Madras High Court
M/S.Slo Industries Limited vs The Debts Recovery Tribunal - I on 7 August, 2018
Author: S.Manikumar
Bench: S.Manikumar, Subramonium Prasad
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 07.08.2018 CORAM: THE HONOURABLE MR.JUSTICE S.MANIKUMAR and THE HONOURABLE MR.JUSTICE SUBRAMONIUM PRASAD W.P.Nos.325 and 326 of 2018 and W.M.P.No.379 of 2018 1.M/s.SLO Industries Limited, Rep by its Managing Director, Mr.Anil Kumar Ojha, 447/265, 2nd Floor, Poonamallee High Road, Aminjikarai, Chennai-600029. 2.Mr.Anil Kumar Ojha, Managing Director, M/s.SLO Industries Limited, 447/265, 2nd Floor, Poonamallee High Road, Aminjikarai, Chennai-600029. 3.Mr.Arun Sharma, 54/D, Aspiran Garden, 2nd Street, Kilpauk, Chennai-600 010. 4.M/s.Aran Steels Private Ltd., Rep. by its Director Mr.Anil Kumar Ojha 447/265, poonamallee High Road, Aminijikarai, Chennai-600 029. .. Petitioners in both WPs Vs. 1.The Debts Recovery Tribunal - I, Chennai Rep. by its Registrar, 6th Floor, 770-A, Spencer Towers Anna Salai, Chennai 600 002. 2.The Corporation Bank, Rep. by the Asst. General Manager, Chennai-Mid Corporate Branch, Kellys Corner, 12, Ormes Road, PB No.113, Kilpauk, Chennai-600 010. .. Respondents in both WPs Prayer in W.P.No.325 of 2018: Writ Petition is filed under Article 226 of the Constitution of India, praying for issuance of a Writ of Certiorarified Mandamus, directing to quash the order dated 02.01.2018, passed in T.A.No.01 of 2017 by the learned 1st respondent Tribunal and consequently, direct the 1st respondent Tribunal to accept the written statement including the counter claim and proof affidavit of evidence, as filed by the petitioners, in accordance with the Recovery of Debts and Bankruptcy Act, 1993 and the Debt Recovery Tribunal (Procedure) Rules, 1993. Prayer in W.P.No.326 of 2018: Writ Petition is filed under Article 226 of the Constitution of India, praying for issuance of a Writ of Declaration, declaring Regulation 2(1)(i) and 3(2)(a) of the Debts Recovery Tribunal-I, Chennai Regulations, 2015 requiring counter claims to be filed separately in Form-1, as ultra vires the provisions of the Recovery of Debts and Bankruptcy Act, 1993 as well as the Debt Recovery Tribunal (Procedure) Rules, 1993. For Petitioners : Mr.K.Manoj Menon in both WPs For R1 : Mr.Venkatasamy Babu in both WPs COMMON ORDER
(Order of this Court was made by S.MANIKUMAR, J.) W.P.No.325 of 2018, has been filed for a Writ of Certiorarified Mandamus, directing to quash the order dated 02.01.2018, passed in T.A.No.01 of 2017 by the learned 1st respondent Tribunal and consequently, direct the 1st respondent Tribunal to accept the written statement including the counter claim and proof affidavit of evidence, as filed by the petitioners, in accordance with the Recovery of Debts and Bankruptcy Act, 1993 and the Debt Recovery Tribunal (Procedure) Rules, 1993.
2. W.P.No.326 of 2018, has been filed for a Writ of Declaration, declaring Regulation 2(1)(i) and 3(2)(a) of the Debts Recovery Tribunal-I, Chennai Regulations, 2015 requiring counter claims to be filed separately in Form-1, as ultra vires the provisions of the Recovery of Debts and Bankruptcy Act, 1993 as well as the Debt Recovery Tribunal (Procedure) Rules, 1993.
3. As writ petitions have been preferred on the same set of facts, submissions being common, they are taken up together and disposed of by means of this common order.
4. Short facts leading to the filing of these writ petitions are that, with regard to filing of counter claims Debts Recovery Tribunal - I, Chennai, first respondent herein, has framed Regulations under Section 22 of the RDB Act being the Regulation 2(1)(i) r/w Regulation 3(2) of the said Regulations, which the petitioners submit as ultra vires the powers of the Tribunal under the said Act. Under Section 36 of the RDB Act, Central Government have framed the Rules. The Regulation framed by the Tribunal, is contrary and ultra vires the RDB Act and Rules framed thereunder.
5. The second respondent herein/Corporation Bank, Chennai, has filed Original Application (T.A.No.01 of 2017), inter alia, against the writ petitioners herein, for recovery of amounts allegedly due and payable. On 19.09.2017, petitioners have filed their written statement including a counter claim, as against the second respondent, as provided for under Section 19(8), 19(9) and 19(10A) of the RDB Act r/w Rule 12 of the Debts Recovery Tribunal (Procedure) Rules, 1993 (Rules).
6. Petitioners have submitted that the Rules have been framed by the Central Government, in exercise of the powers under Section 36 of the RDB Act. On the amendment to Section 19 of the RDB Act, on 04.11.2016, the Central Government have also amended the Rules, in particular, Rule 12 of the Rules, dealing with filing of written statement. As per Section 36(3) of the RDB Act, the Rules so framed have to be laid before each House of Parliament.
7. Relevant provisions of the RDB Act, referred to by the petitioners are as follows:-
Section 19(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. Section 19(9):- A counter claim under sub section (8) shall have the same effect as a cross-suit so as to enable the Tribunal to pass a final order on the same application, both on the original claim and on the counter claim.
Section 19(10-A) Every application under sub section (3) or written statement of defendant under sub section (5) or claim of set-off under sub section (6) or a counter claim under sub section (8) by the defendant, or written statement by the applicant in reply to the counter claim, under sub section (10) or any other pleading whatsoever, shall be supported by an affidavit sworn in by the applicant or defendants verifying all the facts and pleadings, the statements pleading documents and other documentary evidence annexed to the application or written statement or reply to set-off or counter claim, as the case may be:
Provided that if there is any evidence of witness to be led by any party, the affidavits of such witnesses shall be filed simultaneously by the party with the application or written statement or replies filed under sub section (10-A).
Section 19(11):- Where a defendant sets up a counter-claim in the written statement and in reply to such claim the applicant contends that the claim thereby raised ought not to be disposed of by way of counter claim but in an independent action, the Tribunal shall decide such issue along with the claim of the applicant for recovery of the debt.
8. Rule 12 of Rules, was amended with effect from 04.11.2016. The relevant Sub-Rules are:-
(1) the Defendants may, within a period of thirty days from the date of service of summons, file two complete sets of written statement including claim for set-off or counter claim, if any, along with documents in a paper book form.
(2) A copy of the written statement filed under sub-rule (1) shall be served to the applicant.
(3) If the Defendant fails to file the written statement of hid defence, including claim for set-off or counter claim under sub-rule (1), if any, within the period of thirty days, the Presiding Officer may in exceptional cases and special circumstances to be recorded in writing, extend the period, by such further period not exceeding fifteen days.
(4) If the defendant have filed their claim for set-off or counter claim, the applicant shall file reply statement in answer to the claim for set-off or counter claim within a period of thirty days of filing of such claims.
(5) If the applicant fails to file his reply within the period of thirty days, the Presiding Officer may, in exceptional cases and special circumstances, to be recorded in writing, extend the period, by such period not exceeding fifteen days.
(6) The written statement of the defendant including claim for set-off or counter claim or any other pleading whatsoever by the defendant or the applicant, as the case may be, shall be supported by an affidavit sworn in by the defendant or the applicant or the witnesses, verifying all the facts and pleadings and other documents annexed and the affidavits of witnesses, to be led by defendant or the applicant shall be filed simultaneously with the written statement of the defendant or the reply of the applicant.
9. The petitioners have further submitted that the provisions of sub-sections (8), (9) & (11) of Section 19 of RDB Act are almost, "in pari materia" with Order VIII Rule 6A to 6C of CPC (dealing with the counter claim). However, Section 19(11) of RDB Act, prior to amendment on 04.11.2016, was identical to Order VIII Rule 6-C of C.P.C. which is extracted hereunder:-
Prior to 04.11.2016 After 01.11.2016 Where a defendant sets up a counter claim and the applicant contends that the claim thereby raised ought not to be disposed of by way of counter claim but in an independent action, the applicant may, at any time before issues are settled in relation to the counter claim, apply to the Tribunal for an order that such counter claim may be excluded, and the Tribunal may, on the hearing of such application, make such order as it thinks fit.
Where a defendant sets up a counter claim in the written statement and in reply to such claim the applicant contends that the claim thereby raised ought to be disposed of by way of counter claim but in an independent action, the Tribunal shall decide such issue along with the claim of the applicant for recovery of the debt.
10. On 19.09.2017, petitioners have filed written statement including a counter claim, in accordance with Section 19(8) of RDB Act r/w Rule 12(1) of the Rules and the same was taken on file by the Tribunal. Subsequently, on 19.12.2017, the second respondent has contended that the written statement including counter claim filed by the petitioners, is not in proper format. The Registrar, DRT-I, Chennai, first respondent herein, has made an enquiry about the format and the petitioners were informed that the counter claim has to be filed in the same format applicable to the Original Application filed before the Tribunal, namely, as per Form-I.
11. On 02.01.2018, when the Original Application was listed before the Tribunal, the Presiding Officer, inter alia, passed the following order:-
The Tribunal after referring to Rule 19(7) of RDDB & F1 Act, read with Order 8 Rule 6 (A)(4) CPC and stated that the counter claim as filed has no cause title in it and therefore directed that the counter claim be filed in a proper format. The order of the Tribunal not complied with.
12. Tribunal has observed that such format is prescribed under the Regulations framed by the Tribunal under Section 22 of the RDB Act. Section 22 of the Act reads thus:-
"The Tribunal and the Appellate Tribunal shall not be bounded by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908), but shall be guided by the principles of natural justice and, subject to the other provisions of this Act and of any rules, the Tribunal and the Appellate Tribunal shall have powers to regulate their own procedure including the places at which they shall have their sittings."
13. In exercise of the power conferred, the Tribunal/first respondent herein, has framed the Debts Recovery Tribunal-I, Chennai Regulations, 2015.
Regulation 2(1)(i):- 'pleading' includes an O.A., S.A., application filed under Section 31-A of the Act, appeal written statement, counter claim, replication/rejoinder and reply;
Regulation 3 deals with form of pleading and Regulation 3(2) deals with the manner in which the paper book has to be arranged. The format of the Index to the paper book is provided in Form 1 of the Regulations.
14. On the basis of such Regulations, Petitioners have been directed to file the written statement and counter claim in separate paper books, each of which has to be in the format namely, Original Application, as arranged in the manner provided for in Form-1 of Rules.
15. On 02.01.2018, on behalf of petitioners, the second petitioner signed the proof affidavit of evidence and produced the same before the Presiding Officer, for perusal and submitted that as the original documents had been collated and arranged, and the Registry of the DRT-I, Chennai, required them to be stitched in a book form and to file the same before the end of the day. However, as regards this, the Presiding Officer, has observed as follows:-
"Counter Proof Affidavit not filed. Ld Counsel for the Defendant had shown a few typed pages clipped and offered to file the same in the Court. The same is not received as it is not even stitched. Hence Counter Proof Affidavit is not filed. Proof Affidavit in the counter claim 1/2017 also not filed. However, it is stated that the Proof Affidavit has been included in the Counter Proof Affidavit itself."
16. The petitioners have submitted that the Tribunal/first respondent herein, has required that two proof affidavits have to be separately filed by the same witness, namely, a counter proof affidavit against the claim and a proof affidavit in support of the counter claim. Reference has been made to Regulation 19(3) of the Regulations, which reads as follows:-
"The parties may, after the completion of pleadings, file the evidence in support of its claim/defence by way of affidavit and the documents, if any with copies thereof to the other party."
17. According to the petitioners, based on the Regulation, Tribunal is insisting that counter claims be numbered separately, (as C.C.No.1 of 2017), as a separate action and not as part of the written statement and that the proof affidavit of the same witness be separately filed, one as counter proof affidavit to defend the claim made by the applicant bank and another as proof affidavit in support of the counter claim. According to the petitioners, Regulations 2(1)(i) r/w with 3(1)&(2), is contrary to and ultra vires of Section 19(8) of RDB Act and Rule 12(1) of the Rules. Directing the same witness, to adduce evidence by way of proof affidavits separately, for defence as stated in written statement and for the counter claim, is against Regulation 19(3) of Regulations and the abovesaid reasons, petitioners have prayed for the reliefs, stated supra.
18. On 08.01.2018, this court ordered notice through court and privately returnable by 18.01.2018. Upon receipt of notice, Mr.Venkatasamy Babu, learned senior panel counsel for Government of India, has filed Memo of Appearance for R1 and filed a counter affidavit.
19. The Registrar of DRT-I, Chennai, first respondent herein, has filed a counter affidavit stating inter alia that, the present writ petitions, challenging the Regulations of DRT-I, Chennai, are not maintainable, since the proceedings dated 19.12.2017 and 02.01.2018, which are termed as orders by the writ petitioners, are neither orders nor based on DRT regulations, but were based on Section 19(7) of Recovery of Debts and Bankruptcy Act (formerly RDDB & FI Act) read with Rule 8(6) A(4) of CPC. Thus, according to the Registrar, DRT-I, Chennai, when there is no nexus whatsoever between the proceedings dated 19.12.2017 and 02.01.2018 and DRT Regulations, the claim of the present writ petitioners that they are aggrieved by the Regulations framed by DRT-I, Chennai, and that the said Regulations shall be declared as ultra vires the provisions of RDB Act, and DRT Procedure Rules, are not maintainable and liable to be dismissed.
20. He further submitted that, insofar as the Regulations followed by DRT-I, Chennai are concerned, the same are commonly framed, by all the DRTs of Southern Region in the year 2015, and it is incorrect to say that DRT-I, Chennai alone had framed its own Regulations. The Registrar, DRT-I, Chennai, has denied all the averments made in the supporting affidavits, filed by the writ petitioners, as erroneous and therefore, he prayed for dismissal of these writ petitions.
21. Mr.K.Manoj Menon, learned counsel for the petitioners submitted that, from reading of Section 22 of the Act, it is clear that the power of the Tribunal, to regulate its procedure is subject to other provisions contained in the Act and Rules framed thereunder. Accordingly, any Regulations framed by the Tribunal in exercise of its power, under Section 22 of RDB Act, cannot be in conflict with or contrary to any provisions contained in the Act or the Rules framed thereunder. In the instant case, Regulations 2(1)(i) and 3(2)(a), are in direct conflict, to express provisions of Section 19 of the RDB Act, and Rule 12 of the Rules and therefore, it is liable to be declared ultra vires.
22. Learned counsel for the petitioners further contended that the Tribunal's requirement based on the Regulation 3(2) of the Regulations, to direct that the counter claim, should be filed separately as per Form-1, is ultra vires the powers of the Tribunal and any power for matters provided in the Rules can be exercised only by Central Government, under Section 36 of the RDB Act, 1993 r/w DRT (Procedure) Rules and not by the Tribunal. The Central Government have framed the Rules and set out the procedure for filing of written statement in Rule 12 of the said Rules, and therefore it is contended that the Tribunal, has no authority or power, in the guise of regulating its procedure, to frame the Regulations, contrary to or supplanting such Rules.
23. He further contended that the Tribunal's Regulations, are not mere change of the Rules that have been framed by the Central Government, but also change the manner of adducing of evidence, before the Tribunal. The Tribunal, requiring/directing filing of separate proof affidavit of evidence of the same witness, one in support of the written statement and another in support of the counter claim, is erroneous, when the mandate of the Act and Rules are that the written statement including counter claim is one action, and not separate actions.
24. He further submitted that the Tribunal has failed to notice the amendment brought about to Section 19(11) of the RDB Act, with effect from 04.11.2016. Sections 19(8), (9) and (10) of the RDB Act are pari materia with Order VIII Rule 6A of C.P.C., which though noticed by the Tribunal, have not been properly applied, but insisted for filing two separate pleadings, one as written statement and another as counter claim.
25. Learned counsel for the petitioners further submitted that the Tribunal has erred in requiring compliance, in accordance with Order 8 Rule 6(A)(4) of CPC, which provision has not been incorporated in Section 19 of the RDB Act, when other provisions of Order 8 Rule 6 A have been incorporated. According to him, the Legislative intent is to try both the claim of an applicant bank and the counter claims of defendants, in the same proceeding, as if it were a suit, and cross suit and to be disposed of, in the same trial.
26. Learned counsel for the petitioners further submitted that the Regulations which are inconsistent with the substantive provisions of the RDB Act or Rules, and that the effect of negating them, to such extent, are be held to be ultra vires, he also submitted that procedural laws are required to achieve the ends of justice and must be read to ensure compliance with the basic rule of law, rather than to frustrate the same.
27. He further submitted that the provisions of Order XX Rule 19 of CPC dealing with decrees clearly provide that only one decree is passed, both with regard to claim, and counter claim, and not two separate decrees.
28. Learned counsel for the petitioners further submitted that the Tribunal's insistence of filing of counter claim separately, in the form of the original application as per Form-1, is contrary to Section 19(8) of the RDB Act and Rule 12(1) of the Rules and that even Section 19(11) of the RDB Act, as amended, provides that a counter claim can be disposed of, as an independent action only when the applicant bank contends that the claim of the defendants, ought not to be disposed of, by way of counter claim but in an independent action, the Tribunal, shall be requested, at such stage, to decide such an issue along with the claim of the applicant, but to make a Regulation which treats every counter claim, as an independent action, even at the time of filing the written statement including the counter claim would render Section 19(11) of the Act otiose, and the same is contrary to the Act and Rules.
29. On the basis of the counter filed by the Registrar, DRT-1, Chennai, per contra, Mr.Venkatasamy Babu, learned Senior Panel counsel for Government of India, made submissions and prayed for dismissal of the writ petitions.
30. Heard the learned counsel for the parties and perused all the materials available on record.
31. Proceedings of the Debts Recovery Tribunal - I, Chennai, dated 02.01.2018, made in T.A.No.1 of 2017, is as follows:-
"PROCEEDINGS BEFORE THE HON'BLE P.O., DRT-I ON 2.1.2018 T.A. 1/2017 2.1.2018 Jr Counsel for the Applicant Bank and Counsel for the Defendants present. Passed over at the request of Jr Counsel, as it was represented that Senior is on his way.
Later when called at 3.00 p.m., Jr Counsel for the Applicant Bank and Counsel for the Defendants present. Defendants Counsel sought a passover in the morning that Counter Proof Affidavit in OA and PA in the Counter claim will be filed.
Counter Proof Affidavit not filed. Ld Counsel for the Defendants had shown a few typed pages clipped and offered to file the same in the court. The same is not received as it is not even stitched. Hence Counter Proof Affidavit is not filed. Proof Affidavit in the counter claim 1/2017 also not filed. However, it is stated that the Proof Affidavit has been included in the Counter Proof Affidavit itself. Thus Proof Affidavit in Counter claim also not filed. The Tribunal after referring to Rule 19(7) of RDDB&FI Act, read with Order 8 Rule 6(A)(4) CPC and stated that the counter claim as filed has not cause title in it and therefore directed that the counter claim be filed in a proper format. The order of the Tribunal not complied with.
Matter adjourned to 8.1.2018, at request of both sides."
32. Regulations 2(1)(i) and 3(2)(a) of the Debts Recovery Tribunal-I, Chennai Regulations, 2015, are extracted hereunder:-
"Regulation 2(1)(i):- 'pleading' includes an O.A., S.A., application filed under Section 31-A of the Act, appeal written statement, counter claim, replication/rejoinder and reply;
Regulation 3 deals with form of pleading and Regulation 3(2) deals with the manner in which the paper book has to be arranged. The format of the Index to the paper book is provided in Form 1 of the Regulations."
33. DRT-I, Chennai, Regulations 2015, have been framed in exercise of the powers conferred by Sub Section (1) of Section 22 of the Recovery of Debts due Bank and Financial Institutions Act, 1993, which have come into force from the date of its notification, by the Presiding Officer, DRT-I, Chennai, (i.e) 1st August 2015.
34. Section 2(1)(i) of the Regulations defines, "pleadings includes an Original Application, SA, application filed under Section 31-A of the Act, appeal, written statement, counter claim, replication/rejoinder and reply. As per Chapter II of the Regulations, "Pleadings" are defined, form of pleadings etc., the procedure to be followed, in so far as pleadings includes counter claim or application etc, the paper book shall be arranged in the following manner that pleadings in respect of counter claim as well:
"(a) Index in Form-1 of these Regulations,
(b) List of dates and events,
(c) Pleadings,
(d) I.A., if any,
(e) Affidavit,
(f) Index of annexure/documents,
(g) Original/attested copies of documents,
(h) Power of Attorney, Board Resolution/letter of authorisation, if any,
(i) Vakalatnama."
35. Admittedly, the petitioners have filed, written statement as contemplated, including a counter claim, after the commencement of the Rules, i.e. 04.11.2016, along with the documents.
36. Rule 12 of the Rules, framed under Section 36 of the Recovery of Debts Due to Bank and Financial Institutions Act, 1993, states that, the defendant may, within a period of thirty days from the date of the service of notice, file two complete sets of written statement including claim for set off or counter claim, if any, along with documents in a paper book form.
37. Rule 12, the amended Rules, takes care of the procedure to be followed in the matter of filing of written statement along with claim for set off or claim petition if any, in paper book form. As per amended Rule 12 of the Rules, which have come into force from 04.11.2016, suffice to file complete set of written statement, including claim for set off claim form if any, along with documents in paper books.
38. As rightly pointed out by Mr.K.Manoj Menon, learned counsel for the petitioners, statutory rules, have a primacy over the Regulations framed by the Tribunals. It is also the submission that other two Debts Recovery Tribunals located at Chennai, accept filing of a single written statement, including a claim for set off and counter claim, along with one paper book, without insisting separate proof affidavit for the written statement and counter claim.
39. Insofar as the Regulations followed by DRT-I, Chennai are concerned, the same are stated to be commonly framed by all the DRTs of Southern Region in the year 2015. Though, Regulations framed by all Tribunals may be similar, but the procedure followed by the Tribunals at Chennai, is stated to be different.
40. Written statement, counter claim or set off, if any along with a single paper book, and a common proof affidavit, combining all together would be more convenient, for reference, during the course of hearing instead of referring to written statement, separate counter claim and a separate paper book, to the defence/counter claim.
41. Common evidence has to be adduced, both in defence against the claim, and counter claim, if any, to be made by the defendants cases. In such circumstances, it is suffice to have a common proof affidavit. It would be appropriate, if there is common pleadings/paper book/common proof affidavit, for reference.
42. Bare reading of the Rule 12 of the Rules, which has come into force on 04.11.2016, is also indicative that suffice for the defendant to file set off, including claim or counter claim, if any, along with documents in a paper book form.
43. For all the reasons, proceedings dated 02.01.2018, passed in T.A.No.01 of 2017, on the file of the DRT-I, Chennai, directing the defendants to file separate counter claim/proof affidavit, are set aside. Tribunal is directed to take on record, the pleadings and proof affidavit submitted by the petitioners, without insisting for filing separate paper book, one for defence of the claim and another for counter claim, and separate affidavit and proceed with the merits of the case.
44. With the above directions, writ petitions are accordingly allowed. However, there shall be no order as to costs. Consequently, the connected writ miscellaneous petition is closed.
[S.M.K., J.] [S.P., J.] 07.08.2018 Index: Yes Internet: Yes dm To
1.The Debts Recovery Tribunal - I, Chennai Rep. by its Registrar, 6th Floor, 770-A, Spencer Towers Anna Salai, Chennai 600 002.
2.The Corporation Bank, Rep. by the Asst. General Manager, Chennai-Mid Corporate Branch, Kellys Corner, 12, Ormes Road, PB No.113, Kilpauk, Chennai-600 010.
S.MANIKUMAR, J.
AND SUBRAMONIUM PRASAD, J.
dm W.P.Nos.325 and 326 of 2018 and W.M.P.No.379 of 2018 07.08.2018