Debt Recovery Tribunals upheld as a valid banking recovery mechanism with adequate safeguards and natural justice-based procedure.

Parliament was held competent to create specialised Debt Recovery Tribunals for recovery of bank dues because banking includes lending and recovery, and Article 246(1) was not limited by the enabling tribunal provisions in Articles 323A and 323B. The Act was also found neither arbitrary nor violative of Article 14, as its streamlined procedure, natural justice safeguards, and limited departure from the Code of Civil Procedure were directed to expeditious recovery. The Court further upheld the transfer of pending cases and the recovery machinery, noting that the scheme included procedural safeguards, hearing rights, affidavit evidence with cross-examination where necessary, and appellate review. The statutory framework was sustained in full.

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Issues: (i) Whether Parliament had legislative competence to enact a law establishing Debt Recovery Tribunals for recovery of bank dues; (ii) Whether the Act and its procedures were unconstitutional as arbitrary, unreasonable, or violative of Article 14 of the Constitution of India; (iii) Whether the provisions relating to procedure, transfer of pending cases, and recovery machinery were invalid for want of sufficient safeguards.

Issue (i): Whether Parliament had legislative competence to enact a law establishing Debt Recovery Tribunals for recovery of bank dues.

Analysis: The constitutional entries are to be construed broadly, and Parliament's power under Article 246(1) is not curtailed merely because Articles 323A and 323B provide enabling provisions for specified tribunals. Banking includes lending and recovery of dues, and the establishment of a specialised adjudicatory forum for expeditious recovery of bank debts falls within the legislative field relating to banking. The Act therefore rests on a valid legislative source and the contrary view that such a tribunal could not be created outside Articles 323A and 323B was not accepted.

Conclusion: Parliament had legislative competence, and the challenge on that ground failed.

Issue (ii): Whether the Act and its procedures were unconstitutional as arbitrary, unreasonable, or violative of Article 14 of the Constitution of India.

Analysis: The Act was designed to address delay in recovery of bank dues and to create a specialised forum with streamlined procedure. The Tribunal is not bound by the Code of Civil Procedure but is guided by natural justice, and the statutory scheme permits counterclaim and set-off while allowing the Tribunal to regulate procedure. The Court held that the absence of civil-court procedure did not make the law arbitrary, and the mere replacement of the ordinary forum by a tribunal did not erode judicial independence or offend Article 14.

Conclusion: The Act was not arbitrary, unreasonable, or violative of Article 14.

Issue (iii): Whether the provisions relating to procedure, transfer of pending cases, and recovery machinery were invalid for want of sufficient safeguards.

Analysis: The amended provisions and rules provided for selection of presiding officers through a committee involving the Chief Justice of India or his nominee, issuance of summons, hearing of both sides, affidavit-based evidence with cross-examination where necessary, appellate scrutiny of recovery officer orders, and recovery modes with statutory guidance. The transfer of pending matters to the Tribunal was held to be a logical consequence of conferring exclusive jurisdiction on the Tribunal, and the recovery provisions were supported by detailed procedural safeguards and appellate review. The provisions were therefore not held to be arbitrary or invalid.

Conclusion: The procedural, transfer, and recovery provisions were upheld.

Final Conclusion: The constitutional challenge failed in entirety, and the statutory scheme for recovery of bank debts through specialised tribunals was sustained as a valid and workable legislative measure.

Ratio Decidendi: Parliament may, under the constitutional scheme of legislative competence over banking, create specialised tribunals for recovery of bank dues, and such tribunals are valid where their procedure is guided by natural justice and supported by adequate statutory safeguards.

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