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The Rajasthan High Court has stayed the operation of the government’s September 6 Gazette notification, which doubled the pecuniary limit to ₹20 lakh for filing loan recovery application in Debts Recovery Tribunals (DRTs) by banks and financial institutions.
The petitioner contended that the upping of the pecuniary limit could be done only by Parliament by amending Section 1(4) of the Recovery of Debts Due to Banks and Financial Institutions (RDDBFI) Act, 1993, for raising the limit upwards, and not by the Central government under its delegated powers by the impugned notification. The court has issued a notice to the respondent (Union of India), returnable by November 12.
“Till the returnable date, operation of notification, dated September 6, shall remain stayed,” said Justices Mohammad Rafiq and Goverdhan Bardhar.
What this means is that it is status quo for now on the pecuniary jurisdiction (₹10 lakh) of the DRTs. These tribunals have been established by the Government of India under an Act of Parliament (Act 51 of 1993) for expeditious adjudication and recovery of debts due to banks and financial institutions.
The pecuniary limit for filing loan recovery application in DRTs by banks and financial institutions was upped from ₹10 lakh to ₹20 lakh to declutter the tribunals. The Finance Ministry wants banks to step up recovery, with equal focus on non-IBC (Insolvency & Bankruptcy Code) cases as well.
When a bank or financial institution has to recover debt from a person, it makes an application named Original Application to the tribunal against the person.
The government has established 39 DRTs, including six new DRTs at Bengaluru, Chandigarh, Dehradun, Ernakulam, Hyderabad and Siliguri, and five Debts Recovery Appellate Tribunals (DRATs) across the country, under the provisions of the RDDBFI Act.
According to the Finance Ministry’s 2017-18 annual report, 19,199 cases (Original Applications) involving approximately ₹57,550.48 crore, were disposed of by 39 DRTs between April 1, 2017, and November 30, 2017.
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