Nahar
Industrial Enterprises Ltd. Vs. Hongkong & Shanghai Banking Corp. [2009] INSC
1318 (29 July 2009)
Judgment
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 AND TRANSFER PETITION (C) Nos.
1207-1209 OF 2008 Hongkong & Shanghai Banking Corporation Ltd. ....
Appellant Versus Nahar Industrial Enterprises Ltd. and others .... Respondents
S.B.
Sinha, J.
Leave
granted.
INTRODUCTION
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
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 2 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 lies 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.
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 3 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, 4 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."
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.
5 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.
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 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.
7 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, 8 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.
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? 9 (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 :
10 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.
11 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.
12 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 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 13 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 14
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 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 15 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 16 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 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.
17
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 18 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 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 19 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."
20
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 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.
21
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 date to such Tribunal:
22
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
23 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.
`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 "revenue court" being one of them.
Sub-section (2) of Section 5 provides that `revenue court' would not be civil
court.
24
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.
(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."
25
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 26 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
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:
"38.
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:
"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.
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 30 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 31 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)? (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 32 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 installments 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 33 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, 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."
34
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? (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?"
35 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."
36 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 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, 37 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 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 38
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.
39
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 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 40 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 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."
41
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 42 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 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.
43 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."
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.
45 (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 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 46 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 47 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 in Durgesh Sharma v. Jayshree [supra].
Noticing the history of the provisions relating to transfer to which we have
adverted to heretobefore, it was held:
"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.
47. 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 48 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..."
WHETHER
TRIBUNAL IS A CIVIL COURT 49 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" are
"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, 50 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.
51 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.
52 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. Anushuman Shukla 53 [ (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.
54 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.
55 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 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 56 (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 head note 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."
57
Reference may also be had to Parmananda Pegu v. State of Assam, [(2004) 7 SCC
779], wherein it was stated:
"21.
The decision of this Court in Chandrakant Chimanlal Desai v. State of Gujarat
has 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 AIR6 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 head note 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."
58
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. 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.
59 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 dependent 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 60 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 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 61 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.
62 In
Raghunath Rai Bareja (supra), this Court has clearly held:
"...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 63 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:
64
"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 65 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 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.
66 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.
67 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
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:
68 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 69 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:- "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 70 `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 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 71 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 :- "76. 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".
77. 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 72 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.
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, 73 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 74
matters contained in Section 18 which has a direct co-relation with Section 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 75 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:
[...] (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.
76 (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 :- "22. 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 this behalf shall be 77 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:- 78 "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 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.
79 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 80 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.
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 full 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.
... ....
....
48... The
legislative intent is clear. Since, further, the Parliament had enacted the
later statute 82 knowing full 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 83 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.
84 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 85 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.
(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.
86 (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 87 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]} 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.
88 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 89 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 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 90 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:
"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 91 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 92
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 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.
93 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."
94 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 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 95 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 96 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.
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
97 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. 98 [Asok Kumar Ganguly]
New Delhi;
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