M/S. Impressioni Exports Pvt. ... vs The Bank Of Baroda
2001 Latest Caselaw 1110 Del

ORDER

Sharda Aggarwal, J.

1. The appellant company has preferred the present appeal against the judgment and decree dated 10th February, 1999 by Additional District Judge dismissing the appellant's suit for recovery of Rs. 4,14,865/-.

2. The appellant company was allowed the Foreign Bill Purchase (FBP) and Packing Credit Facility (PCF) by the respondent bank to the extent of Rs. 3 lakhs each. According to the appellants, the terms and conditions were not disclosed by the respondent bank at the time of granting of facilities and the appellant company was made to sign the unfilled bank documents. The appellant company had deposited with the respondent bank two bills - (i) bill NO. 90 D(502473) for US $ 21,467; and (ii) bill No. 91 C(503282) for GBP 13,500. They claimed that bill NO. 90-D was discharged under two bank drafts and the balance, if any, was required to be discharged from the margin money lying with the respondent bank. According to them, the bank wrongfully crystallised bill No. 90-D before the date of maturity prescribed by the Reserve Bank of India Guidelines. As a consequence, the bank wrongly charged excess amount of Rs. 1,16,198/- on account of fluctuations in foreign exchange rate. Likewise, the export bill No. 91-C was discharged by the appellants under Letter of credit, but the said bill was not purchased by the respondent bank but was sent for collection. The demand draft for US$ 2630 was given to the bank under Foreign Bill Purchase facility which was allegedly not lodged for collection in time and when it was lodged for collection, it was lodged in the wrong branch of the bank. In this respect, the respondent debited the account of the appellant for a sum of Rs. 61,785/- towards some cancellation charges against some forward contract alleged to have been booked by the appellant company. The appellants also claimed to have deposited a bank draft of Rs. 41,104/- towards duty draw back. They also claimed the deposited of further amounts of Rs. 50,000/- on 6th May, 1992 and Rs. 49,848/- on 24th March, 1993. The claim of the appellants in the suit is that the bank refused to settle the accounts and filed a false recovery suit before the Debt Recovery Tribunal (hereinafter referred to as the Tribunal). The title deeds of property No.2-C/25, New Rohtak Road, New Delhi were alleged to be handed over the the bank for the purposes of valuation and were offered as security, which was not accepted by the bank. Thus, appellants claimed recovery against the bank to the tune of Rs. 4,14,865/- and for mandatory injunction for return of original title deeds of the property.

3. Respondent, bank in the written statement alleged that the Foreign Bill Purchase facility was to the extent of Rs. 4 lakhs whereas the Packing Credit Facility was extended to the tune of Rs. 6 lakhs. All the terms and conditions were disclosed to the appellants and the documents were duly signed. Two export bills have been admitted. Further it is denied that the export bill No. 90-D was discharged by two bank drafts by the appellants. Any margin money lying with the bank was also denied. Draft of US$ 2630 was returned unpaid. It was not sent for collection in time at the request of the Managing Director of the appellant company for fluctuations in foreign exchange rates. The bank held the appellants liable. Various amounts as alleged by the appellants were infact correctly debited to their account. The respondent bank had raised preliminary objection that with regard to the Foreign Bill Purchase facility and Packing Credit Facility provided to the appellants, the bank had already filed a suit for recovery before the Tribunal where the appellants had filed their written statement and in view of the pendency of the said suit before the Tribunal, the present suit filed by the appellant was not maintainable. The plea was also raised that the claim in the bank suit is nothing else but adjustment and defense to the suit filed by the bank and it could not be treated as a counter claim. The following issues were framed by the Trial Court on the pleadings of the parties:

i) Whether in view of the recovery suit pending before the Debt Recovery Tribunal, if the present suit is not maintainable

ii) Whether the present case is covered as counter claim/set off?

iii) Relief.

4. Since issues could be decided on the pleadings of the parties and the documents placed on record, the learned Trial Court after considering the documents placed on record and the pleas raised by the parties held that it was not a counter claim and the plaint disclosed that it was only calling for proper accounting so as to reduce the claim of the bank. The pleas taken by the appellant are nothing else but please set up in defense in the suit filed by the bank before the Tribunal and holding that the claim in the suit could be decided by the Tribunal itself while deciding the suit of the bank, the appellant's suit was dismissed.

5. Challenge to the dismissal of the suit is on the ground that the appellants could not file such a suit before the Tribunal as held by this Court in two judgments, namely, State Bank of India Vs. Vijay Kumar Tayal & Ors. II (1996) BC 589 and Cafex Exports Ltd. Vs. Canara Bank, . Recovery of debts due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as Act) came into force on 24th June, 1997. By virtue of Section 17 of the Act, the Tribunal was conferred with the jurisdiction to try and entertain the application for recovery of debts due to banks and financial institutions. The Appellate Tribunal has also been empowered to entertain appeals from the orders of the Tribunal. The jurisdiction of Civil Courts has been excluded in the ration to matters falling within the jurisdiction of the Tribunal except under Article 226 and 227 of the Constitution of India. Section 31 of the Act provides for transfer of pending cases to the Tribunal. Accordingly, suits instituted by the banks and financial institutions of a value exceeding Rs. 10 lakhs are liable to be transferred to the Tribunal from the appointed date. Such transfer of cases from the Civil Court gave rise to a number of questions, like suits where cross suits are instituted or counter claims are filed. In addition to the same, there are cases where set off or adjustment of claim is asked by the defendants. This controversy came up for consideration in the two decisions, referred above, before this Court wherein it was held that suits for recovery filed by banks and financial institutions wherein the defendant raises a plea for adjustment or set off, to wipe off or reduce the plaintiff's claim, would be liable to be transferred to the Tribunal for trial. As regards the counter claims and cross suits, it was held that counter claims should be de-linked from the suits filed, even though trial with the suits could be expedient and convenient. The suits instituted by the banks or financial institutions alone be transferred to the Tribunal. The reason given for this was that the Tribunal has the jurisdiction to entertain only claims from banks and financial institutions and would not have the jurisdiction to entertain the cross-suits or counter claims which may be founded either on the same or separate cause of action. In view of this legal position, the cross suits or counter claims were not being transferred to the Tribunal. In any case, in view of the decisions, referred to above, the suit wherein claim for adjustment and set off is made was liable to be transferred to the Tribunal for trial.

6. We have noticed that the Act was amended in January, 2000 widening the jurisdiction of the Tribunal to entertain counter claim, set off or adjustment or cross suit filed by the defendants in the suit filed by the banks or financial institutions before it. Both the learned counsel agree that in vie of the amendment in the Act, the present suit be transferred to the Tribunal to be tried Along with the suit field by the bank.

7. The facts of the present case reveal that the appellants' suit against the respondent bank cannot be treated as a counter claim. All that the appellants say in the suit is that on proper accounts being taken between the parties, appellant would not be liable to pay the amount claimed by the respondent bank in its suit before the Tribunal. The pleas taken by the appellant in the present suit are nothing else but their defense to the suit of the respondent herein before the Tribunal. Learned Trial Court was right in holding that the present suit could not be treated as a counter claim to the bank's suit before the Tribunal. We, however, feel that in this view of the matter, the present being a suit raising a plea of adjustment, in order to wipe off or reduce the bank's claim, was liable to be transferred to the Tribunal for trial even prior to the amendment in the Act.

8. In this view of the matter and in view of the amendment in Section 19 of the Act, we allow the appeal, set aside the impugned judgment and decree dated 10th February, 1999 and direct that the present suit No. 130/98 be transferred to the Tribunal to be tried Along with the bank's suit/application No. 910/95 titled as "Bank of Baroda Vs. M/s Impression Exports Pvt. ltd."