DRT - Recovery of Debts due to Banks and Financial Institutions Act, 1993 -whether a suit containing a “counter-claim” or claiming a “set-off” filed by a debtor can be heard and tried before the Debt Recovery Tribunal (hereinafter referred to as ‘DRT’) under the RDB Act or must be tried by a Civil Court alone. - Apex court held that there is a difference opinion between several Benches of this court - directed the registry to place the case before CJ =
whether having regard to the
Recovery of Debts due to Banks and Financial Institutions Act, 1993
[hereinafter referred to as ‘RDB Act’], a suit containing a “counter-claim”
or claiming a “set-off” filed by a debtor can be heard and tried before the
Debt Recovery Tribunal (hereinafter referred to as ‘DRT’) under the RDB Act
or must be tried by a Civil Court alone. =
There is a difference of opinion between
several Benches of this Court on the issue. This is likely to create a
doubt as to the true position in law, hence we consider it appropriate to
refer the following questions of law to a larger Bench:
Whether an independent suit filed by a borrower against a Bank or Financial
Institution, which has applied for recovery of its loan against the
plaintiff under the DRB Act, is liable to be transferred and tried along
with the application under the RDB Act by the DRT?
If the answer is in the affirmative, can such transfer be ordered by a
court only with the consent of the plaintiff?
Is the jurisdiction of a Civil Court to try a suit filed by a borrower
against a Bank or Financial Institution ousted by virtue of the scheme of
the RDB Act in relation to proceedings for recovery of debt by a Bank or
Financial Institution? =
In view of above, the Registry is directed to place the papers before the
Hon'ble Chief Justice of India for taking appropriate action in accordance
with law.
2014 - Sept.Month - http://judis.nic.in/supremecourt/filename=41930
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL Nos.8973-8973 OF 2014
(Arising out of Special Leave Petition (C) Nos. 975-976 of 2012)
Bank of Rajasthan Ltd. ….
Appellant
Versus
VCK Shares & Stock Broking Services Ltd. …. Respondent
1 JUDGMENT
S. A. BOBDE, J.
Leave granted.
In these appeals, the question before us is whether having regard to the
Recovery of Debts due to Banks and Financial Institutions Act, 1993
[hereinafter referred to as ‘RDB Act’], a suit containing a “counter-claim”
or claiming a “set-off” filed by a debtor can be heard and tried before the
Debt Recovery Tribunal (hereinafter referred to as ‘DRT’) under the RDB Act
or must be tried by a Civil Court alone.
The appellant – Bank filed an application for recovery under Section 19 of
the RDB Act before the DRT for a recovery certificate against the
respondent for Rs. 8,62,41,973.36/-. Though the respondent entered
appearance before the DRT, it filed Civil Suit No. 77 of 1998 before the
Calcutta High Court against the appellant claiming a decree for sale of
pledged shares and payment of sale proceeds to the respondent. After the
appellant sold pledged shares for a total sum of Rs. 5,77,68,000/-, the
respondent filed Civil Suit No. 129 of 1999 praying inter alia for
following reliefs:
A declaration that sale of shares of BFL Software Ltd. was void;
A decree for return of pledged shares in respect of overdraft facility
account and in default to pay Rs. 48.95 crores; and
A declaration that no sum was payable by the respondent to the appellant in
respect of Term Loan dated 27.07.1994 and overdraft Account dated
19.09.1995 and that the appellant is not entitled to a decree for a sum of
Rs. 8,62,41,973.36 from the respondent.
The appellant filed an application in C.S. No. 129 of 1999 for rejecting
the suit on the ground that the High Court did not have jurisdiction since
the subject matter was within the exclusive jurisdiction of the DRT. The
Single Judge allowed that application and directed that the suits be taken
off from the file of the High Court. The Division Bench stayed operation
of the Order of the Single Judge.
Since the DRT held that the appellant’s claim for Rs.
6,04,17,777.36 was satisfied, it directed inter alia to return the title
deeds of the pledged shares. On the counter claim, the DRT held that the
respondent was entitled to recover Rs. 6,88,187.49
from the appellant within 4 weeks.
The appellant’s petition under Article 227 of the Constitution before the
High Court of Calcutta challenging the DRT order dismissing the appellant’s
appeal against the DRT order was dismissed in default. The Division Bench
allowed the appeal filed by the respondent against the order of the Single
Judge taking off the suits from the file of the High Court. This Judgment
of the High Court is questioned in these appeals.
In United Bank of India, Calcutta vs. Abhijit Tea Co. Pvt. Ltd. and
Others[1], a two-Judge Bench of this Court took the view that as per the
legislative scheme of the RDB Act, jurisdiction was indeed conferred upon
the Tribunal to try “counter-claim” and “set-off” by Section 19 of the RDB
Act and that all such counter-claims and set-offs, including a cross suit
filed independently should be tried by a Debt Recovery Tribunal. The Court
was considering a case where the borrower-company had filed an application
that suit filed by the Bank should remain on the Original Side of the
Calcutta High Court. That application was allowed by the Single Judge.
Against this order the Bank had preferred the Special Leave Petition.
Though the RDB Act had not come into force when the suit was filed by the
Bank, the debtor-company had filed the application and resisted the
transfer of the suit. This Court took the view that the above pleas raised
by the respondent-company are all inextricably connected with the amount
claimed by the Bank and therefore directed transfer of the suit.
In a later decision in Indian Bank vs. ABS Marine Products (P) Ltd.[2], a
Bench of two Judges of this Court took the view that the jurisdiction of
the Civil Courts is not barred in regard to any suit filed by a borrower
against a bank for any relief. That jurisdiction is barred only in regard
to applications by a bank or a financial institution for recovery of its
debt. The Bench also held that though a ‘counter-claim’ and ‘set off’ may
be made under sub-sections (6) and (11) of Section 19 of the DRB Act, no
jurisdiction is conferred on the Tribunal to try independent suits or
proceedings initiated by borrowers.
It held that what is provided and permitted is a cross-action by the
respondent in a pending application filed by a bank. It was held that the
borrower had the option to file a separate suit before the Civil Court and
the counter-claim before the Tribunal was not the only remedy. Referring
to the earlier Judgment in Abhijit’s[3] case (supra), the Bench observed
that an independent suit can be deemed to be a counter-claim and can be
transferred to the Tribunal only if the following conditions are satisfied:
The subject-matter of the bank’s suit, and the suit of the defendant
against the bank, is inextricably connected in the sense that the decision
in one would affect the decision in the other.
Both parties (the plaintiff in the suit against the bank and the bank)
should agree for the independent suit being considered as a counter-claim
in the bank’s application before the Tribunal, so that both can be heard
and disposed of by the Tribunal.
In State Bank of India vs. Ranjan Chemicals Ltd. and Another[4], a two-
Judge Bench considered the matter from the perspective of whether it was
just and proper to order a joint trial of two cases i.e. one before the DRT
and another before the Civil Court. The two-Judge Bench referred to
Abhijit’s[5] case (supra) and observed that though a borrower-company
always had an option to sue the bank in a civil court, it does not in any
manner affect the power of the Court to order a joint trial of the
applications. There was no warrant of curtailing the power of the Court to
order a joint trial by introducing a restriction that it can be done only
if there was consent by both sides, though a claim in an independent suit
could be considered as a claim for set-off and a counter-claim within the
meaning of Section 19 of the RDB Act. In such an eventuality the only
question was whether in the interest of justice, convenience of parties and
avoidance of multiplicity, the suit should be transferred to the DRT to be
tried as a cross-suit. Thus the Bench leaving Ranjan Chemicals Case held in
effect that the consent of the parties for transfer of the suit to the DRT
was not necessary, as held in the Indian Bank Case (supra).
In a subsequent decision of this Court by another two-Judge Bench in Nahar
Industrial Enterprises Limited vs. Hong Kong and Shanghai Banking
Corporation[6], the issue cropped up again. The Court considered the three
authorities referred to above i.e. United Bank of India, Calcutta vs.
Abhijit Tea Co. Pvt. Ltd. and Others[7]; Indian Bank vs. ABS Marine
Products (P) Ltd.[8] and State Bank of India vs. Ranjan Chemicals Ltd. and
Another[9]. The two-Judge Bench in this case i.e. Nahar’s case (supra)
observed that in the Indian Bank’s case, the Court had come to the
conclusion that the respective claims of the parties were not inextricably
connected and therefore the transfer of a suit to the Tribunal can only be
on the basis of the consent of the parties. The Bench in Indian Bank case
had held that the claims can be transferred only if the following two
conditions exists:
Inextricable connection of the subject matter of the two proceedings; and
The agreement of both parties that the suit should be transferred to the
Tribunal.
It further directed that the Bench in Ranjan Chemicals[10] case was bound
by the decision in the Indian Bank Case[11] being a co-ordinate Bench, and
therefore, could not have taken a contrary view by holding that the Court
can consider a suit to be a claim of ‘set-off’ and transferred to the
Tribunal for being tried jointly with the application filed by the bank as
a cross-suit and that too without the consent of parties. The Bench, vide
para 60, held as under:
“We are in agreement with all the above observations of this Court. Ranjan
Chemicals[12] was bound by the decision rendered in Indian Bank[13] being a
coordinate Bench. It could not have taken a contrary view.”
Though having so observed, the Bench apparently did not consider it
appropriate to have the matter decided by a larger Bench. It was held that
if all suits whether inextricably connected with the application filed
before the DRT by the Bank are transferred, the same would amount to
ousting the jurisdiction of the civil court indirectly and consent of the
plaintiff is necessary for transferring the suits. This finding is in
consonance with the observation of the Court in the Indian Bank’s Case[14]
but is at variance with the Judgment in Ranjan Chemicals[15] case.
According to the last judgment i.e. Nahar’s case[16], the Bench deciding
Ranjan Chemicals case could not have taken a contrary view but was bound by
the decision rendered in the Indian Bank case. Many other aspects of
variance and consonance have been pointed out to us but we have not dealt
with them in view of the one aspect alone, which has been highlighted.
Mr. Shyam Divan, learned senior counsel appearing for the appellant relied
upon the decision of this Court in Jit Ram v. State of Haryana[17] and
Union of India v. Godfrey Philips India Ltd.[18], where in paragraph 12,
this Court observed as follows:
“………..We find it difficult to understand how a Bench of two Judges in Jit
Ram case could possibly overturn or disagree with what was said by another
Bench of two Judges in Motilal Sugar Mills case[19]. If the Bench of two
Judges in Jit Ram case found themselves unable to agree with the law laid
down in Motilal Sugar Mills case, they could have referred Jit Ram case to
a larger Bench, but we do not think it was right on their part to express
their disagreement with the enunciation of the law by a coordinate Bench of
the same Court in Motilal Sugar Mills. We have carefully considered both
the decisions in Motilal Sugar Mills case and Jit Ram case and we are
clearly of the view that what has been laid down in Motilal Sugar Mills
case represents the correct law in regard to the doctrine of promissory
estoppel and we express our disagreement with the observations in Jit Ram
case to the extent that they conflict with the statement of the law in
Motilal Sugar Mills case and introduce reservations cutting down the full
width and amplitude of the propositions of law laid down in that case.”
Shri Divan submitted that the Bench deciding Ranjan Chemical’s Case[20] had
decided at variance with the Judgment in Indian Bank case[21]. They were
Benches of coordinate strength and the latter ought to have referred the
matter to a larger Bench instead of taking a contrary view. The learned
senior counsel also pointed out that this, in fact is the exact observation
of the Bench in Nahar’s case[22] which did not also consider it appropriate
to refer the issues to a larger Bench.
Mr. Jaideep Gupta, learned senior counsel appearing for the respondent
submitted that the matter does not call for a reference as there is
complete consistency in the views of the Court in Indian Bank case (supra)
and Nahar case (supra) since both the judgments have taken the view that
the jurisdiction of the civil courts has not been ousted and a suit filed
before the civil court can be transferred to the DRT only with the consent
of both parties. According to the learned counsel, Nahar’s case (supra) is
the last word on the point and it must be taken to lay down the correct
law, and in any case the law which is binding.
It is not possible to accede to the submissions made on behalf of the
respondent as pointed out above. There is a difference of opinion between
several Benches of this Court on the issue. This is likely to create a
doubt as to the true position in law, hence we consider it appropriate to
refer the following questions of law to a larger Bench:
Whether an independent suit filed by a borrower against a Bank or Financial
Institution, which has applied for recovery of its loan against the
plaintiff under the DRB Act, is liable to be transferred and tried along
with the application under the RDB Act by the DRT?
If the answer is in the affirmative, can such transfer be ordered by a
court only with the consent of the plaintiff?
Is the jurisdiction of a Civil Court to try a suit filed by a borrower
against a Bank or Financial Institution ousted by virtue of the scheme of
the RDB Act in relation to proceedings for recovery of debt by a Bank or
Financial Institution?
At this stage, Shri Diwan, learned senior counsel for the appellant prayed
for stay of further proceedings in the two suits being Civil Suit No. 77 of
1998 and Civil Suit No. 129 of 1999, both titled “VCK Shares & Stock
Broking Services Ltd. Vs. Bank of Rajasthan” pending before the High Court
of Calcutta. The suits are apparently pending since the years 1998 & 1999
and due to various proceedings, which have been taken out by the parties,
have virtually remained stationary. We are informed that the suits are at
the stage of amendment of the pleadings, which have not been carried out.
Suffice it to say that there is virtually no progress in the suits and much
progress is not likely to take place for a long time. Moreover, the
respondent – plaintiff has made a monetary claim, the satisfaction of which
can be appropriately ensured by any order which may be passed in the
proceedings. We thus see no reason to direct stay of the suits. The
interim relief prayed for the same is rejected.
In view of above, the Registry is directed to place the papers before the
Hon'ble Chief Justice of India for taking appropriate action in accordance
with law.
................……………….J.
[RANJAN
GOGOI]
……....……….………………J.
[S.A. BOBDE]
New Delhi,
September 17, 2014
-----------------------
[1]
[2] (2000) 7 SCC 357
[3]
[4] (2006) 5 SCC 72
[5]
[6] (2000) 7 SCC 357
[7]
[8] (2007) 1 SCC 97
[9]
[10] (2000) 7 SCC 357
[11]
[12] (2009) 8 SCC 646
[13]
[14] (2000) 7 SCC 357
[15]
[16] (2006) 5 SCC 72
[17]
[18] (2007) 1 SCC 97
[19]
[20] (2007) 1 SCC 97
[21]
[22] (2006) 5 SCC 72
[23]
[24] (2007) 1 SCC 97
[25]
[26] (2006) 5 SCC 72
[27]
[28] (2006) 5 SCC 72
[29]
[30] (2007) 1 SCC 97
[31]
[32] (2009) 8 SCC 646
[33]
[34] (1981) 1 SCC 11
[35]
[36] (1985) 4 SCC 369
[37]
[38] (1979) 2 SCC 409
[39]
[40] (2007) 1 SCC 97
[41]
[42] (2006) 5 SCC 72
[43]
[44] (2009) 8 SCC 646
whether having regard to the
Recovery of Debts due to Banks and Financial Institutions Act, 1993
[hereinafter referred to as ‘RDB Act’], a suit containing a “counter-claim”
or claiming a “set-off” filed by a debtor can be heard and tried before the
Debt Recovery Tribunal (hereinafter referred to as ‘DRT’) under the RDB Act
or must be tried by a Civil Court alone. =
There is a difference of opinion between
several Benches of this Court on the issue. This is likely to create a
doubt as to the true position in law, hence we consider it appropriate to
refer the following questions of law to a larger Bench:
Whether an independent suit filed by a borrower against a Bank or Financial
Institution, which has applied for recovery of its loan against the
plaintiff under the DRB Act, is liable to be transferred and tried along
with the application under the RDB Act by the DRT?
If the answer is in the affirmative, can such transfer be ordered by a
court only with the consent of the plaintiff?
Is the jurisdiction of a Civil Court to try a suit filed by a borrower
against a Bank or Financial Institution ousted by virtue of the scheme of
the RDB Act in relation to proceedings for recovery of debt by a Bank or
Financial Institution? =
In view of above, the Registry is directed to place the papers before the
Hon'ble Chief Justice of India for taking appropriate action in accordance
with law.
2014 - Sept.Month - http://judis.nic.in/supremecourt/filename=41930
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL Nos.8973-8973 OF 2014
(Arising out of Special Leave Petition (C) Nos. 975-976 of 2012)
Bank of Rajasthan Ltd. ….
Appellant
Versus
VCK Shares & Stock Broking Services Ltd. …. Respondent
1 JUDGMENT
S. A. BOBDE, J.
Leave granted.
In these appeals, the question before us is whether having regard to the
Recovery of Debts due to Banks and Financial Institutions Act, 1993
[hereinafter referred to as ‘RDB Act’], a suit containing a “counter-claim”
or claiming a “set-off” filed by a debtor can be heard and tried before the
Debt Recovery Tribunal (hereinafter referred to as ‘DRT’) under the RDB Act
or must be tried by a Civil Court alone.
The appellant – Bank filed an application for recovery under Section 19 of
the RDB Act before the DRT for a recovery certificate against the
respondent for Rs. 8,62,41,973.36/-. Though the respondent entered
appearance before the DRT, it filed Civil Suit No. 77 of 1998 before the
Calcutta High Court against the appellant claiming a decree for sale of
pledged shares and payment of sale proceeds to the respondent. After the
appellant sold pledged shares for a total sum of Rs. 5,77,68,000/-, the
respondent filed Civil Suit No. 129 of 1999 praying inter alia for
following reliefs:
A declaration that sale of shares of BFL Software Ltd. was void;
A decree for return of pledged shares in respect of overdraft facility
account and in default to pay Rs. 48.95 crores; and
A declaration that no sum was payable by the respondent to the appellant in
respect of Term Loan dated 27.07.1994 and overdraft Account dated
19.09.1995 and that the appellant is not entitled to a decree for a sum of
Rs. 8,62,41,973.36 from the respondent.
The appellant filed an application in C.S. No. 129 of 1999 for rejecting
the suit on the ground that the High Court did not have jurisdiction since
the subject matter was within the exclusive jurisdiction of the DRT. The
Single Judge allowed that application and directed that the suits be taken
off from the file of the High Court. The Division Bench stayed operation
of the Order of the Single Judge.
Since the DRT held that the appellant’s claim for Rs.
6,04,17,777.36 was satisfied, it directed inter alia to return the title
deeds of the pledged shares. On the counter claim, the DRT held that the
respondent was entitled to recover Rs. 6,88,187.49
from the appellant within 4 weeks.
The appellant’s petition under Article 227 of the Constitution before the
High Court of Calcutta challenging the DRT order dismissing the appellant’s
appeal against the DRT order was dismissed in default. The Division Bench
allowed the appeal filed by the respondent against the order of the Single
Judge taking off the suits from the file of the High Court. This Judgment
of the High Court is questioned in these appeals.
In United Bank of India, Calcutta vs. Abhijit Tea Co. Pvt. Ltd. and
Others[1], a two-Judge Bench of this Court took the view that as per the
legislative scheme of the RDB Act, jurisdiction was indeed conferred upon
the Tribunal to try “counter-claim” and “set-off” by Section 19 of the RDB
Act and that all such counter-claims and set-offs, including a cross suit
filed independently should be tried by a Debt Recovery Tribunal. The Court
was considering a case where the borrower-company had filed an application
that suit filed by the Bank should remain on the Original Side of the
Calcutta High Court. That application was allowed by the Single Judge.
Against this order the Bank had preferred the Special Leave Petition.
Though the RDB Act had not come into force when the suit was filed by the
Bank, the debtor-company had filed the application and resisted the
transfer of the suit. This Court took the view that the above pleas raised
by the respondent-company are all inextricably connected with the amount
claimed by the Bank and therefore directed transfer of the suit.
In a later decision in Indian Bank vs. ABS Marine Products (P) Ltd.[2], a
Bench of two Judges of this Court took the view that the jurisdiction of
the Civil Courts is not barred in regard to any suit filed by a borrower
against a bank for any relief. That jurisdiction is barred only in regard
to applications by a bank or a financial institution for recovery of its
debt. The Bench also held that though a ‘counter-claim’ and ‘set off’ may
be made under sub-sections (6) and (11) of Section 19 of the DRB Act, no
jurisdiction is conferred on the Tribunal to try independent suits or
proceedings initiated by borrowers.
It held that what is provided and permitted is a cross-action by the
respondent in a pending application filed by a bank. It was held that the
borrower had the option to file a separate suit before the Civil Court and
the counter-claim before the Tribunal was not the only remedy. Referring
to the earlier Judgment in Abhijit’s[3] case (supra), the Bench observed
that an independent suit can be deemed to be a counter-claim and can be
transferred to the Tribunal only if the following conditions are satisfied:
The subject-matter of the bank’s suit, and the suit of the defendant
against the bank, is inextricably connected in the sense that the decision
in one would affect the decision in the other.
Both parties (the plaintiff in the suit against the bank and the bank)
should agree for the independent suit being considered as a counter-claim
in the bank’s application before the Tribunal, so that both can be heard
and disposed of by the Tribunal.
In State Bank of India vs. Ranjan Chemicals Ltd. and Another[4], a two-
Judge Bench considered the matter from the perspective of whether it was
just and proper to order a joint trial of two cases i.e. one before the DRT
and another before the Civil Court. The two-Judge Bench referred to
Abhijit’s[5] case (supra) and observed that though a borrower-company
always had an option to sue the bank in a civil court, it does not in any
manner affect the power of the Court to order a joint trial of the
applications. There was no warrant of curtailing the power of the Court to
order a joint trial by introducing a restriction that it can be done only
if there was consent by both sides, though a claim in an independent suit
could be considered as a claim for set-off and a counter-claim within the
meaning of Section 19 of the RDB Act. In such an eventuality the only
question was whether in the interest of justice, convenience of parties and
avoidance of multiplicity, the suit should be transferred to the DRT to be
tried as a cross-suit. Thus the Bench leaving Ranjan Chemicals Case held in
effect that the consent of the parties for transfer of the suit to the DRT
was not necessary, as held in the Indian Bank Case (supra).
In a subsequent decision of this Court by another two-Judge Bench in Nahar
Industrial Enterprises Limited vs. Hong Kong and Shanghai Banking
Corporation[6], the issue cropped up again. The Court considered the three
authorities referred to above i.e. United Bank of India, Calcutta vs.
Abhijit Tea Co. Pvt. Ltd. and Others[7]; Indian Bank vs. ABS Marine
Products (P) Ltd.[8] and State Bank of India vs. Ranjan Chemicals Ltd. and
Another[9]. The two-Judge Bench in this case i.e. Nahar’s case (supra)
observed that in the Indian Bank’s case, the Court had come to the
conclusion that the respective claims of the parties were not inextricably
connected and therefore the transfer of a suit to the Tribunal can only be
on the basis of the consent of the parties. The Bench in Indian Bank case
had held that the claims can be transferred only if the following two
conditions exists:
Inextricable connection of the subject matter of the two proceedings; and
The agreement of both parties that the suit should be transferred to the
Tribunal.
It further directed that the Bench in Ranjan Chemicals[10] case was bound
by the decision in the Indian Bank Case[11] being a co-ordinate Bench, and
therefore, could not have taken a contrary view by holding that the Court
can consider a suit to be a claim of ‘set-off’ and transferred to the
Tribunal for being tried jointly with the application filed by the bank as
a cross-suit and that too without the consent of parties. The Bench, vide
para 60, held as under:
“We are in agreement with all the above observations of this Court. Ranjan
Chemicals[12] was bound by the decision rendered in Indian Bank[13] being a
coordinate Bench. It could not have taken a contrary view.”
Though having so observed, the Bench apparently did not consider it
appropriate to have the matter decided by a larger Bench. It was held that
if all suits whether inextricably connected with the application filed
before the DRT by the Bank are transferred, the same would amount to
ousting the jurisdiction of the civil court indirectly and consent of the
plaintiff is necessary for transferring the suits. This finding is in
consonance with the observation of the Court in the Indian Bank’s Case[14]
but is at variance with the Judgment in Ranjan Chemicals[15] case.
According to the last judgment i.e. Nahar’s case[16], the Bench deciding
Ranjan Chemicals case could not have taken a contrary view but was bound by
the decision rendered in the Indian Bank case. Many other aspects of
variance and consonance have been pointed out to us but we have not dealt
with them in view of the one aspect alone, which has been highlighted.
Mr. Shyam Divan, learned senior counsel appearing for the appellant relied
upon the decision of this Court in Jit Ram v. State of Haryana[17] and
Union of India v. Godfrey Philips India Ltd.[18], where in paragraph 12,
this Court observed as follows:
“………..We find it difficult to understand how a Bench of two Judges in Jit
Ram case could possibly overturn or disagree with what was said by another
Bench of two Judges in Motilal Sugar Mills case[19]. If the Bench of two
Judges in Jit Ram case found themselves unable to agree with the law laid
down in Motilal Sugar Mills case, they could have referred Jit Ram case to
a larger Bench, but we do not think it was right on their part to express
their disagreement with the enunciation of the law by a coordinate Bench of
the same Court in Motilal Sugar Mills. We have carefully considered both
the decisions in Motilal Sugar Mills case and Jit Ram case and we are
clearly of the view that what has been laid down in Motilal Sugar Mills
case represents the correct law in regard to the doctrine of promissory
estoppel and we express our disagreement with the observations in Jit Ram
case to the extent that they conflict with the statement of the law in
Motilal Sugar Mills case and introduce reservations cutting down the full
width and amplitude of the propositions of law laid down in that case.”
Shri Divan submitted that the Bench deciding Ranjan Chemical’s Case[20] had
decided at variance with the Judgment in Indian Bank case[21]. They were
Benches of coordinate strength and the latter ought to have referred the
matter to a larger Bench instead of taking a contrary view. The learned
senior counsel also pointed out that this, in fact is the exact observation
of the Bench in Nahar’s case[22] which did not also consider it appropriate
to refer the issues to a larger Bench.
Mr. Jaideep Gupta, learned senior counsel appearing for the respondent
submitted that the matter does not call for a reference as there is
complete consistency in the views of the Court in Indian Bank case (supra)
and Nahar case (supra) since both the judgments have taken the view that
the jurisdiction of the civil courts has not been ousted and a suit filed
before the civil court can be transferred to the DRT only with the consent
of both parties. According to the learned counsel, Nahar’s case (supra) is
the last word on the point and it must be taken to lay down the correct
law, and in any case the law which is binding.
It is not possible to accede to the submissions made on behalf of the
respondent as pointed out above. There is a difference of opinion between
several Benches of this Court on the issue. This is likely to create a
doubt as to the true position in law, hence we consider it appropriate to
refer the following questions of law to a larger Bench:
Whether an independent suit filed by a borrower against a Bank or Financial
Institution, which has applied for recovery of its loan against the
plaintiff under the DRB Act, is liable to be transferred and tried along
with the application under the RDB Act by the DRT?
If the answer is in the affirmative, can such transfer be ordered by a
court only with the consent of the plaintiff?
Is the jurisdiction of a Civil Court to try a suit filed by a borrower
against a Bank or Financial Institution ousted by virtue of the scheme of
the RDB Act in relation to proceedings for recovery of debt by a Bank or
Financial Institution?
At this stage, Shri Diwan, learned senior counsel for the appellant prayed
for stay of further proceedings in the two suits being Civil Suit No. 77 of
1998 and Civil Suit No. 129 of 1999, both titled “VCK Shares & Stock
Broking Services Ltd. Vs. Bank of Rajasthan” pending before the High Court
of Calcutta. The suits are apparently pending since the years 1998 & 1999
and due to various proceedings, which have been taken out by the parties,
have virtually remained stationary. We are informed that the suits are at
the stage of amendment of the pleadings, which have not been carried out.
Suffice it to say that there is virtually no progress in the suits and much
progress is not likely to take place for a long time. Moreover, the
respondent – plaintiff has made a monetary claim, the satisfaction of which
can be appropriately ensured by any order which may be passed in the
proceedings. We thus see no reason to direct stay of the suits. The
interim relief prayed for the same is rejected.
In view of above, the Registry is directed to place the papers before the
Hon'ble Chief Justice of India for taking appropriate action in accordance
with law.
................……………….J.
[RANJAN
GOGOI]
……....……….………………J.
[S.A. BOBDE]
New Delhi,
September 17, 2014
-----------------------
[1]
[2] (2000) 7 SCC 357
[3]
[4] (2006) 5 SCC 72
[5]
[6] (2000) 7 SCC 357
[7]
[8] (2007) 1 SCC 97
[9]
[10] (2000) 7 SCC 357
[11]
[12] (2009) 8 SCC 646
[13]
[14] (2000) 7 SCC 357
[15]
[16] (2006) 5 SCC 72
[17]
[18] (2007) 1 SCC 97
[19]
[20] (2007) 1 SCC 97
[21]
[22] (2006) 5 SCC 72
[23]
[24] (2007) 1 SCC 97
[25]
[26] (2006) 5 SCC 72
[27]
[28] (2006) 5 SCC 72
[29]
[30] (2007) 1 SCC 97
[31]
[32] (2009) 8 SCC 646
[33]
[34] (1981) 1 SCC 11
[35]
[36] (1985) 4 SCC 369
[37]
[38] (1979) 2 SCC 409
[39]
[40] (2007) 1 SCC 97
[41]
[42] (2006) 5 SCC 72
[43]
[44] (2009) 8 SCC 646
