Madras HC allows DRTs to decide case jurisdiction

The Madras High Court has left it to the Debt Recovery Tribunals (DRT) to decide under which Act the cases pending before them should be tried.

DRT sources said currently there is a confusion as banks which had earlier filed cases under the Recovery of Debts Due to Banks and Financial Institutions Act 1993 (popularly called the DRT Act) also pursued the same cases under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (Srafesi Act) is more commonly known as Securitisation Act, after it was enacted.

The Madras High Court, in an order in April 2004, has given liberty to debtors to file necessary objections with this regard by filing appropriate application with DRTs.

DRTs can consider and dispose in accordance with the law taking into consideration the facts and circumstances, only if defaulting borrowers raise objections that the case can be heard under only one Act.

When the Securitisation Act was enacted, the defaulting borrowers had filed a case with the Supreme Court on the contention that such an Act was unnecessary when there was already a DRT Act.

The Supreme Court did not buy defaulting borrowers' contention that there was no need for the Securitisation Act after the enactment of the DRT Act.

The court had observed that the DRT Act could not get the desired results of bad debt recovery hence there can be no bar to the parliament to enact a subsequent legislation.

Under the DRT Act, cases taken up by the DRT should be concluded in 180 days. For faster clearances pending with DRTs, the Narasimham Committee had recommended that each DRT should handle about 500-600 cases annually.

However, it takes nearly two years for cases to be cleared by the DRTs as they get bogged down by large number of pending cases.

The Supreme Court had upheld the constitutional rights of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Act, 2002, on April 8, 2004.

The Madras High Court had disposed off all the writ petitions pending with it in lieu with the Supreme Court's upholding the constitutional rights of the Securitisation Act.