 "Hope for debt-heavy companies")
When the Debt Recovery Tribunal (DRT) on Tuesday ordered J.P.MorganChase Bank not to give defaulter Vijay Mallya access to $40 million parked in its New York branch, and also sought the statement of accounts with the bank, it was well within its rights to do so under Indian debt recovery laws.
Debt Recovery Tribunals have the same powers as are vested in a civil court under the Civil Procedure Code, 1908 (CPC). The procedure and powers of DRT and the Debt Recovery Appellate Tribunal are mentioned in section 22 of Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
Under Section 2 of the Act, DRTs have powers to summon and enforce the attendance of any person and to examine him or her on oath, receive evidence on affidavits, examine witnesses or documents, review its own decisions, dismiss an application for default or deciding it ex parte, among others.
“Further, in the case of Allahabad Bank vs Radhakrishna Maity, the Supreme Court held that in view of Section 22 (1) of the Act, DRT can exercise powers contained in CPC, and can even go beyond as long as it passes orders in conformity with the principles of natural justice,” said Babu Sivaprakasam, partner and head of banking & finance practice, Economic Laws Practice.
Debt Recovery Tribunals have the same powers as are vested in a civil court under the Civil Procedure Code, 1908 (CPC). The procedure and powers of DRT and the Debt Recovery Appellate Tribunal are mentioned in section 22 of Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
Under Section 2 of the Act, DRTs have powers to summon and enforce the attendance of any person and to examine him or her on oath, receive evidence on affidavits, examine witnesses or documents, review its own decisions, dismiss an application for default or deciding it ex parte, among others.
“Further, in the case of Allahabad Bank vs Radhakrishna Maity, the Supreme Court held that in view of Section 22 (1) of the Act, DRT can exercise powers contained in CPC, and can even go beyond as long as it passes orders in conformity with the principles of natural justice,” said Babu Sivaprakasam, partner and head of banking & finance practice, Economic Laws Practice.
Legal experts said that it will be within the powers of DRT and DRAT for the purposes of discharging their functions to seek the production of bank statements and details of share sale of a defaulter.
A consortium of banks, led by the State Bank of India, has been taking measures to recover Rs 9,000 crore of dues from Vijay Mallya-promoted bankrupt airline, Kingfisher Airlines. The $40 million is part of the $75 million deal that Vijay Mallya received from Diageo Plc, to give up his chairmanship in United Spirits.
A consortium of banks, led by the State Bank of India, has been taking measures to recover Rs 9,000 crore of dues from Vijay Mallya-promoted bankrupt airline, Kingfisher Airlines. The $40 million is part of the $75 million deal that Vijay Mallya received from Diageo Plc, to give up his chairmanship in United Spirits.
