicitor General
and learned amicus curiae
s. Issue Suggestions of Suggestions of the
No the learned Addi. learned amicus
F Solicitor General curiae
1. Premises & All DRTs and Concurring
Physical DRATS should
Infrastructure be housed in
suitable buildings.
G Pending
construction of
these buildings, the
Tribunals should be
housed in rented
premises having an
H
UNION OF !NOIA & ORS. v. DEBTS RECOVERY 485
TRIBUNAL BAR ASSOCIATION
area of at least A
8000 sq.ft. where
suitable space for
records, etc. and
amenities for the
officers of the court, B
staff, litigants and
lawyers should be
provided.
2. Increase in A DRAT must be
Number of established in each
c
DRTs/DRATs ---- state where there is
a ORT or multiple
DRTs. DRATs may
be established in
the city where the
concerned High D
Court of a State is
located.
3. Appointment Qualifications for Appointment of
of Recovery Recovery Officers Recovery Officers E
Officers should include at by way of deputation
the very least, a from Government
basic degree in law. . Departments/
If possible, judicial Ministries, Banks
officers or and Financial
F
advocates with five Institutions should
years standing at be discontinued.
the Bar may be Instead, the person
appointed as appointed must be a
Recovery Officers. . person of a judicial
background, G
preferably a judicial
officer of the rank
below the
designation of Addi.
District and H
486 SUPREME COURT REPORTS [2013] 1 S.C.R.
A Sessions Judge on
deputation, and
should be given the
same facilities and
perks he/she enjoys
B in the parent cadre.
4. Vacancies A select list of a. For posts other
and Status candidates should be than P r e s i d i n g
of Senior maintained to fill the Officers and
Officers of vacancies. The Recovery Officers,
c DRTs/DRATs selections should be on-going process of
made within a fixed sourcing staff/officers
time frame. on deputation should
be discontinued, and
permanent cadres
should be
D established.
b. The post of
Presiding Officers,
Registrars and
Recovery Officers
E should be filled up
from the state cadre
of Judicial Officers
through deputations
and rotations so that
these posts do not
F
remain vacant.
c. Judicial officers
must be provided the
same facilities and
perks as they enjoy in
G their parent cadres.
Further, residential
accommodation must
be necessarily
earmarked for
Presiding Officers.
H
UNION OF INDIA & ORS. v. DEBTS RECOVERY 487
TRIBUNAL BAR ASSOCIATION
A .
5. Information a. DRTs and DRATs Concurring
Technology must have a
and website. Possibility
Computeri- of publication of
sation notices and auctions
on the website B
should be explored,
keeping necessary
safeguards in mind.
b. The National
Informatics Centre
should be called
c
upon to prepare
appropriate software
for computerization
of processes in the
DRTs, from filing fo D
disposal, so that the
time taken for
disposal is reduced
. .
10. We are pleased to note the positive and forthcoming
response of the UOI to the suggestions of the learned Addi. E
Solicitor General and the learned amicus curiae. Having taken
note of the urgent need to address the abject conditions
prevailing in the Tribunals, the UOI, has agreed to:
i. Provide adequate infrastructure to DRTs/DRATs on the F
following basis:
a. If sufficient space as per requirement is available in the
Government building, then space· from the concerned
department will be allotted on a permanent basis.
G
b. If space is not available in the Government building but
sufficient space is available in public sector undertakings'
buildings, then the DRTs/DRATs IT)ay move to the same
·on a permanent lease/rental basis.
H
488 SUPREME COURT REPORTS [2013] 1 S.C.R.
· A c. If (a) and (b) are not possible, then suitable land may
be purchased for construction of a building, or a suitably
constructed building may be purchased from public
authorities. This may be completed in a phased manner.
In the mean time, DRTs and DRATs may continue at their
B present locations or hire alternative suitable space as per
norms.
d. Further, on the basis of a spot study conducted by the
Department of Financial Services on 11th December
2011, the existing space authorization of 5000 sq. ft. for
c DRTs and 3600 sq. ft. for DRATs was examined. In light
of the study and requirements of additional facilities, the
same has been increased to 7200 sq. ft. and 4500 sq. ft.
respectively. In case more than one DRT is
accommodated in one building, space would be saved for
D common facilities such as bar room, consultation chamber,
reception, canteen, washrooms, etc. In such a case, the
space requirements for the second and third DRT (if
located in the same building) may be around 6000 sq. ft.
and 5500 sq. ft. respectively.
E
e. Preference is to be given to buildings where parking
facility is provided either within the building premises or
in the vicinity.
ii. Consider the feasibility of establishing more DRTs/
F DRATs and redefining the jurisdiction of some DRTs on
the basis of data showing pendency of cases and existing
workload of all the DRTs and DRATs.
iii. Fill all anticipated vacancies for the posts of senior
G officers, as and when they arise, with candidates who have
already been selected according to the stipulated rules.
iv. Extend the facility of General Pool of Accommodation
of the type entitled to Group A officers upto April 2013 to
the Presiding Officers. In the meantime, the Ministry of
H
UNION OF INDIA & ORS. v. DEBTS RECOVERY 489
TRIBUNAL BAR ASSOCIATION
Finance and Ministry of Urban Development will examine A
all issues to finalise modalities for either buying or
construction of flats/houses for use of the members of the
Tribunals. Further, in case this proposal does not
materialize, then the possibility of hiring accommodation
shall be considered at the appropriate stage. B
v. Implement the "e-DRT Project" to automate and improve
ORT services by building IT systems as expeditiously as
possible.
vi. Carry out the recruitment of Recovery Officers by C
promotion, failing which, by deputation, in accordance with
the eligibility criteria as defined in the recruitment rules of
each ORT. Keeping in mind the profile of the post of a
Recovery Officer, it may not be possible to appoint judicial
officers of a rank below that of an Additional District and D
Sessions Judge, as suggested by the learned amicus
curiae. However, the UOI shall give preference to only
those candidates who either have legal experience or hold
a degree in law. Further, with respect to improving the
selection procedure of Recovery Officers, the E
Departmental Promotion Committee (DPC), provided for
in the recruitment rules, shall be expanded to include the
Presiding Officer of any ORT as a member of the DPC to
take part in the selection of the Recovery Officers. At the
same time, the level of representation of the Reserve Bank F
of India in the DPC will also be raised from the rank of
Deputy Legal Advisor to Joint Legal Advisor, RBI.
vii. Hold regular training programmes for Recovery
Officers/Assistant Registrars/Registrars to give them
minimum working knowledge of the procedures followed G
in DRTs, the provisions of the RDDBFI Act, the SARFAESI
Act, the Rules made thereunder, and the provisions of
Schedules II and Ill of the Income Tax Act, 1961.
11. We are confident that the aforementioned measures H
490 SUPREME COURT REPORTS [2013] 1 S.C.R.
A proposed by the UOI, shall go a long way in improving the
administration of justice in these Tribunals. We are in
agreement with these proposals and hope that they will be
implemented efficiently and expeditiously by the concerned
authorities. Having said that, it is necessary that the exercise
B undertaken by this Court must reach its logical end sans any
delays and glitches or any other hindrances in the
implementation of these suggestions. To this effect, we issue
the following directions:
i. All the aforementioned proposals and measures agreed
c upon by the UOI in response to the suggestions made by
the learned amicus curiae and the Addi. Solicitor General
shall be implemented expeditiously within a suitable time
frame. In the event that the UOI or the concerned authority
fails to comply with the aforesaid assurances, it will be
D open to the learned amicus curiae to bring the same to
this Court's notice for appropriate directions.
ii. Further, we believe that the High Courts are empowered
to exercise their jurisdiction of superintendence under
E Article 227 of the Constitution of India in order to oversee
the functioning of the DRTs and ORATs. Section 18 of the
RDDBFI Act leaves no scope for doubt in this behalf. It
reads thus:
18. Bar of Jurisdiction.-On and from the appointed day,
F no court or other authority shall have, or be entitled to
exercise, any jurisdiction, powers or authority (except the
Supreme Court, and a High Court exercising jurisdiction
under articles 226 and 227 of the Constitution) in relation
to the matters specified in section 17.
G
Article 227 of the Constitution stipulates that every High
Court shall have superintendence over all courts and tribunals
throughout the territories interrelation to which it exercises
jurisdiction. This power of superintendence also extends to the
H administrative functioning of these courts and tribunals [Shalini
UNION OF INDIA & ORS. v. DEBTS RECOVERY 491
TRIBUNAL BAR ASSOCIATION
Shyam Sheffy & Anr. Vs. Rajendra Shankar Pati/1]. Hence, A
in light of the above, we expect that all the High Courts shall
keep a close watch on the functioning of DRTs and DRAT,
which fall within their respective jurisdictions. The High Courts
shall ensure a smooth, efficient and transparent working of the
said Tribunals. We are confident that through the timely and B
ap12ropriate superintendence of the High Courts, the Tribunals
sh~I' ~dhere to the rigour of appropriate standards
indispensable to the fair and efficient administration of justice.
12. Before parting, we place on record our deep
appreciation for the able assistance rendered to us by Mr. C
Sidharth Luthra, the learned Addi. Solicitor General, Mr. Rajeeve
Mehra, the learned amicus curiae and Mr. Arjun Kapoor, Law
Clerk-cum-Research Assistant.
13. These appeals stand disposed of in the above terms. D
R.P. Appeals disposed of.
1. c201 O) s sec 329.
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