2019 (7) TMI 1631 - HC - Indian Laws

Validity of notification dated 06.09.2018 issued by the Central Government in exercise of powers conferred by subsection (4) of Section 1 of the Act of 1993 - recovery of debts in the Debts Recovery Tribunal by banks and financial institutions - Whether the Central Government, by issuing the aforesaid notification, was competent to raise the threshold limit of ten to twenty lakh rupees for maintainability of a petition for recovery of debt before the Debts Recovery Tribunal by any bank or financial institution? HELD THAT - The substantial energy and resources of the large number of Tribunals across the country is being consumed for the segment of the recovery cases having value between ten and twenty lakh rupees, which although account for 41% of the total pendency but on the present scale account only 5% of the total value of the recovery claims. The notification issued by the Central Government raising the limit of ten to twenty lakh rupees is therefore intended to achieve the object with which the Tribunals were set up as would be evident from the statement of objects and reasons as also preamble of the Act of 1993. Section 1(4) of the Act of 1993 has not indicated any outer threshold value of the claim upto which the limit could be raised but we see no reason to enter into that aspect firstly because the validity of Section 1(4) of the Act of 1993 has not been challenged in the present writ petition and secondly we are satisfied with the reasons given by the Central Government that enhancing the threshold limit for filing claims before the Tribunals to twenty lakh rupees, cannot be considered excessive. Even otherwise, the worth of ten lakh rupees in the year 1993 when the Act was introduced, due to price inflation, was ₹ 49.23 lakh in the year 2017, meaning thereby, the value of one rupee in 1993 stood reduced to approximately twenty paisa in 2017. Even when the constitutional validity of Section 1(4) of the Act of 1993 has not been challenged in the present writ petition, we find that sufficient guidelines are available in the Act of 1993 by way of its preamble, statement of objects and reasons, which provide ample justification for the decision of the Central Government for raising the threshold limit of ten lakh rupees to twenty lakh rupees. Petition dismissed.

Summary

Issues Involved:
1. Validity of the notification dated 06.09.2018 issued by the Central Government raising the threshold pecuniary limit from ten lakh rupees to twenty lakh rupees for filing applications for recovery of debts in the Debts Recovery Tribunal.
2. Interpretation of Section 1(4) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993.
3. Whether the Central Government has the authority to increase the threshold limit without amending the Act.

Detailed Analysis:

1. Validity of the Notification:
The petitioners challenged the notification issued by the Central Government, arguing that it exceeded the authority granted under Section 1(4) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993. They contended that the Act allows for the reduction of the threshold limit but not its increase. The Central Government, however, argued that the notification was within its jurisdiction and necessary due to inflation and the need to streamline the functioning of the Debts Recovery Tribunals.

2. Interpretation of Section 1(4) of the Act of 1993:
The petitioners argued that Section 1(4) permits the Central Government to reduce the threshold limit but not to increase it. They relied on various judgments, including Union of India Vs. Delhi High Court Bar Association, to support their interpretation. The Central Government countered that the phrase "or such other amount" allows for both upward and downward adjustments, provided the amount is not less than one lakh rupees.

3. Authority to Increase the Threshold Limit:
The court examined whether the Central Government could raise the threshold limit without amending the Act. It referred to the concept of conditional legislation, where the legislature enacts a law in full but leaves its operation contingent on certain conditions to be determined by an external authority. The court cited precedents, including State of Bombay Vs. Narottam Das Jethabhai, to support the view that the Central Government's action was a valid exercise of conditional legislation.

Conclusion:
The court concluded that the Central Government was within its rights to issue the notification, raising the threshold limit from ten lakh rupees to twenty lakh rupees. The decision was based on the rationale that the increase was necessary to manage the workload of the Debts Recovery Tribunals and ensure expeditious recovery of larger debts. The court dismissed the writ petition, upholding the validity of the notification and the Central Government's authority under Section 1(4) of the Act of 1993.