Thungabhadra Industries vs Govt of AP
decided on 20.10.63 by Supreme Court of India, Case No No – 781, 783 of 1962
Citations – 1964 AIR 1372, 1964 (5) SCR 174
Judges – A.K. Sarkar; K.C. Das Gupta and N. Rajagopala Ayyangar
DRT Solutions
Citation –
DRTS-015-Thungabhadra-vs Govt AP-1963
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-015.
Comments by DRT Solutions
An Important Supreme Court Judgment of 1963 about Review and Appeal
Utility of this Judgment – On account of Hurried Disposals in DRTs, Several
Orders are inherently Defective calling for Review and Appeal, where this
Judgment becomes very Useful
Conclusion
With this SC judgment of 1963, law is well settled that if Review is filed first
and then Appeal is filed, both can be proceeded with simultaneously till either
of the two is finally decided, other should be discontinued.
Comments
(a)
The full text of the
judgment is given below with important portions marked in Red on para 8 and 13
which are self explanatory and are reproduced below:-
Extract from para 8 is reproduced below:-
O. XLVII R.
1(1) of the Civil Procedure Code permits an application for review being filed
`from a decree or order from which an appeal is allowed but from which no appeal
has been preferred.` In the present case, it would be seen, on the date when the
application for review was filed the appellant had not filed an appeal to this
court and therefore the terms of O. XLVII R. 1(1) did not stand in the way of
the petition for review being entertained. Learned Counsel for the respondent
did not contest this position. Nor could we read the judgment of the High court
as rejecting the petition for review on that ground. The crucial date for
determining whether or not the 'terms of O. XLVII. R.1 (1) are satisfied is the
date when the application for review is filed. If on that date no appeal has
been filed it is competent for the court hearing the petition for review to
dispose of the application on the merits notwithstanding the pendency of the
appeal, subject only to this, that if before the application for review is
finally decided the appeal itself has been disposed of, the jurisdiction of the
court hearing the review petition would come to an end.
Extract from para 13 is reproduced below:-
IN the
result the appeal is allowed and the common judgment of the High court in the
three appeals is reversed and the petitions for review--C.M.Ps 4672, 4673 and
4674 of 1959 on the file of the High court are allowed with costs here and in
the High court--one set of hearing fees.
IN THE
SUPREME COURT OF INDIA
Equivalent
Citations: 1964 (5) SCR 174 : 1964 AIR(SC) 1372
Judges :
A.K. Sarkar : K.C. Das Gupta : N. Rajagopala Ayyangar
Thungabhadra Industries
Versus
Government of A.P. Represented By The Deputy Commissioner of Commercial Taxes,
Anantapur
Case No. :
781 , 783 of 1962
Date of
Decision : 22-Oct-1963
Advocates
Appeared:
Chetty A.
Ranganadham : Narasimhan M.S. : Sachthey R.N. : Sastri A.V. Viswanatha : Shastri
M. S. K.
JUDGMENT/ORDER:
N.R. AYYANGAR, J.
(1) THE points
raised in these three appeals which come before us by virtue of special leave
under Art. 136 of the Constitution are somewhat out of the ordinary and raise
for consideration whether the common order passed by the High court of Andhra
Pradesh rejecting applications to review an earlier order by that court, is
correct on the facts which we shall state presently.
(2) THE
appellant--M/s Thungabhadra Industries Ltd. are' manufacturers of groundnut oil,
part of which they convert for sale into hydrogenated oil while the rest is sold
as ordinary oil. Under the Madras General Sales Tax Act, hereinafter referred to
as the Act, which has application to the State of Andhra Pradesh, while in
regard to groundnuts the tax is levied at the point of purchase, groundnut oil
is taxed at the point of sale. The result of this feature naturally is that when
a person purchases groundnut and converts the same into oil and sells the oil
extracted he has to pay tax at both the points. Rules have been framed in order
to alleviate what might be considered a hardship by reason of this double levy.
Rule 5(k) of the Turnover & Assessment Rules provides: `5. (k) in the case of a
registered manufacturer of groundnut oil and cake, the amount which he is
entitled to deduct from his gross turnover under rule 18 subject to the
conditions specified in that rule`. and Rule 18 referred to reads: `18. (1) Any
dealer who manufactures groundnut oil and cake from groundnut and/or kernel
purchased by him may, on application to the assessing authority having
jurisdiction over the area in which he carries on his business, be registered as
a manufacturer of ground nut oil and cake. (2) Every such registered
manufacturer of groundnut oil will be entitled to a deduction under clause (k)
of sub-rule (1) of rule 5 equal to the value of the groundnut and/or kernel,
purchased by him and converted into 'oil and cake if he has paid the tax to the
State on such purchases: Provided that the amount for which the oil is sold is
included in his net turnover: Provided further that the amount of the turn over
in respect of which deduction is allowed shall not exceed the amount of the
turnover attributable to the groundnut and/or kernel used in the manufacture of
oil and included in the net turnover.` The appellant is admittedly a
manufacturer who is registered for the purposes of that rule.
(3) IN respect of
the year 1949-50 the appellant while submitting his return disclosing his
turnover of the sale of oil, included therein the value of the hydrogenated oil
that he sold and claimed a deduction under the rule in respect of the value of
the groundnuts which had been utilised for conversion into hydrogenated oil on
which he had paid tax at the point of their purchase. This claim was negatived
by the Sales Tax authorities on the ground that `hydrogenated groundnut oil` was
not `groundnut oil` within r. 18(2). Having failed before the departmental
authorities in getting its claim to deduction allowed, the appellant approached
the High court with a Tax Revision Case numbered 120 of 1953 on its file but the
High court, by its judgment dated 11/02/1955, upheld the view of the department.
An application was thereafter made to the High court to grant a certificate of
fitness under Art. 133(1) on the ground that substantial questions of law as to
the interpretation of the General Sales Tax Act. and the Rules made thereunder,
as well as of certain other enactments which were relied upon in support of
their claim by the appellants, arose for decision in the case. The learned
Judges by their order dated 21/02/1956 granted the certificate. In view of the
points arising in this appeal we consider it would be convenient to set out the
text of this order: `This petition raises a question of general importance
namely whether hydrogenated groundnut oil popularly known as Vanaspathi is
ground- nut oil so as to enable the assessee to claim exemption under Rules
18(2) and 5(1) (g) of the Turnover and Assessment Rules framed by the government
in exercise of the powers conferred by Section 3 and sub rules 4 and 5 of the
Madras General Sales Tax Act, 1939. The answer to the question arising in this
matter turns upon whether the chief characteristics of groundnut oil remain the
same in spite of the chemical processes it undergoes, It also involves the
interpretation of the notifications issued by the government of India under the
Essential Supplies (Temporary Powers) Act and certain provisions of the
Vegetable Oils Products Control Order. In these circumstances we think it a fit
case for appeal to the Supreme court. Leave is therefore granted.` Thereafter
the appeal was entertained in this court and numbered as Civil Appeal 498 of
1958, was finally disposed of on 18/10/1960 and is now reported as M/s
Thungabhadra Industries Ltd. v. The Commercial lax Officer, Kumool(1).
(4) MEANWHILE in
regard to the assessment of the three succeeding years---1950-51, 1951-52 and
1952-53, the same question as to whether `hydrogenated groundnut oil` was
`groundnut oil` entitled to the deduction of the purchase turnover under r.
18(2) of the Turnover and Assessment Rules was raised and was decided against
the appellant by the Sates Tax Officer. This order was taken up in appeal to the
Deputy Commissioner of Commercial Taxes by the appellant and as apparently the
identical question was pending in the High court in regard to the year 1949-50,
the appellate authority awaited the decision of the High court and when T.R.C.
120 of 1953 was decided against the appellant on 11/02/1955, disposed of the
appeal against the appellant by its order dated 5/04/1955. Thereafter the
appellant approached the Sales Tax Appellate tribunal but this was obviously a
formality because the tribunal were bound by the judgment of the High court and
the appeals were dismissed by order dated October 20, 1955. Against the orders
of the Sales Tax Appellate tribunal the appellant preferred three Tax Revision
Cases- T.R.C. 75,76 and 77 of 1956 in regard to the three assessment years. The
learned Judges of the High court dismissed the three Revision Cases on 7/10/1958
followingtheir earlier decision in T.R.C. 120 of 1953 in regard to the
assessment for the year 1949-50. At this date, it would be noticed, the
correctness of the decision of the High court in T.R.C. 120 of 1953 was pending
adjudication in this court by virtue of the Certificate of fitness granted by
the High court under Art. 133(1). Desiring to file an appeal to this court
against the judgment of the High court in these three Tax Revision Cases as
well, the appellant filed, on 16/02/1959, three miscellaneous petitions under
Art. 133(1) of the Constitution praying for a certificate of fitness that the
case involved substantial questions of law as to the interpretation of the Sales
Tax Act and the Rules made thereunder etc. The learned Judges, however, by their
order dated 4/09/1959 dismissed the petition stating: `The judgment sought to be
appealed against is one of affirmance. We do not think that it involves any
substantial question of law as to the interpretation of the Constitution; nor do
we regard this as a fit case for appeal to the Supreme court.`
(5) THE question
that arises for consideration in these appeals is primarily whether this order
dated 4/09/1959, is vitiated by error apparent on the face of the record. How
that matter becomes relevant is because the appellant filed three applications
for review of this order under O. XLVII r. 1 of the Civil Procedure Code
specifying this as the ground for relief. These applications for review were
filed on 23/11/1959, and apparently notice was issued to the respondent-State
government and the petition for review came on for hearing on 6/01/1961. On that
date the learned Judges dismissed the said applications and assigned the
following as the reasons for their order: `The only ground argued in support of
these review petitions is that leave to appeal to the Supreme court was granted
in similar circumstances in regard to previous year and there was no reason why
leave should have been refused in these cases. We do not think that would
furnish a sufficient ground for reviewing the order dismissing the petitions for
leave to file an appeal t 0 the Supreme court. That apart, the Supreme court was
moved under Article 136 of the Constitution for special leave and that was
dismissed may be on the ground that it was not flied in time. In the
circumstances, we think that our order dated 4/9/1959 dismissing S.C.C.M.Ps No.
4823, 4825 and 4827 of 1959 cannot be reviewed.` The appellants thereupon made
applications for special leave from this court to challenge the correctness of
this last order and the leave having been granted after notice to the
respondent, the appeals are now before us.
(6) BEFORE dealing
with the arguments addressed to us on behalf of the appellant it is necessary to
advert to an objection raised by learned Counsel for the respondent urging that
the special leave granted to the appellant should be revoked. We declined to
permit the respondent to urge any such argument in this case primarily for two
reasons. In the first place, the special leave was granted after notice to the
respondent and therefore after hearing the respondent as to any objection to the
maintainability of the appeal or to the granting of special leave. In the
circumstances, any ground in relation to these matters should have been urged at
that stage and except possibly in some extraordinary cases where the ground
urged happens to arise subsequent to the grant of the special leave or where it
could not be ascertained by the respondent at that date notwithstanding, the
exercise of due care; except in such circumstances this court will not permit
the respondent to urge any argument regarding the correctness of the order of
the court granting special leave. Indeed, the very object of issuing notice to
the respondent before the grant of leave is to ensure that the latter is
afforded an opportunity to bring to the notice of the court any grounds upon
which leave should be refused and the purpose of the rule would be frustrated if
the respondent were permitted to urge at a later stage--at the stage of the
hearing of the appeal and long after the appellant has incurred all the
costs--that the leave granted after notice to him should be revoked on a ground
which was available to him when the application for special leave was heard.
This apart, even the statement of the case filed on behalf of the respondent
does not disclose any ground upon which the leave granted should be revoked:
nor, of course, does it make any prayer seeking such relief. One of the objects
which the statement of the case is designed to achieve is manifestly that no
party shall be taken by surprise at the hearing and this is ensured by the
provision in O. XIX r. 4 of the Supreme court Rules reading: `No party shall,
without the leave of the court, rely at the hearing on any grounds not specified
in the Statement of the Case filed by him.` Nor, of course, was there any
contention that the ground that he proposed to submit came into existence after
the filing of the statement of case. It was in these circumstances that we
declined to permit the respondent to develop an argument to persuade us to hold
that the leave granted by this court should be revoked, though we might add that
the matter mentioned by learned Counsel for the respondent in this respect would
not, even if urged at the hearing of the special leave petition, have materially
assisted him in resisting the grant of special leave. The point he desired to
urge was that in the petition for special leave the appellant had averred that
the decision of this court reversing the judgment of the High court in T.R.C.
120 of 1953 had been brought to the notice of the High court, but that this
statement must be erroneous or untrue for two reasons: (1) This is not referred
to in the order now under appeal, and (2) the decision of this court was not
reported in any of the law reports--official or unofficial -- till long after
January 1961 when the petition for review was heard. It is manifest that neither
of the two circumstances would by itself prove the untruth of the averment in
the special leave petition. The learned Judges might well have thought that the
decision had no material bearing on the only point that arose for consideration
before them, viz., whether their order of September 1959 was or was not vitiated
by error of the sort which brought it within O. XLVII. r. 1 of Civil Procedure
Code. It is obvious that so viewed, it would not have any relevance. As regards
the other point, the appellant did not have need to wait for a report of the
case in the law reports but might very well have produced a copy of the judgment
of this court--and being a party to the proceeding here it is improbable that it
had not a copy, so, that its statement that it drew the attention of the court
to the decision is not proved to be false by the decision not being reported
till long after January, 1961. The oral application for revoking the leave
granted is therefore rejected as entirely devoid of substance.
(7) WE shall next
proceed to deal with the merits of the appeals. Before doing so however, it is
necessary to advert to a circumstance which the learned Judges considered a
proper reason for rejecting the petition for review. This arises out of the
second of the grounds assigned by the learned Judges in their order dated
6/01/1961, refusing to grant the review. This may be quoted in their own words:
`That apart, the Supreme court was moved under Art. 136 of the Constitution for
special leave and that was dismissed, may be on the ground that it was not filed
in time.` The facts in relation to this matter might now be stated. As already
seen, the applications for reviewing the order dated 4/09/1959, refusing the
certificates were filed on 23/11/1959. During the pendency of those review
applications the appellant filed, on 30/11/1959, petitions seeking special leave
of this court under Art. 136 of the Constitution but those petitions were filed
beyond the period of limitation prescribed by the Rules. An application was
therefore filed along with the special leave petitions seeking condonation of
delay in the filing of the petitions. The petitions and the applications for
condonation of delay came on together for hearing and this court refused to
condone the delay, so that the petitions for special leave never legally came on
the file of this court.
(8)
O. XLVII R. 1(1) of the Civil Procedure Code permits an
application for review being filed `from a decree or order from which an appeal
is allowed but from which no appeal has been preferred.` In the present case, it
would be seen, on the date when the application for review was filed the
appellant had not filed an appeal to this court and therefore the terms of O.
XLVII R. 1(1) did not stand in the way of the petition for review being
entertained. Learned Counsel for the respondent did not contest this position.
Nor could we read the judgment of the High court as rejecting the petition for
review on that ground. The crucial date for determining whether or not the
'terms of O. XLVII. R.1 (1) are satisfied is the date when the application for
review is filed. If on that date no appeal has been filed it is competent for
the court hearing the petition for review to dispose of the application on the
merits notwithstanding the pendency of the appeal, subject only to this, that if
before the application for review is finally decided the appeal itself has been
disposed of, the jurisdiction of the court hearing the review petition would
come to an end.
(9) WE consider it
would be convenient to consider the first part of the order of the High court
now under appeal after examining the principal question whether the order of
September, 1959, rejecting the appellant's petition for a certificate is
vitiated by error apparent on the record. If one analysed that order only one
reason was given for the rejection of the certificate of fitness. No doubt, in
the first sentence of their order they stated that the judgment was one of
affirmance, but that was merely preliminary to what followed where they recorded
that the certificate was refused for the reason thatthe case did not involve any
substantial question of law regarding the interpretation of the Constitution.
The preliminary statement that their judgment was one of affirmance would,
however, seem to show that what the learned Judges had in mind were the terms of
Art. 133 of the Constitution where alone--as distinct from Art. 132--there is
reference to a judgment of affirmance, though per incuriam they reproduced the
terms of Art. 132(1). As it was the case of no party that any question of
interpretation of the Constitution was involved, the reference to `the
substantial question of law relating to the interpretation of the Constitution`
must obviously have been a mistake for a substantial question of law arising in
the appeal. Though learned Counsel for the appellant stressed this ground in the
order of September, 1959 as itself disclosing an error apparent on the face of
the record or was at least, ,indicative that the learned Judges did not apply
their minds to the consideration of the question arising in the application for
a certificate of fitness, we shall proceed on the basis that this was merely a
clerical error in their order and that the learned Judges had really in mind the
terms of Art. 133(1) which had been invoked by the appellants in their
application for the certificate. On the basis that the words in the order of
September, 1959 referring to a substantial question of law as to the
interpretation of the Constitution were really meant to say that no substantial
question of law was involved in the appeal sought to be filed in this court how
does the matter stand ? There was practically no question of fact that fell to
be decided in T.R.Cs. 75 to 77 of 1956 and the sole question related to the
claim to deduct the value of the groundnut on which purchase tax had been paid
and which had been converted into hydrogenated oil which had been sold and which
had been included in the appellant's turnover. In fact, these T.R.Cs. were
decided by the High court not independently on a consideration of any particular
facts which arose in them, but by following the decision of the High court in
T.R.C. 120 of 1953 which had accepted the construction which the departmental
authorities had placed on r. 18(2) of the Turnover & Assessment Rules. The
substantial points of law which were claimed to arise in the appeal had been set
out in extension the petition seeking the certificate and, in fact, they were
practically a reproduction of the contents of the earlier petition seeking a
certificate against the decision in T.R.C. 120 of 1953. The learned Judges--and
the learned C.J. was a party to the earlier decision and to the grant of the
certificate of fitness on that occasion--considered these points and had stated
as their opinion that substantial questions of law of general importance were
involved in the case and they had given expression to these views in a judgment
which we have reproduced earlier.
(10) WHAT, however,
we are now concerned with is whether the statement in the order of September
1959 that the case did not involve any substantial question of law is an `error
apparent on the face of the record`. The fact that on the earlier occasion the
court held on an 'identical state of facts that a substantial question of law
arose would not per se be conclusive, for the earlier order itself might be
erroneous. Similarly, even if the statement was wrong, it would not follow that
it was an `error apparent on the face of the record`, for there is a distinction
which is real, though it might not always be capable of exposition, between a
mere erroneous decision and a decision which could be characterised as vitiated
by `error apparent`. A review is by no means an appeal in disguise whereby an
erroneous decision is reheard and corrected. but lies only for patent error. We
do not consider that this furnishes a suitable occasion for dealing with this
difference exhaustively or in any great detail, but it would suffice for us to
say that where without any elaborate argument one could point to the error and
say here is a substantial point of law which stares one in the face, and there
could reasonably be no two opinions entertained about it, a clear case of error
apparent on the face of the record would be made out. No questions of fact were
involved in the decision of the High court in T.R.Cs. 75 to 77 of 1956. The
entire controversy turned on the proper interpretation of r. 18(1) of the
turnover & Assessment Rules and the other pieces of legislation which are
referred to by the High court in its order of February 1956 nor could it be
doubted or disputed that these were substantial questions of law. In the
circumstances therefore, the submission of the appellant that the order of
September 1959 was vitiated by `error apparent'' of the kind envisaged by O.
XLVII r. 1, Civil Procedure Code when it stated that `no substantial question of
law arose` appears to us to be clearly well-founded. Indeed, learned Counsel for
the respondent did not seek to argue that the earlier order of September 1959
was not vitiated by such error.
(11) HE, however,
submitted that this court should have regard not to whether the earlier order
was so vitiated or not but to the grounds which were urged by the appellant at
the hearing of the application for review and that if at that stage the point in
the form in which we have just now expressed was not urged, this court would not
interfere with the order rejecting the application for review. He pointed out
that at the stage of the arguments on the application for review the only ground
which was urged before the court, as shown by the judgment of the court, was
that the order of September, 1959 was erroneous for the reason that a
certificate had been granted on a previous occasion. We have extracted the text
of this order of January, 1961 in which this argument is noticed and it is
stated that it was the only point urged before the court. The question then
arises as to what is meant by `in similar circumstances in regard to a previous
year`. Learned Counsel for the respondent submits that we should understand
these words to mean that the appellant relied on the order dated 21/02/1956,
granting the certificate of fitness in regard to the decision of the High court
in T.R.C. 120 of 1953 solely as some sort of precedent and no more. On that
basis learned Counsel strenuously contended that the mere fact that in regard to
an earlier year a certificate was granted would not by itself render an order
refusing a certificate in a later year erroneous on the ground of patent error.
We have already dealt with this aspect of the matter. We do not, however, agree
that this is the proper construction of the argument that they rejected. The
order dated 21/02/1956, in relation to the previous year was placed before the
court and was relied on not as a binding precedent to be followed but as setting
out the particular substantial questions of law that arose for decision in the
appeals, and the attention of the court was drawn to the terms ofthe previous
order with a view to point out the failure to appreciate the existence of these
questions and to make out that the statement in the order of September, 1959
that no substantial question of law was involved in the appeals was erroneous on
the face of it. This is made perfectly clear by the contents of the petition for
review where the aspect we have just now set out is enunciated. The earlier
order being of the same court and of a bench composed in part of the same
Judges, the earlier order was referred to as a convenient summary of the various
points of law that arose for the purpose of bringing to the notice of the court
the error which it committed in stating that no substantial question of law
arose in the appeals. If by the first sentence the learned Judges meant that the
contention which they were called upon to consider was directed to claim the
previous order of 1956 as a binding precedent, they failed to appreciate the
substance of the appellant's argument. If, however, they meant that the matters
set out by them in their order granting a certificate in relation to their
decision in T.R.C. 120 of 1953 were not also involved in their judgment in
T.R.Cs. 75 to 77 they were in error, for it is the case of no one that the
questions of law involved were not identical. If, besides, they meant to say
that these were not substantial questions of law within Art. 133(1), they were
again guilty of error. The reasoning, therefore, of the learned Judges in the
order now under appeal, is no ground for rejecting the applications to review
their orders of September, 1959. We therefore consider that the learned Judges
were in error in rejecting the application for review and we hold that the
petitions for review should have been allowed. We only desire to add that in so
holding we have not in any manner taken into account or been influenced by the
view expressed by this court in Tungabhadra Industries Ltd. v. The Commercial
Tax Officer, Kurnool(1) regarding the construction of Rule 18(2) of the Turnover
& Assessment Rules, since that decision is wholly irrelevant for considering the
correctness of the order rejecting the applications for review which is the only
question for decision in these appeals.
(12) BEFORE
concluding we desire to make an observation arising out of an appeal made to us
by learned Counsel for the respondent that even if the appeal were allowed we
should make no direction as regards costs against his client. The right of the
appellant to the benefit of the exemption which he claimed and which was
disallowed to him by the judgment of the High court in T.R.Cs 75, 76 and 77
really depended on the correct construction of r. 18(2) of the Turnover &
Assessment Rules and in particular on the meaning of the expression `groundnut
oil` occurring there--whether it included `hydrogenated oil`. This court in its
judgment in M/s Tungabhadra Industries Ltd. v. The Commercial Tax Officer,
Kurnool(1) pronounced on the proper construction of the word 'groundnut oil'
occurring in r. 1 8 of the Turnover & Assessment Rules as they then stood. The
assessment proceedings for 1950-51, 1951-52 and 1952-53 had not attained
finality against the assessee by the termination of all proceedings, because
there were still applications for review pending before the High court. In the
circumstances, it would have been reasonable to expect that the Sales Tax
authorities should have afforded the appellant the benefit of the decision of
this court in regard to these later years also unless there was some insuperable
difficulty or other circumstance in the way of their doing so, and learned
Counsel for the respondent has brought none to our notice. That is so far as
regards the merits of the controversy in the tax revision cases in which
certificates were sought. Of course, if on any technical or similar points the
State is entitled to succeed indisputably they would not be prevented from doing
so and they would be entitled to collect the tax as assessed and as decided in
its favour by the High court. But when the respondent fails in the objections
raised to prevent the matter coming to this court, we do not see any
justification for the plea that costs should not follow the event but that the
appellant should be deprived of it bright to costs.
(13)
IN the result the appeal is allowed and the common
judgment of the High court in the three appeals is reversed and the
petitions for review--C.M.Ps 4672, 4673 and 4674 of 1959 on the file of the
High court are allowed with costs here and in the High court--one set of
hearing fees.
The following is reproduction of the item no (1) of the weekly mail 264th
Issue dtd 31.05.13 and is relevant
(1) Review & Appeal – Necessity & Importance in DRTs, & Civil Courts in India
(b)
There is huge pendency in
Indian Courts now crossing more than 3 crore cases. There was no such pendency
in British India but after the country became free, there was deluge of cases
due to fundamental rights and those arising due to separation of powers between
executive, judiciary and legislative wings.
(c)
The country needed
immediate Judicial Reforms in 1947 and thereafter but till date no real
seriousness has been shown by all those who are concerned.
(d)
On account of huge
pendency and delay in civil courts, the bank lobby voiced for separate courts
for quick recoveries of bank over dues and as a result the DRTs were proposed.
The right course of action was to improve the civil courts instead of
establishing new courts in the name of Tribunals.
(e)
In establishing and
running of the DRTs also there is no real seriousness on following two counts:-
(1)
In the recommendation of
Tiwari Committee in 1981, it was said that the Advocates and Judges in DRTs
should be experts in banking, industry and finance but till date neither such
experts have been appointed nor the existing persons have been trained.
(2)
We have not learnt
anything from the experience of Tribunals in UK. The tribunals were first
established there in 1800 and it took 157 years to find out the solutions by Sir
Frank committee who recommended that the tribunals should be monitored and
supervised by public bodies.
(f)
On the other hand, the
DRTs themselves appear to be working against the Principles of Natural Justice
(which they are supposed to follow as per the DRT Act) as despite the 15 years
old verdict of the Supreme Court, the DRTs are not being transferred from the
control of the Ministry of Finance to Ministry of Law. The Ministry of Finance
is holding regular meetings with the DRT judges. The said Ministry is openly
posting bank officers as the Judges and Recovery Officers of the DRTs. Recently
the Supreme Court has said that only Judicial Officials be posted as Recovery
Officers.
(g)
It is well known that
Lenders’ Liability Act was to be enacted along with the Securitisation Act but
the bank lobby managed to drop the same and diverted the attention by getting
Lenders’ Liability Guidelines from RBI.
(h)
In view of above, there is
all around pressure and lobbying for quickest possible recovery of bank overdues.
Under such facts and circumstances, most of the proceedings and orders in DRTs
are having legal defects due to obvious hurry and bias towards lendes. It is
well known that ‘Justice hurried is justice buried’
(i)
It is now responsibility
of the Borrowers’ Advocates to immediately examine all the proceedings and
orders thoroughly and critically whether any Review and or Appeal will cure the
defects.
(j)
We have been emphasizing
all along that the litigant borrowers and guarantors have to take personal
interest for the above examination and prevail upon their advocates to take
remedial measures without loss of time. The borrowers must understand the
parameters of Review and Appeal. They should go through the petitions and attend
the court hearings and arguments.
(k)
The complete history of
Review past 150 years, analysis of ingredients and comparison with Appeal is
given in ‘AIR 1948 Allahabad 353’ which needs to be studied by the borrowers and
their advocates.
(l)
The limitation for filing
Review and or Appeal must be kept in view.
(m)
If Review and Appeal both
are required, first Review must be filed and then Appeal must be filed in such a
manner that both are within limitation. If there is any delay, application for
condonation must be moved.
(n)
As per the SC judgment of 1963 vide link
http://www.drtsolutions.com/Thungabhadra-GovtAP-Review-Appeal.htm full
text given on our web site along with important portion marked in Red as well as
our comments. This judgment is dealt with today in this weekly mail below.
Accordingly the Review and Appeal both can be prosecuted simultaneously.
As soon as one is finally decided, other should be discontinued.
(o)
In view of facts and
circumstances, we reiterate that when the bank lobby is sticking to its guns
right from legislation of DRT Act and Securitisation Act as well as their
amendments, controlling DRTs, postings and meetings with the DRT judges and
Recovery Officers, excluding rightful appeals due to huge deposits for stay and
appeals etc; the borrowers must file their counter-claims and damages which are
the only defence. The pleadings of the said counter-claims must be drafted by
persons having knowledge of banking, industry and finance as well as law of
torts and damages.
(p)
The Review and Appeals
must be properly contested keeping in view the important judgments given by us
on our web site vide link
http://www.drtsolutions.com/DRT-Judgments.htm. The petitions
be drafted thoroughly, arguments held keeping in view the various points given
above, written arguments be submitted and the court forced to mention all the
points pressed in accordance with the SC Judgment given vide link
http://www.drtsolutions.com/Points-Pressed.htm
(q)
Side by side the
counter-claim be transferred to civil court as per the comments for the judgment
vide link
www.drtsolutions.com/Nahar-HSBC-Counter-claim-Appeal.htm
(r)
It is reiterated that the
best recovery is by running of the business with the application of tools like
revival, rehabilitation and restructuring. Further if the lenders desire quick
recoveries through DRTs, they should set their own house in order first i.e.
follow all the RBI Guidelines strictly, hold a thorough legal audit before
filing case before DRT, compensate the borrowers for the wrong doings and delays
committed by the lender etc.
(s)
It is unlikely that the
behavior of the lenders will change and the only factor which will change them
will be when they are flooded with several damage and counter-claims. Such
damages are quite common in US where the banks now take all precautions to help
the borrowers and guarantors due to the said damage claims.
(t)
Justice Krishna Iyer said
that our courts are 200 years behind developed countries. Further there are 74
countries whose judicial management and systems are better than us and hence
there is enough scope for improvements in DRTs and civil courts in India. The
advocates should not hesitate to apprise the DRT Judges to understand the
realities so that they do not cause any injustice to the borrowers who are very
small compared with the mighty banks. Borrowers are not asking for any favour to
them but their only demand is that no favour or bias be shown to the lenders. If
the Judges only follow the rule and procedure of law, the wrong doings committed
by the lenders will come to light and due to the counter-claims, there will be
no debt due rather the lenders will have to pay huge sums to the borrowers. Day
is not far when some sincere and honest DRT Judge will definitely award such
judgment.
(u)
Many of our clients have
understood the above facts and followed the strategy mentioned by us and as a
result they are either winning their cases against the lenders or the lenders
are forced to settle as less as 5% of the dues.
