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2000 DIGILAW 1021 (MAD)

M. Vasanthalakshi and Another v. Indian Bank and Others

2000-10-17

A.RAMAMURTHI

body2000
Judgment :- A. RAMAMURTHI, J. For the The applicants/third parties have filed this application under Order 14, rule 8 of Original Side Rules read with Order 7, rule 11 of the Civil Procedure Code, 1908, to grant leave to file an application to set aside the ex parte decree dated January 4, 1996. The case in brief is as follows : The first respondent filed a suit against respondents Nos. 2 to 7 on the file of this court for recovery of a sum of Rs. 10, 99, 690 under open cash credit facility with interest at the rate of 17 per cent. per annum and for other reliefs. The first applicant's mother was the seventh defendant in the suit. The second respondent is a partnership firm and respondents Nos. 3 to 7 are partners. The second respondent firm is engaged in manufacture and sales of handwoven sacks, silk sarees and pavadais. The firm was having transaction with the first respondent-bank. The second respondent seems to have obtained a loan from the bank and the third respondent somehow obtained the document of the eighth respondent's immovable property and deposited the title deeds and created an equitable mortgage to secure the loan amount availed of by respondents Nos. 2 to 7. The third respondent also seems to have obtained a confirmation letter on August 8, 1990. Since respondents Nos. 2 to 7 failed to repay the loan amount, the first respondent instituted the suit for recovery of the same. The defendants in the suit failed to appear and contest and, as such, the ex parte decree was passed on January 4, 1996. After the passing of the ex parte decree, the first respondent without approaching this court, for passing final decree seems to have approached the Debt Recovery Tribunal constituted under section 19 and filed O.A. No. 194 of 1999 for issuance of a recovery certificate as per the preliminary decree. The applicants herein are the legal heirs of the seventh respondent and no notice was also sent to them. Respondents Nos. 1 to 7 colluding together, played fraud and obtained collusive decree against the valuable properties of the eighth respondent. The ex parte decree is not binding on the eighth respondent as she is not a legally competent person to enter into any transaction or execute any document since she is insane. Respondents Nos. 1 to 7 colluding together, played fraud and obtained collusive decree against the valuable properties of the eighth respondent. The ex parte decree is not binding on the eighth respondent as she is not a legally competent person to enter into any transaction or execute any document since she is insane. The husband of the eighth respondent is the second applicant. The eighth respondent was kept in a separate room from 1983 and there is no possibility of going to the bank and affixing her signature. These things can be proved only if the applicants are granted leave to file an application as otherwise, they would be put to much loss and hardship. If the leave is granted, the respondents are not in any way prejudiced. Now, the first respondent-bank is taking steps to sell away the only property of the eighth respondent, who is made guarantor by playing fraud. The applicants came to know about the ex parte decree only on June 14, 2000, and have filed the application within 30 days from the date of knowledge. They are having valid grounds in succeeding the suit. The entire loan transaction is sham and nominal and, hence, the petition.The first respondent filed a counter-affidavit and denied the various averments. On the date when this application was filed by the applicants, the suit stood transferred to the Debt Recovery Tribunal by operation of law. There can be no application in the suit which was not pending on the file of this court. This court cannot grant leave. The cause alleged for setting aside the ex parte decree was not sufficient. There was no termination of the suit and the suit continued to be pending till the decree amount is satisfied. Meanwhile, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, was enacted which came into force on October 30, 1996. The debt due to the bank is more than Rs. 10 lakhs. It comes within the ambit of section 2(g) of the Debt Recovery Tribunal Act. Section 18 of the Act bars the jurisdiction of any other court or authority to adjudicate the claim. Section 31(2) of the Act says that what remains to be done is only to transmit the records to the Tribunal. Therefore, the bank filed an application before the Debt Recovery Tribunal for the realisation of the amount. Section 18 of the Act bars the jurisdiction of any other court or authority to adjudicate the claim. Section 31(2) of the Act says that what remains to be done is only to transmit the records to the Tribunal. Therefore, the bank filed an application before the Debt Recovery Tribunal for the realisation of the amount. It is for the Tribunal to decide regarding pending suits which stood transferred by operation of law, whether to proceed from the stage which was reached before such transfer or from any earlier stage. This application has been made only to wriggle out of the liability and to delay the realisation of the amount. The application for setting aside the ex parte decree should have been filed only before the Debt Recovery Tribunal and not before this court, after the establishment of the Tribunal. Heard learned counsel for both the sides. The points that arise for consideration are : (1) Whether the application to set aside the ex parte decree filed before this court is maintainable ?(2) To what relief ? Points : The applicants/third parties representing themselves as the legal heirs of the seventh defendant in the suit, have filed this application to grant leave to file an application to set aside the ex parte decree dated January 4, 1996. The first respondent-bank filed a suit against respondents Nos. 2 to 7 for recovery of a certain amount. The defendants in the suit failed to appear and contest and after giving sufficient opportunity, the ex parte decree was passed on January 4, 1996. Learned counsel for the applicants stated that the seventh defendant died and without impleading the legal heirs, the bank moved the Debt Recovery Tribunal for issue of recovery certificate as per the preliminary decree dated January 4, 1996. Learned counsel further stated that the bank ought to have moved this court to pass a final decree and thereafter only, should have proceeded with the execution for recovery of the amount. The applicants also questioned the validity of the equitable mortgage created to the bank. In order to prove the contentions raised by the applicants, they sought leave to file an application as otherwise, they would be put to much loss and hardship. The applicants also came to know about the ex parte decree only June 14, 2000, and within the time allowed under law, the present application is filed. In order to prove the contentions raised by the applicants, they sought leave to file an application as otherwise, they would be put to much loss and hardship. The applicants also came to know about the ex parte decree only June 14, 2000, and within the time allowed under law, the present application is filed. The first respondent-bank alone opposed the application and stated that the present application filed before this court is not maintainable under law. The Debt Recovery Tribunal was formed by operation of law on October 30, 1996, and as the debt due to the bank is more than Rs. 10 lakhs, they moved the Tribunal for a recovery certificate. Learned counsel for the first respondent also relied upon sections 17, 18 and 31 of the Debt Recovery Act to support his contention that on and after the formation of the Tribunal, by operation of law, the cases get transferred to the Tribunal and there is no jurisdiction for this court to try the same except under certain contingencies. In short, it is stated that the present application filed by the applicants is not maintainable under law and this application has been filed only to wriggle out of the liability and to delay the realisation of the amount. They ought to have moved only before the Debt Recovery Tribunal and not before this court after the establishment of the Tribunal.The short question that has to be decided is whether the applicants are entitled to file this application before this court or they should move only before the Tribunal. Learned counsel for the applicants relied on Allahabad Bank v. Ghanshyam Das Damani, wherein it was observed that Order 9, rule 13 of the Civil Procedure Code and section 22(2)(g) have to be read side by side. In the earlier one the court which has passed the decree can pass an order to set aside and in the later one, setting aside any order of dismissal of any application for default or any order passed by it ex parte. The cardinal principle is if the suit is decreed ex parte by the civil court, it should be revived by the civil court alone and if order is passed ex parte before the Tribunal it will be revived by it alone. The cardinal principle is if the suit is decreed ex parte by the civil court, it should be revived by the civil court alone and if order is passed ex parte before the Tribunal it will be revived by it alone. If the suit decreed by the High Court is recalled by the Tribunal under the control and supervision of such High Court, it will be the last day of the judiciary. Incidentally the High Court is one having different jurisdiction. There should be a limitation as to how far the Tribunal should proceed with a matter assigned before it and as unfettered right to the Tribunal, if at all given by the Legislature may create a hazardous situation in the judicial discipline. The same view has also been reiterated in United Bank of India v. Abhijit Tea Co. Pvt. Ltd. 2000 6 Scale 283 . Learned counsel for the first respondent relied on Har Sahai Mal Tika Ram v. Punjab National Bank 2000 (1) BC 7 wherein it was observed that it does not require any aid of any other law. Section 31 provides that on the constitution of a Tribunal all suits pending before any court immediately before the date of establishment of the Tribunal shall stand transferred on that date to such Tribunal. The expression "that date" means the date of establishment of the Tribunal. Thus, the transfer was complete on the establishment of the Tribunal. No further order of transfer was necessary. On the other hand, by reason of section 31, the jurisdiction of the civil court was withdrawn. By reason of statutory transfer of the suit in terms of section 31 of the said Act, sub-section (2) requires transmission of the records. It is not the transfer of the suit. No further order of transfer was necessary. On the other hand, by reason of section 31, the jurisdiction of the civil court was withdrawn. By reason of statutory transfer of the suit in terms of section 31 of the said Act, sub-section (2) requires transmission of the records. It is not the transfer of the suit. By reason of section 31 read with section 34 of the said Act, there was no alternative for the court but to transmit the records of the case to the Tribunal.Reliance is also placed upon another decision in Punjab National Bank v. Chajju Ram 2000 5 Supreme 357 , wherein it was observed as follows (page 44) : "A bare reading of section 31 shows that the execution application being a proceeding pending in a civil court when the Act came into force was liable to be transferred to the Tribunal because the amount for which the execution application had been filed as per the decree which had been passed, was over Rs. 10 lakhs ... Section 31A is clearly applicable in the present case. The decree was passed by a court before the commencement of the amendment Act and the same has not yet been executed. At least after the amendment, it is only the Tribunal which would have the jurisdiction of entertaining the application for execution of the decree inasmuch as the amount due for which the decree was sought to be executed is over Rs. 10 lakhs." It is, therefore, clear that section 31 of the Recovery of Debts Due to Banks and Financial Institutions Act contemplates not only the transfer of a suit but also transfer of a proceeding which may be other than a suit like an execution application. It is just and necessary to reproduce section 31A to appreciate the contentions of the parties and it reads as follows : "31A. Power of Tribunal to issue certificate of recovery in case of decree or order. - (1) Where a decree or order was passed by any court before the commencement of the Recovery of Debts Due to Banks and Financial Institutions (Amendment) Act, 2000, and has not yet been executed, then, the decree-holder may apply to the Tribunal to pass an order for recovery of the amount. - (1) Where a decree or order was passed by any court before the commencement of the Recovery of Debts Due to Banks and Financial Institutions (Amendment) Act, 2000, and has not yet been executed, then, the decree-holder may apply to the Tribunal to pass an order for recovery of the amount. (2) On receipt of an application under sub-section (1), the Tribunal may issue a certificate for recovery to a Recovery Officer.(3) On receipt of a certificate under sub-section (2), the Recovery Officer shall proceed to recover the amount, as if it was a certificate in respect of a debt recoverable under this Act." This decision is applicable to the case on hand. Learned counsel for the first respondent also placed reliance on State Bank of Bikaner and Jaipur v. Ballabh Das and Co. which also reiterated the same proposition. It has also been held in National Rubber Industries v. State Bank of India, that section 17 deals with the jurisdiction, power and authority of the Tribunal which clearly envisages that the Tribunal shall exercise its power on and from the appointed day, and to entertain and decide applications from the banks and financial institutions for recovery of debts due to such banks and financial institutions. Section 18 bars the jurisdiction of the civil court and other authority on and from appointed day except the jurisdiction of the Supreme Court and the High Court in relation to the matters specified in section 17 aforesaid. The application under Order 9, rule 13 of the Civil Procedure Code for setting aside the ex parte decree is a proceeding in terms of section 31 of the Act and the application filed in pending matter before the court which is liable to be transferred to the Tribunal under section 31 of the Act. This decision is also applicable to the case on hand. It is admitted that the Debt Recovery Tribunal was formed on October 30, 1996. In view of the language employed under section 31 of the Act, on and after the formation of the Tribunal, the suit and other proceedings instituted by the petitioners, wherein the claim is more than Rs. 10 lakhs, automatically get transferred by operation of law. Admittedly, in the present case, the ex parte decree was passed on January 4, 1996, and under the circumstances, the first respondent-bank rightly approached the Tribunal to get the recovery certificate. 10 lakhs, automatically get transferred by operation of law. Admittedly, in the present case, the ex parte decree was passed on January 4, 1996, and under the circumstances, the first respondent-bank rightly approached the Tribunal to get the recovery certificate. The only remedy available to the applicants is to move before the appropriate forum namely, the Tribunal to set aside the ex parte decree. The present application filed before this court is not maintainable in view of the fact that by operation of law, the suit and other proceedings get transferred to the Tribunal. Hence, the points are answered accordingly.For the reasons stated above, the application fails and is dismissed.