Kerala High Court stays Centre's Notification on transferring Applications above ₹100 Crores to DRT Chennai.
The Kerala High Court on Friday stayed the operation of Notification issued by the Ministry of Finance, dated October 4, 2022, to the extent it transfers/ confers jurisdiction of all applications involving a debt amount of ₹ 100 Crores and above falling within the jurisdiction of Debts Recovery Tribunal-I and Debts Recovery Tribunal-II, Ernakulam with the Debts Recovery Tribunal-I, Chennai. The Court clarified that the stay order shall operate until the disposal of the petition.
The Single Judge Bench of Kerala High Court noted "the borrowers from banks and other financial institutions who are already in dire straits due to the persistent defaults are now forced, by virtue of Ext. P1 notification to approach a Tribunal in a different State, while the Tribunal in Kerala continues to be in existence".
High Court observed that the right of access to a court of law has already been declared to be a fundamental right. An effective adjudicatory mechanism which is reasonably accessible in terms of distance is an essential facet of the said right. (See the decision in Rojer Mathew v. South Indian Bank Limited and Others, REED 2018 SC 05001). The Senior Counsel, therefore, argued the impugned notification as ex-facie arbitrary and violative of Article 14 of the Constitution of India.
Recently, the Bombay High Court had also stayed the notification relating to the DRT jurisdiction.
It was submitted by Senior Advocate N.N. Sugunapalan, instructed by Advocate A.B. Mohanakumar, that when a securitisation application challenging the sale of the petitioner's property was filed before the Debts Recovery Tribunal, Ernakulam, the Registry of the DRT Ernakulam returned the application relying upon the impugned notification and directed it to be presented before the appropriate forum since the sale notice was for the recovery of a sum of Rs.976.57 Crores. The counsel contended that the notification under the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act), specifying jurisdiction for applications could not apply to the applications filed under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The counsel argued that Sections 3, 17 and 19 when read with section 2B of the RDB Act that the notification, if valid, would apply only to applications filed by the financial institutions or banks under the RDB Act and not to applications under the SARFAESI Act filed by individual borrowers or oust the jurisdiction of the existing DRT's.
On these grounds, the Court was of the prima facie view that the challenge against the impugned notification as being unconstitutional had substantial merit.
High Court while passing the order staying the operation of the impugned notification until disposal of the writ petition, noted that "Balance of convenience leans in favour of staying the operation of the said notification as otherwise if ultimately the notification is set aside, great prejudice would be caused to all the litigants".
The case has been posted for 13 January 2023 for further hearing.
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