Samaresh Banerjea, J.@mdashThe appeal being APO No. 57 of 2001 is against an Order dated 13th March, 2001 passed by the learned single Judge rejecting an application being T. No. 801 of 2001 made by the Appellant in Suit No. 7 of 1995 (ABS Marine Products Private Limited v. Indian Bank & Ors.) for transfer of the said suit to the Debt Recovery Tribunal constituted under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, which is hereinafter referred to as the said Act.
2. Since the issues involved in the Appeal being APO No. 57 of 2001 are almost identical to the issues involved in the Appeal being APO No. 58 of 2001 which is an appeal from an order dated 24th January, 2001 passed by the learned single Judge rejecting the oral prayer of the Appellant for transfer of the same suit to the Debt Recovery Tribunal, the two appeals were heard together.
3. The facts giving rise to the above appeals are as follows:
The Respondent No. 1 filed a suit being suit No. 7 of 1995 (ABS Marine Products Pvt Ltd v. Indian Bank & Ors.) in this Court claiming inter alia diverse amounts totaling Rs.25, 38, 58, 000/- from the Appellant inter alia on account of losses and damages allegedly suffered by the Respondent No.1 by reason of the alleged breach of promise committed by the Appellant in not advancing a sum of Rs.90 lakhs to the Respondent No. 1 in terms of its letter of sanction dated 19th December, 1991.
4. The Appellant filed its Written Statement in the said suit. The said suit has been heard on several dates and is pending Judgment.
5. After the said suit was filed by the Respondent No.1, the Appellant filed an application u/s 19 of the said Act in the Debt Recovery Tribunal constituted under the said Act for recovery of Rs.30,67,820.04p. from the Respondent No.1 along with interest and other reliefs.
6. The cause of action of the Appellant in the said application is the alleged failure of the Respondent No. 1 to comply with the terms and conditions of the Ad-hoc Packing Credit loan aggregating Rs.25 lakhs sanctioned by the Appellant to the Respondent No. 1 on 12th July, 1991 and 6th December, 1991 respectively.
7. The Respondent No. 1 filed its Written Statement to the said application which has duly been included in the paper book filed by the Appellant in its appeal being APO No. 57 of 2001.
8. While the suit of the Respondent No. 1 as also the application of the Appellant were pending some of the provisions of the said Act were amended by the Recovery of Debt Due to Banks and Financial Institutions (Amendment) Act, 2000, which is hereinafter referred to as the Amendment Act of 2000.
9. The relevant provisions of the said Act as amended with effect from 17th January, 2000 are as follows:
2. Definitions-In this Act, unless1 the context otherwise requires,-
(g) ''debt'' means any liability (inclusive of interest) which is claimed as due from any person by a bank or a financial institution or by a consortium of banks or financial institutions during the course of any business activity undertaken by the bank or the financial institution or the consortium under any law for the time being in force, in cash, or otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or order of any Civil Court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on the date of application.
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.
18. Bar of Jurisdiction-On and from the appointed day, no Court or other authority shall have, or be entitled to exercise, any jurisdiction, powers or authority (except the Supreme Court, and a High Court exercising jurisdiction under Articles 226 and 227 of the Constitution) in relation to the matters Specified in section 17.
19. Application to the Tribunal-(1) Where a bank or a financial institution has to recover any debt from any person, it may make an application to the Tribunal within the local limits of whose jurisdiction.
(a) the defendant, or each of the defendants where there more than one, at the time of making the application, actually and voluntarily resides, or carries on business, or personally works for gain; or
(b) any of the defendants where there are more than one at the time of making the application, actually and voluntarily resides, or carries on business, or personally works for gain, or
(c) the cause of action wholly or in part, arises (2)
(3)........
(4) On receipt of the application under sub-section (1) or sub-section (2) the Tribunal shall issue summons requiring the defendant to show cause within thirty days of the service of summons as to why the relief prayed for should not be granted.
(5) The defendant shall, at or before the first hearing or within such as the Tribunal may permit, present a written statement of his defence.
(6) Where the defendant claims to set-off against the applicant''s demand any ascertained sum of money legally recoverable by him from such applicant, the defendant may, at the first hearing of the application, but not afterwards unless permitted by the Tribunal, present a written statement containing the particulars of the debt sought to be set-off.
(7) The written statement shall have the same effect as a plaint in a cross-suit so as to enable the Tribunal to pass a final order in respect both of the original claim and of the set off.
(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 counter-claim is in the nature of a claim for damages or not.
(9) A counter-claim 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 counter-claim.
(10) The applicant shall be at liberty to file a written statement in answer to the counter claim of the defendant within such period as may be fixed by the Tribunal.
(11) Where a defendant sets up a counter-claim and the applicant contends that the claim thereby raised ought not to be disposed of by way of counter-claim but in an independent action, the applicant may at any time before issues are settled in relation to the counter-claim, apply to the Tribunal for an order that such counter-claim may be excluded, and the Tribunal may, on the hearing of such application make such order as it thinks fit.
(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.
31. Transfer of pending cases,-(1) Every suit or other proceeding pending before any Court immediately before the date of establishment of a Tribunal under this Act, being a suit or proceeding the cause of action whereon it is based is such that it would haw been, if it had arisen after such establishment, within the jurisdiction of such Tribunal, shall stand transferred on that date to such Tribunal;
Provided that nothing in this sub-section shall apply to any appeal pending as aforesaid before any Court
(2) Where any suit or other proceeding stands transferred from any Court to a Tribunal under sub-section (1),-
(a) the Court shall, as soon as may be after such transfer, forward the records of such suit or other proceeding to the Tribunal, and
(b) the Tribunal may, on receipt of such records proceed to deal with such suit or other proceeding, so far as may be, in the same manner as in the case of an application made u/s 19 from the stage which was reached before such transfer on from any earlier stage as the Tribunal may deem fit.
34. Act to have overriding effect-(1) Save as provided under sub section (2), the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than the Act.
(2) The provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of, the Industrial Finance Corporation Act, 1948 (15 of 1948) the Sates Financial Corporation Act, 1951 (63 of 1951) the Unit Trust of India Act, 1963 (52 of 1963), the Industrial Reconstruction Bank of India Act, 1984 (62 of 1984) (the Sick Industrial Companies (Special Provisions Act, 1985 (1 of 1986) and, the Small Industries Development Bank of India Act, 1989 (39 of 1989).
10. On or about 24th January, 2001 Suit No.7 of 1995 came up for hearing before the learned single Judge, when a prayer was made on behalf of the Appellant for transfer of the said suit to the Debt Recovery Tribunal in view of the amendment of section 19 of the said Act.
11. The learned single Judge by his Order dated 21st January, 2001 which is impugned in the Appeal being APO No. 58 of 2001 rejected the prayer of the Appellant inter alia holding that the said suit which had been filed prior to the Respondent No. l''s application in the Debt Recovery Tribunal u/s 19 of the said Act was neither a cross suit, nor could be termed as a counter claim.
12. Thereafter the Appellant made a formal application being T. No. 801 of 2001 before the learned single Judge for transfer of the said suit to the Debt Recovery Tribunal. The said application was also rejected by an Order dated 13th March, 2001 which is impugned in the appeal being APO No. 57 of 2001, inter alia on the ground that the said application was hit by the principles of res judicata. The learned Judge also observed that relief could not be granted to the Appellant since the question of law raised by the Appellant in the said application had been decided by the learned Judge in the case of Arun Chamaria v. Corporation Bank where the learned Judge had held that a cross suit was maintainable in the Civil Court.
13. The entire case of the Appellant is summarized in paragraphs 9 and 10 of the said application of the Appellant before the learned single Judge. The said paragraphs are extracted hereinbelow:
9. In January 2002 the 1993 Act was amended. By the said amendment all suits by or against the bank is to be tried by the Debt Recovery Tribunal only. The jurisdiction of the Civil Court is barred u/s 18 of the said 1993 Act in respect of bank matters. The plea raised by the Plaintiff in the above suit is inextricably connected with the issue in the application for recovery of amount filed by your Petitioner.
10. So far as the plea for disbursement of financial assistance and further financial assistance is concerned, it is broadly in the nature of counter claim and the plea for damages raised in the above suit is indeed broadly a plea of set off falling within sub-clause (6) and (7) of section 19 of the 1993 Act.
14. Ms. Nadira Patherya appearing on behalf of the Appellant argued that after the amendment of the said Act by the Amendment Act of 2000, all suits by or against a bank or a financial institution are only to be tried by the Debt Recovery Tribunal. Ms. Patherya contended that u/s 18 of the said Act the jurisdiction of the Civil Court is barred in respect of bank matters.
15. Ms. Patherya carefully look us through the pleadings of the Respondent No.1 as contained in its plaint in suit No. 7 of 1995 as also in its Written Statement before the Debt Recovery Tribunal which clearly shows that Paragraphs 1 to 23 of the Plaint have verbatim been reproduced as Paragraphs 1 to 23 of the Written Statement with the exception that the words plaintiff and defendant have appropriately been substituted.
16. Ms. Patherya has argued that the sum of Rs.25, 38, 58, 000/-claimed by the Respondent No. 1 in Suit No.7 of 1995 has also been raised by way of a counter claim by the Respondent No. 1 in its Written Statement filed in the Debt Recovery Tribunal. In this context Ms. Patherya has drawn our attention to the concluding portion of paragraph 23 of the said Written Statement of the Respondent No.1 which is reproduced hereinbelow:
In the circumstances the defendant is entitled to compensation and damages and claims the said sum from the Plaintiff No. 1 and a sum of Rs. 25,38,58,000.00. The defendant is also entitled to interest @20% per annum.
17. Ms. Patherya emphatically argued that the language and tenor of Paragraphs 1 to 23 of the Written Statement of the Respondent No. 1 and in particular the use of the expression claims the said sum and a sum of Rs. 25,38,58,000.00 shows that the amount claimed by the Respondent No.1- in the suit has also been claimed by way of a counter claim in Tribunal.
18. According to Ms. Patherya, the suit of the Respondent No. 1 is therefore, in the nature of a counter claim and/or set off which the Debt Recovery Tribunal can decide as a cross suit under sub-sections (9) and (7) of section 19 of the said Act.
19. Ms. Patherya emphasized on section 34 of the said Act which, provides that the provisions of the said Act shall have effect notwithstanding anything to the contrary in any other law and argued that the suit of the Respondent No.1 which could be the subject matter of a counter claim and/or set off, was a cross suit to be tried by the Debt Recovery Tribunal alone u/s 19 of the said Act and not by the Civil Court under any other law.
20. Ms. Patherya, also argued that the issues raised in the said suit filed by the Respondent No.1 are integrally interconnected with the issues involved in the application of the Appellant in the Debt Recovery Tribunal and as such the suit of the Respondent No.1 has to be heard along with the Appellant''s application in the Debt Recovery Tribunal
21. In support of her contention that a cross suit in the nature of a set off or counter claim filed by a borrower against a bank or a financial institution is also to be transferred to the Debt Recovery Tribunal. Ms. Patherya has cited the decision of the Supreme Court in
22. Ms. Patherya has also referred to the decisions of the Supreme Court in the cases of
23. In the case of
24. In the case of
25. In the case of
26. Mr. Dhruba Ghosh, the learned Junior counsel appearing on behalf of the Respondent No.1 argued that section 18 of the said Act bars the jurisdiction of Civil Courts only in relation to matters specified in section 17 of the said Act, that is, applications from banks and financial institutions for recovery of debts due to such banks and financial institutions.
27. Mr. Ghosh further argued that prior to the amendment of the said Act by the Amendment Act of 2000, the Debt Recovery Tribunal deciding an application u/s 19 of the said Act had no power and/or jurisdiction to adjudicate any counter-claim or any claim for set off that might be raised by a defendant against the concerned bank or financial institution. Section 19 of the said Act as amended has removed such disability and enables the Debt Recovery Tribunal to adjudicate a counter claim or a claim for set off which a borrower might raise in its Written Statement. The said section does not take away the right of a borrower to file an independent suit against a bank in the Civil Court if the borrower so chooses.
28. In support of his contention that a borrower has the option to institute an independent suit or to raise a claim for set off or a counter claim in the proceedings before the Debt Recovery Tribunal, Mr. Ghosh has relied on the decision of a single Judge of this Court in the case of A.K. Chamaria v. Corporation Bank, reported in 2001(2) CLT 12 (also included in the Paper Book in A.P.O. No 57 of 2001) where the learned single Judge after discussing all the relevant provisions of the said act as amended by the Amendment Act of 2002 at length, held that the jurisdiction of Civil Courts was debarred only in respect of proceedings initiated by banks and financial institutions against its borrowers and/or constituents for recovery of debts. There was, however no bar to a borrower filing a separate suit against a bank or a financial institution in the Civil Court.
29. Mr. Ghosh submitted that in the case of United Bank of India v. Abhijit Tea Co. Pvt. Ltd. & Ors., the Supreme Court held the earlier suit of the constituent against the bank to be a cross suit in the nature of set off and counter claim and directed its transfer to the Debt Recovery Tribunal in the special facts and circumstances of that case, where transfer to the Debt Recovery Tribunal of a suit filed by the bank against the borrower for recovery of its dues was being resisted on the ground of its being inextricably interconnected with the borrower''s earlier suit.
30. Mr. Ghosh has submitted and rightly so, that in the case of United Bank of India v. Abhijit Tea Co. Pvt Ltd. & Ors. (supra) the jurisdiction of the Civil Court to decide a suit filed by a borrower against a bank or financial institution was not in issue. Furthermore, the Supreme Court did not hold that no suit could be filed in a Civil Court against a bank or a financial institution.
31. Lastly, Mr. Ghosh submitted that the Respondent No. 1 had a distinct and independent cause of action against the Appellant which was not connected with the cause of action of the Appellant against the Respondent No.1 in its application filed in the Debt Recovery Tribunal. Mr. Ghosh pointed out that the Appellant''s application in the Debt Recovery Tribunal was for recovery of its alleged dues in respect of packing credit loans aggregating Rs.25 lakhs sanctioned by the Appellant on 12th July, 1991 and 6th December, 1991 respectively whereas the suit of the Respondent No.1 against the Appellant was on account of alleged losses and damages suffered by the Respondent No.1 on account of breaches of promise, committed by the Appellant in not advancing Rs. 90 lakhs to the Respondent No. 1 in terms of its letter of sanction dated 19th December, 1991. According to Mr. Ghosh, the two proceedings are not so inextricably interconnected that they cannot be tried separately.
32. Mr. Shyam Prosad Sarkar, senior counsel appearing on behalf of the Respondent No. 1 summarized the submissions made by Mr. Ghosh and submitted that the Respondent No.1 has not raised any counter claim in its Written Statement in the proceedings initiated by the Appellant in the Debt Recovery Tribunal. Mr. Sarkar contended that the Respondent No.1 has merely narrated the facts which led to the institution of Suit No.7 of 1995 in its Written Statement before the learned Tribunal. Our attention has, in this context been drawn to paragraphs 24 and 25 of the Written Statement.
33. Mr. Sarkar further submitted that the Debt Recovery Tribunal is not competent to adjudicate a counter claim u/s 19(8) of the said Act, which exceeds the claim of the applicant. According to Mr. Sarkar, the absence of any provision in the said Act for the execution of an order of the Debt Recovery Tribunal allowing the counter claim of the defendant, demonstrates such incompetence.
34. Our attention has been drawn to section 25 of the said Act which provides that the Recovery Officer, shall on receipt of a 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 modes specified in the said section namely, attachment and sale of the property of the defendant, the arrest of the defendant and appointing a receiver for the management of the properties of the defendant. Our attention has also been drawn to section 28 of the said Act providing for modes of recovery of the amount of a debt other than those specified in section 25.
35. Mr. Sarkar emphasized on the use of the word defendant in sub sections (a), (b) and (c) of section 25 and also the various sub-sections of section 28 to contend that no steps can be taken against the applicant for recovery of any amount due from the applicant to the defendant.
36. Therefore, according to Mr. Sarkar, if the claim of a borrower exceeds the claim of the bank or financial institution, as in the instant case, the borrower has no option but to file a civil suit.
37. We are however, unable to agree with the aforesaid submission of Mr. Sarkar section 19(8) of the said Act does not restrict the amount of a counter claim to the amount of the claim of the bank or financial institution or to any lesser amount.
38. It is true that the provisions of Chapter V of the said Act, for the recovery of debts, do not apply to the execution of any order allowing a counter claim in view of the specific definition of debt in section 2(g) of the said Act. An amount due from a bank or financial institution to any person is not a ''debt'' within the meaning of the said Act.
39. This, however, does not mean that an order passed by the Tribunal on the counter claim of a defendant cannot be executed at all. Section 19 (25) of the said Act, confers wide powers on the Tribunal to pass such orders or to issue 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 Tribunal can, therefore, pass any order it deems necessary or expedient for the execution of an order passed against a bank or financial institution in a counter claim raised by the borrower.
40. The Tribunal may, in exercise of powers conferred on it u/s 19(25) of the said Act pass orders for recovery of any amount due to a borrower in the manner laid down in Chapter V of the said Act or in any other manner it deems expedient. Since a set off or a counter claim u/s 19 is tried as a cross suit, in our view, the word defendant in the Chapter V or elsewhere in the said Act in relation to the implementation of orders passed by the Tribunal has to, if the context permits, be construed to include a bank or financial institution whose position is that of a defendant in a cross suit.
41. The main issue involved in these Appeals is the effect of the insertion of sub-sections (6) to (11) of section 10 by the Amendment Act of 2000 on an independent suit instituted by a constituent and/or borrower against a bank or financial institution claiming monetary reliefs; whether as contended on behalf of the Appellant, the Civil Court cases to have jurisdiction in respect of all such suits by reason of the aforesaid amendment.
42. Section 19(6) of the said Act as amended provides that where the defendant in an application of a bank or financial institution u/s 19 of the said Act, claims to set off against the applicant''s demand, any ascertained sum of money legally recoverable by him from such applicant the defendant may present a Written Statement containing the particulars of the debt ought to be set off. The Written Statement so filed shall under sub-section (7) have the same effect as a plaint in a cross suit so as to enable the Tribunal to pass a final order in respect of both the original claim and the set off.
43. Similarly, section 19(8) of the said Act as amended provides that the defendant in an application of a bank or financial institution may, in addition to his right of pleading a set off under sub-section (6), set up by way of counter claim 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 filling of the application, but before the defendant has delivered his defence or before the time limited for delivering his defence has expired" such counter claim is in the nature of a claim for damages or not.
44. Sub-section (9) of section 19 of the said Act as amended provides that a counter-claim 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 counter claim. Sub-section (10) of section 19 of the said Act enables the applicant, that is, the bank or financial institution, to file a Written Statement to the counter claim of a defendant.
45. Sub-section (6) and (8) of section 19 of the said Act are only enabling provisions which enable a borrower and/or constituent to plead a set off to the claim to the bank or financial institution or to set up a counter claim if it so chooses and sub-sections (7) and (9) deal with the manner in which a claim for set off or a counter claim, if any, should be dealt with. In this context, it is important to note the use of the word ''may'' in sub-sections (6) and (8) in contrast with the use of the word ''shall'' in sub-sections (7) and (9) of section 19 as amended.
46. Prior to the amendment of section 19 of the said Act by the Amendment Act of 2000 there was no express provision in the said Act empowering the Tribunal to decide a claim for set off or a counter claim that might be raised by a borrower against a bank or financial institution in its Written Statement to an application by a bank or financial institution u/s 19 of the sad Act. The aforesaid lacuna has been removed by the Amendment Act of 2000.
47. The defendant in an application of the bank or financial institution u/s 19 of the said Act now has the option to plead a set off or to set up a counter claim, if the defendant so chooses, and a claim for set off or a counter claim, if raised shall have the same effect as a plaint in a cross suit.
48. Section 19 of the said Act does not affect the jurisdiction of the Civil Court to entertain or proceed with an independent suit filed by a constituent and/or borrower against a bank or a financial institution. A constituent and/or borrower may agitate its claim against a bank or financial institution either by way of a counter claim or set off or by instituting an independent suit.
49. Section 19(11) of the said Act itself shows that it is still possible for a borrower to institute an independent action against a bank or financial institution even though proceedings initiated by such bank or financial institution against the borrower in the Tribunal for recovery of its debts, might be pending. The said section provides that where a defendant raises a counter claim and the applicant contends that the claim thereby raised ought not to be disposed of as a counter claim hut in an independent action, the applicant may, at any time before issues are settled in such counter claim apply to the Tribunal for an order that the counter claim be excluded, and the Tribunal may on hearing such application make such order as it thinks fit.
50. The only provision in the said Act which expressly imposes a bar on the jurisdiction of the Civil Court is section 18. The said section prohibits the Civil Court from exercising jurisdiction or power only in relation to the matters specified in section 17 of the said Act.
51. Section 17(1) of the said Act confers jurisdiction on a Tribunal constituted under the said Act to entertain and decide applications from banks and financial institutions for recovery of ''debts'' due to such banks and financial institutions. A suit or any other proceeding initiated by a borrower against a bank or a financial institution for recovery of any amount due or payable by the concerned bank or financial institution to the borrower is not a matter specified in section 17 of the said Act.
52. To construe section 17 of the said Act to include applications against banks and financial institutions would amount to addition of words which do not exist in the said section. Moreover, the word "debt" has clearly been defined in section 2(g) of the said Act as a liability claimed as due from any person by a bank or financial institution or by a consortium of banks or financial institutions during the course of any business activity undertaken by the bank or the financial institution or the consortium under any law for the time being in force, whether in cash or otherwise, secured or unsecured or assigned or payable under a decree or order of any Civil Court or any arbitration award or otherwise or under a mortgage. Any amount payable by a bank or financial institution is not ''debt'' within the meaning of the said Act.
53. Section 18 which bars the jurisdiction of inter alia; the Civil Court in respect of the matters specified in section 17 of the said Act cannot, therefore have any application to proceedings initiated by a borrower against a bank or financial institution.
54. There is no ambiguity in section 17 or 18 of the said Act and the said sections make it absolutely clear that the jurisdiction of the Civil Court has only been barred in respect of proceedings initiated by banks and financial institutions for recovery of ''debts'' due and payable to banks and financial institutions.
55. There is a strong presumption that Civil Courts have jurisdiction to decide all suits of a civil nature. The exclusion of jurisdiction of Civil Courts is not to be readily inferred and such exclusion must either be explicitly expressed or clearly implied. The provisions of the said Act which confer jurisdiction on the Debt Recovery Tribunal and those which bar the jurisdiction of Civil Courts either expressly or impliedly, must be strictly construed.
56. We therefore agree with the view of the learned single Judge in the case of A.K. Chamaria v. Corporation Bank (supra) that section 18 of the said Act does not affect the jurisdiction of the Civil Court to try a suit instituted by a borrower against a bank even though such a suit may be in the nature of a set off or a counter claim.
57. The next issue which arises for our consideration is the scope and effect of section 31 of the said Act after the amendment of the said Act by the Amendment Act of 2000. Significantly, the only charge in the said section that has been made by the Amendment Act of 2000, is the word ''de novo'' in section 31(2)(b), which is not material to the issues involved in these appeals.
58. Section 31 of the said Act provides that every suit or other proceeding pending before any Court immediately before the date of establishment of a Tribunal under this act, being a suit or proceeding, the cause of action whereon it is based is such, that it would have been, if it had risen after such establishment, within the jurisdiction of such Tribunal, shall stand transferred on that date to such Tribunal.
59. The question before us is whether section 31 of the said Act should be read as consequential to section 18 of the said Act, which bars the Civil Courts from exercising any jurisdiction, power or authority in relation to the matters specified in section 17 of the said Act, that is applications from banks and financial institutions for recovery of debts due to such banks and financial institutions, and construed to provide for transfer only of those pending suits or proceedings, based on a cause of action on the basis of which an application for recovery of debts due to a bank or financial institution could have been initiated in the Tribunal u/s 17 of the said Act, after the establishment of such a Tribunal, or whether section 31 should widely be interpreted to include all independent suits by borrowers against banks and financial institutions, based on a cause of action on the basis of which a claim for set off u/s 19(6) or a counter claim u/s 19(8) could possibly be raised by the borrower in defence to an application of a bank or a financial institution u/s 19(1) of the said Act.
60. A wide interpretation of section 31 to include all suits or other proceedings instituted by a borrower against a bank, which could possibly be the subject matter of a set off u/s 19(6) of the said Act or a counter claim u/s 19(8) of the said Act could lead to disastrous results and anomalies not contemplated by the said Act for the reasons discussed hereinafter.
61. Even after the amendment of the said Act by the Amendment Act of 2000, there is no provision in the said Act, which enables a borrower to file an independent suit against a bank or a financial institution in the Tribunal. The absence of any provision enabling the Tribunal to entertain an independent suit or proceeding initiated by the borrower indicates that the jurisdiction of the Civil Court in such matters is not excluded.
62. There is no provision in the said Act, which bars the Civil Court from entertaining or proceeding with a suit filed by a borrower against a bank or financial institution. It is therefore, still open to a borrower to institute a suit against the bank in the Civil Court.
63. Section 31 of the said Act however, clearly provides that only those suits and other proceedings which were pending before any Court immediately before the establishment of a Tribunal under the said Act shall stand transferred in the Tribunal. The said section does not apply to any suit or proceeding initiated in a Civil Court after the establishment of a Tribunal under the said Act.
64. If, therefore, section 31 is widely construed to include all suits against a bank or financial institution, the cause of action whereof could possibly be the subject matter of a set off or a counter claim u/s 19(6) and 19(8) of the said Act, then suits pending immediately before the establishment of the Tribunal under the said Act would stand transferred to the Tribunal on and from the date of its establishment but the Civil Court would continue to exercise jurisdiction in respect of suits and other proceedings of the same nature instituted in the Civil Court by a borrower against a bank or financial institution after the establishment of the Tribunal under the said Act.
65. Moreover, if section 31 were to be construed to include suits or proceedings based on a cause of action, which could possibly be the subject matter of a set off or counter claim, it could possibly be contended, as is being done in the instant case, that all suits pending against a bank or financial institution in a Civil Court immediately before the establishment of a Tribunal under the said Act, in which monetary relief is claimed by the borrower, stand transferred to the Tribunal on and from the date of its establishment.
66. If all such suits were to stand transferred to the Tribunal, deemed a claim for set off or a counter claim, and tried as a cross suit to enable the Tribunal to pass a final order on the application of the bank or financial institution, both in respect of the claim of the bank or financial institution and the claim for set off or counter claim, then the disposal of proceedings initiated by banks or financial institutions for recovery of ''debts'' would unnecessarily be delayed.
67. In fact the object of parliament in enacting the said Act was to provide for the establishment of Tribunals for expeditious adjudication and recovery of ''debts'' due to banks and financial institutions and for matters connected therewith or incidental thereto. The difficulties experienced by banks and financial institutions in recovering their debts prompted the enactment of the said Act as will appear from the Statement of Objects and Reasons. Suits against banks and financial institutions were not intended to be transferred to the Tribunal. On the other hand, the transfer of all suits against banks or financial institutions would delay the disposal of applications instituted by banks and financial institutions for recovery of its debts and thereby defeat the very purpose of setting up Tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions.
68. If the suit of a borrower stands transferred to the Tribunal, such suit will, for all practical purposes, be deemed to be a counter claim and tried as a cross suit. It would however, be open for a bank or financial institution to contend that suit should be tried as an independent action in view of section 19(11) of the said Act. If such contention of the bank or financial institution were accepted the suit transferred from the Civil Court to the Tribunal would have to be retransferred from the Tribunal to the Civil Court since there is no provision in the said Act empowering the Tribunal to entertain or decide an independent suit.
69. The Civil Court either has jurisdiction to proceed with a civil suit, or has no jurisdiction by reason of any express or implied bar to the jurisdiction of the Civil Court imposed by statute. The jurisdiction of the Civil Court to proceed with a suit cannot be contingent upon an order passed by Tribunal, and that too on an application of one of the parties to the proceedings. Nor, can the jurisdiction of the Civil Court to proceed with a suit cease as soon as the bank or financial institution initiates proceedings in the Tribunal.
70. In an application initiated by a bank or financial institution In the Tribunal for recovery of its ''debts'' the defendant Can raise a counter claim provided the cause of action for such counter claim accrued prior to the delivery of defence or alternatively, prior to the expiry of the time for delivery of defence.
71. If suits based on a cause of action which could possibly be the subject matter of a counter claim u/s 19(6) of the said Act were to fall within the purview of section 31 of the said Act, then those suits instituted by borrowers, in which the cause of action accrued prior to the delivery of defence or expiry of the time for delivery of defence in proceedings by banks or financial institutions for recovery of ''debts'' in the Tribunal, would stand transferred to the Tribunal, but other similar suits in which the cause of action accrued after the delivery of defence or the expiry of the for delivery of defence would remain with the Civil Court.
72. Furthermore, by virtue of section 31 of the said Act suits an-proceedings covered by the said section automatically stand transferred to the Tribunal from the date of its establishment. The Registry of the Court just performs the ministerial act of transmitting the records to the Tribunal.
73. If independent suits by borrowers are construed to be covered by section 31 of the said Act, then in each case, the date of delivery of defence and/or the date fixed for delivery of defence in the proceedings initiated by the bank or financial institution for recovery of its due would have to be ascertained in order to examine whether the cause of action for the borrower''s suit accrued at a prior date and could be the subject matter of a counter claim as otherwise the time limit stipulated in section 19(6) of the said Act would be rendered meaningless.
74. In our view, section 31 of the said Act under which suits and proceedings pending inter alia in Civil Courts before the establishment of the Tribunal stand transferred to the Tribunal on the date of its establishment must be read in the context of section 18 of the said Act and construed to apply to those suits or proceedings based on a cause of action which could be the subject matter of an application for recovery of "debts" due to a bank or a financial institution, in respect of which the jurisdiction of inter alia the Civil Court has been barred. The claim for set off or counter claim, if any, raised in such proceedings shall also stand transferred by virtue of section 31 of the said Act.
75. Even a wide construction of section 31 of the said Act to include all money suits against banks and financial institutions would not help the Appellant in the instant case since the suit of the Appellant was not pending on the date of establishment of the Tribunal under the said Act.
76. In the case of United Bank of India, Calcutta v. Abhijit Tea Co. Pvt. Ltd., reported in AIR 2000 SC 2960, the borrower resisted transfer of a suit filed by the bank against the borrower for recovery of its dues, to the Debt Recovery Tribunal, on various grounds including the ground that the suit of the bank was integrally interconnected with an earlier suit filed by the borrower against the bank in the Civil Court and the two suits therefore had to be tried together.
77. The points that arose for consideration in the case of Abhijit Tea Co. Put Ltd. (supra) formulated by the Supreme Court are as follows:
(i) Whether the suit No 410/85 by the Bank which was disposed by judgment dated 29-3-94 and which Judgment was set aside by the Bench on 11-8-98 and remanded to the single Judge, could not be treated as pending immediately before the commencement of the Act on 27-4-94 (in West Bengal) and whether it could not be transferred to the Recovery Tribunal?
(ii) What is the combined effect of sections 18 and 31 of the Act on pending proceedings?
(iii) Whether the pendency of suit No.272/85 filed by the debtor company against the Bank for specific performance and for perpetual and mandatory injunctions raising common issues between parties in both those suits was a sufficient reason for retention of the Bank''s suit No.410/.85 on the Original Side of the High Court to be tried along with the suit No.272/85 filed by the debtor company?
(iv) Whether the suit No.272/85 filed by the debtor company was, in substance, one in the nature of a "counter claim" against the Bank and was one which also fall within the special Act by reason of section 19(8) to (11) of the Act (as introduced by Amending Act 1/2000) and if that be so, whether it could still be successfully pleaded by the Respondent company that the pendency of the company''s suit 272/85 was a ground for retention of Bank''s suit No.410/85 on the Original Side of the High Court?
78. The question before the Supreme Court being, whether the Bank''s suit was liable to be retained in this Court, the Supreme Court held in no uncertain terms that the suit fled by the bank was only to be tried by the Tribunal by reason of the specific, bar to the jurisdiction of the Civil Courts created by section 18 of the said Act.
79. In the special facts of the case of Abhijit Tea Co. Put. Ltd. (supra) the Supreme Court was of the view that the two suits were, in fact inextricably interconnected and accordingly held that there could be no difficulty in treating the cross suit as one by way of set off and counter claim and as proceedings which ought to be dealt with simultaneously with the main suit by the bank. In that case, the bank''s suit was for recovery of its dues inclusive of interest in relation to a loan advanced by the bank whereas the earlier suit of the borrower was for specific performance of an alleged agreement for waive interest on arrears, at lower rates of interest and the repayment in instalments in respect of !he same loan transactions.
80. Significantly, the decision of the Supreme Court in the case of Abhijit Tea Co. Pvt. Ltd. was rendered in the following circumstances:
Out decision in regard to the real nature of suit 272/85 has become necessary in the context of a plea by the debtor-company that the company''s suit 272/85 is liable to be retained in the Civil Court and on account of the plea that the connected suit by the Bank 410/85 is also to be retained. Such a plea, as shown above, cannot be accepted. Thus, both the suits are suits falling within the Act.
81. The aforesaid observation of the Supreme Court makes it clear that the aforesaid decision was rendered in the context of the specific plea of the borrower in that case that the bank''s suit for recovery of a debt should be retained in the Civil Court in view of the borrower''s earlier suit, and that the Supreme Court never intended the said decision to be a binding precedent.
82. The decision rendered by the Supreme Court in the special facts and circumstances of the case of Abhijit Tea Co. (supra) is not applicable in the facts and circumstances of the instant case.
83. As argued by Mr. Ghosh, the question of the jurisdiction of the High Court to adjudicate a suit which was in the nature of a counter claim or a set off was not in issue in the case of Abhijit Tea Co. Pvt. Ltd. The Supreme Court has nowhere held that all suits against a bank or financial institution, in which pecuniary relief is claimed, must be decided by the Tribunal constituted under the said Act
84. In the case of Arun Kumar Charnria v. Corporation Bank (supra), the learned single Judge relying on the decisions of the Supreme Court in the case of
85. In the instant case, however, the Appellant''s application u/s 19(1) of the said Act is for recovery of its dues in respect of packing credit loans aggregating Rs.25 lakhs advanced by the Appellant, whereas the suit of the Respondent No.1 was for compensation on account of alleged losses and damages allegedly caused by the Appellant to the Respondent No. 1 by its failure to lend and advance Rs. 90 lakhs to the Respondent in terms of a letter of sanction dated 19th December, 1991. The terms and conditions of the packing credit loan were different from the terms and conditions on which the loan of Rs. 90 lakhs was to be granted. The two proceedings are, therefore not inextricably inter connected with each other and can be decided separately. On the other hand, the trial of the two proceedings together would delay the disposal of the proceedings initiated by the Appellant in the Tribunal for recovery of its dues from the Respondent No. 1.
86. As we have already observed above, only those suits which were pending in the Civil Court immediately before the establishment of the Tribunal under the said Act stand transferred to the Tribunal on the date of its establishment. The language of section 31 of the said Act is clear and unambiguous in that regard. A departure from the rule of literal construction is not permissible except to avoid any part of the statute from becoming meaningless.
87. No case has been made out in the instant case for any departure from the said rule. On the other hand, the fact that the Amendment Act of 2000 amended section 31(2)(b) by deleting the words ''de novo'' but retained the words ''pending immediately before the establishment of the Tribunal under the Act'' makes it absolutely clear that the said Act does not contemplate transfer of suits not pending on the date of establishment of the Tribunal.
88. The instant suit of the Respondent No. 1 instituted in 1995 was not pending when the Tribunal under the said Act was established and is patently not covered by section 31 of the said Act. Even otherwise, only proceedings initiated by banks and financial institutions for recovery of ''debts'' within the meaning of the said Act stand transferred to the Tribunal, in our view, along with the claim for set off or counter claim if any raised by the borrower in those proceedings.
89. The Respondent No.1''s prior suit is not a counter claim. It is true that the reliefs claimed in the suit could also have been claimed by raising a counter claim had the Respondent No.1 chosen to do so. However, as contended by Mr. Sarkar, the Respondent No.1 has not actually raised any counter claim in respect of the amount claimed in the suit. In the Written Statement of the Respondent No. 1 before the Tribunal, there is no prayer for any decree or order in favour of the Respondent No.1 for the amount claimed in the suit or any other amount. Even assuming that the amount claimed in the Respondent No.1''s prior has in fact been claimed by way of a counter claim in the proceedings initiated by the bank in the Tribunal subsequently, that would make no difference to the jurisdiction of the Civil Court to proceed with the suit. It may perhaps not be out of place to mention that Supreme Court has power under Article 142 of the Constitution to pass any order to do complete justice in any matter pending before it, which this Court lacks. This Court does not have discretion under the said Act to transfer to the Tribunal any suit or proceeding which does not stand transferred u/s 31 of the said Act.
90. The jurisdiction of Civil Courts to decide questions of civil nature being the general rule and exclusion being an exception the onus of showing that jurisdiction is excluded in any particular case is on the party raising such a contention. In the instant case the Appellant has failed to discharge its onus of establishing that this Court has no jurisdiction to try Suit No.7 of 1995.
91. The learned single Judge rightly passed the order dated 24th January, 2001 impugned in A.P.O. No. 58 of 2001 rejecting the prayer of the Appellant for transfer of Suit No.7 of 1995 to the Tribunal. The prayer of the Appellant for transfer of the suit having been rejected on merits and not on the ground that no formal application for transfer had been made, the application being T. No. 501 of 2001 praying for the same reliefs was barred by res judicata and/or analogous principles and the learned Judge rightly rejected the same on that ground by his order dated 13th March, 2001 impugned in A.P.O. No. 57 of 2001. There are no grounds for interference with aforesaid orders.
The appeals, therefore, fail and are dismissed without any order as to costs. The orders imugned in the appeals are affirmed.
Xerox certified copy, if applied for, shall be given expeditiously subject to compliance with requisite formalities.
I. Banerjee, J.
I agree.
