Nahar Industrial Enterprises vs Honkong & Shanghai Banking Corp.
decided on 29.07.09
by Supreme Court of India, Judges – S.B. Sinha & Ashok Kumar Ganguly, Civil
Appeal No : 4796 of 2009
DRT Solutions Citation –
DRTS-013-Nahar vs HSBC-2009
http://www.drtsolutions.com/Nahar-HSBC-Counter-claim-Appeal.htm
We have now numbered the
Judgments published on this web site as DRTS-00.)
Accordingly all the judgments published so far have been numbered. The judgment
on this page is numbered as DRTS-013.
Comments by DRT Solutions
An Important Supreme Court Judgment about Tribunal, Court, DRT, Transfer from
Court to Tribunal, Counter-claim and Appeal
The full text of the
judgment is given below with important portions marked in Red on pages 29, 35,
36, 38, 43, 44, 45, 49 to 52, 54, and 55. If the borrower litigants find that
the adjudication of their counter-claim is not being done properly, based on
this judgment, they should request DRT to transfer the said counter-claim to
civil court in the interest of justice, equity and good conscience. They will
not only get complete justice but their right to appeal will be safe guarded
without any deposit. Since in all the cases, the amount of counter-claim is much
more than the claim of the bank, there is ‘No Debt Due’ and hence until and
unless the counter-claim is decided, no recovery action can be initiated against
any decision of the DRT. The following are the important aspects:-
(1)
The ‘Tiwari
Committee’ constituted by the RBI in 1981 first proposed establishment of
Tribunals for expeditious recovery of bank overdues. The said committee
recommended that these tribunals should be manned by persons (i.e. the Advocates
and the Judges) having knowledge and experience in banking, industry and
finance. Till date (even after 20 years of establishment of DRTs) the said
recommendation has not been implemented. On one hand, huge court fee and other
charges are being collected by the DRTs, no money is being spent on the training
of the Judges and the Advocates on the essential knowledge of banking, industry
and finance. This is clearly affecting award of justice particularly to the
borrowers and guarantors.
(2)
The Supreme Court of
India, 15 years back laid down the law that the Tribunals be transferred from
control of the Administrative Ministry (i.e. Ministry of Finance in case of the
DRTs) to Ministry of Law. Till date even after the SC verdict, the DRTs are not
being transferred from the control of Ministry of Finance to Ministry of Law.
The Ministry of Finance continues to post bank officials as DRT Judges and
Recovery Officers. The Ministry of Finance continues to hold regular meetings
with the DRT Judges asking them to expedite bank recoveries. All these are open
violations of Principles of Natural Justice which are governing the DRT Act and
the Securitisation Act. Under such facts and circumstances, the borrowers and
guarantors can not expect justice.
(3)
The DRT Act was
enacted in 1993. The provision of counter-claim in this Act was incorporated in
2000 and is exactly the same as in CPC 1908. In CPC itself such provision was
made in 1976. The salient features of the counter-claim are as under:-
(a)
The counter-claim is the suit filed by the borrower. Whereas the banks are bound
to file their claim for adjudication in DRTs, the borrowers are not bound to do
so. The bar of civil court vide section 18 of the DRT Act applies to the banks
only.
(b)
Further as per Section 19(11) of the DRT Act, “Where a defendant sets up a
counter-claim and the applicant contends that the claim thereby raised ought not
be disposed of but by way of counter-claim but in an independent action, the
applicant may, at any time before issues are settled in relation to the
counter-claim, apply to the Tribunal for an order that such counter-claim may be
excluded, and the Tribunal may, on the hearing of such application, make such
order as it thinks fit.”
(c)
In view of above, either the DRT has to adjudicate the counter-claim following
the established procedure laid down in the CPC or transfer the case to the civil
court.
(d)
Since the amount of counter-claim is much more than the claim of the bank, there
can not be any recovery action as there is ‘No Debt Due’ till the counter-claim
is fully adjudicated upon either by the DRT or by the civil court.
(4)
While all out
emphasis has been laid on expeditious adjudication and enforcement of securities
to free blocked public funds, an important aspect has not been paid attention.
If all these matters are so important, the banks and the financial institutions
have to be always careful and ever vigilant to avoid such actions which will
delay the matters in court of law. The RBI has emphasized all these aspects
since 1976 but the bank bureaucracy has not been serious in respect of e.g.
signing of blank documents, execution of proper documents, eliminating
questionable one side documents, providing copy of complete set of documents
executed, timely sanction of needed funds, timely revival, restructure and
rehabilitation, avoiding questionable delays, strict observance of RBI
Guidelines and Govt policies, strict observance of duty of care, strict
observance of Supreme Court leading judgments like Kripack, Maneka Gandhi,
Mardia etc., proper determination of NPA as per RBI Guidelines, proper process
for initiation of declaration of willful defaulters, proper conduct and actions
of the Authorised Officers, strict legal audit by independent auditor before
issue of notice u/s 13(2), 13(4), application u/s 14 and any appeal, transfer of
DRTs from Ministry of Finance to Ministry of Law etc. If all these are strictly
enforced, the consequent cases filed before DRT will be expeditiously decided.
Further the burden of unnecessary cases on DRTs and Civil Courts will come down
heavily. Under such circumstances only there will be expeditious recovery.
Otherwise the present system of mindless litigation and unsatisfactory recovery
will continue.
(5)
The bureaucracy in
banks and financial institutions instead of correcting themselves and devising
remedial internal measures are more inclined to secure stronger legal powers,
having controls on DRTs through Ministry of Finance by appointing bank officers
as Judges and Recovery Officers in DRTs and blaming others. It is like if you
point out one finger to others, you forget that three fingers are pointing
towards you.
(6)
Since the banks and
financial institutions are less likely to correct themselves, the legal
compulsions like damages and counter-claims will alone force them to do so.
(7)
The full
text of this useful judgment is given below with important portions marked in
Red on page 29, 35, 36, 38, 43, 44, 45, 49 to 52, 54, and 55.
Page No - 01
http://indiankanoon.org/doc/1155272/
Supreme Court of India
Nahar Industrial Enterprises ... vs Hongkong & Shanghai Banking Corp. on 29
July, 2009
Author: S Sinha
Bench: S.B. Sinha, Asok Kumar Ganguly
IN THE
SUPREME COURT OF INDIA
CIVIL
APPELLATE JURISDICTION
CIVIL
APPEAL NO. 4796 OF 2009
(Arising out of SLP (C) No.24715 of 2008)
Nahar
Industrial Enterprises Ltd. ... Appellant Versus
Hong
Kong & Shanghai Banking Corporation ... Respondent WITH
TRANSFER PETITION (C) No. 1195 OF 2008
Axis
Bank Ltd. .... Appellant Versus
Rajshree Sugars & Chemicals Ltd. .... Respondent WITH
TRANSFER PETITION (C) No. 1196 OF 2008
Axis
Bank Ltd. .... Appellant Versus
Nahar
Industrial Enterprises Ltd. .... Respondent
Page No - 02
AND
TRANSFER PETITION (C) Nos. 1207-1209 OF 2008 Hongkong & Shanghai Banking
Corporation Ltd. .... Appellant Versus
Nahar
Industrial Enterprises Ltd. and others .... Respondents
JUDGMENT
S.B.
Sinha, J.
Leave
granted.
INTRODUCTION
2.
Whether the High Court and/or this Court has the power to transfer a suit
pending in a Civil Court situated in one State to a Debt Recovery Tribunal
situated in another is the question involved herein.
BACKGROUND FACTS
3. We
may notice the facts of the matter from Civil Appeal @ SLP (C) No.24715 of 2008.
It arises out of a judgment and order dated 15th September, 2008 passed by a
learned Single Judge of the High Court of Punjab and Haryana at Chandigarh in
Transfer Application No.186 of 2008 whereby and whereunder the suit filed by the
appellant and pending before the Civil Judge (Junior Division), Ludhiana was
transferred to the Debt Recovery Tribunal-III at Mumbai.
Some
of the parties to the lis before us are the banks or financial institutions
within the purview of the Recovery of Debts Due to Banks and Financial
Institutions Act, 1993 (1993 Act). The others are debtors of such banks or
financial institutions. The parties hereto entered into diverse agreements in
terms whereof banks or the financial institutions lent money to the debtors.
Page No - 03
Appellant entered into International Swaps and Derivatives Agreement with the
respondent. On 1.11.2006, the appellant and the respondent entered into globally
used market standard Master Agreement and Schedule published by ISDA (ISDA
Master Agreement) (hereinafter referred to as Master Agreement) wherein the
respondent undertook derivative transactions for hedging or transformation of
risk exposure. Under the said Master agreement i.e. the ISDA Agreement including
the Schedule thereto, the appellant had entered into ten transactions with the
respondent and out of those ten transactions, appellant has unwound (closed at
the instance of the appellant at a mutually agreed value) four transactions; one
transaction got matured and one expired due to occurrence of a contingent event.
In all the six transactions, appellant had received an aggregate sum of about
Rs.1,87,00,000/- (Rupees one crore eighty seven lakhs only) from the respondent.
In respect of 2 transactions Swap Reference: NCW072009996 and Swap Reference:
NCW 072009997 both dated 13th July, 2007, the appellant has till date received
Rs.13,00,000 (Rupees Thirteen Lakhs Only) from the respondent. As on 02.04.2008,
four foreign exchange derivative transactions were outstanding between the
appellant and the respondent, dated 13.07.2007, 13.07.2007, 26.07.2007 and
30.07.2007.
Appellant vide his letter of 03.04.2008 purported to disclaim, repudiate and
reject only two out of those four transactions, i.e., the transactions with
trade dates 26th July 2007 and 30th July, 2007. Appellant filed a suit in the
Civil Court at Ludhiana seeking a declaration that foreign exchange derivative
contracts dated 26.7.2007 and 30.7.2007, entered into by and between them were
void as being illegal and violative of Foreign Exchange Management Act, 2000 as
well as the Circulars and Guidelines issued by the Reserve Bank of India, and,
thus, against public policy. The said suit was marked as Civil Suit No.108 of
2008.
An
application for grant of injunction was also filed. By reason of an order dated
5.4.2008, the learned Civil Judge directed both the parties to maintain status
quo in regard to the said two contracts, directing: Lest the purpose be not
defeated by delay, both the parties are directed to maintain status quo (as on
today) regarding the contracts involving the present cases till 16.4.2008.
Compliance U/O 39 R.3 CPC be made as per rules. Plaintiffs shall also be duty
bound to get the service effected on defendants for date fixed Summons be also
given dasti.
Page No - 04
The
said order of status quo is said to have been communicated to the respondent on
or about 8.4.2008.
Respondent issued a notice dated 12.4.2008 upon the appellant terminating the
pending derivative transaction. Appellant contends that termination of the said
derivative transaction is in violation of the order of status quo passed by the
learned Civil Judge on 5.4.2008. Appellant responded to the said notice calling
upon it to withdraw the same.
On or
about 15.4.2008, the respondent-bank filed an application before the Debt
Recovery Tribunal at Mumbai marked as OA No.122 of 2008 along with an interim
application marked as Interim Application No.125 of 2008 for recovery of dues
under the two remaining Foreign Exchange Derivative Contracts dated 13.7.2007.
Meanwhile, the order of status quo passed on 5.4.2008 was extended by the
learned Civil Judge by an order dated 16.4.2008 till 23.4.2008. In the original
application filed by the respondent-bank, the Tribunal by an order dated
22.4.2008 restrained the appellant from alienating, or in any way creating third
party interests in its fixed assets in relation to the transactions which were
not the subject matter of the suit. Respondent-bank issued two letters on
24.4.2008 to the appellant calling upon it to pay the amount due under the two
transactions dated 26.7.2008 and 30.7.2008, and on the same day filed another
application before the Debt Recovery Tribunal for recovery of dues under the
said two foreign exchange derivative contracts. An application for clarification
and/or modification of stay of the order dated 5.4.2008 was filed by the
appellant before the civil judge which was heard on 13.5.2008 and 17.5.2008. The
matter was adjourned to 29.5.2008.
IMPUGNED JUDGMENT
Respondent, however, filed transfer application before the High Court of Punjab
& Haryana on or about 27.5.2008 seeking transfer of proceedings pending
before the Civil Judge, Ludhiana to the Debts Recovery Tribunal, III, Mumbai. An
application for violation of the order of injunction was filed by the appellant
before the Civil Court on 28.5.2008. By reason of the impugned order, a learned
Single Judge of the High Court allowed the said application transferring the
suit filed by the appellant in the Ludhiana
Page No - 05
court
to the DRT tribunal, Mumbai in the form of a counter claim. The Banks and the
Financial Institutions including Axis Bank have also filed Transfer Petitions,
said to be by way of abundant caution, before this Court under Section 25 of the
Code which are marked as TP (C) Nos. 1207-1209 of 2008 and 1195-2008 &
1196-2008 respectively . While issuing the notice in SLP (C) No. 24715 of 2008
this Court, by order dated 20.10.2008, directed :-
Issue
notice.
Mr.
Sameer Parekh, Advocate accepts notice on behalf of the respondent.
As the
question involved in this petition is a pure question of law, no counter
affidavit need be filled. Put up for final disposal on 2nd December, 2008. We
make it clear that on that day, this Court shall consider as to whether this
Court, in the peculiar facts and circumstances of this case, may exercise its
jurisdiction under Article 142 of the Constitution of India.
In the
meantime, there shall be stay of the operation of the final judgment and order
dated 15.9.2008 of the High Court of Punjab & Haryana in Transfer
Application No.186/2008 as also stay of the proceedings before the Debt Recovery
Tribunal, Mumbai in OA Nil of 2008 (Lodging No.270).
The
parties shall file written submissions before the next date of hearing;
ISSUES
ARISING
In the
background of these facts, the following questions that arise for our
consideration are:
(I).
Whether the High Court/Supreme Court has the power to transfer a suit from a
Civil Court to the DRT, keeping in mind,
a. The
effect of a transfer from the Civil Court to the DRT is to oust the jurisdiction
of the civil court which cannot be done without express statutory provisions.
Page No - 06
b.
Proceedings before DRT is sui generis; totally different from the procedure in a
Civil Court.
c.
Power of transfer under CPC (Sections 22, 23, 24 and 25) is inapplicable as
these sections apply in a case where the transfer is from one Court to another;
DRT being not a Court.
d. The
power to transfer under the DRT Act is restricted to cases filed by Banks that
were pending on the date when the Act came into force and in respect of those
cases in which DRT has jurisdiction.
(II).
Whether the decision of this Court in Indian
Bank v. ABS Marine Products (P) Ltd. [(2006)
5 SCC 72], is applicable in the case of transfer of a suit from the Civil Court
to the DRT to be tried as a counterclaim, and could a Coordinate two Judge Bench
in State
Bank of India v. Ranjan Chemicals Ltd. and another,
[ (2007) 1 SCC 97 ] have departed from the ratio thereof after noticing it and
without referring the matter to a larger bench of Three Judges?
(III)
Even if the power to transfer exists, in the facts and circumstances of the
case, whether it ought to have been exercised. (IV) Whether Article 142 is
applicable to direct a transfer from a Civil Court to DRT, especially when:
(i)
The DRT Act does not bar the jurisdiction of the Civil Court to entertain a suit
against a bank and therefore powers under Article 142 ought not to be exercised
to have such an effect. (ii) Article 142 is not applicable where a statute
occupies the field. (iii) Power under Article 142 should be exercised only to
prevent injustice and do complete justice between the parties. (V). Whether in
the exercise of powers under Article 142, transfer of case ought to be refused
to do complete justice between the parties and the proceedings before the DRT be
stayed pending disposal of the suit. SUBMISSIONS OF THE COUNSEL
Dr.
A.M. Singhvi, Mr. S. Ganesh, Mr. Rohington Nariman and Mr. Rakesh Dwivedi,
learned senior counsel appearing on behalf of the appellants would contend :
Page No - 07
1) The
High Court had no power to transfer a pending Civil Suit to a Debt Recovery
Tribunal as the same was beyond its jurisdiction. 2) The High Court and/or the
Supreme Court have no power to transfer a case from a Civil Court to Debt
Recovery Tribunal inasmuch as : a) The effect of a transfer from Civil Court to
Debt Recovery Tribunal would oust the jurisdiction of the Civil Court which is
impermissible in law in absence of any express statutory provision.
b)
Debt recovery proceeding is sui generis and provides for a totally different
procedure from the one followed under the Code of Civil Procedure.
c)
Power to transfer vested in the High Court or on this Court being confined to
Sections 22, 23, 24 and 25, the same cannot be applied for the purpose of
transferring a Civil Suit to Debt Recovery Tribunal, as the latter is not a
Civil Court. d) The power to transfer under DRT Act must be confined in respect
of cases filed by banks which were pending on the date DRT Act came into force.
e)
This Court in Indian
Bank v. ABS Marine (supra)
having categorically held that no suit could be transferred from a Civil Court
to a Debt Recovery Tribunal as a counter claim, keeping in view the scheme
contained in the said Act and the Code, the contrary view taken in Ranjan
Chemicals, (supra) cannot be held to be good law.
f) The
provision of Section 23(3) of the Code being a procedural provision, as has been
held by this Court in Durgesh
Sharma v. Jayshree, [(2008) 9 SCC 648], High Court cannot be said to
have any power/jurisdiction to transfer a suit pending in a Civil Court, which
is subordinate to it, to a Tribunal which is not subordinate to the High Court.
g)
Ranjan Chemicals having failed to appreciate that transfer of a suit from the
Civil Court to the Debt Recovery Tribunal without plaintiffs' consent resulted
in defeating the plaintiff's statutory right to approach the Civil Court and
furthermore resulted in ouster of the jurisdiction thereof, neither of which
could be ordered or directed without any specific empowering provision in the
statute.
h)
It is well
settled legal position that jurisdiction of the Civil Court can only be ousted
by a specific and unequivocal statutory provision or by necessary implication.
i) Transfer of a suit to a Tribunal having no jurisdiction to decide the issues
raised by the plaintiff
Page No - 08
against the bank
and/or financial institution would affect the rights of the appellant. It would
furthermore affect its right of appeal, which is a right vested on the plaintiff
on the date of filing of the suit. The condition of pre-deposit being one of the
conditions for maintaining an appeal before the Appellate Tribunal, in the event
such a right of transfer is upheld, the same would amount to burdening the right
of appeal with certain conditions which the Parliament never intended to confer.
An unfettered right of appeal, which is statutory would thus become fettered,
without the intervention of statute. Thus, what has not been done directly would
be done indirectly as a result of transfer.
j) The
Bench deciding Ranjan Chemicals being a coordinate Bench to the previous Bench
deciding Indian Bank was bound to follow it, for maintenance of judicial
discipline. In the event of any disagreement, the only course open to it was to
refer the question to a larger Bench.
k) The
suit filed by the appellant involved complicated questions of law relating to
interpretation of Section 45U and 45V of the Reserve Bank of India Act, 1934 as
also questions relating to fraud etc. These questions cannot be satisfactorily
decided by the Tribunal which does not have expertise in such mattes. l) In one
of the cases, the suit has been filed on the Original Side of the High Court of
Madras with leave in terms of Clause 12 of the Letters Patent and against an
interlocutory order an intra court appeal filed under Clause 15 thereof is
pending, no order of transfer could have been passed both in relation to the
suit as also the appeal as neither the Tribunal nor the Appellate Tribunal can
be a substitute for the High Court as also the Division Bench thereof.
m) In
the Ludhiana suit application under Order XXXIX Rule 2A of the Code having been
pending in respect whereof the Tribunal did not have jurisdiction, in the event
an order of transfer is passed, would lead to a great anomaly, as the suit must
be transferred along with all incidental or supplemental proceedings in respect
whereof the Debt Recovery Tribunal would have no jurisdiction under the Act.
n)
Alternatively, it was argued that even if the power to transfer exists, in the
facts and circumstances of this case and in the interests of justice, the same
should not be exercised. o) This Court also should not exercise its jurisdiction
under Article 142 of the Constitution of India as the said Act does not bar the
jurisdiction of the Civil Court to
Page No - 09
entertain a civil case against a bank since the field is occupied by the statute
and it is a settled law that power under Article 142 of the Constitution of
India can be exercised only to prevent injustice and to do complete justice
between the parties.
Mr.
Shyam Diwan and Mr. Ashok Desai, learned senior counsel appearing on behalf of
the respondent, on the other hand, contended:- a) Definition of `debt' as
contained in Section 2(g) of the Act means any liability which is claimed as due
from any person by a bank during the course of any business activity undertaken
by it and would bring within its purview any agreement for enforcement whereof
the bank should have no option but to approach the Tribunal only.
b)
When a
particular claim made by a bank is a `debt' within the meaning of the provisions
of the Act, it must be determined or adjudicated upon by the Tribunal only and
not by a Civil Court.
c) The allegation of
`Fraud', `Misrepresentation', `Undue Influence' or any other defence, which are
available to a borrower to contest the claim of the bank, can be raised before
the Tribunal itself and adjudicated upon and determined by the Tribunal.
d) As both the suits
pending before the Civil Court and/or the High Court as also the petitions
pending before the Tribunals arise out of the Master Agreement entered into by
and between the parties, the Tribunal having jurisdiction would be entitled to
determine the said questions.
e) Having regard to
the scheme of the Act as also the provisions of the Code, the Tribunal must be
given an extended meaning so as to hold that the Tribunal is in effect and
substance a court
and thus the High Court in exercise of its jurisdiction under Section 24 of the
Code and this Court in exercise of its jurisdiction under Section 25 thereof
have ample jurisdiction to transfer a suit to the Tribunal.
f) In
the event it is held that neither the High Court nor this Court have the
jurisdiction to direct such transfer, the borrowers would be free to file
vexatious preemptive suits and obtain order of injunctions which will cause
hindrance to the cause of administration of justice
Page No - 10
g)
Even if it is held that the High Court did not have jurisdiction to order such
transfer under Section 24 of the Code, it must be held to have inherent powers
under Section 151 thereof. h) This Court in any event should exercise its
jurisdiction under Article 142 of the Constitution of India with a view to do
complete justice between the parties and to avoid an injustice to the cause of
the administration of justice.
STATUTORY FRAMEWORK
RECOVERY OF DEBTS DUE TO BANKS AND FINANCIAL INSTITUTIONS ACT, 1993
Before
dealing with the rival contentions of the parties, we must first set out the
relevant statutory provisions. The 1993 Act was enacted to provide for the
establishment of Tribunals for expeditious adjudication and recovery of debts
due to Banks and Financial Institutions and for matters connected therewith or
incidental thereto. The Statement of Objects and Reasons for enacting the said
Act reads as under:
Banks
and financial institutions at present experience considerable difficulties in
recovering loans and enforcement of securities charged with them. The existing
procedure for recovery of debts due to the banks and financial institutions has
blocked a significant portion of their funds in unproductive assets, the value
of which deteriorates with the passage of time. The Committee on the Financial
System headed by Shri M. Narasimham has considered the setting up of the Special
Tribunals with special powers for adjudication of such matters and speedy
recovery as critical to the successful implementation of the financial sector
reforms. An urgent need was, therefore, felt to work out a suitable mechanism
through which the dues to the banks and financial institutions could be realized
without delay. In 1981, a Committee under the Chairmanship of Shri T. Tiwari had
examined the legal and other difficulties faced by banks and financial
institutions and suggested remedial measures including changes in law. The
Tiwari Committee had also suggested setting up of Special Tribunals for recovery
of dues of the banks and financial institutions by following a summary
procedure. The setting up of Special Tribunals will not only fulfill a long-felt
need, but also will be an important step in the implementation of the Report of
Narasimham Committee. Whereas on 30th September, 1990 more than
fifteen lakhs of cases filed by the public sector banks and about 304 cases
filed by the financial institutions were
Page No - 11
pending in various courts, recovery of debts involved more than Rs.5622 crores
in dues of Public Sector Banks and about Rs.391 crores of dues of the financial
institutions. The locking up of such huge amount of public money in litigation
prevents proper utilisation and recycling of the funds for the development of
the country.
Section 2 is the interpretation section.
Section 2(g) defines `debt' to mean any liability (inclusive of interest) which
is claimed as due from any person by a bank or a financial institution or by a
consortium of banks or financial institutions during the course of any business
activity undertaken by the bank or the financial institution or the consortium
under any law for the time being in force, in cash or otherwise, whether secured
or unsecured, or assigned, or whether payable under a decree or order of any
civil Court or any arbitration award or otherwise or under a mortgage and
subsisting and legally recoverable on, the date of the application.
Chapter II deals with establishment of Tribunals and Appellate Tribunals.
Sub-section (1) of Section 3 deals with establishment of Tribunal. Sub-section
(2) provides that the Central Government shall also specify, in the notification
referred to in sub-section (1), the areas within which the Tribunal may exercise
its jurisdiction for entertaining and deciding the applications filed before it.
Chapter III of the Act deals with jurisdiction, powers and authority of
Tribunals. Section 17 reads as under:
Section 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.
Section 18 bars the jurisdiction of all courts in relation to the matters
specified in Section 17 (except of the Supreme Court and of a High Court under
Articles 226 and 227
Page No - 12
of the
Constitution). Chapter IV deals with the procedure of the Tribunals. Section 19
provides for an application by a bank or financial institution to recover any
debt from any person. Sub-section (8) of Section 19 enables a defendant to set
up, by way of counter-claim against the claim of the applicant, any right or
claim in respect of a cause of action accruing to the defendant against the
applicant in addition to his right of pleading a set-off under sub-section (6).
Sub-section (9) provides that such a counter claim shall have the same effect as
a cross-suit. Sub-section 22 of Section 19 empowers the Presiding Officer of a
Tribunal to issue a certificate under his signature on the basis of an order of
the Tribunal to the Recovery Officer for recovery of the amounts of debt
specified therein. We may, however, notice that Section 19 of the Act was
amended twice, - once by Act 1 of 2000 which came into force w.e.f. 17.1.2000
and the second time by Act 30 of 2004 which came into force on and from
11.11.2004.
Section 22 provides for the procedure and powers of the Tribunal and Appellate
Tribunal, sub-section (1) whereof reads as under:
Section 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 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;
Section 24 provides that the provisions of the Limitation Act, 1963 shall, as
far as may be, apply to an application made to a Tribunal. Section 31 provides
for transfer of pending cases. It reads, thus :
Section 31. Transfer of pending cases.—
(1)
Every suit or other proceeding pending before any court immediately before the
date of establishment of a Tribunal under this Act, being a suit or proceeding
the cause of action where on it is based is such that it would have been, if it
had arisen after such establishment, within the jurisdiction of such Tribunal,
shall stand transferred on that
Page No - 13
date
to such Tribunal: Provided that nothing in this sub-section shall apply to any
appeal pending as aforesaid before any court.
(2)
Where any suit or other proceeding stands transferred from any court to a
Tribunal under sub- section (1),--
(a)
the court shall, as soon as may be after such transfer, forward the records of
such suit or other proceeding to the Tribunal; and
(b)
the Tribunal may, on receipt of such records, proceed to deal with such suit or
other
proceeding, so far as may be, in the same manner as in the case of an
application made under section 19 from the stage which was reached before such
transfer or from any earlier stage as the Tribunal may deem fit;
CODE
OF CIVIL PROCEDURE
We
may, at this juncture, also notice some of the provisions of the Code of Civil
Procedure (Code), which are of relevance herein. Section 2 (2) defines a decree
to mean the formal expression of an adjudication which, so far as regards the
Court expressing it, conclusively determines the rights of the parties with
regard to all or any of the matters in controversy in the suit and may be either
preliminary or final. It shall be deemed to include the rejection of a plaint
and the determination of any question within section 144, but shall not include—
(a)
any adjudication from which an appeal lies as an appeal from an order, or
(b)
any order of dismissal for default.
An
explanation is added to that definition which says a decree is preliminary when
further proceedings have to be taken before the suit can be completely disposed
of. It is final when such adjudication completely disposes of the suit. It may
be partly preliminary and partly final.
Page No - 14
`Judge' has been defined under Section 2(8) to mean the presiding officer of a
Civil Court.
Section 2(14) defines an order to mean the formal expression of any decision of
a Civil Court which is not a decree.
Section 3 of the Code provides for hierarchy of courts in the following terms :-
Section 3 - Subordination of Courts
For
the purposes of this Code, the District Court is subordinate to the High Court,
and every Civil Court of a grade inferior to that of a District Court and every
Court of Small Causes is subordinate to the High Court and District Court;
The
Code recognizes different courts, the court being one of them. Sub-section (2)
of Section 5 provides that `revenue court' would not be civil court.
Section 9 of the Code empowers the Civil Court to try all suits of civil nature
excepting the suits of which their cognizance is either expressly or impliedly
barred.
Sections 10 and 11 thereof deal with stay of suit and res judicata.
Section 12 provides for bar to further suit.
The
place of suing of a suit is dealt with under Sections 15 to 21.
Section 22 provides for power to transfer suits which may be instituted in more
than one court.
Section 23 of the Code reads as under:
Section 23-To what Court application lies.—
(1)
Where the several Courts having jurisdiction are subordinate to the same
Appellate Court, an application under section 22 shall be made to the Appellate
Court.
Page No - 15
(2)
Where such Courts are subordinate to different Appellate Courts but to the same
High Court, the application shall be made to the said High Court.
(3)
Where such Courts are subordinate to different High Courts, the application
shall be made to the High Court within the local limits of whose jurisdiction
the Court in which the suit is brought is situate
Section 24 provides for the general power of transfer and withdrawal.
Sub-section (5) of Section 24 provides that a suit or proceeding may be
transferred from a Court which has no jurisdiction to try it. Sub-Sections (1)
and (5) of Section 25 provides for power of Supreme Court to transfer suits in
the following terms:
25.
Power of Supreme Court to transfer suits, etc.--(1) On the application of a
party, and after notice to the parties, and after hearing such of them as desire
to be heard, the Supreme Court may, at any stage, if satisfied that an order
under this section is expedient for the ends of justice, direct that any suit,
appeal or other proceeding be transferred from a High Court or other Civil Court
in one State to a High Court or other Civil Court in any other State.
xxx
xxx xxx
(5)
The law applicable to any suit, appeal or other proceeding transferred under
this section shall be the law which the Court in which the suit, appeal or other
proceeding was originally instituted ought to have applied to such suit, appeal
or proceeding; Section 153B provides that trial must be held in an open court.
Provisions of Order XX Rule 1 provide not only that Civil Court must pronounce a
judgment in open court but it must also date and sign the same.
EFFECT
OF AMENDMENTS
The
Debts Recovery Tribunal has been constituted for determining a specific category
of cases, namely - recovery of debts due to Banks and Financial Institutions. It
has wide powers. It may determine all the issues relating to or connected with
the recovery of debt due to banks and financial institutions. A fortiori all
defences which can ultimately be raised before it by the borrowers for
contesting a claim of the Bank or the Financial
Page No - 16
Institution can also be determined by it. Indisputably prior to amendments of
the Act before 2000 and 2004, a plea of set off or counter-claim was not
available to a debtor.
The
question as to whether a High Court had power to transfer a counter claim to the
Debts Recovery Tribunal came up for consideration before Delhi High Court in
Cofex Exports Ltd. vs. Canara Bank [AIR 1997 Delhi 355] wherein the High Court
opined that Debt Recovery Tribunal is not a court but is a Tribunal having been
created by a statute vested with a special jurisdiction to try only applications
by banks or financial institutions to recover any debt. Although having regard
to the provisions contained in clauses (a) to (b) of sub-section (2) of Section
22 of the Act it had all the trappings of a court but it was held not to be a
court as such, opining:
For
reasons more than one, we are of the opinion that a set-off or a counter claim
cannot be entertained by a Debt Recovery Tribunal. [...] It has not been
conferred with jurisdiction to entertain counter-claim or plea of set-off by
reference to the provisions of Order 8 of the CPC. Entertaining a counter-claim
or a cross suit or a plea of set-off would not only be without jurisdiction but
also an exercise in futility inasmuch as the Tribunal would not adjudicate
thereupon nor pass a decree in favor of the defendant against the plaintiff. The
law creating Tribunal and conferring jurisdiction on it has not provided for
set-off or counter claim being entertained by it just as the Civil Procedure
Code does it for civil courts. If a counter claim was to be tried by Tribunal it
may have to go into disputes arising between the parties though not 'filling the
same character'. There may be disputes which by no stretch of imagination can be
tried by Tribunal. Claims preferred by bank or financial institutions are
capable of being disposed of by summary enquiry while claims preferred by other
persons would not be capable of being so disposed of. The principle of
convenience and the mechanics of litigation before Tribunal (as set out in the
Act) - both exclude set-off or counter claim being placed before the Tribunal.
If set-off, counter claims and cross suits were allowed to be raised before the
Tribunal the very object behind its creation will be lost ;
In
relation to the conflict of jurisdiction between the Civil Court and the
Tribunal, it was observed:
Page No - 17
39.
... Finality shall attach to the findings arrived at and reached by each of the
two within its respective jurisdictional competence. Issues heard and decided by
the Tribunal shall operate as res judicata and shall bind the parties in the
suit before the civil court by virtue of explanation VIII to S. 11 Civil
Procedure Code . However, the civil court shall be free to decide such issues as
lie within its jurisdictional competence. If the civil court must decide an
issue seized by it and within its competence and if there be an unavoidable
conflict between the findings recorded by the civil court and by the Tribunal,
the finding of Civil Court would obviously override and supersede the findings
recorded by the Tribunal for a court is a court and tribunal is a tribunal; the
former adjudicates on trial, the later holds only a summary inquiry guided by
principles of natural justice as the Act provides;
It
was, thus, held that the Tribunal is inferior to that of the Civil Court. The
Court summed up its conclusions, thus:
42.
To sum up our answers to the questions referred to in para 7 above are:-
1. A
suit the subject matter whereof lies within the jurisdictional competence of the
Tribunal cannot be refused to be transferred by a civil court to the Tribunal
merely because a cross suit or a counter claim has been filed or preferred
before the civil court.
2. A
cross suit or cross claim or a plea in the nature of set-off cannot be
transferred to the Tribunal along with the suit with which it is associated and
which is liable to be transferred to the Tribunal.
3. A
plea of set-off raised in a suit filed by a bank or financial institution cannot
be tried by Tribunal nor would it enable the suit being retained by civil court
before it if the subject matter of suit lies within the jurisdictional
competence of tribunal otherwise;
One of
the questions which would arise, thus, for our consideration is whether having
regard to the amendment of Section 19 by reason of Act 1 of 2000 and Act 30 of
2004 empowering the Tribunal to determine a claim of set off and/or counter
claim, and whether Cofex Exports Ltd. (supra) is still good law.
Page No - 18
The
Debts Recovery Act, as it originally stood, did not contain any provision
enabling a defendant in an application filed by the bank/financial institution
to claim any set-off or make any counterclaim against them. On that, among other
grounds, the Act was held to be unconstitutional by the Delhi High court in Delhi
High Court Bar Assn. v. Union of India, [AIR
1995 Del 325]. During the pendency of appeal against the said decision, before
this Court, the Act was however amended by Act 1 of 2000 to remove the lacuna by
providing for set-off and counterclaims by defendants in the applications filed
by banks/financial institutions before the Tribunal. The provisions of the Act
as amended were upheld by this Court in Union
of India v. Delhi High Court Bar Assn.[(2002)
4 SCC 275]. Indisputably, however, after the aforementioned amendments were
carried out, the Debts Recovery Tribunal would have jurisdiction to determine
the claims of set off and counter-claims. It may be that the bank or the
financial institution in terms of the provisions of sub-section (9) of Section
19 of the Act, despite such counter-claim being treated to be a cross- suits
would be entitled to raise a contention that the same should not be determined
by the Tribunal. In the event such a contention has not been raised, the
Tribunal will have jurisdiction to pass a final judgment both on the claim of
the bank or the financial institution on the one hand and the cross-objections
of the borrower on the other.
THREE
AUTHORITIES
ABHIJIT TEA
United
Bank of India, Calcutta v. Abhijit Tea Co. Pvt. Ltd. & Ors. reported in [(2000)
7 SCC 357] has been relied on for the proposition that even a claim for relief
of specific performance, perpetual and mandatory injunction being the subject
matter of the suit by the respondent therein was in the nature of counter claim.
Therein, the following questions were framed:
(1)
Whether the suit No. 410/1985 by the Bank which was disposed by judgment dated
29-3-94 and which judgment was set aside by the Bench on 11-8-98 and remanded to
the Single Judge, could not be treated as pending immediately before the
commencement of the Act on 27-4-94 (in West Bengal) and whether it could not be
transferred to the Recovery Tribunal)?
Page No - 19
(2)
What is the combined effect of Sections 18 and 31 and of the Act on pending
proceedings?
(3)
Whether the pendency of suit No. 272/ 1985 filed by the debtor company against
the Bank for specific performance and for perpetual and mandatory injunctions
raising common issues between parties in both these suits was a sufficient
reason for retention of the Bank's suit No. 410/85 on the original side of the
High Court to be tried alongwith the Suit No. 272/85 filed by the debtor
company?
(4)
Whether the suit No. 272/85 filed by the debtor company was, in substance, one
in the nature of a counter-claim against the Bank and was one which also fell
within the special Act by reason of Section 19(8) to (11) of the Act (as
introduced by Amending Act 1/2000) and if that be so, whether it could still be
successfully pleaded by the respondent-company that the pendency of the
company's suit 272/85 was a ground for retention of Bank's suit No. 410/85 on
the original side of the High Court;
Applying the principles of purposive construction as well as having regard to
the statements of objects and reasons of the Act, it was held that if speedy
disposal is the purpose of the Act, in the event of the respondent's contention
being accepted, the suit would perpetually remain pending on the original side
of the Calcutta High Court because of the provisions contained in Section 18 of
the Act, stating :
Surely, that would place the Bank in a worse position after the 1993 Act than
before inasmuch as before the Act, there was at least the possibility of the
Bank's suit being decided by the civil court on some future day, however,
remote; It was opined:
38. In
our view, the above pleas raised by the respondent company are all inextricably
connected with the amount claimed by the Bank. The plea of the company is that
interest is not to be charged or is to be charged at a lesser rate, that
instalments are to be permitted and more monies should have been advanced. In
our view, these claims made by the Company in its suit 272/85 against the Bank
amount to 'counter claim' and fall within Sub- clauses (8) to (11) of Section 19
of the Act (as introduced by Act 1/ 2000). The plea for deduction of damages is
in the nature of a 'set off' falling under Sub-clauses (6) and (7) of Section
19; Holding that the suit of specific performance of contract,
Page No - 20
perpetual and mandatory injunction were in the nature of counter claim which
comes within the purview of sub-section (8) of Section 19 of the Act, it was
opined:
41.
... A permanent injunction directing the Bank not to charge interest because of
an alleged agreement in that behalf is likewise a plea that no interest is
chargeable. So far as the plea for further financial assistance is concerned, it
is also, broadly, in the nature of a 'counter-claim'. All these fall under
Section 19(8) to (10). Again, the plea for deducting 'damages' though raised in
the suit is indeed broadly a plea of; set off; falling under Sub-clause (6) and
(7) of Section 19.
42.
Both the suits, the one by the Bank against the respondent (suit 410/85) and the
other by the debtor against the Bank (suit 272/ 85) which raises claims or pleas
in the nature of set-off or counter- claim are interconnected. The respondent's
suit falls under Sub-clauses (6), (7) and (8) to (11) of Section 19, as stated
above. Our decision in regard to the real nature of suit 272/85 has become
necessary in the context of a plea by the debtor- company that the company's
suit 272/85 is liable to be retained in the civil Court and on account of the
plea that the connected suit by the Bank 410/85 is also to be retained. Such a
plea, as shown above, cannot be accepted. Thus, both the suits are suits falling
within the Act;
Therein the company approached the appellant Bank for certain credit
facilities. However, by sanction advices the bank gave ad hoc sanction upto
Rs.5,00,000/-; whereas according to the bank, the company could utilize the said
credit facilities but committed default in paying the amount of advance. The
Bank filed an OA for recovery thereof. The Bank also sanctioned a middle term
loan and certain other credit facilities but the sanctioned loan was not
utilized. The company filed a suit for damages with interest.
INDIAN
BANK
In
that case, the following questions were raised;
(i)
Whether the subject-matter of the borrower's suit before the High Court and the
Bank's application before the Tribunal were inextricably connected?
Page No - 21
(ii)
Whether the provisions of the Debts Recovery Act mandate or require the transfer
of an independent suit filed by a borrower against a bank before a civil court
to the Tribunal, in the event of the bank filing a recovery application against
the borrower before the Tribunal, to be tried as a counterclaim in the bank's
application?
(iii)
Whether the observation in Abhijit that the suit filed by the borrower against
the bank has to be transferred to the Tribunal for being tried as a counterclaim
in the applications of the bank, is to be construed as a principle laid down by
this Court, or as an observation in exercise of power under Article 142 in order
to do complete justice between the parties;
The
credit facilities and the packaging facilities were held to be not inextricably
linked with each other stating;
9. The
issues that arose in the Bank's application was whether the borrower failed to
repay the sums borrowed and whether the Bank was entitled to the amounts
claimed. On the other hand, the issues that arose in the borrower's suit were
whether the Bank had promised/agreed to advance certain monies; whether the Bank
committed breach in refusing to release such loans in terms of the sanction
letter; whether the borrower failed to fulfil the terms and conditions of
sanction and therefore the Bank's refusal to advance, was justified; and even if
there was breach, whether the borrower suffered any loss on account of such non-
disbursement and if so whether the borrower was entitled to the amounts claimed.
While the claim of the Bank was for an ascertained sum due from the borrower,
the claim of the borrower was for damages which required firstly a determination
by the court as to whether the Bank was liable to pay damages and thereafter
assessment of quantum of such damages. Thus there is absolutely no connection
between the subject matter of the two suits and they are no way connected. A
decision in one does not depend on the other. Nor could there be any
apprehension of different and inconsistent results if the suit and the
application are tried and decided separately by different forums. In the
circumstances, it cannot be said that the borrower's suit and the Bank's
application were inextricably connected;
In
the fact situation obtaining therein, the suit by the Bank and the suit of the
company against the Bank were found to be not inextricably connected, i.e.
decision in one would
Page No - 22
not
affect the decision in the other. Abhijit Tea was clarified to the effect that
where the respective claims of the parties were not inextricably connected, the
transfer of a suit to the Tribunal can be only on the basis of consent of the
parties and not otherwise. The first question was, thus, answered in the
negative. On the second question, the Court distinguishing the decision in
Abhijit Tea Co. (P) Ltd. & Ors. (supra) in regard to the question whether an
independent suit of a defendant in the bank's application can be deemed to be a
counter claim and can be transferred to the Tribunal, opined that the same would
apply only where the following conditions are satisfied, in the following words:
25.
Though there appears to be some merit in the first respondent's submission, we
do not propose to examine that aspect. Suffice it to clarify that the
observations in Abhijit that an independent suit of a defendant (in the bank's
application) can be deemed to be a counterclaim and can be transferred to the
Tribunal, will apply only if the following conditions were satisfied:
(i)
The subject-matter of the bank's suit, and the suit of the defendant against the
bank, should be inextricably connected in the sense that decision in one would
affect the decision in the other.
(ii)
Both parties (the plaintiff in the suit against the bank and the bank) should
agree for the independent suit being considered as a counterclaim in the bank's
application before the Tribunal, so that both can be heard and disposed of by
the Tribunal.
In
short the decision in Abhijit is distinguishable both on facts and law;
In
regard to the effect of sub-sections (6) to (11) of Section 14 of the amended
Act, it was observed :
16.
... The effect of sub-sections (6) to (11) of Section 19 of the amended Act is
that any defendant in a suit or proceeding initiated by a bank or financial
institution can: (a) claim set-off against the demand of a bank/financial
institution, any ascertained sum of money legally recoverable by him from such
bank/financial institution; and (b) set-up by way of counterclaim against the
claim of a bank/financial institution, any right or claim in respect of a cause
of action accruing to such defendant against the
Page No - 23
bank/financial institution, either before or after filing of the application,
but before the defendant has delivered his defence or before the time for
delivering the defence has expired, whether such a counterclaim is in the nature
of a claim for damages or not. What is significant is that Sections 17 and 18
have not been amended. Jurisdiction has not been conferred on the Tribunal, even
after amendment, to try independent suits or proceedings initiated by borrowers
or others against banks/financial institutions, nor the jurisdiction of civil
courts barred in regard to such suits or proceedings. The only change that has
been made is to enable the defendants to claim set-off or make a counterclaim as
provided in sub-sections (6) to (8) of Section 19 in applications already filed
by the banks or financial institutions for recovery of the amounts due to them.
In other words, what is provided and permitted is a cross-action by a defendant
in a pending application by the bank/financial institution, the intention being
to have the claim of the bank/financial institution made in its application and
the counterclaim or claim for set- off of the defendant, as a single unified
proceeding, to be disposed of by a common order; It was held :
18. In
this case, the first respondent does not wish his case to be transferred to the
Tribunal. It is, therefore, clear that the suit filed by the first respondent
against the Bank in the High Court for recovery of damages, being an independent
suit, and not a counterclaim made in the application filed by the Bank, the
Bank's application for transfer of the said suit to the Tribunal was
misconceived and not maintainable. The High Court, where the suit for damages
was filed by the Company against the Bank, long prior to the Bank filing an
application before the Tribunal against the Company, continues to have
jurisdiction in regard to the suit and its jurisdiction is not excluded or
barred under Section 18 or any other provision of the Debts Recovery Act; The
question came up for consideration again in Ranjan Chemicals (supra), wherein
this Court, inter alia, held that having regard to the nature of the respective
claims arising out of the loan transactions, the Court can exercise its inherent
jurisdiction when it was just and proper to order a joint trial of the two
causes as there is nothing in the Act to show that the Tribunal is prevented
from entertaining the claim made by the borrower in his suit.
Purporting to distinguish the decision in Indian Bank (supra), it was held that
as the claim of the company in the suit could have been maintained as a counter
claim in the application of the bank, there was no warrant for curtailing the
power of the court to
Page No - 24
order
joint trial by introducing a restriction to the effect that it could be ordered
only if there was consent by both the parties, holding:
8.
Their Lordships have held that the subject matter of the suit and the proceeding
before the Tribunal were in no way connected, but it appears to us that the two
litigations arise out of the same transaction or series of transactions between
the Bank and the Company. Even if, as observed by their Lordships, a counter
claim in the application by the Bank before the Tribunal was not the only remedy
available to the Company but an option was available to the Company to sue, and
the Company has exercised that option by filing a suit, it does not in any
manner affect the power of the Court to order a joint trial of the application
and the suit in the Debt Recovery Tribunal provided the Debt Recovery Tribunal
has jurisdiction to entertain the action of the Company. What is relevant to
note is that the claim of the Company in the suit could have been maintained as
a counter- claim in the application of the bank, even if it did not arise out of
the same cause of action. There is no warrant for curtailing the power of the
Court to order joint trial by introducing a restriction to the effect that a
joint trial can be ordered only if there was consent by both sides. The power
inherent in the Court on well accepted principles to order a joint trial, does
not depend upon the volition of the parties but it depends upon the convenience
of trial, saving of time and expenses and the avoidance of duplicating at least
a part of the evidence leading to saving of time and money;
It was
opined:
11. A
joint trial is ordered when a Court finds that the ordering of such a trial,
would avoid separate overlapping evidence being taken in the two causes put in
suit and it will be more convenient to try them together in the interests of the
parties and in the interests of an effective trial of the causes. This power
inheres in the Court as an inherent power. It is not possible to accept the
argument that every time the Court transfers a suit to another court or orders a
joint trial, it has to have the consent of the parties. A Court has the power in
an appropriate case to transfer a suit for being tried with another if the
circumstances warranted and justified it. In the light of our conclusion that
the claim of the company in the suit could be considered to be a claim for set
off and a counter claim within the meaning of Section 19 of the Act, the only
Page No - 25
question is whether in the interests of justice, convenience of parties and
avoidance of multiplicity of proceedings, the suit should be transferred to the
Debt Recovery Tribunal for being tried jointly with the application filed by the
bank as a cross suit. Obviously, the proceedings before the Debt Recovery
Tribunal could not be transferred to the civil Court since that is a proceeding
before a Tribunal specially constituted by the Act and the same has to be tried
only in the manner provided by that Act and by the Tribunal created by that Act.
Therefore, the only other alternative would be to transfer the suit to the
Tribunal in case that is found warranted or justified;
PRECEDENTIAL VALUE
The
core question which would arise for our consideration is whether by reason of a
transfer the jurisdiction of the civil court can be taken away or otherwise
conferred upon the Tribunal? In Indian Bank and Ranjan Chemicals coordinate
bench of this court took somewhat different views even thereupon. Whereas in
Indian Bank it was held that the transfer can be effected with consent, the said
question was ignored in Ranjan Chemicals. Whereas the question of jurisdiction
of the civil court vis-`-vis the Tribunal was uppermost in the mind of the Bench
in Indian Bank, no significance was attached thereto in Ranjan Chemicals. It
proceeded on the basis that the joint trial would be permissible if some of the
issues are common and if some of the evidence to be let in is also common
especially when the two actions arise out of the same transactions or series of
transactions wherefor several sub-sections of Section 19 of the Act had not been
adverted to. In Ranjan Chemicals the Court posed a wrong question unto itself,
namely the jurisdiction of the Tribunal vis-`-vis exclusion of jurisdiction of
the civil court. Indian Bank was decided upon taking into consideration all
provisions of the Act as also the Code. It entered into the niceties of the
question. It referred to all the binding precedents. It was a well considered
decision. Ranjan Chemicals, therefore, was building upon the decision in Indian
Bank being a coordinate Bench. It could not have taken a contrary view. It was
not even held that Indian Bank was wrong far less plainly wrong.
Submission of the learned counsel appearing on behalf of the Bank that consent
of the parties would not be required in a case where the subject matter of the
banker's suit as also the suit of the debtor are inextricably connected, would
have to be rejected. We do not see any reason why both the conditions laid down
in Indian Bank (supra) should be
Page No - 26
read
disjunctively and not conjunctively. The Division Bench used the words following
conditions which would clearly go to show that both of them are required to be
conjunctively read. We are not here concerned with the question whether the
civil suit filed by a debtor should be read as a counter-claim for the purpose
of exercising jurisdiction under Section 25 of the Code as in effect and
substance we are concerned with the jurisdiction of this Court to pass an order
of transfer. If this Court has no jurisdiction, the question of considering the
plaint filed by the debtor as a counter-claim in the suit filed by the Bank
before the DRT would not arise.
In
Ranjan Chemicals (supra), therefore, in our opinion, the Court having not posed
unto itself the aforementioned question, should have considered the decision of
a coordinate bench in Indian Bank (supra) in that perspective. It must
furthermore be noticed that Indian Bank (supra) was clarifying Abhijit Tea
(supra). Conditions laid down in paragraph 25 of Indian Bank (supra) must also,
therefore, be read in that context as otherwise, the same would lead to
misreading and misinterpreting the judgment.
We may
notice some decisions of this court as regards the binding nature of the
precedents of a coordinate Bench.
In Union of India v. Raghubir Singh, [
(1989) 2 SCC 754 ], this Court has held :-
27.
[...] It is in order to guard against the possibility of inconsistent decisions
on points of law by different Division Benches that the Rule has been evolved,
in order to promote consistency and certainty in the development of the law and
its contemporary status, that the statement of the law by a Division Bench is
considered binding on a Division Bench of the same or lesser number of Judges.
This principle has been followed in India by several generations of Judges.
28.
We are of opinion that a pronouncement of law by a Division Bench of this Court
is binding on a Division Bench of the same or a smaller number of Judges, and in
order that such decision be binding, it is not necessary that it should be a
decision rendered by the Full Court or a Constitution Bench of the Court;
Page No - 27
See
also Union
of India v. Godfrey Philips India Ltd., [(1985)
4 SCC 369] In
Sub-Committee of Judicial Accountability v. Union of India, [(1992)
4 SCC 97], this Court has held :-
5....
Indeed, no co-ordinate bench of this Court can even comment upon, let alone sit
in judgment over, the discretion exercised or judgment rendered in a cause or
matter before another co- ordinate bench.
In
Central Board of Dawoodi Bohra Community v. State of Maharashtra, (2005)
2 SCC 673 this Court has held :-
12.
Having
carefully considered the submissions made by the learned Senior Counsel for the
parties and having examined the law laid down by the Constitution Benches in the
abovesaid decisions, we would like to sum up the legal position in the following
terms:
(1) The law laid
down by this Court in a decision delivered by a Bench of larger strength is
binding on any subsequent Bench of lesser or coequal strength.
(2) It will be open
only for a Bench of coequal strength to express an opinion doubting the
correctness of the view taken by the earlier Bench of coequal strength,
whereupon the matter may be placed for hearing before a Bench consisting of a
quorum larger than the one which pronounced the decision laying down the law the
correctness of which is doubted.
We are in agreement
with all the above observations of this court. Ranjan Chemicals was bound by the
decision rendered in Indian Bank being a coordinate Bench. It could not have
taken a contrary view.
SECTION 31 OF DRT ISSUE:
We may
at this juncture notice the provisions for transfer under the DRT Act especially
Section 31 which states that only suits or proceeding pending before the court
immediately before the establishment of the Tribunal under the Act shall stand
transferred to the Tribunal. Section 31 admittedly does not apply to the facts
and circumstances of the present case. There is no dispute in this behalf.
Moreover, it is
Page No - 28
beyond
any dispute that there exists no other provision for transfer under the DRT Act
from a Court to Tribunal. The respondents, therefore, do not and cannot rely on
any of the provisions of the DRT Act for contending that the Court had any other
power to direct transfer.
In
Indian Bank (supra) this court noted thus;
15.
[...] There is no provision in the Act for transfer of suits and proceedings,
except section 31 which relates to suit/proceedings by a bank or financial
institution for recovery of a debt. It is evident from section 31 that only
those cases and proceedings (for recovery of debts due to banks and financial
institutions) which were pending before any court immediately before the date of
establishment of a tribunal under the Debts Recovery Act stood transferred, to
the tribunal In Raghunath Rai Bareja & Anr. v. Punjab National Bank & Anr,
(2007) 2 SCC 230 this court opined:
19.
[...] Apart from section 31, there is no other provision for transferring a suit
or other proceedings pending before any other court to tribunal. [...]
28.
[...] whatever power there are of transfer of proceedings to the tribunal are
contained in section 31 of the RBD Act, and no transfer is permissible dehors
section 31;
Therefore there exists no express power of transfer under the DRT which would be
applicable to the facts of the present case. The provisions of the Act and the
entire statutory scheme being well-defined, no further elaboration on our part
is required.
POWER
IN THE COURT TO TRANSFER CASES UNDER SECTIONS 23, 24, AND 25 OF THE CODE.
The
power of the High Court to issue a direction for transfer of a suit beyond its
territorial jurisdiction in terms of sub-section (3) of Section 23 of the Act
came up for consideration recently inDurgesh
Sharma v. Jayshree [supra].
Noticing the history of the provisions relating to transfer to which we have
adverted to here to before, it was held:
Page No - 29
46.
Having considered the scheme of the Code as amended from time to time, in our
judgment, the law relating to transfer of cases (suits, appeals and other
proceedings) is well settled. It is found in Sections 22 to 25 of the Code and
those provisions are exhaustive in nature. Whereas Sections 22, 24 and 25 deal
with power of transfer, Section 23 merely provides forum and specifies the court
in which an application for transfer may be made. Section 23 is not a
substantive provision vesting power in a particular court to order transfer.
In
our considered opinion, where several courts having jurisdiction are subordinate
to one appellate court, an application for transfer may be made to such
appellate court and the court may transfer a case from one court subordinate to
it to another court subordinate to it. Likewise, where such courts are
subordinate to the same High Court, an application may be made and action may be
taken by the High Court transferring a case from one court subordinate to it to
any other court subordinate to that High Court. But where such courts are
subordinate to different High Courts, it is only the Supreme Court (this Court)
which may pass an order of transfer. In other words, if two courts are
subordinate to different High Courts, one High Court has no power, jurisdiction
or authority to transfer a case pending in any court subordinate to that High
Court to a court subordinate to other High Court. It is only the Supreme Court
(this Court) which may order the transfer;
Section 25 of the Code was considered to be containing both substantive as well
as procedural law. Section 23, on the other hand was held to be merely a
procedural or machinery provision. It was held that no order of transfer can be
made thereunder, stating:...If the case is covered by Section 25 of the Code, it
is only that section which will apply for both the purposes, namely, for the
purpose of making application and also for the purpose of effecting transfer. On
the contrary, reading of sub- section (3) of Section 23 of the Code in the
manner suggested by the learned counsel for the respondent - wife would result
in allowing inroad and encroachment on the power of this Court not intended by
Parliament. Section 23, therefore, in our considered view, must be read subject
to Section 25 of the Code. The decisions taking a contrary view do not lay down
correct law. We, therefore, overrule them...;
Page No - 30
WHETHER TRIBUNAL IS A CIVIL COURT
The
terms Tribunal; court; and the civil court; have been used in the Code
differently. All courts are Tribunals but all Tribunals are not courts.
Similarly all civil courts courts but all courts are not civil courts. It is not
much in dispute that the broad distinction between a court and a Tribunal is
whereas the decision of the court is final the decision of the Tribunal may not
be. The Tribunal however, which is authorized to take evidence of witnesses
would ordinarily be held to be a court within the meaning of Section 3 of the
Evidence Act, 1872. It includes not only Judges and Magistrates but also
persons, except Arbitrators, legally authorized to take evidence. It is an
inclusive definition. There may be other forums which would also come within the
purview of the said definition. In
State of M.P. v. Anshuman Shukla, (2008)
7 SCC 487, this Court while holding certain authorities to be a `court' within
the meaning of the Evidence Act, noted thus:-
19.
The definition of courts under the Evidence Act is not exhaustive (see Empress
v. Ashootosh Chuckerbutty. Although the said definition is for the purpose of
the said Act alone, all authorities must be held to be courts within the
meaning of the said provision who are legally authorised to take evidence. [...]
21. In
Brajnandan Sinha v. Jyoti Narain it
has been held that any tribunal or authority whose decision is final and binding
between the parties is a court. In the said decision, the Supreme Court, while
deciding a case under the Court of Enquiry Act held that a court of enquiry is
not a court as its decision is neither final nor binding upon the parties. The
same, however, would not mean that only because a Tribunal has `all the
trappings of a court', it would be a court. {See
Bharat Bank Ltd. v. Employees of the Bharat Bank Ltd. [1950
SCR 459] Para 7 and 27}. Civil court is a body established by law for
administration of justice. Different kinds of law, however exists, constituting
different kinds of courts. Which courts would come within the definition of the
civil court have been laid down under the Code of Civil Procedure itself. Civil
Courts contemplated under Section 9 of Code of Civil Procedure find mentioned in
Sections 4 and 5 thereof. Some suits may lie before the Revenue Court, some
suits may lie before the Presidency Small Causes Courts. The Code of Civil
Procedure itself lays down that the Revenue Courts would not be courts
subordinate to the High Court.
Page No - 31
We may
notice that a learned Single Judge of the Calcutta High Court in State Bank of
India (supra) and a Division Bench of the Delhi High Court in Cofex Exports Ltd.
(supra) have held that the DRT is not a court and it exercises powers of a civil
court only in respect of limited matters. Civil Courts are constituted under
statutes, like Bengal, Agra and Assam Civil Courts Act, 1887. Pecuniary and
territorial jurisdiction of the civil courts are fixed in terms thereof.
Jurisdiction to determine subject matter of suit, however, emanates from Section
9 of the Code. We would revert to the interpretation of the said provision
vis-`-vis the provisions of the Act a little later.
In
P. Sarathy v. State Bank of India [(2000)
5 SCC 355], this Court opined that although there exists a distinction between a
court and a civil court, but held that a Tribunal which has not merely the
trappings of a court but has also the power to give a decision or a judgment
which has finality and authoritativeness will be court within the meaning of
Section 14 of the Limitation Act, 1963.
In
the context of Section 29(2) of the Limitation Act, 1963 the term `court' is
considered to be of wide import. However, there again even for that purpose
exists a distinction between a court and the civil court.
In
P. Sarathy v. State Bank of India, (Supra) this
Court has held :-
12. It
will be noticed that Section 14 of the Limitation Act does not speak of a civil
court but speaks only of a court. It is not necessary that the court spoken of
in Section 14 should be a civil court. Any authority or tribunal having the
trappings of a court would be a court within the meaning of this section.
13.
... in order to constitute a court in the strict sense of the term, an essential
condition is that the court should have, apart from having some of the trappings
of a judicial tribunal, power to give a decision or a definitive judgment which
has finality and authoritativeness which are the essential tests of a judicial
pronouncement. We may, however, notice that in the context of applicability of
Section 5 of the Limitation Act in regard to Arbitration Tribunal which was
constituted in terms of a statutory provision has been referred to a three Judge
Bench in State of Madhya Pradesh and another v.
Page No - 32
Anushuman Shukla [ (2008) 7 SCC 487 ]. Be that as it may, the word `civil court'
vis-`-vis a court must be construed having regard to the text and context of the
statute.
TRANSFER OF CASES
Learned Senior Counsel Shri Divan cited before us certain precedents beginning
from Bhagwati Devi v. M/s IS Goel, 1983 [ACJ 123], till Kususm Ignots & Alloys
v. Punjab National Bank, [(2005) 12 SCC 358] to bring home the point that this
Court has regularly exercised power to transfer cases to and from Tribunals. The
Senior Counsel in all cited eight precedents in this behalf. Amongst them are Rajasthan
State Road Transport v. Poonam Pahwa, [(1997)
6 SCC 100]; Dolly
Kantibhai Patel v. Balu Tukaram, [(2001)
9 SCC 723]; Mohan
Singh v. Saheb Singh, [(2000)
9 SCC 403]; and Kahlon v. K Paramasivam, [(2004) 13 SCC 564] wherein this Court
exercised the power under section 25 of the Code to transfer the case from one
Motor Vehicles Tribunal to another. Similarly Kusum Ignots (supra) and M/s Jai
Shiva Cement v. Allahabad Bank, [(JT) 2000 (8) SC 323], are the decisions where
the Supreme Court exercised the power under section 25 of the CPC to transfer
the case from one DRT to another.
These
cases relate to transfer from one Tribunal to another Tribunal and not from a
civil court to the Tribunal. No legal principle can be culled out therefrom. The
Courts therein had not gone into the question whether the Tribunal is a civil
court or not. The provisions of the Code of Civil Procedure had not been
adverted to. The power of transfer under Section 25 of the Code was assumed sub
silento without any discussion. We are in agreement with the submissions of
learned senior counsel Dr. Singhvi and Shri Rakesh Dwividi that those decisions
are clearly distinguishable on the facts of each case as they relate to transfer
from one Tribunal to another and not from a civil court to a Tribunal. It has
also been pointed out by Mr. Dwividi that reliance placed by Mr. Desai on the
cases cited by him and referred to herein is misleading as the Head Notes of
those cases are misleading. He argues that though the SCC refers to Section 25
of the CPC therein in regard to the power of transfer of the court, however, the
text of the judgments is silent in regard thereto.
We
may hereinafter may make reference to the Head Notes of a few of them. The SCC
Head Note to Kahlon (supra) reads as under: Civil Procedure Code, 1908 - S. 25 -
Motor
Page No - 33
accidents claim case filed by petitioner in town of place of work - due to 100
per cent disablement due to accident, petitioner quitting job and shifting back
to home town - transfer of claim case to home town of petitioner, allowed;
Similarly, the SCC Head note of Mohan Singh (supra) reads: Civil Procedure Code,
1908 -- S. 25 -- Motor accident claim petition -- Transfer of -- Petitioner
residing in Delhi and most of the evidence related to the case present in Delhi
-- Amended provision of the statute providing that the claim may be filed where
the claimant resides -- On facts and circumstances of the case, claim petition
pending before Motor Accident Claims Tribunal, Muzaffarnagar transferred to the
Tribunal concerned at Delhi -- Motor Vehicles -- Motor Vehicles Act, 1988, S.
166(2);
Also
the Head note of Dolly Kantibhai Patel (supra) reads thus: Civil Procedure Code,
1908 -- S. 25 -- Motor accident claim petition -- Transfer of -- Petitioner
(claimant) going back to USA, where he was living earlier -- Petitioner
requiring transfer of claim from MACT, Nasik to Vadodara (Gujarat) on the ground
that his power-of-attorney holder was residing at Vadodara and all other
occupants of vehicle, who were involved in accident, hailing from Vadodara --
Also the insurance company having its branch office at Vadodara -- In view of
above reasons, transfer of claim petition allowed as prayed for;
However on close scrutiny of the text of judgments of this Court, we find that
no reference therein has been made to Section 25 of the Code, or to any other
provision under which the said power is exercised. It must in this context be
noted that Head notes by the editors of a Reports are not a conclusive guide to
the text of the judgment reported. They are made only for the convenience of the
readers as a short summary to the text and for easy reference and at times they
are misleading. The United States Supreme Court in United States v. Detroit
Timber & Lumber Co., 200 U. S. 321, 337.
In the
first place, the headnote is not the work of the court, nor does it state its
decision,-though a different rule, it is true, is prescribed by statute in some
states. It is simply the work of the reporter, gives his understanding of the
decision, and is prepared for the convenience of the profession in the
examination of the reports;
Page No - 34
Reference may also be had to Parmananda
Pegu v. State of Assam, [(2004) 7 SCC 779], wherein it was stated:
The
decision of this Court in Chandrakant
Chimanlal Desai v. State of Gujarathas created some difficulty in
understanding the law which is otherwise so well settled. The learned Judges
imported the observations which were made in Kashmira Singh v. State of M.P. in
the context of evidentiary value of the confession of co-accused and applied
them to the case of retracted confession. It appears that the learned Judges
went by the headnote in the AIR which opens up with the sentence: (AIR p. 159)
The
confession of an accused person....; However, in the text of the judgment it is
crystal clear that the entire discussion and the statement of law was only with
reference to the confession of the co-accused. While clarifying that the
confession of the co- accused is not evidence in the ordinary sense of the term
as pointed out by the Privy Council, this Court observed in Kashmira Singh case
that such a confession cannot be made the foundation of a conviction and can
only be used in support of other evidence.
22. In
Chimanlal case the learned Judges, after referring to the headnote portion of
Kashmira Singh in AIR 1952 SC 159 proceeded to apply the test applicable to the
confession of the co-accused to a case of retracted confession.
23. In
view of the error in comprehending the scope of the decision in Kashmira Singh
case the decision in Chimanlal case falls close to the category of decisions
rendered per incuriam.
Reliance has also been placed on a decision of this Court in Rajasthan State
Road Transport (supra) wherein a Motor Accident Claims Tribunal was held to be a
civil court purported to be on the basis of a decision in Bhagwati Devi (supra)
wherein the principles contained in Order XXIII of the Code had been held to be
applicable to the Motor Accident Claims Tribunal.
A
provision in the Code which is benevolent in character and sub serve the social
justice doctrine in a situation of that nature has been applied, but the same,
in our opinion, by itself would not make a Tribunal a civil court. No reason has
been assigned as to why a Tribunal has been considered to be a civil court for
the purpose of Section 25 of the Act.
Page No - 35
The
court appears to have proceeded on the basis that an appeal before the High
Court shall lie in terms of Section 173 of the Motor Vehicles Act, 1988 from an
Award passed by the Tribunal, thus showing that it is a part of the hierarchy of
the civil court. Motor Accident Claims Tribunal, thus, is a court subordinate to
the High Court. No appeal against the judgment of the Debt Recovery Tribunal
lies before the High Court unlike under the Motor Vehicles Act, 1988. The two
Tribunals are differently structured and have been established to serve totally
different purposes.
If
the Tribunal was to be treated to be a civil court, the debtor or even a third
party must have an independent right to approach it without having to wait for
the Bank or Financial Institution to approach it first.
The
continuance of its counter-claim is entirely dependant on the continuance of the
applications filed by the Bank. Before it no declaratory relief can be sought
for by the debtor. It is true that claim for damages would be maintainable but
the same have been provided by way of extending the right of counter-claim.
Debt
Recovery Tribunal cannot pass a decree. It can issue only recovery certificates.
[See Sections 19(2) and 19(22) of the Act]. The power of the Tribunal to grant
interim order is attenuated with circumspection. {See Dataware Design Labs. v.
State Bank of India, {[2005] 12 Comp. Cas. 176 (Ker) at 184}.
Concededly in the proceeding before the Debt Recovery Tribunal detailed
examination; cross-examinations, provisions of the Evidence Act as also
application of other provisions of the Code of Civil Procedure like
interrogatories, discoveries of documents and admission need not be gone into.
Taking recourse to such proceedings would be an exception. Entire focus of the
proceedings before the Debt Recovery Tribunal centers round the legally
recoverable dues of the bank.
Should
we adopt the principle of purposive interpretation so as to hold that the DRT
would be a Civil Court? We have noticed hereinbefore that Civil Courts are
created under different Acts. They have their own hierarchy. They necessarily
are subordinate to the High Court. The appeals from their judgment will lie
before a superior court. The
Page No - 36
High
Court is entitled to exercise its power of revision as also superintendence over
the said courts.
For
the aforementioned purpose, we must bear in mind the distinction between two
types of courts, viz., civil courts and the courts trying disputes of civil
nature. Only because a court or a tribunal is entitled to determine an issue
involving civil nature, the same by itself would not lead to the conclusion that
it is a civil court. For the said purpose, as noticed hereinbefore, a legal
fiction is required to be created before it would have all attributes of a civil
court. The Tribunal could have been treated to be a civil court provided it
could pass a decree and it had all the attributes of a civil court including
undertaking of a full-fledged trial in terms of the provisions of the Code of
Civil Procedure and/or the Evidence Act. It is now trite law that jurisdiction
of a court must be determined having regard to the purpose and object of the
Act. If the Parliament, keeping in view the purpose and object thereof thought
it fit to create separate tribunal so as to enable the banks and the financial
institutions to recover the debts expeditiously wherefor the provisions
contained in the Code of Civil Procedure as also the Evidence Act need not
necessarily be resorted to, in our opinion, by taking recourse to the doctrine
of purposive construction, another jurisdiction cannot be conferred upon it so
as to enable this Court to transfer the case from the civil court to a tribunal.
It is difficult to accept the submission of Mr. Diwan that if such an
interpretation is accepted, the same would remove the anomaly which would
otherwise be present in the cases where recovery is for a sum below Rs. 10 lakhs
and for those where recovery is for a sum of Rs. 10 lakhs or more. Parliament
created such an anomaly, if any, knowingly. Expeditious recovery of the debts
above Rs. 10 lakhs is the object of the Act. Casus omissus, if any, it is
well-known cannot be supplied by the court.
In
Raghunath Rai Bareja (supra), this Court has clearly held:
Page No - 37
...Assuming there is a defect or an omission in the words used by the
legislature, the court cannot correct or make up the deficiency, especially when
a literal reading thereof produces an intelligible result...;
Would
the tribunal answer the description of the civil court must be considered having
regard to the provisions of the Act constituting civil court as also the
provisions of the Code of Civil Procedure? We have held that the Tribunals are
neither civil courts nor courts subordinate to the High Court. The High Court
ordinarily can be approached in exercise of its writ jurisdiction under Article
226 or its jurisdiction under Article 227 of the Constitution of India. The High
Court exercises such jurisdiction not only over the courts but also over the
Tribunals. Appellate tribunals have been constituted for determining the appeals
from judgments and orders of the Tribunal. The principles of purposive
construction, therefore, in our opinion, are not attracted in the instant case.
Had the Parliament intended to make the Tribunals civil courts, a legal fiction
could have been raised. There are statues like the Andhra Pradesh Land Grabbing
Act where such a legal fiction has been raised. {See
V.
Laxminarasamma v. A. Yadaiah (Dead) and Ors., [2009
(3) SCALE 685]}.
Whereas the doctrine of purposive construction is a salutary principle, the same
cannot be extended to a case which would lead to an anomaly. It can inter alia
be resorted to only when difficulty or doubt arises on account of ambiguity. It
is to be preferred when object and purpose of the Act is required to be
promoted.
For
the foregoing reasons, we are of the opinion that the decisions of this Court
laying down the principles of purposive interpretation, whereupon strong
reliance has been placed by Mr. Divan, viz., New India Assurance Company Ltd. v
Nusli Neville Wadia and Another [(2008) 3 SCC 279],Dilip
S. Dahanukar v. Kotak Mahindra Co. Ltd. and Another [(2007) 6 SCC
528], South Eastern Coalfields Ltd. v. CCET, MP [(2006) 6 SCC 340] and Uco
Bank v. Rajinder Lal Capoor [(2008)
5 SCC 257], cannot have any application. On the other hand, if the principles of
purposive interpretation are resorted to, the same would amount to rewriting of
the statute. In
Sri Ram Saha v. State of West Bengal and Ors. [JT
2004 (9) SC 136 : (2004) 11 SCC 497], this Court held:
Page No - 38
19. It
is well-settled principle of interpretation that a statute is to be interpreted
on its plain reading; in the absence of any doubt or difficulty arising out of
such reading of a statute defeating or frustrating the object and purpose of an
enactment, it must be read and understood by its plain reading. However, in case
of any difficulty or doubt arising in interpreting a provision of an enactment,
courts will interpret such a provision keeping in mind the objects sought to be
achieved and the purpose intended to be served by such a provision so as to
advance the cause for which the enactment is brought into force. If two
interpretations are possible, the one which promotes or favours the object of
the Act and purpose it serves, is to be preferred. At any rate, in the guise of
purposive interpretation, the courts cannot rewrite a statute. A purposive
interpretation may permit a reading of the provision consistent with the purpose
and object of the Act but the courts cannot legislate and enact the provision
either creating or taking away substantial rights by stretching or straining a
piece of legislation.
[See
also D.P.P.
v. Bhagwan (1970)
3 All ER 97].
CONCLUSION
The
Tribunal was constituted with a specific purpose as is evident from its
statement of objects. The preamble of the Act also is a pointer to that too. We
have also noticed the scheme of the Act. It has a limited
jurisdiction. Under the
Act, as it originally stood, did not even have any power to entertain a claim of
set off or counter-claim. No independent proceedings can be initiated before it
by a debtor. A debtor under the common law of contract as also in terms of the
loan agreement may have an independent right. No forum has been created for
endorsement of that right. Jurisdiction of a civil court as noticed hereinbefore
is barred only in respect of the matters which strictly come within the purview
of Section 17 thereof and not beyond the same. The Civil Court, therefore, will
continue to have jurisdiction. Even in respect of set off or counter-claim,
having regard to the provisions of sub-sections (6) to (11) of Section 19 of the
Act, it is
evident :-
a) That the proceedings
must be initiated by the bank
Page No - 39
b) Some species of the
remedy as provided therein would be available therefor.
c) In terms of
sub-section (11) of Section 19, the bank or the financial institution is at
liberty to send a borrower out of the forum.
d) In terms of the
provisions of the Act, thus, the claim of the borrower is excluded and not
included.
e) In the event the bank
withdraws his claim the counter-claim would not survive which may be contrasted
with Rule 6 of Order VIII of the Code.
f) Sub-section (9) of
Section 19 of the Act in relation thereto has a limited application.
g) The claim petition by
the bank or the financial institution must relate to a lending/borrowing
transaction between a bank or the financial institution and the borrower.
h) The banks or the
financial institutions, thus, have a primacy in respect of the proceedings
before the Tribunal. i) An order of injunction, attachment or appointment of a
receiver can be initiated only at the instance of the bank or the financial
institution. We, however, do not mean to suggest that a Tribunal having a
plenary power, even otherwise would not be entitled to pass an order of
injunction or an interim order, although ordinarily expressly it had no
statutory power in relation thereto.
j) It can issue a
certificate only for recovery of its dues. It cannot pass a decree.
k) Although an appeal can
be filed against the judgment of the Tribunal, pre-deposit to the extent of 75 %
of the demand is imperative in character.
l) Even cross-examination
of the witnesses need not be found to be necessary.
m) Subject to compliance
of the principle of natural justice it may evolve its own procedure.
n) It is not bound by the
procedure laid down under the Code. It may however be noticed in this regard
that just because the Tribunal is not bound by the Code, it does
Page No - 40
not mean that it would
not have jurisdiction to exercise powers of a court as contained in the Code.
`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.'[ See
Industrial Credit and Investment Corpn. of India Ltd. v. Grapco Industries Ltd., (1999)
4 SCC 710]
The Tribunal, therefore,
would not be a Civil Court.
TRIBUNAL WHETHER IS
SUBORDINATE TO THE HIGH COURT:
The Court would be
subordinate to High Court in terms of the provisions of the Code only in the
event it comes within the purview of the hierarchy of the court as contained in
Section 3 of the Act. This, however, does not mean that even when the Presiding
Judge or the Presiding Officer of the Court exercises power conferred upon it
under a statute still then it would not be a court subordinate to the High
Court. A court while adjudicating a dispute under the Employees State Insurance
Act or a Reference Court under the Land Acquisition Act, Election Tribunal or a
Tribunal acting as a Motor Vehicles Accident Claim Tribunal, while exercising
revisional jurisdiction from an order passed by the Executive Magistrate under
the Code or exercising an appellate power under special statutes like Municipal
Acts would still be a court subordinate to the High Court. However, for the
aforementioned purpose the Presiding Officer must be holding a Court which would
otherwise come within the purview of the hierarchy of the courts.
In N.P. Balakrishanan v.
P.M.R. Mariyumma, [AIR 1997 Kerala 89], the High Court has held :-
In view of the
discussions it is clear that even though Rent Control Court under the Rent
Control Act is a `Court' and is not a persona designate it is not a Civil Court
for the purpose for the provisions of S. 115 of the CPC. Therefore, against an
interim order of the Rent Control Court no revision petition will lie. We are
not considering whether an appeal will lie against the interim order in question
or whether a petition under Art. 227 of the Constitution is maintainable.
In M/s. Brooke Bond India
Ltd. v. Union of India and others, [ AIR 2001 AP 526 ] the Andhra Pradesh High
Court has held:-
Page No - 41
The contention urged by
the counsel for appellant that the Railway Claims Tribunal is a civil Court
cannot be accepted. Merely because Section 18(3) of the Act provides that the
Claims Tribunal, for the purpose of discharging the functions under the Act,
shall have the same powers as are vested in the civil Court under the Code of
Civil Procedure, 1908 and S. 25 provides that the proceedings before the
Tribunal shall be deemed to be `judicial proceedings' as contemplated under
Sections 193, 210 and 228, IPC, they do not make the Railway Claims Tribunal a
`Civil Court'.
In Devendra Somabhai Naik
v. M/s. Accurate Transheet Pvt. Ltd. [AIR 2003 Gujarat 141] the High Court has
held :-
No doubt, Article 137
deals with filling of applications, but then the applications, which are
contemplated to be filed, are the applications filed before the civil Court. The
appellant is also not successful in convincing this Court to hold that the
`Copyright Board' is a `Civil Court'. In view of the aforesaid discussion, the
present appeal fails. The Court has not found any error in the order under
challenge. The appeal is dismissed with no order as to costs.
In State Bank of India
v. Madhumita Construction (Pvt.) Ltd. and others,
[ AIR 2003 Cal 7], the Calcutta High Court has held :-
13. ... On the other
hand, it is a question as to whether this Court had jurisdiction or not. If the
DRT has exclusive jurisdiction and this Court ceases to have jurisdiction, in
that event, it is not a question of granting injunction restraining the
respondent Nos. 53 to 57 from proceeding with the same. But it is a case whether
this Court has jurisdiction to proceed with or not. If it has jurisdiction, in
that event, it can very much grant the injunction. If it has no jurisdiction, it
cannot do so. Even if it is assumed that Section 41(b) applies, still then DRT
as such is not a Court subordinate to this Court. It does not fall within the
hierarchy of the Courts as provided in the Bengal, Agra and Assam Civil Courts
Act, 1887. The Tribunal constituted under the DRT Act is not a Court. It is a
Tribunal having the trappings of a Court. A Tribunal with trappings of Court
cannot be equated with a Court as is understood from the expression Court. A
Court is a body established by law for the administration of justice by Judges
or Magistrates. This definition may include a Tribunal as well. Inasmuch as, it
is also a body constituted or
Page No - 42
established by law for
administration of justice. But, when it comes to the distinction between Court
and Tribunal, then the Court as it understood is different from a Tribunal. The
word Court, however,has not been defined anywhere in any law. Different kinds of
Courts have since been established under different laws. The hierarchy of the
Court as established under Bengal, Agra and Assam Civil Court Act are Courts in
respect of which the Code of Civil Procedure is applicable and the jurisdiction
is open. Section 4 and 5 CPC also spells out Courts in the context of
applicability of CPC. Under Section 9 of CPC. All suits of civil nature are
triable by a Court unless cognizance of a particular kind of suit is expressly
or impliedly barred. There are certain kinds of suits which are triable by
revenue Courts or Provincial or Presidencies Small Cause Court. The
subordination of the Courts is determined under Section 3, CPC on the basis of
the provisions of Code of Civil Procedure applicable to it having regard to the
provisions contained in Bengal, Agra and Assam Civil Courts Act.
In Greater Bombay Coop.
Bank Ltd. v. United Yarn Tex (P) Ltd.,[
(2007) 6 SCC 236 ], this Court has held :-
Section 31 of the RDB Act
clearly refers to transfer of "every suit or other proceeding pending
before any court. The word court in the context of the RDB Act, signifies
"civil court". It is clear that the Registrar, or an officer
designated by him or an arbitrator under Sections 61, 62, 70 and 71 of the APCS
Act, 1964 and under Section 91 and other provisions of Chapter IX of the MCS
Act, 1960 are not civil courts.
In
Harinagar Sugar Mills v. Shyam Sundar Jhunjhunwala this
Court held: (AIR p. 1680, para 32) By `courts' is meant courts of civil
judicature and by `tribunals', those bodies of men who are appointed to decide
controversies arising under certain special laws. Among the powers of the State
is included the power to decide such controversies. This is undoubtedly one of
the attributes of the State, and is aptly called the judicial power of the
State. In Rama Rao v. Narayan it was held that the nominee of Registrar
appointed under Section 95 of the Maharashtra Cooperative Societies Act, 1961 is
not a court within the meaning of Section 195 Cr PC.
Page No - 43
In Kihoto Hollohan v.
Zachillhu it was held that: (SCC p. 706, para 98) `All tribunals are not courts,
though all courts are tribunals.' The word `courts' is used to designate those
tribunals which are set up in an organised State for the administration of
justice.
In Supreme Court Legal
Aid Committee v. Union of India it
was held: (SCC p.745, para 14)
14. It is common
knowledge that a `court' is an agency created by the sovereign for the purpose
of administering justice. It is a place where justice is judicially
administered. It is a legal entity.
EXCLUSION OF JURISDICTION
MUST BE EXPRESS
The Civil Court
indisputably has the jurisdiction to try a suit. If the suit is vexatious or
otherwise not maintainable action can be taken in respect thereof in terms of
the Code. But if all suits filed in the Civil Courts, whether inextricably
connected with the application filed before the DRT by the banks and financial
institutions are transferred, the same would amount to ousting the jurisdiction
of the Civil Courts indirectly. Suits filed by the debtor may or may not be
counter claims to the claims filed by banks or financial institutions but for
that purpose consent of the plaintiff is necessary.
It is furthermore difficult
to accept the contentions of the respondents that the statutory provisions
contained in section 17 and 18 of the DRT Act have ousted the jurisdiction of
the civil court as the said provisions clearly state that the jurisdiction of
the civil court is barred in relation only to applications from banks and
financial institutions for recovery of debts due to such banks and financial
institutions.
A civil court is entitled to decide the respective claims of the parties in a
suit. It must come within the purview of the hierarchy of courts as indicated in
Section 3 of the Code. It will have jurisdiction to determine all disputes of
civil nature unless the same is barred expressly by a statute or by necessary
implication.
Although some arguments have been advanced before us whether having regard to
the provisions of Sections 17 and 18 of the Act the civil court jurisdiction is
completely ousted, we are of the view that the jurisdiction of the civil court
would be ousted only in respect of the matters contained in Section 18 which has
a direct co-relation with Section
Page No - 44
17 thereof, that is to say
that the matter must relate to a debt payable to a bank or a financial
institution. The application before the Tribunal would lie only at the instance
of the bank or the financial institution for the recovery of its debt. It must
further be noted in this respect that had the jurisdiction of the civil courts
been barred in respect of counterclaim also, the statute would have said so and
Sections 17 and 18 would have been amended to introduce the provision of
counterclaim.
We may in this context place on record the following observations from Indian
Bank (supra):
14. Section 9 of the Code
of Civil Procedure provides that the courts shall have jurisdiction to try all
suits of a civil nature, excepting suits of which their cognizance is either
expressly or impliedly barred.
15. It is evident from
Sections 17 and 18 of the Debts Recovery Act that civil court's jurisdiction is
barred only in regard to applications by a bank or a financial institution for
recovery of its debts. The jurisdiction of civil courts is not barred in regard
to any suit filed by a borrower or any other person against a bank for any
relief.[...]
16. [...]What
is significant is that Sections 17 and 18 have not been amended. Jurisdiction
has not been conferred on the Tribunal, even after amendment, to try independent
suits or proceedings initiated by borrowers or others against banks/financial
institutions, nor the jurisdiction of civil courts barred in regard to such
suits or proceedings.
It must be remembered that
the jurisdiction of a civil court is plenary in nature. Unless the same is
ousted, expressly or by necessary implication, it will have jurisdiction to try
all types of suits.
In Dhulabhai v. State of M.P.,[ (1968) 3 SCR 662 ], this Court opined:-
35. [...] The result of
this inquiry into the diverse views expressed in this Court may be stated as
follows:
Page No - 45
[...] (2) Where there is
an express bar of the jurisdiction of the court, an examination of the scheme of
the particular Act to find the adequacy or the sufficiency of the remedies
provided may be relevant but is not decisive to sustain the jurisdiction of the
civil court.
Where there is no express
exclusion the examination of the remedies and the scheme of the particular Act
to find out the intendment becomes necessary and the result of the inquiry may
be decisive. In the latter case it is necessary to see if the statute creates a
special right or a liability and provides for the determination of the right or
liability and further lays down that all questions about the said right and
liability shall be determined by the Tribunals so constituted, and whether
remedies normally associated with actions in civil courts are prescribed by the
said statute or not.
(7) An exclusion of the
jurisdiction of the civil court is not readily to be inferred unless the
conditions above set down apply.
In Dwarka Prasad Agarwal
v. Ramesh Chander Agarwal, [(2003) 6 SCC 220]
19. A bare perusal of the
aforementioned provisions leaves no manner of doubt that thereby the
jurisdiction of the civil court has not been ousted. The civil court, in the
instant case, was concerned with the rival claims of the parties as to whether
one party has illegally been dispossessed by the other or not. Such a suit,
apart from the general law, would also be maintainable in terms of Section 6 of
the Specific Relief Act, 1963. In such matters the court would not be concerned
even with the question as to the title/ownership of the property.
Therein five principles
were laid down stating :- The dispute between the parties was eminently a civil
dispute and not a dispute under the provisions of the Companies Act.
Section 9 of the Code of
Civil Procedure confers jurisdiction upon the civil courts to determine all
disputes of civil nature unless the same is barred under a statute either
expressly or by necessary implication. Bar of jurisdiction of a civil court is
not to be readily inferred. A provision seeking to bar jurisdiction of a civil
court requires strict interpretation. The court, it is well settled, would
normally lean in favour of construction, which would uphold retention of
jurisdiction of the civil court. The burden of proof in
Page No - 46
this behalf shall be on
the party who asserts that the civil court's jurisdiction is ousted. (See
Sahebgouda v. Ogeppa,(2003)
6 SCC 151.) Even otherwise, the civil court's jurisdiction is not completely
ousted under the Companies Act, 1956.
In Nagri Pracharini
Sabha v. Vth Addl. Distt. and Sessions Judge, [1991
Supp (2) SCC 36]
2. A litigant having a
grievance of a civil nature has, independently of any statute, a right to
institute a suit in the civil court unless its cognizance is either expressly or
impliedly barred. The position is well-settled that exclusion of jurisdiction of
the civil court is not to be readily inferred and such exclusion must be either
expressly or implied.
In Ramesh Chand
Ardawatiya v. Anil Panjwani, [
(2003) 7 SCC 350 ] this Court opined :-
19. ... Where there is a
special tribunal conferred with jurisdiction or exclusive jurisdiction to try a
particular class of cases even then the civil court can entertain a civil suit
of that class on availability of a few grounds. An exclusion of jurisdiction of
the civil court is not to be readily inferred. (See Dhulabhai v. State of M.P.)
Power to create or
enlarge jurisdiction is legislative in character. Similarly, right of revision
or appeal is normally a creature of statute. In
Rajasthan SRTC v. Zakir Hussain, [(2005)
7 SCC 447] this Court has held:-
21. It is a well-settled
principle of law as laid down by this Court that if the court has no
jurisdiction, the jurisdiction cannot be conferred by any order of court. This
Court in the case of A.R.
Antulay v. R.S. Nayak, AIR paras
40 to 42 wherein it is, inter alia, held and observed as under: (SCC pp. 650-51,
paras 38-40)
... ...
39[41]. ... The power to
create or enlarge jurisdiction is legislative in character.... Parliament alone
can do it by law and no court, whether superior or inferior or both combined can
enlarge the jurisdiction of a court or divest a person of his rights of
Page No - 47
revision and appeal. ...
...The Act, although, was enacted for a specific purpose but having regard to
the exclusion of jurisdiction expressly provided for in Sections 17 and 18 of
the Act, it is difficult to hold that a civil court's jurisdiction is completely
ousted. Indisputably the banks and the financial institutions for the purpose of
enforcement of their claim for a sum below Rs. 10 lakhs would have to file civil
suits before the civil courts. It is only for the claims of the banks and the
financial institutions above the aforementioned sum that they have to approach
the Debt Recovery Tribunal.
It is also without any
cavil that the banks and the financial institutions, keeping in view the
provisions of Sections 17 and 18 of the Act, are necessarily required to file
their claim petitions before the Tribunal. The converse is not true.
Debtors can file their
claims of set off or counter-claims only when a claim application is filed and
not otherwise. Even in a given situation the banks and/or the financial
institutions can ask the Tribunal to pass an appropriate order for getting the
claims of set-off or the counter claims, determined by a civil court. The
Tribunal is not a high powered tribunal. It is a one man Tribunal. Unlike some
Special Acts, as for example Andhra Pradesh Land Grabbing (Prohibition) Act,
1982 it does not contain a deeming provision that the Tribunal would be deemed
to be a civil court. The liabilities and rights of the parties have not been
created under the Act. Only a new forum has been created. The banks and the
financial institutions cannot approach the Tribunal unless the debt has become
due. In such a contingency, indisputably a civil suit would lie. There is a
possibility that the debtor may file preemptive suits and obtain orders of
injunction, but the same alone, in our opinion, by itself cannot be held to be a
ground to completely oust the jurisdiction of the civil court in the teeth of
Section 9 of the Code. Recourse to the other provisions of the Code will have to
be resorted to for redressal of his individual grievances.
It is also difficult to
accept the contention of leaned counsel for the banks that the civil court's
jurisdiction is not in consonance with the Act. We do not find the same to be
correct.
On the ground of
inconsistency in the procedures contained in the two Acts alone, the
jurisdiction of the civil court cannot be said to have been ousted.
Page No - 48
Reliance has been placed
by Mr. K.K. Venugopal, learned senior counsel for the bank on Vijay Kumar Sharma
v. State of Karnataka, (1990) 2 SCC 562, wherein this Court has held :-
44. The court then
referred to its earlier decision in Deepchand v. State of U.P. and pointed out
that in that case the following principles were laid down to ascertain whether
there is repugnancy or not:
1. Whether there is
direct conflict between the two provisions;
2. whether Parliament
intended to lay down an exhaustive code in respect of the subject matter
replacing the earlier law;
3. whether the two laws
occupy the same field.
The court then referred
to Sutherland on Statutory Construction (Vol. 1 3rd edn., p. 486) on the
question of repeal of special and local statutes by general statutes.
It was further stated :-
46. What is important
from our point of view, is the view taken in that case that when repugnancy is
alleged between the two statutes, it is necessary to examine whether the two
laws occupy the same field, whether the new or the later statute covers the
entire subject matter of the old, whether legislature intended to lay down an
exhaustive code in respect of the subject matter covered by the earlier law so
as to replace it in its entirety and whether the earlier special statute can be
construed as remaining in effect as a qualification of or exception to the later
general law, since the new statute is enacted knowing fully well the existence
of the earlier law and yet it has not repealed it expressly. The decision
further lays down that for examining whether the two statutes cover the same
subject matter, what is necessary to examine is the scope and the object of the
two enactments, and that has to be done by ascertaining the intention in the
usual way and what is meant by the usual way is nothing more or less than the
ascertainment of the dominant object of the two legislations. ... .... ....
Page No - 49
48... The legislative
intent is clear. Since, further, the Parliament had enacted the later statute
knowing fully well the existence of the earlier statute and yet it did not
expressly repeal it, it will be presumed that the Parliament felt that there was
no need to repeal the said statute.
However, in that case
itself it has been held that repugnancy and inconsistency is synonymous.
Furthermore in a case of
this nature where the banks itself have filed applications for transfer, the
jurisdiction of the civil court must be presumed. Submission of Mr. Desai that
this Court can direct the Tribunal to follow the provisions of the Code, in our
opinion, cannot be accepted. Such a direction would be in the teeth of the
provisions of the Act. Reliance placed by the learned counsel on sub-section (2)
of Section 22 of the Act to contend that the provisions of the Code are
applicable, in our opinion, militates against the said contention. Sub-section
(2) of Section 22 deals with applicability of the provisions of the Code in a
limited manner. Sub-section (3) raises a legal fiction that the 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 all the purposes
of Section 196 of the Indian Penal Code, 1860. The very fact that a legal
fiction has been created and the Tribunal or the Appellate Tribunal shall be
deemed to be a civil court for purposes of Section 195 and Chapter XXVI of the
Code of Civil Procedure, 1973, itself suggests that the Parliament did not
intend to take away the jurisdiction of the civil court. In any event, the said
legal faction has a limited application. Its scope and ambit cannot be extended.
In Bharat Bank Ltd. (supra) it has clearly been held that although the labour
court may have all the trappings of a court, but it is still not a court. We may
notice that some of the Parliamentary statutes, like the Family Courts Act
confers all the powers on Family Courts which are essential for discharging the
functions of Civil Court under the Code of Criminal Procedure.
We accept that disposal of
a civil suit takes a long time. But indisputably remedy of summary and speedy
trial by itself would not be sufficient to oust the jurisdiction of the civil
court. Had the intention of the Parliament been so, it could have expressly said
so. Casus omissus, as is well known, cannot be supplied.
Page No - 50
VESTED RIGHT OF APPEAL
Another aspect of the
matter also cannot be lost sight of. A plaintiff of a suit will have a vested
right of appeal. The said right would be determined keeping in view the date of
filing of the suit. Such a right of appeal must expressly be taken away. An
appeal is the right of entering a superior court, and invoking its aid and
interposition to redress the error of the court below and though procedure does
surround an appeal the central idea is a right. The right of appeal has been
recognized by judicial decisions as a right which vests in a suitor at the time
of institution of original proceedings. The Privy Council in Colonial Sugar
Refining Company v. Irving, [(1905) AC 369 (PC)] noted that to deprive a suitor
in a pending action of an appeal to a superior tribunal which belonged to him as
of right, is a very different thing from regulating procedure. When a person
files a civil suit his right to prosecute the same in terms of the provisions of
the Code as also his right of appeal by way of first appeal; second appeal etc.
are preserved. Such rights cannot be curtailed, far less taken away except by
reason of an express provision contained in the statute. Such a provision in the
statute must be express or must be found out by necessary implication.
In Garikapati Veeraya
v. N. Subbiah Choudhry, [
1957 SCR 488 ], this Court opined :-
23. From the decisions
cited above the following principles clearly emerge:
(i)
That the legal pursuit of a
remedy, suit, appeal and second appeal are really but steps in a series of
proceedings all connected by an intrinsic unity and are to be regarded as one
legal proceeding.
(ii) The right of appeal is
not a mere matter of procedure but is a substantive right.
(iii) The institution of
the suit carries with it the implication that all rights of appeal then in force
are preserved to the parties thereto till the rest of the career of the suit.
Page No - 51
(iv) The right of appeal is
a vested right and such a right to enter the superior court accrues to the
litigant and exists as on and from the date the lis commences and although it
may be actually exercised when the adverse judgment is pronounced such right is
to be governed by the law prevailing at the date of the institution of the suit
or proceeding and not by the law that prevails at the date of its decision or at
the date of the filing of the appeal.
(v) This vested right of
appeal can be taken away only by a subsequent enactment, if it so provides
expressly or by necessary intendment and not otherwise.
[See also Dilip
S. Dahanukar v. Kotak Mahindra Co. Ltd. and Anr., (2007)
6 SCC 528]
The Code not only contains
procedural provisions but also substantive rights ; right of appeal is one of
them. A forum of appeal is determined in terms of the provisions of the Code
having regard to the pecuniary jurisdiction of the Court as may be notified by
the appropriate Government from time to time. A suitor has the right to maintain
a first appeal. A second appeal also is maintainable before a High Court,
subject of course to the effect that questions of law must be there for the
court's consideration. For the said purpose no pre-deposit is required to be
made, as is necessary in terms of the Act, that 75% of the awarded amount is
required to be deposited, subject of course, to an order to the contrary, which
may be passed by the Debt Recovery Appellate Tribunal. Such a right of
conditional appeal, in our opinion, curtails party's right to maintain an appeal
as a matter of right. While we say so, we are not oblivious of the fact that in
terms of Order XLI Rule 1 of the Code, in the event of passing of a money decree
the amount is required to be deposited. The said provision, however, has been
held to be directory. Order XLI Rule 1 is required to be read with Order XLI
Rule 5 thereof. {See
Sihor Nagar Palika Bureau v. Bhabhlubhai Virabhai &
Co., [(2005) 4 SCC 1 ], Malwa
Strips Pvt. Ltd. v. Jyoti Limited [(2009)
2 SCC 426]}
Page No - 52
More recently in Transmission
Corporation of A.P. v. Ch. Prabhakar and Ors., (2004)
5 SCC 551 this court similarly opined:
....The
right of appeal is a substantive right which is really a step in series of
proceedings all connected by an intrinsic unity and is to be regarded as one
legal proceeding and further being a vested right such a right to enter the
superior court accrues to the litigant and exists as on and from the date the
lis commences....A civil suit may also be maintainable before Original Side of
the High Court in terms of the statutes under which the High Courts are
constituted or in terms of the provisions of the Letters Patent. An intra court
appeal is available against a decree passed by a learned Single Judge of a High
Court in a suit filed before it.
In the event, however, if a
civil suit is transferred to the Debt Recovery Tribunal, the plaintiff would be
deprived of his right in relation to the procedural mechanism as contained in
the Code as also the Evidence Act. His right of appeal would also stand
curtailed. While exercising the power of transfer, the High Court and this Court
would thus be curtailing the right of a suitor indirectly which could not be
done directly. It clearly establishes the Parliamentary intent that only civil
suits are subject matter of inter State transfer from one civil court to another
civil court. If such a power is exercised, all the rights of the plaintiff
remain intact, no right is taken away and no right is diluted.
INHERENT JURISDICTION
Section 151 of the Code
of Civil Procedure does not confer any extraordinary jurisdiction on this Court.
It saves the inherent power of all the civil courts, i.e., from the trial judge
to this Court. Thus, where a matter has expressly been provided for in the body
of the Code, ordinarily inherent power shall not be resorted to. The underlying
principle of Section 151 of the Code ordinarily would apply where the area is
grey. It indisputably confers incidental powers. It confers power on a court to
do something which in absence of any provision contrary thereto would lead to
advancement of justice and prevent injustice. The power to transfer one case
from one court to another or from one tribunal
Page No - 53
to another having
jurisdiction of a different State is an extraordinary jurisdiction. For
exercising the said power, this Court has to take into consideration a large
number of factors. Such a power is to be exercised if exceptional situation
arises and not otherwise.
In Padma Sen and
Another v. The State of Uttar Pradesh [AIR
1961 SC 218], this Court, having regard to the provisions contained in Order
XXVI, Rule 9 of the Code of Civil Procedure vis-`-vis Order XXXVIII, Rule 5,
Order XXXIX, Rules 1(b) and 7 thereof, categorically held that the court has no
inherent power under Section 151 of the Code of Civil Procedure to appoint a
Commissioner to seize accounts books in the possession of the plaintiff upon an
application by the defendant that his apprehension that they would be tampered
with, stating:
10. The defendants had no
rights to these account books. They could not lay any claim to them. They
applied for the seizure of these books because they apprehended that the
plaintiff might make such entries in those account books which could go against
the case they were setting up in Court. The defendants' request really amounted
to the Court's collecting documentary evidence which the defendants considered
to be in their favour at that point of time. It is no business of the Court to
collect evidence for a party or even to protect the rival party from the evil
consequences of making forged entries in those account books. If the plaintiff
does forge entries and uses forged entries as evidence in the case, the
defendants would have ample opportunity to dispute those entries and to prove
them forgeries.
11. We are therefore of
opinion that the Additional Munsif had no inherent power to pass the order
appointing a Commissioner to seize the plaintiff's account books. The order
appointing Sri Raghubir Pershad as Commissioner for this purpose was therefore
an order passed without jurisdiction and was therefore a null and void order.
The said decision, we are
not oblivious, has been distinguished by this Court in Manohar
Lal Chopra v. Rai Bahadur Rao Raja Seth Hiralal [AIR
1962 SC 527] in a case for grant of injunction stating that Rules 1 and 2 of
Order XXXIX of the Code of Civil Procedure is not exhaustive, stating:
Page No - 54
22. In the above case,
this Court did not uphold the order of the civil court, not coming under the
provisions of Order 26, appointing a commissioner for seizing the account books
of the plaintiff on the application of the defendants. The order was held to be
defective not because the Court had no power to appoint a commissioner in
circumstances not covered by Section 75 and Order 26, but because the power was
exercised not with respect to matters of procedure but with respect to a matter
affecting the substantive rights of the plaintiff. This is clear from the
further observations made at p. 887. This Court said:
The question for
determination is whether the impugned order of the Additional Munsif appointing
Sri Raghubir Pershad Commissioner for seizing the plaintiff's books of account
can be said to be an order which is passed by the Court in the exercise of its
inherent powers. The inherent powers saved by Section 151 of the Code are with
respect to the procedure to be followed by the Court in deciding the cause
before it. These powers are not powers over the substantive rights which any
litigant possesses. Specific powers have to be conferred on the Courts for
passing such orders which would affect such rights of a party. Such powers
cannot come within the scope of inherent powers of the Court in matters of
procedure, which powers have their source in the Court possessing all the
essential powers to regulate its practice and procedure.
The Plaintiff furthermore
is the dominus litus. He may institute a suit having regard to the provisions
contained in Sections 16 to 20 of the Code of Civil Procedure in any civil court
within whose jurisdiction inter alia a cause of action arises. If the
jurisdiction of the civil court is not barred or if he having regard to common
law principle is entitled to maintain an action in two different forums, he may
choose one of them.
[See
Rajasthan State Road Transport Corporation and Anr. v. Bal Mukund Bairwa, 2009
(2) SCALE 428]
A debtor having regard to
the provisions of the DRT Act would not be entitled to maintain an action before
the Tribunal. If a suit is to be transferred from a civil court to a tribunal,
he would loose some rights including the right to prefer an appeal before a
higher court in terms of Sections 96 and 100 of the Code of Civil Procedure. Mr.
Diwan, however, has strongly placed reliance upon Union
of India and Another v. Delhi High Court Bar Association and Others [(2002)
4 SCC 275] wherein it was observed that the
Page No - 55
tribunals have become an
essential part of the judicial system in the country. Such observations were
made keeping in view the provisions of Articles 323A and 323B of the
Constitution of India. The logical extension of the said observations would not
lead to a conclusion that the tribunals are either civil courts or this Court
would be entitled to exercise its inherent power for transfer of a civil suit to
a tribunal.
We may place on record
that in Durgesh Sharma (supra) this Court has clearly held that the provisions
of Sections 22 to 25 of the Code of Civil Procedure are exhaustive in nature. If
that be so, inherent power of the court could clearly not be invoked.
Reliance has also been
placed on M/s.
Ram Chand and Sons Sugar Mills Private Ltd. v. Kanhayalal Bhargava and Others [AIR
1966 SC 1899] wherein it has been held:
Having regard to the said
decisions, the scope of the inherent power of a court under Section 151 of the
Code may be defined thus: The inherent power of a court is in addition to and
complementary to the powers expressly conferred under the Code. But that power
will not be exercised if its exercise is inconsistent with, or comes into
conflict with, any of the powers expressly or by necessary implication conferred
by the other provisions of the Code. If there are express provisions
exhaustively covering a particular topic, they give rise to a necessary
implication that no power shall be exercised in respect of the said topic
otherwise than in the manner prescribed by the said provisions. Whatever
limitations are imposed by construction on the provisions of Section 151 of the
Code, they do not control the undoubted power of the Court conferred under
Section 151 of the Code to make a suitable order to prevent the abuse of the
process of the Court.
We, however, are of the
opinion that the principles laid down therein cannot be said to have any
application in the instant case as it would bear repetition to state that by
reason thereof the court would not be entitled to denude a suitor of his right
of appeal and other substantive rights. We are also unable to persuade ourselves
to hold that the right of transfer of a case being procedural in nature should
be construed liberally. By reason thereof, substantive right of a party cannot
be taken away. While accepting that the rules of procedures are intended to
provide justice and not to defeat it as has been held by this Court in
Page No - 56
N.T. Veluswami Thevar v.
G. Raja Nainar and others[AIR
1959 SC 422] and M/s.
Lakshmiratan Engineering Works Ltd. v. Asst. Commissioner (Judicial) I., Sales
Tax, Kanpur Range, Kanpur and another
[AIR 1968 SC 488], that the court must bear in mind that it would not cause
injustice to any of the parties thereby. Reliance has also been placed on Industrial
Investment Bank of India Ltd. v. Marshal's Power &
Telecom (I) Ltd. and Another [(2007) 1 SCC 106] and Durga
Hotel Complex v. Reserve Bank of India and Others[(2007) 5 SCC 120].
Both the aforementioned cases have been determined by a Bench which has decided
Ranjan Chemicals (supra). Those cases related to the contentions raised before
the Banking Ombudsman. The Bench held that the appellants therein could make all
their claims before the DRT while defending the claim of the bank, including the
ones he had put forward before the Banking Ombudsman.
We are not concerned with
such a contention herein. In any event, in view of our findings that we are
bound to follow Indian Bank (supra), this argument has no force.
ARTICLE 142 ISSUE
Indisputably, the power
of this Court under Articles 139A and 142 of the Constitution of India is a wide
and extensive one. This Court may resort thereto to do complete justice. While
doing so, this Court would be entitled to impose conditions.
Whether such a power
should be exercised or not is the question. The principal submission made on
behalf of the Bank is that the suit is pre-emptive in nature. It may be so but
then the banks and the financial institutions have their own remedies. As
adequate remedy is available to them in law, ordinarily, the same should be
directed to be followed. A case of very exceptional nature must be made out for
invoking the extraordinary constitutional jurisdiction of a court.
One of the contentions
which have been raised is whether the transactions under derivative agreements
would come within the purview of the DRT Act. Of course, a tribunal will have a
jurisdiction to decide the issue being a jurisdictional issue. Furthermore, the
company has alleged fraud and misrepresentation.
Page No - 57
This Court in Mardia
Chemicals Ltd. and Others v. Union of India [(2004)
4 SCC 311] has also held that even in such an event, the jurisdiction of the
civil court can be invoked.
Several other issues of
complicated nature may arise before the civil court. We, therefore, are of the
opinion that it may not be a fit case where we should exercise our jurisdiction
under Article 142 of the constitution of India.
DIRECTION
However, we make it clear
that having regard to the pleadings of the parties as also the purpose and
object for which the Tribunal has been constituted, it should proceed to dispose
of the bank's claims expeditiously. We, however, have no doubt whatsoever in our
mind that while determining the respective claims of the parties and the nature
thereof, the tribunal shall comply with all the requirements of law. We,
therefore, are of the opinion that the transfer applications have no merit. They
are dismissed accordingly with the aforementioned observations.
Having regard to our
finding that even Section 24 of the Code of Civil Procedure cannot be taken
recourse to, there cannot be any doubt whatsoever that the Punjab and Haryana
High Court could not have transferred the suit from the civil court Ludhiana to
DRT. Civil Appeal arising out of SLP (C) No. 24715 of 2008 is, therefore,
allowed. However, in the facts and circumstances of the case, there shall be no
order as to costs. ...............................J.
[S.B. Sinha]
................................J.
[Asok Kumar Ganguly]
New Delhi;
July 29, 2009
