Walayar Motels Pvt. Ltd. and ors. Vs. State Bank of Travancore and anr. - Court Judgment

Excerpt:
banking - review - recovery of debts due to banks and financial institutions act, 1993 - application for review filed by judgment debtor on ground that when this court passed original order in revision for appointment of receiver this court lost its jurisdiction to dispose that revision by virtue of coming into force of debts recovery act dated 04.11.1996 - direction to executing court to appoint receiver by order dated 08.11.1996 is not justified under this act - fact that court was reminded of its duties by order dated 08.11.1996 does not amount to entertaining a fresh execution petition or fresh appointment of receiver by the executing court - held, nothing in act stands in way of this court for making direction which it made in civil revision petition - review petition dismissed. - - one can only take it that the bank officers were remiss in bringing to the notice of that court the need for the issue of a direction to the receiver, on the failure of the judgment-debtors to comply with the conditions imposed by this court. 38 of 1988 still subsisted when the execution petition had earlier been dismissed by the executing court presumably for the failure of the officers of the decree holder-bank to take the necessary steps. though literally counsel may be correct, it is well-settled that the revisional power is nothing but an appellate power though confined to correcting errors of jurisdiction and not as wide as the normal appellate power. the proviso to section 31(1) of the act clearly evinces the intention that the exercise of the appellate power by the appellate court including the high court is not in a manner sought to be curtailed or interfered with by the constitution of the tribunals under the act. this court was only reminding that court that it had defaulted in not directing the receiver already appointed to take possession forthwith on the failure of the judgment-debtors to comply with the conditions imposed by this court in its interim order and also directing the executing court to appoint a more competent person to be the receiver in case it found that the receiver already appointed was found to be not up to the mark. thus, in this case the appointment of receiver by the executing court was on a day long prior to november 4, 1996. that order was perfectly within the jurisdiction of that courtand this court only confirmed that order with a further direction that the receiver ought to be directed to take possession forthwith. on the failure of the judgment-debtors to comply with the interim order of this court in c.p.k. balasubramanyan, j. 1. this application for review is filed by the judgment-debtors. in execution of a decree for money involving more than rs. 10 lakhs, the decree holder-bank sought for the appointment of a receiver for the first judgment-debtor undertaking. by order dated august 24, 1993, the executing court appointed a receiver. that order was challenged in the above revision, c. r. p. no. 1563 of 1993. therein, the judgment-debtors moved c. m. p. no. 2512 of 1993 for a stay of the order of the court below appointing the receiver. after hearing counsel for the judgment-debtor and the decree holder-bank, this court passed an order onseptember 3, 1993, granting the judgment-debtors an interim stay on condition that they made a payment of rs. 5 lakhs within a period of seven days from the date of that order and a further amount of rs. 5 lakhs within a period of one month from that order. this court also provided that in case any of those payments were defaulted, the interim stay granted would stand automatically cancelled. the judgment-debtors did not comply with that condition. the court below instead of taking further steps as made clear in the interim order of this court dated september 3, 1993, dragged its feet and did not insist on the receiver appointed, immediately taking possession of the motels and its assets. one can only take it that the bank officers were remiss in bringing to the notice of that court the need for the issue of a direction to the receiver, on the failure of the judgment-debtors to comply with the conditions imposed by this court. 2. the civil revision petition came up for hearing on november 8, 1996. the recovery of debts due to banks and financial institutions act, 1993, came into force on june 24, 1993. the concerned tribunals were constituted and notification in that behalf under section 3 of that act was issued by the central government on november 4, 1996. when the civil revision petition came up for hearing on november 8, 1996, no argument based on the debts recovery act was raised before this court. this court dismissed the civil revision petition on november 8, 1996, and refusing' to accept the submission of counsel for the judgment-debtors that the civil revision petition had become infructuous, proceeded to point out the impropriety in the inaction of the officers of the bank, the want of care on the part of the receiver in doing his duty and the lower court in not taking note of the interim order passed by this court and in ensuring that its order appointing the receiver was implemented and directed the executing court to ensure that the receiver appointed, forthwith takes possession of the property scheduled to the execution petition and if necessary, after replacing the original receiver with another receiver. thereafter, the executing court revived the execution petition which apparently had been closed and proceeded to take steps to appoint a receiver in the place of the original receiver. the judgment-debtors then filed e. a. no. 48 of 1997 requesting the court to review its order appointing the receiver. on december 8, 1996, the executing court took the view that the court was bound by the directions made by this court in the order dated november 8, 1996, and could not go behind that order or review its order passed long back appointing a receiver. when that order in e. a. no. 48 of 1997 was sought to be challenged by way of revision, this court dismissed that revision finding that there was no error of jurisdiction committed by the executing court. thereafter, the judgment-debtor filed c. m. p. no. 177 of 1997 before this court in the revision which had already been disposed of. that petition purported to be one for clarifying whether the appointment of areceiver in e. p. no. 213 of 1993 in o. s. no. 38 of 1988 still subsisted when the execution petition had earlier been dismissed by the executing court presumably for the failure of the officers of the decree holder-bank to take the necessary steps. after hearing both sides, this court passed an order dated february 7, 1997, holding up the receiver taking possession of the assets of the first judgment-debtor by giving the option to the judgment-debtors to pay off the balance decree amount in monthly instalments of rs. 3 lakhs. the first of such instalments was to be paid on or before march 10, 1997. it is said that the prior orders of this court were challenged before the supreme court by way of special leave to appeal, though in the affidavit it is submitted that what was challenged before the supreme court was the order dated february 7, 1997. it is stated on behalf of the judgment-debtors that when the petition for special leave came up for consideration on march 10, 1997, the judgment-debtors were directed to approach this court and accordingly the petition for special leave was withdrawn with liberty to move this court. a copy of the order of the supreme court in that behalf is not produced before this court by the judgment-debtors. but they have filed this review petition essentially on the ground that on november 8, 1996, when this court passed the original order in the revision, this court had lost its jurisdiction to dispose of that revision by virtue of the coming into force of the debts recovery act and the constitution of the concerned tribunal on november 4, 1996.3. as noticed already, no contention based on the debts recovery act was raised at the time of the hearing of the revision on november 8, 1996. learned counsel for the debtors submits that at the time of arguing c.m.p. no. 177 of 1997, this aspect was pursued. though i find no reference to such an argument in the order i passed, i have decided to proceed on the basis that such a contention was in fact raised on behalf of the judgment-debtors at the time this court heard and disposed of c. m. p. no. 177 of 1997. i may notice that this aspect is also not seen referred to in the affidavit in support of c. m. p. no. 177 of 1997. 4. according to counsel for the judgment-debtors, by the constitution of the tribunal and the appellate authority under the recovery of debts act with effect from november 4, 1996, this court has lost its jurisdiction to hear and dispose of the revision on november 8, 1996, on which day it was heard. though the act came into force on june 24, 1993, the tribunal and the appellate authority were established in terms of sections 3 and 8 of the act, only on november 4, 1996. the relevant notification was issued only on that day. since this court was dealing with a revision and not with a suit or execution petition, what we are concerned with is the constitution of the appellate tribunal under the act. section 17 of the act conferred jurisdiction on the tribunal to exercise on and from the appointed day the jurisdiction, powers and authority to entertain and decide applicationsfrom the banks and other financial institutions for recovery of debts due to them and on the appellate tribunal 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 the tribunal under the act. section 18 of the act barred the jurisdiction of the courts and other authorities except the supreme court and the high court exercising jurisdiction under articles 226 and 227 of the constitution in respect of matters provided for by the act and specified in section 17 of the act. the definition of 'debt' in the act took in also amounts payable under the decree or order of a civil court, the liability of which was subsisting on and was legally recoverable on the date of the application to be made to the tribunal. section 20 of the act provided for an appeal except in a case where the decision of the tribunal is on consent, by an aggrieved person against the order of the tribunal. section 31 of the act provided for the transfer of pending cases. section 31(1) provided that every suit or proceeding' pending before the court immediately before the date of the establishment of a tribunal under the act, being a suit or proceeding the cause of action whereon is based is such that it would have been if it had arisen after the establishment of the tribunal within the jurisdiction of the tribunal, shall stand transferred on that date to such tribunal. section 31(1) prima facie does not relate to appeals and it relates only to suits or other proceedings pending in the court of first instance. even if there be any doubt in that regard, the same is set at rest by the proviso to section 31(1) of the act, which provides that nothing' in sub-section (1) shall apply to any appeal pending before any court. it is, therefore, clear that an appeal pending before this court is not liable to be transferred to the appellate tribunal under the act. a reference to the relevant provisions of the act indicates that there is also no provision in the act providing for transfer of a pending appeal or a revision before an appellate court including the high court, to the appellate tribunal under the act. any doubt in that regard is also set at rest by section 31(1) of the act specifically dealing with the transfer of pending cases. it is, therefore, clear that there is nothing in the act, express or implied, which calls for a transfer of a revision pending in this court in a matter which would otherwise come under the purview of that act.5. learned counsel for the judgment-debtors contended that what is saved by the proviso to section 31(1) of the act is an appeal and not a revision. though literally counsel may be correct, it is well-settled that the revisional power is nothing but an appellate power though confined to correcting errors of jurisdiction and not as wide as the normal appellate power. but in the absence of any specific provision in the act transferring' such proceedings also to the appellate tribunal constituted under the act, it is not possible to accede to the contention that all revisions pending in this court arising at the stage of execution or otherwise, should stand transferred to the appellate tribunal. the proviso to section 31(1) of the act clearly evinces the intention that the exercise of the appellate power by the appellate court including the high court is not in a manner sought to be curtailed or interfered with by the constitution of the tribunals under the act. section 31(1) of the act dealing with transfer of pending business only refers to a suit or proceeding indicating that only an original proceeding in the court of first instance is contemplated. a transfer of proceeding pending in a court other than the court of first instance is not seen contemplated by the act. i have, therefore, no hesitation in overruling the contention of counsel that the jurisdiction of this court to hear and finally dispose of c. r. p. no. 1563 of 1993 stood ousted on november 8, 1996, when this court finally disposed of the revision. of course, i have already noticed that no such contention was raised at the time of arguing the revision on november 18, 1996.6. the next contention urged on behalf of the judgment-debtors was that by order dated november 8, 1996, what this court had done was to direct the executing court to appoint a receiver. since after november 4, 1996, the executing court cannot proceed with the execution of the decree in this case in view of section 31(1) of the act, the direction to that court to implement the order appointing' the receiver is not justified. it is also contended that the executing court could not have proceeded further with the execution in view of the act. in this case, the executing court passed the order appointing the receiver on august 24, 1993. there is no case that on that day that court did not have jurisdiction to pass that order. it was the correctness of that order that was questioned by the judgment-debtors before this court in the revision. this court found no reason to interfere with the order dated august 24, 1993, by which the executing court had appointed a receiver. on that day the executing court had the jurisdiction to entertain the execution petition and also to appoint a receiver for the assets of the first judgment-debtor. when this court dismissed the revision, this court was not asking or directing' the executing court to appoint a receiver thereafter. this court was only reminding that court that it had defaulted in not directing the receiver already appointed to take possession forthwith on the failure of the judgment-debtors to comply with the conditions imposed by this court in its interim order and also directing the executing court to appoint a more competent person to be the receiver in case it found that the receiver already appointed was found to be not up to the mark. that again is not a direction to the executing court to appoint a receiver for the first time. it is only a direction to change the person of the receiver who has already been appointed. thus, in this case the appointment of receiver by the executing court was on a day long prior to november 4, 1996. that order was perfectly within the jurisdiction of that courtand this court only confirmed that order with a further direction that the receiver ought to be directed to take possession forthwith. that does not involve any fresh entertainment of an execution petition or appointing a receiver after the constitution of the tribunal under the act on november 4, 1996. the executing court had only statistically closed the execution petition and on receiving the order of this court only revived that execution petition. even if that execution petition is to be transferred to the tribunal constituted under the act, that transfer will be only with reference to the state of affairs as on november 4, 1996, and that state of affairs would be that a receiver had already been appointed by the court on august 24, 1993. in other words, the transfer of the execution petition would involve a transfer of the petition with an order of the executing court appointing a receiver. so long as there is no fresh appointment of receiver by the executing court after november 4, 1996, and what has been done is only to implement the order dated august 24, 1993, on a revival of the execution petition, it cannot be said that there is any merit in the contention that the court below could not be directed to name a receiver for the undertaking or to direct the receiver to take possession of the undertaking. the court had taken the property into custodia legis by appointing the receiver. on the failure of the judgment-debtors to comply with the interim order of this court in c. m. p. no. 2512 of 1993, dated september 3, 1993, the executing court should have directed the receiver to forthwith assume possession. that contingency arose long before november 4, 1996. the fact that the court was reminded of its duty by this court on november 8, 1996, and that the court woke up to its responsibility and revived the execution petition with a view to name a more competent receiver does not amount to entertaining a fresh execution petition or the fresh appointment of a receiver by the executing court. in any view, since the jurisdiction of this court in revision is not in any manner affected, even if the order is treated as one of appointment of a receiver by this court, the same could not be faulted on the ground that the said appointment was made after november 4, 1996. i, therefore, find that there is nothing in the recovery of debts act which stands in the way of this court making the directions it had made in the civil revision petition and in c. m. p. no. 2512 of 1993 and in c. m. p, no. 177 of 1997 and in the executing court implementing those directions. i thus find no want of jurisdiction in this court and no error in the orders warranting correction in review jurisdiction. i dismiss the review petition.