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M/S S.P. Builders And Others v. Chairperson, Debt Recovery Appellate Tribunal, Allahabad - WRIT - C No. 77696 of 2005 [2006] RD-AH 17697 (13 October 2006)


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    Reserved on 31.08.2006

    Delivered on 13.10.2006

Civil Misc. Writ Petition No. 77696 of 2005

M/s. S.P. Builders and others


Chairman, Debt Recovery Appellate Tribunal

Allahabad & others

Hon'ble Sudhir Agarwal, J.

The petitioners have approached this Court under Article 226 of the Constitution of India aggrieved by the order dated 21.11.2005 passed by respondent no. 1, Debts Recovery Appellate Tribunal whereby setting aside the order of the Debts Recovery Tribunal Allahabad (hereinafter referred to as ''DRT, Allahabad'), it has remanded the matter transferring it to Debts Recovery Tribunal, Lucknow (hereinafter referred to as ''DRT, Lucknow') for disposal afresh.

In brief the facts giving rise to this case are that the respondent no. 2, Bank of Baroda (hereinafter referred to as the ''Bank') filed an application under Section 19 of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 (hereinafter referred to as the ''Act' in short) against the petitioners for recovery of Rs. 35,91,746.17 along with cost and interest pendente lite and future. The aforesaid application was filed before DRT Allahabad and registered as TA 5/02. The petitioner opposing the aforesaid application, filed a written statement raising set off/counter claim of Rs. 1,06,34,614. During the pendency of the matter before DRT, Allahabad, a notification dated 31.1.2002 was issued under Section 3 of the Act establishing and constituting a Debts Recovery Tribunal at Lucknow and as a consequence thereof, the area of jurisdiction of DRT, Allahabad and DRT, Lucknow was also notified. Since, there is no provisions under the Act for suo motu transfer of cases pending before one DRT to another DRT on creation of a new DRT with jurisdiction carved out from existing DRT and, therefore, TA 5/02 which was pending at DRT, Allahabad continued to proceed thereat and was not transferred to DRT, Lucknow. However, apprehending that the authorities on their own may transmit the record of the aforesaid case to  Lucknow, the petitioners preferred a writ petition no. 21861 of 2002 before this Court seeking a direction for not transferring his case to DRT, Lucknow and the order passed by a Division Bench of this Court on 22.5.2002 is reproduced as under :

"List this case in the first week of July, 2002 alongwith writ petition no. 20798 of 2002.

Till then transfer of T.A. No. 5 of 2002 filed under Section 19 of the Recovery of Debts Due to the Bank and Financial Institutions Act, 1993 pending before the respondent no. 1 shall remain stayed. However, this order shall not be construed as stay or proceedings pending before the Debt Recovery Tribunal."

Consequently, DRT Allahabad proceeded with the matter and after framing eight issues, decided the matter by order dated 13.6.2006. Besides other things, DRT, Allahabad found that the Bank has included certain amounts, which were not advanced to the petitioners at all and, therefore, were not recoverable, its accounting was not reliable and correct and the rate of interest was also wrongly charged and ultimately rejected the application of the Bank. Aggrieved by the order of DRT Allahabad, the Bank  preferred appeal before Debts Recovery Appellate Tribunal (hereinafter referred to as ''DRAT, Allahabad') which has been decided by the order impugned in this writ petition.

The learned counsel for the petitioners has assailed the impugned order passed by the DRAT Allahabad inter alia on the ground that ex-facie the order is wholly non-speaking showing non application of mind. He further submits that even an order of remand could not have been passed in a mechanical way in order to allow the parties to fill up a lacuna. Since the Appellate Court exercises co-extensive jurisdiction with the Trial Court and, therefore, the Appellate Court itself can consider all aspects of the matter and decide the same on merits. A remand order should be passed only when there are very strong reasons showing that the appellate authority itself may not dispose of the matter since examination of some further evidence is necessary or like other reasons. Lastly, it is contended that in any case, remand of the matter by transferring case to DRT, Lucknow from DRT, Allahabad is patently illegal and without jurisdiction since DRAT, Allahabad has no power to transfer a case filed in one Tribunal to another Tribunal except after following the procedure laid down under Section 17-A of the Act.

Learned counsel for the Bank, on the contrary, submitted that the order of DRAT, Allahabad is self speaking and well reasoned needs no interference under Article 226 of the Constitution of India.

Heard learned counsels for the parties and perused the record.

From the perusal of the order of the DRT Allahabad it appears that it formulated eight issues and recorded its finding in respect to each issue which may be summarized as under :

(i) Whether the claim of the applicant bank is barred by time? - The claim of the bank was held to be within time and the issue was decided in favour of the bank.

(ii) Whether the account of the applicant bank is incorrect as alleged by the defendants? If so its effect. - This issue was decided against the bank holding that its account is not correct and, therefore, the outstanding shown against the defendants cannot be the debt due. The relevant extract of the findings recorded on this issue is extracted as under :

"Thus the applicant bank by including these two amounts clearly show its default that they are not maintaining the accounts properly. It is held that the account of the applicant bank is not correct and this goes to the route of the case which helps in establishing that when the account is not correct, then the outstanding of the applicant bank can also not be the debt. The point is answered accordingly.

(iii) Whether the signatures of the defendants were obtained on blank papers? - It was decided against the defendants and in favour of bank.

(iv) Whether the rate of interest charged by the applicant bank is excessive as stated by the defendants? - It was held that the interest charge is excessive and, therefore, the issue was decided against the bank.

(v) Whether the tribunal has no jurisdiction to decide the case?  - Held that Section 31 has no application in the matter and Allahabad tribunal has jurisdiction to continue and hear the matter.

(vi) Whether the defendants are entitled to compensation from the applicant bank? As alleged by the defendants.


(vii) Whether the defendants are entitled to the amount and the relief claimed in the counter claim?

- Decided against the petitioner and in favour of the bank.

(Viii) To what relief, if any, the applicant bank is entitled to get from the defendants? - Decided against the bank on the ground that since the account of the bank is incorrect, therefore, it is not entitled for any relief?

The Appellate Tribunal (DRAT, Allahabad) however, has passed the order, impugned in the writ petition, running in about 11 pages. Up to page-9 and from para 1 to 6  it has narrated the case of the respective parties, the issues framed by the DRT, Allahabad and the rival submissions advanced by the learned counsels for the parties before the DRAT. Thereafter, in para 7, 8 and 9 it has recorded its conclusion and decided the appeal. A perusal thereof shows that the learned DRAT has passed a virtual non-speaking order and without discussing the issues has allowed the appeal. From a statutory body of such a high status, this Court does not expect such a cursory and perfunctory order. In para-7, it has simply said that it does not want to go into the details of the statement of account since the discussion made by DRT, Allahabad are one sided and not as required under the law. Para-8 deals with the submissions of the learned counsel for the parties in respect to the question of limitation and has negatived the same. Thereafter, in para-9, it has held that the judgment under appeal is a one sided document and cannot be sustained in law. There is no discussion whatsoever as to what are the errors committed by the Trial Court, what aspects have not been dealt with by it etc. In fact nothing has been discussed at all. It would be appropriate to reproduce the order of  DRAT as contained in para 7, 8 and 9 of the judgment:

"7. I do not want to go into the details of the statement of accounts matter for the reasons that the discussions are one sided and not being considered in their proper perspective and as such adjudication was not made as it is required under the law

8. On the limitation matter it has been argued by Mr. Agarwal that there were two types of loan facilities granted to the respondent but both have been amalgamated in a single account and as such limitation if not being bifurcated regarding the individual loan cannot be decided properly. In this aspect there is contention of the bank that both the facilities had been operated in the single account of cash credit and as such the point of limitation as decided by the Tribunal cannot be said to be without reason. Regarding the blank portion of the amounts in the relief clause of the O.A. which has also been considered as a point for dismissal of the O.A. by the learned tribunal, have already been considered by this Appellate Tribunal on the basis of the amendment petition filed and such lacuna had already been filed in on allowance of the amendment itself.

9. After going through the impugned judgment and also carefully considering the submissions of the learned counsel for both the parties and also perusing the material on record, I find that the dismissal order recorded one sidely in respect of the claim of the bank cannot be sustained in the eyes of law. Hence when proper adjudication is not there, there is no other alternative but to allow the appeal filed by the bank i.e. R-319/03 and to send back the case on remand after setting aside the decision arrived at by the Tribunal with direction to adjudicate the claim so the bank In their proper perspective after giving opportunity of hearing to both the parties & even giving liberty to the parties to file more evidence by affidavit for clarifying the position and stand taken by the parties. It is further made clear that any observation made by this Appellate tribunal, if goes to the merit, should not be construed as any decision being made on the issues framed by the Tribunal, rather all the issues are required to be decided afresh if on adjudication it is found that some of the amounts as claimed by the bank are not recoverable, then the bank may be asked by applying the provisions of Rule 18 of the DRT Procedure Rules to file fresh accounts. The same is the position with respect to the counter claim/set off. First of all it is to be decided as to whether set off/counter claim are maintainable or not in view of the provisions of Section 19(8) of the DRT Act including fees and then to proceed the matter on merit considering the cases of both the parties in their proper perspective. In that way, the other Appeal i.e. R-325/03 is also hereby allowed. In the facts and circumstances of the case, no cost is allowed to either of the parties. Parties through their counsel are hereby directed to appear before the DRT, Lucknow on 04.02.2006. Although the case was decided by the DRT, Allahabad on the basis of interim order of the Hon'ble High Court, Allahabad on the notification made regarding setting up of the Tribunal at Lucknow, but the Supreme Court decision prevails over any interim decision being arrived at by the Allahabad High Court. In that way, the cases are being sent to the DRT, Lucknow for fresh disposal on remand."

The DRAT is a Appellate Tribunal constituted under section 8 of the Act. Section 22 of the Act provides procedure and powers of the DRT and DRAT and a perusal thereof shows that Appellate Tribunal exercises all such powers as are exercisable by the Tribunal itself on the question of fact as well as law. Section 22 of the Act is reproduced as under :

"Procedure and powers of the Tribunal and the Appellate Tribunal.- (1) The Tribunal and the Appellate Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908) but shall be guided by the principles of natural justice and, subject to the other provisions of this Act and of any rules, the Tribunal and the Appellate Tribunal shall have powers to regulate their own procedure including the places at which they shall have their sitting.

(2) The Tribunal and the Appellate Tribunal shall have, for the purpose of discharging their functions under this Act, the same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908 (5 of 1908), which trying a suit, in respect of the following matter, namely -

(a) summoning and enforcing the attendance of any person and examining him on oath;

(b) requiring the discovery and production of documents;

(c) receiving evidence on affidavits;

(d) issuing commissions for the examination of witnesses or documents;

(e) reviewing its decisions;

(f) dismissing an application for default or deciding it ex parte;

(g) any other matter which may be prescribed.

(3) Any proceeding before the Tribunal or the Appellate Tribunal shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for the purposes of section 196 of the Indian Penal Code (45 of 1860) and the Tribunal or the Appellate Tribunal shall be deemed to be a Civil Court for all the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure 1973 (2 of 1974).  

Therefore, the Appellate Tribunal is not a body of limited jurisdiction. It exercise power co-extensive with the Tribunal itself. In these circumstances, if there was no want of any relevant material, if the Tribunal has not discussed some issues properly, it was open to the Appellate Tribunal to consider itself all such issues and to decide the matter but, that, by itself, cannot be a reason to remand the matter to the Tribunal. This Court in M/s Nehru Steel Rolling Mills, Muzaffarnagar Vs. Commissioner of Sales Tax, 1993 UPTC-407 (Hon'ble M. Katju, J. as His Lordship then was) while considering the correctness of an order passed by the Sales Tax Tribunal remanding the matter to Deputy Commissioner observed as under :

"In my opinion a remand order should not be readily made, and it should only be made when for very strong reasons the authority cannot itself dispose of the matter on merits. It seems that these remand orders were made by the authorities merely to get rid of the case so that the authority could avoid going into the matter deeply and deciding the issue once and for all. This kind of attitude is to be deprecated."

Again in M/s Abid Hasan Watch Company, Varanasi Vs. Commissioner of Sales Tax, 1995 UPTC-1035, this Court observed in paras 8, 9 and 10 as under :

"(8) The procedural law regarding remand may be stated. It is this that Appeal Court may remand a case if it has been decided on a preliminary point and said judgment of lower court is set aside in appeal by the Appeal Court. It may again send the case to lower court with directions in case it is necessary in the interest of justice. Another contingency is where the court from whose decree an appeal is preferred has disposed of the case otherwise than on a preliminary point and the decree is reversed in appeal and a retrial is considered necessary, the Appellate Court can remand the case to decide specific issue or issues. The Appellate Court may also frame issue or issues for determination after remand. In such a case additional evidence may also be directed to be taken. Otherwise the evidence already on record will again be read.

(9) If, however, the evidence on record is sufficient to enable to Appellate Court to pronounce judgment, the Appellate Court may after resettling the issues, if necessary, finally determine the suit.

(10) I would now deal with a few situations where remand or a prayer for it should be frowned upon. It is in  exceptional cases that remand may be ordered, like when there has been no real trial. Mere insufficiency of evidence is no ground for allowing a party to adduce further evidence on remand. If there is insufficiency of evidence for any party to prove his case, he will suffer. Remand with a view to enable a party to fill up lacuna in evidence is not permissible. In protracted litigation the remand should not be resorted to on the ground that final curtain should be drawn."

The question has also been considered by the Apex Court in a catena of cases and it will be useful to refer some recent judgments. In Ashwinkumar K. Patel Vs. Upendra J. Patel and others, AIR 1999 SC 1125, the Apex Court held that even the High Court should not remand a case under Order 41 Rule 23 C.P.C. to lower Court merely if some reasoning of the lower Court is wrong, since it leads to unnecessary delay and cause prejudice to the parties. If the material is available, the High Court should decide the matter itself since it can consider all the aspects. The relevant observations as contained in para-7 is reproduced as under :

"In out view, the High Court should not ordinarily remand a case under Order 41, Rule 23, C.P.C. to the lower Court merely because it considered that the reasoning of the lower Court in some respects was wrong. Such remand orders lead to unnecessary delays and cause prejudice to the parties to the case. When the material was available before the High Court, it should have itself decided the appeal one way or other. It could have considered the various aspects of the case mentioned in the order of the trial Court and considered whether the order of the trial Court ought to be confirmed or reversed or modified."

Recently, in Pushpa Devi and another Vs. Binod Kumar Gupta and another, AIR 2004 SC 1239 it was held if the entire material is available and the parties have raised all issues before the Appellate Court, it should not remand the matter but decide on its own.

Hence, I am of the view that the judgment of the DRAT, Allahabad besides being wholly unreasoned and non-speaking also cannot be sustained insofar it has remanded. The Appellate Tribunal, instead, should have considered and decided the matter itself.

Now coming to the question as to whether DRAT, Allahabad was justified in remanding the matter to DRT, Lucknow instead of DRT, Allahabad, who has passed the order impugned in the appeal. This issue has to be considered in the light of the statutory provisions of the Act. The learned counsel for the respondents refers to Section 31 of the Act in order to justify remand of the matter to DRT, Lucknow. It would be appropriate to consider the scope of Section 31 of the Act, which is reproduced as under :

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 have 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 under Section 19 from the stage which was reached before such transfer or from any earlier stage as the Tribunal may deem fit.

A perusal of the aforesaid section shows that on the date of establishment of a Tribunal, every suit or other proceeding pending before any Court immediately before the date of establishment of the Tribunal shall stand transferred on that date to such Tribunal. Section 31 provides that suits or proceedings pending before any Court shall stand transferred to the Tribunal on its establishment. However, it does not provide that a matter, if pending before one Tribunal, on the establishment of another Tribunal, by carving out some territorial jurisdiction, would stand transferred. In other words transfer of cases pending before a Tribunal is not contemplated under Section 31 at all. Section 31 is applicable in respect to suit and other proceedings pending before any Court immediately before the date of establishment of a Tribunal under the Act. The term ''Court' has not been defined under the Act but the term ''Tribunal' has been defined under Section 2(O) of the Act, which reads as under :

2. Definitions.-(o)"Tribunal" means the Tribunal established under sub-section (1) of section 3.

However, Section 31 itself shows that the legislature has maintained distinction between a ''Court' and a ''Tribunal' and the proceedings pending before a Court are to be transferred by operation of law to a Tribunal constituted under the Act. I am not inclined to take a view that Section 31 can be pressed to infer that a case filed under the Act before a Tribunal would stand transferred to another Tribunal when a new Tribunal is established taking away some jurisdiction from the existing Tribunal. This is further fortified from the fact that Section 18 of the Act bars jurisdiction of a Court or authority to exercise any jurisdiction, powers or authority in relation to matters specified in Section 17 except the Hon'ble Supreme Court and High Court exercising jurisdiction under Articles 226 and 227 of the Constitution of India. The term ''Court' used in Section 18, obviously, is the one referable to Section 31 also. Since the jurisdiction is barred, all pending suits and proceedings  shall have to be transferred to be adjudicated and decided by the Tribunal constituted under the Act. Neither expressly, nor even by necessary implication I do find any reason to read the word ''Court' under Section 31 of the Act to include a ''Tribunal' constituted under the Act in order to extend the scope of Section 31 for transfer of a case from one Tribunal to another constituted under the Act.

At this stage, it would also be appropriate to refer to the genesis of the Act. A committee headed by Sri T. Tiwari submitted a report in 1981 and another committee headed by Sri M. Narasimham  in 1991 recommended for constitution of ''Tribunal' for expeditious adjudication of recovery for debts due to Bank and financial institutions. The Tiwari Committee report of 1981 recommended in Chapter 8, Para 8.2, that the State should have a special procedure to enforce its demand including recovery of dues of the Banks and financial institutions. The aforesaid committee, in fact, therefore recommended for constitution of a Tribunal under Article 323-A, 323-B of the Constitution of India, which may not be bogged down by the Civil Procedure Code, but may have to follow a simple procedure guided mainly by the principles of natural justice. The Apex Court, while considering the scope of Section 31 of the Act in Allahabad Bank Vs. Canara Bank & another, (2000) 4 SCC 406 held that the ''Tribunal' has the exclusive jurisdiction to adjudicate a matter under the Act and, therefore, as provided under Section 18 of the Act, jurisdiction of any other Court or authority is barred.

It results to the logical conclusion that the term ''Court' under Section 31 does not mean the ''Tribunal' constituted under the Act.

This Court also in Har Sahai Mal Tika Ram & others Vs. Punjab National Banki, Badaun & others, 1999 (4) AWC 3170, in para-12 of the judgment, while interpreting Section 31 of the Act, held as under :

"On the other hand, by reason of Section 31, the jurisdiction of the civil court was withdrawn. By reason of statutory transfer of the suit in terms of Section 31 of the said Act, sub-section (2) requires transmission of the records. It is not the transfer of the suit. By reason of Section 31 read with Section 34 of the said Act, there was no alternative for the court but to transmit the records of the case to the Tribunal. The Court is not required to pass any order of transfer of a suit. By reason of Section 31, it only forwards the records of the suit to the Tribunal."

No doubt, the term ''proceedings' has been held to be given a wider meaning as used under Section 31 and I do not find any reason to include within its ambit, an application filed under Section 19 of this very Act before a Tribunal as it would amount to adding so many words in Section 31 of the Act, which is not permissible on a plain reading of the said Section.

Section 19 of the Act empowers a Bank or a financial institution, who has to recover any debt from any person to make an application before a Tribunal within local limits of whose jurisdiction, the defendants are residing or carry on their business or the cause of action wholly or in part arises. Once an application has been filed under Section1 19 of the Act before a Tribunal having jurisdiction under the Act, the procedure of its adjudication is prescribed under Section 23 of the Act, which is procedural in nature. The appellate Tribunal is also required to follow the same procedure. An appeal is a continuation of original proceeding. When the Appellate Tribunal pass an order setting aside the judgment of Tribunal, if it intend to remand the matter, it would have to restore to the same Tribunal wherefrom the appeal has arisen. Therefore, it can safely be said that neither the term ''Court' under Section 31 of the Act includes the term ''Tribunal' nor vice-versa and both have different connotation and meaning. The Act has used both the terms differently in different provisions and there is no reason to read the ''Court' as inclusive of ''Tribunal' or vice-versa for the purpose of Section 31 of the Act. Therefore, in my view, section 31 would have no application in respect to a case pending before a Tribunal, if another Tribunal is established subsequently having a different territorial jurisdiction carving out from existing Tribunal.

It is not that the Act is silent regarding transfer of a case filed in one Tribunal to another, but Section 17-A(2) of the Act empowers the Chairperson of an Appellate Tribunal to transfer a case filed before one Tribunal to another but for the said purpose there has to be an application of any of the parties or he may proceed  on his own motion but only after giving notice to the parties and after hearing them on the question of transfer, but not otherwise. Section 17-A (2) of the Act is reproduced as under :

"(2) The Chairperson of an Appellate Tribunal having jurisdiction over the Tribunals may, on the application of any of the parties or on his own motion after notice to the parties, and after hearing them, transfer any case from one Tribunal for disposal to any other Tribunal."

Section 31 of the Act, therefore, do contemplates transfer of a case from one Tribunal to another constituted under the Act, but in such a case, the procedure prescribed under Section 17-A(2) has to be observed and recourse to Section 31 by transferring a case to another Tribunal is impermissible. Therefore, I am of the considered view that the respondent no. 1 was not justified in remanding the matter for fresh decision to DRT, Lucknow instead of remanding it to DRT, Allahabad since the case could have not been transferred in this manner to DRT, Lucknow.

In the result, this writ petition is allowed. The impugned order 21.11.2005 passed by the respondent no. 1 (Annexure-1 to the writ petition) is quashed and the matter is remanded back to the respondent no. 1 to decide the appeal afresh in the light of the observations made hereinabove and in accordance with law.

Dt. 13.10.2006



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