High Court of Bombay stays Central Government notification amending the pecuniary jurisdiction of Debt Recovery Tribunals

The Aurangabad Bench of the High Court of Bombay, in the case of IshwarlalShankarlalLalwani (Jain) v. Union of India[1]passed an Order on November 17th, 2022 has granted a stay on the application of the Notification dated 04.10.2022 bearing Notification No. 4179 (e)(“Notification”)issued by the Union of India, respondent in the captioned matter.

The Notification amended the pecuniary jurisdiction of the Debt Recovery Tribunals (“DRT”) and empowered the Delhi, Chennai and Mumbai benches of the DRT to undertake cases valued at over INR 100 Crores.

The petitioner while praying for a stay on the Notification had contended that resultant to the application of the same, matters amenable to the jurisdiction of the Debt Recovery Appellate Tribunal (“DRAT”) Mumbai have been transferred to DRT – 1, matters amenable to the DRAT at Chennai have been transferred to the DRT – 1, Chennai and the matters amenable to DRAT Delhi have been transferred to DRT – 1, Delhi. Additionally, the DRTs falling within the appellate jurisdiction of the DRAT benches at Kolkata and Allahabad in addition to the DRAT benches at Kolkata and Allahabad themselves had selectively been left out from the Notification. Thus, it was asserted by the Petitioner that the supposed divestiture of the jurisdiction as applicable on cases pertaining to Recovery of Debt and Bankruptcy Act, 1993 (“RDB Act”) and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”) would eliminate the need for the existence of the hierarchy of tribunals established at several locations around the country. 

The Court observed that the application of the Notification would divest the jurisdiction of DRTs by creating limitations on the pecuniary jurisdiction without making any amendments to the RDB Act. The Court further noted that if the notification is applied, matters allocated to certain DRTs would have to be transferred to particular DRTs. Additionally, if the same is subsequently held unsustainable, the transferred matters which might possibly be in several thousand will again have to be transferred back to the DRT they were directly allocated to.

Considering the aforementioned contentions and observations, it was stated by the Court that the current issue is serious and urgent and therefore the application of the Notification currently shall not be allowed and hence granted the stay as prayed by the Petitioner. The Court further issued a returnable notice to the Respondent and directed them to file an affidavit 10 days prior to the date of return of the Notice for a final hearing.

[1]Writ Petition No. 11164 of 2022; November 17, 2022