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IN THE HIGH COURT OF GAUHATI, ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH
DEVASHIS BARUAH, J.
M/s New Malamati Tea Estate & Ors. - Petitioners
Versus
The Union of India, Rep. by the Secretary to the Ministry of Finance & Ors. - Respondents
WP(C) No. 1842 of 2021
Decided On : 31-08-2023
Recovery of Debts and Bankruptcy Act - Impugned Communication - Section 1(4) of the Recovery of Debts and Bankruptcy Act, 1993 - Summary: The court analyzed the impugned communication dated 01.08.2019, which directed the Debt Recovery Tribunals to adjudicate cases filed during the period from 28.09.2018 to 30.06.2019 with a suit value below Rs.20,00,000. The court held that the impugned communication was without authority and competence, and ultra vires the provisions of Section 1(4) of the Act of 1993. Consequently, the Debt Recovery Tribunal, Guwahati cannot proceed with the adjudication of OA No.97/2019 unless appropriate notifications are issued by the Central Government in accordance with Section 1(4) of the Act of 1993.
Fact of the Case:
The writ petition challenged the communication dated 01.08.2019 issued by the Under Secretary to the Government of India, Ministry of Finance and sought the transfer of Original Application No. 97/2019 pending before the Debt Recovery Tribunal, Guwahati to an appropriate Civil Court.
Finding of the Court:
The impugned communication was set aside and quashed, and the Debt Recovery Tribunal, Guwahati was directed to return Original Application No. 97/2019 to the Respondent No.2. The Respondent No.2 was given the liberty to file recovery proceedings before the competent Civil Court.
Issues: 1. Whether the Respondent No.3 could have amended the notification issued under Sub-Section (4) of Section 1 of the Act of 1993? 2. What relief can be granted to the parties before the Court?
Ratio Decidendi: The impugned communication was without authority and competence, and ultra vires the provisions of Section 1(4) of the Act of 1993. The Debt Recovery Tribunal, Guwahati cannot proceed with the adjudication of OA No.97/2019 unless appropriate notifications are issued by the Central Government in accordance with Section 1(4) of the Act of 1993.
Final Decision: The impugned communication dated 01.08.2019 was set aside and quashed. The Debt Recovery Tribunal, Guwahati was directed to return Original Application No. 97/2019 to the Respondent No.2, who was given the liberty to file recovery proceedings before the competent Civil Court.
JUDGMENT :
1. The instant writ petition is filed by the Petitioners challenging the communication dated 01.08.2019 issued by the Respondent No.3 i.e. the Under Secretary to the Government of India, Ministry of Finance and also for a direction that the Original Application No. 97/2019 pending before the Debt Recovery Tribunal, Guwahati should be transferred to appropriate Civil Court having jurisdiction over the subject matter.
2. The facts involved in the instant case are that Section 1(4) of the Recovery of Debts and Bankruptcy Act, 1993 (formerly known as Recovery of Debts Due to Banks and Financial Institutions Act, 1993) stipulates that the provisions of the said Act i.e. the Recovery of Debts and Bankruptcy Act, 1993 (hereinafter for short referred to as “the Act of 1993”) shall not apply where the amount of debt due to any bank or financial institution or to a consortium of Banks or financial institution is less than Rs.10,00,000/- or such other amount being not less than Rs.1,00,000/- as the Central Government may, by notification specify.
3. It reveals from the records that the Central Government had issued a notification on 06.09.2018 in exercise of the powers under Sub-Section (4) of Section 1 of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 whereby the Central Government specified that the provisions of the said Act shall not apply where the amount of debt due to any bank or financial institutions or to a consortium banks or financial institution is less than Rs.20,00,000/-.
4 It is also seen from the records that the said notification dated 06.09.2018 was put to challenge before the Rajasthan High Court in a writ petition being registered and numbered as D.B.C.WP No.21860/2018. The Rajasthan High Court vide an order dated 26.09.2018 stayed the notification dated 06.09.2018. Thereupon, vide an order dated 01.07.2019, the said writ petition was dismissed. In view of the stay granted by the Rajasthan High Court vide order dated 26.09.2018, a situation arose as to what would happen during the period from 26.09.2018 to 30.06.2019. The said aspect of the matter was deliberated with the Ministry of Law and Justice, Department of Legal Affairs and taking into account the judgment of the Supreme Court in the case of M/s Shree Chamundi Mopeds Ltd. Vs. Church of South India Trust Association, Madras reported in (1992) 3 SCC 1, an opinion dated 18.07.2019 was expressed by the Ministry of Law and Justice, Department of Legal Affairs that the conclusion can be safely drawn that the cases having suit value between Rs.10,00,000/- to Rs.20,00,000/- which were filed before DRTs during the stay period i.e. from 26.09.2018 to 30.06.2019 may continue in the DRTs till the conclusion so that no prejudice shall be caused to the parties who have filed such suits in good faith. This very opinion which was rendered by the Ministry of Law and Justice, Department of Legal Affairs was placed before this Court during the course of the hearing by Mr. S. S. Roy, the learned Central Government Counsel which is kept on record and marked with the letter “X”.
5. This Court further finds it relevant to take note of another development prior to the opinion being rendered by the Ministry of Law and Justice, Department of Legal Affairs. Vide another notification dated 11.07.2019, the Ministry of Finance (Department of Financial Services) issued a notification in exercise of the powers under Sub-Section (4) of Section 1 of the Recovery of Debt Due to Banks and Financial Institutions, 1993 whereby the notification dated 06.09.2018 was amended. The effect of the amendment so made vide the notification dated 11.07.2019 is that after the words “is less than twenty lakh rupees” occurring in the notification dated 06.09.2018, the words which were added/inserted are “but shall continue to apply to debts in respect of which an application for recovery has been filed before the Debts Recovery Tribunal prior to the date of publication of this notifi
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