Debt Recovery Tribunal can’t restrain a person from flying abroad: Bombay HC

The Nagpur bench of the high court passed the order while hearing a plea by a 34-year-old businessman who was restrained by the DRT from leaving India over outstanding dues on a loan

MUMBAI: While it does empower the body to take stringent actions against defaulters, the Debt Recovery Tribunal (DRT) does not have the power to restrain a person from travelling abroad, the Nagpur bench of the Bombay high court ruled on Tuesday.

The Bombay high court. (HT File Photo)

The bench passed the order while hearing a plea by a 34-year-old businessman who was restrained by the DRT from leaving India over outstanding dues on a loan.

“On careful consideration of the language of sub-sections 12, 13(A), 17 and 18 of Section 19 (of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993), we are of the considered view that the Tribunal is not conferred with specific power to restrain a person from leaving the country,” the division bench of justices AS Chandurkar and Amit Borkar ruled.

The high court said that Section 19 of the Act confers certain powers on the DRT to give effect to its orders or prevent abuse of its process, or secure the ends of its justice, and also pass interim orders by way of injunction or stay or attachment against the defendant. However, it does not have specific powers to stop a person – be it a loan defaulter or a guarantor – from travelling abroad.

“In the absence of a specific provision conferring power on the DRT by the statute, the Tribunal has no power to restrain a citizen from travelling abroad, particularly when the said right has been recognised as a facet of Article 21 of the Constitution of India,” said the bench.

“In our view, the provisions under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, as they stand, do not even impliedly confer such powers on the Debt Recovery Tribunal,” they further said.

The petitioner,a businessman named Anurag Gupta, moved the high court after the DRT in Nagpur rejected his plea on May 23 for permission to travel to Turkey to attend the wedding of a relative from June 12-14.

Gupta is a guarantor of an electricity generation company – Gupta Energy Pvt. Ltd. – which took a loan from a consortium and finance corporations, led by Axis Bank. In 2016, the consortium filed an application before the Nagpur DRT for recovery of outstanding dues amounting to ₹110.15 crore, and also applied to the Tribunal to pass an order restraining Gupta from travelling abroad.

Accepting the bank’s plea, the DRT on 18 January 2018 passed an order restraining the person from making foreign trips. As the wedding was scheduled in Turkey between June 12 and June 14, he sought travel permissions from the Tribunal.

The Nagpur resident moved the HC after the DRT rejected his plea, primarily contending that since the right to travel abroad has been recognised by the Supreme Court as a facet of personal liberty under Article 21 of the Indian Constitution, it could not be curtailed, especially since the Act did not confer any such power on the Tribunal.

The banks contested the petition, claiming that the Act confers several powers on the DRT, as are available to a civil court, which include stopping a ‘defaulter’ from travelling abroad.

While granting relief to the businessman, the judges said they are mindful of the necessity of recovering outstanding debt, and are fully conscious that in certain cases, it may be necessary in the interest of the country to prevent certain persons from leaving India, but that cannot be done by exercising executive discretion.