An internal audit undertaken by the finance ministry has revealed that officers entrusted to recover debt as per the orders of debt recovery tribunals often settled cases at a low amount, leading to a loss of at least Rs 1,036 crore (Rs 10.36 billion).
Interestingly, these recovery officers do not have the power to reduce the amount stated in the order issued by the presiding officer.
"The recovery officer has absolutely no powers to stay, alter or close the case without recovering the full amount mentioned in the Recovery Certificate. In simple words, the RO can't go beyond the decree passed by the presiding officer and he has to go by the letter and spirit of the decree passed by the PO," the office of chief controller of accounts wrote in the annual review of internal audit, ministry of finance.
The annual review was published "to point out irregularities or deficiencies which need the immediate attention of the Heads of Departments", S M Kumar, chief controller of accounts, said in the review for 2007-08.
The debt recovery tribunals were set up for the speedy recovery of debts due to banks and financial institutions. At present, there are 30 DRTs and 5 debt recovery appellate tribunals.
DRTs take up cases of only Rs 10 lakhs (Rs 1 million) and above.
Among 2909 cases involving Rs 1,538 crore (Rs 15.38 billion), the RO have closed the cases after instructions from the banks, leading to an under recovery of Rs 1,325 crore (Rs 13.25 billion).
Here also, the RO does not have the power to close cases.
Recommending further investigation, the annual review said, "The authority under which the cases have been closed by the RO at his own level has not been explained".
Likewise, the audit review also found the recovery officers closed certain cases based on the instructions from the bank at an amount of Rs 288.59 crore (Rs 2.88 billion).
In the case of debts recovery tribunal, Lucknow, it was found that irregular closure of a particular case resulted in a loss of Rs 83 lakhs (Rs 8.3 million). The internal audit also found 137 cases where recovery proceedings were prematurely closed by the recovery officer.
In an internal audit of another DRT in Nagpur, it was noted that 436 recovery certificates involving Rs 407 crore (Rs 4.07 billion) were pending as on March 31, 2007.
Despite vast powers given under relevant regulation in Maharastra -- such as attachment of property, arrest and detention of debtors- the delay in execution has been observed, the review said.
