Case Note & Summary
The High Court for the State of Telangana at Hyderabad dealt with a writ petition arising from debt recovery proceedings. The petitioner was a guarantor for a loan availed by respondent No.2 from respondent No.1 Indian Bank. The bank filed O.A.No.219 of 2010 before the Debts Recovery Tribunal-I, Hyderabad under the Recovery of Debts and Bankruptcy Act, 1993 for recovery of the debt. During pendency of the original application, the petitioner filed I.A.No.1823 of 2018 seeking permission to cross-examine AW-1, the bank's witness. The DRT allowed the application by order dated 12.11.2018 and appointed an advocate commissioner to record the cross-examination. The bank challenged that order before the Debts Recovery Appellate Tribunal at Kolkata in Misc. Appeal No.71 of 2025. By the impugned order dated 28.04.2026, the DRAT set aside the DRT order, holding that the DRT order was unreasoned and that the under-valuation grounds were outside the scope of the RDB Act. The petitioner then filed the writ petition challenging the DRAT order. The petitioner argued that the DRAT erred in dismissing the plea for cross-examination because the petitioner had raised a credible ground of under-valuation of agricultural lands, which should be considered under Section 17 of the SARFAESI Act. The petitioner contended that both proceedings were interconnected and that the issue of fraud also required consideration. The respondent bank argued that the DRT lacked jurisdiction to adjudicate SARFAESI matters, that the petitioner had already filed a SARFAESI application which was pending, and that no ground was made out for cross-examining the bank's witness in the original application. The court examined Rule 12(9) of the Debts Recovery Tribunal (Procedure) Rules, 1993 and its proviso, which require the Tribunal to record sufficient reasons and be satisfied that production of a witness for cross-examination is necessary. The court found that the DRT order dated 12.11.2018 merely reproduced the submissions of the parties and allowed the application without assigning any reasons, thereby failing to discharge its obligation. The court reiterated that granting permission under the proviso to Rule 12(9) is not automatic and cannot be used as a ploy to delay proceedings. It relied on Union of India v. Delhi High Court Bar Association in this regard. The court observed that the petitioner's sole ground for cross-examination was under-valuation of the secured assets and alleged violation of SARFAESI provisions. These issues were amenable to adjudication under the SARFAESI Act, particularly Section 17(1) read with Rules 8(5) and 9 of the Security Interest (Enforcement) Rules, 2002. The court held that Section 19 of the RDB Act and Section 17 of the SARFAESI Act are independent and that intermingling of the two Acts, particularly on under-valuation, was untenable. Since the petitioner had already initiated SARFAESI proceedings, the remedy lay there and not in seeking cross-examination in the bank's original application. Accordingly, the High Court found no infirmity in the DRAT's order dated 28.04.2026 and dismissed the writ petition. The court granted liberty to the petitioner to file an appropriate application before the DRT for fresh consideration of the case on merits, to be considered in accordance with law. Interim orders were vacated and no order as to costs was made.
Headnote
A) Debt Recovery Law - Cross-Examination of Witnesses - Rule 12(9) of Debts Recovery Tribunal (Procedure) Rules, 1993 - Permission to cross-examine after filing of affidavits is not automatic; the DRT must record sufficient reasons and be satisfied that production of the witness is necessary. The DRT order dated 12.11.2018 merely reproduced submissions and allowed the I.A. without assigning any reasons; the DRAT rightly set it aside. Held that an unreasoned order fails the mandatory obligation under Rule 12(9) and cannot be sustained (Paras 13-16, 20-21, 25). B) Securitisation and Debt Recovery - Under-Valuation of Secured Assets - Section 17(1) of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 read with Rules 8(5) and 9 of Security Interest (Enforcement) Rules, 2002 - Under-valuation of secured assets is comprehensively dealt with under SARFAESI and cannot be urged in an original application under Section 19 of Recovery of Debts and Bankruptcy Act, 1993. The petitioner had already filed a SARFAESI application and could pursue remedies there. Held that intermingling of RDB Act and SARFAESI Act proceedings is untenable and cross-examination cannot be sought solely on under-valuation grounds in RDB Act proceedings (Paras 17-19, 22-24). C) Writ Jurisdiction - Judicial Review of DRAT Orders - Article 226 Constitution of India - High Court found no infirmity in the DRAT order setting aside the DRT order. The court upheld the DRAT reasoning and dismissed the writ petition; it permitted the petitioner to file an appropriate application before the DRT for fresh consideration on merits in accordance with law. Held that interim orders stand vacated and no order as to costs (Paras 26-27).
Issue of Consideration
Whether the DRAT was justified in setting aside the DRT order allowing cross-examination of the Bank's witness; whether the DRT order complied with Rule 12(9) of the Debts Recovery Tribunal (Procedure) Rules, 1993; whether under-valuation of secured assets under the SARFAESI Act could be raised in original application proceedings under the RDB Act
Final Decision
The writ petition was dismissed. The High Court upheld the DRAT's order dated 28.04.2026 setting aside the DRT's order dated 12.11.2018. The court granted liberty to the petitioner to file an appropriate application before the DRT for fresh consideration of the case on merits, which the DRT shall consider in accordance with law. Interim orders were vacated and no order as to costs was made.
Law Points
- Rule 12(9) of Debts Recovery Tribunal (Procedure) Rules
- 1993 requires recording of sufficient reasons before allowing cross-examination
- permission for witness production is not automatic
- under-valuation of secured assets is exclusively for SARFAESI Act proceedings
- RDB Act and SARFAESI Act are independent
- unreasoned orders are liable to be set aside
