Bombay High Court
Unknown vs Kishore K. Mehta on 30 June, 2008
Author: R.M.S. Khandeparkar
Bench: R.M.S. Khandeparkar, P.B. Majmudar
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO. 710 OF 2007
IN
NOTICE OF MOTION NO. 40 OF 2007
IN
NOTICE NO. N/224 OF 2007
HDFC Bank Ltd., )
a company incorporated under the provisions of )
the Companies Act, 1956 and having its Registered )
office at HDFC Bank House, Senapati Bapat Marg,
Lower Parel, Mumbai-400 013 and amongst other
places one of its offices known as HDFC bank Ltd.,
)
)
)
2nd floor, Trade World, New Building, Kamala Mills, )
Senapati Bapat Marg, Lower Parel, Mumbai-400 013 )...Appellant
versus
Kishore K. Mehta, )
having office at Diamond House, 9 Vatcha Gandhi )
Road, Gamdevi, Mumbai-400 007, and residing at )
Usha Kiran, 1st floor, Flat No. 36, )
Carmichael Road, Mumbai-400 026. )..Respondent
Sri Kishore Jain with Sarvasri Mihir Mody and Pushkar Bavare, instructed by
K. Ashar & Company, for the appellant.
Sri V.R. Dhond with Sri T.N. Tripathi and Ms. Sapana Ranchure, instructed by
Sri T.N. Tripathi for the respondent.
WITH
APPEAL (LODGING) NO. 945 OF 2007
IN
NOTICE OF MOTION NO. 14 OF 2007
IN
NOTICE NO. N/345 OF 2006
Kotak Mahindra Bank Limited, )
a company incorporated under the provisions of )
::: Downloaded on - 09/06/2013 13:32:14 :::
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the Companies Act,1956 and a banking company )
having its Registered Office at 36-38 A, Nariman )
Bhawan, 227, Nariman Point, Mumbai-400 021 )...Appellant
versus
1. Omprakash Agarwal )
2. Krishna Kumar Agarwal )
3. Sharad Kumar Agarwal )
4. Rajkumar Agarwal )
5. Satyanarayan Agarwal )
of Mumbai, all adult Indian Inhabitants residing )
at 6-C, "D" Road, Agarwal House, Churchgate, )
Mumbai-400 020, and their place of gain/business
ig )
or address of occupation as M/s. Krishna Filaments )
Ltd., Eucharistic Congress Building II, 5 Convent )
Street, Colaba, Mumbai-400 039. )..Respondents
Ms. Rajani Iyer, Senior Advocate, with Sri Kishore Jain, instructed by Sri
Tushar Goradia and Ms. Nisha Parmar, for the appellant.
Sri J.P. Sen with Ms. Pratibha Mehta, instructed by M/s. Little & Company, for
the respondents.
CORAM: SRI R.M.S. KHANDEPARKAR
&
SRI P.B. MAJMUDAR, JJ.
DATE: JUNE 30, 2008.
ORAL JUDGMENT: (Per Sri R.M.S. Khandeparkar, J.)
1. We have heard at length the learned counsel for the appellants and the respondents. Admit. Learned counsel appearing for respective respondents waive service. By consent, heard forthwith.
2. Since common questions of law and facts arise in both these appeals, ::: Downloaded on - 09/06/2013 13:32:14 ::: -3- they were heard together and are being disposed of by this common judgment.
3. The short but very important point which arises for consideration in both these appeals is whether an insolvency notice can be issued under Section 9 (2) of the Presidency-Towns Insolvency Act, 1909, hereinafter called as "the Insolvency Act", on the basis of a recovery certificate issued under the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1994, hereinafter called as "the RD Act".
4. As a prelude to the above point for consideration, it would be necessary to ascertain the meaning of "decree or order " under Section 9 (2) of the Insolvency Act as well as that of the expression "of any Court" under Section 9 (1) (e) of the Insolvency Act. It would be also necessary to know whether the Tribunal constituted under the RD Act is the Court within the meaning of the said expression under the Insolvency Act and in particular Section 9 thereof and whether the recovery certificate issued under the RD Act is either a decree or order within the meaning of the said expressions under the Insolvency Act. And finally, to know whether the procedure prescribed and the forum provided under the RD Act are exclusive in nature and bar any other proceeding and forum for realisation of the debt to the Banks and Financial Institutions.
::: Downloaded on - 09/06/2013 13:32:14 ::: -4-5. In both these matters, the Debts Recovery Tribunal, Mumbai, issued recovery certificates under the RD Act pursuant to which the Insolvency Registrar, at the instance of the appellants, issued insolvency notices under the provisions of Section 9 (2) of the Insolvency Act. Upon service of the said notices on the respondents, they took out Notices of Motion under the provisions of Section 9 (5) of the Insolvency Act seeking to set aside the said insolvency notices, inter alia, on the ground that on the basis of the recovery certificate issued by DRT, no insolvency notice can be issued under the provisions of Section 9 (2) of the Insolvency Act. The said Notices of Motion were sought to be opposed by the appellants on the ground that there is no legal impediment in issuing insolvency notice on the basis of the recovery certificate or the order made by DRT under the RD Act.
Reliance was placed in the decision of the learned single Judge in the matter of Deepak Cochhar & anr. vs. Indusind Bank Ltd.1. The learned single Judge after considering the rival contentions and placing reliance in the decision of the Apex Court in the matter of Paramjeet Singh Patheja v. ICDS Ltd.2 held that on the basis of recovery certificate issued by DRT constituted under the RD Act, no insolvency notice under Section 9 (2) of the Insolvency Act can be issued.
6. Section 9 (1) of the Insolvency Act enumerates the acts of insolvency on the part of a debtor and provides that on commission of such 1 2006 (3) Bom.C.R. 520 2 JT 2006 (10) SC 41 ::: Downloaded on - 09/06/2013 13:32:14 ::: -5- insolvency act or acts by a debtor, a notice in terms of sub-section (3) of Section 9 can be issued and served upon him by his creditor provided that the latter is armed with a decree or order for payment of money by such debtor to the creditor. The provisions of law comprised under Section 9 of the Insolvency Act read thus:
"9. Acts of insolvency.- (1) A debtor commits an act of insolvency in each of the following cases, namely:-
(a) if, in the States or elsewhere, he makes a transfer of all or substantially all his property to a third person for the benefit of his creditors generally;
(b) if, in the States or elsewhere, he makes a transfer of his property or of any part thereof with intent to defeat or delay his creditors;
( c) if, in the States or elsewhere he makes any transfer of his property or of any part thereof which would, under this or any other enactment for the time being in force, be void as a fraudulent preference if he were adjudged an insolvent;
(d) if, with intent to defeat or delay his creditors.-
(i) he departs or remains out of the States,
(ii)he departs from his dwelling-house or usual place of business or otherwise absents himself.
(iii)He secludes himself so as to deprive his creditors of the means of communicating with him;
(e) if any of his property has been sold or attached for a period of not less than twenty-one days in execution of the decree of any Court for the payment of money;
(f) if he petitions to be adjudged an insolvent;
(g) If he gives notice to any of his creditors that he has suspended, or that he is about to suspend, payment of his debts.
(h) if he is imprisoned in execution of the decree of any Court ::: Downloaded on - 09/06/2013 13:32:14 ::: -6- for the payment of money.
(2) Without prejudice to the provisions of sub-section (1), a debtor commits an act of insolvency if a creditor, who has obtained a decree or order against him for the payment of money (being a decree or order which has become final and the execution whereof has not been stayed), has served on him a notice (hereafter in this section referred to as the insolvency notice) as provided in sub-section (3) and the debtor does not comply with that notice within the period specified therein:
Provided that where a debtor makes an application under sub-section (5) for setting aside an insolvency notice -
(a) in a case where such application is allowed by the Court, he shall not be deemed to have committed an act of insolvency under this sub-section; and
(b) in a case where such application is rejected by the Court, he shall be deemed to have committed an act of insolvency under this sub-section on the date of rejection of the application or the expiry of the period specified in the insolvency notice for its compliance, whichever is later:
Provided further that no insolvency notice shall be served on a debtor residing, whether permanently or temporarily, outside India, unless the creditor obtains the leave of the Court therefor.
(3) An insolvency notice under sub-section (2) shall-
(a) be in the prescribed form;
(b) be served in the prescribed manner.
( c) specify the amount due under the decree or order and require the debtor to pay the same or to furnish security for the payment of such amount to the satisfaction of the creditor or his agent;
(d) specify for its compliance a period of not less than one month after its service on the debtor or, if it is to be served on a debtor residing, whether permanently or temporarily, outside India, such period (being not less than one month) as may be specified by the order of the Court granting leave for the service of such notice;::: Downloaded on - 09/06/2013 13:32:14 ::: -7-
(e) state the consequences of non-compliance with the notice.
(4) No insolvency notice shall be deemed to be invalid by reason only that the sum specified therein as the amount due under the decree or order exceeds the amount actually due, unless the debtor, within the period specified in the insolvency notice for its compliance, gives notice to the creditor that the sum specified in the insolvency notice does not correctly represent the amount due under the decree or order.
Provided that if the debtor does not give any such notice as aforesaid, he shall be deemed to have complied with the insolvency notice if, within the period specified therein for its compliance he takes such steps as would have constituted a compliance with the insolvency notice had the actual amount due been correctly specified therein.
(5) Any person served with an insolvency notice may, within the period specified therein for its compliance, apply to the Court to set aside the insolvency notice on any of the following grounds, namely:-
(a) that he has a counter-claim or set off against the creditor which is equal to or is in excess of the amount due under the decree or order and which he could not, under any law for the time being in force, prefer in the suit or proceeding in which the decree or order was passed.
(b) that he is entitled to have the decree or order set aside under any law providing for the relief of indebtedness and that -
(i) he has made an application before the competent authority under such law for the setting aside of the decree or order; or
(ii)the time allowed for the making of such application has not expired.
(c ) That the decree or order is not executable under the provisions of any law referred to in clause (b) on the date of the application.
Explanation.- For the purposes of this section, the act of an agent may be the act of the principal, even though the agent have no specific authority to commit the act."
::: Downloaded on - 09/06/2013 13:32:14 ::: -8-7. On the face of it, Section 9 (2) quoted hereinabove nowhere discloses that a decree or order referred to thereunder has to be necessarily issued by a Court. It simply speaks of "decree or order for payment of money". The Insolvency Act nowhere defines the terms "decree" or "orders"
nor it defines the expression "decree or order of any Court" which has been used in sub-section (1) of Section 9 thereof.
8. The fact remains that even though the said terms and the expressions are not defined under the Insolvency Act, it is apparent that the same relates to an ultimate result of adjudication of a dispute relating to a debt or a claim for money. It is essentially relating to the determination of a right to a monetary claim in a civil action, in contrast to criminal proceedings.
9. The right to receive money would obviously arise under a contract between the parties and the right to recover the same would be in terms of statutory provision. Such a right would be a contractual right and, therefore, could be enforceable by following the procedure prescribed by the law applicable to civil proceedings.
10. The manner in which a dispute can be adjudicated upon depends upon the procedural law which is in force in the State. As regards the civil dispute, the law in that regard which is in force is the Code of Civil Procedure. It is essentially in terms of the Code of Civil Procedure that the ::: Downloaded on - 09/06/2013 13:32:14 ::: -9- Civil Courts are empowered to decide all the disputes of civil nature including the claim for property, immovable as well as movable, which would obviously include claim for money and, therefore, the action for recovery of money could be by following the procedure prescribed under the said Code, vide Union of India and another vs. Delhi High Court Bar Association and others3 and Deep Chand and others vs. Land Acquisition Officer and others4.
11. Undoubtedly, as already observed above, the Insolvency Act nowhere defines the above referred terms. In the absence of definition of the said terms in the Insolvency Act and the action for recovery of the debts being in accordance with the civil procedure, one has to refer to the Code of Civil Procedure to understand the meaning of the said terms and the expressions in the Insolvency Act.
12. Under Section 2 (2) of the Code of Civil Procedure ("CPC" for short) the term "decree is defined as under:
" "decree" means the formal expression of an adjudication which, so far as regards the Court expressing it, conclusively determines the rights of the parties with regard to all or any of the matters in controversy in the suit and may be either preliminary or final. It shall be deemed to include the rejection of a plaint and the determination of any question within Section 144, but shall not include-
(a) any adjudication from which an appeal lies as an appeal 3 2002 (2) SCALE 668 4 AIR 1994 SC 1901.::: Downloaded on - 09/06/2013 13:32:15 ::: -10-
from an order, or
(b) any order of dismissal for default.
Explanation.- A decree is preliminary when further proceedings have to be taken before the suit can be completely disposed of. It is final when such adjudication completely disposes of the suit. It may be partly preliminary and partly final."
The use of the words like "court", "suit" and "adjudication sufficiently indicate the scope of the said term. The "adjudication" implies a legal process of resolving a dispute or a the process of judicially deciding a case. An adjudication has to be in a suit which obviously relate to the civil proceedings. The adjudicatory authority has to be a Court. Since the proceedings are required to be of civil nature, the court would obviously be a Civil Court.
13. The Apex Court in The Bharat Bank Ltd. Delhi vs. The Employees of the Bharat Bank Ltd., Delhi,5 while distinguishing Court from Tribunals, has clearly ruled that before a person or persons can be said to constitute a Court, it must be held that they derive their powers from the State and are exercising the judicial powers of the State. The Tribunal, though may enjoy many of the trappings of a Court, yet they are not Court in strict sense of exercise of judicial powers of the State. The expression judicial power implies the one which every sovereign authority must of necessity have to decide 5 AIR 1950 SC 188 ::: Downloaded on - 09/06/2013 13:32:15 ::: -11- controversies between its subjects or between itself and its subjects. It is also to be noted that even where the Court hears a matter not as a Civil Court but either as a Tribunal or persona designata its decision cannot be termed as a decree or order. It would be an award.
14. It was clearly held by the Apex Court in Hanskumar Kishan Chand vs. The Union of India6 that " Nor does it make any difference in the legal position that the reference under the statute is to a Court as arbitrator. In that case, the Court hears the matter not as a Civil Court but as persona designata, and its decision will be an award not open to appeal under the ordinary law applicable to decisions of Courts. A statute however might provide for the decision of a dispute by a Court as Court and not as arbitrator, in which case its decision will be a decree or order of Court in its ordinary civil jurisdiction, and that will attract the normal procedure governing the decision of that Court, and a right of appeal will be comprehended therein" .
15. The Courts of ordinary civil jurisdiction are obliged to entertain all 6 AIR 1958 SC 947 ::: Downloaded on - 09/06/2013 13:32:15 ::: -12- suits of civil nature except specifically or impliedly barred and this is clear from Section 9 of the CPC and elaborately explained by the Apex Court in Most Rev. P.M.A. Metropolitan and others, etc. etc. vs. Moran Mar Marthoma and another etc. etc.,7 wherein it was held thus:
"One of the basic principles of law is that every right has a remedy. Ubi jus ibi remediem is the well known maxim,. Every civil suit is cognizable unless it is barred, "there is an inherent right in every person to bring a suit of a civil nature and unless the suit is barred by statute one may, at one's peril, bring a suit of one's choice. It is no answer to a suit, howsoever frivolous the claim, that the law confers no such right to sue. Smt. Ganga Bai v. Vijay Kumar, AIR 1974 SC 1126. The expansive nature of the Section is demonstrated by use of phraseology both positive and negative. The earlier part opens the door widely and latte debars entry to only those which are expressly or impliedly barred. The two explanations, one existing from inception and latter added in 1976 bring out clearly the legislative intention of extending operation of the Section to such religious matters where right to property or office is involved irrespective of whether any fee is attached to the office or not. The language used is simple but explicit and clear. It is structured on the basic principle of a civilised jurisprudence that absence of machinery for enforcement of right renders it nugatory. The heading which is normally key to the Section brings out unequivocally that all civil suits are cognizable unless barred. What is meant by it is explained further by widening the ambit of the Section by use of the word "shall" and the expression all suits or a civil nature unless expressly or impliedly barred.
28. Each word and expression casts an obligation on the Court to exercise jurisdiction for enforcement of right. The word "shall" makes it mandatory. No Court can refuse to entertain a suit if it is of description mentioned in the Section. That is amplified by use of expression, 'all suits of civil nature'. The word 'civil' according to dictionary means, 'relating to the citizen as an individual; civil rights'. In Black's Legal Dictionary it is defined as 'relating to provide rights and remedies sought by civil actions as contrasted with criminal proceedings. In law it is understood as an antonym of criminal. Historically the two
7 AIR 1955 SC 2001 ::: Downloaded on - 09/06/2013 13:32:15 ::: -13- broad classifications were civil and criminal. Revenue, tax and company etc. were added to it later. But they too pertain to the larger family of 'civil'. There is thus no doubt about the width of the word 'civil'. Its width has been stretched further by using the word 'nature' along with it. That is even those suits are cognizable which are not only civil but are even of civil nature".
16. It has been held by the Apex Court in the case of Paramjeet Singh Patheja (supra) that the words 'court', 'adjudication' and 'suit' conclusively show that only a court can pass a decree and that too only in suit commenced by a plaint and after adjudication of a dispute by a judgment pronounced by the Court. It is obvious that an arbitrator is not a court, an arbitration is not an adjudication and, therefore, an award is not a decree.
17. It has been further held by the Apex Court in Patheja's case (supra) that :
"The expression 'Court' in the context (of Article 136) denotes a tribunal constituted by the State as a part of the ordinary hierarchy of courts which are invested with the State's inherent judicial powers. A sovereign State discharges legislative, executive and judicial function and can legitimately claim corresponding powers which are legislative, executive and judicial. Under our constitution, the judicial functions and powers of the State are primarily conferred on the ordinary courts which have been constituted under its relevant provisions. The Constitution recognized hierarchy of court and to their adjudication are normally entrusted all disputes between citizens as well as between citizens and the State. These courts can be described as ordinary courts of civil judicature. They are governed by their prescribed rules of procedure and they deal with questions of ::: Downloaded on - 09/06/2013 13:32:15 ::: -14- fact and law raised before them by adopting a process which is described as judicial process. The powers which these courts (exercise ?) are judicial powers, the functions they discharge are judicial functions and the decisions they reach are and pronounce are judicial decisions."
(emphasis supplied) and further that:
"47. Tribunals occupy a special position of their own under the scheme of our Constitution. Special matters are entrusted to them and in that sense they share with the courts one common characteristic both the Courts and the tribunals are 'constituted by the State and are invested with judicial as distinguished from purely administrative or executive functions'... The basic and fundamental feature which is common to both the courts and tribunals is that they discharge judicial functions and exercise judicial powers which inherently vest in a sovereign State.
48. By 'courts' is meant courts of civil judicature and by 'tribunals/ those bodies of men who are appointed to decide controversies arising under certain special laws. Among the power of the State is the power to decide such controversies. This is undoubtedly one of the attributes of the State and is aptly called the judicial power of the State".
18. In M/s. Harinagar Sugar Mills Ltd. vs. Shyam Sundar Jhunjhunwala and others8 the Apex Court has held that :
"All tribunals are not Courts, though all Courts are tribunals. The word "Courts" is used to designate those tribunals which are set up in an organised State for the administration of justice".
"By "Courts" is meant Courts of Civil Judicature and by "tribunals", those bodies of men who are appointed to decide controversies arising under certain special laws. Among the powers of the State is included the power to decide such controversies. This is undoubtedly one of the attributes of the State, and is aptly called the judicial power of the State. 8 1962 (2) SCR 339 ::: Downloaded on - 09/06/2013 13:32:15 ::: -15- In the exercise of this power, a clear division is thus noticeable. Broadly speaking, certain special matters to before tribunals, and the residue goes before the ordinary Courts of Civil Judicature. Their procedures may differ, but the functions are not essentially different. What distinguishes them has never been successfully established."
"In my opinion, a Court in the strict sense is a tribunal which is a part of the ordinary hierarchy of Courts of Civil Judicature maintained by the State under its constitution to exercise the judicial power of the State. These Courts perform all the judicial functions of the State except those that are excluded by law from their jurisdiction"
19. The above discussion and decisions of the Apex Court leave no scope for any doubt that the term "decree" in Section 9 (2) of the Insolvency Act refers to the decree for payment of money issued by a Civil Court. If the term 'decree' is to be understood as defined in CPC, obviously, there is no justification to apply different criteria to understand the meaning of the term 'order' in the said Section. The term 'order' has been defined in CPC in Section 2 (14) to mean "the formal expression of any decision of a Civil Court which is not a decree". It specifically refers to an order by a Civil Court.
Obviously, therefore, considering the decisions referred to above, the same criteria has to be adopted while understanding the term "order" as is applied to understand the term 'decree' and obviously, therefore, it would refer to a 'decree or order' passed by a Civil Court.
20. In fact, the above point is well settled by the decision of the Apex Court in Patheja's case read with the observations in Harinagar Sugar Mills ::: Downloaded on - 09/06/2013 13:32:15 ::: -16- case. It is true that Patheja's case was delivered while dealing with the point as to whether the arbitration award is a decree for the purpose of Section 9 of the Insolvency Act and whether insolvency notice can be issued on the basis of an arbitral award. While dealing with the said issue, the Apex Court has considered the scope of the term 'decree and order' under Section 9 (2) of the Insolvency Act and has clearly held that the said terms have to be understood as defined under the provisions of the CPC. As already seen above, the definition 'decree or order' in terms of CPC necessarily refers to the one issued by the Civil Court and not by any Tribunal as such, unless it is so provided under the statute under which the Tribunal is constituted.
21. It is also to be noted that the RD Act is a complete Code by itself which provides not only for adjudication of the claim relating to the Bank dues but also for execution of the decision arrived at by the adjudicatory authorities constituted under the RD Act without leaving any scope for alternative proceedings in relation to such claims. Besides there is a specific bar provided under Section 18 of the RD Act and further provision for overriding effect of the RD Act in terms of Section 34 thereof. In this regard, the Apex Court in the case of Allahabad Bank vs. Canara Bank and another9 has clearly ruled that:
"21. In our opinion, the jurisdiction of the Tribunal in regard to adjudication is exclusive. The RDB Act requires the Tribunal alone to decide applications for recovery of debts due to Banks or financial institutions. Once the Tribunal 9 AIR 2000 SC 1535 ::: Downloaded on - 09/06/2013 13:32:15 ::: -17- passes an order that the debt is due, the Tribunal has to issue a certificate under Section 19 (22) (formerly under section 19 (7) to the Recovery Officer for recovery of the debt specified in the certificate. The question arises as to the meaning of the word 'recovery' in Section 17 of the Act. It appears to us that basically the Tribunal is to adjudicate the liability of the defendant and then it has to issue a certificate under Section 19 922). Under Section 18, the jurisdiction of any other Court or authority which would otherwise have had jurisdiction but for the provisions of the Act, is ousted and the power to adjudicate upon the liability is exclusively vested in the Tribunal. (This exclusion does not however apply to the jurisdiction of the Supreme Court or of a High Court exercising power under Article 226 or 227 of the Constitution). This is the effect of Sections 17 and 18 of the Act.
22. We hold that the provisions of Sections 17 and 18 of the RDB Act are exclusively so far as the question of adjudication of the liability of the defendant to the appellant Bank is concerned.
(ii) execution of certificate by Recovery Officer : Is his jurisdiction exclusive.
23. Even in regard to 'execution' , the jurisdiction of the Recovery Officer is exclusive. Now a procedure has been laid down in the Act for recovery of the debt as per the certificate issued by the Tribunal and this procedure is contained in Chapter V of the Act and is covered by Sections 25 to 30. It is not the intendment of the Act that while the basic liability of the defendant is to be decided by the Tribunal under Section 17, the Banks/Financial Institutions should go to the Civil Court or the Company Court or some other authority outside the Act for the actual realisation of the amount. The certificates granted under Section 19 (22) has, in our opinion, to be executed only by the Recovery Officer. No dual jurisdiction at different states are contemplated."
22. Apart from the exclusive jurisdiction to deal with the subject, the provisions of law comprised under Section 34 of the DR Act also provide for ::: Downloaded on - 09/06/2013 13:32:15 ::: -18- overriding effect in relation to the provisions made under the RD Act over the provisions of other Act. Dealing with the provisions of law in the RD Act, the Supreme Court in Allahabad Bank's case (supra) held that :
"The provisions of section 34 (1) clearly state that the RDB Act overrides other laws to the extent of 'inconsistency'. In our opinion, the prescription of an exclusive Tribunal both for adjudication and execution is a procedure clearly inconsistent with realisation of these debts in any other manner.
24. There is one more reason as to why it must be held that the jurisdiction of the Recovery Officer is exclusive. The Tiwari Committee which recommended the constitution of a Special Tribunal in 1981 for recovery of debts due to Banks and financial institutions stated in its Report that the exclusive jurisdiction of the Tribunal must relate not only in regard to the adjudication of the liability but also in regard to the execution proceedings. It stated in Annexure XI of its Report that all "execution proceedings" must be taken up only by the Special Tribunal under the Act. In our opinion, in view of the special procedure for recovery prescribed in Chapter V of the Act, and section 34, execution of the certificate is also within the exclusive jurisdiction of the Recovery Officer.
25. Thus, the adjudication of liability and the recovery of the amount by execution of the certificate are respectively within the exclusive jurisdiction of the Tribunal and the Recovery Officer and no other Court or authority much less the Civil Court or the Company Court can go into the said questions relating to the liability and the recovery except as provided in the Act."
23. Chapter II of the RD Act deals with the subject of establishment of Tribunal and Appellate Tribunal. The provisions in the said Chapter deal with composition of such Tribunals, qualifications for appointment as Presiding Officer, term of office, staff of Tribunal, establishment of Appellate ::: Downloaded on - 09/06/2013 13:32:15 ::: -19- Tribunal, composition of Appellate Tribunal, qualifications for appointment as Chairperson of the Appellate Tribunal, resignation as well as removal of the Presiding Officers of the Tribunal and Chairperson of the Appellate Tribunal. Chapter III deals with the subject of jurisdiction, powers and authority of such Tribunals under the RD Act. Section 17 (1) thereunder provides that 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. Sub-section (2) thereof provides that an Appellate Tribunal shall exercise the jurisdiction, powers and authority to entertain appeals against any order made, or deemed to have been made by the Tribunal under the RD Act.
24. Section 17-A speaks of power of Chairperson of Appellate Tribunal Section 18 provides for bar of jurisdiction for the Courts and Tribunals other than those constituted under RD Act to exercise powers thereunder. It provides that on and from the appointed day, no Court or other authority shall have, or be entitled to exercise, any jurisdiction, powers or 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 of the RD Act.
25. Chapter IV prescribes in detail the procedure to be followed by ::: Downloaded on - 09/06/2013 13:32:15 ::: -20- the Tribunals constituted under the RD Act. In terms of Section 19 (4), on receipt of the application under sub-section (1) or sub-section (2), the Tribunal shall issue summons requiring the defendant to show cause within thirty days of the service of summons as to why the relief prayed for should not be granted. In terms of sub-section (5) thereof, the defendant shall, at or before the first hearing or within such time as Tribunal may permit, present a written statement of his defence. Under sub-section (6) where the defendant claims to set-off against the applicant's demand any ascertained sum of money legally recoverable by him from such applicant, the defendant may, at the first hearing of the application, but not afterwards unless permitted by the Tribunal, present a written statement containing the particulars of the debt sought to be set off. Sub-section (7) provides that the written statement shall have the same effect as a plaint in a cross-suit so as to enable the Tribunal to pass a final order in respect of both the original claim and of the set off. Under sub-section (8), a defendant in an application may, in addition to his right of pleading a set off under sub-section (6), set up, by way of counter claim against the claim of the applicant, any right or claim in respect of a cause of action accruing to the defendant against the applicant either before or after the filing of the application but before the defendant has delivered his defence or before the time limited for delivering his defence has expired, whether such counter claim is in the nature of a claim for damages or not and sub-section (9) provides that such a counter-
claim under sub-section (8) shall have the same effect as a cross-suit so as ::: Downloaded on - 09/06/2013 13:32:15 ::: -21- to enable the Tribunal to pass a final order on the same application, both on the original claim and on the counter claim. Sub-section (12) empowers the Tribunal to make interim orders against the defendant to debar him from transferring, alienating or otherwise dealing with, or disposing of, any property and assets belonging to him without the prior permission of the Tribunal as well as orders by way of stay and attachment. Sub-section (13) (A) deals with the power of the Tribunal to issue direction to furnish security in the same manner as provided under Order 34 Rule 1 of CPC. Similarly, power of attachment before judgment is provided under sub-section (13) (B).
26. In terms of sub-section (17) of Section 19, in case of disobedience of an order made by the Tribunal under sub-sections (12), (13) and (18) or breach of any of the terms on which the order was made, the Tribunal may order the properties of the person guilty of such disobedience or breach to be attached and may also order such person to be detained in the civil prison for a term not exceeding three months, unless in the meantime the Tribunal directs his release. The power of appointment of receivership is contemplated under sub-section (18) on similar lines as provided under the CPC.
27. Sub-section (19) of Section 19 provides that where a certificate of recovery is issued against a company registered under the Companies ::: Downloaded on - 09/06/2013 13:32:15 ::: -22- Act, 1956, the Tribunal may order the sale proceeds of such company to be distributed among its secured creditors in accordance with the provisions of Section 529-A of the Companies Act, 1956 and to pay the surplus, if any to the Company. Sub-section (20) provides that the Tribunal may, after giving the applicant and the defendant an opportunity of being heard, pass such interim or final order, including the order for payment of interest from the date on or before which payment of the amount is found due upto the date of realisation or actual payment, on the application as it thinks fit to meet the ends of justice. Sub-section (23) deals with the power to forward certificate of recovery to the Tribunal within whose jurisdiction the property is situated for execution. Sub-section (25) provides that a Tribunal may make such orders and give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice.
28. Section 20 of the RD Act deals with appeals to the Appellate Tribunal and Section 21 provides for deposit of amount of debt due, on filing appeal. Section 22 deals with procedure and powers of the Tribunal and the Appellate Tribunal and states that they are not bound by the procedure laid down by the CPC but shall be guided by the principles of natural justice and, subject to the other provisions of the DR Act and of any rules made thereunder, they shall have powers to regulate their own procedure including the places at which they shall have their sittings. As regards the items ::: Downloaded on - 09/06/2013 13:32:15 ::: -23- specified under sub-section (2) of Section 22, the Tribunals and Appellate Tribunal enjoy the same powers as are enjoyed by the Civil Court in terms of the CPC in discharge of their functions and the said items include issuance of summons, enforcing the attendance of any person before the Tribunal, requiring the discovery and production of documents, receiving evidence on affidavits, issuance of commissions, setting aside of the order of dismissal for default, or order for ex-parte proceedings and reviewing its decisions. Section 23 empowers the litigating parties to be represented by legal practitioners before such Tribunals. Section 24 deals that the provisions of the Limitation Act shall apply to an application made to a Tribunal.
29. Chapter V deals with the subject of recovery of debt determined by Tribunal under the RD Act. Section 25 thereof states that the Recovery Officer shall, on receipt of the copy of the certificate under sub-section (7) of Section 19, proceed to recover the amount of debt specified in the certificate by one or more of the modes viz. Attachment and sale of the movable or immovable property of the defendant, arrest of the defendant and his detention in prison and appointment of a receiver for the management of the movable or immovable properties of the defendant. Section 26 provides that it shall not be open to the defendant to dispute before the Recovery Officer the correctness of the amount specified in the certificate and no objection to the certificate on any other ground shall also be entertained by the Recovery Officer. Sub-section (2) thereof provides that a Presiding ::: Downloaded on - 09/06/2013 13:32:15 ::: -24- Officer shall have power to withdraw the certificate or correct any clerical or arithmetical mistake in the certificate. Sub-section (3) requires the Presiding Officer to intimate to the Recovery officer any order withdrawing or cancelling a certificate or any correction made therein. Section 27 deals with subject of stay of proceedings under certificate and amendment or withdrawal thereof.
30. Section 28 provides for other modes of recovery of the dues under the provisions of RD Act. Sub-section (1) thereof provides that where a certificate has been issued to the Recovery Officer under sub-section (7) of Section 19, the Recovery Officer may, without prejudice to the modes of recovery specified in Section 25, recover the amount of debt by any one or more of the modes provided under the said Section. Sub-section (3) (i) provides that the Recovery Officer may, at any time or from time to time, by notice in writing, require any person from whom money is due or may become due to the defendant or to any person who holds or may subsequently hold money for or on account of the defendant, to pay to the Recovery Officer either forthwith upon the money becoming due or being held or within the time specified in the notice in that regard provided that sufficient time is granted to pay the amount. Such a notice has to be issued to a person who holds any money for or on account of the defendant jointly with any person or other persons. Sub-section (3) (vi) of Section 28 provides that where a person to whom a notice under the said section is sent objects ::: Downloaded on - 09/06/2013 13:32:15 ::: -25- to it by a statement on oath that the sum demanded or the part thereof is not due to the defendant or that he does not hold any money for or on account of the defendant, then, nothing contained in this sub-section shall be deemed to require such person to pay any such sum or part thereof, as the case may be, but if it is discovered that such statement was false in any material particular, such person shall be personally liable to the Recovery Officer to the extent of his own liability to the defendant on the date of the notice, or to the extent of the defendant's liability for any sum due under the RD Act whichever is less. Sub-section (3) (ix) provides that any person discharging any liability to the defendant after the receipt of a notice under the said sub-
section shall be personally liable to the Recovery Officer to the extent of his own liability to the defendant so discharged or to the extent of the defendant's liability for any debt due under the RD Act whichever is less.
Sub-section (3) (x) of Section 28 provides that if a person to whom a notice under this Section is sent fails to make payment in pursuance thereof to the Recovery officer, he shall be deemed to be a defendant in default in respect of the amount specified in the notice and further proceedings may be taken against him for the realisation of the amount as if it were a debt due from him, in the manner provided in Sections 25, 26 and 27 and the notice shall have the same effect as an attachment of a debt by the Recovery Officer in exercise of his powers under Section 25 of the RD Act. Sub-section (5) of Section 28 provides that the Recovery Officer may recover any amount of debt due from the defendant by distraint and sale of his movable property in ::: Downloaded on - 09/06/2013 13:32:15 ::: -26- the manner laid down in the Third Schedule of the Income-tax Act, 1961 (43 of 1961). Section 29 provides for application of certain provisions of the Income-tax Act and it states that the provisions of the Second and Third Schedules to the Income-tax Act, 1961 and the Income-tax (Certificate Proceedings) Rules, 1962, as in force from time to time shall, as far as possible, apply with necessary modifications as if the said provisions and the rules referred to the amount of debt due under the said Act instead of to the Income-tax.
31. Section 30 deals with appeal against the order of Recovery Officer and provides that notwithstanding anything contained in Section 29, any person aggrieved by an order of the Recovery Officer made under the said Act may, within thirty days from the date on which a copy of the order is issued to him, prefer an appeal to the Tribunal and on receipt of appeal, the Tribunal may , after giving an opportunity to the appellant to be heard, and after making such enquiry as it deems fit, confirm, modify or set aside the order made by the Recovery Officer in exercise of his powers under Sections 25 to 28. Section 31 of Chapter VI deals with the subject of transfer of pending cases.
32. Section 31-A deals with the power of Tribunal to issue certificate of recovery in case of decree or order.
::: Downloaded on - 09/06/2013 13:32:15 ::: -27-33. Section 34 provides that save as provided under sub-section (2), the provisions of the Act shall have the effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act.
Sub-section (2) of Section 34 provides that the provisions of RD Act or Rules made thereunder shall be in addition to, and not in derogation of the Industrial Finance Corporation Act, 1948, the State Financial Corporations Act, 1951, the Unit Trust of India Act, 1963, the Industrial Reconstruction Bank of India Act, 1984, the Sick Industrial Companies (Special Provisions) Act, 1985 and the Small Industries Development Bank of India Act, 1989.
34. The Debts Recovery Tribunal (Procedure) Rules, 1993 prescribes elaborate procedure for processing the application as well as presentation of the applications, etc.
35. Considering the above provisions of law and the scheme of the Act, it is abundantly clear that the RD Act provides detailed procedure for the purpose of adjudication as well as recovery and realisation of the debt amount payable to the Bank and financial institutions. Not only it provides for the machinery for the same but also provides that no other forum will have jurisdiction and power to deal with the matters specified under Section 17 of the said Act, apart from providing that the provisions of the DR Act would ::: Downloaded on - 09/06/2013 13:32:15 ::: -28- have overriding effect over any other law in force. As already seen above, Section 17 speaks about complete jurisdiction and powers to be enjoyed under the provisions of the RD Act by the Tribunals constituted under the Act. Section 18 of the RD Act prohibits Courts and authorities from entertaining any such matter of its adjudication or execution. Sections 25 and 28 deal elaborately with the modes of recovery and realisation of the debts which are advanced to others by the Banks and financial institutions.
36. It has been clarified by the Apex Court in United Bank of India vs. Debts Recovery Tribunal10 that the expression 'debt' has to be given the widest amplitude to mean any liability which is alleged as due from any person to a Bank during the course of any business activity undertaken by the bank either in cash or otherwise, whether secured or unsecured, whether payable under a decree or order of any Court or otherwise and legally recoverable on the date of the application. Further it was held by the Delhi High Court in J.V. Mansukhani & Co. vs. Presiding Officer11 that the use of expression "any liability" or "any person" and "otherwise" throughout the Section 17 of the RD Act shows the legislative intent to provide the word 'debt' with widest possible meaning. Taking into consideration the provisions of law comprised under RD Act, it was also held by the Andhra Pradesh High Court in Venkateswara Textiles Traders and Printers vs. Canara 10 AIR 1999 SC 1381 11 AIR 2000 Del. 103 ::: Downloaded on - 09/06/2013 13:32:15 ::: -29- Bank12 that a Tribunal is competent to decide all the applications including cross-suit or cross-claim petitions since the Tribunals are established as a substitute to the civil Courts to try the suits filed by the bank and all the applications arising out of the same.
12 AIR 1998 AP 282 ::: Downloaded on - 09/06/2013 13:32:15 ::: -30-
37. If one peruses Section 9 of the Insolvency Act as quoted above, and as rightly not disputed on behalf of the appellants , it is essentially to get necessary information about the assets of the debtor so that the creditor can proceed against those assets to recover and realise the debt amount due by such person to the Bank or the financial institution. As seen above, the very power to collect information regarding assets of the debtor are bestowed upon the Recovery Officer and Tribunal and nothing prevents the Banks and financial institutions to get detailed information about the assets of the debtor while the statutory provisions ensure that the debtor does not suppress any material in that regard and if any attempt is made for the same the debtor could be punished by the Tribunal. In other words, Section 9 of the Insolvency Act which speaks about the opportunity to the creditor to get the details about the assets of the debtor and provides necessary protection to the debtor from unwarranted harassment to the debtor from the creditor.
Provisions on similar lines for similar result which could be attained by taking resort to Section 9 are provided under the RD Act in terms of the provisions contained under Section 17 read with Sections 19, 25, 28 and 29 of the RD Act.
38. Applying the law laid down by the Apex Court in Allahabad Bank's case that no dual jurisdiction at any stage is contemplated and the provisions of Section 34 clearly give overriding effect, in our considered opinion, would rule out resort to the provisions of Section 9 (2) of the Insolvency Act by a ::: Downloaded on - 09/06/2013 13:32:15 ::: -31- creditor on the basis of a recovery certificate issued under the RD Act.
39. It is sought to be contended on behalf of the appellant that the Section 34 thereof gives overriding effect only to the extent of inconsistency between the provisions of the RD Act and such other Act and considering the provisions of Section 9 of the Insolvency Act, it cannot be said to be inconsistent with the provisions of the RD Act. However, it is to be borne in mind that the Apex Court has clearly ruled against the existence of dual jurisdictions to adjudicate the claim regarding debt to the Banks and financial institutions and since the provisions of the RD Act provide for complete machinery for adjudication as well as for recovery of the debt, it is to be held that such banks and financial institutions cannot take resort to the provisions of Section 9 of the Insolvency Act for issuance of show cause notice thereunder. In fact, Section 28 (4-A) of the RD Act clearly provides that the Recovery officer may, by order, at any stage of the execution of the certificate of recovery, require any person, and in case of a company, any of its officers against whom or which the certificate of recovery is issued, to declare on affidavit the particulars of his or its assets and sub-section (5) thereof specifically provides that Recovery officer may recover any amount of debt due from the defendant by distraint and sale of his movable property in the manner laid down in the Third Schedule to the Income tax Act, 1961.
Section 29 further provides that provisions of Second and Third Schedules to the Income-tax Act, 1961 and the Income-tax (Certificate Proceedings) ::: Downloaded on - 09/06/2013 13:32:15 ::: -32- Rules, 1962, as in force from time to time shall, as far as possible, apply with necessary modifications as if the said provisions and the rules referred to the amount of debt due under the RD Act instead of the Income tax Act, provided that any reference under the said provisions and Rules to the assessee shall be construed as a reference to the defendant under the RD Act. These provisions, therefore, clearly disclose that RD Act is a complete Code by itself which leaves no room for the banks and financial institutions to look for any other forum for adjudication of their claim regarding the debt as well as for recovery thereof.
40. In the decision of the Apex Court in M/s. Unique Butyle Tube Industries Pvt. Ltd. vs. U.P. Financial Corporation and others,13 sought to be relied upon on behalf of the appellants, the question for consideration was whether the proceedings for recovery initiated by Uttar Pradesh Public Monies (Recovery of Dues) Act, 1972, on 6th January, 2001 were maintainable in view of Section 34 (2) of the RD Act. It was ruled therein that Section 34 of the Act consists of two parts. Sub-section (1) deals with the overriding effect of the Act notwithstanding anything inconsistent therewith contained in any other law for the time being in force. Sub-section (1) itself makes an exception as regards matters covered by sub-section (2).
The U.P. Act is not mentioned in the said sub-section. The mode of recovery of debt under U.P. Act is not saved under the said provision i.e. Sub-section 13 2002 (9) Scale 778 ::: Downloaded on - 09/06/2013 13:32:15 ::: -33- (2) which is of considerable importance so far as the case which was being considered by the Apex Court. The Apex Court therein further held that even a bare reading makes it clear that it is intended to be in addition to and not in derogation of certain statutes, one of which is the Financial Act. In other words, a Bank or a Financial institution has the option or choice to proceed further under the Act or under the modes of recovery permissible under the Financial Act. To that extent, the High Court's conclusions quoted above were found correct. However, the High Court ig decision holding the proceedings under U.P. Act were permissible was found incorrect. In other words, the decision rather than lending any assistance to the contentions sought to be raised on behalf of the appellants supports the view that we are taking in the matter except the acts which are specifically mentioned in sub-
section (2) of Section 34, no proceedings under any other Act is held to be permissible taking into consideration the overriding effect provided under Section 34 (1) of the RD Act. It was clearly ruled by the Apex Court that:
"It is well settled principle in law that the Court cannot read anything into a statutory provision which is plain and unambiguous. A statute is an edict of the legislature. The language employed in a statute is the determinative factor of legislative intent. The first and primary rule of construction is that the intention of the Legislation must be found in the words used by the Legislature itself. The question is not what may be supposed and has been intended but what has been said".
Once the provisions of law clearly specify that the overriding effect provided under sub-section (1) of Section 34 of the RD Act would not prohibit the ::: Downloaded on - 09/06/2013 13:32:15 ::: -34- Banks and Financial Institutions from taking resort to the provisions of the statutes specified under sub-section (2) of Section 34, it would mean that all other statutes which are not specified in the said provision of law are subject to the provisions of sub-section (1) of Section 34 and for the same reason since Insolvency Act does not find place in sub-section (2) of Section 34 of the RD Act, the provisions of law comprised under sub-section (1) would be attracted in relation to the provisions of the Insolvency Act.
41. To decide the point under consideration, mere issue of inconsistency in the provisions of two statutes is not sufficient. Rather what is important is that the statutory provisions under the RD Act do not leave any scope for any other parallel proceedings under any other statute, either for adjudication of claim or for recovery, including realisation of, the amount ordered to be due and payable to the Bank or financial institutions and compels the creditor to enforce his claim by taking resort to the machinery provided under the RD Act and under no other statute.
42. In Modern Syntax (I) Ltd. vs. Debts Recovery Tribunal, Jaipur and others14 relied upon by the appellants, the point involved was whether the proceedings under the DR Act would lie against an industrial undertaking and its owner company. Once that undertaking has been declared to be "Relief Undertaking" within the meaning of Rajasthan Relief Undertakings 14 AIR 2001 Rajasthan 170 ::: Downloaded on - 09/06/2013 13:32:15 ::: -35- (Special Provisions) Act, 1961, and while answering the said question in negative it was held by the Rajasthan High Court that :
" In our opinion, the two legislations in question deal with two separate and distinctive matters. The said legislations occupy two different fields. The Central legislation occupies the field of Banking under List I and provides for the incidental issue of adjudication of banking disputes, while the State legislation occupies the field of social security and providing unemployment relief falling under the Concurrent List. Thus, the parliamentary legislation and the State legislations occupy different fields and deal with separate and distinctive matters. Thus, in our opinion, the plea of repugnancy is not available to the respondent Bank."
It was further held that:
"So far as the provisions of RDB Act and RRU Act are concerned, both the legislations are valid laws made by different legislatures exercising powers under different lists.
The RDB Act and RRU Act deal with different subjects. The fields occupied by the two statutes in their pith and substance are separate and there is no direct inconsistency between RDB Act and RRU Act........ Once a relief undertaking Notification is issued, the State is competent to suspend legal proceedings of all kinds including the proceedings instituted under the Central Legislation"
It is on this aspect the Rajasthan High Court had held that the Bank could proceed to recover the dues from the debtor after the expiry of the period of one year as was mentioned in the notification issued under RRU Act and for that purpose orders could be issued in the same application which was already filed before the Tribunal. The decision was totally on a different count and on the basis that two legislations were occupying totally different ::: Downloaded on - 09/06/2013 13:32:15 ::: -36- fields. That is not the point attracted in the matter in hand while dealing with the issue regarding realisation of the debt confirmed by an adjudicatory authority under the RD Act and certificate in that regard having been issued as a recovery certificate. Though RD Act is a Central legislation which undoubtedly occupies the field in relation to the Banking business, we wonder whether the provision of law comprised under Section 9 of the Insolvency Act cannot be said to be a State legislation as such. In any case, considering the law laid down by the Apex Court in Allahabad Bank's case (supra), there is no scope to contend that Banks and financial institutions will have additional forum and procedure to get necessary details about the assets of the debtor when there is already provisions in the RD Act to get all such information.
43. As regards the decision of the Apex Court in the case of Andhra Bank vs. Official Liquidator and another15, apart from the observation with reference to the point regarding the relief which was required to be granted on the facts of the Allahabad Bank's case , since the Recovery Officer had sold all the properties of the Company and moneys were lying with the Tribunal and partly in the Court, the decision clearly reiterates the ruling in Allahabad Bank's case (supra). The only observation which was made in Andhra Bank was that:
"While determining point No.6, however, a stray observation was made to the effect that the "workmen's dues" have 15 2005 Vol. 125 Company Cases 453 ::: Downloaded on - 09/06/2013 13:32:15 ::: -37- priority over all other creditors, secured and unsecured because of Section 529A (1)(a) . Such a question did not arise in the case as the Allahabad Bank was indisputably an unsecured creditor. Such an observation was thus neither required to be made keeping in view the fact situation obtaining therein nor does it find support from the clear and unambiguous language contained in Section 529A (1) (a). We have, therefore, no hesitation in holding that finding of this Court in Allahabad Bank (supra) to the aforementioned extent does not lay down the correct law. (emphasis supplied)
44. Point No.6 which was framed by the Apex Court in Allahabad Bank's case and which is referred to in the above observation reads thus:
"What is the relief to be granted on the facts of the case since the Recovery Officer has now sold some properties of the Company and the monies are lying partly in the Tribunal or partly in this Court?
Obviously, therefore, the observations in the Andhra Bank's decision is of no help to the appellants to contend that the view taken in Allahabad Bank's case is no more a good law. The Apex Court has not taken a view different from that was taken in Allahabad Bank's case.
45. Attention was also drawn to the decision of the Supreme Court in the case of Manohar Nathurao Samarth vs. Marotrao and others16 while contending that a liberal view has to be taken while interpreting the provisions of decree or order or even the term 'court' in Section 9 of the 16 (1979) 4 SCC 93 ::: Downloaded on - 09/06/2013 13:32:15 ::: -38- Insolvency Act. In the said case, as regards the interpretation of statutes, the Apex Court had held that :
"Even assuming that literality in construction has tenability in given circumstances, the doctrinal development in the nature of judicial interpretation takes us to other methods like the teleological, the textual, the contextual and the functional. The strictly literal may not often be logical if the context indicates a contrary legislative intent."
This observation regarding the interpretation of statutes is of no help to the appellants in the matter in hand as in Allahabad Bank's case as well as in Patheja's case, the Apex Court has clearly held that the provisions comprised under Section 9 of the Insolvency Act on being put into force and applied to the debtor, can virtually result in civil death of the debtor and, therefore, they are to be interpreted strictly. Once the Apex Court in no uncertain terms has held that the said provisions are to be interpreted strictly, the question of applying liberal interpretation does not arise at all.
46. In Sant Ram vs. Rajinder Lal and others,17 the decision was in relation to interpretation of statutes which are welfare legislation like Rent Act and, therefore, is of no help to the appellants in the case in hand.
47. For the reasons stated above, therefore, with utmost respect, we are unable to persuade ourselves to agree with the view taken by the single Judge in Deepak Cochhar (supra). It does not lay down the correct proposition 17 AIR 1978 SC 1601 ::: Downloaded on - 09/06/2013 13:32:15 ::: -39- of law on the point in issue.
48. For the reasons stated above, therefore, the point for consideration has to be answered in negative. Having so answered, we find no case made out for interference in the impugned judgment delivered by the learned single Judge in the case in hand and hence the appeals fail and are hereby dismissed with no order as to costs.
49. At this stage, the learned counsel for the appellants prays for stay of the order passed today. He also requests for stay of the proceedings before the learned single Judge in which the impugned order has been passed. In our considered opinion, there is no case made out for grant of any stay as such nor for stay of the proceedings. Hence request is rejected.
R.M.S. KHANDEPARKAR, J.
P.B. MAJMUDAR, J.
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