Debt Recovery Tribunals poor performance has worsen the crisis in Indian Banking
One of the main reasons affecting the Indian economy is the consistent rise in the NPA’s of all the public/private sector banks. As per the report published in The Hindu as of June 2016 the total amount of Gross NPAs for all the banks is around 6 lakh crores. Further it reveals that top 20 NPAs account are to the tune of Rs. 1.54 lakh crores. When the defaulters does not pay their debts, the bank approaches the DRT in order initiate the process to recover the money from the defaulters.
But instead of adjudicating the matter on merits on time, the DRTs prolong the matter for years and years, wherein the public exchequer money remain unutilised. Moreover the said inaction can be because of many reasons which being an open secret these days. From time to time question marks have been raised over the integrity of the people who are heading these Tribunals.
In 1995, the Delhi High Court & subsequently the Ghuwati & Karnataka High Court has struck down the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 ruling that it was “unconstitutional as it erodes the independence of the judiciary and is irrational, discriminatory, unreasonable, and arbitrary violative of Article 14 of the Constitution. However on appeal the Supreme Court in 2002 overruled various High Courts Judgements and upheld the constitutionality of the act.
The very objective for setting up these tribunals was to set up a speedier mechanism for wiping out the bad debts from the account books of the banks. Initially civil courts had the jurisdiction over such matters which was shifted to 38 DRT’s & 5 DRAT’s across the nation after the enactment of 1993 Act. Since their very inception one of the major concern has been over their judicial independence as these tribunals are controlled by Ministry of Finance which in one way or the other has a significant influence on them.
One more reason is the appointment of the presiding officers who often lack judicial wisdom. Further reason is the poor appointment of supporting staff such as registrars & recovery officers who are also the epitome of corruption sometimes. It has also been witnessed that these tribunals lacks office space also and sometimes the basic minimum requirement of blank papers also. There are number of incidents where the police has arrested officials of Tribunals who were caught red handed for accepting the bribe.
One of the incident was reported in the Indian Express that DRT Bar Association members had from July 1 to July 7 last year refrained from work in protest against the presiding officer of DRT. They had alleged that the Presiding officer is not only in the habit of misbehaving with the advocates, but also with various senior bank officers after summoning them and his attitude is vindictive against them. As per the Business Standard report the even the Bar Council of Delhi had also moved the complaint to the finance ministry for the removal of one of the presiding officers of these tribunals.
The banking system continues to bleed red ink on their balance sheets but the wheels of justice will continue to grind on slowly.
Gaurav Goel is an Advocate and a Managing Partner of the Law Firm “Supreme Laws” and is also the President of Progressive Lawyers Forum of Punjab & Haryana High Court.