The Supreme Court has come down heavily on the high courts for interfering in debt recovery cases of nationalised banks and other public sector financial institutions’ through writ jurisdiction and the debt recovery tribunals for their failure to expedite the recoveries of non-performing assets.
Though the tribunal initially functioned with a great zeal but “with the passage of time the proceedings before them became synonymous with those of the regular courts and the lawyers representing the borrowers and defaulters used every possible mechanism and dilatory tactics to impede the expeditious adjudication of such cases,” the apex court in a judgement said. A bench of justices G.S. Singhvi and A.K. Ganguly while deciding a petition of United Bank of India challenging the interference of the high court, pointed out that the Parliament passed new enactment — Secruritisation and Reconstitution of Financial Assets and Enforcement Act in 2002, to ensure fast recovery of the NPA, which at one time were to the tune of Rs 1,20,000 crore.
But the unnecessary interference by HCs using their special powers of writ jurisdiction under Article 226 of the Constitution, again had created problem for tribunals in for fast decisions in the NPA cases.
“It is a matter of serious concern that despite repeated pronouncements of this court (SC), the high courts continue to ignore the availability of statutory remedies under the Debt Recovery Tribunal Act, 1993 and the SARFAEST Act, 2002 and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues.” Cautioning the HCs against using writ powers under Article 226, the bench said “we hope and trust that in future the HCs will exercise their discretion in such matters with greater caution, care and circumspection.”
While terming the slow recovery of NPA as a bane to the nation’s economy, the apex court specifically referred to the recommendations of the Narasimha Committee and Andhyarujina committee, which had highlighted the problems of banks and financial institutions in expediting the debt recovery cases, which linger on in courts for years resulting him huge revenue losses to them.
Terming the DRT Act and SARFAESI Act as “most radical legislative” enactments by Parliament to tackle the malaise of NPA, the apex court said the HCs should allow the cases to be handled by the tribunals under the provisions of these legislations.