Debt Recovery Appellate Tribunal - Delhi
State Bank Of India vs Sree Porcelain P. Ltd. And Ors. on 22 September, 2005
Equivalent citations: IV(2005)BC201, [2005]128COMPCAS138(NULL)
ORDER
Motilal B. Naik, J. (Chairman)
1. This appeal is directed against the order made by the DRT, Jaipur, on June 19, 2001, on an application filed under Section 19(7) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, seeking issuance of recovery certificate enabling the applicant-bank, for pursuing appropriate remedy thereafter.
2. The State Bank of India instituted a suit for recovery of certain amounts on November 9, 1983, before the District Court at Alwar. A preliminary decree was passed on February 13, 1986, against the defendants with certain condition. However, when the conditions of preliminary decree were not complied with by the defendants, a final decree was passed on November 9, 1993. While so, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short "the RDB Act") came to be enacted, and pursuant to which the DRT was established at Jaipur, which started functioning from August 30, 1994. When the DRT at Jaipur started functioning, the applicant-bank moved an application before the said DRT under Section 19(7) of the RDB Act on May 21, 2000, seeking issuance of a recovery certificate on the basis of the final decree to enable the bank to pursue appropriate remedy. The DRT, by order dated June 19, 2001, rejected the said application on the ground of limitation, against which the present appeal has been filed on various grounds.
3. A few facts which are relevant for the purpose of taking appropriate decision in the appeal are recorded as under:
Though there are five respondents in the appeal, respondents Nos. 1, 2 and 4 were set ex-parte, having failed to appear before this Tribunal. Respondents Nos. 3 and 5, who are husband and wife, appeared in person and made their submissions. On behalf of the appellant, Mr. R. P. Vats, counsel, made elaborate submissions.
4. According to learned counsel for the appellant, in terms of Section 31A of the RDB Act, which came into force with effect from January 17, 2000, when a decree or order is passed by any court before the commencement of the Recovery of Debts Due to Banks and Financial Institutions (Amendment) Act, 2000 and such a decree or order has not yet been executed, then, the decree-holder may apply to the Tribunal to issue a recovery certificate for the amount covered under the decree. It is stated that though in the instant case the civil court had passed final decree on November 9, 1993, the decree remained unexecuted for some reason or other. However, on constitution of the DRT at Jaipur, an application was filed under Section 19(7) read with Section 31A of the Act, seeking issuance of the recovery certificate. Counsel contended that the said application was rejected by the Tribunal holding that seeking of such certificate is beyond the period of limitation. Counsel stated that as per the provisions of article 136 of the Limitation Act, 1963, for the execution of a decree other than a decree granting a mandatory injunction, the period of limitation is 12 years. When the final decree was passed on November 9, 1993, in normal circumstances the bank was entitled to take steps for execution of the decree before the competent civil court, but as a result of the constitution of the DRT's pursuant to the enactment of the RDB Act, the bank took a decision to seek recovery certificate from the DRT, for initiating further steps under the scheme of the RDB Act. Learned counsel stated that in terms of Article 136, for execution of the decree obtained by the bank 12 years of period is available, that the Tribunal committed an error holding that the period of limitation as three years as prescribed under Article 137 of the Limitation Act.
5. As indicated above, though there are five respondents, respondents Nos. 1, 2 and 4 remained ex-parte. Respondents Nos. 3 and 4 appeared in person. Incidentally, the third respondent is also an advocate. He urged the proposition as a party in person on his behalf and on behalf of his wife who is the fifth respondent in this appeal.
6. The case of Mr. S. N. Sharma, the third respondent party in person is that when a decree is passed on November 9, 1993, the appellant-bank could not have kept the matter pending for several years. It is further urged that Section 31(1) of the RDB Act contemplates that every suit or every proceeding pending before any court immediately before the date of establishment of a Tribunal under this Act, shall stand transferred on that date to such Tribunal; provided that nothing in this sub-section shall apply to any appeal pending as aforesaid before any court.
7. Laying emphasis on this provision, Mr. S. N. Sharma stated that no proceedings were pending before any court at the time when the DRT's came to be established. According to him, a preliminary decree though was passed in 1986, final decree came to be passed on November 9, 1993, i.e., before the establishment of DRTs, and in such circumstances the course open to the appellant was to get the decree executed in the civil court, but, when there were no pending proceedings, the appellant could not have invoked the provisions under Section 31A of the Act, and stated that such an illegality cannot be cured in the appeal. Mr. S. N. Sharma also pleaded that as per Section 2(g) of the RDB Act, the appellant had a three years limit from the date of decree for recovery. According to him, the three-year-period from the date of decree expired by November 9, 1996 and as such the appellant is barred from recovering the amounts.
8. First of all, let me clarify the position with regard to the definition of "debt" as provided under Section 2(g) of the RDB Act. Section 2(g) reads thus:
"'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."
9. Counsel contended that in terms of the said provisions the bank shall be entitled to recover the dues within three years as provided under article 137 of the Limitation Act. In this case, the facts disclose, though a preliminary decree was passed way back in 1986, the defendants failed to comply with the order and a final decree came to be passed on November 9, 1993. After the advent of the Recovery of the Debts Due to Banks and Financial Institutions Act, 1993, DRTs were constituted, all cases were to be filed before the DRTs where financial obligations are more than Rs. 10 lakhs, and as per Section 31, all cases stood transferred from the civil court to the DRTs. There is no doubt that when the DRT was established at Jaipur, no case against these respondents was pending before the District Court at Alwar, as by that time suit was decreed in favour of the appellant-bank. In terms of article 136, as indicated above, the decree so obtained is executable in 12 years.
10. Prior to the introduction of amendment in 2000, by which Section 31A was inserted, which came into force with effect from January 17, 2000, where the bank/financial institution which had obtained a decree from the civil courts and such decree was not executed, there was some difficulty in executing decrees so obtained from the civil courts. The Legislature visualised the situation and inserted Section 31A, which provided sufficient powers to the Tribunals to issue certificates for recovery in cases where decrees or orders passed by any court before the commencement of the Recovery of Debts Due to Banks and Financial Institutions (Amendment) Act, 2000, remained unexecuted.
11. A plain reading of this provision makes it clear that even after obtaining a decree from a civil court and such a decree remained unexecuted, after constitution of DRTs, the bank/financial institution was entitled to seek a recovery certificate to be executed by the Recovery Officer under the scheme of the RDB Act, by making appropriate application. The argument that the petitions which are not specifically covered under any article, are covered only under article 137, which provides three years for taking steps when the right to apply accrues, in my considered view, is neither here nor there. Since the provisions under article 136 precisely apply in cases where applications have not been filed for execution of any decrees which have been obtained from the competent civil court, such decree could be executable within 12 years from the date when the decree or order becomes enforceable.
12. Article 136 of the Limitation Act, 1963, provides 12 years for execution of any decree other than a decree granting mandatory injunction or order of civil court, whereas, article 137 meets a situation where no specific period of limitation is provided elsewhere, and thus to meet such contingency a period of three years is provided. When the Legislature has provided a specific period of 12 years under article 136, I do not think the Tribunal was justified in deciding the case against the appellant-bank, holding that the execution of decree should have been completed within three years of the decree. Such a recourse, in my considered view, is untenable, and on that ground the impugned order is liable to be set aside, and accordingly it is set aside.
13. The appeal is allowed. However, in the circumstances, with costs.
14. L.R. copy be marked.