Durga Parsad Sah Vs. State of Bihar and ors. - Court Judgment

Excerpt:
- - 1. whether the transfer of a suit from the (civil) court to the debt recovery tribunal under section 31 of the recovery of debts due to banks and financial institutions act, 1993 would depend upon the amount sought to be recovered at the time of institution of the suit or whether the interest accruing pendentelite till the establishment of the tribunal must also be taken into account to find that the amount of debt had exceeded rs. 10 lacs to attract the jurisdiction of the tribunal and consequently to cause ouster of the jurisdiction of the civil court this is the question to be answered in this writ petition.2. the, facts of the case are simple, brief and without controversy. in the year. 1986 the state bank of india (respondent no. 2) filed a suit registered as money suit no. 70 of.....

Judgment:
1. Whether the transfer of a suit from the (Civil) Court to the Debt Recovery Tribunal under Section 31 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 would depend upon the amount sought to be recovered at the time of institution of the suit or whether the interest accruing pendentelite till the establishment of the tribunal must also be taken into account to find that the amount of debt had exceeded Rs. 10 lacs to attract the jurisdiction of the tribunal and consequently to cause ouster of the jurisdiction of the civil Court This is the question to be answered in this writ petition.

2. The, facts of the case are simple, brief and without controversy. In the year. 1986 the State Bank of India (respondent No. 2) filed a suit registered as Money Suit No. 70 of 1986 in the Court of Subordinate Judge 1, Muzaffarpur for recovery of its loan, along with interest accused till the date of institution of the suit, from the defendants, including the present petitioner who was defendant No. 4 in the suit. In para 17 of the plaint the valuation of the suit for the purpose of jurisdiction and court fee was shown as Rs. 4,95,016.15 paise and the relief prayed for, insofar as relevant for the present, was in the following terms :

"That on the adjudication of the facts stated above the court be pleased to pass a money decree for Rs. 4,95,016,15 in favour of the plaintiff against the defendants as per the account given in Schedule I and II of the plaint along with the contractual rate of interest pendentelite and future at bank's advance rate i.e. the rate of 16.25% P.A."

3. The suit that was filed in 1986 was finally allowed, on contest by Judgment, dated 6-9-2000 and the court gave the bank a simple money decree in the following terms :

"Claim for Rs. 4.95,016.15 paise.

'This suit coming on this day for final disposal before Shri Arun Kumar, Sub-Judge, 3rd Muzaffarpur, in the presence of Shri Gopal Krishna Khan, Advocate for the plaintiff and Shri Akhileshwar Pd., Advocate and Shri Birendra Kumar, Advocate for the defendant it is ordered that the suit be and the same is hereby decreed on contract witness against the defendants 1 and 4 and ex parte against defendants 2 and 3. The plaintiff is entitled to recover the amount as claimed together with interest pendentelite and future at contractual rate to the date of satisfaction of the decree and in the mean time....."

4. While the suit was pending before the Subordinate Judge, Muzaffarpur. The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 ('the Act', hereinafter) came into force with effect from 24-6-1993. On 13-12-1996 a notification was issued making appointment of the Presiding Officer of the tribunal under the Act and by another notification, dated 24-1-1997 issued by the Central Government under Section 3 of the Act, a Debt Recovery Tribunal was established at Patna having Jurisdiction over the State of Bihar and Orissa.

5. In view of the intervening developments, the decree-holder bank made an application under Section 19 of the Act praying before the tribunal for issuance of a recovery certificate for a sum of Rs. 35,38,237.70 paise and further interest at contractual rate with quarterly rests from 1-3-2002 (the date till when Interest was calculated in the petition). In the petition it was explained that the claim on the date of filing of the suit was Rs. 4,95,016.15 paise, the interest pendentelite (from the date of institution of the suit to the date of the decree) and future interest from the date of the decree to 28-2-2002 amounted to Rs. 30,74,089.85 paise and the cost of litigation awarded under the decree was Rs. 11,131.70 paise the total recoverable amount, thus, added upto Rs. 35,38,237.70 paise.

6. The tribunal allowed the application filed by the decree-holder bank and by order, dated 1-5-2002 directed for preparation of a certificate of recovery. In pursuance of that order, the certificate of recovery was prepared, signed and sealed by the tribunal and a notice, dated 18-7-2002 demanding payment of a sum of Rs. 36,54,175.70 was issued to the petitioner.

7. At this stage, the petitioner came to this Court challenging the order of the tribunal and the demand notice issued by it and seeking quashing of the entire proceeding pending before it in Execution (OA) Case No. 9 of 2002 on the plea that it was based on a decree of the Civil Court which was nullity in the eyes of law.

8. Mr. Ashwini Kumar Singh, learned Counsel appearing on behalf of the petitioner submitted that on 24-1-1997 when the tribunal was set up at Patna, the bank's debt with the accrual of interest pendentelite had already swelled up to an amount far in excess of Rs. 10 lacs, the ceiling fixed under Section 1(4) of the Act. The debt would thus attract the jurisdiction of the tribunal and consequently the Civil Court had ceased to have any jurisdiction over the matter. The suit pending before the Sub-ordinate Judge stood transferred by operation of law and the fact that in reality the Civil Court proceeded with the suit was of no consequence in the eyes of law and as the Civil Court was completely denuded of its jurisdiction the decree passed by it was plainly a nullity and cannot form the basis of any recovery proceeding before the tribunal.

9. Mr. Shailesh Kumar Sinha, counsel appearing for the respondent bank tried to deflect the main issue raised on behalf of the petitioner by submitting that the order of the tribunal dated 1-5-2002 by which the application filed by the respondent bank was allowed, was appealable under Section 20 of the Act and, therefore, this writ petition was not maintainable and the petitioner could agitate his grievances in appeal before the appellate tribunal. In support of his submission, Mr. Sinha relied upon a decision of the Supreme Court in Punjab National Bank v. O.C. Krishnan, AIR 2001 SC 3209. Mr. Sinha also submitted that the High Court "cannot permit legal engineering to work in its prerogative writ jurisdiction for the benefit of bad debtors" and cited a bench decision of this Court in Kavita Pigments and Chemical (P) Limited v. Allahabad Bank (2000) 3 Pat LJR 241 : (AIR 2001 Patna 66) in support of the submission.

10. Though the submissions of Mr. Sinha are not without substance, I propose here to consider the correctness and validity of the contention raised on behalf of the petitioner that the suit, on the tribunal being set up on 24-1-1997 stood transferred to the tribunal by operation of law and further proceeding in the suit before the Civil Court was without jurisdiction.

11. In support of his submission Mr. Ashwini Kumar Singh, counsel for the petitioner relied upon the provisions of Sections 2(c), 2(g), 17 and 18 of the Act. Section 2(c) defines "appointed day" as follows :

" "appointed day" in relation to a Tribunal or an Appellate Tribunal, means the date on which such Tribunal is established under Sub-section (1) of Section 3 or, as the case may be, Sub-section (1) of Section 8;"

Section 2(g) defines debt as under :

"(g) "debt" means any liability (inclusive of interest) which is claimed as due from any person by a bank or a financial institution or by a consortium of banks or financial institutions during the course of any business activity undertaken by the bank or the financial institution or the consortium under any law for the time being in force, in cash or otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or order of any Civil Court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on, the date of the application;"

12. Mr. Singh emphasised that debt was defined as inclusive of interest and submitted that the expressions, "the date of application" at the end of the definition did not qualify the amount of liability as on the date of application but qualified the debts which were subsisting and recoverable on the date of making the application.

13. He then placed Section 17 dealing with the jurisdiction, powers and authority and Tribunal, the relevant extract from which is as follows :

"17(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."

14. Learned counsel finally referred to Section 18 which laid down a bar of jurisdiction and provided as follows :

"18. Bar of Jurisdiction.-- On and from the appointed day, no court or other authority shall have, or be entitled to exercise, any jurisdiction, powers of authority (except the Supreme Court, and a High Court exercising Jurisdiction under Articles 226 and 227 of the Constitution) in relation to the matters specified in Section 17."

15. Mr. Singh submitted that debt being inclusive of interest, the Bank's claim against the petitioner on 24-1-1997 had gone over Rs. 10 lacs and hence, any proceeding for recovery of the claim would attract the provisions of Section 17 and would bar the jurisdiction of the civil Court under Section 18 of the Act. therefore, the Court of the Subordinate Judge committed a jurisdictional error in not transmitting the records of the case to the Tribunal and proceeding further with the matter.

16. In support of his submission Mr. Singh also relied upon two decisions of the Supreme Court, one in Allahabad Bank v. Canara Bank, (2000) 4 SCC 406 : (AIR 2000 SC 1535) paragraphs 10, 18, 19, 20 and 21 and the other in Punjab National Bank v. Chajju Ram (2000) 6 SCC 655 : (AIR 2000 SC 2671) paragraphs 5 to 9.

17. The issues under consideration in those two cases were quite different from the one arising in this case and the two decisions do not seem to advance the case of the petitioner in any manner. In Allabahad Bank v. Canara Bank, the Supreme Court examined the conflicting claims of the two Banks for realisation of their respective dues from the same debtor. One of the Banks on the basis of a simple money decree against the debtor-company from the Debts Recovery Tribunal under the Act instituted a sale proceeding before the Tribunal which was stayed by the Company Judge in a winding up proceeding pending before him. The main question that arose for consideration in that case was whether under the Act the Tribunal enjoyed exclusive jurisdiction In matters of adjudication and execution in regard to recovery of Bank's dues or whether the Tribunals jurisdiction was subject to leave and control by the Company Judge. It was of course held by the Supreme Court that the jurisdiction of the Tribunal under the Act was not fettered by any control by the Company Court.

18. In Punjab National Bank, the Bank had filed the suit in 1986 and the judgment and decree for a sum exceeding Rs. 10 lacs was made on 16-2-1994. The Tribunal was set up on 30-8-1994 and the execution application was filed before the Court of Civil Judge on 21-12-1994. On these facts the question arose whether or not the execution proceeding would be transferred to the Tribunal. The Supreme Court on an interpretation of different provisions, particularly of Section 31-A of the Act held that the execution proceeding was liable to be transferred to the Tribunal.

19. These two decisions, therefore, are of no help to the petitioner in this case.

20. Coming now to the provisions of the Act relied upon by Mr. Singh, I find that the petitioner can derive no help from Sections 17 and 18 which relate to applications for recovery of debts that might be made after the Tribunal has been established. In both Sections 17 and 18 is found the expressions on or from the appointed day which makes it manifest that the provisions of the two sections are prospective in their application and do not control or relate to pending cases, Pending suits and proceedings are controlled by Section 31 of the Act, Sub-section (1) of which, relevant for the present, is as follows :--

"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 whereon it is framed 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;

Provided xx xx xx xx

(2) xx xx xx xx"

21. In the above-quoted provision the underlined expressions clearly Indicate that the question of transfer of pending cases would be determined on the basis of the cause of action on which the suit or proceeding was based. In other words, if the cause of action was such that the suit or proceeding would be instituted before a Civil Court even after the coming into force of the Act, that suit or proceeding shall continue before the Civil Court and shall not be transferred to the Tribunal. In terms of Section 31 it is the cause of action on which the suit or the proceeding was based that would determine its transferability to the Tribunal and any interest accruing pendente lite is of no consequence and, therefore, it cannot be argued that since on the appointed date the Bank's debt had exceeded Rs. 10 lacs, the suit was liable to be transferred to the Tribunal. In the case in hand the suit was filed for recovery of a sum of Rs. 4,95,016.15 paise and a suit on that cause of action would still be filed before a Civil Court and not before the Tribunal. Hence, the money suit filed by the respondent-Bank was not liable to be transferred to the Tribunal on the appointed date.

22. To my mind any other interpretation would lead to highly anomalous and impractical consequences. A suit for recovery of a sum below Rs. 10 lacs, the ceiling fixed under Section 1(4) of the Act, must still be filed before a Civil Court. Now, if the accrual of interest is also to be taken into account then all suits filed for recovery of sums ranging for instance, from 5-9-99 lacs would be getting transferred from the Civil Court to the Tribunal at different stages of hearing. This, to my mind, Would be a very awkward and undesirable way to conduct a Judicial proceeding. I am, therefore, clearly of the opinion that it would be the amount sought to be recovered on the date of institution of the suit that would determine the forum for its institution. In case the amount of debts, as on the institution of the suit is below Rs. 10 lacs the suit must be instituted before the Civil Court but in case on the date the decree is made, the amount of debt exceeds Rs. 10 lacs, by accrual of interest, the execution of the decree can only take place before the Tribunal in terms of Section 31-A of the Act and this is exactly what has happened in this case.

23. I, therefore, see no infirmity, much less any illegality in the impugned order passed by the Tribunal. I find no merit in this writ petition, It is accordingly dismissed but with no order as to costs.