Page 1 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS.617-618 OF 2013

(Arising Out of SLP (C) Nos. 22808-22809 of 2010)

UNION OF INDIA & ORS. — APPELLANT

S

VERSUS

DEBTS RECOVERY TRIBUNAL

BAR ASSOCIATION & ANR.

— RESPONDENTS

O R D E R

1.Leave granted.

2.These appeals arise out of judgment dated 18

th

September 2008 in CWP No. 11742 of 2007, and order

dated 21

st

August 2009 in Review Application 161 of

2009, rendered by the High Court of Punjab & Haryana,

whereby certain directions relating to provision for

adequate space for the smooth functioning of the Debts

Recovery Tribunals (for short “the DRTs”) at

Chandigarh, have been issued. The circumstances that

have led to the filing of these appeals are succinctly

stated below.

1

Page 2 3.A Bench of the DRT was established at Chandigarh by

the Union of India (for short “the UOI”), vide notification

dated 24

th

March 2000, in a rented building.

Subsequently, a second Bench of the DRT was

established, which was supposed to function from

another premises. However, both the Benches

continued to function from the same premises where

the earlier Bench was functioning. By a communication

dated 20

th

July, 2007, the UOI directed that the second

Bench would function from the premises acquired for it.

Thereupon, the respondent Bar Association made a

representation to the Presiding Officers of both the

Benches, requesting them to inter alia, continue to

function from the premises from where the first DRT

was functioning. However, in light of the aforesaid

communication issued by the UOI, the request of the

Bar Association was not acceded to.

4.Aggrieved, the Bar Association filed a Civil Writ Petition

in the High Court of Punjab & Haryana, seeking

directions to the UOI, to inter alia provide adequate

accommodation for the functioning of both the DRTs;

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Page 3 and to frame Rules for recruitment/appointment of the

Presiding Officer & the Recovery Officers. In light of the

assurance on behalf of the UOI that adequate space

would be taken on lease for the smooth functioning of

both the Benches at the same place, and that further,

land was also being acquired for housing the DRTs, the

writ petition was disposed of with a direction that the

construction of the building shall be completed within

three years from the date of its order. However, the

High Court did not examine the other issues referred to

above on the ground that they were unrelated to the

inadequacy of office space needed by the DRTs.

5.Having failed to get the said order reviewed, the UOI is

before us in these appeals. In order to appreciate the

issue involved in the matter before us, it would be

useful to have a bird’s eye view of the constitution of

DRTs and their functioning.

6.Prior to the promulgation of the Recovery of Debts Due

to Banking and Financial Institutions Act, 1993 (for short

“the RDDBFI Act”), all banks and financial institutions

were required to file their recovery cases in the form of

suits before the civil courts, on the basis of their

3

Page 4 territorial and pecuniary jurisdictions. Due to delays in

the disposal of such suits by civil courts on account of

heavy dockets, the recovery of loans and enforcement

of securities suffered. Thus, an urgent need was felt to

work out a suitable mechanism through which, the dues

of the banks and financial institutions could be realized

expeditiously. This led to the establishment of DRTs and

the Debts Recovery Appellate Tribunals (for short

“DRATs”) under the RDDBFI Act for expeditious

adjudication and recovery of debts due to banks and

financial institutions.

7. As per the information available, there are all in all 33

DRTs established in the entire country out of which

Delhi, Mumbai, Chennai, Kolkata, Chandigarh and

Ahmedabad have two or more DRTs each. However,

there are only five DRATs, established in Allahabad,

Chennai, Delhi, Kolkata and Mumbai, each covering

multiple DRTs of a particular geographical zone. As a

result, DRATs are overburdened and are also facing an

acute shortage of infrastructure and staff.

8. Given the poor state of affairs as highlighted by the

Bar Association, we were constrained to take

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Page 5 cognizance and hence, vide order dated 15

th

November

2010, directed the learned Addl. Solicitor General to file

an affidavit suggesting measures for improving the

working of the said Tribunals. Subsequently, on 7

th

April

2011, this Court appointed Mr. Rajeeve Mehra, Senior

Advocate, as amicus curiae to assist the Court.

Consequently, having considered the views of all DRTs,

DRATs as well as the Bar Associations, the learned Addl.

Solicitor General and the learned amicus curiae have

filed their responses, highlighting the core issues and

respective suggestions to address the same. In light of

the above, the UOI was directed to place on record their

response on the issues so raised, in particular, on the

criteria being adopted for appointment of the members,

Recovery Officers etc. In pursuance thereof, the UOI has

filed status reports, indicating the measures agreed

upon by the Government to address the

aforementioned issues. Before we proceed to list the

same, it would be helpful to discuss the core issues in

respect of which the suggestions have been made.

9.At present, DRTs and DRATs suffer from severe

infrastructural constraints. Most of the DRTs are being

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Page 6 run from rented premises and face acute shortage of

space, exorbitant rents, limitations on non-

renewal/extension of leases etc. It has been brought to

our notice that where the DRTs have been allotted

space of about 5000 sq. ft., the actual requirement is

not less than 7,500 sq. ft. Similarly, the learned amicus

curiae brought to the fore several other issues plaguing

the smooth functioning of the Tribunals, the most

significant being: that there is a need to increase the

number of DRATs in the country to reduce the workload

of the existing DRATs; that many serving Recovery

Officers lack a judicial background or are appointed on

deputation from those very banks or financial

institutions which are filing recovery cases in DRTs,

thereby raising serious questions about their

independence, impartiality and fairness; that the time

taken in filling up vacancies for the posts of senior

officials of DRTs and DRATs is extremely long; and that

the presence of modern and technological systems of

administration continues to be elusive in the

administration of justice in as much as many DRTs and

DRATs do not even have websites or computerized

systems.

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Page 7 Suggestions made by the learned Addl. Solicitor

General and learned a micus curiae

S.

No

Issue Suggestions of

the learned

Addl. Solicitor

General

Suggestions of

the learned

amicus curiae

1.Premises &

Physical

Infrastructur

e

All DRTs and

DRATs should be

housed in

suitable

buildings.

Pending

construction of

these buildings,

the Tribunals

should be housed

in rented

premises having

an area of at

least 8000 sq.ft.

where suitable

space for

records, etc. and

amenities for the

officers of the

court, staff,

litigants and

lawyers should

be provided.

Concurring

2.Increase in

Number of

DRTs/DRATs

---

A DRAT must be

established in

each state

where there is a

DRT or multiple

DRTs. DRATs

may be

established in

the city where

the concerned

High Court of a

State is located.

3.Appointment Qualifications for Appointment of

7

Page 8 of Recovery

Officers

Recovery Officers

should include at

the very least, a

basic degree in

law. If possible,

judicial officers

or advocates

with five years

standing at the

Bar may be

appointed as

Recovery

Officers.

Recovery

Officers by way

of deputation

from

Government

Departments/Mi

nistries, Banks

and Financial

Institutions

should be

discontinued.

Instead, the

person

appointed must

be a person of a

judicial

background,

preferably a

judicial officer of

the rank below

the designation

of Addl. District

and Sessions

Judge on

deputation, and

should be given

the same

facilities and

perks he/she

enjoys in the

parent cadre.

4.Vacancies

and Status of

Senior

Officers of

DRTs/DRATs

A select list of

candidates

should be

maintained to fill

the vacancies.

The selections

should be made

within a fixed

time frame.

a. For posts

other than

Presiding

Officers and

Recovery

Officers, on-

going process of

sourcing

staff/officers on

deputation

should be

discontinued,

and permanent

cadres should

8

Page 9 be established.

b. The post of

Presiding

Officers,

Registrars and

Recovery

Officers should

be filled up from

the state cadre

of Judicial

Officers through

deputations and

rotations so that

these posts do

not remain

vacant.

c. Judicial

officers must be

provided the

same facilities

and perks as

they enjoy in

their parent

cadres. Further,

residential

accommodation

must be

necessarily

earmarked for

Presiding

Officers.

5.Information

Technology

and

Computerisa

tion

a.DRTs and

DRATs must

have a

website.

Possibility of

publication

of notices

and

auctions on

the website

should be

explored,

keeping

necessary

Concurring

9

Page 10 safeguards

in mind.

b.The National

Informatics

Centre

should be

called upon

to prepare

appropriate

software for

computeriza

tion of

processes in

the DRTs,

from filing

to disposal,

so that the

time taken

for disposal

is reduced.

10.We are pleased to note the positive and forthcoming

response of the UOI to the suggestions of the learned

Addl. Solicitor General and the learned amicus curiae.

Having taken note of the urgent need to address the

abject conditions prevailing in the Tribunals, the UOI,

has agreed to:

i.Provide adequate infrastructure to DRTs/DRATs on

the following basis:

a.If sufficient space as per requirement is available in

the Government building, then space from the

10

Page 11 concerned department will be allotted on a

permanent basis.

b.If space is not available in the Government building

but sufficient space is available in public sector

undertakings’ buildings, then the DRTs/DRATs may

move to the same on a permanent lease/rental basis.

c.If (a) and (b) are not possible, then suitable land may

be purchased for construction of a building, or a

suitably constructed building may be purchased from

public authorities. This may be completed in a

phased manner. In the mean time, DRTs and DRATs

may continue at their present locations or hire

alternative suitable space as per norms.

d.Further, on the basis of a spot study conducted by

the Department of Financial Services on 11

th

December 2011, the existing space authorization of

5000 sq. ft. for DRTs and 3600 sq. ft. for DRATs was

examined. In light of the study and requirements of

additional facilities, the same has been increased to

7200 sq. ft. and 4500 sq. ft. respectively. In case

more than one DRT is accommodated in one building,

space would be saved for common facilities such as

bar room, consultation chamber, reception, canteen,

11

Page 12 washrooms, etc. In such a case, the space

requirements for the second and third DRT (if located

in the same building) may be around 6000 sq. ft. and

5500 sq. ft. respectively.

e.Preference is to be given to buildings where parking

facility is provided either within the building premises

or in the vicinity.

ii.Consider the feasibility of establishing more

DRTs/DRATs and redefining the jurisdiction of some

DRTs on the basis of data showing pendency of cases

and existing workload of all the DRTs and DRATs.

iii. Fill all anticipated vacancies for the posts of

senior officers, as and when they arise, with

candidates who have already been selected

according to the stipulated rules.

iv. Extend the facility of General Pool of

Accommodation of the type entitled to Group A

officers upto April 2013 to the Presiding Officers. In

the meantime, the Ministry of Finance and Ministry of

Urban Development will examine all issues to finalise

modalities for either buying or construction of

flats/houses for use of the members of the Tribunals.

Further, in case this proposal does not materialize,

12

Page 13 then the possibility of hiring accommodation shall be

considered at the appropriate stage.

v.Implement the “e-DRT Project” to automate and

improve DRT services by building IT systems as

expeditiously as possible.

vi.Carry out the recruitment of Recovery Officers by

promotion, failing which, by deputation, in

accordance with the eligibility criteria as defined in

the recruitment rules of each DRT. Keeping in mind

the profile of the post of a Recovery Officer, it may

not be possible to appoint judicial officers of a rank

below that of an Additional District and Sessions

Judge, as suggested by the learned a micus curiae.

However, the UOI shall give preference to only those

candidates who either have legal experience or hold

a degree in law. Further, with respect to improving

the selection procedure of Recovery Officers, the

Departmental Promotion Committee (DPC), provided

for in the recruitment rules, shall be expanded to

include the Presiding Officer of any DRT as a member

of the DPC to take part in the selection of the

Recovery Officers. At the same time, the level of

representation of the Reserve Bank of India in the

13

Page 14 DPC will also be raised from the rank of Deputy Legal

Advisor to Joint Legal Advisor, RBI.

vii.Hold regular training programmes for Recovery

Officers/Assistant Registrars/Registrars to give them

minimum working knowledge of the procedures

followed in DRTs, the provisions of the RDDBFI Act,

the SARFAESI Act, the Rules made thereunder, and

the provisions of Schedules II and III of the Income

Tax Act, 1961.

11.We are confident that the aforementioned measures

proposed by the UOI, shall go a long way in improving

the administration of justice in these Tribunals. We are

in agreement with these proposals and hope that they

will be implemented efficiently and expeditiously by the

concerned authorities. Having said that, it is necessary

that the exercise undertaken by this Court must reach

its logical end sans any delays and glitches or any other

hindrances in the implementation of these suggestions.

To this effect, we issue the following directions:

i.All the aforementioned proposals and measures

agreed upon by the UOI in response to the

suggestions made by the learned amicus curiae and

14

Page 15 the Addl. Solicitor General shall be implemented

expeditiously within a suitable time frame. In the

event that the UOI or the concerned authority fails to

comply with the aforesaid assurances, it will be open

to the learned amicus curiae to bring the same to this

Court’s notice for appropriate directions.

ii.Further, we believe that the High Courts are

empowered to exercise their jurisdiction of

superintendence under Article 227 of the Constitution

of India in order to oversee the functioning of the

DRTs and DRATs. Section 18 of the RDDBFI Act

leaves no scope for doubt in this behalf. It reads thus:

18. Bar of Jurisdiction.—On and from the

appointed day, no court or other authority shall

have, or be entitled to exercise, any jurisdiction,

powers or authority (except the Supreme Court,

and a High Court exercising jurisdiction under

articles 226 and 227 of the Constitution) in

relation to the matters specified in section 17.

Article 227 of the Constitution stipulates that every High

Court shall have superintendence over all courts and

tribunals throughout the territories interrelation to which it

exercises jurisdiction. This power of superintendence also

extends to the administrative functioning of these courts

and tribunals [Shalini Shyam Shetty & Anr. Vs.

15

Page 16 Rajendra Shankar Patil

1

]. Hence, in light of the above,

we expect that all the High Courts shall keep a close

watch on the functioning of DRTs and DRAT, which fall

within their respective jurisdictions. The High Courts shall

ensure a smooth, efficient and transparent working of the

said Tribunals. We are confident that through the timely

and appropriate superintendence of the High Courts, the

Tribunals shall adhere to the rigour of appropriate

standards indispensable to the fair and efficient

administration of justice.

12.Before parting, we place on record our deep

appreciation for the able assistance rendered to us by

Mr. Sidharth Luthra, the learned Addl. Solicitor General,

Mr. Rajeeve Mehra, the learned amicus curiae and Mr.

Arjun Kapoor, Law Clerk-cum-Research Assistant.

1

(2010) 8 SCC 329

16

Page 17 13.These appeals stand disposed of in the above terms.

………………………………… .

(D.K. JAIN, J.)

..………………………………….

(H.L. DATTU, J.)

NEW DELHI,

JANUARY 22, 2013.

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