Bombay High Court Stays Notification Changing Jurisdiction of DRT in matters valued at Rs 100 crores or more

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The high court stayed the notification of the central government transferring all cases valued at Rs 100 crores or more to Mumbai, Chennai, and Delhi while noting that if later on, the notification is found unsustainable then 1000’s of cases will have to be transferred back to the respective tribunals.

A division bench of the Bombay High Court at Aurangabad comprising Justice Ravindra V. Ghuge and Justice Sanjay A. Deshmukh has stayed a notification of the Central Government which said that the matter valued at 100 crores or more will be transferred to the debt recovery tribunal of Mumbai, Chennai, and Delhi.

The petition was filed by one Ishwarlal Lalwani through advocate A. A Yadkikar wherein it was stated that there are various Debt Recovery Tribunals within a state against which an appeal can be filed before the Debt Recovery Appellate Tribunal. The plea said there are three debt recovery tribunals in Mumbai, 2 at Ahemdabad, and 1 each at Aurangabad, Nagpur, and Pune. After the impugned notification the debt recovery cases which could be heard by different tribunals within Maharashtra will now be heard only by the Debt Recovery Tribunal in Mumbai if the matter is valued at 100 crores or more.

The petition stated that a similar notification has been made for the benches of Chennai and Delhi. However, benches at Allahabad and Kolkata have been selectively kept out of the notification, the plea read.

The advocate for the petitioner argued that if the notification is made applicable to the RDB Act, it would also be made applicable to the SARFAESI Act and the very purpose of establishing the Debts Recovery Tribunals at various locations in each State, would be defeated.

Further, he submitted that the Debts Recovery Appellate Tribunal is considered to be an appellate jurisdiction, and depending upon the territorial jurisdiction, demarcated areas have been subjected to the jurisdiction of the different Debts Recovery Tribunals.

The court agreed with the petitioner and while staying the notification the court said that if at a later stage the notification is found unsustainable then 1000’s of cases will again be transferred to the original debt recovery tribunal. The court while granting interim relief said that:

“Prima facie, it appears from the record that, the Debts Recovery Tribunals 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 appears to be unsustainable. We are also conscious that, 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 Court also directed the Union of India to file its affidavit considering the urgency of the matter.

Deputy Solicitor General AG Talhar sought 8 weeks to file the reply.