Lack Of Local Courts Prompts Jammu And Kashmir High Court Intervention In Debt Recovery Cases

Lack Of Local Courts Prompts Jammu And Kashmir High Court Intervention In Debt Recovery Cases

The Jammu and Kashmir High Court found the lack of Debt Recovery Tribunals (DRTs) in the Union Territories of Jammu & Kashmir and Ladakh to be a violation of easy access to justice, a right guaranteed by the Indian Constitution.

Chief Justice N. Kotiswar Singh and Justice Wasim Sadiq Nargal, recognising the importance of easy access to justice, ruled that residents of Jammu and Kashmir and Ladakh can utilise the High Court's writ jurisdiction under Article 226 of the Constitution.

This temporary solution allows residents to challenge debt recovery actions initiated by banks and financial institutions under the SARFAESI Act. The judges made this decision because the current Debt Recovery Tribunals (DRTs) located in Chandigarh are seen as too inconvenient for residents of these Union Territories. This ruling will remain in place until DRTs are established within Jammu and Kashmir and Ladakh.

The Jammu and Kashmir High Court's decision arose from challenges brought by borrowers in J&K and Ladakh against debt recovery actions initiated under the SARFAESI Act. These borrowers argued that the designated remedy of travelling to Debt Recovery Tribunals located in faraway Chandigarh imposed undue hardship, effectively violating their fundamental right to access justice enshrined in Article 21 of the Constitution.

The hardships they faced included high airfare costs due to limited air connectivity and lack of direct flights, coupled with the difficult road conditions and harsh weather prevalent in J&K and Ladakh.

Additionally, they pointed to the limited access to affordable legal representation, as outstation lawyers would be required due to the distance, and the lack of proper infrastructure for e-filing and virtual hearings in many parts of these Union Territories. Despite these arguments, the banks and financial institutions, represented by the respondents, contended that the SARFAESI Act already provided an alternative remedy through DRTs and the High Court should not entertain these petitions.

The judges recognised that there was an alternative remedy available under Section 17. However, they stressed that a valid alternative must be "efficacious," meaning it allows people to exercise their rights. While the Debt Recovery Tribunals themselves were considered legally suitable forums, their location in Chandigarh was deemed a significant hurdle due to the vast distance from J&K and Ladakh. This geographical barrier effectively rendered the DRTs an inadequate option for residents of these Union Territories.

The court observed that in the landmark case of Anita Kushwaha vs. Pushap Sudan (2016), the Supreme Court meticulously examined the multifaceted concept of access to justice. The court asserted the indispensability of a redressal forum that is easily, readily and regularly available to borrowers and aggrieved parties, particularly in matters governed by the SARFAESI Act.

The bench remarked that the absence of a Debts Recovery Tribunal (DRT) within the Union Territories of Jammu and Kashmir and Ladakh seems to amount to a denial of easy access to justice. The bench refrained from delving into all aspects of access to justice, as discussed in the Anita Kushwaha case, such as the obligation of the State to furnish an effective adjudicatory mechanism and ensure speedy adjudication.

Highlighting the limitations of virtual hearings, the Court acknowledged challenges with internet connectivity in J&K and Ladakh. They further recognised the irreplaceable value of in-person appearances in certain cases. This, combined with the significant geographical distance from Chandigarh, the economic hardship of travel, and the lack of proper infrastructure for e-filing, all amounted to a substantial barrier to justice for borrowers in these Union Territories.

The court further expressed concern about the lack of domestic courts with jurisdiction in J&K and Ladakh due to the State Reorganisation Act of 2019. This impacted cases handled under the SARFAESI Act. The judges observed that the hardship faced by residents of Jammu and Kashmir and Ladakh due to the absence of local courts with jurisdiction under the Act is evident. The long distance to Chandigarh denies them the ease of access enjoyed by those with DRTs in their own states.

The bench underscored the crucial need for effective and fair implementation of the SARFAESI Act, emphasising the importance of providing litigants with accessible and efficient redressal forums. They stressed the necessity of establishing local debt recovery Tribunals (DRTs) or alternative benches within Jammu and Kashmir and Ladakh to alleviate the burdensome and costly proceedings faced by litigants.

The bench also pointed out that the absence of readily available adjudicating forums could detrimentally impact litigants' right to easy access to justice, especially evident in cases where numerous petitioners have approached the court alleging irregular, malafide, or illegal acts by banks and financial institutions in violation of SARFAESI Act provisions.

The court highlighted the dangers of borrowers and debtors lacking a readily accessible forum for disputes under the SARFAESI Act. This potential for injustice led them to conclude that the writ petitions were admissible. However, the court acknowledged the need to examine each case individually on its merits.

Recognising the potentially serious financial consequences of interim orders, the court stressed the importance of swift resolution. Consequently, they directed that the petitions be listed for further consideration within a month, ensuring each case would be addressed promptly.