The Debt Recovery Tribunal (DRT) in Ahmedabad has issued a directive to banks and financial institutions to refrain from engaging junior or proxy lawyers to represent them in debt recovery cases. The tribunal said that such lawyers are often not well-versed with the facts of the cases and fail to adequately defend the interests of the banks.
DRT’s directive stirs controversy
The DRT’s directive, dated August 31, 2023, was issued by its presiding officer, S.K. Jain. It stated that the tribunal had observed that many banks and financial institutions were appointing junior or proxy lawyers who were not authorized by the original counsel or the bank’s legal department. The directive said that such lawyers were unable to answer the queries of the tribunal or produce relevant documents or evidence. The directive also said that such lawyers were causing delays and adjournments in the proceedings, which affected the speedy disposal of cases.
The directive further said that the banks and financial institutions should ensure that only competent and experienced lawyers, who are well-acquainted with the facts and law of the cases, should appear before the tribunal. It also warned that if any bank or financial institution failed to comply with the directive, the tribunal would take appropriate action against them.
The directive has stirred a controversy among the legal fraternity, as some lawyers have questioned its legality and validity. They have argued that the DRT has no authority to issue such a directive, as it is not a regulatory body for lawyers. They have also claimed that the directive violates the right of the banks and financial institutions to choose their own counsel.
Banks defend their choice of lawyers
Some banks and financial institutions have defended their choice of lawyers, saying that they have appointed them as per their internal policies and procedures. They have also said that they have full faith and confidence in their lawyers, who are competent and qualified to handle their cases.
A senior official of a public sector bank, who did not wish to be named, said that the bank had a panel of empanelled lawyers who were authorized to represent it in various courts and tribunals. He said that the bank had also given power of attorney to some of its officers, who could appoint any lawyer from the panel as per their discretion. He said that the bank had no intention to disrespect or disregard the DRT’s directive, but it had to follow its own rules and regulations.
Another official of a private sector bank, who also requested anonymity, said that the bank had hired some junior lawyers to assist its senior counsel in some cases. He said that the junior lawyers were well-trained and supervised by the senior counsel, who had ultimate responsibility for the cases. He said that the bank had not faced any difficulty or inconvenience due to the junior lawyers, and it had always complied with the orders and directions of the DRT.
Experts opine on the issue
Some legal experts have opined on the issue, saying that both sides have valid points and arguments. They have suggested that a balance should be struck between the interests of the banks and financial institutions, who want to recover their dues from defaulters, and the interests of the DRT, which wants to ensure speedy and effective disposal of cases.
Dr. R.K. Singh, a former presiding officer of DRT Mumbai, said that he understood the concerns of both parties. He said that while it was true that some junior or proxy lawyers were not competent enough to handle complex debt recovery cases, it was also true that some senior or experienced lawyers were too busy or expensive to appear before the DRT regularly. He said that there was no hard and fast rule or guideline for appointing lawyers for debt recovery cases, and it depended on various factors such as availability, affordability, expertise, etc.
He suggested that instead of issuing a blanket directive, the DRT should deal with each case on its own merits and circumstances. He said that if the DRT found any lawyer to be incompetent or negligent in any case, it could impose costs or penalties on him or her, or even debar him or her from appearing before it in future. He said that this would serve as a deterrent for other lawyers as well.
Dr. S.K. Sharma, a professor of law at Gujarat National Law University (GNLU), said that he agreed with Dr. Singh’s views. He said that while he appreciated the DRT’s intention to ensure speedy justice for both creditors and debtors, he felt that its directive was too harsh and arbitrary. He said that there was no legal basis for issuing such a directive, as it infringed upon the right of parties to choose their own counsel. He said that this right was recognized by various laws and judgments of courts.
He suggested that instead of issuing a directive, the DRT should issue an advisory or a guideline for banks and financial institutions, advising them to appoint competent and experienced lawyers for their cases. He said that this would be more persuasive and acceptable than a coercive measure.
