R PRABAKARAN Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioner-borrower has preferred this Writ Petition against the Notification in F.No.G-26036/2/2005, dated 9.1.2007 issued by the Ministry of Finance, Department of Economic Affairs (Banking Division), Government of India, under Section 3 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as 'the DRT Act'), notifying the establishment of new Debt Recovery Tribunal (for short, 'the DRT'), at Madurai and Chennai, carving out the jurisdiction of the earlier DRT at Chennai and Coimbatore.

(2.) MR. A.L. Somayaji, learned Senior Counsel appearing for the petitioner submitted that what is under challenge is the carving out of three Districts, i.e. Salem, Erode and Namakkal from the jurisdiction of the DRT, Coimbatore and placing it under the jurisdiction of the DRT, Madurai. According to the petitioner, the Districts of Salem, Erode and Namakkal were in between 100-155 Kms. from Coimbatore (Salem-150 Kms., Erode-100 Kms. and Namakkal-155 Kms.), but now, in view of the placing of such Districts under the jurisdiction of Madurai, the parties will have to move far away distance in between 200-240 Kms. to Madurai (Salem-200 Kms., Erode-240 Kms. and Namakkal-200 Kms.). It is the case of the petitioner that he has already incurred huge expenses while attending the proceedings in Chennai and further expenses were incurred when proceedings were transferred to Coimbatore and in view of the present Notification, he will have to again incur expenses and will have to go to a far-off city for conducting the proceedings. It is not just inconvenience alone to him, but he has to spend three times for the same litigation. Similar plight is faced by the other persons. Even the Banks would be inconvenienced and therefore, he has impleaded the License Officers Forum, represented by its Secretary, DRT, Central Bank Building, V.H.Road, Coimbatore, as a party to the Writ Petition. It is the further case of the petitioner that the Notification is inconsistent with Rule 6 of the DRT (Procedure) Rules, 1993. Though Section 3 of the DRT Act empowers the Central Government to constitute more than one Tribunal, it does not provide for any guideline or procedure to be followed before such Tribunals are constituted. Therefore, Section 3 of the DRT Act is arbitrary, illegal and unfettered power of the State. Giving reference to Krishnagiri District, it is pleaded that though it is a separate District, and was a part of DRT, Coimbatore, by jurisdiction, now the cases arising out of Krishnagiri District do not find a place in the Notification defining the revised jurisdiction, which shows non-application of mind. Though such pleadings are made, learned Senior Counsel appearing for the petitioner, while challenging the impugned Notification, at the time of hearing, made the following submissions: (a) The Central Government abdicated its powers to the Debt Recovery Appellate Tribunal (for short, 'the DRAT'), Chennai, by accepting its request and on the basis of the suggestions made by the DRAT, the impugned Notification has been issued without application of mind. The Notification is based on extraneous consideration, i.e. recommendations / suggestions of the DRAT, Chennai. (b) The impugned Notification has no nexus with the object in carving out the jurisdiction of the said three Districts from the jurisdiction of the DRT, Coimbatore. (c) In the absence of any material before the Central Government to justify the carving out of the Districts of Salem, Erode and Namakkal from the jurisdiction of the DRT, Coimbatore for placing it under the jurisdiction of the DRT, Madurai, the impugned Notification is illegal. (d) The impugned Notification in effect, is violative of Rule 6 of the DRT (Procedure) Rules, 1993.

(3.) FROM the statement of objects and reasons of the DRT Act, it would be evident that as the Banks and financial institutions were experiencing considerable difficulties in recovering loans and enforcement of securities charged with them and the existing procedure for recovery of debts due to the Banks and financial institutions blocked a significant portion of their funds, on the basis of the recommendations of "M. Narasimhan Committee", Special Tribunals with special powers for adjudication, were constituted for the early recovery of such debts and dues. The main aim and object of the DRT Act are for early recovery of the debts and dues of the Banks and financial institutions.