IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 11.10.2011 CORAM THE HONOURABLE MR.JUSTICE D.MURUGESAN AND THE HONOURABLE MR.JUSTICE K.K.SASIDHARAN W.P.No.19707 of 2011 ICICI Bank Limited represented by its Chief Manager Mr.N.Anandakumar having its Zonal Office at ICICI Bank Towers 4th Floor, West Wing Plot No.24 Ambattur Industrial Estate Chennai 600 058 .. Petitioner -vs- 1. The Debts Recovery Appellate Tribunal Ethiraj Salai, Egmore Chennai 600 008 2. The Debts Recovery Tribunal-2 Deva Towers, 6th Floor No.770-A, Anna Salai Chennai 600 002 3. R.Subramanian .. Respondents Petition under Article 226 of the Constitution of India, praying for the issue of a Writ of Certiorari, to call for the records of the learned Debt Recovery Appellate Tribunal, Chennai with regard to the order dated 12.8.2011 passed in M.A.No.606 of 2010 filed against the order dated 30.09.2010 passed in I.A.No.250 of 2010 in O.A.No.190 of 2010 on the file of the Debt Recovery Tribunal-II, Chennai and quash the same. For Petitioner :: Mr.A.L.Somayaji Senior Counsel for Mr.Shivakumar For Respondents :: Mr.T.V.Ramanujam Senior Counsel for Mr.Prakash Goklaney for R3 https://hcservices.ecourts.gov.in/hcservices/ O R D E R D.MURUGESAN, J. This Court is called upon to decide the question as to whether the Debts Recovery Tribunal or the Debts Recovery Appellate Tribunal would have power to direct the borrower or the guarantor to surrender the passport to the Tribunal and to further restrain the borrower or the guarantor from leaving the country without the written permission of the Debts Recovery Tribunal/the Debt Recovery Appellate Tribunal, as the case may be. 2. The above issue arises under the following circumstances. The petitioner is M/s ICICI Bank Limited, Chennai (hereinafter referred to as 'the bank'). M/s Subhiksha Trading Services Limited availed credit facilities in the form of term loan for their retail trading business in the sale of grocery, fruits and vegetables, pharma, mobiles and fast moving consumer goods and also for expansion of their business in the States of Karnataka, Andhra Pradesh and Gujarat. The said facilities were availed in the year 2005. The third respondent by name R.Subramanian (hereinafter referred to as 'the respondent'), who is the Managing Director of the said company, had also executed Personal Guarantee in favour of the bank guaranteeing the due repayment of the facilities except the credit card facility. As the company failed and committed default in repayment of the loan and the interest, the bank had recalled the facilities and called upon the company to pay the dues. As the company failed to pay the dues demanded in the notice, the bank invoked the guarantee of the respondent. Despite receipt of the said notice, the respondent also failed and neglected to make payments. In the circumstances, the bank filed O.A.No.96 of 2010 before the Debts Recovery Tribunal-III, Chennai for recovery of a sum of Rs.221,97,76,635.78p as on 31st December, 2009, which application stood transferred to the file of Debts Recovery Tribunal-II and renumbered as O.A.No.190 of 2010. Along with the said O.A., among other interlocutory applications, the bank also filed I.A.No.250 of 2010 under Section 19(25) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 seeking for a direction to the said R.Subramanian, the respondent, to surrender his passport and not to leave the country without the permission of the Tribunal. By order dated 30.9.2010, the Debts Recovery Tribunal-II, Chennai allowed the said I.A., and directed the respondent to deposit his passport with the Registrar of the Tribunal within fifteen days from the date of the said order and further directed that the respondent should not leave the country without obtaining the permission of the Tribunal. 3. This order was challenged by the respondent before the Debts Recovery Appellate Tribunal, Chennai by filing M.A.No.606 of 2010. By the impugned order dated 12.8.2011, the Debts Recovery Appellate Tribunal set aside the order of the Debts Recovery Tribunal on the ground that the Tribunal has no authority under law to impound the passport, as the passport authority empowered under the Passports Act, 1967 would alone have such power. This order is questioned in this writ petition. https://hcservices.ecourts.gov.in/hcservices/ 4. For consideration of the issue, the following provisions under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as 'the RDDBFI Act') and the Debts Recovery Tribunal (Procedure) Rules, 1993 (hereinafter referred to as 'the DRT Rules') as well as the rules of the Second Schedule to the Income Tax Act. 1961 are referable. They read as follows: “S.17. Jurisdiction, powers and authority of Tribunals.--(1) A Tribunal shall exercise, on and from the appointed day, the jurisdiction, powers and authority to entertain and decide applications from the banks and financial institutions for recovery of debts due to such banks and financial institutions. (2) An Appellate Tribunal shall exercise, on and from the appointed day, the jurisdiction, powers and authority to entertain appeals against any order made, or deemed to have been made, by a Tribunal under this Act. S.19. Application to the Tribunal.-- (12) The Tribunal may make an interim order (whether by way of injunction or stay or attachment) against the defendant to debar him from transferring, alienating or otherwise dealing with, or disposing of, any property and assets belonging to him without the prior permission of the Tribunal. (13(A) Where, at any stage of the proceedings, the Tribunal is satisfied, by affidavit or otherwise, that the defendant, with intent to obstruct or delay or frustrate the execution of any order for the recovery of debt that may be passed against him,-- (i)is about to dispose of the whole or any part of his property; or (ii)is about to remove the whole or any part of the property from the local limits of the jurisdiction of the Tribunal; or (iii)is likely to cause any damage or mischief to the property or affect its value by misuse or creating third party interest, the Tribunal may direct the defendant, within a time to be fixed by it, either to furnish security, in such sum as may be specified in the order, to produce and place at the disposal of the Tribunal, when required, the said property or the value of the same, or such portion thereof as may be sufficient to satisfy the certificate for https://hcservices.ecourts.gov.in/hcservices/ the recovery of debt, or to appear and show cause why he should not furnish security. (B) Where the defendant fails to show cause why he should not furnish security, or fails to furnish the security required, within the time fixed by the Tribunal, the Tribunal may order the attachment of the whole or such portion of the properties claimed by the applicant as the properties secured in his favour or otherwise owned by the defendant as appears sufficient to satisfy any certificate for the recovery of debt. (18) Where it appears to the Tribunal to be just and convenient, the Tribunal may, by order,-- (a) appoint a receiver of any property, whether before or after grant of certificate for recovery of debt; (b) remove any person from the possession or custody of the property; (c) commit the same to the possession, custody or management of the property; (d) confer upon the receiver all such powers, as to bringing and defending suits in the Courts or filing and defending applications before the Tribunal and for the realization, management, protection, preservation and improvement of the property, the collection of the rents and profits thereof, the application and disposal of such rents and profits, and the execution of documents as the owner himself has, or such of those powers as the Tribunal thinks fit; and (e) appoint a Commissioner for preparation of an inventory of the properties of the defendant or for the sale thereof. (25) The Tribunal may make such orders and give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice. S.22. Procedure and powers of the Tribunal and the Appellate Tribunal.--(1) The Tribunal and the Appellate Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908), but shall be guided by the principles of natural justice and, subject to the other provisions of this Act and of any https://hcservices.ecourts.gov.in/hcservices/ rules, the Tribunal and the Appellate Tribunal shall have powers to regulate their own procedure including the places at which they shall have their sittings. (2) The Tribunal and the Appellate Tribunal shall have, for the purposes of discharging their functions under this Act, the same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely:-- (a) summoning and enforcing the attendance of any person and examining him on oath; (b) requiring the discovery and production of documents; (c) receiving evidence on affidavits; (d) issuing commissions for the examination of witnesses or documents; (e) reviewing its decisions; (f) dismissing an application for default or deciding it ex parte; (g) setting aside any order of dismissal of any application for default or any order passed by it ex parte; (h) any other matter which may be prescribed. (3) Any proceeding before the Tribunal or the Appellate Tribunal shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for the purposes of section 196, of the Indian Penal Code (45 of 1860) and the Tribunal or the Appellate Tribunal shall be deemed to be a civil Court for all the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974). S.25. Modes of recovery of debts.--The Recovery Officer shall, on receipt of the copy of the certificate under sub-section (7) of section 19, proceed to recover the amount of debt specified in the certificate by one or more of the following modes, namely:-- (a) attachment and sale of the movable or immovable property of the defendant; (b) arrest of the defendant and his detention in prison; (c) appointing a receiver for the management of the movable or immovable properties of the defendant. R.18. Orders and directions in certain cases.-- The Tribunal may make such orders to give such directions as may be necessary or expedient to https://hcservices.ecourts.gov.in/hcservices/ give effect to its orders or to prevent abuse of its process or to secure the ends of justice. The Second Schedule to Income Tax Act, 1961 R.75. Custody pending hearing. Pending the conclusion of the inquiry, the Tax Recovery Officer may, in his discretion, order the defaulter to be detained in the custody of such officer as the Tax Recovery Officer may think fit or release him on his furnishing security to the satisfaction of the Tax Recovery Officer for his appearance when required.” 5. The object and purpose for which the Debt Recovery Tribunals were constituted have relevance for deciding the issue. Before we advert to the object and purpose and importance of the RDDBFI Act, we may refer the banking structure in India. Even while India was to secure independence, the Reserve Bank of India Act, 1935 was enacted to regulate the functions of the banks. Indian independence marked the end of a regime of laissez-faire for the Indian banking. The Government of India initiated measures to play an active role in the economic life of the nation, which resulted in the greater involvement of the State in diffierent segments of the economy including banking and finance. One of the major steps taken was to regulate the banking including the Reserve Bank of India during January, 1949, as the Reserve Bank of India is the Indian Central Banking Authority. Thereafter, the Banking Regulation Act, 1949 was enacted empowering the Reserve Bank of India to regulate, control and inspect the banks in India. Having noticed that the Indian banking industry had become an important tool to facilitate the development of Indian economy, nationalisation of the banking industry was mooted, which ultimately led to the enactment of Banking Companies (Acquisition of Transfer of Undertaking) Act, 1969. The above steps were taken having regard to the banks playing an active and important role in the growth of Indian economy. 6. When the banks and financial institutions experienced considerable difficulties in recovering loans and enforcement of securities charged with them from the borrowers, posing threat to Indian economy as a whole, especially when some of the borrowers who availed loans for development of their units, became sick and weak resulting in accumulated non-performing assets, the RDDBFI Act was enacted by virtue of the powers conferred on the Union of India under Entry 45 of List-I of Seventh Schedule. The Tribunals were established in terms of Section 3 of the RDDBFI Act to exercise jurisdiction, powers and authority conferred by the Act. Section 17 deals with the jurisdiction, powers and authority of the Tribunals. Sub-section (1) of Section 17 relates to the jurisdiction, powers and authority to entertain and decide applications from the banks and financial institutions for recovery of debts due to such banks and financial institutions. Similar jurisdiction, powers and authority were also conferred on the Appellate Tribunal by virtue of sub- section (2) of Section 17. Those powers are exclusively conferred onthe Tribunal and the Appellate Tribunal except the Supreme Court and the High Court in terms of Section 18 of the Act. The provision https://hcservices.ecourts.gov.in/hcservices/ is intended to confer wider power to the Tribunal/ Appellate Tribunal to deal with the matters relating to various modes of recovery of unpaid loan or bad debts. 7. While dealing with the applications filed by a bank or a financial institution to recover any debt from any person, in terms of sub-section 12 of Section 19, the Tribunal may make an interim order (whether by way of injunction or stay or attachment) against the respondent in the application to debar him from transferring, alienating or otherwise dealing with, or disposing of, any property and assets belonging to him without the prior permission of the Tribunal. By virtue of sub-section (13) of Section 19, the Tribunal may appoint a Receiver to take custody and management of the property. By virtue of sub-section 13A of Section 19, the Tribunal, in the event, is satisfied that the respondent with the intent to obstruct or delay or frustrate the execution of any order for the recovery of debt that may be passed against him, is about to dispose of the whole or any part of his property; or is about to remove the whole or any part of the property from the local limits of the jurisdiction of the Tribunal; or is likely to cause any damage or mischief to the property or affect its value by misuse or creating third party interest, may direct such person to furnish security for a sum that may be specified in the order or to produce and place at the disposal of the Tribunal the said property or the value of the same or such portion thereof as may be sufficient to satisfy the certificate for the recovery of debt. To manage the property so attached, the Tribunal has the power to appoint a receiver either before or grant of certificate for recovery of debt under sub-section (18) of Section 19. In terms of sub-section (17) of Section 19, the Tribunal has the power to order the properties of the person guilty of disobedience of the orders made under sub-sections (12), (13) and (18) of Section 19, to be attached and may also order such person to be detain in the civil prison for a term not extending three months. 8. By virtue of sub-section (25) of Section 19 and Rule 18 of the Rules, the Tribunal may make such orders and give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice. In terms of Section 22 of the Act, the Tribunal and the Appellate Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, but shall be guided by the principles of natural justice and subject to the other provisions of the Act and the rules made thereunder. By that provision, the Tribunal and the Appellate Tribunal shall have the powers to regulate their own procedures including the places at which they shall have their sittings. 9. The Apex Court, in Industrial Credit and Investment Corporation of India Ltd. v. Grapco Industries Ltd., (1994) 4 SCC 710, while considering the provisions of the Act and the powers of the Tribunal, has observed that the powers of the Tribunal, except as stated in sub-section (2) of Section 19, are wider than the powers of a Civil Court and the only limitation was that it should observe principles of natural justice. The Apex Court has observed as follows:- https://hcservices.ecourts.gov.in/hcservices/ “ We, however, do not agree with the reasoning adopted by the High Court. When Section 22 of the Act says that the Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, it does not mean that it will not have jurisdiction to exercise powers of a Court as contained in the Code of Civil Procedure. Rather, the Tribunal can travel beyond the Code of Civil Procedure and the only fetter that is put on its powers is to observe the principles of natural justice.” The Apex Court has further observed:- “It will, thus, be seen that while there are no limitations on the powers of the Tribunal under the Act, the Legislature has thought fit to restrict the powers of the authorities under various enactments while exercising certain powers under those enactments. ... Further, when power is given to the Tribunal to make an interim order by way of injunction or a stay, it inheres in it the power to grant that order even ex parte, if it is so in the interest of justice. ..” Subsequently, while concurring with the view expressed in the above case, the Apex Court in Allahabad Bank v. Radha Krishna Maity, A.I.R. 1999 SC 3426, has observed in paragraphs 9 and 10 as follows:- “9.The scope and extent of the powers of the Tribunal are mainly referred to in sub-clause (1) of Section 22 of the Act which says that the Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure but shall be guided by principles of natural justice. As stated in Grapco by this Court, the Tribunal can exercise powers contained in the Code of Civil Procedure and can even go beyond the Code as long as it passes orders in conformity with principles of natural justice. We may add that Section 19(6) does not in any manner limit the generality of the powers of the Tribunal under Section 22(1). It merely states that certain types of injunction or stay orders may be passed by the Tribunal. It is to be noticed that sub-clause (6) of Section 19 starts with the words - “The Tribunal may make an interim order....” The provision is an enabling provision and merely states that certain types of injunction or stay orders mentioned therein can be passed by the Tribunal but such an enumeration cannot, in our opinion, be deemed to be exhaustive nor restricting the Tribunal's powers only to those types of injunction or stay orders. The width and amplitude of the powers are to be gathered from Section 22(1) as stated in Grapco. In addition, Rule 18 enables the https://hcservices.ecourts.gov.in/hcservices/ Tribunal to pass orders to secure the ends of justice. 10.Thus, we are of the view that the Tribunal certainly has powers to pass other types of injunction orders or stay orders apart from what is stated in Section 19(6). ...” (emphasis supplied) 10. The above judgment was rendered with reference to the powers of the Tribunals to pass interim orders of stay or injunction in terms of the provisions of sub-section 19(6) prior to amendment Act 1 of 2000, whereby the same power was retained to the Tribunal under Section 19(12) of the Act. In the light of the above law laid down by the Apex Court, the question to be considered is as to “whether the Tribunal, in exercise of the power conferred under sub-section (25) of Section 19 could pass an order directing the borrower or the guarantor, as the case may be, to surrender his passport and in such event, the direction to surrender the passport would amount to impounding of the passport and further, whether the Tribunal could direct the borrower or the guarantor not to leave the country without permission of the Tribunal or the Appellate Tribunal”. 11. Before answering the above issue, as it is argued by the learned senior counsel for the respondent that the passport or a travel document could be impounded or revoked only by the passport authority and not by any other authority/forum/Court, we will now deal with certain provisions of the Passport Act. 12. A passport is considered to be essentially a political document for the benefit of its holder. A passport recognises the holder as the citizen of the country granting it and is in the nature of a request to the other country for his free passage there. In that sense, it is a document of importance for travel abroad and is of considerable value to its holder. The issuance of passport is governed by the provisions of the Passports Act, 1967. There is an embargo under Section 3 of the Passports Act that no person shall depart from or attempt to depart from India, unless he holds in this behalf a valid passport or travel document. In order to obtain the passport or a travel document, one has to make an application to the passport authority who is empowered to issue such passport or travel document. The application is to be made under Section 5 of the Act and the passport authority is defined under Section 2(c) of the Act. The passport authority has the power to refuse passport or travel documents on the grounds enumerated under Section 6. The power to vary, impound or revoke passports and travel documents is conferred on the passport authority under Section 10. The reasons for such variation, impounding and revocation of passports and travel documents are enumerated under Section 10(3) of the Act, which reads as under:- “S.10(3) The passport authority may impound or cause to be impounded or revoke a passport or travel document,-- (a) if the passport authority is satisfied that the holder of the passport or travel document is in wrongful possession thereof, https://hcservices.ecourts.gov.in/hcservices/ (b) if the passport or travel document was obtained by the suppression of material information or on the basis of wrong information provided by the holder of the passport or travel document or any other person on his behalf: Provided that if the holder of such passport obtains another passport, the passport authority shall also impound or cause to be impounded or revoke such other passport. (c) if the passport authority deems it necessary so to do in the interests of the sovereignty and integrity of India, the security of India, friendly relations in India with any foreign country, or in the interests of the general public; (d) if the holder of the passport or travel document has, at any time after the issue of the passport or travel document, been convicted by a Court in India for any offence involving moral turpitude and sentenced in respect thereof to imprisonment for not less than two years; (e) if proceedings in respect of an offence alleged to have been committed by the holder of the passport or travel document are pending before a Criminal Court in India; (f) if any of the conditions of the passport or travel document has been contravened; (g) if the holder of the passport or