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HC upholds DRT action

Our Legal Correspondent

CHENNAI, March 30

THE Madras High Court has held that the Debt Recovery Tribunals set up under Act 51 of 1993 have powers to proceed against mortgaged properties, and their orders are in accordance with law.

Mr. Justice P. Sathasivam, who was disposing of appeals against an order of the IV Additional Judge, City Civil Court, Chennai, dismissing the injunction petition to restrain the respondents (Recovery Officer of Indian Bank, Debt Recovery Tribunal, Chenn ai, and Indian Bank, Chennai) from auctioning certain property against monies borrowed from the bank, observed that mere reading of Section 18 of Act 51 of 1993 indicated that the Debt Recovery Tribunal exercised powers of all the courts except the High Court and Supreme Court under Articles 226 and 32 of the Constitution.

The appellants, Mr. R.M. Rajendran and his wife Mrs. Valliammal, had bought some property with the knowledge of the earlier mortgage of the same property by one Mr. Velur D. Narayanan against a loan obtained by him from the second respondent bank (Indian Bank). Since Mr. Narayanan did not repay the amount, the bank filed a suit against him before the Original Side of this court.

The suit was instituted on August 18, 1996 and consequent upon the constitution of the Debt Recovery Tribunal, Chennai, on November 4, 1996, the suit was pending in this court and was transferred to the Tribunal.

The Judge said that appellants herein purchased the very same property from Mr. Velur D. Narayanan on October 16, 1996. The bank had filed the suit on the Original Side of this court on August 16, 1996. It was clear that the sale had taken place two mont hs after the institution of the suit. It was not the case of the appellants that they were not aware of the mortgage created by Mr. Narayanan.

In spite of the admitted factual position, it was not open to the appellants to dispute the filing of the suit before the Original Side of this Court and the subsequent proceedings which had taken place before the Debt Recovery Tribunal.

The Tribunal was a substitute for civil court in matters relating to debts due to banks and financial institutions. The recovery certificate issued under sub-section 7 of Section 19 of the Act was a decree issued by the civil courts. It had the force and effect of the decree passed by the Civil courts. The cumbersome and time-consuming process adopted by the courts under CPC had been avoided by the aforesaid Act.

The Recovery Officer of the Tribunal who proceeded on the basis of the recovery certificate under Section 19(7) of the Act was performing the functions of the executing court. Most of the provisions of Order 21 CPC relating to execution of decrees were c ontained in the Second and Third Schedules of the Income-Tax Act, 1961, and the Income-Tax (Certificate Proceedings) Rules, 1962.

In the light of the provisions in the Act and Rules, the Judge said he was satisfied that the second respondent bank was entitled to proceed against the suit property and the orders passed by the first respondent (Debt Recovery Tribunal) were in accordan ce with law. Inasmuch as all the equities were against the appellants, they were not entitled to equitable remedy of injunction and their application for injunction from auctioning the said property deserved to be dismissed.

The appeal had no merit and was dismissed.