IN THE HIGH COURT AT CALCUTTA ORDINARY ORIGINAL CIVIL JURISDICTION GA No.2404 of 2012 GA No.2778 of 2012 CS No.268 of 2012 SUDHA KHEMKA AND ANOTHER -VERSUS- CENTRAL BANK OF INDIA AND OTHERS For the Plaintiffs: Mr Mr Mr Mr Pratap Chatterjee, Sr Adv., Reetobrata Mitra, Adv., Manik Das, Adv., Rudrajit Sarkar, Adv.For the Defendant No.1: Ms Usha Doshi, Adv.For the Defendant No.2: Mr Hirak Mitra, Sr Adv., Mr Arun Geetesh, Adv., Ms Nilanjana Adhya, Adv., Mr Rishav Medora, Adv.For the Defendant No.3: Mr Anuj Singh, Adv., Mr S.E.Huda, Adv., Mr Sounak Sengupta, Adv., Ms Purnima Nath, Adv., Mr Lucky Mukherjee, Adv.Hearing concluded on: April 2, 2014.
BEFORE SANJIB BANERJEE, Judge Date: April 8, 2014.
SANJIB BANERJEE, J.
: – Nostalgia may have no place in a judgment, but it may be excusable to lament the extinction of a few legal axioms in the wake of the new laws that now come in faster than one can make it count and, often, unmindful of the manner of implementation thereof.
What remains unchanged is that the old order has to change yielding place to the new, never mind that a few maxims are undone in the process.
As the law in the country boldly goes to places where previous generations of law-makers had been reluctant to take it and justicing marches out of court to embrace tribunalisation of the justice delivery system, there remains a band of the old-fashioned that is stuck, like a broken record, with the refrain that the Constitution had ordained that the role of adjudication would, in the main, be the exclusive domain of the judiciary.
Yet, it must be recognised that the Constitution of India is a living document and it need not be interpreted by reference to a dictionary of the time that it was scripted.
So much for the prologue.
Of the two interlocutory petitions in the suit that have been assigned to this Bench and are taken up for consideration, one is for the rejection of the plaint on the ground of Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
The second defendant secured creditor insists that whether or not measures under Section 13(4) of the said Act of 2002 had been resorted to by it, the sweep of Section 34 of the said Act of 2002 would oblige the civil court to anticipate the likely effect of a suit before entertaining it.
Since the prohibition under Section 34 of the said Act of 2002 is on the civil court, which implies that the receipt of a suit in derogation thereof would amount to inherent lack of jurisdiction, it appears to be an argument available to a secured creditor in the context of the embargo under the relevant provision.
What the secured creditor in this case suggests is that the expression in Section 34 of the said Act of 2002 “empowered by or under this Act to determine” not only deals with a lis pending before a Debts Recovery Tribunal or an Appellate Tribunal, but also any matter which a Debts Recovery Tribunal or an Appellate Tribunal is authorised to adjudicate upon.
The claim in the plaint is that by reason of the conduct of the fiRs.defendant bank, which granted credit facilities to the proforma defendant company in liquidation, the plaintiffs are deemed to have been relieved of their obligation as guarantors to the transaction.
The further case of the plaintiffs is that the assignment of the debt by the bank to the second defendant, which is an asset reconstruction company, is illegal; as a consequence whereof, the second defendant never stepped into the shoes of the bank to occupy the possession of a secured creditor qua the plaintiffs or the proforma defendant company in liquidation.
The reliefs sought in the suit are set out: “The plaintiffs pray for leave under clause 12 of the Letters Patent and under Order 2 Rule 2 of the Code of Civil Procedure, 1908, and claim: a) Declaration that the deed of assignment dated 30th March, 2011, be adjudged null and void and be delivered up, cancelled and set aside; b) Declaration that there is no assignment of the alleged debts of the plaintiffs in favour of the defendant No.2 under the Deed of Assignment dated March 30, 2011, as allegedly executed by and between the defendant No.1 and the defendant No.2; c) Declaration that the Deed of Assignment dated March 30, 2011, as purportedly executed by and between the defendant No.1 and the defendant No.2 is invalid, unenforceable and void ab-initio; d) Declaration that the defendants are not entitled to proceed or to take any steps on the basis of the purported deed of assignment dated March 30, 2011, against the plaintiffs; e) Declaration that the plaintiffs are discharged from any and all obligations as guarantors of the purported credit facilities of the Proforma Defendant.
f) Decree for perpetual injunction restraining the defendants and/or any of their men, servants and agents from proceeding or taking any steps against the plaintiffs on the basis of the purported Deed of Assignment dated March 30, 2011, refer to hereinbefore; g) Receiver; h) Injunction; i) Costs; j) Further or other reliefs.” In aid of the claim in the plaint, the plaintiffs have applied by way of GA No.2404 of 2012 for the following principal interlocutory reliefs: “(a) The deed of assignment dated 30th March, 2011, be stayed till disposal of the suit; (b) The respondent No.2 and/or their men, servants, agents and/or assigns be restrained by an order of injunction from taking any step and/or further steps to invoke any right emanated from the alleged deed of assignment dated 30th March, 2011;” The second defendant asserts that whether or not the suit could have been entertained or the plaint is liable to be rejected, the orders of interlocutory injunction cannot be granted in view of Section 34 of the said Act of 2002.
It is such provision that binds the civil court that needs to be seen: “34.
Civil court not to have jurisdiction.- No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.” The second defendant secured creditor relies on two recent judgments reported at (2013) 9 SCC620(Standard Chartered Bank v.V.Noble Kumar) and at (2014) 1 SCC479(Jagdish Singh v.
Heeralal) to suggest that there is little choice that a civil court has in a matter where its jurisdiction stands ousted not only in respect of any action taken by a secured creditor under the said Act of 2002, but also in respect of any matter that a Debts Recovery Tribunal or a Debts Recovery Appellate Tribunal is empowered to determine under such Act.
In V.
Noble Kumar the Supreme Court held that an appeal under Section 17 of the Act “is available to the borrower against any measure taken under Section 13(4)” and that such remedy may be availed by the borrower “only after losing possession of the secured assets.” In Jagdish Singh the Supreme Court emphasised that the effect of Section 34 of the said Act of 2002 would curtail the plenary authority of civil courts to receive suits of a civil nature by virtue of Section 35 of the said Act of 2002.
According to the secured creditor, in view of Section 34 of the said Act of 2002 no quia timet action in respect of matters capable of being determined by the Debts Recovery Tribunal or the Debts Recovery Appellate Tribunal would be maintainable.
The secured creditor refers to the decision reported at (2004) 4 SCC311(Mardia Chemicals Ltd v.
Union of India) where the constitutionality of the said Act of 2002 was upheld with the observation that the prohibition under Section 34 “covers even matters which can be taken cognizance of by the Debt Recovery Tribunal though no measure in that direction has so far been taken …” The secured creditor stresses on the history of the legislation as noticed both in Mardia Chemicals Ltd and in the judgment reported at (2008) 1 SCC125(Transcore v.
Union of India).It is submitted on behalf of the secured creditor that since the said Act of 2002 was brought in in furtherance of the financial policy of the Union, the legitimacy thereof could not be decided by the court.
The second defendant insists that if the legislature has the authority to abridge the private rights of individual citizens in the interest of the larger public good, the plaintiffs’ argument that a party seeking redressal of a civil wrong has, theoretically, to have a forum available at any time that he wishes to invoke its jurisdiction, should not be countenanced.
The secured creditor relies on a single Bench opinion of this court reported at (2012) 2 CHN149(Authorised Signatories Deutsche Bank v.
Sandip Dey) where the court rejected a plaint filed by a tenant upon the landlord issuing a notice to the tenant that the secured creditors of the landlord had invoked the provisions of the said Act of 2002 against the landlord.
The second defendant here claims that such opinion is consistent with the objective of the said Act of 2002 to allow only the tribunal recognised thereunder to adjudicate upon the claims of any person in respect of a secured asset covered by such statute.
The secured creditor submits that a judgment of this court reported at AIR2008Cal 9 (Manager, UCO Bank v.
Samar Sarkar) that a secured creditor is not authorised to evict a tenant from any mortgaged property in the process of the realisation of the dues of the landlord–borrower is not good law in view of the several Supreme Court pronouncements.
The secured creditor has relied on the following observation from a speech in the House of Lords reported at 1958 AC549(Escoigne Properties Ltd v.
Inland Revenue Commissioners).“I return, therefore, to the question: What is the true meaning of section 42 as it stands?.
This cannot be answered by simply looking at the words of the statute and nothing else.
A statute is not passed in a vacuum, but in a framework of circumstances, so as to give a remedy for a known state of affaiRs.To arrive at its true meaning, you should know the circumstances with reference to which the words were used: and what was the object, appearing from those circumstances, which Parliament had in view … All that the courts can do is to take judicial notice of the previous state of the law and of other matters generally known to well-informed people.
Thus one of the best ways, I find, of understanding a statute is to take some specific instances which, by common consent, are intended to be covered by it.
This is especially the case with a Finance Act.
I often cannot understand it by simply reading it through.
But when an instance is given, it becomes plain.
I can say at once: “Yes, that is the sort of thing Parliament intended to “cover.” The reason is not far to seek.
When the draftsman is drawing the Act, he has in mind particular instances which he wishes to cover.
He frames a formula which he hopes will embrace them all with precision.
But the formula is as unintelligible as a mathematical formula to anyone except the experts: and even they have to know what the symbols mean.
To make it intelligible, you must know the sort of thing Parliament had in mind.
So you have to resort to particular instances to gather the meaning.” The secured creditor argues that just as Mardia Chemicals Ltd had observed that public interest has always to be considered to be above private interest, a previous opinion of the Supreme Court has also observed in the judgment reported at (1980) 4 SCC507(Srinivasa Enterprises v.
Union of India) that “when a general evil is sought to be suppressed some martyrs may have to suffer for the legislature cannot easily make meticulous exceptions and has to proceed on broad categorisations, not singular individualisations.” Another judgment on the said Act of 2002 reported at (2010) 8 SCC110(United Bank of India v.
Satyawati Tondon) has also been placed for the recognition therein that extreme self-restraint is required to be exercised by High Courts while wielding their authority under Article 226 of the Constitution in matters pertaining to claims under the said Act of 2002.
On the basis of the judicial pronouncements on the said Act of 2002, the secured creditor concludes that there is hardly any latitude for a civil court to exercise any modicum of judicial authority in respect of any matter which a Debts Recovery Tribunal or a Debts Recovery Appellate Tribunal is empowered by or under the said Act of 2002 to determine.
The reliefs claimed in the suit are taken up in seriatim by the secured creditor to suggest that all of them may be canvassed by the plaintiffs at the appropriate stage under Section 17 of the said Act of 2002; and, since the tribunal has been conferred the authority under Section 17 of the said Act of 2002 to receive any complaint in connection with any of the measures taken by a secured creditor under Section 13(4) of such Act, the suit could not have been received by this court and, at any rate, its further progress should immediately be arrested and the plaint rejected or the suit dismissed by leaving the plaintiffs free to carry their grievances to the appropriate forum.
Despite the plaintiffs being conscious of the validity of the said Act of 2002, particularly Section 34 thereof, having been upheld, the primary plank of defence to the secured creditor’s application for rejection of the plaint or dismissal of the suit is that the philosophy of the said Act of 2002 goes against the grain of the rule of law that is regarded in this country and the jurisprudence that has been indigenously developed over the last hundred years or so upon initially borrowing foreign juridical concepts.
The plaintiffs emphasise on the fundamental: that if a right to approach a civil court inhered in a person and such right was taken away by a statute, the statute had per force to identify the forum where the right could be exercised; and, at a time of choice of such person.
Apart from the plaintiffs seeking to question the judiciary’s failure to discharge its judicial obligation to adjudicate upon disputes by allowing increasing tribunalisation – often manned by the judicially untrained – it is submitted that a judicial officer authorised to entertain a civil suit may be required to render an advance ruling by gauging from the uncontroverted statements in the plaint as to whether the subjectmatter of the suit had the potential to form a lis before the Debts Recovery Tribunal under the said Act of 2002.
The plaintiffs assert that since the tribunal is empowered to receive any grievance pertaining to the measures adopted by a secured creditor under Section 13(4) of the said Act of 2002, the exclusive authority of the sovereign function of justicising relating to civil disputes in such complex matters as inheritance, religious practice, customs and usage have to be understood to have been abdicated in favour of a tribunal with scarcely a check on its composition and constitution.
The civil court’s jurisdiction under Section 9 of the Civil Procedure Code, according to the plaintiffs, is a fundamental pillar of the independence of the judiciary which is a part of the basic structure of the Constitution.
If such authority is allowed to be denuded by successive legislations that park judicial matters with fora controlled by the executive, it would go against the constitutional ethos that the country holds so dear, they lament.
The plaintiffs refer, in this context, to the judgment reported at (1993) 3 SCC161(Shiv Kumar Chadha v.
Municipal Corporation of Delhi) which recognised that the civil court was the repository of all civil grievances for which no remedy may have been provided in different statutes.
However, the judgment observed that there could be statutes “which in public interest affect even the common law rights or liability of the citizens, which were in the nature of existing rights”, but does not touch upon the issue of judicial authority being weaned away from the judiciary that the plaintiffs stress on.
The plaintiffs rely on a judgment reported at (2011) 3 Mh.
LJ71(State Bank of India v.
Sagar) for the observation therein that “a line of demarcation … is required to be drawn to define the compact area of jurisdiction of the Debts Recovery Tribunal under section 17 of the said Act”.
The plaintiffs contend that in view of the Supreme Court opinion at paragraph 24 of Jagdish Singh, it cannot be said that a suit instituted prior to a secured creditor adopting any measure under Section 13 of the said Act of 2002 would not be maintainable.
The plaintiffs suggest that if a suit was maintainable at the time that it was launched, the plaint cannot be rejected on the ground of any subsequent step taken by a secured creditor under the said Act of 2002.
The judicial wisdom as reflected in the repeated pronouncements of the Supreme Court from Mardia Chemicals Ltd to Jagdish Singh, give no latitude to a civil judge – be he a puisne Judge of a High Court exercising original jurisdiction – to address the several questions raised by the plaintiffs and the several other matters hinted at.
Since the constitutional validity of the said Act of 2002, including Section 34 thereof, has been upheld, it is needless to ponder over the underlying suggestion of the plaintiffs that the judiciary, that was not allowed to develop for want of infrastructure and resources, cannot be made the whipping boy to divest it of its judicial authority in several key areas.
Just as the submission of a suitor who was attempted to be non-suited was recorded without comment in the judgment reported at (2011) 2 Cal LT255(Prabir Chatterjee v.
ICICI Bank Ltd).so must the fundamental premise of the plaintiffs’ argument herein be allowed to pass.
But so much must be said: jurisdiction is neither a privilege nor a power, it is an obligation; and, an institution may forego its privileges, but its constitutional obligation may not be within its discretion to part with.
The reliefs claimed in the plaint are all capable of being canvassed in couRs.of proceedings under Section 17 of the said Act of 2002 and, as such, the suit has to be arrested.
But it must be observed that Section 34 of the 2002 Act demolishes at least two principles that were regarded as axiomatic in civil law.
A plaint may now be rejected on the basis of a circumstance that may not be evident from the plaint.
And, the partial rejection of a plaint may be possible to throw out such matters which are capable of adjudication by the Debts Recovery Tribunal under the said Act of 2002 and retain such matters that are not.
In view of the express prohibition in Section 34 of the said Act of 2002, it is held that CS No.268 of 2012 could not have been entertained and, accordingly, the plaint relating thereto is rejected in its entirety as all the reliefs claimed therein are capable of adjudication before the appropriate Debts Recovery Tribunal.
GA No.2778 of 2012 is allowed accordingly.
GA No.2404 of 2012 is dismissed as a consequence of the suit going out.
The subsisting interim order stands vacated.
There will be no order as to costs.
Certified website copies of this judgment, if applied for, be urgently made available to the parties, subject to compliance with all requisite formalities.
(Sanjib Banerjee, J.) Later: The petitioners seek a stay of the operation of this order which is declined.
(Sanjib Banerjee, J.)