DRT Has No Jurisdiction To Modify Settlement Terms In Application Filed After Disposal Of Matter: Rajasthan High Court
The Rajasthan High Court held that the Debts Recovery Tribunal (“DRT”) had no jurisdiction to rewrite/modify the terms and conditions of the One-time Settlement (“OTS”)/Settlement, in relation to an application filed after disposal of the matter based on a Consent Recovery Certificate.The bench of Justice Anoop Kumar Dhand was hearing a petition against the order of the DRT wherein...
The Rajasthan High Court held that the Debts Recovery Tribunal (“DRT”) had no jurisdiction to rewrite/modify the terms and conditions of the One-time Settlement (“OTS”)/Settlement, in relation to an application filed after disposal of the matter based on a Consent Recovery Certificate.
The bench of Justice Anoop Kumar Dhand was hearing a petition against the order of the DRT wherein an application filed by the respondent seeking more time to repay the amount was allowed, after the matter under SARFAESI Act was already disposed of by the DRT by passing a Consent Recovery Certificate based on OTS reached between the Parties.
Based on default committed by the respondent, SARFAESI proceedings were initiated by the bank (petitioner) against them. However, OTS was arrived between the Parties, and the matter was disposed of by DRT by passing a Consent Recovery Certificate.
Subsequently, more time was sought by the respondent to repay, and accordingly, an amended Consent Recovery Certificate was passed.
As per the petitioner, when these orders were not complied with the OTS stood frustrated, and petitioner decided to proceed against the respondent for recovery. In the meanwhile, respondent filed an application before the DRT seeking modification of the earlier orders which was allowed, and 12 more months were granted to the respondent. Against this, current petition was filed.
The petitioner submitted that by doing so, DRT had exceeded its jurisdiction since once the matter was disposed of, there could not be any extension or rescheduling of the repayment terms.
On the contrary, the respondents held that as per Section 19(25) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (the “Act”), DRT had the jurisdiction.
After hearing the contentions, the Court agreed with the arguments put forth by the petitioner and opined that the DRT exceeded its jurisdiction by entertaining the application by the respondents.
The Court held that the inherent discretionary powers under Section 19(25) were exercisable only in relation to the pending petition before DRT and not for applications filed after final adjudication under SARFAESI.
A reference was made to the Supreme Court case of Jaipur Vidyut Vitran Nigam Ltd. And Ors. Vs. Adani Power Rajasthan Ltd. and Anr., in which it was held that, “any attempt to file misc. application for clarification, modification or recall, in order to seek a substantive modification of the judgment of the Court is an attempt to change the norms of the original order and such an attempt is not permissible in a misc. application.”
While ruling that a post-disposal application for modification and clarification of the order of disposal shall lie only in rare cases, the Court held that DRT became functus officio after passing the Consent Recovery and the Amended Consent Recovery, and nothing remained to be decided by it on the same subject matter. Hence, it had no jurisdiction to entertain the respondent's application contrary to the OTS.
Accordingly, the petition was allowed, and the order passed by the DRT was set aside.
Title: Bank of Baroda v U.N Automobiles Pvt Ltd.
Citation: 2025 LiveLaw (Raj) 294