Calcutta High Court
Vck Share & Stock Broking Services Ltd vs Bank Of Rajasthan Ltd on 19 April, 2011
Author: Bhaskar Bhattacharya
Bench: Bhaskar Bhattacharya
1
IN THE HIGH COURT AT CALCUTTA
Civil Appellate Jurisdiction
(Original Side)
Present:
The Hon'ble Mr. Justice Bhaskar Bhattacharya
And
The Hon'ble Mr. Justice Sambuddha Chakrabarti
A.P.O. No.488 of 2002
G.A. No.1747 of 2010
C.S. No.77 of 1998
VCK Share & Stock Broking Services Ltd.
Versus
Bank of Rajasthan Ltd.
With
A.P.O. No.489 of 2002
G.A. No.1748 of 2010
C.S. No.129 of 1999
VCK Share & Stock Broking Services Ltd.
Versus
Bank of Rajasthan Ltd.
For the Plaintiff: Mr. Anindya Mitra,
Mr. Nirmalya Mohan Bhattacharya,
Mr. Brajesh Jha.
For the Respondent: Mr. Soumen Sen,
Mr. Sourav Mukherjee,
Mr. Utsav Mukherjee.
Heard on: 01.04.2011.
Judgment on: 19th April, 2011.
Bhaskar Bhattacharya, J.:
2 These two appeals were heard analogously, as similar question of law is involved in these two appeals and by a composite order, the learned Single Judge of this Court disposed of two applications, being G.A. No.4171 of 2000 and G.A. No.4206 of 2000 by transferring the two suits filed by the appellants before us, being C.S. No.77 of 1998 and C.S. No.129 of 1999 with a direction that the plaints should be taken off the file with liberty to the plaintiffs to place those before the Debts Recovery Tribunal (DRT) within three months.
Being dissatisfied, the plaintiffs have preferred these two appeals, being A.P.O. No.488 of 2002 and A.P.O. No.489 of 2002.
The facts giving rise to filing of these appeals may be summed up thus:
a) On 6th March, 1998, the appellants filed a suit being C.S. No.77 of 1998 in the Original Side of this Court against the bank claiming various reliefs as detailed below:
"i) Decree for sale of shares mentioned in paragraph 11 above and payment of such sale proceeds to the plaintiff No.1;
ii) A decree for accounts as claimed in paragraph 29 and an appropriate decree for payment of money upon such enquiry; 3
iii) Mandatory injunction directing the defendants to return the documents mentioned in paragraphs 6 & 12 to the plaintiff;
iv) An enquiry into the damages suffered by the plaintiffs and a decree for such sum as may be found due upon such enquiry;
v) Interest, interim and further; vi) Receiver; vii) Injunction viii) Costs; ix) Such further relief or reliefs." b) Subsequently on 9th March, 1999, another suit being C.S. No.129 of
1999 was filed by the appellants against the selfsame bank and thereby claiming the following reliefs:
"i) A declaration that the purported sale of 4,98,000 shares of BFL Software pledged by the plaintiff and of other pledged shares mentioned in Annexure 'I' were and are void;
ii) A decree directing the defendant to unconditionally return the shares pledged with it by the plaintiff in respect of the said overdraft account, particulars whereof are set out in Annexure 4 "D", hereto; in default a decree be passed, against the defendant in favour of the plaintiff for the sum of Rs.48,95,08,757.45 representing the market price of the said shares on the date of the defendant's refusal to the return the said shares on February 17, 1999. Alternatively, an enquiry be made to determine the market value of the said shares or with reference to the such other date as this Hon'ble Court may seem fit and proper; and a decree be passed for the value of the shares as determined by this Hon'ble Court;
iii) Declaration that no sum is payable by the plaintiff to the defendant in respect of the said term loan account dated July 27, 1994 and the said overdraft account dated September 19, 1995 and that the defendant is not entitled to a decree for the sum of Rs.8,62,41,973.37 or any part thereof against the plaintiff in respect of the said two accounts;
iv) In the alternative, an enquiry be made into and accounts be taken of the dealings and transactions between the parties relating to the term loan account dated July 27, 1994; and over draft account dated September 19, 1995 for determination of the amount, if any to be lawfully payable by the plaintiff to the defendant, and a decree for redemption in favour of the plaintiff be passed against the defendant directing the 5 defendant to return the title deeds mentioned in Annexure "B"
and the pledged shares mentioned in Annexure "D" upon/or against payment by the plaintiff of the amount lawfully adjudged to be due to the defendant in respect of the said two accounts;
v) Injunction;
vi) Receiver;
vii) Costs;
viii) Further or other reliefs."
c) Prior to the filing of the aforesaid two suits, the bank approached the DRT on 21st November, 2007 for issue of certificate against the appellants for a sum of Rs.8,62,41,973.36p. on the allegation that the appellants after taking loan from the bank failed to repay the amount.
d) The appellants entered appearance in the proceedings before the DRT on 4th March, 1999 and filed their written statement on 1st November, 2000.
e) In the two suits filed by the appellant in the Original Side of this Court, the bank filed two applications being G.A. No.4171 of 2000 and G.A. No.4206 of 2000, thereby praying for rejection of both the 6 plaints and/or stay of all further proceedings in respect of both the suits in view of the provisions contained in Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (Act).
f) In those two applications for transfer, the contention put forward by the defendant-bank was that it would appear from the averments made in the plaint that the suit was barred by the law for the time being in force and this High Court did not have any jurisdiction to deal with the subject-matter of the suit as the same was within the exclusive jurisdiction of the DRT and as such, the suit was barred by the provisions of the Act. It was further contended that the plaintiffs did not have any cause of action against the bank and the plaints filed in the suits did not disclose any cause of action. It was further contended that after the amendment of the Act came into effect from 17th January, 2000, the claims of the plaintiffs had to be decided by the DRT and the DRT had exclusive jurisdiction over the subject- matter of the suits.
g) The aforesaid application was contested by the appellants before the learned Single Judge thereby contending that the suits filed by the appellants before this Court were quite maintainable and the provisions contained in Act did not take away the right of a borrower to file a suit before Civil Court against the Bank or the financial institutions.
7
h) The learned Single Judge by the order impugned herein came to the conclusion that the claims made by the plaintiffs in the two suits against the defendant-bank came within the purview of Sub-sections (8) to (11) of Section 19 of the Act and therefore, the plea for declaration in relation to the damages claimed in the suit was nothing but of the nature of set off. The learned Single Judge consequently held that this Court has no jurisdiction to entertain the suits and the prayers made in the plaints were really in the nature of either counter-claim or set off and therefore, after the creation of the DRT, the jurisdiction of the Civil Court has been excluded in respect of the counter-claim against the claim of the bank. The learned Single Judge, therefore, held that the suits field by the plaintiffs were not entertainable before this Court and it would be proper to direct the plaintiffs that the plaints field in this Court should be taken off the file and the plaintiffs would be at liberty to place the same before the DRT within three months.
Being dissatisfied, the plaintiff has come up with these two appeals. Mr. Anindya Mitra, the learned senior Advocate appearing on behalf of the appellant, has strenuously contended before us that there is no provision in the Act for ousting the jurisdiction of the Civil Court to entertain suits and/or proceedings against Banks and Financial Institutions and Section 31 of the Act 8 merely refers to the suits and proceedings pending before any Court immediately before the date of establishment of a Tribunal under the Act which is filed by such Banks and Financial Institutions and was pending on the date, the Act came into operation. Mr. Mitra further contends that there is no provision for the transfer of the suits filed against the Banks and Financial Institutions which are pending before a Civil Court and there is also no provision for transfer of any suit filed against the Bank and Financial Institutions subsequent to coming into force of the Act before a Civil Court. Mr. Mitra contends that the two suits were filed by the appellants after Act came into operation and after the establishment of the DRT-1, Kolkata.
According to Mr. Mitra even the amendment of the Act effected in the year 2000 has no impact on the jurisdiction of the Civil Court to entertain a suit instituted by a borrower against the bank. Mr. Mitra contends that the learned Single Judge totally misconstrued the plaint case of his client and passed the order impugned.
Mr. Mitra further submits that the point involved in this appeal has now been decided by the Supreme Court in various decisions, namely, India Bank Vs. ABS Marine Products (P) Ltd., reported in 2006 (5) SCC 72 and Nahar Industrial Enterprises Limited Vs. Hongkong and Shanghai Banking Corporation & Ors., reported in 2009 (8) SCC 646 and it was held that the jurisdiction of a Civil Court to entertain a suit against the bank at the instance of a borrower is not curtailed by the provision contained in the Act.
9
Mr. Sen, the learned Advocate appearing on behalf of the bank, has, on the other hand, opposed the aforesaid contentions of Mr. Mitra and has submitted that in the present case, the proceeding before the Debts Recovery Tribunal by the bank is a prior proceeding and thereafter, the two suits were filed of concerning the shares pledged by the appellants by way of security to the loan advanced and in the alternative, for damages, and thus, the issues sought to be raised in the subsequent suits could have been conveniently raised in the statement of defence either by way of set off or counter-claim before the DRT. According to Mr. Sen, the original written statement was filed by the plaintiff in the DRT on 1st November, 2000 just after the amendment of 2000 in which initially no counter-claim was raised and thereafter, an amendment to the original written statement was carried out on 23rd January, 2003 by which the appellants before us specifically alleged wrongful and illegal sale of various shares which included the shares of BFL Software which is the subject-matter of the subsequent suit being C.S. No.129 of 1999. According to Mr. Sen, the subject-matter of the two suits in the High Court formed the subject-matter of defence and the counter-claim in the other proceeding before the DRT and thus, the learned Single Judge rightly passed the order impugned.
Mr. Sen further contends that the question involved in these appeals is whether the common question of law or fact arises in both the proceedings and this question should not be answered from the point of view of ouster of jurisdiction of the Civil Court. According to him, it is to be answered keeping in 10 mind the reason for introduction of the amendment of the Act and the Civil Court is required to take into consideration the fact that the financial institution cannot raise a counter-claim before a Civil Court.
Mr. Sen, in this connection, strongly relied upon the decisions of the Supreme Court in the cases of United Bank of India Vs. Abhijit Tea Company Private Limited, reported in (2000) 7 SCC 357 and the State Bank of India Vs. Ranjan Chemicals & Anr., reported in (2007) 1 SCC 97. Mr. Sen contends that in the subsequent decision of the Supreme Court in the case of Nahar Industrial Enterprises Limited (Supra), the Supreme Court proceeded on the basis that the case of Indian Bank had clarified Abhijit Tea (Supra) although such fact was incorrect. Mr. Sen further submits that in ABS Marine (Supra), the Supreme Court disapproved Abhijit Tea. On the other hand, in the case of Ranjan Chemicals (Supra), it had relied upon Abhijit Tea (Supra) and had disapproved ABS Marine Products Pvt. Ltd (Supra).
In such circumstances, Mr. Sen submits that we should follow the decision of Ranjan Chemicals which is in accordance with the object which the amendment of the Act sought to achieve.
Mr. Sen lastly contended that after the decision of the DRT in the matter, there is hardly any scope of hearing of these two suits on merit and therefore, this appeal should be dismissed by not interfering with the order passed by the learned Single Judge.
11
Therefore, the question that arises for determination in these two appeals is whether the learned Single Judge was justified in directing the plaintiff to re- file the plaint before the DRT and to strike out the plaints filed in the Original Side of this Court.
After hearing the learned counsel for the parties and after going through the materials on record, we are of the view that a Civil Court can direct return of plaint only if it appears to such Court at any stage of the suit that it has no pecuniary or territorial jurisdiction to entertain the same. In case of inherent lack of jurisdiction, for the bar created by any statute, the Civil Court will not return the plaint but will either reject the plaint if it appears that on the basis of averments made even in the plaint, the suit is barred by any law for the time being in force or dismiss the suit as not maintainable without going into the merit of the dispute if it appears on consideration of the materials on record that the suit is not maintainable before a Civil Court. In the case before us, the learned Trial Judge has, however, taken recourse to the return of plaint to be presented to the DRT on the ground of want of jurisdiction of the Civil Court.
Therefore, the crucial question before us is whether a suit filed by a borrower against a bank or financial institution is barred in view of the provisions of the Act.
12
We find that the said point has been already decided in several decisions of the Supreme Court holding that a suit filed by a borrower against the bank is not barred before the Civil Court although the suit filed by the bank against the borrower is barred if the valuation exceeds rupees ten lakh.
We may at this stage profitably refer to the following observations of the Supreme Court in the case of Nahar Industrial Enterprises Ltd (Supra), in dealing with a case of transfer of the civil suit to DRT:
"We may in this context place on record the following observations from Indian Bank: (SCC pp. 81-82, paras 14-16) "14. Section 9 of the Code of Civil Procedure provides that the courts shall have jurisdiction to try all suits of a civil nature, excepting suits of which their cognizance is either expressly or impliedly barred.
15. It is evident from Sections 17 and 18 of the Debts Recovery Act that civil court's jurisdiction is barred only in regard to applications by a bank or a financial institution for recovery of its debts. The jurisdiction of civil courts is not barred in regard to any suit filed by a borrower or any other person against a bank for any relief. ...
"16. What is significant is that Sections 17 and 18 have not been amended. Jurisdiction has not been conferred on the Tribunal, even after amendment, to try independent suits or proceedings initiated by borrowers or others against banks/financial institutions, nor the jurisdiction of civil courts barred in regard to such suits or proceedings."13
It must be remembered that the jurisdiction of a civil court is plenary in nature. Unless the same is ousted, expressly or by necessary implication, it will have jurisdiction to try all types of suits."
"A debtor having regard to the provisions of the DRT Act would not be entitled to maintain an action before the Tribunal. If a suit is to be transferred from a civil court to a Tribunal, he would lose some rights including the right to prefer an appeal before a higher court in terms of Sections 96 and 100 of the Code of Civil Procedure. Mr Divan, however, has strongly placed reliance upon Union of India v. Delhi High Court Bar Assn. wherein it was observed that the Tribunals have become an essential part of the judicial system in the country. Such observations were made keeping in view the provisions of Articles 323-A and 323-B of the Constitution of India. The logical extension of the said observations would not lead to a conclusion that the Tribunals are either civil courts or this Court would be entitled to exercise its inherent power for transfer of a civil suit to a Tribunal.
"We may place on record that in Durgesh Sharma this Court has clearly held that the provisions of Sections 22 to 25 of the Code of Civil Procedure are exhaustive in nature. If that be so, inherent power of the court could clearly not be invoked. Reliance has also been placed on Ram Chand and Sons Sugar Mills (P) Ltd. v. Kanhayalal Bhargava wherein it has been held: (AIR p. 1902, para 5) "5. ... Having regard to the said decisions, the scope of the inherent power of a court under Section 151 of the Code may be defined thus:
the inherent power of a court is in addition to and complementary to the powers expressly conferred under the Code. But that power will not be exercised if its exercise is inconsistent with, or comes into conflict with, any of the powers expressly or by necessary implication conferred by the other provisions of the Code. If there are express 14 provisions exhaustively covering a particular topic, they give rise to a necessary implication that no power shall be exercised in respect of the said topic otherwise than in the manner prescribed by the said provisions. Whatever limitations are imposed by construction on the provisions of Section 151 of the Code, they do not control the undoubted power of the Court conferred under Section 151 of the Code to make a suitable order to prevent the abuse of the process of the court.
"We, however, are of the opinion that the principles laid down therein cannot be said to have any application in the instant case as it would bear repetition to state that by reason thereof the court would not be entitled to denude a suitor of his right of appeal and other substantive rights.
We are also unable to persuade ourselves to hold that the right of transfer of a case being procedural in nature should be construed liberally. By reason thereof, substantive right of a party cannot be taken away. While accepting that the rules of procedures are intended to provide justice and not to defeat it as has been held by this Court in N.T. Veluswami Thevar v. G. Raja Nainar and Lakshmiratan Engg. Works Ltd. v. CST, that the court must bear in mind that it would not cause injustice to any of the parties thereby.
"Reliance has also been placed on Industrial Investment Bank of India Ltd. v. Marshal's Power & Telecom (I) Ltd. and Durga Hotel Complex v. RBI. Both the aforementioned cases have been determined by a Bench which has decided Ranjan Chemicals. Those cases related to the contentions raised before the Banking Ombudsman. The Bench held that the appellants therein could make all their claims before the DRT while defending the claim of the bank, including the ones he had put forward before the Banking Ombudsman. We are not concerned with 15 such a contention herein. In any event, in view of our findings that we are bound to follow Indian Bank, this argument has no force."
(Emphasis supplied by us).
In the aforesaid case of Nahar Industrial Enterprises (Supra), the Supreme Court having taken note of all the earlier decisions of the Supreme Court on the points, viz. 1) United Bank of India Vs. Abhijit Tea Company Private Limited, reported in (2000) 7 SCC 357, 2) State Bank of India Vs. Ranjan Chemicals & Anr., reported in (2007) 1 SCC 97, 3) Indian Bank Vs. ABS Marine Products Pvt. Ltd reported in (2006) 5 SCC 72 and after having interpreted those earlier decisions came to the conclusion that the civil suit at the instance of the borrower was not barred. We are bound by the decision in the case of Nahar Industrial Enterprises (Supra), regarding the position of law on the point.
We, therefore, find that the learned Single Judge erred in law in returning the plaint for presentation before the DRT which was not permissible in law.
We, consequently, set aside the order passed by the learned Single Judge and allow these appeals. Let the suits be proceeded with in this Court in accordance with law. We make it clear that we have not gone into the question as regards the effect of the award passed by DRT on these suits and it would be for the learned Single Judge of this Court having present determination to take up suits to decide such question in accordance with law. 16
In the facts and circumstances, there will be, however, no order as to costs.
(Bhaskar Bhattacharya, J.) I agree.
(Sambuddha Chakrabarti, J.) Later:
After this order is passed, the learned advocate appearing on behalf of the respondent prays for stay of operation of our order.
In view of what have been stated above, we find no reason to stay our order. The prayer is refused.
Photostat certified copy of this order be made available to the parties within a week from today.
(Bhaskar Bhattacharya, J.) I agree.
(Sambuddha Chakrabarti, J.) 17