Charge of Debt Recovery Tribunal cannot be given to Presiding Officer of DRT outside the State: Kerala High Court

The Kerala High Court has ruled that charge of a Debt Recovery Tribunal (DRT) cannot be given to a presiding officer of a DRT situated outside the State (Kerala Fashion Jewellery Vs. Union of India).

A Division Bench of Chief Justice S Manikumar and Justice Shaji P Chaly, therefore, quashed a notification issued by the Central government which had entrusted the charge of the Debt Recovery Tribunal - 2 (DRT-2), Ernakulam to the presiding officer of DRT-2 Bangalore after the post of presiding officer at DRT-2 Ernakulam fell vacant.

"If and when the office of the Tribunal under the (Recovery of Debts and Bankruptcy) Act falls vacant, the course open to the Central Government is only to authorise the Presiding Officer of any other Tribunal constituted under any other law within the jurisdictional State, to discharge the functions of the Presiding Officer of a DRT, which would be more beneficial and accessible to the litigant public," the High Court ruled.

The judgment though pronounced on March 23, 2021 was published on the website of Kerala High Court only this week.

Bar & Bench had reported on April 1 that DRT-2, Ernakulam had become non-functional due to this ruling.

The judgment came on a petition filed by Kerala Fashion Jewellery, a jewellery firm from Thrissur, seeking to overturn a previous order passed by a single-judge of the Kerala High Court who had upheld the notification issued in this regard by the Central government.

The petitioners argued that the action of issuing the order authorising the presiding officer of one DRT to also act as presiding officer of another DRT, by the Centre was ultra vires of Section 4 (2)(a) and 4(2)(b) of the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act), which came into force from 2016, repealing and substituting a previous provision that had authorised conferring of additional charge to the presiding officer of another DRT.

The judgment of the Division Bench noted that the Recovery of Debts and Bankruptcy Act, 1993 is an Act to provide for the establishment of tribunals for expeditious adjudication and recovery of debts.

The Bench, while overturning the order by single-judge, observed that single-judge had failed to note that the very purpose of the amendment to Section 4(2) of RDB Act, 1993 is to safeguard the interest of the litigants, so that they would be entitled to access justice and get their case adjudicated at the same place they reside and where the cause of action has arisen.

"Going by the provisions of the Amended Act, 1993 and consequent to the substitution of sub-section (2) of Section 4, it is clear that when there is a vacancy, the Central Government is vested with the powers only to authorise a Presiding Officer of any other Tribunal constituted by the Central Government in the State under any other law for the time being in force to discharge the functions of the Presiding Officer of a Debt Recovery Tribunal under the Act, 1993," the Court said.

Consequently, the Division Bench set aside the order by single-judge and left it open to the Central government to issue a fresh notification in accordance with law as per the provisions of the Recovery of Debts and Bankruptcy Act, 1993, at the earliest.

The post of presiding officer of DRT-2, Ernakulam continues to be vacant as of June 2021.