Madhya Pradesh High Court
Kishorilal Loomba And Sons And Ors. vs Debts Recovery Tribunal And Anr. on 18 October, 2000
Equivalent citations: [2003]115COMPCAS572(MP)
Author: Arun Mishra
Bench: Arun Mishra
JUDGMENT Bhawani Singh, C.J.
1. This writ petition is directed against order of the Debts Recovery Tribunal, Jabalpur dated July 19, 2000 (annexure P4) passed in T. A. No. 36 of 1998 by which the Tribunal has rejected the application of petitioners preferred under the proviso to Sub-rule (6) of Rule 12 of the Debts Recovery Tribunal (Procedure) Rules, 1994.
2. Civil Suit No. 8A of 1996 for recovery of Rs. 78,00,822,75 with interest pendente lite at the future rate of 18.75 per cent. per annum with quarterly rest was instituted by the Bank of India (respondent No. 2 hereafter) against the petitioners in the Court of the First Additional District Judge, Raisen. Following the constitution of the Debts Recovery Tribunal, Jabalpur under Section 31 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereafter the Act), the suit was transferred to the Tribunal before evidence could be recorded by the civil court. After receipt of record, before issuance of summons to the defendants the Tribunal received evidence in the form of affidavit on behalf of the bank. This was done behind the petitioners.
3. After receiving summons, the petitioners entered appearance and filed a reply to the T. A, They also filed an application under the second proviso to Sub-rule (6) of Rule 12 of the DRT (Procedure) Rules, 1994, praying that since they were not accepting the contents of the affidavit, the same be ignored and not read into evidence. This prayer the Tribunal has rejected holding that provisions of the Act and the Rules provide for taking evidence by way of affidavits.
4. Section 22 of the Act permits the Tribunal/Appellate Tribunal to regulate their own procedure. In exercise of this power, regulations known as Debts Recovery Tribunals Regulation of Practice 1993, have been framed. Chapter XI of these Regulations deals with examination of witnesses in attendance for cross-examination. Regulations 31 and 32 provide that :
"31. Examination of witnesses and the issue of commissions.--
(a) Evidence shall be on affidavit.
(b) Provisions of Section 22 Sub-section (2) of the Act and the relevant provisions of the Code of Civil Procedure shall mutatis mutandis apply in the matters of summoning and enforcing attendance of any person as witness and for examining him on oath and issuing a commission for the examination of such witnesses.
32. Attendance of deponent for cross-examination.--The Tribunal may, on the application of either party assigning reasons and after hearing, order the attendance of deponent who has sworn an affidavit for the cross-examination or may reject such application."
5. According to these Regulations, evidence before the Tribunal is by affidavits and the Tribunal has been authorised to call the deponent for cross-examination or reject such a prayer if ever made. It is stated that Regulations are subject to the provisions of the Act and the Rules including Section 22 (1) and (2) of the Act and Rule 12(6).
6. The contention of the petitioner is that regulations 31 and 32 of the Regulations are in excess of the authority conferred by Section 22 (1) and (2) of the Act. They are in conflict with Rule 12(6), particularly to the proviso to Sub-rule (6) of Rule 12. According to Sub-section (2) of Section 22, authority to refuse cross-examination of a person swearing an affidavit and to direct evidence by affidavit only, is not only against the principles of natural justice but in excess of and in conflict with Sub-section (2) of 22 of the Act also. Sub-section (2) of Section 22 vests in the Tribunal powers of a civil court under the Civil Procedure Code, 1908, for purposes mentioned therein which include discretion to the court not to receive evidence on affidavit and if attendance of the depot nent for cross-examination is desired by a party, allow the same. At the same time, Sub-rule (6) of Rule 12 enjoins upon the Tribunal a duty to record reasons if it desires a fact to be proved by affidavit or that the affidavit of any witness be read as evidence. The proviso to Sub-rule (6) of Rule 12 requires the Tribunal to direct attendance in court for cross-examination if desired by the opposite, party and in that event, evidence of such witness shall not be given by affidavit. Regulations 31 and 32 of the Regulations are in contravention of and in conflict with Section 22 of the Act and Rule 12(6) of the Rules, since the Tribunal has jurisdiction to make regulations subject to the provisions of the Act, the petitioners contend. It is also submitted that proceedings before the Tribunal are in the nature of a civil suit, therefore, procedure envisaged under the Code of Civil Procedure, 1908, ought to be followed. Affidavit evidence is no evidence under Section 3 of the Evidence Act, 1872. Therefore, unless it is admitted by the other side, it deserves no consideration. Consequently, the procedure followed by the Tribunal does not envisage arriving at justice between the parties and provisions of regulations 31 and 32 deserve to be declared ultra vires the provisions of the Act. These are some of the material grievances raised by the petitioners in this petition.
7. In the Statement of Objects and Reasons placed beforeiParliament in April, 1993, justification for enacting this law is that banks and financial institutions were experiencing considerable difficulties in recovering loans and enforce ment of securities charged to them. The existing procedure, for recovery of debts due to them had blocked a significant portion of their funds in unpro ductive assets, the value of which deteriorated with the passage of time. The committee headed by Shri M. Narasimhan considered setting up of special Tribunals with special powers for adjudications of such matters and speedy recovery as critical to the successful implementation of the financial sector reforms which was not possible unless suitable mechanism to recover blocked moneys in unproductive assets were realised. A large number of civil cases involving crores of rupees were pending before civil courts where the proce dure for recovery of dues due to the banks and financial institutions was lengthy and cumbersome.
8. Accordingly, in the backdrop of the aforesaid situation, the Ordinance was promulgated on June 24, 1993. Subsequently, the Bill was introduced in the Parliament repealing the Ordinance and enacting the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The preamble to the Act provides for the establishment of Tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions and for matters connected therewith or incidental thereto. Therefore, the policy and purpose of legislation gathered from the preamble suggest in clear terms that the object of legislation is a departure from the existing mode of recovering debts due to banks and financial institutions to avoid delay in procedures and the recoveries involving claims of higher values.
9. Chapter IV of the Act provides for procedure of Tribunals. It starts from Section 19 under which a claim has to be filed through application to the Tribunal competent to adjudicate the matter. The application has to be in a form and accompanied by such documents or other evidence as may be prescribed. After receipt of the application, summonses are issued to the defendants to show cause within thirty days or within an extended period why the relief prayed for should not be granted. It is after hearing the applicant and defendants that the Tribunal may pass such order on the application as it thinks fit to meet the ends of justice. The Tribunal is competent to pass interim orders under Sub-section (6) of Section 19.
10. The question is whether an opportunity of being heard contemplated in Sub-section (4) of Section 19 would mean embarking upon the normal procedures of examination-in-chief and cross-examination. Learned counsel for the petitioners contends that this procedure should be resorted to under the proviso to Sub-rule (6) of Rule 12 of the Debts Recovery Tribunal (Procedure) Rules, 1993, when a claim to that effect is raised by the defendant in the application. We do not appreciate this contention. A harmonious construction of various provisions of the Act, Rules and the Regulations suggests that the Tribunal and the Appellate Tribunal are not bound by the procedure laid down by the Code of Civil Procedure 1908 (5 of 1908). It shall be guided by principles of natural justice of which examination-in-chief and cross-examination are not always the essential parts.
11. The Tribunal and the Appellate Tribunal have been empowered to regulate their own procedure, of course, subject to other provisions of the Act and the Rules. With this background, the contention that where a claim for summoning witness(es) is raised, the Tribunal has to proceed under Sub-section (2) of Section 22 of the Act cannot be accepted. It may be realised that Sub-section (2) of Section 22 will apply where Tribunal decides to summon any person for examination on oath and it mentions procedure for receiving evidence on affidavit, etc., but it would not override the provision of Sub-section (1) of Section 22. In case Sub-section (2) of Section 22 is given prominence over Sub-section (1) of Section 22, the object of vesting Tribunals with powers mentioned in Sub-section (1) of Section 22 would stand annihilated, defeating the purpose of the provisions and intention of the Legislature. Further, the result would be that the Tribunals shall have to follow dilatory procedures available under the Code of Civil Procedure 1908 which the Legislature intended to avoid by enacting the Act of 1993. Therefore, the normal procedure is to receive evidence by affidavit(s) and it is only for reasons to be recorded that the Tribunals may summon the deponent for cross-examination. Consequently, it can be said that Sub-section (4) of Section 19 does not contemplate oral evidence. It is only in exceptional or in special circumstances looking to the nature of the facts and the Tribunal's being satisfied on pleas being raised before it that oral evidence/cross-examination may be resorted to and provisions of Code of Civil Procedure 1908 have limited application in areas the Act prescribes and where some of its principles may be found helpful which are not inconsistent with the Act and the Rules. A similar view has been taken by this court in the decisions in W. P. No. 2694 of 2000 Kishorilal Loomba Cold Retreads Pvt. Ltd. v. Bank of India dated July 21, 2000, W. P. No. 4475 of 2000, Shree Santoshi Pipe Works v. Debts Recovery Tribunal dated August 9, 2000, W. P. No. 4764 of 2000 Maheshwari Agencies v. Debts Recovery Tribunal dated August 19, 2000 and W. P. No. 4775 of 2000 Omprakash Mantri v. Debts Recovery Tribunal dated August 19, 2000.
12. In the aforesaid background, the statement that regulations 31 and 32 of the Regulations of Practice 1998 are in excess of the authority under Section 22 of the Act is not sustainable. Construing them in the manner submitted by the petitioners would make the purpose of the Act and the scheme redundant. Rather a harmonious and purposeful meaning has to be assigned to the provisions of the Act, Rules and Regulations to achieve the basic purpose of the legislation.
13. We find no merit in the challenge, therefore, the petition is dismissed.