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2003 DIGILAW 351 (GUJ)

TOPLINE SHOES LTD v. CORPORATION BANK

2003-06-23

J.N.PATEL

body2003
JAYANT PATEL, J. ( 1 ) RULE. Mr. Panesar waives service of rule on behalf of respondent Nos 1 and 2. With the consent of the parties matter is taken for final hearing. ( 2 ) THE present petition arises against the order, dated 18. 6. 03 passed by the Chairperson of the Debt Recovery Appellate Tribunal, Bombay (hereinafter referred to as "the Appellate Authority") below application in Misc. Appeal No. 218/03 whereby the prayer for interim stay has been rejected and the matter is posted for hearing on 14. 8. 03. ( 3 ) THE contention raised on behalf of the petitioner is that the petitioner through the petitioner No. 2 who appears as party in person and his counterclaim application is pending and not only that but in the said counterclaim application the petitioner-company is permitted to sue as an indigent person and after such permission was granted the order is stayed for some time against which the appeal is preferred being Misc. Appeal No. 215/03 by the respondent-Bank and the hearing of the said appeal is fixed on 14. 8. 03. Therefore, it has been submitted that if in the meantime the original applications are posted for proceeding with the main application before the tribunal there will not be simultaneous hearing of counterclaim. He relied on the earlier order of the tribunal dated 15. 10. 01 in Appeal No. 184/01 whereby as per the contention of the petitioner the Debt Recovery Tribunal, Ahmedabad is directed to decide the original application and the counterclaim of the appellant therein who is petitioner herein together. It has also been submitted that the application for extension of time was moved by the petitioner-company, but the same is also not considered. It has also been submitted that the question of deficit stamp duty in the document ought to have been decided by the tribunal first before hearing of OA finally. Under the circumstances, the present petition. ( 4 ) ON behalf of the respondent-bank Mr. Panesar has raised various contentions including that the petitioner No. 2 has no right to represent the company since he is the Managing Director of the Company. He submitted that there is no right of audience to the petitioner and the only mode of representing the company is through the lawyer authorised for such purpose. Mr. Panesar has raised various contentions including that the petitioner No. 2 has no right to represent the company since he is the Managing Director of the Company. He submitted that there is no right of audience to the petitioner and the only mode of representing the company is through the lawyer authorised for such purpose. Mr. Panesar also submitted that the conduct of the petitioner is such that they would not be entitled to invoke the jurisdiction of this court and he, in any case, submitted that there are enabling powers with the tribunal to exclude the counterclaim as per the provisions of Sec. 19 (11) of the Act. Mr. Panesar, therefore, submitted that it is not necessary that in every matter the counterclaim would be heard simultaneously with the original application. In his contention when the petitioner had raised objection regarding admission of certain documents on the ground of stamp duty the tribunal had passed the order of listing the said application with the main Original Application as per the order, dated 1. 8. 2000 and the said order is not challenged and therefore he submitted that subsequently when the tribunal has proceeded with the matter, namely, the Original Application simultaneously with the application for stamp duty the petitioner can not raise such objection and in the submission of Mr. Panesar the said objection is with a view to stall and delay the proceedings before the Tribunal which have been initiated by the bank for recovery of the amount. ( 5 ) THE party in person appearing on behalf of the petitioner as well as Mr. Panesar, both have submitted that by suitable observations the interim orders of the appellate authority may be modified until the tribunal passes final order under section 19 (11) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as "the Act") and matter may be finally disposed of and other questions may be kept open. ( 6 ) IN view of the aforesaid last submission made by the learned counsel appearing for respondents and party in person to decide the matter finally keeping the legality and validity of the other questions raised by both sides open, the matter deserves to be examined only to that extent. ( 6 ) IN view of the aforesaid last submission made by the learned counsel appearing for respondents and party in person to decide the matter finally keeping the legality and validity of the other questions raised by both sides open, the matter deserves to be examined only to that extent. It appears that as per the scheme of Section 19 (9) of the Act normally the counterclaim arising from the same cause of action is to be processed and decided with the original application. However, such procedure is subject to the exception as provided under section 19 (11) of the Act in as much as the applicant may prefer application to the tribunal for an order that such a counterclaim may be excluded and the tribunal after hearing upon such application may pass such order for that purpose. Therefore, in a given case, if the tribunal finds proper for valid reasons to exclude the counterclaim from the main matter, it may exercise its judicial discretion and may pass appropriate orders. Therefore, on conjoint reading of subsection (9) with subsection (11) of section section 19 of the Act it appears that if there is a judicial order for excluding the counterclaim, then the counterclaim may be excluded and the original application may be tried separately. Otherwise, in normal circumstances, the counterclaim will be tried simultaneously with the original application as per provisions of section 19 (9) of the Act. ( 7 ) IF the aforesaid interpretation is kept in mind and the facts of the present case are examined, it appears that there is no order passed by the tribunal as on today of excluding the counterclaim and as such Mr. Panesar fairly submitted that no application is moved by the petitioner under subsection (11) of section 19 of the Act for such purpose and as per his contention counterclaim is not yet registered and he further submitted that normally before the issues are settled application is required to be filed and therefore he submitted that in view of this interpretation opportunity may be given to the bank to submit application under Section 19 (11) of the Act and let the tribunal decide such application after hearing the present petitioner. ( 8 ) IN my view and on plain and simple reading of Subsection (11) of Section 19 it transpires that such application for excluding the counterclaim could be submitted at any time before the issues are settled in relation to counterclaim and therefore outer limit of framing of issues is provided but thereby it does not mean that if the counterclaim is filed and pending on account of objections of defendants such application can not be filed by the applicant of the original application. ( 9 ) AS such in view of the provisions of Subsection (11) of Section 19 read with other provisions of the Act the tribunal will have to decide as to whether it is a fit case to exclude the counterclaim or not. Since no such application is preferred and the decision is not rendered by the tribunal, in my view, the appellant authority ought to have considered the matter for the purpose of staying the final hearing of O. A. before the Tribunal and since the aforesaid important aspect is not considered the order of the appellate authority of rejecting stay deserves to be interfered with. ( 10 ) IN view of the aforesaid discussion, I find that the following directions shall meet with the ends of justice: the interim order passed by the Chair person of the appellate tribunal shall stand substituted by the order that; (I) it will be open to the respondent-Bank to submit application under section 19 (11) of the Act to exclude the counterclaim. (II) if such an application is preferred, the Presiding Officer of the tribunal shall give opportunity of hearing to the petitioner-company and shall decide the application on merits as early as possible preferably within a period of one month from the date of preferring of such an application by the Bank. (III) until the decision is rendered by the tribunal below such application which may be preferred by the bank the tribunal shall not proceed with the final hearing of the original application. It is clarified that the contentions of both sides which may be agitated for the application under section 19 (11) are kept open and it will be open to both sides to challenge the decision under section 19 (11) if otherwise permissible under law. It is clarified that the contentions of both sides which may be agitated for the application under section 19 (11) are kept open and it will be open to both sides to challenge the decision under section 19 (11) if otherwise permissible under law. ( 11 ) SINCE the present final order is passed at a stage when the arguments in OA are complete of the respondent-Bank and the petitioner has yet to submit oral/written arguments, after the order below application under section 19 (11) is passed by the tribunal and without prejudice to rights of the parties to challenge the said order in accordance with law, an opportunity of 15 days shall be given by the tribunal to the petitioner to submit written/oral arguments in the original application in case of allowing the application under section 19 (11 ). ( 12 ) THE petition is allowed in terms of the aforesaid directions. Rule is made absolute accordingly. No costs. Ld. Advocate Mr. Panesar appearing for the respondent Bank shall communicate this order to the Presiding Officer of the tribunal by tomorrow. Mr. Panesar shall submit his written arguments within a period of 15 days unless there is any prohibitory order of the competent court. .