Kerala High Court
Glenny, C.J. vs The Catholic Syrian Bank Ltd. on 27 March, 2003
Equivalent citations: AIR2003KER373, III(2003)BC454, [2003]117COMPCAS227(KER), 2003(3)CTC111, 2003(2)KLT973, [2003]47SCL344(KER)
Author: Kurian Joseph
Bench: Kurian Joseph
ORDER Jawahar Lal Gupta, C.J.
1. Do the provisions of Recovery of Debts Due to Banks and Financial Institutions Act, 1993, debar the Civil Court from setting aside an ex parte decree passed by it?. This is the short question that arises in this appeal. In view of the conflict in judicial opinion, the Division Bench has referred this case to a Full Bench. A few facts as relevant for the decision of this case may be briefly noticed.
2. On May 11, 1994 the appellant took a loan of an amount for Rs. 3,34,000 from the respondent bank. He failed to repay. On October 27, 1998 the bank filed a suit for the recovery of Rs. 8,61,530 with interest. The suit was filed in the Court of the Sub Judge at Thrissur. On June 16, 2000 the Court passed an ex parte decree. The bank's claim was allowed with interest at the rate of 18 per cent per annum from October 27, 1988 till realization. The bank was also held entitled to its costs. The decree was for an amount of more than Rs. 11 lakhs, On August 28, 2000 the bank filed a petition, viz. O.A.No.258 of 2000 before the Debts Recovery Tribunal, Eranakulam, for the recovery of the amount. After more than six months, on March 23, 2001, the appellant filed an Interlocutory Application No. 1391 of 2001 before the Sub Court, Thrissur under Order 9, Rule 13, C.P.C. He prayed that the ex parte decree be set aside. On October 22, 2001 the trial Court dismissed the application. It held that in view of the provisions of Sections 18, 22(g) and 31 of the Act, it had no jurisdiction to entertain the application. On February 7, 2002 the appellant filed the present appeal. The matter was posted before a Division Bench. On August 13, 2002 the case was referred to a Full Bench. Thus, the matter has been placed before this Bench.
3. Ms. Seemanthini, Learned Counsel for the appellant contended that the Debts Recovery Tribunal was established for the State of Kerala on November 4, 1996. The suit was field almost two years later. The claim in the suit was for an amount of less than Rs. 10 lakhs. Consequently the suit did not fall within the jurisdiction of the Tribunal. Thus, the Civil Court had entertained it. On February 10, 1999 the trial Court had passed an order for ex parte proceedings. Ultimately the ex parte decree was passed on June 16, 2000. Since the suit had been rightly instituted before the Civil Court and the ex parte decree had been passed after the appointed day, only the Court, which has tried the suit could have set aside the ex parte decree. On the other hand, Mr. Varghese Kuriakose, learned Counsel for the respondent - bank contended that the Decree passed by the Civil Court was for more than Rs. 11 lakhs. A claim for such an amount was beyond the jurisdiction of the civil Court. In view of the provisions of Sections 18, 22(g) and 31 of the Act, the petitions for execution or for the setting aside of the decree, could be filed before the Tribunal only. On this basis, the Counsel contended that the order passed by the learned trial Court is absolutely legal and valid. Learned Counsel for both sides placed reliance on various decisions. These shall be noticed at the appropriate stage.
4. In view of the contentions of the counsel, the short question that arises for consideration is: Did the Court err in dismissing the application for setting aside the ex parte decree?
5. At the outset, the historical antecedents of the Act may be briefly noticed. A Committee of Financial System was set up by the Government of India under the Chairmanship of Mr. M. Narasimhan, This Committee had noticed that the "Banks and Financial Institutions at present face considerable difficulties in recovering the dues from the clients and enforcement of security charged to them due to the delays in the legal processes. A significant portion of the funds of the Banks and Financial Institutions is, thus, blocked in unproductive assets, the value of which keep deteriorating with the passage of time ...... The question of speeding up the process of recovery was examined in great detail by a Committee set-up by the Government under the Chairmanship of late Shri Tiwari. The Committee recommended inter alia the setting up of Special Tribunals which could expedite the recovery process." Presumably, in pursuance of the observations of the Committee and in view of the fact that huge amounts of public money were lying locked up in litigation, a Bill was introduced in the Parliament "to provide for the establishment of Tribunals and Appellate Tribunals for expeditious adjudication and recovery of debts due to Banks and Financial Institutions". During the pendency of the Bill, the President issued the "Recovery of Debts Due to Banks and Financial Institutions Ordinance" on June 24, 1993. Ultimately, the Act was promulgated. Certain amendments have also been made.
6. The Act is divided into six chapters. Chapter I, Sections 1 and 2, are preliminary in nature. These, provide for the extent of application of the Act and define various terms and expressions. Where the amount of debt is less that Rs. 10 lakhs, the provisions of the Act do not apply. Chapter II, Sections 3 to 16 provide for the establishment of the Tribunal, appellate Tribunal and matters ancillary thereto. Chapter III, Sections 17 and 18, delineate the jurisdiction, the powers and the authority of the Tribunal. It also provides for exclusion of jurisdiction of Courts except the Supreme Court and the High Court in relation to the matters specified in Section 17. Chapter IV, Sections 19 to 24 lay down the procedure that has to be followed by the Tribunal. Chapter V, Sections 25 to 30 provide for the recovery of debt as determined by the Tribunal, Chapter VI, Sections 31 to 37, contain miscellaneous provisions. It inter alia provides for the transfer of the pending cases to the Tribunals and the overriding effect of the Act. Section 36 confers power on the Central Government to make rules,
7. A perusal of the provisions of the Act shows that the Central Government has been empowered to establish the Tribunals for the expeditious adjudication and recovery of debts due to Bank and Financial Institutions. It can by notification establish one or more Tribunals and specify the area within which each of the Tribunals would exercise jurisdiction. Only a person who is or has been or is qualified to be a District Judge, can be appointed as the Presiding Officer of the Tribunal. He shall hold office for a term of five years or until he attains the age of 60 years, whichever is earlier. Similarly, the Central Government can establish one or more appellate Tribunals and specify the areas of their jurisdiction.
8. Under Section 17, the Tribunal is empowered and authorized "to entertain and decide applications from the Banks and Financial Institutions for recovery of debts.....," Similarly, the Appellate Tribunal has been vested with the jurisdiction and power to entertain and decide appeals. The jurisdiction of the Civil Courts except the High Court and the Supreme Court has been excluded in respect of the matter regarding which the power of adjudication has been vested in the Tribunal. The application has to be filed before a Tribunal within the local limits of whose jurisdiction the defendant ordinarily resides or carries on business or works for gain or the cause of action wholly or in part arises. The Tribunal is required to issue summons requiring the defendant to show cause within 30 days of the service of the summons as to why the relief as prayed for should not be granted. The Tribunal can "after giving the applicant and the defendant an opportunity of being heard, pass such orders on the application as it thinks fit to meet the ends of justice". Thereafter, even procedure for recovery etc. has also been laid down. The aggrieved party is entitled to file an appeal. But a substantial part of the amount found due has to be deposited. However, if good reason is shown the Tribunal has the power to reduce the amount. The Tribunal as well as the Appellate Tribunal have to follow the principles of natural justice. These have been vested with powers of a Civil Court in the matter of summoning and enforcing the attendance of any person, or the discovery and production of documents. They can also receive evidence on affidavits, issue commissions for the examination of witnesses or documents, review the decisions or dismiss the application for default or decide the case ex parte. The mode of recovery of debts has also been laid down. Provisions of the Limitation Act apply to the applications to be submitted to the Tribunal.
9. It is, thus, clear that the Tribunal as constituted under the Act is not merely administrative. It is a part of the machinery for adjudication of disputes. It can be established regionally or locally. The procedure to the followed by the Tribunal is 'adversary' and not 'inquisitorial'. The Presiding Officer is a person who has either held or is holding or is qualified to hold a high judicial office. He is trained in law. The procedure to be followed by the Tribunal is simple, clear and uncomplicated. It is intended to provide a simpler, speedier and cheaper remedy than the ordinary Courts. The process should not be slow and costly. It is not 'formalistic'. It is not unduly 'conservative, rigid and technical'. The Tribunal not bound by the strict rules of evidence or the provisions of the Code of Civil Procedure. Yet, the procedure is calculated to ensure a just and fair opportunity to the parties. The hearing is open and judicial. The Tribunal can make final and legally enforceable decisions.
10. The Tribunal is, thus, constituted under a Statute. It is invested with judicial functions. It has all the trappings of a Court.
11. The Indian mind has so far been tuned to the archaic and cumbersome provisions of the Civil Procedure Code and the Evidence Act. Thus, the litigants have been looking at the Civil Courts as the main repositories of judicial power. The people have almost come to believe that the goddess of Justice sits in the Civil Court only. However, the experience has shown that proceedings before Civil Courts take too long. On account of the lengthy procedure, delay occurs. It can be avoided. There is an urgent need to expedite the proceedings. The Parliament has recognized the fact that delay cannot be countenanced. It is precisely with this object in view that the Constitution was amended to provide for the setting up of Tribunals. Various Tribunals have been actually set up. The 1993 Act too is a step in that direction. There are bound to be teething troubles. Some doubts are bound to arise. However, there is no cause for despair. In this context, the words of Prof. Wade in his treatise on 'Administrative Law' are relevant. He has said that:
"Tribunals are subject to a Law of Evolution which fosters diversity of species. Each one is devised for the purpose of some particular Statute and is, therefore, so to speak, tailor-made."
So is the present Statute. It is not old. It is subject to the Law of Evolution. In fact, it is still going through the process. However, the experience so far has shown that it is tailor-made for the recovery of public dues. It provides a simple but effective and speedier remedy. The Courts have to, through the process of interpretation, give it meaning and content so that the declared objective of expeditiously recovering the public dues it achieved and not defeated,
12. It is in this background that the question as posed above has to be considered.
13. The Act was promulgated on August 27, 1993. However, it is the admitted position that the Tribunal for the State of Kerala was constituted on November 4, 1996. Thus, for the purpose of the present case, November 4, 1996 shall be the 'appointed day' as contemplated under Section 2(c) of the Act. Under Section 2(g), debt has been defined to include interest. Debt is the amount "due from any person ...... payable under a decree or order of any Civil Court ..... subsisting ...... and legally recoverable on the date of application". By virtue of Section 17, the Tribunal alone has the jurisdiction for recovery of debts ......" Thus, it is clear that even the amount due under a Decree ex parte or otherwise, passed by the Civil Court is a 'debt' due to the financial institution including a bank. Still further, under Section 19, an application "to recover any debt from any person" can be filed before the Tribunal. The claim may be based on an agreement or a decree.
14. Ms. Seemanthini contended that the application for setting aside the ex parte decree could not be filed before the Tribunal. The suit had been instituted after the appointed day before the Civil Court. Thus, only the Civil Court could have the jurisdiction to decide the application.
15. This contention cannot be accepted. It is undoubtedly true that under the general law, the Court, which passes a ex parte Decree alone can set it aside. However, it deserves notice that under Section 17(1) of the Act, whenever the amount in dispute is Rs. 10 lakhs or more, the Tribunal alone has the jurisdiction " to entertain and decide" it. Still further, under Section 18, the jurisdiction of the Civil Court has been completely barred. The Act specifically provides that from the appointed day no Court or authority shall be entitled to exercise any jurisdiction in relation to the recovery of debts due to banks and financial institutions. The power of the Supreme Court and the High Courts alone has been preserved. The effect is that the Civil Court cannot entertain any application, which directly or indirectly relates to the recovery of debt of Rs. 10 lakhs or more. This is a clear pointer towards the legislative intent. Clearly, the ouster of the jurisdiction of the Civil court is complete and comprehensive.
16. Thus, whenever an application has to be filed for the recovery of any debt, and the amount is Rs. 10 lakhs or more, it can be filed only before the Tribunal. The 'debt', as defined under the Act, can even arise out of a Decree passed by the Civil Court. The mode of recovery is only by way of an application before the Tribunal. Not by way of a petition for execution before the Civil Court. Thus, if an application for the recovery of the amount found due by the Civil Court can be filed before the Tribunal only, there appears to be no special reason for allowing any other application to be presented before the Civil Court. Why have parallel proceedings before two forums? Would it be conducive to any Public or Private Interest? Would it result in avoidable complications and delay? The answer can only be in the negative. Thus, it appears that an application for setting aside a Decree, ex parte or otherwise, can be filed only before the Tribunal and not before the Civil Court. The only condition in view of Section 1(4) is that the amount should not be less than Rs. 10 lakhs.
17. There is another aspect of the matter. Section 31 of the Act provides for the transfer of even pending cases. The obvious intention is that even in cases where the Civil Court has already taken seizin of the case, it cannot proceed any further. The matter has to be transferred to the Tribunal.
18. Ms. Seemanthini contended that Section 31 postulates three conditions. Firstly, the suit or proceeding should be pending before the establishment of the Tribunal. Secondly, the cause of action on which the suit or proceeding is based should be in respect of an amount exceeding Rs. 10 lakhs. Thirdly, an application for the setting aside of an ex parte Decree under Order 9, Rule 13 is not a suit. On these premises, she submitted that the applications could not have been filed before the Tribunal.
19. The contention is apparently attractive. However, Section 31 has to be read in the context of the other provisions. As already noticed, under Section 17 the jurisdiction has been conferred exclusively on the Tribunal. Section 18 ousts the right of the Civil Court to try any matter relating to the recovery of an amount of Rs. 10 lakhs or more. Thus, it cannot be said that once the Civil Court has passed the Decree, the subsequent proceedings also shall be within its jurisdiction. This would not be in conformity with the Act. It appears clear to us that even when an application for setting aside an ex parte Decree has to be filed, it would be a 'proceeding' within the meaning of Section 31. It would lie exclusively within the jurisdiction of the Tribunal and not the Civil Court. Any other interpretation would do violence to the plain language of the statute and shall defeat the declared objective of the legislation.
20. Learned Counsel for the appellant was at pains to point out that the words' before the establishment of the tribunal' cannot be ignored. She is undoubtedly right. However, text has to be read in the context. The only meaning of these words is that if any proceeding is pending before the establishment of the Tribunal, it shall be transferred. If it has to be initiated after the establishment of the Tribunal, it shall not lie before the Civil Court. Only the Tribunal shall be the competent forum.
21. Another fact, which deserves mention, is that the respondent-Bank has filed O.A.No. 258 of 2000 before the Tribunal at Ernakulam. It is for the recovery of the amount as found due by the Civil Court. The Tribunal shall have to examine it in accordance with the provisions of the Act. However, if the contention as raised by the counsel for the appellant is accepted, the Tribunal and the Civil Court shall conduct parallel proceedings. Such a course of action shall not promote anybody's interest. It will, in fact, defeat the object of the Act.
22. Ms. Seemanthini contended that the application filed by the bank could only be for the execution of the Decree already passed by the Civil Court. Thus, it would not fall within the ambit of Section 19 of the Act. Is it so?
23. The contention cannot be accepted. As already notice, 'debt' under the Act includes an amount due under a Decree passed by the Civil Court. Under Section 19, a bank can institute an application to recover any debt from a person. Thus, even an application for the recovery of an amount as due under a Decree passed by the Civil Court falls within the ambit of Section 19. The statute does not really make any distinction between an application for recovery or execution. The aim and object is to secure the public dues. It is to recover the money. Still further, the Tribunal has to decide the application "after giving the applicant and the defendant an opportunity of being heard". It can pass an order "on the application as it thinks fit to meet the ends of justice". Still further, under Section 19(22), the Presiding Officer can "issue a certificate under his signature..... to the Recovery Officer for recovery of the amount of debt specified in the certificate". Thus, the provision embodies a simple but complete and comprehensive procedure that covers everything from the beginning to the end. Then the aggrieved party has a right to file an appeal against the order under Section 20. In our view, even in a case where the Decree has been passed by the Civil Court for an amount of Rs. 10 lakhs or more, the appeal shall lie before the Appellate Tribunal. However, deposit as contemplated under Section 21 has to be made before the appeal can be entertained. It is in view of this position that the Bank appears to have actually filed the O.A.No. 258 of 2000 before the Tribunal at Ernakulam. The action of the Bank was in strict conformity with the provisions of the Act. It is not shown to be contrary to any provision of the statute. Thus, the contention as raised by the learned counsel for the appellant is rejected.
24. Ms. Seemanthini contended that the decree having been passed by the Civil Court, the tribunal shall have no power to set it aside.
25. This contention cannot be accepted. It is undoubtedly true that under Section 22 the tribunal is not bound to follow the provisions of the Code of Civil Procedure. But the parliament has given it the power to devise its own procedure. Such a procedure has to be in conformity with the principles of natural justice. Still further, it has the power of a Civil Court in respect of the matters specified in Sub-clauses (a) to (h) of Clause (2). This includes the power to set aside an ex parte order. It is true that in Sub-clause (g), the expression is "setting aside any order........passed by it ex parte." Since the ex parte Decree had been passed by the Civil Court, it can legitimately be contended that the provisions of Section 22(2)(g) are not, strictly speaking, applicable. However, in this situation it deserves mention that the tribunal would be entitled to evolve any fair procedure, which may conform to the principles of natural justice. If it finds that the appellant had not been duly served, the Tribunal shall be entitled to set aside the ex parte Decree.
26. Secondly, if the contention as raised on behalf of the appellant were accepted, the provisions of Sections 17 and 18 would be rendered otiose. Thirdly, the purpose of the statute is to expedite he recovery of public dues. By accepting the contention raised on behalf of the appellant, the basic purpose for which the statute has been enacted is likely to be defeated. Lastly, it may also be mentioned that Section 20 confers the right to file appeals before the Appellate Tribunal. This power relates to not only the orders actually passed by the Tribunal but even to those" deemed to have been made by a Tribunal". Does it not mean that even a Decree passed by the Civil Court shall be deemed to have been passed by the tribunal? It is well settled canon of interpretation that the words of a statute cannot be ignored by the Court. They have to be given some meaning and content. Still further, it is also settled that if he statute creates a fiction, then all those circumstances, which are necessary for giving the fiction a full meaning and content, have to be assumed to exist. The rule in this behalf ,was clearly enunciated in East End Dwellings Co. Ltd. v. Finsbury Borough Council, 1952 A.C. 109. Lord Asquith had observed as follows:
"If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequence and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it .......The Statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs."
27. The above dictum contains a salutary principle. It enables the Court to do justice.
28. In this context, it also deserves mention that since the application under Section 19 has to be decided by the Tribunal after giving an opportunity to the appellant in accordance with the principles of natural justice, the whole exercise of filing the application for setting aside the ex parte Decree or the present appeal seems to be wholly futile. It is the admitted position that the loan was taken. It was not suggested that the payment had been made. Thus, the money is due from him. In any case, he can raise all the pleas before the Tribunal in his defence. These shall, we have no doubt, be considered by the tribunal. There appears to be no justifiable cause for complaint. In fact, the effort appears to be to delay the payment. Nothing more.
29. Mr. Warrier also appeared in the case. The learned Counsel pointed out that there are certain gaps in the statute. By way of illustration it was submitted by the learned Counsel that supposing the Civil Court has passed a Decree for an amount of Rs. 11 lakhs and the judgment-debtor pays an amount of Rs. 2 lakhs, the Bank will not be in a position to file an application before the Tribunal. Such instances can be multiplied.
30. Perfection is still a novelty. No statute can provide for all possible situations. Often, there are gaps. Whenever there is a lacuna, it can be filled up either by the Legislature by making an amendment or by the process of judicial interpretation. So far as the present statute is concerned, one thing is clear. Debt has been defined to mean a liability "subsisting on" the date of the application. Thus, the statute contains a clear indication that on the date of the application the amount recoverable from the debtor should not less than Rs. 10 lakhs . Resultantly, in case a bank has a decree for Rs. 11 lakhs and it wants to recover the full amount, it many refuse to accept a part payment so as to ensure that it does not lose the right to approach the Tribunal. In case the amount is accepted and the liability subsisting on the date of the application is less than Rs. 10 lakhs, a petition before the Tribunal shall not be competent. This is the clear position of law. The bank has an option. It has the right to make the choice. Of course, the legislature can provide that a part payment shall not oust the jurisdiction of the Tribunal. However, the Court can only decide the matter in the light of the facts as proved on the record and the law as it exists. It has to follow the statute. Normally, it does not add to it.
31. Mr. Warrier also pointed out that the Act was preceded by an Ordinance. Under Section 30, a fiction was introduced. It was inter alia provided that "an order made by the Recovery Officer.....shall be deemed to have been made by the Tribunal." While promulgating the Act, the provision in Section 29 was modified. However, a corresponding change was not made in the provisions contained in Section 17. Thus, there was an inadvertent omission. Is it so?
32. It is undoubtedly correct that there can be 'obvious oversights' in the drafting of a Statute. In such cases, the Courts cannot be helpless. Maxwell on "The Interpretation of Statutes" (Twelth Edition) at page 230 says thus:
"Just as the Court will occasionally fill omissions, so it will sometimes- contrary to the general principle that effect must be given to every word in a statute- read a Section and while doing so ignore certain words."
Again at Page 231, it was said, "Sometimes, where the sense of a statute demands it or where there has been an obvious mistake in drafting, a Court will be prepared to substitute another word or phrase for that which actually appears in the Next of the Act."
33. Thus, it is clear that whenever the Court finds it necessary, it can omit to read or even substitute certain words. Should it be done in the present case? In view of the clear words in the Act, it does not appear that there is any obvious oversight or mistake. The provision merely provides a fiction. The parliament could have introduced it. The words must be given their true and natural meaning.
34. What is the position in the present case? As already noticed, the Tribunal had been constituted on November 4, 1996. In spite of that, the bank had instituted the suit on October 27, 1988 before the Civil Court. Since the amount recoverable from the appellant on that date was less than Rs. 10 lakhs, the Bank could not have filed the application before the Tribunal. On June 16, 2000 the Civil Court had passed an ex parte Decree. Thereafter, the bank filed the application before the Tribunal for the recovery of the amount due from the appellant. The amount was due to the Bank under the Decree. It was the debt that the petitioner owed to the respondent. Since the liability was more that Rs. 11 lakhs, the application could be filed only before the Tribunal. This is precisely what the Bank has done. Similarly, the appellant could have approached the Tribunal for setting aside the ex parte decree.
35. The learned counsel for the parties referred to various decisions. These may be noticed. On behalf of the appellant, reference is made to the decision of a Division Bench of this Court in Lily Foam Industries (P) Ltd. and Ors. v. Indian Bank and Anr., C.M.A. No. 295 of 1997 decided on December 9, 1997. In this case, the contention was that "a petition filed under Order 9, Rule 13 of C.P.C. to set aside the ex parte decree passed by a Civil Court, has to be considered by a Tribunal". It was not accepted. Similarly, in Indian Bank v. Master Marine Foods (P) Ltd. and Ors., CM. A. No. 150 of 1997, it was held that "the decree having been passed by the Court when it has the jurisdiction, the Court retained the jurisdiction to correct the decree if it was warranted." A similar view was taken by the Court in Thomas Abraham v. Muraleedharan Nair, 1999 (2) K.L.T. 656. In Official Receiver v. Sellamma and Ors., A.I.R. 1973 Mys. 154, a Division Bench of the Mysore High Court had also taken the view that despite the principle that the decree of the trial Court gets merged into that of the appellate Court does not affect the statutory right to file an application under Order 9, Rule 13 before the Court which passed the ex parte decree. Allahabad Bank v. Ghanshyam Das Damani, A.I.R. 1998 Cal. 243. However, it deserves mention that within this Court a contrary view was expressed by a Division Bench in Kunju Beevi v. Syndicate Bank, 1999 (2) KLT 245. The Bench had held that Section 18 took away the jurisdiction of the Civil Court. Thus, the application for setting aside an ex parte Decree passed even before the Constitution of the Tribunal, the application was liable to be transferred to the Tribunal.
36. In the context of these decisions, it deserves notice that the Debt Recovery Act is a special law. Section 34 gives it an overriding effect. Thus, there is a complete and comprehensive mechanism. This being the factual position, its provisions must be given full effect and cannot be narrowly construed.
37. There is another aspect of the matter. The principle of 'generalis specialibus non derogant' was explained in the Vera Cruz's case, 1884 (10) Appeal. Cases 59 at page 68, it was observed as under:
"Now if anything be certain it is this that where there are general words in a later Act capable of reasonable and sensible application without extending to subjects specially dealt with by earlier legislation, you are not to hold that earlier and special legislation indirectly repealed, altered, or derogated from merely by force of such general words, without any indication of a particular intention to do so."
38. In the present case, the legislature has made its intention manifest. It has clearly provided that the remedy is 'in addition'. Not 'in derogation'. It is also an accepted norm for interpretation of a statute that "the intention which appears to be most in accord with convenience, reason, justice and legal principles should, in all case of doubtful significance, be presumed to be true one". (Maxwell on Interpretation of Statutes--Chapter 10) The Interpretation as given by the Counsel for the respondent fulfils this test.
39. It is true that in the normal course of events, an application for setting aside a decree would lie to the Court which passed it. The Court, which has decreed the suit, is the normal forum, which would consider and decide whether or not the defendant was properly served. It would be the normal forum to determine the validity of the ex parte decree. However, it deserves notice that the Act is a special statute. The provision in Section 34 gives it an overriding effect. The legislative intent has been clarified by ousting the jurisdiction of the Civil Court. Still further, in Section 31, a specific provision for the transfer of pending cases has been made. The provision embodies within itself not only the pending suit but also the 'other proceedings'. An application under Order 9, Rule 13 shall be a proceeding falling within the ambit of Section 31. It is in this view of the matter that while considering the provisions of the statute, Their Lordships of the Supreme Court in Union of India v. Delhi High Court Bar Association, AIR 2002 SC 1479 were pleased to observe as under in paragraph 24:
"24. The manner in which a dispute is to be adjudicated upon is decided by the procedural laws which are enacted from time to time. It is because of the enactment of the Code of Civil Procedure that normally all disputes between the parties of a civil nature would be adjudicated upon by the Civil Courts. There is no absolute right in anyone to demand that his dispute is to be adjudicated upon only by a Civil Court. The decision of the Delhi High Court proceeds on the assumption that there is such a right. As we have already observed, it is by reason of the provisions of the Code of Civil Procedure that the the Civil Courts had the right, prior to the enactments of the Debt Recovery Act, to decide the suits for recovery filed by the banks and financial institutions. This forum, namely, that of Civil Court, now stands replaced by a Banking Tribunal in respect of the debts due to the bank. When in the Constitution Articles 323-A and 323-B contemplate establishment of a Tribunal and that does not erode the independent of the judiciary, there is no reason to presume that the Banking Tribunals and the Appellate Tribunals so constituted would not be independent, or that justice would be denied to the defendants or that the independent of the judiciary would stand eroded."
Again in paragraph 26, it was observed as under:
"26. With the establishment of the Tribunals, Section 31 provides for the transfer of pending cases from Civil Courts to the tribunal. We do not find such a provision being in any way bad in law. Once a Debt Recovery Tribunal has been established, and the jurisdiction of Courts barred by Section 18 of the Act, it would be only logical that any matter pending in the Civil Court should stand transferred to the Tribunal. This is what happened when the Central Administrative Tribunal was established. All cases pending in the High Courts stood transferred. Now that exclusive jurisdiction is vested in the Banking Tribunal, it is only in that forum that bank cases can be tried and, therefore, a provision like Section 31 was enacted."
Thus, it is clear that the "forum.... of a Civil Court, now stands replaced by a Banking tribunal in respect of the debts due to Bank". Still further, "any matter pending in the Civil Court" has to be transferred to the Tribunal. Any matter shall include a suit or any other application or proceedings.
40. Ms. Seemanthini contended that the issue of jurisdiction regarding the pendency of proceedings has to be determined in the context of the valuation of suit at the time of its institution. Thus, the petition for setting aside of the ex parte decree had also to be filed before the Civil Court. This contention cannot be accepted. The matter has been considered by Their Lordships of the Supreme Court in Punjab National Bank v. Chajju Ram, 2000 (6) SCC 655. It was observed by Their Lordships as under:
"7. Learned Counsel for the respondents submitted that the use of the words 'cause of action' in Section 31 indicated that it is only pending suits which would be transferred. We are unable to agree with this submission. The words 'cause of action' are preceded by the words 'being a suit or proceeding'. Section 31 contemplates not only the transfer of a suit but also transfer of a proceeding, which may be other than a suit, like an execution application. Understood in this context, the words 'being a suit or proceeding the cause of action whereon it is based...' would mean that in the case of an execution application of the decree is for more than Rs. 10 lakhs, then that is the cause of action or the reason for an application for execution being filed before the Tribunal."
The above observations clearly show that the cause of action for the purpose of determining the forum for adjudicating the claim shall be the amount of the decree and not the claim as originally made in the suit. Since the ex parte decree is for an amount exceeding Rs. 10 lakhs, the forum for deciding the application shall be the Tribunal and not the Civil Court. It also deserves notice that in State Bank of Bikaner and Jaipur v. Ballah Das and Co., 1999 (7) SCC 539 it was inter alia observed by Their Lordships of the Supreme Court in paragraph 9 that "Section 31 of the Act makes it clear that the transfer is automatic because of the operation of law and, therefore, the bank was really not required to file applications." In Bhanu Construction Co. Pvt Ltd v. Andhra Bank, Hyderabad, 2001 (1) SCC 347, the appellant had entered into a contract with the National Thermal Power Corporation. The said Corporation had terminated the contract and encashed the bank guarantee of Rs. 2.34 crores on December 4, 1987. The bank had filed a suit on August 27, 1993 seeking recovery of an amount of Rs. 19 crores. An application was also filed with the prayer that a direction be given that the deposit made by the Thermal Corporation shall be payable to the Bank. On September 20, 1994 the Civil Court gave a direction that the Power Grid Corporation of India shall not pay any money to the Company until further orders from the Civil Court. This Order was challenged by the appellant through a petition under Article 226 of the Constitution before the High Court. It was allowed by the High Court on the ground that "the above said suit was instituted on 27th August 1993, and the impugned order of the Civil Court which was passed on 20th September 1994, subsequent to the passing of the Act, i.e. 24h June 1993, therefore, the Civil Court, had no jurisdiction. The Tribunal was established on 30th November 1994. The order passed by the Civil Court was quashed. In the appeal preferred before the Division Bench by the two Banks.... The Bench agreed with the trial Court that the order passed by the Civil Court was without jurisdiction. But, at the same time, the Division Bench felt that inasmuch as no Decree had been passed, it was not the stage at which the writ petition could be entertained. Hence the appeal was allowed and the writ petition was dismissed." On Appeal, Their Lordships disposed of the appeals with the following observations:
"1O. It will be noticed that the 'appointed day' in the Act in relation to a Tribunal means the day on which the Tribunal is established and not the day on which the Act came into force. In the present case, it is not in dispute that the Tribunal was established on 30th November 1994 subsequent to the passing of the order of the Civil Court. It is true that the Civil Court passed an order on 20th September 1994 after the Act had come into force. But for the purpose of Section 18 of the Act what is relevant is not the date of passing of the Act but the date of he establishment of the Tribunal namely 30th November 1994 that is relevant. The impugned order in the present case was passed by the Civil Court on 20th September 1994 prior to the establishment of the Tribunal on 30th November 1994. Therefore, the learned Single Judge as well as the Division Bench were wrong in thinking that the order of the Tribunal (sic Civil Court) was without jurisdiction.
11. It will also be noticed that Section 31 of the Act deals with the transfer of pending cases. According to Section 31(2)(b) the Tribunal may, on receipt of such records, proceed to deal with such suit or other proceedings, so far as may be, in the same manner as in the case of an application made under Section 19 from the stage which was reached before such transfer or from any earlier stage as the Tribunal may deem fit.
12. Therefore, now that the suit has been transferred to the Tribunal, it will be for the appellant to seek appropriate reliefs before the Tribunal, If the appellant wants any modification or vacation of the interim order passed by the Civil Court on 20th September 1994, it can move the tribunal."
A perusal of the above observations shows that even though the order had been passed by the Civil Court before the appointed day, the jurisdiction of the Tribunal to deal with the matter was sustained.
41. The issue regarding the maintainability of an application under Order 9, Rule 13 was also considered by a learned Single Judge of the Patna High Court in Ram Laxman Glass (P) Ltd. v. State of Bihar, AIR 2000 Pat, 210 it was observed as under:
" In the scheme of the Act, creation of the jurisdiction to try the suits and transfer thereof, to the Tribunal is total, subject to the exception of pending appeals. The main matter shall automatically stand transferred by operation of law along with all the steps taken in that direction on the appointed day. After all the applications for setting aside the ex parte judgment is an adjunct to the main matter and has no separate existence de hors the same. There is yet another aspect of the matter. In view of the nature and scope of Section 31(2)(b) of the Act discussed in this Judgment, if the Civil Court is allowed to retain jurisdiction over an application vide Order 9, Rule 13, the provisions of Section 31(2)(b) is rendered unworkable, nay the whole Act, which is clearly demonstrated by the facts and circumstances of the present case itself. After the entire records including the application under Order 9, Rule 13 was transferred to the Tribunal, it decided to proceed de novo and the very existence of the application came to an end. In this view of the matter also, there is no scope to hold that the same Court shall deal with such an application, which had passed the ex parte Judgment and Decree. That principle is applicable in the usual situation where the jurisdiction in the main matter continues with the same Court and not in a situation like the present one where the jurisdiction has been completely abolished. Section 9, C.P.C. provides that The Courts (subject to the provisions herein contained), have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred....' Where has in the present case remained the scope with the Civil Court to deal with the applications? And the overriding factor with its brooding omni- presence is the legislative intent, purpose and the scheme of the Act that the transfer of jurisdiction to the Tribunal is total, except the appeals which were pending on the appointed day which is transient. If the substratum is gone, where is the question of the super structure."
42. Thus, it is clear that even an application for setting aside an ex parte Decree constitutes proceedings in relation to the recovery of the debt by the bank. These proceedings lie within the exclusive jurisdiction of the Tribunal and not the Civil Court.
43. The next question that arises is Could the Civil Court dismiss the application when it had found that it had no jurisdiction to deal with the matter?
44. The answer is simple. In view of the fact that the amount in dispute was in excess of Rs. 10 lakhs, the Civil Court had no jurisdiction to deal with the matter. That is also the finding recorded by it. Thus it was imperative for the civil Court to transfer the application to the Tribunal. The lack of jurisdiction to decide that matter also precluded the Civil Court from dealing with the application. It had clearly erred in proceeding to decide and dismiss the application.
45. In view of the above, it is held as under:
(i) On October 27, 1998 the Civil Court was entitled to entertain and try the suit for recovery of Rs. 8,61,530 with interest as filed by the Bank.
(ii) The 1993 Act is a special statute. It overrides the provisions of the general law. Thus, after the establishment of the Tribunal for the State of Kerala on November 4, 1996, the Civil Court is not entitled to entertain a suit or any other proceeding relating to the recovery of a debt of Rs. 10 lakhs or more by a Bank. By virtue of Section 18, the jurisdiction of the civil court has been completely ousted.
(iii) An application under Order 9, Rule 13 as filed by the appellant on March 23, 2001 could not have been entertained by the Civil Court. Thus, it should have been returned to the applicant (the present appellant) for presentation to the competent forum, viz. the Tribunal.
(vi) In view of our finding that the civil court had no jurisdiction in the matter, its order dismissing the application is also liable to be set aside. Resultantly, we quash the order. It is further directed that the application shall be returned to the appellant for presentation to the tribunal.
(v) Since the Civil Court has been replaced by the Tribunal and in view of the provisions of Section 31 of the Act, the view taken by this Court in Lily Foam Industries (P) Ltd. and Ors. v. Indian Bank and Anr. (C.M.A. No.295 of 1997) decided on December 9, 1997 as also in Indian Bank v. Master Marine Foods (P) Ltd. and Ors. (C.M.A.No,150 of 1997) and in Thomas Abraham v. Muraleedharan Nair, 1999 (2) K.L.T 656 cannot be sustained as good law. The view of the Division Bench in Kunju Beevi v. Syndicate Bank, 1999 (2) K.L.T 245 is affirmed.
(vi) A decree passed by the civil court can be challenged by the aggrieved party before the Appellate Tribunal. In our view, even in a case where the decree has been passed by the Civil Court for an amount of Rs. 10 lakhs or more, the appeal shall lie before the Appellate Tribunal.
In view of the above, the order passed by the Civil Court on October 22, 2001 is set aside. It is directed that the Civil Court shall return the application to the appellant for presentation to the Tribunal. In the circumstances, we make no order as to costs.