Patna High Court
Rajiv Sachdeva vs State Bank Of India And Ors. on 25 September, 1998
Equivalent citations: AIR1999PAT41, 1998(3)BLJR1976, [2000]101COMPCAS216(PATNA), AIR 1999 PATNA 41, (1998) 3 BLJ 659, (1999) 1 BANKCLR 213, (2000) 101 COMCAS 216, (1998) 2 EASTCRIC 944, (1999) 1 CIVLJ 584, (1999) 3 CURCC 102, (1998) 3 PAT LJR 535, 1998 BLJR 3 1976
Author: M.Y. Eqbal
Bench: M.Y. Eqbal
ORDER M.Y. Eqbal, J.
1. This Civil Revision application is directed against the order dated 1-9-1997 passed by the Subordinate Judge I, Jamtara, Dumka in Title (Mortgage) Suit No. 38 of 1986, whereby and whereunder he has allowed the prayer of the plaintiff-Bank and ordered for transfer of the aforementioned suit to the Debts Recovery Tribunal, Patna and kept in his Court the counter claim of the defendants for trial and disposal.
2. The facts of the case lie in a narrow compass.
3. Plaintiff-Opposite party No. 1 State Bank of India instituted title (Mortgage) Suit No, 38 of 1986 seeking a relief of mortgage decree as contemplated under Order XXXIV, Rule 4 of the Code of Civil Procedure (for short 'CPC) and also for a money decree for recovery of loan amount. The defendants entered appearance and filed their written statement separately. Defendant-Opposite party No. 2, namely, M/s Raj Hans Steel Limited filed its written statement-cum-counter claim wherein the counter claim was valued at Rs. 2,50,000/-. The petitioner who is defendant No. 4 also filed his written statement and counter claim which was valued at Rs. 42,51,000/-. Defendant No. 2, however, died on 1-9-1989 leaving behind his widow, three daughters and one son (the petitioner). The suit was, however, ultimately taken up for hearing and the plaintiff examined some witnesses. In the meantime, the plaintiff filed a petition on 15-3-1997 seeking transfer of the suit to the Debts Recovery Tribunal, Patna, in view of notification issued by the Central Government under the Debts Recovery Act. The defendant filed rejoinder to the said petition. Learned Court below after hearing the parties passed the impugned order and ordered for transfer of the suit to the Debts Recovery Tribunal, Patna and kept the defendants' counter claim for trial and disposal by that Court. Hence this Civil revision application.
4. Mr. Dhrub Narain, learned Senior Counsel appearing for the petitioner assailed the impugned order as being illegal and wholly without jurisdiction. Learned counsel firstly submitted that the Court below failed to consider that the plaintiffs suit was not simple suit for money decree, but it was a mortgage suit in which decree was claimed under Order XXXIV, Rule 4 of the CPC and as such it is not covered under the Recovery of Debts Due to Banks & Financial Institutions Act, 1993 thereinafter referred to as 'the Debt Recovery Act). Learned counsel secondly submitted that the Debt Recovery Tribunal has no jurisdiction to decide the issue involved in a mortgage suit. Learned counsel thirdly submitted that the Court below has committed grave error of law in not transferring the counter claim and keeping it in the Court for trial and disposal. According to the learned counsel either the suit could not have been transferred or it would have been transferred along with the counter claim in order to avoid conflicting judgment. Learned counsel relied upon the decisions of the case of Venkateshwara Textiles Trader v. Canara Bank, AIR 1998 Andh Pra 282.
5. On the other hand, Mr. S.A. Sanjay, learned counsel appearing on behalf of the opposite party Bank, submitted that after the enforcement of the Act of 1993, the jurisdiction of the Civil Court has been ousted and all pending cases are liable to be transferred to the Tribunal constituted under the said Act. Learned counsel submitted that the Act has not made any distinction between the money suit and mortgage suit rather according to the Act all suits at the instance of the Bank for the recovery of loan are liable to be transferred to the Tribunal. Learned counsel further submitted that so far as the counter claim is concerned, the Court below has rightly held that the same is to be tried by itself because the counter claim could not have been transferred to the Tribunal. Learned counsel relied upon the decision of the case of Cofex Exports Ltd. v. Canara Bank, AIR 1997 Delhi 355 (357).
6. Before appreciating the rival contentions of the learned counsel appearing for the parties, it would be useful to look into the object and purpose of the enactment of the Recovery of Debts due to the Banks and Financial Institutions Act, 1993. Preamble of the Act says that it has been enacted to provide for the establishment of the Tribunals for expeditious adjudication and recovery of debts due to the Banks and Financial Institutions and for matters connected therewith or incidental thereto. It appears that the purpose of this legislation is forspeedy recovery of money advanced through various financial institutions including the Bank as several Crores of rupees were blocked in loan pending litigation by way of several suits in the Court throughout the country. It further appears that before enactment two Committees were set up under the Chairmanship of Mr. M. Narasimhan and Mr. T. Tiwari known as Narsimhan and Tiwari Committee and the Committee recommended for setting up special Tribunals which could expedite the recovery process and consequently the Government of India with a view to meet this specific need of the Banks and Financial Institutions promulgated an ordinance on 24th July, 1993 which was called as Recovery of Debts Due to Banks & Financial Institutions Ordinance, 1993, which was later on replaced by an Act of Parliament. Chapter II which consists of Sections 3 to 16 which deal with the establishment of Tribunal and Appellate Tribunal. Section 17 provides jurisdiction, power and authority of the Tribunal and Section 18 oust the jurisdiction of the Courts. Sections 17 and 18 worth to be quoted herein below :
Section 17: "Jurisdiction, powers and authority of Tribunals:
(1) 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.
(2) An Appellate Tribunal shall exercise, on and from the appointed day, the jurisdiction, powers and authority to entertain appeals against any order made, or deemed to have been made, by a Tribunal under this Act.
Section 18 ; "Bar of Jurisdiction.
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 Articls 226 and 227 of the Constitution) in relation to the matters specified in Section 17."
Sections 19 to 30 deal with procedure for the recovery of debts by the Tribunal. The next important section is Section 31 which deals with the transfer of pending cases. Section 31 reads as under:
Section 31 : "Transfer of pending cases (1) Every suit or other proceeding pending before any Court immediately before the date of establishment of a Tribunal under this Act, being a suit or proceeding the cause of action whereon it is based is such that it would have been, if it had arisen after such establishment, within the jurisdiction of such Tribunal, shall stand transferred on that date to such Tribunal:
Provided that nothing in this sub-section shall apply to any appeal pending as aforesaid before any Court.
(2) Where any suit or other proceeding stands transferred from any Court to a Tribunal under Sub-section (1)-
(a) the Court shall, as-soon as may be after such transfer, forward the records of such suit or other proceeding to the Tribunal; and
(b) the Tribunal may, on receipt of such records, proceed to deal with such suit or other proceeding, 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 or de novo as the Tribunal may deem fit."
7. From a bare reading of these provisions it is manifest that Section 17 of the Act confers exclusive jurisdiction to the Tribunal to entertain and decide applications from the Bank and Financial institutions for recovery of debt due to such bank and financial institutions. Section 18 creates a bar of jurisdiction to a Court other than Supreme Court and High Court exercising jurisdiction under Articles 225 and 227 of the Constitution. According to this section no Courts OP other authorities shall have jurisdiction to entertain and decide such application filed by the bank or other financial institutions for recovery of debts. Section 31 provides for transfer of all suits or proceedings pending before any Court. According to this all pending suits or proceedings pending before any Court shall stand transferred after establishment of the tribunal under the Act. From the combined reading of these provisions it is, therefore, clear that on and from the appointed date, the Tribunal has exclusive jurisdiction to entertain and decide the applications from the Bank and financial institutions for recovery of debts. Further the jurisdiction of Courts except the writ jurisdiction of High Court and Supreme Court, has become barred and the Civil Courts have been divested of the powers to proceed further in the matter and so far as the pending cases are concerned, the suits shall automatically stand transferred by operation of law and that the civil Courts have to pass merely a formal order and have to forward the records of the cases to the Tribunal.
8. After hearing the submissions made by the learned counsel of the parties, the following questions emerge for consideration by this Court, viz:
(i) Whether a mortgage suit filed by the Bank will come within the purview of this Act?
(ii) Whether a counter claim filed by the defendant is also liable to be transferred along with the suit?
9. Re (i): This question can be very conveniently answered in affirmative. It is not disputed by the defendants that the plaintiff-Bank advanced loan against the personal guarantee and against the security of immoveable property by creating a mortgage. The bank, therefore, may file a suit either for a simple decree to a mortgage suit for a decree as contemplated under Order XXXIV, of the CPC. But the only purpose for filing either of the two suits is to recover the amount due from the borrower and the guarantor. It is, therefore, clear that all such suits filed by the Bank or other financial institutions are for the purpose of recovery of debt due to them irrespective of the nature of the suit, stands transferred by the operation of the Debt Recovery Act.
Re : (ii):-- Before answering this question it would be necessary first to make distinction between the nature of defence that may be taken by the defendant in a suit for recovery of money. The defendant is entitled to take a defence of payment or adjustment of the dues. The defendant may also take defence by way of set off and counter claim. So far defence of payment or adjustment is concerned, the defendant is entitled to take such defence in the written statement without paying any Court-fee for the amount claimed by way of payment or adjustment. But so far defence by way of counter claim or set off is concerned, specific procedure has been provided under the Code of Civil Procedure. Rules 6A to 6G of Order VIII as inserted by C.P.C. (Amendment) Act of 1976 deals with the counter claim by the defendant. Rules 6A and 6D are worth to be quoted hereunder:
Order 8, Rule 6A: "Counter-claim by defendant.-- (1) A defendant in a suit may in addition to his right of pleading a set-off under Rule 6, set up, by way of counter claim against the claim of the plaintiff, any right or claim in respect of a cause of action accruing to the defendant against the plaintiff either before or after filing of the suit 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 damage or not:
Provided that such counter-claim shall not exceed the pecuniary limits of the jurisdiction of the Court.
(2) Such counter-claim shall have the same effect as a cross suit so, as to enable the Court to pronounce a final judgment in the same suit, both on the original claim and on the counter-claim.
(3) The plaintiff shall be at liberty to file a written statement in answer to the counter-claim of the defendant within such period as may be fixed by the Court.
(4) The counter-claim shall be treated as a plaint and governed by the rules applicable to plaints."
Order VIII, Rule 6D : "Effect of discontinuance of suit.-- If in any case in which the defendant sets up a counter-claim, the suit of the plaintiff is stayed, discontinued or dismissed, the counterclaim may nevertheless be proceeded with."
10. On a plain reading of the aforesaid provisions it is manifest that the defendant in addition to his right of pleading may set up a counter-claim against the claim of the plaintiff, which, however, does not exceed the pecuniary limit of jurisdiction of the Court. Sub-rule (2) provides that such counter-claim shall have the same effect as a cross suit and the Court may pronounce judgment on the counter claim also. Sub-rule (4) very clearly provides that the counter claim shall be treated as a plaint and governed by the rules applicable to plaints. Rule 6D provides that in a suit where counter claim has been set up by the defendant then in the event of stay, discontinuance or dismissal of the suit, the counter claim may be proceeded with.
11. Thus it is clear that the Statute confers a right to the defendant to set up a counter-claim in a suit and so far counter claim is concerned, the defendant occupies the position of a plaintiff and the counter-claim shall be treated as cross-suit or an independent suit. It is also clear that even if a suit in which counter claim is made by the defendant is stayed or discontinued or dismissed, the Court shall proceed with the counter-claim as if it is a suit and shall pronounce judgment. A Division Bench of the Delhi High Court has occasion to deal with exactly the same question in the case of Exports Ltd. v. Canara Bank (AIR 1997 Delhi 355) (supra), One of the question arose in that case was that if a civil suit is instituted before the Civil Court is liable to be transferred to Tribunal on account of latter's exclusive jurisdictional competence to try it, whether the Civil Court should transfer the cross suit or cross-claim also to the Tribunal along with the suit with which it is associated. Their Lordships after considering catena decisions of different High Courts observed as under :
Para 40 : "A civil Court while transferring a suit to the Tribunal for the purpose of being heard as an application under Section 31 of the DRT Act shall transfer the suit but shall not transfer a counterclaim cross-claim or a cross-suit not even a plea of set off. Before transferring a suit filed by a Bank or a financial institution to the Tribunal, the Civil Court shall direct the defendant to take steps for separating the pica of set off and counter-claim from the written statement. On that being done the plea shall be registered as a suit filed by the defendant, designating the defendant as plaintiff and the bank or financial institution as the defendant. A cross-suit presents no difficulty; in spite of the suit having been transferred to the Tribunal a cross-suit would remain pending before the Civil Court for the very obvious reason that law does not contemplate a cross-suit being Iransferrcd to Tribunal."
12. The question raised before the Division Bench of the Delhi High Court has been summed up and answered in paragraph 42 of the judgment which reads as under :
Para 42 : 1. A suit the subject matter whereof lies within the jurisdictional competence of the Tribunal cannot be refused to be transferred by a Civil Court to the Tribunal merely because a cross-suit or a counter claim has been filed or preferred before the Civil Court.
2. A cross-suit' or cross-claim or a plea in the nature of set off cannot be transferred to the Tribunal along with the suit with which it is associated and which is liable to be transferred to the Tribunal.
3. A plea of set off raised in a suit filed by a bank or financial institution cannot be tried by Tribunal nor would it enable the suit being retained by Civil Court before it if the subject matter of suit lies within the jurisdictional competence of the Tribunal otherwise.
13. Having regard to the facts of the case and the question raised before me in the instant case I find myself in full agreement with the observations made by the Division Bench of the Delhi High Court in the case of Cofex Textiles Limited (AIR 1997 Delhi 355) (supra). Besides the reason stated hereinabove, in my considered opinion the Tribunal under the Debt Recovery Act has been conferred power to decide all suits filed or initiated at the instance of the Bank and other financial institutions for the recovery of debt due to them. Section 17 of the Act does not speak that all other claims raised by the defendant in the shape of set off or counter-claim against the Bank shall also be decided by the Tribunal.
14. Having regard the facts and circumstances of the case and the discussions made above, I am of the opinion that the Court below has not committed any illegality in the exercise of jurisdiction by retaining the counter claim of the defendant as the Civil Court has jurisdiction to proceed with the counter-claim as a cross suit or independent suit and pronounce judgment in accordance with law.
15. In the result, there is no merit in this Civil revision application which is, accordingly, dismissed.