Sanju Panda, J.
1. This writ application has been filed by the petitioners challenging the order dated 13.7.2009 passed by the Debts Recovery Appellate Tribunal, Kolkota in Appeal No. 11 of 2009 dismissing the appeal.
2. The opposite party-Bank filed O.A. No. 187 of 2008 before the Debts Recovery Tribunal, Cuttack Bench, Orissa for recovery of loan amount advanced to the petitioner No. 1-Company. In the said proceeding, the present petitioners filed Misc. Application Nos. 566 and 567 of 2008 raising the plea of lack of jurisdiction of the Debts Recovery Tribunal, Cuttack to adjudicate the claims in O.A. No. 187 of 2008 in view of an arbitration clause in Clause-35 of the Loan Agreement to refer the claims for arbitration as per Section 8(1) of the Arbitration & Conciliation Act, 1996. The Debts Recovery Tribunal, Cuttack without considering the matter in its proper perspective, by its order dated 20.1.2009 rejected the applications holding that it had jurisdiction to proceed with O.A. No. 187 of 2008 and did not refer the matter for arbitration. Challenging the said order, the present petitioner No. 1-Company filed Appeal No. 11 of 2009 before the learned Debts Recovery Appellate Tribunal, Kolkata under Section 20 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993. However, the Debts Recovery Appellate Tribunal also dismissed the said appeal on 13.7.2009 confirming the order dated 20.1.2009 passed by the Debts Recovery Tribunal, Cuttack.
3. Learned Counsel for the petitioners submitted that Clause 34 and 35 of the Loan Agreement dated 21.1.2002 have been specifically referred to in the Memorandum of Association and Articles of Association of petitioner No. 1-Company. Clause 35 of the Loan Agreement specifically states that the Borrower shall forthwith and from time to time as may be required by the Bank make such alterations or additions to its Memorandum and Articles of Association as may be necessary to conform the above agreement. The Memorandum of Association of petitioner No. 1-Company is the charter of a Company which deals with the main objects of a Company as it cannot exceed the powers conferred by its Memorandum of Association. Article/Clause 19 of the Memorandum of Association of the Company speaks of referring of all questions, disputes and differences arising between the Company and any other person whosoever in connection with or in respect of any matter rejating to the business or affairs of the Company to arbitration. The opposite party-Bank had the knowledge about the said arbitration clause and never raised any objection that such clauses were not in conformity with the Loan Agreement dated 21.1.2002 or the Supplemental Agreement dated 31.3.2005. The Bank had agreed sub-silentio to such arbitration clause in Article of the Memorandum of Association of the Company. Therefore, the Bank did not choose to exclude the said clause in Clause 38 of the Loan Agreement or any where in the Loan Agreement dated 21.1.2002 or the Supplemental Agreement dated 31.3.2005 or any time thereafter till filing of O.A. No. 187 of 2008. By its conduct, having agreed to such clause, now the Bank is estopped from pleading the contrary or raising any objection for referring for arbitration the subject-matter of the dispute covered under O.A. No. 187 of 2008. In support of his contention he cited the decisions reported in : AIR 2008 SC 357 Bharat Petroleum Corporation Ltd. v. Great Eastern Shipping Co. Ltd.; : AIR 2001 SC 3381 Vessel M.V. Baltic Confidence v. State Trading Corporation of India Ltd. & : AIR 2006 SC 2422 Group Chimlque Tunisien SA v. Southern Petrochemicals Industries Corporation Ltd. Further, he submitted that if any two specially enacted laws are having non obstinate clauses and there is a jurisdictional dispute about which law shall prevail or have an overriding effect, then the subsequent legislation having non obstinate clause shall prevail/will have the overriding effect. Therefore, the non obstinate clauses in Sections 5 and 42 of the Arbitration and Conciliation Act, 1996 shall prevail/will have the overriding effect over the non-obstinate clauses in Sections 17 and 18 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993. He also cited the decision reported in : AIR 2008 SC 2361 Bank of India v. Ketan Parekh and Ors. wherein the apex Court has dealt with the above position of law.
4. Learned Counsel for the petitioners also submitted that an arbitration clause cannot bar the consumer forums to adjudicate upon any dispute as the provisions of the Consumer Protection Act, 1986 are not in derogation of any other law. The petitioners had not filed the O.A. Therefore, by mere filing of a consumer dispute by them cannot lift the statutory bar of jurisdiction engrafted by Sections 5 and 42 of the Arbitration and Conciliation Act, 1996 for deciding the dispute filed in the Debts Recovery Tribunal, Cuttack. Therefore, the petitioners prayed for interference of this Court invoking the jurisdiction under Article 226 of the Constitution of India.
5. Learned Counsel for the opposite party-Bank submitted that since the Debts Recovery Tribunal, Cuttack as well as the Debts Recovery Appellate Tribunal, Kolkata have already confirmed the orders, interference with the said orders is not warranted in exercise of the jurisdiction under Article 226 of the Constitution of India. Further, he pleaded that since the petitioners had filed a consumer dispute earlier, now they are not entitled to advance the plea for the arbitration and the dispute will have to be adjudicated by arbitration only and not by any other forums. He further submitted that petitioner No. 1-Company also did not file the Agreement along with the application under Section 8 of the Arbitration and Conciliation Act, 1996. Therefore, both the Debts Recovery Tribunal as well as the Debts Recovery Appellate Tribunal rightly rejected the applications taking into consideration the decision reported in AIR 2008 SC 1016 Atul Singh and Ors. v. Sunil Kumar Singh and Ors. He further submitted that Section 18 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 ousted the jurisdiction of other Courts and authorities except the High Courts and the Supreme Court. In support of his contention, he cited the decision, reported in AIR 2000 SC 1535 Allahabad Bank v. Canara Bank and Anr. He also submitted that since the Tribunals have exclusive jurisdiction to adjudicate the claim of the Banks and Financial Institutions, the impugned order need not be interfered with.
6. In reply to the above submission made by the learned Counsel for the opposite-party Bank, the learned Counsel for the petitioners submitted that the decision reported in the decision of Atul Singh's case (supra) is not applicable to the present case on the facts and circumstances of the case as all the agreements had already been filed in O.A. No. 187 of 2008 vide Annexures 16 and 22 whereunder the successors, respective heirs, legal representatives, executors, administrators of the guarantors are bound by the loan agreements and other related agreements pertaining to the loan transaction and remedies to be availed of by the parties to the said agreements and no separate claim is being agitated by the respective heirs and legal representatives of late Shanti Devi, one of the alleged guarantors and who are opposite party Nos. 5 to 15 in O.A. No. 187 of 2008. Both the forums below have not considered the said aspect.
7. On the rival submissions of the learned Counsel for the parties and on perusal of the record, it appears that the Memorandum of Association of the petitioner No. 1 Company cannot be construed as an agreement as provided under Section 7 of the Arbitration and Conciliation Act, 1996. The Memorandum of Association is also not a contract between the Bank and the Company, and it has no nexus with the contract executed between the Bank and the borrower-Company. The Memorandum of Association of the Company codified the main objects of the Company and its Articles are the Regulation of the Company to rule and regulate its acts in relation to the Company with its subscribers, members/share holders and empower the Company to achieve its goal. Clause-19 of the said Memorandum provides that reference to arbitration can be made in case the Company enters into an agreement for arbitration in accordance with the provisions as enumerated under Section 7 of the Arbitration and Conciliation Act, 1996. However, no arbitration clause was incorporated in the loan agreement executed between the Bank and the petitioner No. 1 Company.
Section 17 and 18 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 provides the bar in respect of jurisdiction of other Court or authority to adjudicate the matter relating to the recovery of debts due to financial institutions than the Debts Recovery Tribunal. Therefore, the opposite party-Bank has filed the O.A. for realisation of the loan amount advanced in favour of the petitioner No. 1-Company.
The Bank has filed the O.A. for adjudication of contractual liabilities of the Company as per the terms and conditions of the contract and agreement executed by the petitioners while taking financial assistance from the Bank. The Securitisation and Reconstruction of Financial Assets. and Enforcement of Security Interest Act, 2002 and the Recovery of Debts due to Banks and Financial Institutions Act, 1993 being Special Statutes prevail upon the provisions of the General Statute like Arbitration and Conciliation Act.
Therefore, we are unable to accept the contention of the learned Counsel for the petitioner that the Debts Recovery Tribunal has no jurisdiction to adjudicate the matter without referring the dispute to arbitration. Rather, the Debts Recovery Tribunal has jurisdiction to adjudicate the dispute.
8. In course of argument, it is also submitted by the parties that the matter is now pending before the Debts Recovery Tribunal, Cuttack. In the said proceeding the Bank has already filed its evidence on affidavit. The defendants have not filed their affidavit evidence. The Debts Recovery Appellate Tribunal, Kolkata permitted the petitioner No. 1-Company to file its reply evidence by 27th of July, 2009. Since before this Court the petitioner No. 1 -Company has challenged the orders passed by the Debts Recovery Appellate Tribunal, Kolkata and Debts Recovery Tribunal, Cuttack and obtained an interim order, they have not yet filed their evidence on affidavit.
9. Since the matter is pending before the Debts Recovery Tribunal, Cuttack for final adjudication, though the Bank has filed the original application for recovery of the amount, in absence of any adjudication for realisation of the amount we are of the considered view that in the interest of justice the petitioners shall file their evidence on affidavit before the Debts Recovery Tribunal, Cuttack within a period of 15 days from today raising therein all their objections for proper adjudication of the dispute.
With the above direction, the writ application is disposed of.
I.M. Quddusi, A.C.J.
I agree.