DRT Is Not A ‘Court’ And It Exercises Powers Of A Civil Court Only In Respect Of Limited Matters

1.         Hon’ble Supreme Court in Nahar Industrial Enterprises Ltd vs Hongkong & Shanghai Banking Corp. {2009 (8) SCC 646; 2009 (2) DRTC 273 (SC); Decided on 29 July, 2009} observed that:

“We may notice that a learned Single Judge of the Calcutta High Court in State Bank of India vs Madhumita Construction Pvt Ltd (AIR 2003 Cal. 7) and a Division Bench of the Delhi High Court in Cofex Exports Ltd. vs. Canara Bank [AIR 1997 Delhi 355] have held that the DRT is not a court and it exercises powers of a civil court only in respect of limited matters. Civil Courts are constituted under statutes, like Bengal, Agra and Assam Civil Courts Act, 1887. Pecuniary and territorial jurisdiction of the civil courts are fixed in terms thereof. Jurisdiction to determine subject matter of suit, however, emanates from Section 9 of the Code.

                        “If the Tribunal was to be treated to be a civil court, the debtor or even a third party must have an independent right to approach it without having to wait for the Bank or Financial Institution to approach it first. The continuance of its counter-claim is entirely dependant on the continuance of the applications filed by the Bank. Before it no declaratory relief can be sought for by the debtor. It is true that claim for damages would be maintainable but the same have been provided by way of extending the right of counter-claim.”

2.                  Hon’ble Supreme Court in Nahar Industrial Enterprises case (supra) further observed that:

“The Tribunal was constituted with a specific purpose as is evident from its statement of objects. The preamble of the DRT Act also is a pointer to that too. We have also noticed the scheme of the Act. It has a limited jurisdiction. Under the DRT Act, as it originally stood, did not even have any power to entertain a claim of set off or counter-claim. No independent proceedings can be initiated before it by a debtor. A debtor under the common law of contract as also in terms of the loan agreement may have an independent right. No forum has been created for endorsement of that right. It was held by hon’ble Supreme Court that the Tribunal, therefore, would not be a Civil Court.

“Further, Section 22 of the DRT Act provides that the Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908, therefore, DRT is not obliged to undertake a full-fledged trial in terms of the provisions of the Code of Civil Procedure and/or the Evidence Act. Therefore, the Guarantor would be deprived of his right in relation to the procedural mechanism as contained in the Code as also the Evidence Act. Also, before the Tribunal no declaratory relief of discharge from liability can be sought for by the Guarantor.”

 

Thus, Hon’ble Supreme Court held that if the Tribunal was to be treated to be a civil court, the debtor or even a third party must have an independent right to approach it without having to wait for the Bank or Financial Institution to approach it first. The Tribunal was constituted with a specific purpose as is evident from its statement of objects. It has a limited jurisdiction. No independent proceedings can be initiated before it by a debtor. A debtor under the common law of contract as also in terms of the loan agreement may have an independent right. No forum has been created for endorsement of that right. It was held by hon’ble Supreme Court that the Tribunal, therefore, would not be a Civil Court.

DRT Has No Jurisdiction

























 hh

 

 

About Us

Narendra has around 26 years of rich experience in the domain of Companies Act, Arbitration and Conciliation Act, Consumer Protection Act, SICA, 1985,

more about us
get in touch
  • 199, Alkapuri,Dewas-455001 (MP) India

  • (07272) 421309

  •  
  •  9424858767

Subscription

Get subscribed with us!!!!!