REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.   4796        OF 2009 (Arising out of SLP (C) No.24715 of 2008)

Nahar Industrial Enterprises Ltd. … Appellant

Versus

Hong Kong & Shanghai Banking Corporation … Respondent

WITH TRANSFER PETITION (C) No. 1195 OF 2008  

Axis Bank Ltd. …. Appellant  

Versus

Rajshree Sugars & Chemicals Ltd. …. Respondent

WITH TRANSFER PETITION (C) No. 1196 OF 2008  

Axis Bank Ltd. …. Appellant  

Versus

Nahar Industrial Enterprises Ltd. …. Respondent

AND TRANSFER PETITION (C) Nos. 1207-1209 OF 2008  

Hongkong & Shanghai Banking Corporation Ltd. …. Appellant  

Versus

Nahar Industrial Enterprises Ltd. and others …. Respondents

J U D G M E N T

S.B. Sinha, J.

Leave granted.

INTRODUCTION

Whether the High Court and/or this Court has the power to transfer a  

suit  pending  in  a  Civil  Court  situated  in  one  State  to  a  Debt  Recovery  

Tribunal situated in another is the question involved herein.

BACKGROUND FACTS

We may notice the facts of the matter from Civil Appeal @ SLP (C)  

No.24715  of  2008.    It  arises  out  of  a  judgment  and  order  dated  15th  

September,  2008 passed by a learned Single Judge of the High Court  of  

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Punjab and Haryana at Chandigarh in Transfer Application No.186 of 2008  

whereby and whereunder the suit filed by the appellant and pending before  

the  Civil  Judge  (Junior  Division),  Ludhiana  was  transferred  to  the  Debt  

Recovery Tribunal-III at Mumbai.  

Some of the parties  to  the  lis  before us are  the  banks  or  financial  

institutions within the purview of the Recovery of Debts Due to Banks and  

Financial Institutions Act, 1993 (1993 Act).  The others are debtors of such  

banks  or  financial  institutions.   The  parties  hereto  entered  into  diverse  

agreements in terms whereof  banks or the financial institutions lent money  

to the debtors.

Appellant  entered  into  International  Swaps  and  Derivatives  

Agreement  with  the  respondent.  On  1.11.2006,  the  appellant  and  the  

respondent entered into globally used market standard Master Agreement  

and Schedule  published by ISDA (ISDA Master  Agreement)  (hereinafter  

referred  to  as  “Master  Agreement”)  wherein  the  respondent  undertook  

derivative transactions for hedging or transformation of risk exposure.

Under the said Master agreement i.e. the ISDA Agreement including  

the Schedule thereto, the appellant had entered into ten transactions with the  

respondent and out of those ten transactions, appellant has unwound (closed  

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at the instance of the appellant at a mutually agreed value) four transactions;  

one  transaction  got  matured  and  one  expired  due  to  occurrence  of  a  

contingent  event.   In  all  the  six  transactions,  appellant  had  received  an  

aggregate  sum of about  Rs.1,87,00,000/-  (Rupees  one crore eighty  seven  

lakhs  only)  from  the  respondent.  In  respect  of  2  transactions  Swap  

Reference:  NCW072009996 and Swap Reference:  NCW 072009997 both  

dated  13th July,  2007,  the  appellant  has  till  date  received  Rs.13,00,000  

(Rupees Thirteen Lakhs Only) from the respondent.   

As on 02.04.2008, four foreign exchange derivative transactions were  

outstanding  between  the  appellant  and the  respondent,  dated  13.07.2007,  

13.07.2007, 26.07.2007 and 30.07.2007.

Appellant  vide  his  letter  of  03.04.2008  purported  to  disclaim,  

repudiate  and  reject  only  two  out  of  those  four  transactions,  i.e.,  the  

transactions with trade dates 26th July 2007 and 30th July, 2007.

Appellant  filed  a  suit  in  the  Civil  Court  at  Ludhiana  seeking  a  

declaration that foreign exchange derivative contracts dated 26.7.2007 and  

30.7.2007, entered into by and between them were void as being illegal and  

violative  of  Foreign  Exchange  Management  Act,  2000  as  well  as  the  

Circulars and Guidelines issued by the Reserve Bank of India, and, thus,  

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against public policy.  The said suit  was marked as Civil Suit No.108 of  

2008.

An application for grant of injunction was also filed.  By reason of an  

order dated 5.4.2008, the learned Civil  Judge directed both the parties  to  

maintain status quo in regard to the said two contracts, directing:

“Lest the purpose be not defeated by delay, both  the parties are directed to maintain status quo (as  on  today)  regarding  the  contracts  involving  the  present cases till 16.4.2008.  Compliance U/O 39  R.3 CPC be made as per rules.  Plaintiffs shall also  be  duty  bound  to  get  the  service  effected  on  defendants for date fixed Summons be also given  dasti.”

The said order of status quo is said to have been communicated to the  

respondent on or about 8.4.2008.

Respondent  issued  a  notice  dated  12.4.2008  upon  the  appellant  

terminating  the  pending  derivative  transaction.   Appellant  contends  that  

termination of the said derivative transaction is in violation of the order of  

status  quo  passed  by  the  learned  Civil  Judge  on  5.4.2008.   Appellant  

responded to the said notice calling upon it to withdraw the same.

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On  or  about  15.4.2008,  the  respondent-bank  filed  an  application  

before the Debt Recovery Tribunal at  Mumbai marked as OA No.122 of  

2008  along  with  an  interim  application  marked  as  Interim  Application  

No.125  of  2008  for  recovery  of  dues  under  the  two  remaining  Foreign  

Exchange Derivative Contracts dated 13.7.2007.

Meanwhile, the order of status quo passed on 5.4.2008 was extended  

by the learned Civil Judge by an order dated 16.4.2008 till 23.4.2008.  In the  

original application filed by the respondent-bank, the Tribunal by an order  

dated  22.4.2008  restrained  the  appellant  from alienating,  or  in  any  way  

creating third party interests in its fixed assets in relation to the transactions  

which were not the subject matter of the suit.   Respondent-bank issued two  

letters on 24.4.2008 to the appellant calling upon it to pay the amount due  

under the two transactions dated 26.7.2008 and 30.7.2008, and on the same  

day  filed  another  application  before  the  Debt  Recovery  Tribunal  for  

recovery of dues under the said two foreign exchange derivative contracts.

An  application  for  clarification  and/or  modification  of  stay  of  the  

order dated 5.4.2008 was filed by the appellant before the civil judge which  

was  heard  on  13.5.2008  and  17.5.2008.   The  matter  was  adjourned  to  

29.5.2008.   

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IMPUGNED JUDGMENT

Respondent, however, filed transfer application before the High Court  

of Punjab & Haryana on or about 27.5.2008 seeking transfer of proceedings  

pending before the Civil Judge, Ludhiana to the Debts Recovery Tribunal,  

III,  Mumbai.  An application for violation of the order of injunction was  

filed by the appellant before the Civil Court on 28.5.2008.  By reason of the  

impugned order, a learned Single Judge of the High Court allowed the said  

application transferring the suit filed by the appellant in the Ludhiana court  

to the DRT tribunal, Mumbai in the form of a counter claim.

The Banks and the Financial Institutions including Axis Bank have  

also filed Transfer Petitions, said to be by way of abundant caution, before  

this Court under Section 25 of the Code which are marked as TP (C) Nos.  

1207-1209 of 2008 and 1195-2008 & 1196-2008 respectively .  

While issuing the notice in SLP (C) No. 24715 of 2008 this Court, by  

order dated 20.10.2008, directed :-

“Issue notice.

Mr.  Sameer  Parekh,  Advocate  accepts  notice  on  behalf of the respondent.

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As the question involved in this petition is a pure  question of law, no counter affidavit need be filled.

Put up for final disposal on 2nd December, 2008.

We make it clear that on that day, this Court shall  consider as to whether this Court, in the peculiar  facts and circumstances of this case, may exercise  its  jurisdiction  under  Article  142  of  the  Constitution of India.

In  the  meantime,  there  shall  be  stay  of  the  operation  of  the  final  judgment  and  order  dated  15.9.2008 of the High Court of Punjab & Haryana  in Transfer Application No.186/2008 as also stay  of  the  proceedings  before  the  Debt  Recovery  Tribunal,  Mumbai  in  OA Nil  of  2008  (Lodging  No.270).

The  parties  shall  file  written  submissions  before  the next date of hearing.”

ISSUES ARISING

In the background of these facts, the following questions that arise for  

our consideration are:

(I). Whether the High Court/Supreme Court has the power to transfer a  

suit from a Civil Court to the DRT, keeping in mind,

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a. The effect of a transfer from the Civil Court to the DRT is to  

oust  the jurisdiction  of the civil  court  which cannot be done  

without express statutory provisions.

b. Proceedings before DRT is sui generis & totally different from  

the procedure in a Civil Court.

c. Power of transfer under CPC (Sections 22, 23, 24 and 25) is  

inapplicable as these sections apply in a case where the transfer  

is from one Court to another & DRT being not a Court.  

d. The power to transfer under the DRT Act is restricted to cases  

filed  by Banks that  were  pending  on the  date  when the Act  

came into force and in respect of those cases in which DRT has  

jurisdiction.

(II). Whether the decision of this Court in  Indian Bank v.  ABS Marine  

Products  (P)  Ltd. [(2006)  5  SCC 72],  is  applicable  in  the  case  of  

transfer of a suit from the Civil  Court to the DRT to be tried as a  

counterclaim, and could a Coordinate two Judge Bench in State Bank  

of India  v.  Ranjan Chemicals Ltd. and another, [ (2007) 1 SCC 97 ]  

have  departed  from the  ratio  thereof  after  noticing  it  and  without  

referring the matter to a larger bench of Three Judges?

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(III) Even if the power to transfer exists, in the facts and circumstances of  

the case, whether it ought to have been exercised.  

(IV) Whether  Article  142 is  applicable  to direct  a transfer  from a Civil  

Court to DRT, especially when:  

(i) The DRT Act does not bar the jurisdiction of the Civil Court to  

entertain  a  suit  against  a  bank  and  therefore  powers  under  

Article 142 ought not to be exercised to have such an effect.  

(ii) Article 142 is not applicable where a statute occupies the field.

(iii) Power under Article 142 should be exercised only to prevent  

injustice and do complete justice between the parties.  

(V). Whether in the exercise of powers under Article 142, transfer of case  

ought to be refused to do complete justice between the parties and the  

proceedings before the DRT be stayed pending disposal of the suit.   

SUBMISSIONS OF THE COUNSEL

Dr. A.M. Singhvi, Mr. S. Ganesh, Mr. Rohington Nariman and Mr.  

Rakesh  Dwivedi,  learned  senior  counsel  appearing  on  behalf  of  the  

appellants would contend :

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1) The High Court had no power to transfer a pending Civil Suit to a  

Debt Recovery Tribunal as the same was beyond its jurisdiction.

2) The High Court and/or the Supreme Court have no power to transfer a  

case from a Civil Court to Debt Recovery Tribunal inasmuch as :

a) The  effect  of  a  transfer  from Civil  Court  to  Debt  Recovery  

Tribunal would oust the jurisdiction of the Civil Court which is  

impermissible  in  law  in  absence  of  any  express  statutory  

provision.

b) Debt  recovery  proceeding  is  sui  generis and  provides  for  a  

totally  different  procedure  from  the  one  followed  under  the  

Code of Civil Procedure.

c) Power to  transfer  vested in  the High Court  or  on this  Court  

being confined to Sections 22, 23, 24 and 25, the same cannot  

be applied for the purpose of transferring a Civil Suit to Debt  

Recovery Tribunal, as the latter is not a Civil Court.

d) The  power  to  transfer  under  DRT Act  must  be  confined  in  

respect of cases filed by banks which were pending on the date  

DRT Act came into force.

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e) This  Court  in  Indian  Bank v.  ABS  Marine (supra)  having  

categorically held that no suit could be transferred from a Civil  

Court to a Debt Recovery Tribunal as a counter claim, keeping  

in view the scheme contained in the said Act and the Code, the  

contrary view taken in  Ranjan Chemicals, (supra)  cannot be  

held to be good law.

f) The provision of Section 23(3) of the Code being a procedural  

provision, as has been held by this Court in Durgesh Sharma  v.  

Jayshree, [(2008) 9 SCC 648], High Court cannot be said to  

have any power/jurisdiction to transfer a suit pending in a Civil  

Court,  which is  subordinate to it,  to a Tribunal which is  not  

subordinate to the High Court.    

g) Ranjan Chemicals having failed to appreciate that transfer of a  

suit from the Civil Court to the Debt Recovery Tribunal without  

plaintiffs’ consent resulted in defeating the plaintiff’s statutory  

right to approach the Civil Court and furthermore resulted in  

ouster  of  the  jurisdiction  thereof,  neither  of  which  could  be  

ordered or directed without any specific empowering provision  

in the statute.    

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h) It  is  well  settled  legal  position  that  jurisdiction  of  the  Civil  

Court  can  only  be  ousted  by  a  specific  and  unequivocal  

statutory provision or by necessary implication.   

i) Transfer of a suit to a Tribunal having no jurisdiction to decide  

the  issues  raised  by  the  plaintiff  against  the  bank  and/or  

financial institution would affect the rights of the appellant.  It  

would furthermore affect its right of appeal,  which is a right  

vested on the plaintiff  on the date of filing of the suit.   The  

condition  of  pre-deposit  being  one  of  the  conditions  for  

maintaining  an  appeal  before  the  Appellate  Tribunal,  in  the  

event such a right of transfer is upheld, the same would amount  

to burdening the right of appeal with certain conditions which  

the Parliament never intended to confer.  An unfettered right of  

appeal, which is statutory would thus become fettered, without  

the  intervention  of  statute.   Thus,  what  has  not  been  done  

directly would be done indirectly as a result of transfer.   

j) The  Bench  deciding  Ranjan  Chemicals being  a  coordinate  

Bench to the previous Bench deciding Indian Bank was bound  

to follow it, for maintenance of judicial discipline.  In the event  

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of any disagreement, the only course open to it was to refer the  

question to a larger Bench.  

k) The suit filed by the appellant involved complicated questions  

of law relating to interpretation of Section 45U and 45V of the  

Reserve Bank of India Act, 1934 as also questions relating to  

fraud etc.   These questions cannot be satisfactorily decided by  

the Tribunal which does not have expertise in such mattes.  

l) In one of the cases, the suit has been filed on the Original Side  

of the High Court of Madras with leave in terms of Clause 12 of  

the Letters  Patent  and against  an interlocutory order  an intra  

court appeal filed under Clause 15 thereof is pending, no order  

of transfer could have been passed both in relation to the suit as  

also  the  appeal  as  neither  the  Tribunal  nor  the  Appellate  

Tribunal  can  be  a  substitute  for  the  High  Court  as  also  the  

Division Bench thereof.   

m) In the Ludhiana suit application under Order XXXIX Rule 2A  

of  the  Code  having  been  pending  in  respect  whereof  the  

Tribunal  did  not  have  jurisdiction,  in  the  event  an  order  of  

transfer is passed, would lead to a great anomaly, as the suit  

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must  be transferred along with all  incidental  or supplemental  

proceedings  in  respect  whereof  the  Debt  Recovery  Tribunal  

would have no jurisdiction under the Act.  

n) Alternatively, it was argued that even if the power to transfer  

exists,  in the facts  and circumstances of this case and in the  

interests of justice, the same should not be exercised.   

o) This Court also should not exercise its jurisdiction under Article  

142 of the Constitution of India as the said Act does not bar the  

jurisdiction of the Civil Court to entertain a civil case against a  

bank since the field is occupied by the statute and it is a settled  

law that power under Article 142 of the Constitution of India  

can be exercised only to prevent injustice and to do complete  

justice between the parties.

Mr.  Shyam  Diwan  and  Mr.  Ashok  Desai,  learned  senior  counsel  

appearing on behalf of the respondent, on the other hand, contended:-

a) Definition  of  ‘debt’  as  contained  in  Section  2(g)  of  the  Act  

means any liability which is claimed as due from any person by  

a bank during the course of any business activity undertaken by  

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it  and  would  bring  within  its  purview  any  agreement  for  

enforcement  whereof  the  bank should have no option but  to  

approach the Tribunal only.  

b) When a particular claim made by a bank is a ‘debt’ within the  

meaning of the provisions of the Act, it must be determined or  

adjudicated upon by the Tribunal only and not by a Civil Court.  

c) The  allegation  of  ‘Fraud’,  ‘Misrepresentation’,  ‘Undue  

Influence’  or  any  other  defence,  which  are  available  to  a  

borrower to contest the claim of the bank, can be raised before  

the Tribunal itself and adjudicated upon and determined by the  

Tribunal.

d) As  both  the  suits  pending  before  the  Civil  Court  and/or  the  

High Court as also the petitions pending before the Tribunals  

arise out of the Master Agreement entered into by and between  

the parties, the Tribunal having jurisdiction would be entitled to  

determine the said questions.

e) Having regard to the scheme of the Act as also the provisions of  

the Code, the Tribunal must be given an extended meaning so  

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as to hold that the Tribunal is in effect and substance a court  

and thus the High Court  in exercise  of  its  jurisdiction  under  

Section  24  of  the  Code  and  this  Court  in  exercise  of  its  

jurisdiction under Section 25 thereof have ample jurisdiction to  

transfer a suit to the Tribunal.  

f) In the event it is held that neither the High Court nor this Court  

have  the  jurisdiction  to  direct  such  transfer,  the  borrowers  

would  be  free  to  file  vexatious  preemptive  suits  and  obtain  

order of injunctions which will cause hindrance to the cause of  

administration of justice  

g) Even if it is held that the High Court did not have jurisdiction to  

order such transfer under Section 24 of the Code, it  must be  

held to have inherent powers under Section 151 thereof.  

h) This Court in any event should exercise its jurisdiction under  

Article  142  of  the  Constitution  of  India  with  a  view  to  do  

complete justice between the parties and to avoid an injustice to  

the cause of the administration of justice.   

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STATUTORY FRAMEWORK

RECOVERY  OF  DEBTS  DUE  TO  BANKS  AND  FINANCIAL  INSTITUTIONS ACT, 1993

Before dealing with the rival contentions of the parties, we must first  

set  out  the  relevant  statutory  provisions.  The  1993  Act  was  enacted  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 Statement of Objects and  

Reasons for enacting the said Act reads as under:

“Banks  and  financial  institutions  at  present  experience  considerable  difficulties  in  recovering  loans and enforcement of securities charged with  them. The existing procedure for recovery of debts  due  to  the  banks  and  financial  institutions  has  blocked  a  significant  portion  of  their  funds  in  unproductive  assets,  the  value  of  which  deteriorates  with  the  passage  of  time.  The  Committee  on  the  Financial  System  headed  by  Shri M. Narasimham has considered the setting up  of  the  Special  Tribunals  with special  powers  for  adjudication of such matters and speedy recovery  as critical to the successful implementation of the  financial  sector  reforms.  An  urgent  need  was,  therefore,  felt  to  work out  a  suitable  mechanism  through which the dues to the banks and financial  institutions  could  be  realized  without  delay.  In  

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1981, a Committee under the Chairmanship of Shri  T.  Tiwari  had  examined  the  legal  and  other  difficulties  faced  by  banks  and  financial  institutions  and  suggested  remedial  measures  including changes in law. The Tiwari Committee  had also suggested setting up of Special Tribunals  for  recovery  of  dues  of  the  banks  and  financial  institutions  by  following  a  summary  procedure.  The setting up of Special Tribunals will not only  fulfill  a  long-felt  need,  but  also  will  be  an  important step in the implementation of the Report  of  Narasimham  Committee.  Whereas  on  30th  September, 1990 more than fifteen lakhs of cases  filed  by  the  public  sector  banks  and  about  304  cases  filed  by  the  financial  institutions  were  pending  in  various  courts,  recovery  of  debts  involved  more  than  Rs.5622  crores  in  dues  of  Public  Sector  Banks and about  Rs.391 crores  of  dues of the financial institutions. The locking up of  such  huge  amount  of  public  money  in  litigation  prevents  proper  utilisation  and  recycling  of  the  funds for the development of the country.”

Section 2 is the interpretation section.   

Section 2(g) defines ‘debt’ to mean 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  

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decree or order of any civil Court or any arbitration award or otherwise or  

under a mortgage and subsisting and legally recoverable on, the date of the  

application.  

Chapter  II  deals  with  establishment  of  Tribunals  and  Appellate  

Tribunals.   Sub-section  (1)  of  Section  3  deals  with  establishment  of  

Tribunal.  Sub-section (2) provides that the Central Government shall also  

specify, in the notification referred to in sub-section (1), the areas within  

which  the  Tribunal  may  exercise  its  jurisdiction  for  entertaining  and  

deciding the applications filed before it.  Chapter III of the Act deals with  

jurisdiction, powers and authority of Tribunals.   

Section 17 reads as under:

“Section 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.”

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Section 18 bars the jurisdiction of all courts in relation to the matters  

specified in Section 17 (except of the Supreme Court and of a High Court  

under Articles 226 and 227 of the Constitution).  Chapter IV deals with the  

procedure of the Tribunals.  Section 19 provides for an application by a bank  

or financial institution to recover any debt from any person.  Sub-section (8)  

of Section 19 enables a defendant to 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 in addition to his right of  

pleading a set-off under sub-section (6).  Sub-section (9) provides that such a  

counter claim shall have the same effect as a cross-suit.  Sub-section 22 of  

Section  19  empowers  the  Presiding  Officer  of  a  Tribunal  to  issue  a  

certificate under his signature on the basis of an order of the Tribunal to the  

Recovery Officer for recovery of the amounts of debt specified therein.   

We may, however, notice that Section 19 of the Act was amended  

twice, - once by Act 1 of 2000 which came into force w.e.f. 17.1.2000 and  

the second time by Act  30 of  2004 which came into  force on and from  

11.11.2004.

21

Section 22 provides for the procedure and powers of the Tribunal and  

Appellate Tribunal, sub-section (1) whereof reads as under:

“Section  22  -  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  sittings.”

Section 24 provides that the provisions of the Limitation Act, 1963  

shall, as far as may be, apply to an application made to a Tribunal.   

Section 31 provides for transfer of pending cases.  It reads, thus :

“Section  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 where on 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:

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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.”

CODE OF CIVIL PROCEDURE

We may, at this juncture, also notice some of the provisions of the  

Code of Civil Procedure (Code), which are of relevance herein.   

Section 2 (2) defines a "decree" to mean the formal expression of an  

adjudication which, so far as regards the Court expressing it, conclusively  

determines the rights of the parties with regard to all or any of the matters in  

controversy in the suit and may be either preliminary or final.  It shall be  

deemed to include the rejection of a plaint  and the determination of  any  

question within section 144, but shall not include-- (a) any adjudication from  

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which  an  appeal  lies  as  an  appeal  from  an  order,  or  (b)  any  order  of  

dismissal for default.  An explanation is added to that definition which says  

a decree is preliminary when further proceedings have to be taken before the  

suit  can  be  completely  disposed  of.  It  is  final  when  such  adjudication  

completely disposes of the suit. It may be partly preliminary and partly final.  

‘Judge’ has been defined under Section 2(8) to mean the presiding  

officer of a Civil Court.  Section 2(14) defines an “order” to mean the formal  

expression of any decision of a Civil Court which is not a decree.   

Section 3 of the Code provides for hierarchy of courts in the following  

terms :-

“Section 3 - Subordination of Courts  

For the purposes of this Code, the District Court is  subordinate  to  the  High  Court,  and  every  Civil  Court of a grade inferior to that of a District Court  and every Court of Small Causes is subordinate to  the High Court and District Court.”

The Code recognizes different courts, the “revenue court” being one  

of them.  Sub-section (2) of Section 5 provides that ‘revenue court’ would  

not be civil court.   

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Section 9 of the Code empowers the Civil Court to try all suits of civil  

nature excepting the suits of which their cognizance is either expressly or  

impliedly barred.   

Sections 10 and 11 thereof deal  with stay of  suit  and res judicata.  

Section 12 provides for bar to further suit.   

The place of suing of a suit  is dealt  with under Sections 15 to 21.  

Section 22 provides for power to transfer suits which may be instituted in  

more than one court.   

Section 23 of the Code reads as under:

“Section 23-To what Court application lies.—(1)  Where  the several  Courts  having jurisdiction  are  subordinate  to  the  same  Appellate  Court,  an  application under section 22 shall be made to the  Appellate Court. (2) Where such Courts are subordinate to different  Appellate Courts but to the same High Court, the  application shall be made to the said High Court. (3) Where such Courts are subordinate to different  High Courts, the application shall be made to the  High  Court  within  the  local  limits  of  whose  jurisdiction the Court in which the suit is brought  is situate.”

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Section 24 provides for the general power of transfer and withdrawal.  

Sub-section (5)  of  Section 24 provides  that  a suit  or  proceeding may be  

transferred from a Court which has no jurisdiction to try it.  Sub-Sections (1)  

and (5) of Section 25 provides for power of Supreme Court to transfer suits  

in the following terms:

“25. Power of Supreme Court to transfer suits,  etc.—(1) On the application of a party, and after  notice to the parties, and after hearing such of them  as desire to be heard, the Supreme Court may, at  any  stage,  if  satisfied  that  an  order  under  this  section is expedient for the ends of justice, direct  that  any  suit,  appeal  or  other  proceeding  be  transferred from a High Court or other Civil Court  in one State to a High Court or other Civil Court in  any other State.

xxx xxx xxx

(5) The law applicable to any suit, appeal or other  proceeding transferred under this section shall be  the law which the Court in which the suit, appeal  or other proceeding was originally instituted ought  to have applied to such suit, appeal or proceeding.”

Section  153B  provides  that  trial  must  be  held  in  an  open  court.  

Provisions  of  Order  XX Rule  1  provide  not  only  that  Civil  Court  must  

pronounce a judgment in open court but it must also date and sign the same.  

 EFFECT OF AMENDMENTS

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The Debts Recovery Tribunal has been constituted for determining a  

specific  category of cases,  namely – recovery of debts due to Banks and  

Financial Institutions.  It has wide powers.  It may determine all the issues  

relating to or connected with the recovery of debt due to banks and financial  

institutions.  A fortiori all defences which can ultimately be raised before it  

by  the  borrowers  for  contesting  a  claim  of  the  Bank  or  the  Financial  

Institution can also be determined by it.  Indisputably prior to amendments  

of the Act before 2000 and 2004, a plea of set off or counter-claim was not  

available to a debtor.   

The question  as  to  whether  a  High Court  had  power  to  transfer  a  

counter  claim to the Debts  Recovery Tribunal  came up for consideration  

before Delhi High Court in Cofex Exports Ltd. vs. Canara Bank [AIR 1997  

Delhi 355] wherein the High Court opined that Debt Recovery Tribunal is  

not a court but is a Tribunal having been created by a statute vested with a  

special jurisdiction to try only applications by banks or financial institutions  

to recover any debt. Although having regard to the provisions contained in  

clauses (a) to (b) of sub-section (2) of Section 22 of the Act it had all the  

trappings of a court but it was held not to be a court as such, opining:

27

“38. For  reasons  more  than one,  we are  of  the  opinion that a set-off or a counter claim cannot be  entertained by a Debt Recovery Tribunal.  […] It  has  not  been  conferred  with  jurisdiction  to  entertain  counter-claim  or  plea  of  set-off  by  reference to the provisions of Order 8 of the CPC.  Entertaining  a  counter-claim or  a cross  suit  or  a  plea  of  set-off  would  not  only  be  without  jurisdiction  but  also  an  exercise  in  futility  inasmuch  as  the  Tribunal  would  not  adjudicate  thereupon  nor  pass  a  decree  in  favor  of  the  defendant  against  the  plaintiff.  The  law creating  Tribunal and conferring jurisdiction on it has not  provided  for  set-off  or  counter  claim  being  entertained by it just as the Civil Procedure Code  does it for civil courts. If a counter claim was to be  tried by Tribunal it may have to go into disputes  arising between the parties though not 'filling the  same character'. There may be disputes which by  no stretch of imagination can be tried by Tribunal.  Claims preferred by bank or financial institutions  are  capable  of  being  disposed  of  by  summary  enquiry  while  claims  preferred  by  other  persons  would not be capable of being so disposed of. The  principle  of  convenience  and  the  mechanics  of  litigation before Tribunal (as set out in the Act) -  both exclude set-off or counter claim being placed  before the Tribunal. If set-off, counter claims and  cross  suits  were  allowed to  be raised  before  the  Tribunal the very object behind its creation will be  lost.”

In relation to the conflict of jurisdiction between the Civil Court and  

the Tribunal, it was observed:

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“39. … Finality shall attach to the findings arrived  at  and  reached  by  each  of  the  two  within  its  respective jurisdictional competence. Issues heard  and decided by the Tribunal  shall  operate  as  res  judicata and shall bind the parties in the suit before  the civil court by virtue of explanation VIII to S.  11 Civil Procedure Code . However, the civil court  shall be free to decide such issues as lie within its  jurisdictional  competence.  If  the civil  court  must  decide  an  issue  seized  by  it  and  within  its  competence and if there be an unavoidable conflict  between the findings  recorded by the  civil  court  and  by  the  Tribunal,  the  finding  of  Civil  Court  would  obviously  override  and  supersede  the  findings recorded by the Tribunal for a court is a  court  and  tribunal  is  a  tribunal;  the  former  adjudicates on trial, the later holds only a summary  inquiry guided by principles  of natural  justice as  the Act provides.”

It was, thus, held that the Tribunal is inferior to that of the Civil Court.  

The Court summed up its conclusions, thus:

“42. To  sum  up  our  answers  to  the  questions  referred to in para 7 above are:-  

1. A suit the subject matter whereof lies  within  the  jurisdictional  competence  of  the  Tribunal cannot be refused to be transferred by a  civil court to the Tribunal merely because a cross  suit or a counter claim has been filed or preferred  before the civil court.  

2. A cross suit or cross claim or a plea in  the nature of set-off  cannot be transferred to the  Tribunal  along  with  the  suit  with  which  it  is  associated and which is liable to be transferred to  the Tribunal.  

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3. A plea of set-off raised in a suit filed  by a bank or financial institution cannot be tried by  Tribunal nor would it enable the suit being retained  by civil court before it if the subject matter of suit  lies  within  the  jurisdictional  competence  of  tribunal otherwise.”

One of the questions which would arise, thus, for our consideration is  

whether having regard to the amendment of Section 19 by reason of Act 1 of  

2000 and Act 30 of 2004 empowering the Tribunal to determine a claim of  

set off and/or counter claim, and whether Cofex Exports Ltd. (supra) is still  

good law.

The Debts Recovery Act, as it originally stood, did not contain any  

provision enabling a defendant in an application filed by the bank/financial  

institution to claim any set-off or make any counterclaim against them. On  

that, among other grounds, the Act was held to be unconstitutional by the  

Delhi High court in  Delhi High Court Bar Assn. v.  Union of India, [AIR  

1995 Del 325].  During the pendency of  appeal against  the said decision,  

before this Court, the Act was however amended by Act 1 of 2000 to remove  

the lacuna by providing for set-off and counterclaims by defendants in the  

applications  filed  by  banks/financial  institutions  before  the  Tribunal.  The  

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provisions of the Act as amended were upheld by this Court in  Union of  

India v. Delhi High Court Bar Assn.[(2002) 4 SCC 275].

Indisputably,  however,  after  the  aforementioned  amendments  were  

carried  out,  the  Debts  Recovery  Tribunal  would  have  jurisdiction  to  

determine the claims of set off and counter-claims.  It may be that the bank  

or the financial institution in terms of the provisions of sub-section (9) of  

Section 19 of the Act, despite such counter-claim being treated to be a cross-

suits  would be entitled to raise a contention that the same should not be  

determined by the Tribunal.  In the event such a contention has not been  

raised, the Tribunal will have jurisdiction to pass a final judgment both on  

the claim of the bank or the financial institution on the one hand and the  

cross-objections of the borrower on the other.  

THREE AUTHORITIES  

ABHIJIT TEA

United Bank of India, Calcutta v.  Abhijit Tea Co. Pvt. Ltd. & Ors.  

reported in [(2000) 7 SCC 357] has been relied on for the proposition that  

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even a claim for relief  of specific  performance,  perpetual  and mandatory  

injunction being the subject matter of the suit by the respondent therein was  

in  the  nature  of  counter  claim.   Therein,  the  following  questions  were  

framed:

“(1) Whether the suit No. 410/1985 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)?

(2) What is the combined effect of Sections 18 and  31 and of the Act on pending proceedings?

(3) Whether the pendency of suit  No. 272/ 1985  filed by the debtor company against the Bank for  specific  performance  and  for  perpetual  and  mandatory  injunctions  raising  common  issues  between parties in both these 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  alongwith the Suit No. 272/85 filed by the debtor  company?

(4) 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 fell 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  

32

of Bank's suit No. 410/85 on the original side of  the High Court?”

Applying the principles of purposive construction as well as having  

regard to the statements of objects and reasons of the Act, it was held that if  

speedy disposal is the purpose of the Act, in the event of the respondent’s  

contention being accepted, the suit would perpetually remain pending on the  

original side of the Calcutta High Court because of the provisions contained  

in Section 18 of the Act, stating :

“Surely,  that  would  place  the  Bank  in  a  worse  position after the 1993 Act than before inasmuch  as before the Act, there was at least the possibility  of the Bank’s suit being decided by the civil court  on some future day, however, remote.”

It was opined:

“38.  In  our  view,  the  above  pleas  raised  by  the  respondent company are all inextricably connected  with the amount claimed by the Bank. The plea of  the company is that interest is not to be charged or  is to be charged at a lesser rate, that instalments are  to be permitted and more monies should have been  advanced. In our view, these claims made by the  Company  in  its  suit  272/85  against  the  Bank  amount  to  'counter  claim'  and  fall  within  Sub- clauses  (8)  to  (11)  of  Section 19 of  the  Act  (as  

33

introduced by Act 1/ 2000). The plea for deduction  of  damages  is  in  the  nature  of  a  'set  off'  falling  under Sub-clauses (6) and (7) of Section 19.”

Holding that the suit  of specific performance of contract,  perpetual  

and mandatory injunction were in the nature of counter claim which comes  

within the purview of sub-section (8) of Section 19 of the Act, it was opined:

“41. …  A  permanent  injunction  directing  the  Bank not to charge interest because of an alleged  agreement in that behalf is likewise a plea that no  interest is chargeable. So far as the plea for further  financial  assistance  is  concerned,  it  is  also,  broadly,  in  the  nature  of  a  'counter-claim'.  All  these fall under Section 19(8) to (10). Again, the  plea for deducting 'damages' though raised in the  suit  is  indeed broadly  a  plea  of  "set  off"  falling  under Sub-clause (6) and (7) of Section 19.

42. Both the suits, the one by the Bank against  the respondent (suit 410/85) and the other by the  debtor against the Bank (suit 272/ 85) which raises  claims or pleas in the nature of set-off or counter- claim  are  interconnected.  The  respondent's  suit  falls under Sub-clauses (6), (7) and (8) to (11) of  Section 19, as stated above. Our 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.”

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Therein the company approached the appellant Bank for certain credit  

facilities.  However, by sanction advices the bank gave ad hoc sanction upto  

Rs.5,00,000/-; whereas according to the bank, the company could utilize the  

said credit facilities but committed default in paying the amount of advance.  

The Bank filed an OA for recovery thereof.  The Bank also sanctioned a  

middle term loan and certain other credit facilities but the sanctioned loan  

was not utilized.  The company filed a suit for damages with interest.

INDIAN BANK

In that case, the following questions were raised :

“(i) Whether  the  subject-matter  of  the  borrower’s  suit  before  the  High  Court  and  the  Bank’s  application  before  the  Tribunal  were  inextricably connected?

(ii) Whether  the  provisions  of  the  Debts  Recovery Act mandate or require the transfer of an  independent suit filed by a borrower against a bank  before a civil court to the Tribunal, in the event of  the bank filing a recovery application against the  borrower  before  the  Tribunal,  to  be  tried  as  a  counterclaim in the bank’s application?

(iii) Whether the observation in  Abhijit that the  suit filed by the borrower against the bank has to  be transferred to the Tribunal for being tried as a  counterclaim in the applications of the bank, is to  be  construed  as  a  principle  laid  down  by  this  Court,  or as an observation in exercise of power  under Article 142 in order to do complete justice  between the parties?”

35

The credit facilities and the packaging facilities were held to be not  

inextricably linked with each other stating :

“9. The issues that arose in the Bank's application  was whether the borrower failed to repay the sums  borrowed and whether the Bank was entitled to the  amounts  claimed.  On  the  other  hand,  the  issues  that arose in the borrower's suit were whether the  Bank  had  promised/agreed  to  advance  certain  monies;  whether  the  Bank  committed  breach  in  refusing  to  release  such  loans  in  terms  of  the  sanction  letter;  whether  the  borrower  failed  to  fulfil  the  terms  and  conditions  of  sanction  and  therefore  the  Bank's  refusal  to  advance,  was  justified; and even if there was breach, whether the  borrower suffered any loss on account of such non- disbursement and if so whether the borrower was  entitled to the amounts claimed. While the claim of  the Bank was for an ascertained sum due from the  borrower,  the  claim  of  the  borrower  was  for  damages which required firstly a determination by  the court as to whether the Bank was liable to pay  damages and thereafter assessment of quantum of  such  damages.  Thus  there  is  absolutely  no  connection between the subject matter of the two  suits and they are no way connected. A decision in  one does not depend on the other. Nor could there  be any apprehension of different and inconsistent  results if the suit and the application are tried and  decided  separately  by  different  forums.  In  the  circumstances, it cannot be said that the borrower's  suit  and the Bank's  application were inextricably  connected.”

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In the fact situation obtaining therein, the suit by the Bank and the suit  

of  the  company  against  the  Bank  were  found  to  be  not  inextricably  

connected, i.e. decision in one would not affect the decision in the other.   

Abhijit Tea was clarified to the effect that where the respective claims  

of the parties were not inextricably connected, the transfer of a suit to the  

Tribunal can be only on the basis of consent of the parties and not otherwise.

The first question was, thus, answered in the negative.   

On  the  second  question,  the  Court  distinguishing  the  decision  in  

Abhijit Tea Co. (P) Ltd. & Ors. (supra) in regard to the question whether an  

independent suit of a defendant in the bank’s application can be deemed to  

be a counter claim and can be transferred to the Tribunal, opined that the  

same would apply only where the following conditions are satisfied, in the  

following words:

 “25. Though there  appears  to  be some merit  in  the  first  respondent’s  submission,  we  do  not  propose to examine that aspect. Suffice it to clarify  that the observations in Abhijit that an independent  suit of a defendant (in the bank’s application) can  be  deemed  to  be  a  counterclaim  and  can  be  transferred to the Tribunal, will apply only if the  following conditions were satisfied:

(i) The subject-matter of the bank’s suit, and  the  suit  of  the  defendant  against  the  bank,  

37

should be inextricably  connected in  the sense  that decision in one would affect the decision in  the other.

(ii)  Both  parties  (the  plaintiff  in  the  suit  against the bank and the bank) should agree for  the  independent  suit  being  considered  as  a  counterclaim in  the  bank’s  application  before  the  Tribunal,  so  that  both  can  be  heard  and  disposed of by the Tribunal.

In short the decision in  Abhijit is distinguishable  both on facts and law.”

In regard to the effect of sub-sections (6) to (11) of Section 14 of the  

amended Act, it was observed :

“16. … The effect of sub-sections (6) to (11) of  Section  19  of  the  amended  Act  is  that  any  defendant  in  a  suit  or  proceeding  initiated  by  a  bank or financial institution can: (a) claim set-off  against the demand of a bank/financial institution,  any ascertained sum of money legally recoverable  by  him from such bank/financial  institution;  and  (b)  set-up  by  way  of  counterclaim  against  the  claim of a bank/financial institution, any right or  claim in respect of a cause of action accruing to  such  defendant  against  the  bank/financial  institution,  either  before  or  after  filing  of  the  application, but before the defendant has delivered  his defence or before the time for delivering the  defence has expired, whether such a counterclaim  is  in  the  nature  of  a  claim for  damages  or  not.  What is significant is that Sections 17 and 18 have  not  been  amended.  Jurisdiction  has  not  been  conferred on the Tribunal, even after amendment,  to try independent suits or proceedings initiated by  borrowers  or  others  against  banks/financial  institutions,  nor  the  jurisdiction  of  civil  courts  barred in regard to such suits or proceedings. The  only change that has been made is to enable the  defendants to claim set-off or make a counterclaim  as provided in sub-sections (6) to (8) of Section 19  in  applications  already  filed  by  the  banks  or  

38

financial  institutions for recovery of the amounts  due to them. In other words, what is provided and  permitted  is  a  cross-action  by  a  defendant  in  a  pending  application  by  the  bank/financial  institution, the intention being to have the claim of  the  bank/financial  institution  made  in  its  application and the counterclaim or claim for set- off  of  the  defendant,  as  a  single  unified  proceeding, to be disposed of by a common order.”

It was held :

“18. In  this  case,  the  first  respondent  does  not  wish his case to be transferred to the Tribunal. It is,  therefore,  clear  that  the  suit  filed  by  the  first  respondent against the Bank in the High Court for  recovery  of  damages,  being  an independent  suit,  and  not  a  counterclaim  made  in  the  application  filed  by  the  Bank,  the  Bank’s  application  for  transfer  of  the  said  suit  to  the  Tribunal  was  misconceived  and  not  maintainable.  The  High  Court, where the suit for damages was filed by the  Company against the Bank, long prior to the Bank  filing  an  application  before  the  Tribunal  against  the  Company,  continues  to  have  jurisdiction  in  regard  to  the  suit  and  its  jurisdiction  is  not  excluded or barred under Section 18 or any other  provision of the Debts Recovery Act.”

The question came up for consideration again in  Ranjan Chemicals  

(supra), wherein this Court, inter alia, held that having regard to the nature  

of the respective claims arising out of the loan transactions, the Court can  

exercise its inherent jurisdiction when it was just and proper to order a joint  

trial of the two causes as there is nothing in the Act to show that the Tribunal  

is prevented from entertaining the claim made by the borrower in his suit.  

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Purporting to distinguish the decision in  Indian Bank (supra), it  was held  

that as the claim of the company in the suit could have been maintained as a  

counter  claim  in  the  application  of  the  bank,  there  was  no  warrant  for  

curtailing  the  power  of  the  court  to  order  joint  trial  by  introducing  a  

restriction to the effect that it could be ordered only if there was consent by  

both the parties, holding:

“8.  Their  Lordships  have  held  that  the  subject  matter  of  the  suit  and the  proceeding before the  Tribunal were in no way connected, but it appears  to us that the two litigations arise out of the same  transaction  or  series  of  transactions  between  the  Bank and the Company. Even if, as observed by  their Lordships, a counter claim in the application  by the Bank before the Tribunal was not the only  remedy  available  to  the  Company  but  an  option  was  available  to  the  Company  to  sue,  and  the  Company has exercised that option by filing a suit,  it does not in any manner affect the power of the  Court to order a joint trial of the application and  the suit  in the  Debt Recovery Tribunal  provided  the  Debt  Recovery  Tribunal  has  jurisdiction  to  entertain  the  action  of  the  Company.  What  is  relevant to note is that the claim of the Company in  the suit could have been maintained as a counter- claim in the application of the bank, even if it did  not arise out of the same cause of action. There is  no warrant for curtailing the power of the Court to  order joint trial by introducing a restriction to the  effect that a joint trial can be ordered only if there  was consent by both sides. The power inherent in  the  Court  on well  accepted  principles  to  order  a  joint trial, does not depend upon the volition of the  parties  but  it  depends  upon  the  convenience  of  

40

trial,  saving  of  time  and  expenses  and  the  avoidance  of  duplicating  at  least  a  part  of  the  evidence leading to saving of time and money.”

It was opined:

“11. A joint trial is ordered when a Court finds that  the ordering of such a trial, would avoid separate  overlapping  evidence  being  taken  in  the  two  causes put in suit and it will be more convenient to  try them together in the interests of the parties and  in the interests of an effective trial of the causes.  This  power  inheres  in  the  Court  as  an  inherent  power.  It  is  not  possible  to  accept  the  argument  that every time the Court transfers a suit to another  court  or  orders  a  joint  trial,  it  has  to  have  the  consent of the parties. A Court has the power in an  appropriate case to transfer a suit  for being tried  with  another  if  the  circumstances  warranted  and  justified it. In the light of our conclusion that the  claim  of  the  company  in  the  suit  could  be  considered to be a claim for set off and a counter  claim within the meaning of Section 19 of the Act,  the  only  question  is  whether  in  the  interests  of  justice,  convenience  of  parties  and  avoidance  of  multiplicity  of  proceedings,  the  suit  should  be  transferred  to  the  Debt  Recovery  Tribunal  for  being tried jointly with the application filed by the  bank as a  cross suit.  Obviously,  the proceedings  before the  Debt  Recovery  Tribunal  could not  be  transferred  to  the  civil  Court  since  that  is  a  proceeding before a Tribunal specially constituted  by the Act and the same has to be tried only in the  manner provided by that Act and by the Tribunal  created  by  that  Act.  Therefore,  the  only  other  alternative  would  be  to  transfer  the  suit  to  the  Tribunal  in  case  that  is  found  warranted  or  justified.”

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PRECEDENTIAL VALUE  

The core question which would arise for our consideration is whether  

by reason of a transfer the jurisdiction of the civil court can be taken away or  

otherwise  conferred  upon  the  Tribunal?  In  Indian  Bank and  Ranjan  

Chemicals coordinate  bench of  this  court  took somewhat  different  views  

even thereupon.  Whereas in Indian Bank it was held that the transfer can be  

effected with consent, the said question was ignored in  Ranjan Chemicals.  

Whereas the question of jurisdiction of the civil court vis-à-vis the Tribunal  

was uppermost in the mind of the Bench in Indian Bank, no significance was  

attached thereto in  Ranjan Chemicals.   It  proceeded on the basis that the  

joint  trial  would be permissible if some of the issues are common and if  

some of the evidence to be let in is also common especially when the two  

actions arise out of the same transactions or series of transactions wherefor  

several sub-sections of Section 19 of the Act had not been adverted to.  In  

Ranjan Chemicals the Court posed a wrong question unto itself, namely the  

jurisdiction of the Tribunal vis-à-vis  exclusion of jurisdiction of the civil  

court.   Indian  Bank was  decided  upon  taking  into  consideration  all  

provisions of the Act as also the Code.  It entered into the niceties of the  

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question.  It referred to all the binding precedents.  It was a well considered  

decision.  Ranjan Chemicals, therefore, was building upon the decision in  

Indian Bank being a coordinate Bench.  It could not have taken a contrary  

view.  It  was not even held that  Indian Bank was wrong far less plainly  

wrong.   

Submission of the learned counsel appearing on behalf of the Bank  

that consent of the parties would not be required in a case where the subject  

matter  of  the banker’s  suit  as  also the suit  of the debtor  are inextricably  

connected, would have to be rejected.  We do not see any reason why both  

the conditions laid down in Indian Bank (supra) should be read disjunctively  

and  not  conjunctively.   The  Division  Bench  used  the  words  “following  

conditions” which would clearly go to show that both of them are required to  

be conjunctively read.  We are not here concerned with the question whether  

the civil  suit  filed by a debtor  should be read as a counter-claim for the  

purpose of exercising jurisdiction under Section 25 of the Code as in effect  

and substance we are concerned with the jurisdiction of this Court to pass an  

order  of  transfer.   If  this  Court  has  no  jurisdiction,  the  question  of  

considering the plaint filed by the debtor as a counter-claim in the suit filed  

by the Bank before the DRT would not arise.

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In  Ranjan  Chemicals (supra),  therefore,  in  our  opinion,  the  Court  

having  not  posed  unto  itself  the  aforementioned  question,  should  have  

considered the decision of a coordinate bench in Indian Bank (supra) in that  

perspective.  It must furthermore be noticed that  Indian Bank (supra) was  

clarifying  Abhijit  Tea (supra).   Conditions laid down in paragraph 25 of  

Indian  Bank (supra)  must  also,  therefore,  be  read  in  that  context  as  

otherwise,  the  same  would  lead  to  misreading  and  misinterpreting  the  

judgment.

We may notice some decisions of this court as regards the binding  

nature of the precedents of a coordinate Bench.  

In Union of India v. Raghubir Singh, [ (1989) 2 SCC 754 ], this Court  

has held :-  

“27.  […]  It  is  in  order  to  guard  against  the  possibility  of  inconsistent  decisions  on  points  of  law by different  Division  Benches  that  the  Rule  has been evolved, in order to promote consistency  and certainty in the development of the law and its  contemporary status, that the statement of the law  by a  Division  Bench is  considered  binding on a  Division Bench of the same or lesser  number of  Judges. This principle has been followed in India  by several generations of Judges.    

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28. We are of opinion that a pronouncement of law  by a Division Bench of this Court is binding on a  Division Bench of the same or a smaller number of  Judges, and in order that such decision be binding,  it  is  not  necessary  that  it  should  be  a  decision  rendered by the Full Court or a Constitution Bench  of the Court.”

See also Union of India v. Godfrey Philips India Ltd., [(1985) 4 SCC 369]

In  Sub-Committee of Judicial Accountability  v.  Union of India,  

[(1992) 4 SCC 97], this Court has held :-  

“5…. Indeed, no co-ordinate bench of this Court  can even comment upon, let alone sit in judgment  over,  the  discretion  exercised  or  judgment  rendered in a cause or matter  before another co- ordinate bench.  

In  Central  Board  of  Dawoodi  Bohra  Community v.  State  of  

Maharashtra,  (2005) 2 SCC 673 this Court has held :-  

“12. Having carefully considered the submissions  made by the learned Senior Counsel for the parties  and  having  examined  the  law  laid  down  by  the  Constitution  Benches  in  the  abovesaid  decisions,  we would like to sum up the legal position in the  following terms:

(1)  The  law  laid  down  by  this  Court  in  a  decision delivered by a Bench of larger strength is  binding  on  any  subsequent  Bench  of  lesser  or  coequal strength.

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(2)  … It  will  be  open only  for  a  Bench  of  coequal  strength  to  express  an  opinion  doubting  the  correctness  of  the  view taken  by  the  earlier  Bench of coequal strength, whereupon the matter  may  be  placed  for  hearing  before  a  Bench  consisting of a quorum larger than the one which  pronounced the decision laying down the law the  correctness of which is doubted.

We are in agreement with all  the above observations of this  court.  

Ranjan Chemicals was bound by the decision rendered in Indian Bank being  

a coordinate Bench.  It could not have taken a contrary view.   

SECTION 31 OF DRT ISSUE:

We may at this juncture notice the provisions for transfer under the  

DRT Act especially Section 31 which states that only suits or proceeding  

pending  before  the  court  immediately  before  the  establishment  of  the  

Tribunal under the Act shall stand transferred to the Tribunal. Section 31  

admittedly does not apply to the facts and circumstances of the present case.  

There is no dispute in this behalf.   Moreover, it is beyond any dispute that  

there exists no other provision for transfer under the DRT Act from a Court  

to Tribunal.  The respondents, therefore, do not and cannot rely on any of the  

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provisions  of  the  DRT Act  for  contending  that  the  Court  had  any  other  

power to direct transfer.

In Indian Bank (supra) this court noted thus:

“15.  […]  There  is  no  provision  in  the  Act  for  transfer of suits and proceedings, except section 31  which  relates  to  suit/proceedings  by   a  bank  or  financial  institution  for  recovery  of  a  debt.  It  is  evident from section 31 that only those cases and  proceedings  (for  recovery  of  debts  due  to  banks  and  financial  institutions)  which  were  pending  before  any court  immediately  before  the  date  of  establishment  of  a  tribunal  under  the  Debts  Recovery Act stood transferred, to the tribunal”

In  Raghunath Rai  Bareja  & Anr. v.  Punjab National  Bank & Anr,  

(2007) 2 SCC 230 this court opined:

“19. […] Apart from section 31, there is no other  provision  for  transferring  a  suit  or  other  proceedings  pending  before  any  other  court  to  tribunal. […]

28.  […] whatever  power  there  are  of  transfer  of  proceedings to the tribunal are contained in section  31 of the RBD Act, and no transfer is permissible  dehors section 31.”

Therefore there exists no express power of transfer under the DRT  

which would be applicable to the facts of the present case.  The provisions of  

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the  Act  and  the  entire  statutory  scheme  being  well-defined,  no  further  

elaboration on our part is required.  

POWER  IN  THE  COURT  TO  TRANSFER  CASES  UNDER  SECTIONS 23, 24, AND 25 OF THE CODE.

The power of the High Court to issue a direction for transfer of a suit  

beyond its territorial jurisdiction in terms of sub-section (3) of Section 23 of  

the Act came up for consideration recently in  Durgesh Sharma v.  Jayshree  

[supra].  Noticing the history of the provisions relating to transfer to which  

we have adverted to heretobefore, it was held:

“46. Having considered the scheme of the Code  as amended from time to time, in our judgment,  the law relating to transfer of cases (suits, appeals  and other proceedings) is well settled. It is found in  Sections 22 to 25 of the Code and those provisions  are exhaustive in nature. Whereas Sections 22, 24  and  25  deal  with  power of  transfer,  Section  23  merely provides  forum and specifies the court  in  which  an  application  for  transfer  may  be  made.  Section 23 is  not a substantive provision vesting  power in a particular court to order transfer.

47. In  our  considered  opinion,  where  several  courts  having  jurisdiction  are  subordinate  to  one  appellate court, an application for transfer may be  made  to  such  appellate  court  and the  court  may  transfer a case from one court subordinate to it to  another  court  subordinate  to  it.  Likewise,  where  such  courts  are  subordinate  to  the  same  High  Court, an application may be made and action may  be  taken  by  the  High  Court  transferring  a  case  from one court subordinate to it to any other court  

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subordinate  to  that  High  Court.  But  where  such  courts are subordinate to different High Courts, it  is only the Supreme Court (this Court) which may  pass an order  of  transfer.  In other  words,  if  two  courts  are  subordinate  to  different  High  Courts,  one  High  Court  has  no  power,  jurisdiction  or  authority to transfer  a case pending in any court  subordinate  to  that  High  Court  to  a  court  subordinate  to  other  High  Court.  It  is  only  the  Supreme Court (this Court) which may order the  transfer.”

Section  25  of  the  Code  was  considered  to  be  containing  both  

substantive as well as procedural law.  Section 23, on the other hand was  

held to be merely a procedural or machinery provision.  It was held that no  

order of transfer can be made thereunder, stating:

“…If the case is covered by Section 25 of  the Code, it is only that section which will apply  for both the purposes, namely, for the purpose of  making  application  and  also  for  the  purpose  of  effecting transfer.  On the contrary, reading of sub- section (3) of Section 23 of the Code in the manner  suggested  by  the  learned  counsel  for  the  respondent – wife would result in allowing inroad  and encroachment on the power of this Court not  intended by Parliament.  Section 23, therefore, in  our  considered  view,  must  be  read  subject  to  Section 25 of  the Code.   The decisions taking a  contrary view do not lay down correct law.  We,  therefore, overrule them...”

WHETHER TRIBUNAL IS A CIVIL COURT  

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The terms “Tribunal”, “court” and the “civil court” have been used in  

the Code differently.  All “courts” are “Tribunals” but all “Tribunals” are not  

“courts”.  Similarly all “civil courts” are “courts” but all “courts” are not  

“civil courts.”   It is not much in dispute that the broad distinction between a  

“court” and a “Tribunal” is whereas the decision of the “court” is final the  

decision of the “Tribunal” may not be.  

The  “Tribunal”,  however,  which  is  authorized  to  take  evidence  of  

witnesses would ordinarily be held to be a “court” within the meaning of  

Section  3  of  the  Evidence  Act,  1872.   It  includes  not  only  Judges  and  

Magistrates but also persons, except Arbitrators, legally authorized to take  

evidence.  It is an inclusive definition.  There may be other forums which  

would also come within the purview of the said definition.   

In State of M.P. v. Anshuman Shukla, (2008) 7 SCC 487, this Court  

while holding certain authorities to be a ‘court’ within the meaning of the  

Evidence Act, noted thus:-

 “19. The  definition  of  “courts”  under  the  Evidence  Act  is  not  exhaustive  (see  Empress v.  Ashootosh  Chuckerbutty. Although  the  said  definition is for the purpose of the said Act alone,  

50

all authorities must be held to be courts within the  meaning  of  the  said  provision  who  are  legally  authorised to take evidence. […]  

 21. In  Brajnandan Sinha v.  Jyoti Narain it has  been  held  that  any  tribunal  or  authority  whose  decision is final and binding between the parties is  a court.  In the said decision, the Supreme Court,  while deciding a case under the Court of Enquiry  Act held that a court of enquiry is not a court as its  decision  is  neither  final  nor  binding  upon  the  parties.”  

The same, however, would not mean that only because a Tribunal has  

‘all the trappings of a court’, it would be a court.  {See Bharat Bank Ltd. v.  

Employees of the Bharat Bank Ltd. [1950 SCR 459] Para 7 and 27}.  

Civil court is a body established by law for administration of justice.  

Different kinds of law, however exists, constituting different kinds of courts.  

Which courts would come within the definition of the civil court have been  

laid  down  under  the  Code  of  Civil  Procedure  itself.   Civil  Courts  

contemplated under Section 9 of Code of Civil Procedure find mentioned in  

Sections 4 and 5 thereof.  Some suits may lie before the Revenue Court,  

some suits may lie before the Presidency Small Causes Courts.  The Code of  

Civil  Procedure  itself  lays  down that  the  Revenue  Courts  would  not  be  

courts subordinate to the High Court.   

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We may notice that a learned Single Judge of the Calcutta High Court  

in State Bank of India (supra) and a Division Bench of the Delhi High Court  

in  Cofex Exports Ltd. (supra) have held that the DRT is not a court and it  

exercises powers of a civil court only in respect of limited matters.   

Civil  Courts  are  constituted  under  statutes,  like  Bengal,  Agra  and  

Assam Civil Courts Act, 1887.  Pecuniary and territorial jurisdiction of the  

civil  courts  are  fixed in  terms thereof.   Jurisdiction  to  determine  subject  

matter of suit, however, emanates from Section 9 of the Code.  We would  

revert to the interpretation of the said provision vis-à-vis the provisions of  

the Act a little later.   

In  P. Sarathy v.  State Bank of India [(2000) 5 SCC 355], this Court  

opined that although there exists a distinction between a court and a civil  

court, but held that a Tribunal which has not merely the trappings of a court  

but has also the power to give a decision or a judgment which has finality  

and authoritativeness will be court within the meaning of Section 14 of the  

Limitation Act, 1963.

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In the context of Section 29(2) of the Limitation Act, 1963 the term  

‘court’ is considered to be of wide import.   

However, there again even for that purpose exists a distinction between a  

court and the civil court.   

In P. Sarathy v. State Bank of India, (Supra) this Court has held :-  

“12. It  will  be  noticed  that  Section  14  of  the  Limitation Act does not speak of a “civil court”  but speaks only of a “court”. It is not necessary  that the court spoken of in Section 14 should be a  “civil  court”.  Any  authority  or  tribunal  having  the trappings of a court would be a “court” within  the meaning of this section.

13. … in order to constitute a court in the strict  sense of the term, an essential condition is that  the court should have, apart from having some of  the trappings of a judicial tribunal, power to give  a  decision  or  a  definitive  judgment  which  has  finality  and  authoritativeness  which  are  the  essential tests of a judicial pronouncement.”

We  may,  however,  notice  that  in  the  context  of  applicability  of  

Section 5 of the Limitation Act in regard to Arbitration Tribunal which was  

constituted in terms of  a  statutory provision has been referred to a three  

Judge Bench in State of Madhya Pradesh and another v.  Anushuman Shukla  

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[ (2008) 7 SCC 487 ].  Be that as it may, the word ‘civil court’ vis-à-vis a  

court must be construed having regard to the text and context of the statute.   

TRANSFER OF CASES

Learned Senior Counsel Shri Divan cited before us certain precedents  

beginning from Bhagwati Devi v. M/s IS Goel, 1983 [ACJ 123], till Kususm  

Ignots & Alloys  v.  Punjab National Bank, [(2005) 12 SCC 358] to bring  

home the point  that  this  Court  has  regularly  exercised  power  to  transfer  

cases to and from Tribunals. The Senior Counsel in all cited eight precedents  

in this behalf. Amongst them are Rajasthan State Road Transport v. Poonam  

Pahwa,  [(1997)  6  SCC  100];  Dolly  Kantibhai  Patel v.  Balu  Tukaram,  

[(2001) 9 SCC 723]; Mohan Singh v. Saheb Singh, [(2000) 9 SCC 403]; and  

Kahlon v.  K  Paramasivam,  [(2004)  13  SCC  564]  wherein  this  Court  

exercised the power under section 25 of the Code to transfer the case from  

one Motor Vehicles Tribunal to another. Similarly Kusum Ignots (supra) and  

M/s Jai Shiva Cement v.  Allahabad Bank, [(JT) 2000 (8) SC 323], are the  

decisions where the Supreme Court exercised the power under section 25 of  

the CPC to transfer the case from one DRT to another.  

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These cases relate to transfer from one Tribunal to another Tribunal  

and not from a civil court to the Tribunal.  No legal principle can be culled  

out therefrom.  

The  Courts  therein  had  not  gone  into  the  question  whether  the  

Tribunal  is  a  civil  court  or  not.   The  provisions  of  the  Code  of  Civil  

Procedure had not been adverted to.  The power of transfer under Section 25  

of the Code was assumed sub silento without any discussion.       

We are in agreement with the submissions of learned senior counsel  

Dr.  Singhvi  and  Shri  Rakesh  Dwividi  that  those  decisions  are  clearly  

distinguishable on the facts of each case as they relate to transfer from one  

Tribunal to another and not from a civil court to a Tribunal.

It has also been pointed out by Mr. Dwividi that reliance placed by  

Mr. Desai on the cases cited by him and referred to herein is misleading as  

the Head Notes of those cases are misleading.  He argues that though the  

SCC refers  to  Section  25  of  the  CPC therein  in  regard  to  the  power  of  

transfer of the court, however, the text of the judgments is silent in regard  

thereto.  

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We may hereinafter may make reference to the Head Notes of a few  

of them. The SCC Head Note to Kahlon (supra) reads as under:

“Civil  Procedure  Code,  1908  –  S.  25  –  Motor  accidents claim case filed by petitioner in town of  place of work – due to 100 per cent disablement  due to accident, petitioner quitting job and shifting  back  to  home  town  –  transfer  of  claim  case  to  home town of petitioner, allowed”  

Similarly, the SCC Head note of Mohan Singh (supra) reads:

“Civil  Procedure Code, 1908 — S. 25 — Motor  accident claim petition — Transfer of — Petitioner  residing in Delhi and most of the evidence related  to the case present in Delhi — Amended provision  of the statute providing that the claim may be filed  where  the  claimant  resides  —  On  facts  and  circumstances of the case, claim petition pending  before  Motor  Accident  Claims  Tribunal,  Muzaffarnagar  transferred  to  the  Tribunal  concerned at Delhi — Motor Vehicles — Motor  Vehicles Act, 1988, S. 166(2)”

Also the Head note of  Dolly Kantibhai Patel (supra) reads thus:

“Civil  Procedure Code, 1908 — S. 25 — Motor  accident claim petition — Transfer of — Petitioner  

56

(claimant)  going  back  to  USA,  where  he  was  living  earlier  —  Petitioner  requiring  transfer  of  claim from MACT, Nasik to Vadodara (Gujarat)  on  the  ground  that  his  power-of-attorney  holder  was residing at Vadodara and all other occupants  of vehicle, who were involved in accident, hailing  from  Vadodara  —  Also  the  insurance  company  having its branch office at Vadodara — In view of  above reasons, transfer of claim petition allowed as  prayed for”

However on close scrutiny of the text of judgments of this Court, we  

find that no reference therein has been made to Section 25 of the Code, or to  

any other provision under which the said power is exercised. It must in this  

context  be  noted  that  Head  notes  by  the  editors  of  a  Reports  are  not  a  

conclusive guide to the text of the judgment reported. They are made only  

for the convenience of the readers as a short summary to the text and for  

easy reference and at times they are misleading.

The United States Supreme Court in United States v. Detroit Timber  

& Lumber Co., 200 U. S. 321, 337.

“In the first place, the headnote is not the work of  the court,  nor does it  state its decision,-though a  different rule, it is true, is prescribed by statute in  some states. It is simply the work of the reporter,  gives  his  understanding  of  the  decision,  and  is  prepared for the convenience of the profession in  the examination of the reports.”

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Reference may also be had to Parmananda Pegu v. State of Assam,  

[(2004) 7 SCC 779], wherein it was stated:

“21. The  decision  of  this  Court  in  Chandrakant  Chimanlal  Desai v.  State  of  Gujarat has created  some difficulty in understanding the law which is  otherwise  so  well  settled.  The  learned  Judges  imported  the  observations  which  were  made  in  Kashmira Singh v.  State of M.P. in the context of  evidentiary value of the confession of co-accused  and  applied  them  to  the  case  of  retracted  confession. It appears that the learned Judges went  by the headnote in the AIR6 which opens up with  the sentence: (AIR p. 159) “The confession of  an accused person….” However, in the text of the  judgment  it  is  crystal  clear  that  the  entire  discussion and the statement of law was only with  reference  to  the  confession  of  the  co-accused.  While  clarifying  that  the  confession  of  the  co- accused is not evidence in the ordinary sense of the  term  as  pointed  out  by  the  Privy  Council,  this  Court observed in Kashmira Singh case that such a  confession  cannot  be  made  the  foundation  of  a  conviction and can only be used in support of other  evidence.

22. In  Chimanlal  case the  learned  Judges,  after  referring  to  the  headnote  portion  of  Kashmira  Singh in AIR 1952 SC 159 proceeded to apply the  test applicable to the confession of the co-accused  to a case of retracted confession.  

23. In  view  of  the  error  in  comprehending  the  scope of the decision in  Kashmira Singh case the  decision  in  Chimanlal  case falls  close  to  the  category of decisions rendered per incuriam.”  

58

Reliance has also been placed on a decision of this Court in Rajasthan  

State  Road Transport (supra)  wherein a Motor Accident  Claims Tribunal  

was held to be a civil court purported to be on the basis of a decision in  

Bhagwati Devi (supra) wherein the principles contained in Order XXIII of  

the  Code  had  been  held  to  be  applicable  to  the  Motor  Accident  Claims  

Tribunal.    

A provision in  the  Code which is  benevolent  in character  and sub  

serve the social justice doctrine in a situation of that nature has been applied,  

but the same, in our opinion, by itself would not make a Tribunal a civil  

court.   No  reason  has  been  assigned  as  to  why  a  Tribunal  has  been  

considered to be a civil court for the purpose of Section 25 of the Act.  The  

court appears to have proceeded on the basis that an appeal before the High  

Court shall lie in terms of Section 173 of the Motor Vehicles Act, 1988 from  

an  Award  passed  by  the  Tribunal,  thus  showing  that  it  is  a  part  of  the  

hierarchy of  the  civil  court.   Motor Accident  Claims Tribunal,  thus,  is  a  

court subordinate to the High Court.  No appeal against the judgment of the  

Debt Recovery Tribunal lies before the High Court unlike under the Motor  

Vehicles Act, 1988.  The two Tribunals are differently structured and have  

been established to serve totally different purposes.

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If the Tribunal was to be treated to be a civil court, the debtor or even  

a third party must have an independent right to approach it without having to  

wait  for  the  Bank  or  Financial  Institution  to  approach  it  first.   The  

continuance of its counter-claim is entirely dependant on the continuance of  

the applications filed by the Bank.  Before it no declaratory relief can be  

sought  for  by  the  debtor.   It  is  true  that  claim  for  damages  would  be  

maintainable but the same have been provided by way of extending the right  

of counter-claim.  

Debt  Recovery  Tribunal  cannot  pass  a  decree.   It  can  issue  only  

recovery certificates.  [See Sections 19(2) and 19(22) of the Act].   

The power of the Tribunal to grant interim order is attenuated with  

circumspection.   {See  Dataware  Design  Labs.   v.   State  Bank  of  India,  

{[2005] 12 Comp. Cas. 176  (Ker) at 184}.

Concededly  in  the  proceeding  before  the  Debt  Recovery  Tribunal  

detailed examination; cross-examinations, provisions of the Evidence Act as  

also  application  of  other  provisions  of  the  Code  of  Civil  Procedure  like  

interrogatories, discoveries of documents and admission need not be gone  

into.  Taking recourse to such proceedings would be an exception.  Entire  

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focus of the proceedings before the Debt Recovery Tribunal centers round  

the legally recoverable dues of the bank.  

Should we adopt the principle of purposive interpretation so as to hold  

that the DRT would be a Civil Court?  We have noticed hereinbefore that  

Civil  Courts  are  created  under  different  Acts.   They  have  their  own  

hierarchy.  They necessarily are subordinate to the High Court.  The appeals  

from their  judgment  will  lie  before a superior  court.   The High Court  is  

entitled to exercise its power of revision as also superintendence over the  

said courts.

For the aforementioned purpose, we must bear in mind the distinction  

between two types of courts, viz., civil courts and the courts trying disputes  

of civil nature.  Only because a court or a tribunal is entitled to determine an  

issue  involving  civil  nature,  the  same  by  itself  would  not  lead  to  the  

conclusion  that  it  is  a  civil  court.   For  the  said  purpose,  as  noticed  

hereinbefore, a legal fiction is required to be created before it would have all  

attributes of a civil court.  The Tribunal could have been treated to be a civil  

court provided it could pass a decree and it had all the attributes of a civil  

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court including undertaking of a full-fledged trial in terms of the provisions  

of the Code of Civil Procedure and/or the Evidence Act.

It  is  now trite  law that  jurisdiction  of  a  court  must  be determined  

having  regard  to  the  purpose  and  object  of  the  Act.   If  the  Parliament,  

keeping  in  view  the  purpose  and  object  thereof  thought  it  fit  to  create  

separate tribunal so as to enable the banks and the financial institutions to  

recover  the  debts  expeditiously  wherefor  the  provisions  contained  in  the  

Code of Civil Procedure as also the Evidence Act need not necessarily be  

resorted to, in our opinion, by taking recourse to the doctrine of purposive  

construction, another jurisdiction cannot be conferred upon it so as to enable  

this Court to transfer the case from the civil court to a tribunal.

It is difficult to accept the submission of Mr. Diwan that if such an  

interpretation is accepted, the same would remove the anomaly which would  

otherwise be present in the cases where recovery is for a sum below Rs. 10  

lakhs and for those where recovery is for a sum of Rs. 10 lakhs or more.  

Parliament  created  such  an  anomaly,  if  any,  knowingly.   Expeditious  

recovery of the debts above Rs. 10 lakhs is the object of the Act.  Casus  

omissus, if any, it is well-known cannot be supplied by the court.  

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In Raghunath Rai Bareja (supra), this Court has clearly held:

“…Assuming there is a defect or an omission in  the words used by the legislature, the court cannot  correct or make up the deficiency, especially when  a  literal  reading  thereof  produces  an  intelligible  result…”  

Would the tribunal answer the description of the civil court must be  

considered having regard to the provisions of the Act constituting civil court  

as also the provisions of the Code of Civil Procedure?

We have held that  the Tribunals are neither  civil  courts  nor courts  

subordinate  to  the  High  Court.   The  High  Court  ordinarily  can  be  

approached  in  exercise  of  its  writ  jurisdiction  under  Article  226  or  its  

jurisdiction under Article 227 of the Constitution of India.  The High Court  

exercises  such  jurisdiction  not  only  over  the  courts  but  also  over  the  

Tribunals.   Appellate  tribunals  have been constituted for  determining the  

appeals  from  judgments  and  orders  of  the  Tribunal.   The  principles  of  

purposive construction,  therefore,  in  our  opinion,  are  not  attracted  in  the  

instant case.  Had the Parliament intended to make the Tribunals civil courts,  

a legal fiction could have been raised.  There are statues like the Andhra  

Pradesh Land Grabbing Act where such a legal fiction has been raised.  {See  

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V.  Laxminarasamma v.  A.  Yadaiah  (Dead)  and  Ors.,  [2009  (3)  SCALE  

685]}.

Whereas the doctrine of purposive construction is a salutary principle,  

the same cannot be extended to a case which would lead to an anomaly.  It  

can inter alia be resorted to only when difficulty or doubt arises on account  

of ambiguity.  It is to be preferred when object and purpose of the Act is  

required to be promoted.

For the foregoing reasons, we are of the opinion that the decisions of  

this Court laying down the principles of purposive interpretation, whereupon  

strong reliance has been placed by Mr. Divan, viz.,  New India Assurance  

Company Ltd.   v  Nusli Neville Wadia and Another [(2008) 3 SCC 279],  

Dilip S. Dahanukar v. Kotak Mahindra Co. Ltd. and Another [(2007) 6 SCC  

528],  South Eastern Coalfields Ltd. v. CCET, MP [(2006) 6 SCC 340] and  

Uco Bank v.  Rajinder Lal Capoor [(2008) 5 SCC 257],  cannot have any  

application.  On the other hand, if the principles of purposive interpretation  

are resorted to, the same would amount to rewriting of the statute.  

In  Sri Ram Saha v.  State of West Bengal and Ors. [JT 2004 (9) SC  

136 : (2004) 11 SCC 497], this Court held:

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“19. It is well-settled principle of interpretation  that  a  statute  is  to  be  interpreted  on  its  plain  reading; in the absence of any doubt or difficulty  arising out of such reading of a statute defeating or  frustrating the object and purpose of an enactment,  it must be read and understood by its plain reading.  However, in case of any difficulty or doubt arising  in interpreting a provision of an enactment, courts  will interpret such a provision keeping in mind the  objects  sought  to  be  achieved  and  the  purpose  intended to be served by such a provision so as to  advance  the  cause  for  which  the  enactment  is  brought  into  force.  If  two  interpretations  are  possible,  the  one  which promotes  or  favours  the  object  of the Act and purpose it  serves,  is  to be  preferred.  At any rate,  in  the guise of  purposive  interpretation,  the courts cannot rewrite a statute.  A purposive interpretation may permit a reading of  the  provision  consistent  with  the  purpose  and  object  of  the  Act  but  the  courts  cannot  legislate  and enact  the  provision either  creating or  taking  away substantial rights by stretching or straining a  piece of legislation.”

  [See also D.P.P. v. Bhagwan (1970) 3 All ER 97].

CONCLUSION

The Tribunal  was constituted with a specific  purpose as  is  evident  

from its statement of objects.   The preamble of the Act also is a pointer to  

that too.  We have also noticed the scheme of the Act.   It  has a limited  

65

jurisdiction.  Under the Act, as it originally stood, did not even have any  

power  to  entertain  a  claim of  set  off  or  counter-claim.   No independent  

proceedings  can  be  initiated  before  it  by  a  debtor.   A  debtor  under  the  

common law of contract as also in terms of the loan agreement may have an  

independent right.  No forum has been created for endorsement of that right.  

Jurisdiction of a civil court as noticed hereinbefore is barred only in respect  

of the matters which strictly come within the purview of Section 17 thereof  

and not beyond the same.  The Civil Court, therefore, will continue to have  

jurisdiction.  Even in respect of set off or counter-claim, having regard to the  

provisions of sub-sections (6) to (11) of Section 19 of the Act, it is evident :-  

a) That the proceedings must be initiated by the bank

b) Some  species  of  the  remedy  as  provided  therein  would  be  

available therefor.     

c) In  terms  of  sub-section  (11)  of  Section  19,  the  bank  or  the  

financial institution is at liberty to send a borrower out of the  

forum.  

d) In terms of  the provisions of the Act,  thus,  the claim of the  

borrower is excluded and not included.

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e) In the event  the  bank withdraws his  claim the counter-claim  

would  not  survive  which  may be  contrasted  with  Rule  6  of  

Order VIII of the Code.

f) Sub-section (9) of Section 19 of the Act in relation thereto has a  

limited application.    

g) The claim petition by the bank or the financial institution must  

relate to a lending/borrowing transaction between a bank or the  

financial institution and the borrower.  

h) The banks or the financial institutions, thus, have a primacy in  

respect of the proceedings before the Tribunal.   

i) An order of injunction, attachment or appointment of a receiver  

can be initiated only at the instance of the bank or the financial  

institution.   We,  however,  do  not  mean  to  suggest  that  a  

Tribunal having a plenary power, even otherwise would not be  

entitled  to  pass  an  order  of  injunction  or  an  interim  order,  

although  ordinarily  expressly  it  had  no  statutory  power  in  

relation thereto.  

j) It can issue a certificate only for recovery of its dues.  It cannot  

pass a decree.  

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k) Although an appeal  can be filed against  the judgment of the  

Tribunal, pre-deposit  to the extent of 75 % of the demand is  

imperative in character.  

l) Even cross-examination of the witnesses need not be found to  

be necessary.  

m) Subject to compliance of the principle of natural justice it may  

evolve its own procedure.

n) It is not bound by the procedure laid down under the Code. It  

may however  be  noticed in  this  regard that  just  because  the  

Tribunal  is  not  bound by the  Code,  it  does not  mean that  it  

would not  have jurisdiction to exercise  powers of  a court  as  

contained in the Code. ‘Rather, the Tribunal can travel beyond  

the Code of Civil Procedure and the only fetter that is put on its  

powers  is  to  observe  the  principles  of  natural  justice.’[  See  

Industrial Credit and Investment Corpn. of India Ltd. v. Grapco  

Industries Ltd., (1999) 4 SCC 710]  

The Tribunal, therefore, would not be a Civil Court.   

TRIBUNAL WHETHER IS SUBORDINATE TO THE HIGH COURT:

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The  Court  would  be  subordinate  to  High  Court  in  terms  of  the  

provisions of the Code only in the event it comes within the purview of the  

hierarchy of the court as contained in Section 3 of the Act.  This, however,  

does not mean that even when the Presiding Judge or the Presiding Officer  

of the Court exercises power conferred upon it under a statute still then it  

would  not  be  a  court  subordinate  to  the  High  Court.   A  court  while  

adjudicating  a  dispute  under  the  Employees  State  Insurance  Act  or  a  

Reference  Court  under  the  Land Acquisition Act,  Election  Tribunal  or  a  

Tribunal  acting  as  a  Motor  Vehicles  Accident  Claim  Tribunal,  while  

exercising  revisional  jurisdiction  from an  order  passed  by  the  Executive  

Magistrate under the Code or exercising an appellate power under special  

statutes like Municipal Acts would still be a court subordinate to the High  

Court.  However, for the aforementioned purpose the Presiding Officer must  

be holding a Court which would otherwise come within the purview of the  

hierarchy of the courts.  

In N.P. Balakrishanan  v.  P.M.R. Mariyumma, [AIR 1997 Kerala 89],  

the High Court has held :-

“In  view of  the  discussions  it  is  clear  that  even  though  Rent  Control  Court  under  the  Rent  Control  

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Act is a ‘Court’ and is not a persona designate it is not  a Civil Court for the purpose for the provisions of S.  115 of the CPC.  Therefore, against an interim order  of the Rent Control Court no revision petition will lie.  We  are  not  considering  whether  an  appeal  will  lie  against  the  interim  order  in  question  or  whether  a  petition  under  Art.  227  of  the  Constitution  is  maintainable.”

In M/s. Brooke Bond India Ltd.  v.  Union of India and others, [ AIR  

2001 AP 526 ] the Andhra Pradesh High Court has held:-  

“The contention urged by the counsel for appellant  that the Railway Claims Tribunal is a civil Court  cannot be accepted.  Merely because Section 18(3)  of the Act provides that the Claims Tribunal, for  the purpose of discharging the functions under the  Act, shall have the same powers as are vested in  the civil Court under the Code of Civil Procedure,  1908  and  S.  25  provides  that  the  proceedings  before the Tribunal shall be deemed to be ‘judicial  proceedings’ as contemplated under Sections 193,  210 and 228, IPC, they do not make the Railway  Claims Tribunal a ‘Civil Court’.  

In  Devendra Somabhai Naik  v.  M/s. Accurate Transheet Pvt. Ltd.  

[AIR 2003 Gujarat 141] the High Court has held :-  

“No  doubt,  Article  137  deals  with  filling  of  applications,  but then the applications,  which are  contemplated to be filed, are the applications filed  before the civil Court.   The appellant is also not  successful in convincing this Court to hold that the  

70

‘Copyright Board’ is a ‘Civil Court’.  In view of  the aforesaid discussion,  the present  appeal  fails.  The  Court  has  not  found  any  error  in  the  order  under challenge.  The appeal is dismissed with no  order as to costs.  

In  State Bank of India  v.  Madhumita Construction (Pvt.) Ltd. and  

others, [ AIR 2003 Cal 7], the Calcutta High Court has held :-   

“13. … On the other hand, it  is a question as to  whether this  Court had jurisdiction or not.  If the  DRT  has  exclusive  jurisdiction  and  this  Court  ceases to have jurisdiction, in that event, it is not a  question  of  granting  injunction  restraining  the  respondent Nos. 53 to 57 from proceeding with the  same.  But  it  is  a  case  whether  this  Court  has  jurisdiction  to  proceed  with  or  not.  If  it  has  jurisdiction, in that event, it can very much grant  the injunction. If it has no jurisdiction, it cannot do  so. Even if it is assumed that Section 41(b) applies,  still then DRT as such is not a Court subordinate to  this Court. It does not fall within the hierarchy of  the  Courts  as  provided  in  the  Bengal,  Agra  and  Assam  Civil  Courts  Act,  1887.  The  Tribunal  constituted under the DRT Act is not a Court. It is  a  Tribunal  having  the  trappings  of  a  Court.  A  Tribunal with trappings of Court cannot be equated  with a Court as is understood from the expression  "Court". A Court is a body established by law for  the  administration  of  justice  by  Judges  or  Magistrates.  This  definition  may  include  a  Tribunal  as  well.  Inasmuch as,  it  is  also  a  body  constituted or established by law for administration  of  justice.  But,  when it  comes  to  the  distinction  between Court and Tribunal, then the Court as it  understood is different from a Tribunal. The word  "Court", however, has not been defined anywhere  

71

in any law. Different kinds of Courts have since  been  established  under  different  laws.  The  hierarchy of the Court as established under Bengal,  Agra  and  Assam  Civil  Court  Act  are  Courts  in  respect  of  which the  Code of  Civil  Procedure is  applicable and the jurisdiction is open. Section 4  and 5 CPC also spells out Courts in the context of  applicability of CPC. Under Section 9 of CPC.  All  suits of civil nature are triable by a Court unless  cognizance of a particular kind of suit is expressly  or  impliedly  barred.  There  are  certain  kinds  of  suits  which  are  triable  by  revenue  Courts  or  Provincial or Presidencies Small Cause Court. The  subordination  of  the  Courts  is  determined  under  Section 3, CPC on the basis of the provisions of  Code  of  Civil  Procedure  applicable  to  it  having  regard to the provisions contained in Bengal, Agra  and Assam Civil Courts Act.”

In  Greater Bombay Coop. Bank Ltd. v.  United Yarn Tex (P) Ltd.,[  

(2007) 6 SCC 236  ], this Court has held :-

 “76. Section 31 of the RDB Act clearly refers to  transfer of “every suit or other proceeding pending  before any court”. The word “court”, in the context  of the RDB Act, signifies “civil court”. It is clear  that the Registrar, or an officer designated by him  or an arbitrator under Sections 61, 62, 70 and 71 of  the  APCS Act,  1964  and  under  Section  91  and  other provisions of Chapter  IX of the MCS Act,  1960 are not “civil courts”.

77. In  Harinagar  Sugar  Mills v.  Shyam Sundar  Jhunjhunwala this Court held: (AIR p. 1680, para  32)

“By  ‘courts’  is  meant  courts  of  civil  judicature  and  by  ‘tribunals’,  those  bodies  of  

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men who are appointed to decide controversies  arising under certain special laws. Among the  powers  of  the  State  is  included  the  power  to  decide such controversies. This is undoubtedly  one of the attributes of the State, and is aptly  called the judicial power of the State.”

In  Rama  Rao v.  Narayan it  was  held  that  the  nominee of Registrar appointed under Section 95  of  the  Maharashtra  Cooperative  Societies  Act,  1961  is  not  a  “court”  within  the  meaning  of  Section 195 Cr PC.

In  Kihoto Hollohan v.  Zachillhu it was held that:  (SCC p. 706, para 98)

“  ‘All  tribunals  are  not  courts,  though  all  courts are tribunals.’ The word ‘courts’ is used  to designate those tribunals which are set up in  an  organised  State  for  the  administration  of  justice.”

In  Supreme Court Legal Aid Committee v.  Union  of India it was held: (SCC p.745, para 14)

“14. It is common knowledge that a ‘court’  is  an agency created by the sovereign for the  purpose of  administering justice.  It  is  a  place  where justice is judicially administered. It is a  legal entity.”

EXCLUSION OF JURISDICTION MUST BE EXPRESS

The Civil Court indisputably has the jurisdiction to try a suit.  If the  

suit is vexatious or otherwise not maintainable action can be taken in respect  

thereof  in  terms of  the  Code.   But  if  all  suits  filed  in  the  Civil  Courts,  

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whether inextricably connected with the application filed before the DRT by  

the banks and financial institutions are transferred, the same would amount  

to ousting the jurisdiction of the Civil Courts indirectly.  Suits filed by the  

debtor may or may not be counter claims to the claims filed by banks or  

financial  institutions  but  for  that  purpose  consent  of  the  plaintiff  is  

necessary.   It  is  furthermore  difficult  to  accept  the  contentions  of  the  

respondents that the statutory provisions contained in section 17 and 18 of  

the  DRT Act  have  ousted  the  jurisdiction  of  the  civil  court  as  the  said  

provisions clearly state that the jurisdiction of the civil court is barred in  

relation  only  to  applications  from  banks  and  financial  institutions  for  

recovery of debts due to such banks and financial institutions.

A civil court is entitled to decide the respective claims of the parties  

in a suit.   It  must come within the purview of the hierarchy of courts as  

indicated in Section 3 of the Code.  It will have jurisdiction to determine all  

disputes of civil nature unless the same is barred expressly by a statute or by  

necessary  implication.   Although  some  arguments  have  been  advanced  

before us whether having regard to the provisions of Sections 17 and 18 of  

the Act the civil court jurisdiction is completely ousted, we are of the view  

that the jurisdiction of the civil court would be ousted only in respect of the  

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matters contained in Section 18 which has a direct co-relation with Section  

17 thereof, that is to say that the matter must relate to a debt payable to a  

bank or a financial institution.  The application before the Tribunal would lie  

only at the instance of the bank or the financial institution for the recovery of  

its debt.  It must further be noted in this respect that had the jurisdiction of  

the civil courts been barred in respect of counterclaim also, the statute would  

have said so and Sections 17 and 18 would have been amended to introduce  

the provision of counterclaim. We may in this context place on record the  

following observations from Indian Bank (supra):

“14.  Section  9  of  the  Code  of  Civil  Procedure  provides that the courts shall have jurisdiction to  try  all  suits  of  a  civil  nature,  excepting  suits  of  which  their  cognizance  is  either  expressly  or  impliedly barred.

15. It  is evident from Sections 17 and 18 of the  Debts Recovery Act that civil court's jurisdiction is  barred only in regard to applications by a bank or a  financial institution for recovery of its debts. The  jurisdiction of civil courts is not barred in regard to  any suit  filed by a borrower or any other person  against a bank for any relief.[…]  

16. […]What is significant is that Sections 17 and  18  have  not  been  amended.  Jurisdiction  has  not  been  conferred  on  the  Tribunal,  even  after  amendment,  to  try  independent  suits  or  proceedings  initiated  by  borrowers  or  others  against  banks/financial  institutions,  nor  the  

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jurisdiction of civil courts barred in regard to such  suits or proceedings.

It must be remembered that the jurisdiction of a civil court is plenary  

in nature.  Unless the same is ousted, expressly or by necessary implication,  

it will have jurisdiction to try all types of suits.  

In  Dhulabhai v.  State  of  M.P.,[  (1968)  3  SCR  662 ],  this  Court  

opined:-

“35. […] The result of this inquiry into the diverse  views  expressed  in  this  Court  may  be  stated  as  follows:

[…]  (2)  Where  there  is  an  express  bar  of  the  jurisdiction  of  the  court,  an  examination  of  the  scheme of the particular Act to find the adequacy  or the sufficiency of the remedies provided may be  relevant  but  is  not  decisive  to  sustain  the  jurisdiction of the civil court. Where  there  is  no  express  exclusion  the  examination of the remedies and the scheme of the  particular Act to find out the intendment becomes  necessary  and  the  result  of  the  inquiry  may  be  decisive. In the latter case it is necessary to see if  the statute creates a special right or a liability and  provides  for  the  determination  of  the  right  or  liability  and further  lays  down that  all  questions  about  the  said  right  and  liability  shall  be  determined  by  the  Tribunals  so  constituted,  and  whether remedies normally associated with actions  in civil courts are prescribed by the said statute or  not.

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(7)  An exclusion of the jurisdiction of the civil  court  is  not  readily  to  be  inferred  unless  the  conditions above set down apply.”

In  Dwarka Prasad Agarwal v.  Ramesh Chander Agarwal, [(2003) 6  

SCC 220]  

“19. A  bare  perusal  of  the  aforementioned  provisions leaves no manner of doubt that thereby  the  jurisdiction  of  the  civil  court  has  not  been  ousted.  The  civil  court,  in  the  instant  case,  was  concerned with the rival claims of the parties as to  whether one party has illegally been dispossessed  by  the  other  or  not.  Such a  suit,  apart  from the  general law, would also be maintainable in terms  of Section 6 of the Specific Relief Act,  1963. In  such  matters  the  court  would  not  be  concerned  even with the question as to the title/ownership of  the property.”

Therein five principles were laid down stating :-  

“22. The  dispute  between  the  parties  was  eminently a civil dispute and not a dispute under  the provisions of the Companies Act. Section 9 of  the  Code  of  Civil  Procedure  confers  jurisdiction  upon the civil courts to determine all disputes of  civil  nature  unless  the  same  is  barred  under  a  statute  either  expressly  or  by  necessary  implication. Bar of jurisdiction of a civil court is  not to be readily inferred. A provision seeking to  bar  jurisdiction  of  a  civil  court  requires  strict  interpretation. The court, it is well settled, would  normally  lean  in  favour  of  construction,  which  would uphold retention of jurisdiction of the civil  court. The burden of proof in this behalf shall be  

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on  the  party  who  asserts  that  the  civil  court’s  jurisdiction is ousted. (See Sahebgouda v. Ogeppa,  (2003)  6  SCC  151.)  Even  otherwise,  the  civil  court’s jurisdiction is not completely ousted under  the Companies Act, 1956.”

In  Nagri  Pracharini  Sabha v.  Vth Addl.  Distt.  and Sessions Judge,  

[1991 Supp (2) SCC 36]  

“2. A litigant having a grievance of a civil nature  has,  independently  of  any  statute,  a  right  to  institute  a  suit  in  the  civil  court  unless  its  cognizance is either expressly or impliedly barred.  The  position  is  well-settled  that  exclusion  of  jurisdiction of the civil court is not to be readily  inferred  and  such  exclusion  must  be  either  expressly or implied.”

In Ramesh Chand Ardawatiya v. Anil Panjwani, [ (2003) 7 SCC 350 ]  

this Court opined :-

“19. … Where there is a special tribunal conferred  with  jurisdiction  or  exclusive  jurisdiction  to  try  a  particular class of cases even then the civil court can  entertain a civil suit of that class on availability of a  few  grounds.  An  exclusion  of  jurisdiction  of  the  civil  court  is  not  to  be  readily  inferred.  (See  Dhulabhai v. State of M.P.) ”

Power  to  create  or  enlarge  jurisdiction  is  legislative  in  character.  

Similarly, right of revision or appeal is normally a creature of statute.  In  

Rajasthan SRTC v.  Zakir Hussain, [(2005) 7 SCC 447] this Court has held:-  

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“21. It  is a well-settled principle of law as  laid down by this Court that if the court has no  jurisdiction, the jurisdiction cannot be conferred  by any order of court. This Court in the case of  A.R. Antulay v.  R.S. Nayak, AIR paras 40 to  42 wherein it is, inter alia, held and observed as  under: (SCC pp. 650-51, paras 38-40)  

… …

39[41]. … The power to create or enlarge  jurisdiction is  legislative in character….  Parliament alone can do it by law and no  court,  whether  superior  or  inferior  or  both  combined  can  enlarge  the  jurisdiction of a court or divest a person  of his rights of revision and appeal.  

… … ”

The  Act,  although,  was  enacted  for  a  specific  purpose  but  having  

regard to the exclusion of jurisdiction expressly provided for in Sections 17  

and 18 of the Act, it is difficult to hold that a civil court’s jurisdiction is  

completely ousted.  Indisputably the banks and the financial institutions for  

the purpose of enforcement of their  claim for a sum below Rs. 10 lakhs  

would have to file civil suits before the civil courts.  It is only for the claims  

of the banks and the financial institutions above the aforementioned sum that  

they have to approach the Debt Recovery Tribunal.  

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It is also without any cavil that the banks and the financial institutions,  

keeping  in  view  the  provisions  of  Sections  17  and  18  of  the  Act,  are  

necessarily required to file their claim petitions before the Tribunal.  The  

converse is not true.   

Debtors can file their claims of set off or counter-claims only when a  

claim application is filed and not otherwise.  Even in a given situation the  

banks  and/or  the  financial  institutions  can  ask  the  Tribunal  to  pass  an  

appropriate  order  for  getting  the  claims of  set-off  or  the  counter  claims,  

determined by a civil court.  The Tribunal is not a high powered tribunal.  It  

is a one man Tribunal.  Unlike some Special Acts, as for example Andhra  

Pradesh  Land  Grabbing  (Prohibition)  Act,  1982  it  does  not  contain  a  

deeming provision that the Tribunal would be deemed to be a civil court.  

The liabilities and rights of the parties have not been created under the  

Act.   Only a  new forum has been created.   The banks and the financial  

institutions cannot approach the Tribunal unless the debt has become due.  

In such a contingency, indisputably a civil suit would lie.  

There is a possibility that the debtor may file preemptive suits and  

obtain  orders  of  injunction,  but  the  same alone,  in  our  opinion,  by itself  

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cannot be held to be a ground to completely oust the jurisdiction of the civil  

court in the teeth of Section 9 of the Code.  Recourse to the other provisions  

of  the  Code  will  have  to  be  resorted  to  for  redressal  of  his  individual  

grievances.  

It is also difficult to accept the contention of leaned counsel for the  

banks that the civil court’s jurisdiction is not in consonance with the Act.  

We do not find the same to be correct.

On the ground of inconsistency in the procedures contained in the two  

Acts alone, the jurisdiction of the civil court cannot be said to have been  

ousted.

Reliance  has  been  placed  by  Mr.  K.K.  Venugopal,  learned  senior  

counsel for the bank on Vijay Kumar Sharma  v.  State of Karnataka, (1990)  

2 SCC 562, wherein this Court has held :-  

“44. The court then referred to its earlier decision  in Deepchand v. State of U.P. and pointed out that  in  that  case  the  following  principles  were  laid  down to ascertain whether there is repugnancy or  not:

1. Whether  there  is  direct  conflict  between the two provisions;

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2. whether  Parliament  intended  to  lay  down an exhaustive code in respect of the  subject matter replacing the earlier law; 3. whether  the  two  laws  occupy  the  same field.

The court then referred to Sutherland on Statutory  Construction (Vol.  1  3rd  edn.,  p.  486)  on  the  question of “repeal of special and local statutes by  general statutes”.

It was further stated :-

“46. What is important from our point of view, is  the view taken in that case that when repugnancy  is alleged between the two statutes, it is necessary  to examine whether the two laws occupy the same  field, whether the new or the later statute covers  the  entire  subject  matter  of  the  old,  whether  legislature  intended  to  lay  down  an  exhaustive  code in respect  of the subject  matter  covered by  the earlier law so as to replace it in its entirety and  whether the earlier special statute can be construed  as  remaining  in  effect  as  a  qualification  of  or  exception to the later general law, since the new  statute is enacted knowing fully well the existence  of  the  earlier  law and yet  it  has  not  repealed  it  expressly. The decision further lays down that for  examining whether the two statutes cover the same  subject matter, what is necessary to examine is the  scope and the object  of the two enactments,  and  that has to be done by ascertaining the intention in  the usual way and what is meant by the usual way  is nothing more or less than the ascertainment of  the dominant object of the two legislations.

… …. ….

48...  The  legislative  intent  is  clear.  Since,  further, the Parliament had enacted the later statute  

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knowing  fully  well  the  existence  of  the  earlier  statute and yet it did not expressly repeal it, it will  be presumed that the Parliament felt that there was  no need to repeal the said statute.”

However,  in  that  case  itself  it  has  been  held  that  repugnancy  and  

inconsistency is synonymous.

Furthermore in a case of this nature where the banks itself have filed  

applications for transfer, the jurisdiction of the civil court must be presumed.  

Submission of Mr.  Desai that this Court can direct  the Tribunal to  

follow the provisions of the Code, in our opinion, cannot be accepted.  Such  

a direction would be in the teeth of the provisions of the Act.   

Reliance placed by the learned counsel on sub-section (2) of Section  

22 of the Act to contend that the provisions of the Code are applicable, in  

our opinion, militates against the said contention.  Sub-section (2) of Section  

22 deals with applicability of the provisions of the Code in a limited manner.  

Sub-section (3) raises a legal fiction that the 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 all the purposes of Section 196  

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of the Indian Penal Code, 1860. The very fact that a legal fiction has been  

created and the Tribunal or the Appellate Tribunal shall be deemed to be a  

civil court for purposes of Section 195 and Chapter XXVI of the Code of  

Civil Procedure, 1973, itself suggests that the Parliament did not intend to  

take away the jurisdiction of the civil court.   In any event, the said legal  

faction has a limited application.  Its scope and ambit cannot be extended.

In Bharat Bank Ltd. (supra) it has clearly been held that although the  

labour court may have all the trappings of a court, but it is still not a court.

We  may  notice  that  some  of  the  Parliamentary  statutes,  like  the  

Family  Courts  Act  confers  all  the  powers  on  Family  Courts  which  are  

essential  for  discharging the  functions  of  Civil  Court  under  the  Code of  

Criminal Procedure.  

We  accept  that  disposal  of  a  civil  suit  takes  a  long  time.   But  

indisputably  remedy of  summary  and speedy trial  by itself  would not  be  

sufficient to oust the jurisdiction of the civil court.  Had the intention of the  

Parliament been so, it could have expressly said so.  Casus omissus,  as is  

well known, cannot be supplied.

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VESTED RIGHT OF APPEAL  

Another aspect of the matter also cannot be lost sight of.  A plaintiff  

of  a  suit  will  have  a  vested  right  of  appeal.   The  said  right  would  be  

determined keeping in view the date of filing of the suit.  Such a right of  

appeal must expressly be taken away.   An appeal is the “right of entering a  

superior court, and invoking its aid and interposition to redress the error of  

the court below” and “though procedure does surround an appeal the central  

idea  is  a  right”.   The  right  of  appeal  has  been  recognized  by  judicial  

decisions  as  a  right  which  vests  in  a  suitor  at  the  time of  institution  of  

original  proceedings.   The  Privy  Council  in  Colonial  Sugar  Refining  

Company v. Irving, [(1905) AC 369 (PC)] noted that “ to deprive a suitor in  

a pending action of an appeal to a superior tribunal which belonged to him  

as of right, is a very different thing from regulating procedure”  

When a person files  a civil  suit  his  right  to prosecute  the same in  

terms of the provisions of the Code as also his right of appeal by way of first  

appeal; second appeal etc. are preserved.  Such rights cannot be curtailed, far  

less taken away except by reason of an express provision contained in the  

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statute.  Such a provision in the statute must be express or must be found out  

by necessary implication.     

In  Garikapati Veeraya v.  N. Subbiah Choudhry, [ 1957 SCR 488 ],  

this Court opined :-

“23. From the decisions cited above the following  principles clearly emerge:

(i) That the legal pursuit of a remedy, suit,  appeal and second appeal are really but steps in  a  series  of  proceedings  all  connected  by  an  intrinsic  unity  and  are  to  be  regarded  as  one  legal proceeding.

(ii) The right of appeal is not a mere matter  of procedure but is a substantive right.

(iii) The institution of the suit carries with it  the implication that all rights of appeal then in  force are preserved to the parties thereto till the  rest of the career of the suit.

(iv) The right of appeal is a vested right and  such a right to enter the superior court accrues  to the litigant and exists as on and from the date  the  lis commences  and  although  it  may  be  actually exercised when the adverse judgment  is pronounced such right is to be governed by  the law prevailing at the date of the institution  of the suit or proceeding and not by the law that  prevails at the date of its decision or at the date  of the filing of the appeal.

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(v) This vested right of appeal can be taken  away only by a subsequent enactment, if it so  provides expressly or by necessary intendment  and not otherwise.”

[See also Dilip S. Dahanukar v. Kotak Mahindra Co. Ltd. and Anr., (2007) 6  

SCC 528]

The Code not only contains procedural provisions but also substantive  

rights ; right of appeal is one of them.  A forum of appeal is determined in  

terms  of  the  provisions  of  the  Code  having  regard  to  the  pecuniary  

jurisdiction of the Court as may be notified by the appropriate Government  

from time to time.   A suitor  has the right  to maintain  a first  appeal.   A  

second appeal also is maintainable before a High Court, subject of course to  

the effect that questions of law must be there for the court’s consideration.  

For the said purpose no pre-deposit is required to be made, as is necessary in  

terms  of  the  Act,  that  75%  of  the  awarded  amount  is  required  to  be  

deposited,  subject  of  course,  to  an  order  to  the  contrary,  which  may  be  

passed  by  the  Debt  Recovery  Appellate  Tribunal.   Such  a  right  of  

conditional  appeal,  in  our  opinion,  curtails  party’s  right  to  maintain  an  

appeal as a matter of right.  While we say so, we are not oblivious of the fact  

that in terms of Order XLI Rule 1 of the Code, in the event of passing of a  

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money decree the amount is required to be deposited.  The said provision,  

however, has been held to be directory.  Order XLI Rule 1 is required to be  

read with Order XLI Rule 5 thereof.  {See  Sihor Nagar Palika Bureau v.  

Bhabhlubhai Virabhai & Co., [(2005) 4 SCC 1 ], Malwa Strips Pvt. Ltd. v.  

Jyoti Limited [(2009) 2 SCC 426]}  

More recently in Transmission Corporation of A.P. v.  Ch. Prabhakar  

and Ors., (2004) 5 SCC 551 this court similarly opined:

“….The right of appeal is a substantive right which  is  really  a  step  in  series  of  proceedings  all  connected  by  an  intrinsic  unity  and  is  to  be  regarded as one legal proceeding and further being  a  vested  right  such  a  right  to  enter  the  superior  court accrues to the litigant and exists as on and  from the date the lis commences….”  

A civil suit may also be maintainable before Original Side of the High  

Court in terms of the statutes under which the High Courts are constituted or  

in terms of the provisions of the Letters Patent.  An intra court appeal is  

available against a decree passed by a learned Single Judge of a High Court  

in a suit filed before it.  

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In  the  event,  however,  if  a  civil  suit  is  transferred  to  the  Debt  

Recovery Tribunal, the plaintiff would be deprived of his right in relation to  

the procedural mechanism as contained in the Code as also the Evidence  

Act.  His right of appeal would also stand curtailed.  While exercising the  

power of transfer, the High Court and this Court would thus be curtailing the  

right  of  a  suitor  indirectly  which  could  not  be  done  directly.   It  clearly  

establishes the Parliamentary intent that only civil suits are subject matter of  

inter State transfer from one civil  court  to another civil  court.   If such a  

power is exercised, all the rights of the plaintiff remain intact, no right is  

taken away and no right is diluted.   

INHERENT JURISDICTION  

Section  151  of  the  Code  of  Civil  Procedure  does  not  confer  any  

extraordinary jurisdiction on this Court.  It saves the inherent power of all  

the civil courts, i.e., from the trial judge to this Court.  Thus, where a matter  

has expressly been provided for in the body of the Code, ordinarily inherent  

power shall not be resorted to.  The underlying principle of Section 151 of  

the Code ordinarily  would apply where  the area  is  grey.   It  indisputably  

confers  incidental  powers.   It  confers  power  on a  court  to do something  

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which  in  absence  of  any  provision  contrary  thereto  would  lead  to  

advancement of justice and prevent injustice.  The power to transfer one case  

from one court to another or from one tribunal to another having jurisdiction  

of a different State is an extraordinary jurisdiction.  For exercising the said  

power, this Court has to take into consideration a large number of factors.  

Such  a  power  is  to  be  exercised  if  exceptional  situation  arises  and  not  

otherwise.

In Padma Sen and Another v.  The State of Uttar Pradesh [AIR 1961  

SC 218],  this  Court,  having  regard  to  the  provisions  contained  in  Order  

XXVI, Rule 9 of the Code of Civil  Procedure vis-à-vis  Order XXXVIII,  

Rule 5, Order XXXIX, Rules 1(b) and 7 thereof, categorically held that the  

court  has  no  inherent  power  under  Section  151  of  the  Code  of  Civil  

Procedure  to  appoint  a  Commissioner  to  seize  accounts  books  in  the  

possession  of  the  plaintiff  upon an application  by  the  defendant  that  his  

apprehension that they would be tampered with, stating:

“10.  The  defendants  had  no  rights  to  these  account  books.  They could not  lay  any claim to  them. They applied for the seizure of these books  because they apprehended that the plaintiff might  make such entries  in those account  books which  

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could go against the case they were setting up in  Court. The defendants’ request really amounted to  the  Court’s  collecting  documentary  evidence  which  the  defendants  considered  to  be  in  their  favour at that point of time. It is no business of the  Court  to  collect  evidence  for  a  party  or  even to  protect the rival party from the evil consequences  of making forged entries in those account books. If  the  plaintiff  does  forge  entries  and  uses  forged  entries  as  evidence  in  the  case,  the  defendants  would  have  ample  opportunity  to  dispute  those  entries and to prove them forgeries.

11.  We  are  therefore  of  opinion  that  the  Additional Munsif had no inherent power to pass  the order appointing a Commissioner to seize the  plaintiff’s account books. The order appointing Sri  Raghubir  Pershad  as  Commissioner  for  this  purpose  was  therefore  an  order  passed  without  jurisdiction  and  was  therefore  a  null  and  void  order.”

The said decision, we are not oblivious, has been distinguished by this  

Court in  Manohar Lal Chopra v.  Rai Bahadur Rao Raja Seth Hiralal [AIR  

1962 SC 527] in a case for grant of injunction stating that Rules 1 and 2 of  

Order XXXIX of the Code of Civil Procedure is not exhaustive, stating:

“22.  In  the  above  case,  this  Court  did  not  uphold  the  order  of  the  civil  court,  not  coming  under  the  provisions  of  Order  26,  appointing  a  commissioner for seizing the account books of the  

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plaintiff on the application of the defendants. The  order  was  held  to  be  defective  not  because  the  Court had no power to appoint a commissioner in  circumstances  not  covered  by  Section  75  and  Order 26, but because the power was exercised not  with  respect  to  matters  of  procedure  but  with  respect to a matter affecting the substantive rights  of  the  plaintiff.  This  is  clear  from  the  further  observations made at p. 887. This Court said:

“The question for determination is whether  the  impugned order  of  the  Additional  Munsif  appointing Sri Raghubir Pershad Commissioner  for seizing the plaintiff’s books of account can  be said to be an order which is passed by the  Court  in  the  exercise  of  its  inherent  powers.  The inherent powers saved by Section 151 of  the Code are with respect to the procedure to be  followed  by  the  Court  in  deciding  the  cause  before it. These powers are not powers over the  substantive rights which any litigant possesses.  Specific  powers  have  to  be  conferred  on  the  Courts  for  passing  such  orders  which  would  affect  such  rights  of  a  party.  Such  powers  cannot  come  within  the  scope  of  inherent  powers  of  the  Court  in  matters  of  procedure,  which  powers  have  their  source  in  the  Court  possessing all the essential  powers to regulate  its practice and procedure.”

The Plaintiff furthermore is the dominus litus.  He may institute a suit  

having regard to the provisions contained in Sections 16 to 20 of the Code of  

Civil Procedure in any civil court within whose jurisdiction inter alia a cause  

of action arises.  If the jurisdiction of the civil court is not barred or if he  

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having regard to common law principle is entitled to maintain an action in  

two different  forums, he may choose one of them.  [See  Rajasthan State  

Road  Transport  Corporation  and  Anr. v.  Bal  Mukund  Bairwa,  2009  (2)  

SCALE 428]

A debtor having regard to the provisions of the DRT Act would not be  

entitled  to  maintain  an  action  before  the  Tribunal.   If  a  suit  is  to  be  

transferred  from a  civil  court  to  a  tribunal,  he  would  loose  some  rights  

including the right  to  prefer  an appeal  before a higher  court  in terms of  

Sections 96 and 100 of the Code of Civil Procedure.

Mr.  Diwan,  however,  has  strongly  placed  reliance  upon  Union  of  

India and Another v. Delhi High Court Bar Association and Others [(2002) 4  

SCC  275]  wherein  it  was  observed  that  the  tribunals  have  become  an  

essential part of the judicial system in the country.  Such observations were  

made  keeping  in  view the provisions  of  Articles  323A and 323B of  the  

Constitution of India.  The logical extension of the said observations would  

not lead to a conclusion that the tribunals are either civil courts or this Court  

would be entitled to exercise its inherent power for transfer of a civil suit to  

a tribunal.

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We may place on record that in  Durgesh Sharma (supra) this Court  

has clearly held that the provisions of Sections 22 to 25 of the Code of Civil  

Procedure are exhaustive in nature.  If that be so, inherent power of the court  

could clearly not be invoked.

Reliance has also been placed on  M/s. Ram Chand and Sons Sugar  

Mills Private Ltd. v. Kanhayalal Bhargava and Others [AIR 1966 SC 1899]  

wherein it has been held:

“Having regard to the said decisions, the scope of  the inherent power of a court under Section 151 of  the Code may be defined thus: The inherent power  of a court is in addition to and complementary to  the  powers  expressly  conferred  under  the  Code.  But that power will not be exercised if its exercise  is  inconsistent  with,  or  comes into conflict  with,  any  of  the  powers  expressly  or  by  necessary  implication  conferred  by  the  other  provisions  of  the  Code.  If  there  are  express  provisions  exhaustively covering a particular topic, they give  rise to a necessary implication that no power shall  be exercised in respect of the said topic otherwise  than  in  the  manner  prescribed  by  the  said  provisions.  Whatever  limitations  are  imposed  by  construction on the  provisions of  Section 151 of  the Code, they do not control the undoubted power  of  the  Court  conferred under Section 151 of  the  Code to make a suitable order to prevent the abuse  of the process of the Court.”

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We, however, are of the opinion that the principles laid down therein  

cannot be said to have any application in the instant case as it would bear  

repetition to state that by reason thereof the court would not be entitled to  

denude a suitor of his right of appeal and other substantive rights.

We are also unable to persuade ourselves  to hold that  the right  of  

transfer of a case being procedural in nature should be construed liberally.  

By reason thereof, substantive right of a party cannot be taken away.  While  

accepting that the rules of procedures are intended to provide justice and not  

to defeat it as has been held by this Court in N.T. Veluswami Thevar v. G.  

Raja  Nainar  and  others [AIR  1959  SC  422]  and  M/s.  Lakshmiratan  

Engineering  Works  Ltd. v.  Asst.  Commissioner  (Judicial)  I.,  Sales  Tax,  

Kanpur Range, Kanpur and another [AIR 1968 SC 488], that the court must  

bear in mind that it would not cause injustice to any of the parties thereby.

Reliance has also been placed on Industrial Investment Bank of India  

Ltd. v.  Marshal’s Power & Telecom (I) Ltd. and Another [(2007) 1 SCC  

106] and Durga Hotel Complex v. Reserve Bank of India and Others [(2007)  

5 SCC 120].   Both the aforementioned cases have been determined by a  

Bench which has decided Ranjan Chemicals (supra).  Those cases related to  

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the contentions raised before the Banking Ombudsman.  The Bench held that  

the  appellants  therein  could make all  their  claims before  the  DRT while  

defending  the  claim of  the  bank,  including  the  ones  he had put  forward  

before the Banking Ombudsman.  

We are not concerned with such a contention herein.  In any event, in  

view of our findings that we are bound to follow Indian Bank (supra), this  

argument has no force.

ARTICLE 142 ISSUE

Indisputably, the power of this Court under Articles 139A and 142 of  

the Constitution of India is a wide and extensive one.  This Court may resort  

thereto to do complete justice.  While doing so, this Court would be entitled  

to impose conditions.   

Whether such a power should be exercised or not is the question.   

The principal submission made on behalf of the Bank is that the suit is  

pre-emptive in nature.  It may be so but then the banks and the financial  

institutions have their own remedies.  As adequate remedy is available to  

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them in law, ordinarily, the same should be directed to be followed.  A case  

of very exceptional nature must be made out for invoking the extraordinary  

constitutional jurisdiction of a court.

One  of  the  contentions  which  have  been  raised  is  whether  the  

transactions under derivative agreements would come within the purview of  

the DRT Act.  Of course, a tribunal will have a jurisdiction to decide the  

issue being a jurisdictional  issue.  Furthermore,  the company has alleged  

fraud and misrepresentation.

This Court in  Mardia Chemicals Ltd. and  Others v.  Union of  India  

[(2004) 4 SCC 311] has also held that even in such an event, the jurisdiction  

of the civil court can be invoked.

Several other issues of complicated nature may arise before the civil  

court.  We, therefore, are of the opinion that it may not be a fit case where  

we should exercise our jurisdiction under Article 142 of the constitution of  

India.   

DIRECTION  

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However, we make it clear that having regard to the pleadings of the  

parties  as  also  the  purpose  and  object  for  which  the  Tribunal  has  been  

constituted, it should proceed to dispose of the bank’s claims expeditiously.  

We, however, have no doubt whatsoever in our mind that while determining  

the respective claims of the parties and the nature thereof, the tribunal shall  

comply with all the requirements of law.  We, therefore, are of the opinion  

that the transfer applications have no merit.  They are dismissed accordingly  

with the aforementioned observations.

Having regard to our finding that even Section 24 of the Code of Civil  

Procedure  cannot  be  taken  recourse  to,  there  cannot  be  any  doubt  

whatsoever  that  the  Punjab  and  Haryana  High  Court  could  not  have  

transferred  the  suit  from the  civil  court  Ludhiana  to  DRT.  Civil  Appeal  

arising out of SLP (C) No. 24715 of 2008 is, therefore, allowed.  However,  

in the facts and circumstances of the case, there shall be no order as to costs.

………………………….J. [S.B. Sinha]

..…………………………J.     

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[Asok Kumar Ganguly] New Delhi; July 29, 2009

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