2017 (3) TMI 1895 - HC - Indian Laws

Court rules against travel restrictions by Debt Recovery Tribunal, upholds appellate decision

ICICI BANK LTD. Versus KAPIL PURI & ORS

The Court dismissed the petition, ruling that the Debt Recovery Tribunal (DRT) lacked jurisdiction to impose travel restrictions on the respondents. The ... Imposition of travel restrictions on a defaulting borrower/guarantor - whether the Tribunal constituted under the Recovery of Debts Due to Banks & Financial Institutions Act, 1993 has the power in terms of the provisions of the said Act to impose travel restrictions on a defaulting borrower/guarantor ? - HELD THAT:- Supreme Court in the case of Allahabad Bank, Calcutta [1999 (9) TMI 767 - SUPREME COURT], referring to Sections 19(6) (as existed) [presently Section 19(12)] and 22(1) has held that the Tribunal is not bound by the procedure laid by the Code of Civil Procedure. The Tribunal can travel beyond the Code of Civil Procedure and the only pre-condition is that it has to observe the principles of natural justice. The power of the Tribunal under sub- section 6 of Section 19 to pass injunction or stay orders is not exhaustive but the width and amplitude of the powers can be gathered from Section 22(1). The Supreme Court also observed Rule 18 of the Tribunal enables the Tribunal to pass orders to secure ends of justice. The Tribunal has in the penultimate para held that there is no material to show to the Tribunal that if the respondents 1 and 2 are permitted to travel abroad, they are not likely to return back. The same is a finding of fact and nothing has been shown to us nor any material placed in support of this stand of the petitioner Bank. There are no merit in the present petition. The same is dismissed. Issues Involved:1. Jurisdiction of the Debt Recovery Tribunal (DRT) to impose travel restrictions on defaulting borrowers/guarantors.2. Interpretation of Sections 19(25) and 22(1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.3. Application of the principles of natural justice and procedural laws.4. The validity of contractual clauses restricting travel in the context of fundamental rights.Analysis:Jurisdiction of DRT to Impose Travel Restrictions:The primary issue was whether the DRT had the power to restrain defaulting borrowers/guarantors from traveling abroad. The petitioner bank argued that Sections 19(25) and 22(1) of the Act of 1993, read with Rule 18 of the Debt Recovery Tribunal (Procedure) Rules, 1993, conferred such powers on the Tribunal. The petitioner cited several judgments to support this claim, asserting that the Tribunal could pass orders necessary to secure the ends of justice and prevent abuse of its process.Interpretation of Sections 19(25) and 22(1) of the Act of 1993:The Court examined Sections 19, 22, and 25 of the Act of 1993. Section 19(25) allows the Tribunal to make orders to prevent abuse of its process or to secure the ends of justice. Section 22(1) states that the Tribunal is not bound by the Code of Civil Procedure but should be guided by principles of natural justice. The petitioner argued that these provisions empowered the Tribunal to impose travel restrictions to ensure the recovery of debts.Application of the Principles of Natural Justice and Procedural Laws:The petitioner relied on judgments such as Industrial Credit & Investment Corporation of India Ltd. v. Grapco Industries Ltd., Allahabad Bank, Calcutta v. Radha Krishna Maity, and others, which held that the Tribunal could exercise powers beyond the Code of Civil Procedure, provided it observed principles of natural justice. The petitioner contended that the Tribunal's power to restrain travel was implicit in its broader mandate to secure justice and prevent abuse.The Validity of Contractual Clauses Restricting Travel:The petitioner also argued that the Deeds of Guarantee executed by the respondents contained a clause prohibiting them from leaving India without the bank's permission. The petitioner asserted that this contractual agreement should be enforced, citing the Supreme Court's judgment in Zoroastrian Cooperative Housing Society Ltd. v. District Registrar Cooperative Societies (Urban), which upheld the freedom to enter into contracts.Judgment Analysis:The Court referred to several judgments, including the Kerala High Court's decision in Annai Jayabharathi v. Debt Recovery Tribunal and the Madras High Court's decision in ICICI Bank Ltd. v. Debt Recovery Appellate Tribunal, which supported the Tribunal's power to impose travel restrictions. However, the Court also considered contrary judgments, such as the Gujarat High Court's decision in State Bank of India v. Praful Chandra V. Patel and the Delhi High Court's decisions in A.S. Mittal v. PO, Debt Recovery Tribunal and Sanjeev R. Apte v. IFCI Ltd., which held that the Tribunal lacked such powers.The Court concluded that the Tribunal, being a creature of statute, could only exercise powers explicitly conferred by the statute. The Court agreed with the DRAT's reasoning that the Act of 1993 did not empower the Tribunal to restrain a person from traveling abroad. The Court also noted that the respondents' presence was not necessary for the recovery proceedings and that there was no material evidence to suggest that the respondents would not return if allowed to travel.Conclusion:The Court dismissed the petition, holding that the DRT did not have the jurisdiction to impose travel restrictions on the respondents. The contractual clause in the Deeds of Guarantee did not empower the Tribunal to restrict travel, and the Tribunal's order was not justified under the Act of 1993. The Court affirmed the DRAT's decision to set aside the DRT's order.