DELHI HIGH COURT BAR ASSOCIATION Vs. UNION OF INDIA SECT DEPPT OF ECO AFFAIRS BANKING DEVISION MINISTRY OF FINANCE

JUDGEMENT

(1.) The petitioners have challenged the constitutional validity of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short 'the Act') on the ground that the Act is unreasonable and is violative of Article 14 of the Constitution and that it is beyond the legislative competence of the Parliament to enact such a law. The petitioners have also challenged the appointment of the third respondent as the Debts Recovery Tribunal under section 5 of the Act. The immediate cause for filing this petition under Article 226 of the Constitution was the notification dated 5 July, 1994 issued by the Central Government in the Ministry of Finance, Department of Economic Affairs, Banking Division, whereby, under section 3 of the Act, Debts Recovery Tribunal, with the areas of jurisdiction as Delhi was established. It is alleged that the appointment of the third respondent is an exercise of fraud on the powers conferred on the Central Government under the Act.

(2.) This petition was filed on 22 July 1994 and when it came up for admission, notice was issued to the respondents to show cause as to why rule nisi not be issued, and at the same time the operation of the Act in its applicability to Union Territory of Delhi was stayed by passing the following order on 25 July 1994:-

(3.) On the question of reasonableness of the law as enacted, Mr. Lekhi, learned counsel for the petitioners, referred to the Statement of Objects and Reasons while presenting the Bill, which ultimately took the shape of the Act before the Parliament. Earlier an Ordinance called "The Recovery of Debts Due to Banks and Financial Institutions Ordinance, 1993" was promulgated by the President of India on 24 June 1993. The Act replaced that Ordinance. The Statement of Objects and Reasons may be reproduced:-