Madras High Court
Icici Bank Limited vs The Debts Recovery Appellate Tribunal on 11 October, 2011
Equivalent citations: AIR 2012 MADRAS 111, (2012) 2 BANKCAS 394 (2012) 1 CURCC 99, (2012) 1 CURCC 99
Author: D.Murugesan
Bench: D.Murugesan, K.K.Sasidharan
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 11.10.2011
CORAM
THE HONOURABLE MR.JUSTICE D.MURUGESAN
AND
THE HONOURABLE MR.JUSTICE K.K.SASIDHARAN
W.P.No.19707 of 2011
ICICI Bank Limited
represented by its Chief Manager
Mr.N.Anandakumar
having its Zonal Office at
ICICI Bank Towers
4th Floor, West Wing Plot No.24
Ambattur Industrial Estate
Chennai 600 058 .. Petitioner
-vs-
1. The Debts Recovery Appellate Tribunal
Ethiraj Salai, Egmore
Chennai 600 008
2. The Debts Recovery Tribunal-2
Deva Towers, 6th Floor
No.770-A, Anna Salai
Chennai 600 002
3. R.Subramanian .. Respondents
Petition under Article 226 of the Constitution of India, praying for the issue of a Writ of Certiorari, to call for the records of the learned Debt Recovery Appellate Tribunal, Chennai with regard to the order dated 12.8.2011 passed in M.A.No.606 of 2010 filed against the order dated 30.09.2010 passed in I.A.No.250 of 2010 in O.A.No.190 of 2010 on the file of the Debt Recovery Tribunal-II, Chennai and quash the same.
For Petitioner :: Mr.A.L.Somayaji
Senior Counsel for
Mr.Shivakumar
For Respondents :: Mr.T.V.Ramanujam
Senior Counsel for
Mr.Prakash Goklaney for R3
* * * * *
O R D E R
D.MURUGESAN, J.
This Court is called upon to decide the question as to whether the Debts Recovery Tribunal or the Debts Recovery Appellate Tribunal would have power to direct the borrower or the guarantor to surrender the passport to the Tribunal and to further restrain the borrower or the guarantor from leaving the country without the written permission of the Debts Recovery Tribunal/the Debt Recovery Appellate Tribunal, as the case may be.
2. The above issue arises under the following circumstances. The petitioner is M/s ICICI Bank Limited, Chennai (hereinafter referred to as 'the bank'). M/s Subhiksha Trading Services Limited availed credit facilities in the form of term loan for their retail trading business in the sale of grocery, fruits and vegetables, pharma, mobiles and fast moving consumer goods and also for expansion of their business in the States of Karnataka, Andhra Pradesh and Gujarat. The said facilities were availed in the year 2005. The third respondent by name R.Subramanian (hereinafter referred to as 'the respondent'), who is the Managing Director of the said company, had also executed Personal Guarantee in favour of the bank guaranteeing the due repayment of the facilities except the credit card facility. As the company failed and committed default in repayment of the loan and the interest, the bank had recalled the facilities and called upon the company to pay the dues. As the company failed to pay the dues demanded in the notice, the bank invoked the guarantee of the respondent. Despite receipt of the said notice, the respondent also failed and neglected to make payments. In the circumstances, the bank filed O.A.No.96 of 2010 before the Debts Recovery Tribunal-III, Chennai for recovery of a sum of Rs.221,97,76,635.78p as on 31st December, 2009, which application stood transferred to the file of Debts Recovery Tribunal-II and renumbered as O.A.No.190 of 2010. Along with the said O.A., among other interlocutory applications, the bank also filed I.A.No.250 of 2010 under Section 19(25) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 seeking for a direction to the said R.Subramanian, the respondent, to surrender his passport and not to leave the country without the permission of the Tribunal. By order dated 30.9.2010, the Debts Recovery Tribunal-II, Chennai allowed the said I.A., and directed the respondent to deposit his passport with the Registrar of the Tribunal within fifteen days from the date of the said order and further directed that the respondent should not leave the country without obtaining the permission of the Tribunal.
3. This order was challenged by the respondent before the Debts Recovery Appellate Tribunal, Chennai by filing M.A.No.606 of 2010. By the impugned order dated 12.8.2011, the Debts Recovery Appellate Tribunal set aside the order of the Debts Recovery Tribunal on the ground that the Tribunal has no authority under law to impound the passport, as the passport authority empowered under the Passports Act, 1967 would alone have such power. This order is questioned in this writ petition.
4. For consideration of the issue, the following provisions under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as 'the RDDBFI Act') and the Debts Recovery Tribunal (Procedure) Rules, 1993 (hereinafter referred to as 'the DRT Rules') as well as the rules of the Second Schedule to the Income Tax Act. 1961 are referable. They read as follows:
S.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.
S.19. Application to the Tribunal.--
(12) The Tribunal may make an interim order (whether by way of injunction or stay or attachment) against the defendant to debar him from transferring, alienating or otherwise dealing with, or disposing of, any property and assets belonging to him without the prior permission of the Tribunal.
(13(A) Where, at any stage of the proceedings, the Tribunal is satisfied, by affidavit or otherwise, that the defendant, with intent to obstruct or delay or frustrate the execution of any order for the recovery of debt that may be passed against him,--
(i)is about to dispose of the whole or any part of his property; or
(ii)is about to remove the whole or any part of the property from the local limits of the jurisdiction of the Tribunal; or
(iii)is likely to cause any damage or mischief to the property or affect its value by misuse or creating third party interest, the Tribunal may direct the defendant, within a time to be fixed by it, either to furnish security, in such sum as may be specified in the order, to produce and place at the disposal of the Tribunal, when required, the said property or the value of the same, or such portion thereof as may be sufficient to satisfy the certificate for the recovery of debt, or to appear and show cause why he should not furnish security.
(B) Where the defendant fails to show cause why he should not furnish security, or fails to furnish the security required, within the time fixed by the Tribunal, the Tribunal may order the attachment of the whole or such portion of the properties claimed by the applicant as the properties secured in his favour or otherwise owned by the defendant as appears sufficient to satisfy any certificate for the recovery of debt.
(18) Where it appears to the Tribunal to be just and convenient, the Tribunal may, by order,--
(a) appoint a receiver of any property, whether before or after grant of certificate for recovery of debt;
(b) remove any person from the possession or custody of the property;
(c) commit the same to the possession, custody or management of the property;
(d) confer upon the receiver all such powers, as to bringing and defending suits in the Courts or filing and defending applications before the Tribunal and for the realization, management, protection, preservation and improvement of the property, the collection of the rents and profits thereof, the application and disposal of such rents and profits, and the execution of documents as the owner himself has, or such of those powers as the Tribunal thinks fit; and
(e) appoint a Commissioner for preparation of an inventory of the properties of the defendant or for the sale thereof.
(25) The Tribunal may make such orders and give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice.
S.22. Procedure and powers of the Tribunal and the Appellate Tribunal.--(1) The Tribunal and the Appellate Tribunal shall not be bound 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.
(2) The Tribunal and the Appellate Tribunal shall have, for the purposes of discharging their functions under this Act, the same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely:--
(a) summoning and enforcing the attendance of any person and examining him on oath;
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavits;
(d) issuing commissions for the examination of witnesses or documents;
(e) reviewing its decisions;
(f) dismissing an application for default or deciding it ex parte;
(g) setting aside any order of dismissal of any application for default or any order passed by it ex parte;
(h) any other matter which may be prescribed.
(3) Any proceeding before the Tribunal or the Appellate Tribunal shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for the purposes of section 196, of the Indian Penal Code (45 of 1860) and the Tribunal or the Appellate Tribunal shall be deemed to be a civil Court for all the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974).
S.25. Modes of recovery of debts.--The Recovery Officer shall, on receipt of the copy of the certificate under sub-section (7) of section 19, proceed to recover the amount of debt specified in the certificate by one or more of the following modes, namely:--
(a) attachment and sale of the movable or immovable property of the defendant;
(b) arrest of the defendant and his detention in prison;
(c) appointing a receiver for the management of the movable or immovable properties of the defendant.
R.18. Orders and directions in certain cases.-- The Tribunal may make such orders to give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice.
The Second Schedule to Income Tax Act, 1961 R.75. Custody pending hearing. Pending the conclusion of the inquiry, the Tax Recovery Officer may, in his discretion, order the defaulter to be detained in the custody of such officer as the Tax Recovery Officer may think fit or release him on his furnishing security to the satisfaction of the Tax Recovery Officer for his appearance when required.
5. The object and purpose for which the Debt Recovery Tribunals were constituted have relevance for deciding the issue. Before we advert to the object and purpose and importance of the RDDBFI Act, we may refer the banking structure in India. Even while India was to secure independence, the Reserve Bank of India Act, 1935 was enacted to regulate the functions of the banks. Indian independence marked the end of a regime of laissez-faire for the Indian banking. The Government of India initiated measures to play an active role in the economic life of the nation, which resulted in the greater involvement of the State in diffierent segments of the economy including banking and finance. One of the major steps taken was to regulate the banking including the Reserve Bank of India during January, 1949, as the Reserve Bank of India is the Indian Central Banking Authority. Thereafter, the Banking Regulation Act, 1949 was enacted empowering the Reserve Bank of India to regulate, control and inspect the banks in India. Having noticed that the Indian banking industry had become an important tool to facilitate the development of Indian economy, nationalisation of the banking industry was mooted, which ultimately led to the enactment of Banking Companies (Acquisition of Transfer of Undertaking) Act, 1969. The above steps were taken having regard to the banks playing an active and important role in the growth of Indian economy.
6. When the banks and financial institutions experienced considerable difficulties in recovering loans and enforcement of securities charged with them from the borrowers, posing threat to Indian economy as a whole, especially when some of the borrowers who availed loans for development of their units, became sick and weak resulting in accumulated non-performing assets, the RDDBFI Act was enacted by virtue of the powers conferred on the Union of India under Entry 45 of List-I of Seventh Schedule. The Tribunals were established in terms of Section 3 of the RDDBFI Act to exercise jurisdiction, powers and authority conferred by the Act. Section 17 deals with the jurisdiction, powers and authority of the Tribunals. Sub-section (1) of Section 17 relates to 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. Similar jurisdiction, powers and authority were also conferred on the Appellate Tribunal by virtue of sub-section (2) of Section 17. Those powers are exclusively conferred onthe Tribunal and the Appellate Tribunal except the Supreme Court and the High Court in terms of Section 18 of the Act. The provision is intended to confer wider power to the Tribunal/ Appellate Tribunal to deal with the matters relating to various modes of recovery of unpaid loan or bad debts.
7. While dealing with the applications filed by a bank or a financial institution to recover any debt from any person, in terms of sub-section 12 of Section 19, the Tribunal may make an interim order (whether by way of injunction or stay or attachment) against the respondent in the application to debar him from transferring, alienating or otherwise dealing with, or disposing of, any property and assets belonging to him without the prior permission of the Tribunal. By virtue of sub-section (13) of Section 19, the Tribunal may appoint a Receiver to take custody and management of the property. By virtue of sub-section 13A of Section 19, the Tribunal, in the event, is satisfied that the respondent with the intent to obstruct or delay or frustrate the execution of any order for the recovery of debt that may be passed against him, is about to dispose of the whole or any part of his property; or is about to remove the whole or any part of the property from the local limits of the jurisdiction of the Tribunal; or is likely to cause any damage or mischief to the property or affect its value by misuse or creating third party interest, may direct such person to furnish security for a sum that may be specified in the order or to produce and place at the disposal of the Tribunal the said property or the value of the same or such portion thereof as may be sufficient to satisfy the certificate for the recovery of debt. To manage the property so attached, the Tribunal has the power to appoint a receiver either before or grant of certificate for recovery of debt under sub-section (18) of Section 19. In terms of sub-section (17) of Section 19, the Tribunal has the power to order the properties of the person guilty of disobedience of the orders made under sub-sections (12), (13) and (18) of Section 19, to be attached and may also order such person to be detain in the civil prison for a term not extending three months.
8. By virtue of sub-section (25) of Section 19 and Rule 18 of the Rules, the Tribunal may make such orders and give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice. In terms of Section 22 of the Act, the Tribunal and the Appellate Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, but shall be guided by the principles of natural justice and subject to the other provisions of the Act and the rules made thereunder. By that provision, the Tribunal and the Appellate Tribunal shall have the powers to regulate their own procedures including the places at which they shall have their sittings.
9. The Apex Court, in Industrial Credit and Investment Corporation of India Ltd. v. Grapco Industries Ltd., (1994) 4 SCC 710, while considering the provisions of the Act and the powers of the Tribunal, has observed that the powers of the Tribunal, except as stated in sub-section (2) of Section 19, are wider than the powers of a Civil Court and the only limitation was that it should observe principles of natural justice. The Apex Court has observed as follows:-
We, however, do not agree with the reasoning adopted by the High Court. When Section 22 of the Act says that the Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, it does not mean that it will not have jurisdiction to exercise powers of a Court as contained in the Code of Civil Procedure. Rather, the Tribunal can travel beyond the Code of Civil Procedure and the only fetter that is put on its powers is to observe the principles of natural justice. The Apex Court has further observed:-
It will, thus, be seen that while there are no limitations on the powers of the Tribunal under the Act, the Legislature has thought fit to restrict the powers of the authorities under various enactments while exercising certain powers under those enactments. ... Further, when power is given to the Tribunal to make an interim order by way of injunction or a stay, it inheres in it the power to grant that order even ex parte, if it is so in the interest of justice. .. Subsequently, while concurring with the view expressed in the above case, the Apex Court in Allahabad Bank v. Radha Krishna Maity, A.I.R. 1999 SC 3426, has observed in paragraphs 9 and 10 as follows:-
9.The scope and extent of the powers of the Tribunal are mainly referred to in sub-clause (1) of Section 22 of the Act which says that the Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure but shall be guided by principles of natural justice. As stated in Grapco by this Court, the Tribunal can exercise powers contained in the Code of Civil Procedure and can even go beyond the Code as long as it passes orders in conformity with principles of natural justice. We may add that Section 19(6) does not in any manner limit the generality of the powers of the Tribunal under Section 22(1). It merely states that certain types of injunction or stay orders may be passed by the Tribunal. It is to be noticed that sub-clause (6) of Section 19 starts with the words - The Tribunal may make an interim order.... The provision is an enabling provision and merely states that certain types of injunction or stay orders mentioned therein can be passed by the Tribunal but such an enumeration cannot, in our opinion, be deemed to be exhaustive nor restricting the Tribunal's powers only to those types of injunction or stay orders. The width and amplitude of the powers are to be gathered from Section 22(1) as stated in Grapco. In addition, Rule 18 enables the Tribunal to pass orders to secure the ends of justice.
10.Thus, we are of the view that the Tribunal certainly has powers to pass other types of injunction orders or stay orders apart from what is stated in Section 19(6). ... (emphasis supplied)
10. The above judgment was rendered with reference to the powers of the Tribunals to pass interim orders of stay or injunction in terms of the provisions of sub-section 19(6) prior to amendment Act 1 of 2000, whereby the same power was retained to the Tribunal under Section 19(12) of the Act. In the light of the above law laid down by the Apex Court, the question to be considered is as to whether the Tribunal, in exercise of the power conferred under sub-section (25) of Section 19 could pass an order directing the borrower or the guarantor, as the case may be, to surrender his passport and in such event, the direction to surrender the passport would amount to impounding of the passport and further, whether the Tribunal could direct the borrower or the guarantor not to leave the country without permission of the Tribunal or the Appellate Tribunal.
11. Before answering the above issue, as it is argued by the learned senior counsel for the respondent that the passport or a travel document could be impounded or revoked only by the passport authority and not by any other authority/forum/Court, we will now deal with certain provisions of the Passport Act.
12. A passport is considered to be essentially a political document for the benefit of its holder. A passport recognises the holder as the citizen of the country granting it and is in the nature of a request to the other country for his free passage there. In that sense, it is a document of importance for travel abroad and is of considerable value to its holder. The issuance of passport is governed by the provisions of the Passports Act, 1967. There is an embargo under Section 3 of the Passports Act that no person shall depart from or attempt to depart from India, unless he holds in this behalf a valid passport or travel document. In order to obtain the passport or a travel document, one has to make an application to the passport authority who is empowered to issue such passport or travel document. The application is to be made under Section 5 of the Act and the passport authority is defined under Section 2(c) of the Act. The passport authority has the power to refuse passport or travel documents on the grounds enumerated under Section 6. The power to vary, impound or revoke passports and travel documents is conferred on the passport authority under Section 10. The reasons for such variation, impounding and revocation of passports and travel documents are enumerated under Section 10(3) of the Act, which reads as under:-
S.10(3) The passport authority may impound or cause to be impounded or revoke a passport or travel document,--
(a) if the passport authority is satisfied that the holder of the passport or travel document is in wrongful possession thereof,
(b) if the passport or travel document was obtained by the suppression of material information or on the basis of wrong information provided by the holder of the passport or travel document or any other person on his behalf:
Provided that if the holder of such passport obtains another passport, the passport authority shall also impound or cause to be impounded or revoke such other passport.
(c) if the passport authority deems it necessary so to do in the interests of the sovereignty and integrity of India, the security of India, friendly relations in India with any foreign country, or in the interests of the general public;
(d) if the holder of the passport or travel document has, at any time after the issue of the passport or travel document, been convicted by a Court in India for any offence involving moral turpitude and sentenced in respect thereof to imprisonment for not less than two years;
(e) if proceedings in respect of an offence alleged to have been committed by the holder of the passport or travel document are pending before a Criminal Court in India;
(f) if any of the conditions of the passport or travel document has been contravened;
(g) if the holder of the passport or travel document has failed to comply with a notice under sub-section (1) requiring him to deliver up the same;
(h) if it is brought to the notice of the passport authority that a warrant or summons for the appearance, or a warrant for the arrest, of the holder of the passport or travel document has been issued by a Court under any law for the time being in force or if an order prohibiting the departure from India of the holder of the passport or other travel document has been made by any such Court and the passport authority is satisfied that a warrant or summons has been so issued or an order has been so made.
13. Apart from the power to vary, impound or revoke a passport or travel document, the Central Government or any designated officer could by order suspend any passport by virtue of the provisions of Section 10-A. Any person aggrieved by any order passed under the provisions of the Act could prefer an appeal to the appellate authority under Section 11. The contravention of the provisions of the Act is considered to be an offence, for which penalties are also enumerated under Section 12. The above provisions of the Passports Act would show that the Passports Act is a special enactment governing not only for issuance of passport but also for interim suspension, variation, revocation and impounding of the passport in exercise of powers under Section 10 of the Act which powers are exhaustive. Hence, the Passport Act occupies the field covered under the provisions enumerated therein.
14. The Apex Court in Satwant Singh Sawhney v. D.Ramarathnam, Asst. Passport Officer, 1967 (3) SCR 525, while considering the right of a passport holder to travel abroad, has observed that such a right is guaranteed under Article 21 of the Constitution of India and no person can be deprived of his right to travel except according to procedure established by law. Subsequently, the Apex Court in Menaka Gandhi v. Union of India, 1978 (1) SCC 248, has held as follows:
...Now, it has been held by this Court in Satwant Singh's case (supra) that 'personal liberty' within the meaning of Article 21 includes within its ambit the right to go abroad and consequently no person can be deprived of this right except according to procedure established by law. Prior to the enactment of the Passports Act, 1967, there was no law regulating the right of a person to go abroad and that was the reason why the order of the Passport Officer refusing to issue passport to the petitioner in Satwant Singh's case (supra) was struck down as invalid. It will be seen at once from the language of Article 21 that the protection it secures is a limited one. It safeguards the right to go abroad against executive interference which is not supported by law; and law here means 'enacted law' or 'State law' (vide A.K.Gopalan's case). Thus, no person can be deprived of his right to go abroad unless there is a law made by the State prescribing the procedure for so depriving him and the deprivation is effected strictly in accordance with such procedure....
15. Quoting the above judgments with approval, the Apex Court subsequently in Suresh Nanda v. Central Bureau of Investigation, 2008 (3) SCC 674, while dealing with the powers of the passport authority to impound under Section 10(3)(e) of the Passports Act, has observed as follows:
7. Sub- section (3)(e) of Section 10 of the Act provides for impounding of a passport if proceedings in respect of an offence alleged to have been committed by the holder of the passport or travel document are pending before a criminal court in India. Thus, the P a s sport Authority has the power to impound the passport under the Act. Section 1 0 2 of Cr.P .C. gives powers to the police officer to seize any property which may be alleged or suspected to have been stolen or which may be found under circumstances which create suspicion of the commission of any offence. Sub- section (5) of Section 165 of Cr.P.C. provides that the copies of record made under sub- section (1) or sub-section (3) shall forthwith be sent to the nearest Magistrate empowered to take cognizance to the offence whereas Section 104 of Cr. P.C. authorizes the court to impound any document or thing produced before it under the Code. Section 165 of Cr.P .C. does not speak about the passport which has been searched and seized as in the present case. It does not speak about the documents found in search, but copies of the records prepared under sub- section (1) and sub- section (3). "Impound" means to keep in custody of the law. There must be some distinct action which will show that documents or things have been impounded. According to the Oxford Dictionary "impound" means to take legal or formal possession. In the present case, the passport of the appellant is in possession of CBI right from the date it has been seized by the CBI. When we read Section 104 of Cr. P.C. and Section 10 of the Act together, under Cr.P .C., the Court is empowered to impound any document or thing produced before it whereas the Act speaks specifically of impounding of the passport.
8. Thus, the Act is a special Act relating to a matter of passport, whereas section 104 of the Cr.P .C. authorizes the Court to impound document or thing produced before it. Where there is a special Act dealing with specific subject, resort should be had to that Act instead of general Act providing for the matter connected with the specific Act. As the Passports Act is a special act, the rule that "general provision should yield to the specific provision" is to be applied. See : Damji Valaji Shah & another Vs. L.I.C. of India & others [AIR 1966 SC 135]; Gobind Sugar Mills Ltd. Vs. State of Bihar & others [1999 (7) SCC 76]; and Belsund Sugar Co. Ltd. Vs. State of Bihar and others [AIR 1999 SC 3125] .
9. The Act being a specific Act whereas Section 104 of Cr. P.C. is a general provision for impounding any document or thing, it shall prevail over that Section in the Cr.P .C. as regards the passport. Thus, by necessary implication, the power of Court to impound any document or thing produced before it would exclude passport. (emphasis supplied) In fact, the Apex Court, while considering the difference between the seizure and impounding of passport, has observed as follows in paragraph-12:
12. It may be mentioned that there is a difference between seizing of a document and impounding a document. A seizure is made at a particular moment when a person or authority takes into his possession some property which was earlier not in his possession. Thus, seizure is done at a particular moment of time. However, if after seizing of a property or document the said property or document is retained for some period of time, then such retention amounts to impounding of the property/or document. In the Law Lexicon by P.Ramanatha Aiyar (2nd Edition), the word "impound" has been defined to mean "to take possession of a document or thing for being held in custody in accordance with law ". Thus, the word "impounding" really means retention of possession of a good or a document which has been seized.
16. In the above backdrops of law on two enactments, we may refer to some of the judgments on the issue relied upon on either side. Mr.T.V.Ramanujam, learned senior counsel for the respondent, would rely upon the judgment of the Division Bench of the Delhi High Court in Sanjeev R.Apte v. I.F.C.I. Ltd., and others, 2008 (154) DLT 77. In that case, the Division Bench has held that the Debts Recovery Tribunal/Debts Recovery Appellate Tribunal has no power to grant interim injunction beyond the provisions of Section 19(6) (presently Section 19(12)) of the RDDBFI Act. In that case, the Division Bench had no occasion to consider the provisions of Section 19(25) of the RDDBFI Act and Rule 18 of the DRT Rules, which empower the Tribunal to make such orders and give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice. The power to prevent abuse of its process includes the power to direct the borrower/guarantor, as the case may be, to surrender the passport and not to leave the country without the permission of the Court. Such power can also be traced to the orders passed to secure the ends of justice. The only requirement for the Tribunal before passing orders is to find out as to whether the borrower/guarantor, if allowed to leave the country, may defeat or frustrate the proceedings pending to recover the dues. The learned senior counsel would further rely upon the judgment of a single Judge of the Delhi High Court in A.S.Mittal v. Presiding Officer, Debt Recovery Tribunal and others, 2004 DRTC 188. The said judgment was also quoted with approval by the Division Bench of the Delhi High Court in Sanjeev R.Apte case, referred supra. Even in the said judgment, the Court had no occasion to consider the provisions of Section 19(25) of the RDDBFI act. Yet another judgment of a learned single Judge of Karnataka High Court in ICICI Ltd., Bangalore v. Passport Officer, Bangalore and others, AIR 2002 Karnataka 118, was relied upon by the learned senior counsel. Here again, the Court had no occasion to consider the scope and power of the Tribunal to pass orders to prevent the abuse of its process or to secure the ends of justice.
17. On the other hand, Mr.A.L.Somayaji, the learned senior counsel appearing for the bank would rely upon the judgment of the Division Bench of Kerala High Court in Smt.Annai Jayabharathi v. The Debt Recovery Tribunal & Anr., CDJ 2005 Ker HC 171. The Division Bench, having referred to the Passport Act as well as the right conferred on the passport holder under Article 21 of the Constitution of India, observed that there is no infraction of Article 21 of the Constitution of India in the event the Tribunal directs the borrower/guarantor to surrender passport. The Division Bench has also held that the power of the Tribunal with reference to the provisions of Section 22 of the RDDBFI Act is wider than a civil Court. For the reasons stated in our order, we are entirely in agreement with the decision of the Division Bench of the Kerala High Court and with great respect, we are not in agreement with the view taken by either the Karnataka High Court or the Delhi High Court.
18. We are inclined to add further in support of our above view. The RDDBFI Act was enacted to provide for establishment of Tribunals, for expeditious adjudication and recovery of debts due to banks and financial institutions with the powers to regulate their own procedure and therefore, it is regulatory in nature. Likewise, The Passport Act, 1967 was also enacted to issue passports and travel documents to regulate the departure from India of citizens of India and other persons. Both are special enactments made by the parliament by virtue of the powers conferred under List I of Seventh Schedule.
19. At the time when the Passport Act was enacted, the RDDBFI Act was not enacted and for that reason, there was no occasion for the Parliament to make a provision conferring on the passport authority to order impounding the passport in case the borrower or the guarantor fails to repay the loan and the bank anticipated or apprehended that such borrower/guarantor may leave the country thereby successfully evading payment. The Act underwent subsequent amendments during 1995, 2000 and 2004 as well. Even then, no specific power was conferred upon the passport authority to order impounding or revoke the passport or the travel document of the defaulted borrower or guarantor, who is facing recovery proceedings before the Debts Recovery Tribunal. Both the Acts being enacted under List I of Seventh Schedule, when the Passport Act deals with the issue of passport and travel document in order to regulate departure from India of citizens of India and other persons, the RDDBFI Act is intended to recover the dues from the borrower or the guarantor with wide range of powers to pass interim orders in order to secure the interest of justice in realising the dues. Both the Acts are operating on different fields and the provisions of the Acts are to be considered keeping in mind the respective objects for which they were enacted. In this context, we may further refer to the following facts.
20. Impounding of a passport results in civil consequence besides curtailment of the fundamental rights guaranteed under Article 21 of the Constitution of India. In Suresh Nanda v. Central Bureau of Investigation, (2008) 3 SCC 674, the question before the Hon'ble Supreme Court was as to whether the Central Bureau of Investigation has got power to retain the passport after seizing the same in connection with a crime under investigation. The argument advanced before the Hon'ble Supreme Court was that though there is no specific power conferred upon the investigating agency to impound a passport under Section 102 of the Code of Criminal Procedure, such power has been vested on the investigating agency by implication. But, the Hon'ble Supreme Court did not accept the said contention. The Hon'ble Supreme Court held that under the Code of Criminal Procedure, the investigating agency has been empowered to seize any property or document including a passport. It has been held that though under Section 102 the investigating agency has the power to seize the property which includes a passport or a travel document, it has no power to impound the same and for that reason, if the investigating agency retains the passport for a longer period, it would amount to impounding of passport or travel document. This finding was rendered taking note of sub-section (2) of Section 102 of the Code of Criminal Procedure, which mandates the investigating agency to produce the seized document to jurisdictional magistrate who would deal with the document in terms of Section 104 of the Code of Criminal Procedure. The Hon'ble Supreme Court after referring to dictionary meaning of the term impound held that under Section 104 of the Code of Criminal Procedure, the court before which the document is produced is empowered to impound the same. However, the Passport Act, 1967, being a special enactment which regulates the issuance and impounding of passport, should have overriding effect over the Code of Criminal Procedure, since under the Passport Act, power to impound has been conferred upon the authorities under Sections 10(3)(e) and 10(3)(h) of the Act. Therefore, the general power of the court conferred under Section 104 of the Code of Criminal Procedure by necessary implication stands excluded in respect of a passport. In nutshell, the Hon'ble Supreme Court has held that though in general the criminal court has got power to impound any document, i.e., produced either by the investigating agency or any person in connection with the case before it, the said power does not extend to impound a passport because impounding of passport is the subject covered by a special enactment in the form of the Passport Act. Since the Passport Act does not empower the criminal court to impound the passport, the Hon'ble Supreme Court has held that the criminal court has got no power to pass any order to retain the passport.
21. A close reading of the said judgment would make it manifestly clear that since impounding of passport infringes the right to life guaranteed under Article 21 of the Constitution, such impounding can be made only by following the due procedure established by law. It is needless to point out that the procedure established by law would mean the law made by the Parliament or by the State Legislatures and not otherwise. In the judgment cited supra, the Hon'ble Supreme Court has held that the Passport Act being a special enactment to regulate the issuance of passport and impounding the same, and the Code of Criminal Procedure is a general enactment containing provisions which are procedural in nature, the special enactment shall override the general enactment. With that finding, the Apex Court has held that the criminal Court cannot impound a passport in exercise of the powers conferred under Sections 102 or 104 of the Code of Criminal Procedure.
22. In Allahabad Bank v. Radhakrishnan, AIR 1999 SC 3426, the Hon'ble Supreme Court had an occasion to thoroughly and scientifically examine the provisions of the RDDBFI Act. The argument before the Hon'ble Supreme Court was that the Tribunal has only limited powers to pass interim orders of certain types, but the injunction granted was not of the type enumerated in Section 19(6) [presently, Section 19(12)] of the Act. The order passed by the Tribunal was an interim order against the respondents restraining them from recovering any money from the company till disposal of the interim matter.
23. The scope of such inherent power on a forum specially constituted under the statute came up for consideration before the Full Bench of this Court very recently in Ramalinga v. Radha, 2011 (4) CTC 481. That was a case where there were conflicting views expressed by two Division Benches in respect of the powers of an Insolvency Court to grant an interim order of protection during pendency of insolvency petition under the provisions of Provisional Insolvency Act. A Division Bench in Sinnaswami Chettiar v. Aligi Goundan and others, AIR 1924 Madras 893 held that the court does not have inherent power whereas another Division Bench in Nallagatti Goundan v. Ramana Gounda and others, AIR 1925 Madras 170 took the view that though there is no express provision in the provisions of the Insolvency Act empowering the Insolvency Court to grant such interim order of protection, the Court has got inherent power. In order to resolve the conflicting views in these two judgments, the matter was referred to the Full Bench of this Court. In Ramalinga v. Radha, 2011 (4) CTC 481, the Full Bench held that though there is no specific provision in the Act empowering the Insolvency Court to grant such a relief, the Court has got inherent power to pass such interim order. Thus, the judgment of the Division Bench in Sinnaswami Chettiar v. Aligi Goundan and others, AIR 1924 Madras 893 was overruled and the law laid down in Nallagatti Goundan v. Ramana Goundan and others, AIR 1925 Madras 170 was upheld by the Full Bench. Drawing an analogy from the same, there can be no doubt to hold that the Tribunal/Appellate Tribunal enjoy wider inherent power than an ordinary civil Court which could be exercised to pass interim order to meet the ends of justice including an order to impound a passport. The only limitation would be that such orders should relate only to ensure the implementation of the provisions of the RDDBFI Act, particularly to protect the interest of the banks/financial institutions to recover the dues.
24. Incidentally, we will have to consider the next question as to whether the RDDBFI Act will override the Passport Act. The Passport Act falls within entry 19 of List-I of the Seventh Schedule and the RDDBFI Act falls within entry 45 of List-I of Seventh Schedule of the Constitution of India. Both are special laws which deal with respective entry. If, there is any inconsistency between these two laws, an occasion may arise for this Court to examine as to which will prevail upon the other. In the event, this Court finds no inconsistency between the two laws made by the Parliament, the question of one Act overriding the other does not arise. Insofar as the Passport Act is concerned, of course, it provides for impounding of passport by following a set of procedure by the authority. As held by the Hon'ble Supreme Court it will have overriding effect over the general law, namely, the Code of Criminal Procedure or Code of Civil Procedure so as to exclude the power of impounding by exercise of such inherent power. If we have to consider whether the inherent power of the Court under the Code of Civil Procedure will prevail upon the Passport Act, the answer will be an emphatic no, because the Passport Act is a special enactment which will naturally override the general law. But, insofar as RDDBFI Act is concerned, the inherent power of the Tribunal does not flow from the general law namely, Code of Civil Procedure, as it flows from another statute namely, RDDBFI Act, which is also a special enactment. The Hon'ble Supreme Court has made it very clear that such inherent power flowing from RDDBFI Act is wider than the inherent power which would normally flow on a civil Court. Therefore, the provisions of the Passport Act shall not exclude the inherent power of the Debts Recovery Tribunal to pass any interim order to meet the ends of justice for which power flows from the special enactment namely, RDDBFI Act.
25. In Income Tax Officer v. M.K.Mohammad Kunhi, AIR 1969 SC 430, the Full Bench of the Hon'ble Supreme Court had to examine an important question as to whether the Appellate Income Tax Tribunal has power under the relevant provisions of the Income Tax Act, 1961 to stay the proceedings of recovery of realization of the penalty imposed by the departmental authorities on an assessee during pendency of an appeal before it. In paragraph 6 of the said judgment, the Hon'ble Supreme Court has held thus:
It is well known that an Income-tax Appellate Tribunal is not a court but it exercises judicial powers. The Tribunal's powers in dealing with appeals are of the widest amplitude and have in some cases held similar to and identical with the powers of an appellate Court under the Civil Procedure Code. Having taken such a view based on the earlier judgments on this subject and after referring to Halsbury's Laws of England in paragraph 8 of the judgment, the Hon'ble Supreme Court made the following observation:-
In our opinion the Appellate Tribunal must be held to have the power to grant stay as incidental or ancillary to its appellate jurisdiction. In paragraph 9 of the said judgment, the Hon'ble Supreme Court, with a caution note, has ultimately held as follows:-
9. .... It is needless to point out that the power of stay by the Tribunal is not likely to be exercised in a routine way or as a matter of course in view of the special nature of taxation and revenue. laws. It wilt only be when a strong prima facie case is made out that the Tribunal will consider whether to stay the recovery proceedings and on what conditions and the stay will be granted in most deserving and appropriate cases where the Tribunal is satisfied that the entire purpose of the appeal will be frustrated or rendered nugatory by allowing the recovery proceedings to continue during the pendency of the appeal.
26. In the instant case, though Debts Recovery Tribunal constituted under the RDDBFI Act is not a court stricto sensu, still, undoubtedly, it exercises judicial powers and such judicial powers flow from the RDDBFI Act. As we have already held, the said Act not only empowers the Tribunal to pass interim orders in order to recover the dues, but also enables to regulate its own procedures. Though there is no specific provision in the Act for impounding a passport, such power is inherent in the Tribunal conferred under Section 19(25) of the RDDBFI Act. The power of the Tribunal to make such order can be traced as well to Section 22 of the RDDBFI Act and Rule 18 of the Rules. Clause 75 of the Second Schedule to Income-tax Act, is also made applicable to the Tribunals by virtue of provisions of Section 29 of the RDDBFI Act. Thus, we hold that the power of the Tribunal or Appellate Tribunal to impound a passport has not been either expressly or impliedly excluded by the provisions of the Passport Act. Even while we hold so, having regard to the law laid down by the Apex Court in Menaka Gandhi's case, supra, holding that a right to hold passport cannot be deprived as it may amount to infringement of Article 21 of the Constitution of India, the power under Section 19(25) cannot be exercised as a matter of routine and has to be exercised in deserving cases and that too sparingly. While issuing such order, the Tribunal should satisfy itself as to whether such directions are absolutely necessary in the given set of facts and to meet the ends of justice since the satisfaction of the Tribunal is subject to judicial review.
27. Coming to the facts of this case, at the time when the O.A. was filed by the petitioner-bank, a sum of Rs.221,97,76,635.78p as on 31.12.2009 was due from the respondent. On the ground that the respondent availed the credit facilities during the year 2005 and defaulted in repayment of the loan and the interest as well, the bank called upon the respondent to pay the dues except invoice funding facility. In spite of the same, the respondent failed to pay the money, which necessitated the bank to invoke the various bank guarantees. The bank came to know that the borrower had shut the business for several months and had deliberately not finalised its books of accounts since March, 2007 and the accounts have not been audited till 2008. The borrower had also admittedly borrowed a sum in excess of Rs.800 crores from various lenders and they are claiming that there are no assets worth available with the borrower. The borrower had also not submitted stock statements for several months. The borrower also owed a large sum of money to other lenders apart from the bank and had also transferred various assets to defeat the claim of the bank and other lenders. Under the above circumstances, the bank filed an application under Section 19(25) of the RDDBFI Act before the Debts Recovery Tribunal for a direction to the respondent herein, who is the Managing Director of the principal borrower to surrender his passport and not to leave the country without permission of the Tribunal. The Tribunal, having considered the above grievance, ultimately ordered the application. The said order was set aside by the Debts Recovery Appellate Tribunal solely on the ground that the Tribunal had no jurisdiction to pass such an order.
28. As we have held that both the enactments operate on different field and the powers conferred on the Tribunal to pass interim orders particularly under Section 19(25) of the Act is wide enough to cover the power to pass an order directing the surrender of passport, we hold that the order of the Debts Recovery Appellate Tribunal is unsustainable and is liable to be set aside.
29. The provisions of the RDDBFI Act must be interpreted by the Courts to give effect to the object for which such enactment was made. In order to ensure recovery of the dues to the bank, and for that matter such recovery is in the interest of sustained growth of economy of the country, measures like directing surrender of passport and ordering the borrower/guarantor not to leave the country without the permission of the Tribunal would be well within the powers conferred on the Tribunal under Section 19(25) of the RDDBFI Act. Such an order, in our opinion, is sustainable especially in the present case in view of the fact that the application filed by the bank was in respect of recovery of Rs.221,,97,76,635.78p which was due as on 31.12.2009 from the respondent and the respondent also owed more than a sum of Rs.800 crores to various lenders and that there are no assets worth the value available with the borrower. The Debts Recovery Appellate Tribunal has miserably failed to take note of the above aspects while setting aside the order of the Debts Recovery Tribunal.
30. Hence, for all the above reasons, we set aside the order of the Debts Recovery Appellate Tribunal, Chennai, dated 12.08.2011 passed in M.A.No.606 of 2010 and restore the order of the Debts Recovery Tribunal-II, Chennai, dated 30.09.2010 passed in I.A.No.250 of 2010 in O.A.No.190 of 2010. The writ petition is allowed. No costs.
(D.M.,J.) (K.K.S.,J.)
11.10.2011
Index : Yes
Internet : Yes
ss/sra
To
1. The Debts Recovery Appellate Tribunal
Ethiraj Salai, Egmore
Chennai 600 008
2. The Debts Recovery Tribunal-2
Deva Towers, 6th Floor
No.770-A, Anna Salai
Chennai 600 002
D.MURUGESAN, J.
AND
K.K.SASIDHARAN, J.
(ss/sra)
Order in
W.P.Nos.19707 of 2011
11.10.2011