THE HONOURABLE SMT. JUSTICE M.G. PRIYADARSINI
CIVIL REVISION PETITION No. 1152 of 2014
ORDER:
By way of this civil revision petition, the petitioner-State Bank of India, seeks transfer of pending proceedings in O.S. No. 814 of 2011 from the file of III Additional Chief Judge, City Civil Court, Hyderabad to the Debts Recovery Tribunal, Hyderabad to be tried and disposed of along with O.A. No. 457 of 2011 pending on its file.
2. The brief facts of the case are that the respondent No. 1 is the partnership firm involved in the business of manufacturing, purchase and sale of gold ornaments, bullion gold, precious stones etc. Respondent Nos. 2 to 7 are the partners of respondent No. 1 firm. The respondent No. 1 availed credit facility from the petitioner-Bank under 'Metal Gold Scheme' during the year 2010-2011 for loan limit to the extent of Rs.60.00 crores vide sanction letter dated 21.04.2011 duly executing security documents and furnishing bank guarantees. Later on, alleging fraudulent acts on the part of respondent No. 1 in furnishing created bank guarantees in the name of Punjab National Bank for withdrawing the gold, the petitioner-Bank 2 MGP, J C.R.P._1152_2014 lodged a complaint on 15.09.2011 with the CBI as well as Banking Securities and Fraud Cell, Bangalore apart from initiating proceedings under the Recovery of Debts and Bankruptcy Act, 1993 (previously, Recovery of Debts Due to Banks and Financial Institutions Act, 1993) (for short, 'RDB Act') by filing O.A. No. 457 of 2011 before the Debts Recovery Tribunal, Hyderabad against the respondents on 26.09.2011 for recovery of outstanding debts of Rs.62,00,43,259/-. Without putting up appearance before the Debts Recovery Tribunal, the respondent No. 1 filed a suit against the petitioner-Bank in O.S. No. 814 of 2011 on 23.11.2011 before the III Additional Chief Judge, City Civil Court, Hyderabad seeking recovery of Rs.13,75,000/- with interest thereon at 18% per annum from 11.07.2007 onward apart from damages and costs. Hence, the petitioner-Bank approached this Court seeking transfer of proceedings in the suit in O.S. No. 814 of 2011 to be tried and disposed of along with O.A. No. 457 of 2011.
3. Learned Standing Counsel for the petitioner-Bank submits that the Bank has filed the O.A. seeking recovery of debt due from the respondents placing reliance on the security documents executed by the respondents and that the respondent No. 1 is claiming relief of recovery of money and 3 MGP, J C.R.P._1152_2014 damages etc., from the petitioner-Bank in the suit in O.S. No. 814 of 2011 before the III Additional Chief Judge, City Civil Court, Hyderabad and therefore, the Bank has to rely upon all the loan documents already filed in O.A. No. 457 of 2011 to prove its case in the suit instituted by the respondent No. 1. It is contended that the RDB Act was amended on 17.01.2000 by substituting Section 19 and by virtue of the said amendment, a counter-claim against the claim of the petitioner-Bank is provided under Sub-Section 8 of Section 19 of the RDB Act. Furthermore, Sub-section 9 of Section 19 of the RDB Act provides that a counter-claim shall have the same effect as of a cross-suit. It is submitted that the Debts Recovery Tribunal has been conferred with the jurisdiction to try the suits of the Banks with the value of more than Rs.10.00 lakhs and thus, the jurisdiction of the civil courts is taken away under the RDB Act. Thus, after the amendment and substitution of Section 19 with effect from 17.01.2000, the Debts Recovery Tribunal is vested with the power to adjudicate the claim of the respondent No. 1 against the petitioner-Bank in O.S. No. 814 of 2011 and therefore, the suit filed by the respondent No. 1 against the petitioner-Bank is nothing but a cross-suit against the claim of the Bank in the O.A. Such being the case, until and unless the 4 MGP, J C.R.P._1152_2014 suit in O.S. No. 814 of 2011 is transferred from the court of III Additional Chief Judge, City Civil Court, Hydeabad to the Debts Recovery Tribunal, Hyderabad for trial and disposal along with O.A. No. 457 of 2011, the parties will not be in a position to lead evidence effectively as all the documents relied upon in the O.A. are also the documents to be relied on by the parties in the suit. Hence, it is just and necessary to try the suit in O.S. NO. 814 of 2011 along with the O.A. pending before the Debts Recovery Tribunal, Hyderabad not only for convenient trial but also to avoid multiplicity of proceedings and conflicting judgments.
4. Per contra, the respondent No. 2, who is also the Managing Partner of respondent No. 1 firm, appearing as party- in-person, contended that the RDB Act was enacted with the purpose of providing a summary procedure to enable Banks and financial institutions to recover debts due to them in a speedy manner and it did not take away the jurisdiction of civil courts, and therefore, the very purpose of the statute would be defeated if there is inundation of civil suits filed by the borrowers against the Banks before the DRT. Placing reliance on the decisions of the Apex Court in Nagri Pracharini Sabha v. Distt. & Sessions 5 MGP, J C.R.P._1152_2014 Judge 1 and Ramesh Chand Ardawatiya v. Anil Panjwani 2, the learned counsel submits that a litigant having a grievance of a civil nature has an independent right to institute a civil suit and that the civil court can entertain a civil suit even where a special Tribunal conferred with the exclusive jurisdiction to try a particular class of cases exists.
5. Heard the learned Standing Counsel for the petitioner- Bank and the respondent No. 2, who appeared as party-in- person. Perused the material available on record.
6. In view of the submissions made on either side, it is relevant to refer Section 19 of the RDB Act, which reads thus:-
"19. Application to the Tribunal.--
(1) to (7) xxx (omitted as not necessary) (8) A defendant in an application may, in addition to his right of pleading a set-off under sub-section (6), set up, by way of counterclaim against the claim of the applicant, any right or claim in respect of a cause of action accruing to the defendant against the applicant either before or after the filing of the application but before the defendant has delivered his defence or before the time limited for delivering his defence has expired, whether such counterclaim is in the nature of a claim for damages or not.
1 1991 Supp (2) SCC 36 2 (2003) 7 SCC 350 6 MGP, J C.R.P._1152_2014
(9) A counterclaim under sub-section (8) shall have the same effect as a cross-suit so as to enable the Tribunal to pass a final order on the same application, both on the original claim and on the counterclaim.
(10) to (25) xxx (omitted as not necessary)".
7. Thus, based on the said provisions, the learned Standing Counsel for the petitioner-Bank contends that as per the scheme of the RDB Act, jurisdiction was conferred upon DRT to try a counterclaim and set-off under Section 19 of the RDB Act and therefore, all such counterclaims and set-offs, including a cross-suit filed by the borrower independently, should be tried by DRT.
8. The issue whether an independent suit filed by a borrower against a bank/financial institution, which has already initiated the proceedings for recovery of its loan against the borrower/plaintiff under the RDB Act, is liable to be transferred and tried along with the proceedings under the RDB Act by DRT is no more res integra in view of the reference answered by the Apex Court in Bank of Rajasthan Limited v. VCK Shares and 7 MGP, J C.R.P._1152_2014 Stock Broking Services Limited 3. The relevant findings of the Apex Court at para Nos.43 to 47 and 49 read thus:-
"43. We must note at the threshold itself that there are no restrictions on the power of a Civil Court under Section 9 of the Code unless expressly or impliedly excluded. This was also reiterated by a Constitution Bench of this Court in Dhulabhai vs. State of Madhya Pradesh 4. Thus, it is in the conspectus of the aforesaid proposition that we will have to analyse the rival contentions of the parties set out above. Our line of thinking is also influenced by a Three-Judges Bench of this Court in Dwarka Prasad Agarwal (D) By LRs and Anr. v. Ramesh Chander Agarwal and Ors. 5 where it was opined that Section 9 of the Code confers jurisdiction upon Civil Courts to determine all disputes of civil nature unless the same is barred under statute either expressly or by necessary implication and such a bar is not to be readily inferred. The provision seeking to bar jurisdiction of a Civil Court requires strict interpretation and the Court would normally lean in favour of construction which would uphold the jurisdiction of the Civil Court.
44. Now, if we turn to the objective of the RDB Act read with the scheme and provisions thereof; it is abundantly clear that a summary remedy is provided in respect of claims of banks and financial institutions so that recovery of the same may not be impeded by the elaborate procedure of the Code. The defendant has a right to defend the claim and file a counterclaim in view of sub-Sections (6) and (8) of Section 19 of the RDB Act. In case of pending proceedings to be transferred to the DRT, Section 31 of the RDB Act took care of the issue of mere transfer of the Bank's claim, albeit without transfer of the counterclaim. Thus, if 3 (2023) 1 SCC 1 4 1968 SCR (3) 660 5 (2003) 6 SCC 220 8 MGP, J C.R.P._1152_2014 the debtor desires to institute a counterclaim, that can be filed before the DRT and will be tried along with the case. However, it is subject to a caveat that the bank may move for segregation of that counterclaim to be relegated to a proceeding before a Civil Court under Section 19(11) of the RDB Act, though such determination is to take place along with the determination of the claim for recovery of debt.
45. We are thus of the view that there is no provision in the RDB Act by which the remedy of a civil suit by a defendant in a claim by the bank is ousted, but it is the matter of choice of that defendant. Such a defendant may file a counterclaim, or may be desirous of availing of the more strenuous procedure established under the Code, and that is a choice which he takes with the consequences thereof.
46. We may notice that the RDB Act was amended from time to time, including by amendments made under Act 1 of 2000, Act 30 of 2004, Act 1 of 2013 and Act 44 of 2016. The anomaly, inter alia, initially sought to be cured was on account of the non-availability of provisions on counterclaim and set-off. It is to get over such a scenario that amendment through Act 1 of 2000 was made by the Legislature itself to cure the problem. The Legislature did not, at any stage, make any further amendment for excluding the jurisdiction of the Civil Court in respect of a claim of a defendant in such a proceeding being filed along with the suit. The Legislature in its wisdom has also not considered it appropriate to bring any amendment to enhance the powers of the DRT in this respect.
47. We may also refer to the judgment of this Court in Transcore v. Union of India 6 opining that the DRT, being a Tribunal and a creature of the Statute, does not have any inherent power which inheres in Civil Courts such as Section 151 of the Code.
6
(2008) 1 SCC 125
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48. We now draw our attention to Chapter 5 of the RDB Act, which deals with recovery of debt determined by the DRT. Section 25 of the RDB Act prescribes the mode of recovery of debts, which takes place pursuant to a certificate issued under sub-Section (7) of Section 19 to recover the amount of debt specified in the certificate by any of the modes specified therein. The expanse of the reliefs the defendant may claim in the suit proceeding can certainly go beyond mere adjustments of the amounts of claim, for which the DRT would not have any power.
49. Now, turning to the issue of the power of the Civil Court to transfer an independent proceeding instituted by a defendant to be tried alongside a recovery proceeding before the DRT. There is gainsay that there is no specific power to transfer a suit to the DRT. A plaint can be returned only under the provisions of Order VII Rule 10 of the Code for the reasons specified therein. In the absence of such reasons, Section 151 of the Code cannot be utilised as a residuary power to achieve the transfer, which is really a consequence of return of the plaint when the grounds under Order VII Rule 10 of the Code are not satisfied. The absence of any legislative power cannot give a power by implication to the Civil Court. We believe that it would not be appropriate to read such power to transfer a suit to a DRT under Section 151 of the Code when the DRT is a creature of a statute and that statute does not provide for such eventuality".
9. Thus, in view of answering of the reference by the Apex Court holding that an independent suit filed by the borrower against the Bank or financial institution cannot be transferred to be tried along with application under the RDB Act, this Court finds no merit in the contentions advanced by the learned 10 MGP, J C.R.P._1152_2014 Standing Counsel for the petitioner-Bank seeking transfer of suit in O.S. No. 814 of 2011 from the file of III Additional Chief Judge, City Civil Court, Hyderabad to the Debts Recovery Tribunal, Hyderabad to be tried and disposed of along with O.A. No. 457 of 2011 and therefore, the revision is liable to be dismissed.
10. In the result, the Civil Revision Petition is dismissed. No costs.
Pending Miscellaneous Petitions, if any, shall stand closed.
______________________________
JUSTICE M.G. PRIYADARSINI
10th November, 2023
Tsr
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THE HONOURABLE SMT. JUSTICE M.G. PRIYADARSINI CIVIL REVISION PETTION No. 1152 of 2014 DATE: 10-11-2023 Tsr