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High courts differ on DRT jurisdiction

The Bombay High Court last week differed from the Delhi high court view in the matter of jurisdiction of the Debt Recovery Tribunal when a dispute under the Securitisation Act is involved. In this case, GSL India Ltd vs Asset Reconstruction (India) Ltd, the debt recovery tribunal and the appellate tribunal in Mumbai had rejected the application of GSL India, maintaining the company had no jurisdiction in the matter as the property under proceedings under the Securitisation Act was situated in Gujarat.

Their view was that the tribunal in that state will have jurisdiction. The Bombay High Court reversed that position and ruled that the Mumbai tribunal could deal with the matter. Its interpretation of the provisions of the Debt Recovery Act, the Recovery of Debts due to Banks and the Securitisation Act differed from that of a full bench decision of the Delhi High Court, which is applicable in Delhi jurisdiction.

The Hon'ble court said -

1) Firstly, we are unable to agree with the finding of the Delhi High Court that the proceedings referred to in section 19(1) of the RDDB Act are merely proceedings for recovery of debt and not for enforcement of mortgage.

2) Secondly, we are unable to agree with the reasoning of the Delhi High Court that under section 19(23) of the RDDB Act, the DRT is required to send a copy of the Recovery Certificate for execution to the DRT within whose jurisdiction the property is situated.

3) We are also unable to agree with the Delhi High Court 3 2012 (6) Bom.C.R. 200 VRD 51 of 53 WP 73 of 14.doc judgment that in the RDDB Act, there is no mention of mortgage and an application under section 19(1) thereof is required to only specify the properties required to be attached and which may not necessarily be the mortgaged property. Section 2(g) of the RDDB Act and which defines the word "debt" would certainly take within its sweep a relief for enforcement of mortgage.

4) In view of our discussion earlier in this judgment, we hold that the DRT whilst deciding whether it has territorial jurisdiction to entertain a Securitisation Application filed under section 17 of the SARFAESI Act would be guided by the principles enshrined in section 19(1) of the RDDB Act and not by section 16 of the Code of Civil Procedure, 1908. Rule is accordingly made absolute and the Petition is granted in terms of prayer clause (a).

 Article referred: http://www.business-standard.com/article/opinion/duress-to-sign-away-dues-condemned-115122000687_1.html

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