High Court Slams DRT for ‘Oral Orders’, Grants Relief to Bank of Maharashtra

The petitioner, Bank of Maharashtra, challenged an order passed by the Debts Recovery Tribunal (DRT), Mumbai, which directed the bank to restore possession of a secured asset to the borrowers and guarantors. The bank had already taken physical possession under SARFAESI proceedings and contended that there was no written interim or restraining order preventing it from doing so at the relevant time.

Aggrieved, the bank preferred an appeal before the Debts Recovery Appellate Tribunal (DRAT). Although the appeal was partly heard, it was adjourned and no written order reflecting the proceedings particularly regarding refusal of interim relief was made available. For clarity or protection from the DRAT, the bank approached the High Court seeking relief against the DRT’s direction.

Issue Raised: Whether the DRT could direct restoration of possession based on alleged ‘oral directions’ despite the absence of any written interim order, and whether the High Court should intervene when DRAT proceedings lack transparency or recorded orders.

HC’s Ruling: The Hon’ble High Court held that reliance on ‘oral directions’ by judicial or quasi-judicial authorities is impermissible and cannot form the basis of substantive orders. It observed that there was no written restraint order when the bank took possession, and therefore, the foundation of the DRT’s direction to restore possession appeared unsustainable. The Court also took serious note of the DRAT’s failure to upload or provide its order, leaving the parties uncertain about the status of interim relief. Calling the situation “peculiar” and warranting intervention, the Court exercised writ jurisdiction for a limited purpose.

Thus, the High Court stayed the operation of the DRT’s order directing restoration of possession and directed the DRAT to decide the pending appeal expeditiously within four weeks. It clarified that its observations were prima facie and should not influence the appellate proceedings.

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