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2003 DIGILAW 655 (KER)

Peter Thomas v. State Bank of Travancore

2003-10-20

P.R.RAMAN

body2003
Judgment :- 1. Defendants in O.S. No.59/98 on the file of the Sub Court, Cherthala are the revision petitioners. Pending revision the 1st revision petitioner died and his legal representatives were impleaded as additional petitioners 3 and 4. A petition C.M.P. No.6653/2001 was also filed for appointment of the 2nd petitioner as guardian of minors additional petitioners 3 and 4. It was allowed by separate orders. 2. The respondent-Bank instituted a suit for recovery of an amount of Rs.14,73,786.90 ps. alleged to be due in two transactions. It was averred in the plaint that two loans for an amount of Rs.5 lakhs each were granted to the defendants. One is granted to the 1st defendant for construction of a residential building and the other is granted to the 2nd defendant for business purpose. Commom immovable properties belonging to the 1st defendant were offered as security for both these loans. The suit was instituted on 28.8.1998. Though cause of action was different, since the suit was instituted based on the mortgage, the plaintiff was compelled to institute one suit as contemplated under S.67A of the Transfer of Property Act. The Debts Recovery Tribunal was constituted under the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as 'the Act') from the appointed day, i.e. 4.1.1.1996. Since the amount exceeds Rs.10 lakhs, the suit ought to have been instituted in the Debts Recovery Tribunal as the civil court has no jurisdiction in the matter. Hence, the defendants raised preliminary objection regarding the maintainability of the suit contending that the suit is not maintainable and the civil court has no jurisdiction. The court below by the impugned order dated 31st May, 2001 dismissed the petition against which the present revision is filed. 3. The court below held that the suit was instituted based on two transactions and on the strength of S.67 of the Transfer of Property Act the suit has been filed and hence there is no necessity to file the suit before the Debts Recovery Tribunal. Referring to R.10 of the Debts Recovery Tribunal (Procedure) Rules, 1993 it was held that the said rule also prohibits in filing application based on more than a single cause of action in a single application. Hence it was held that the suit is properly maintainable before the civil court. 4. Referring to R.10 of the Debts Recovery Tribunal (Procedure) Rules, 1993 it was held that the said rule also prohibits in filing application based on more than a single cause of action in a single application. Hence it was held that the suit is properly maintainable before the civil court. 4. As per S.17 of the Act, 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. As per S.2(c) of the Act, "appointed day", in relation to a Tribunal or an Appellate Tribunal, means the date on which such Tribunal is established under sub-s.(1) of S.3 or as the case may be sub-s.(1) of S.B. Admittedly, in this case the Tribunal was constituted with effect from 4.11.1996. 5. As per S.18 of the Act, on and from the appointed day, no court or other authority shall have, or be entitled to exercise, any jurisdiction, powers or authority (except the Supreme Court, and a High Court exercising jurisdiction under Arts.226 and 227 of the Constitution) in relation to the matters specified in S.17. As per S.1(4) of the Act, the provisions of this Act shall not apply where the amount of debt due to any bank or financial institutions is less than ten lakhs rupees or such other amount, being not less than one lakh rupees, as the Central Government may, by notification, specify. 6. As per S.19(1) of the Act, where a bank or a financial institution has to recover any debt from any person, it may make an application to the Tribunal within the local limits of whose jurisdiction: (a) the defendant, or each of the defendants where there are more than one, at the time of making the application, actually and voluntarily resides, or carries on business or personally works for gain; or (b) any of the defendants, where there are more than one, at the time of making the application, actually and voluntarily resides, or carried on business or personally works for gain; or (c) the cause of action, wholly or in part, arises. 7. 7. On a reading of the above provisions, it can be seen that when the claim exceeds Rs.10 lakhs, the proper Forum for adjudicating the dispute is the Debts Recovery Tribunal as constituted under the Act and not the civil court. The present suit however, was instituted after the appointed day before the civil court and admittedly, the suit claim also exceeds Rs.10 lakhs. According to the learned counsel for the respondent, the suit was laid before the Sub Court because of the difficulty created by procedure rules namely, R.10 of the Debts Recovery Tribunal (Procedure) Rules as per which if there are two cause of action and two transactions, separate applications will have to be filed. In this connection R.10 of the Debts Recovery Tribunal (Procedure) Rules, 1993 is extracted hereunder: "10. Plural remedies : An applicant shall not seek relief or reliefs based on more than a single cause of action in one single application unless the reliefs prayed for are consequential to one another." 8. According to the counsel appearing for the respondent-Bank, if the claim is less than Rs.10 lakhs, it could not have been filed before the Debts Recovery Tribunal. However, the learned counsel also fairly submitted that R.10 has been deleted from the statute with effect from 14.2.2003. 9. In this connection in Syndicate Bank v. M/s.Chamundi Industries & Ors. (AIR 2002 Karnataka 56) a Single Bench of the Karnataka High Court held that Tribunal has power to decide claim based on single application for recovery of debt due under two transactions and the provisions of Rule limiting claim based on only one cause of action is inconsistent with the Act. 10. In the aforesaid decision also an application was filed by the Bank under S.17 of the Act for recovery of a sum of Rs.12,90,934/- with interest current and future. The respondents therein did not dispute or deny the transaction. But raised an objection that the Bank has unjustly combined the two distinct cause of action on two distinct loans in an effort to bring their total to an amount exceeding Rs.10,00,000/- with a view to avoid recourse to the normal courts of law and to unjustly avail the summary procedure prescribed under the Act; but the Tribunal rejected the contention and aggrieved thereby the Writ Petition was preferred before the Karnataka High Court. In Para.17 of the said decision is stated thus: "The consequences of filing an application seeking for relief or reliefs based on more than single cause of action is not provided under the Rules. Whereas 0.7, R.10 of C.P.C. provides for return of the plaint if the court has no jurisdiction to entertain the suit. 0.7, R.11 of C.P.C. provides for rejection of the plaint in certain cases. But under the rules, where an application is filed seeking relief based on more than single cause of action, no consequences are provided. Therefore, in the absence of providing consequences in case where application is filed on more than a single cause of action, the Rule is to be held directory and not mandatory. Further, S.19 of the Act does not prohibit filing an application by the Bank seeking for relief or reliefs based on cause of action. Whereas R.10 of the Rules prohibits seeking relief or reliefs based on more than single cause of action. Therefore, limiting the claim based on only one cause of action under the Rule is inconsistent with the Act" 11. The same view was expressed in another decision of the Karnataka High Court in M/s. Jay Jee Service Station, Bangalore & Ann v. M/s. Syndicate Bank, Bangalore & Ann (AIR 1998 Karnataka 249). The High Court of judicature at Madras in the decision in Lakshman Balaraman v. Punjab National Bank, Madras (1999 (1) MLJ 481) also considered this question. That was a case where the respondent therein filed a suit against the defendant for recovery of more than Rs.21 lakhs. The first defendant company availed financial assistance in the nature of term loan and cash credit facilities. The same was sanctioned by respondent and as security for the loan, machineries were hypothecated. The 1st defendant Company was not satisfied with the amount advanced, and it again requested the Bank for further and additional loan in the nature of cash credit pledge. Those facilities were also granted and existing security already given continued as collateral securities for the additional facilities also apart from other securities. There was default in payment and it was found on enquiry that the first defendant was not even doing any business and ultimately necessitated the filing of the suit for recovery of more than Rs.21 lakhs. Those facilities were also granted and existing security already given continued as collateral securities for the additional facilities also apart from other securities. There was default in payment and it was found on enquiry that the first defendant was not even doing any business and ultimately necessitated the filing of the suit for recovery of more than Rs.21 lakhs. The case was transferred to the Tribunal whereupon the 3rd defendant filed I.A. No.143/1997 contending that the transfer application was not maintainable before the Tribunal and therefore, the matter has to be sent back to the High Court. The reason was that the loan was granted under two transactions and the same constitutes two different causes of action. Under R.10 of the Debts Recovery Tribunal (Procedure) Rules, 1993, an application must be confined to one cause of action, and if so made, the claim will be under Rs.10 lakhs only and therefore, the Tribunal has no jurisdiction. The Madras High Court also referred to the decision of the Karnataka High Court in M/s. Jay Jee Service Station's case (AIR 1998 Karnataka 249) and finally it was held that the question as to whether two or more than two different transactions constitute one cause of action shall have to be viewed in the context of the averments made in the plaint and the co-relation which is established between such transactions so as to give rise to a single cause of action and on the facts noticed as above the court held that the application could not be rejected or cannot be said that it is not maintainable before the Tribunal. It was also held that R.10 is not violated, since the case comes under an exception, even if it is treated to be under different causes of action. 12. In view of the fact that R.10 already stands deleted from the statute and in view of the decision taken by the Karnataka High Court, with which I am in full agreement that unless the Act imposes any restriction on the filing of the suit in the manner laid down as contemplated under R.10, the Subordinate Legislature or the Rule Making Authority cannot impose such restriction which will be inconsistent with the Act. As the matter stands, it cannot be said that the application is not maintainable before the Tribunal. 13. As the matter stands, it cannot be said that the application is not maintainable before the Tribunal. 13. The Full Bench of this Court in Glenny v. The Catholic Syrian Bank Ltd. (2003 (2) KLT 973) considered the question as to whether the petition to set aside the ex parte order passed by the civil court which ex parte order was passed prior to coming into force of the Act in which the amount claimed was less than Rs. 10 lakhs and whether the court has jurisdiction to entertain such petition. It was held that the Tribunal under the Act is empowered in a case within its jurisdiction to consider a petition to set aside an ex parte decree passed by itself or by a civil court before the Act came into force or the amount claimed was less than rupees ten lakhs and that the court that passed the decree in such cases has no jurisdiction to entertain such a petition. In the operative portion of the judgment in Para.45 it was held that: (i) On October 27, 1998 the civil court was entitled to entertain and try the suit for the recovery of Rs.8,61,530/- with interest as filed by the bank. (ii) The 1993 Act is a special statute. It overrides the provisions of the general law. Thus, after the establishment of the Tribunal for the State of Kerala on November 4, 1996, the civil court is not entitled to entertain a suit or any other proceeding relating to the recovery of a debt or Rs.10 lakhs or more by a bank. By virtue of S.18, the jurisdiction of the civil court has been completely ousted. (iii) xx xx xx xx (iv) In view of our finding that the civil court had no jurisdiction in the matter, its order dismissing the application is also liable to be set aside. Recently, we quash the order. It is further directed that the application shall be returned to the appellant for presentation to the Tribunal. (v) xx xx xx xx (vi) xx xx xx xx 14. Recently, we quash the order. It is further directed that the application shall be returned to the appellant for presentation to the Tribunal. (v) xx xx xx xx (vi) xx xx xx xx 14. In the operative portion of the said judgment more particularly, Cl.(iv) thereof, it is held that since the civil court has no jurisdiction to consider an application to set aside the ex parte order, that order setting aside the ex parte decree was quashed and was directed to return the application to the appellant for presentation to the Tribunal. O.VII, R.10 of the C.P.C. deals with return of the plaint. As per O.VII, R.10 of the C.P.C., subject to the provisions of R.10A, the plaint shall at any stage be returned to be presented to the court in which the suit should have been instituted and as per explanation, a court of appeal or revision may direct, after setting aside the decree passed in a suit, the return of the plaint, under this sub-rule. Since the suit has been laid before a court having no jurisdiction, the proper remedy is to set aside the decree passed and to direct return of the same to be presented to the proper Forum having jurisdiction. 15. Admittedly, the amount exceeds Rs.10 lakhs and the suit itself was laid after the constitution of the Tribunal namely, the appointed day, and in view of the specific bar under the special statute taking away the jurisdiction of the civil court to entertain such suit, I am inclined to hold that the civil court has no jurisdiction in the matter. Therefore, the order impugned is set aside. 16. The next question arises is as to what should be the nature of the relief to be granted and whether the plaint should be returned to the plaintiff to be presented to the appropriate court. 17. In the view I am taking that the civil court has no jurisdiction in the matter, necessarily any decree passed by the court below consequent to the passing of the impugned order has to be declared as a nullity. The court below shall return the plaint to the plaintiff fixing a time limit for presentation to the proper court, whereupon it will be open to the plaintiff to present the same before the Tribunal having jurisdiction in the matter. The C.R.P. is allowed. The court below shall return the plaint to the plaintiff fixing a time limit for presentation to the proper court, whereupon it will be open to the plaintiff to present the same before the Tribunal having jurisdiction in the matter. The C.R.P. is allowed. In the circumstances, no order as to costs.