Madhya Pradesh High Court Strikes Down DRT's Travel Restrictions on Debtor, Upholding Fundamental Right to Go Abroad

Case Overview

In a significant ruling on personal liberty, the High Court of Madhya Pradesh at Indore has quashed conditions imposed by the Debts Recovery Tribunal (DRT) that effectively barred a debtor from traveling abroad without substantial financial security. The case, Rajiv Soni vs. ICICI Bank (Writ Petition No. 40054 of 2025), centers on Rajiv Soni, a former director and co-guarantor of loans to Metalman Industries Limited, who sought permission to take up a job offer in the United States.

Soni challenged an order dated August 22, 2025, from the DRT's Recovery Officer, which allowed his travel but required him to deposit ₹50 crore in fixed deposit receipts (FDRs) or provide equivalent surety in immovable property or shares. Failure to return would trigger invocation of the guarantee. The court, exercising its writ jurisdiction under Article 226 of the Constitution, ruled that such conditions infringe on fundamental rights and exceed the DRT's statutory powers under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBFI Act).

Background and Legal Question

The dispute arose from loan defaults by Metalman Industries Limited, leading ICICI Bank to declare it a non-performing asset (NPA). The bank filed proceedings under Section 19(1) of the RDDBFI Act, resulting in a recovery certificate. As a co-guarantor, Soni was named a corporate debtor. With his assets already attached and an international job offer in hand, Soni applied to the DRT for travel permission, which was granted conditionally as described.

The core legal question was whether the DRT, as a statutory body, has the authority to impose restrictive conditions on a person's right to travel abroad, especially when no explicit provision in the RDDBFI Act permits such interference.

Arguments from Both Sides

Soni's counsel argued that the conditions were arbitrary, illegal, and unreasonable, violating Articles 19(1)(g) (right to practice any profession or carry on any occupation, trade, or business) and 21 (right to life and personal liberty) of the Constitution. They contended that the RDDBFI Act and its rules grant no power to the DRT to regulate foreign travel, and existing asset attachments sufficed as security. Precedents like Satwant Singh Sawhney v. D. Ramarathnam (AIR 1967 SC 1836) and Maneka Gandhi v. Union of India (AIR 1978 SC 598) were cited to affirm travel abroad as a facet of personal liberty, which cannot be curtailed without enacted law.

ICICI Bank's counsel countered that the writ petition was not maintainable against the bank and that Soni had an alternate remedy of appealing to the DRT Presiding Officer. They highlighted Soni's outstanding liability, past non-compliance with court orders (e.g., failing to deposit ₹1 crore in 2018), and the risk of him absconding, justifying the conditions to secure recovery.

Key Precedents and Principles Applied

The court relied heavily on recent high court decisions interpreting the RDDBFI Act in light of constitutional rights:

• In Anurag v. Bank of India (2022 SCC OnLine Bom 1160), the Bombay High Court held that "personal liberty" under Article 21 includes the right to travel abroad, and the DRT lacks any express or implied power to restrain it. Excerpt: "In the absence of a specific provision... the Debts Recovery Tribunal has no power to restrain a citizen from travelling abroad."

• ICICI Bank Limited v. Kapil Puri (2017 SCC OnLine Del 7377) ruled that Section 19(25) of the RDDBFI Act does not empower travel restrictions, as the tribunal's role is limited to recovery from secured assets, not personal movement. The Delhi High Court noted: "The Debts Recovery Tribunal being a creature of statute would have power as conferred... If the intention was to confer such power... it ought to have been so conferred."

• State Bank of India v. Prafulchandra V. Patel (2011 SCC OnLine Guj 1055) affirmed that without "enacted law" regulating travel, the DRT cannot prohibit departure, distinguishing it from powers like civil detention under Section 19(17).

The court emphasized that deprivation of liberty requires procedure established by law (Article 21), and no such law exists under the RDDBFI Act for travel curbs. Imposing conditions tantamounts to prohibition, rendering them unsustainable.

Court's Reasoning and Excerpts

The single judge bench observed that while the DRT granted permission, the ₹50 crore condition effectively nullified it, depriving Soni of his constitutional rights. Key excerpt: "When the Tribunal does not have the power to deprive a person of his right to travel abroad then it would not also have any power to impose any condition upon him for travelling abroad."

On maintainability, the court exercised discretion, noting that fundamental rights violations warrant direct intervention despite alternate remedies. It dismissed the bank's absconding risk concerns, as assets were already secured.

Final Decision and Implications

The petition was allowed, quashing condition No. (ii) of the August 22, 2025, order. Soni can now travel abroad without the burdensome financial hurdle, preserving his employment prospects.

This ruling reinforces that tribunals like the DRT cannot encroach on constitutional freedoms absent explicit statutory backing. It serves as a precedent for debtors facing similar restrictions, potentially easing international mobility for guarantors while underscoring banks' reliance on asset recovery over personal liberties. For legal professionals, it highlights the interplay between specialized recovery laws and broader constitutional safeguards.