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DRT Not Empowered In Law To Restrain A Debtor's Fundamental Right To Travel Abroad: Bombay High Court

Sharmeen Hakim
8 Jun 2022 3:30 PM GMT
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The Debt Recovery Tribunal (DRT) cannot restrain a citizen from travelling abroad since there is no specific or implied provision empowering it under the Recovery of Debts Due To Banks and Financial Institutions Act 1993, the Nagpur bench of the Bombay High Court held.

The bench of Justices AS Chandurkar and Amit Borkar observed that a citizen's right to travel abroad forms part of "personal liberty" defined under Article 21 of the Constitution. Therefore, to restrain a person from travelling abroad, it was necessary to have such a provision under the Act.

Observing thus, the bench set aside the DRT's order and allowed the petitioner to travel to Turkey for a wedding in the family. "The State has not made any law or provision in the said Act seeking to deprive or regulate the right of a person to travel abroad. The order is, therefore, liable to be set aside."

The Court also said that the DRT wasn't allowed to exceed its powers conferred by the CPC to ensure natural justice with reference to section 22 of the Act. "In our view, Section 22 confers the procedural right to regulate proceedings before it."

Referring to subsections sub sections 12, 13(A), 17 and 18 of Section 19, which empowers the tribunal to pass orders necessary to give effect to its orders, prevent abuse of its process or secure the ends of its justice, the bench held that a person cannot be restrained from travelling abroad under these sections.

"In the absence of a specific provision conferred on the Debt Recovery Tribunal by statute, the Debt Recovery 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."

Facts of the Case

The petitioner – businessman Anurag Gupta approached the Bombay High Court under Article 226 and 227 of the constitution assailing the DRT's order rejecting his plea to travel.

Gupta is a personal guarantor of Gupta Energy Pvt. Ltd engaged in electricity and power generation. To establish the Power Plant, a consortium led by Axis Bank Limited and another group of lenders, financed the project.

Proceedings under the Insolvency & Bankruptcy Code, 2016 are pending against the company before the NCLT and a liquidation order was passed in 2018.

In 2016, the consortium filed an application before the Nagpur DRT seeking recovery of ₹110.15 crore, and also sought to restrain Gupta from travelling abroad.

In 2018, the DRT restrained Gupte from making foreign trips. However, last month Gupta approached the DRT for permission to travel which was denied.

He then approached the High Court 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.

On the contrary the bank said the DRT had wide powers to meet the ends of natural justice.

While agreeing with the petitioner, the court said it was not unmindful of the necessity of regulating the issue of recovery of public money. However, "On consideration of the scheme of the said Act, we hold that the order refusing permission to travel abroad has been made in contravention of the provisions of Article 21 of the Constitution and is violative of the right guaranteed to the petitioner under Article 21."

Case Title: Anurag S/o. Padmesh Gupta vs Bank of India

Citation : 2022 LiveLaw (Bom) 204

Appearance: Akshay Naik a/w Mr. D.V. Chauhan and Mr. C.J. Dhruv, Advocates for Petitioner.

Mr. A. T. Purohit, Advocate for Respondent No.1.

Mr. D. Gupta, Advocate for Respondent No.2 (Official Liquidator)

Click Here To Read/Download Order

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