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2004 DIGILAW 562 (PAT)

State Bank Of India v. Ranjan Chemicals Limited

2004-05-20

S.N.HUSSAIN

body2004
Judgment S.N.Hussain, J. 1. Heard learned counsel for the parties. The State Bank of India, namely, the defendant-petitioner, is aggrieved by the order dated September 24, 2002, by which the learned Subordinate Judge 1, Patna, had rejected the petition of the defendant-bank for transferring the money suit, namely M. S. No. 168 of 2001, to the Debts Recovery Tribunal, Patna (hereinafter referred to as "the Tribunal" for the sake of brevity). 2. The said money suit was filed by the opposite parties on December 24, 2001, for a decree of Rs. 1,739.15 lakhs against the State Bank of India and its authorities, who were defendants, as damages along with interest, both pendente lite and future at the rate of 18 per cent. per annum, because the plaintiffs highly viable industrial unit, as adjudged by the Industrial Investment Bank of India, had failed due to the inaction of the State Bank of India. 3. In the said money suit the defendant-petitioner appeared and filed a petition on July 17, 2002, claiming that the suit for damages filed by the plaintiff-opposite parties was not maintainable u/s. 19(8) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as "the Act" for the sake of brevity) and it was fit to be transferred to the Tribunal as a counter claim in O. A. Case No. 18 of 2002, which was filed by the State Bank of India u/s. 19 of the Act before the Tribunal for realisation of loan of Rs. 833.06 lakhs odd from the opposite parties. 4. The said petition of the State Bank of India has been rejected by the impugned order, which has been challenged in this civil revision on the ground that the object of the Act was that the Tribunal should consider all such disputes to redress the harassments to the banks and only if the Tribunal feels so the dispute may be transferred to any other authority or court. In support of his said contention learned counsel for the petitioner relied upon the case of United Bank of India V/s. Abhijit Tea Co. In support of his said contention learned counsel for the petitioner relied upon the case of United Bank of India V/s. Abhijit Tea Co. Pvt. Ltd. [2000] 102 Comp Cas 53 ; [2000] 7 SCC 357, in paragraphs 38 and 40 whereof it had been held that the plea of deduction of damages from the loan amount was in the nature of a set off falling under sub-sections (6) and (7) of sec. 19 of the Act and hence even if the suit was filed earlier it would be considered as counter claim for the O. A. case before the Tribunal, where the suit should also be transferred. Learned counsel for the petitioner also relied upon another case of Ruby Knitting Industries V/s. Central Bank of India [2001] 107 Comp Cas 584 (Delhi) ; [2002] 1 BC 608 holding that sec. 19 has been introduced by the 2000 amendment in the Act for taking care of such kind of cases which are in nature of counter claim for any right or damages. 5. On the other hand, learned counsel for the opposite party seriously controverted the submissions of learned counsel for the petitioner and submitted that sec. 17 of the Act is with respect to the specific jurisdiction, powers and authority of Tribunals in deciding applications from banks and financial institutions for recovery of debts due to such banks and financial institutions, whereas sec. 18 of the Act provides a bar on other courts or authorities not to exercise any jurisdiction, powers or authority in relation to the matters specified in sec. 17 of the Act, meaning thereby no court shall entertain any application from banks and financial institutions for recovery of debts and hence there is no bar over the authority of the civil court to decide a suit filed by the plaintiffs for damages. Learned counsel for the opposite party further contended that sec. 31 of the Act provides that every suit or other proceedings pending before any court, cause of action of which was within the jurisdiction of the Tribunal, shall stand transferred to the Tribunal, but here in the instant case the cause of action for the plaintiffs did not lie before the Tribunal and hence it is only the civil court which has jurisdiction to decide the issues involved in the suit. In the aforesaid circumstances he contended that the decisions cited by learned counsel for the petitioner mentioned above are not at all applicable in the facts and circumstances of this case. He further relied upon a decision in the case of Rajiv Sachdeva V/s. State Bank of India [1998] 3 PLJR 535 ; [2000] 101 Comp Cas 216 (Patna) in which it was held that sec. 17 of the Act does not speak that all other claims raised by the company shall also be decided by the Tribunal specially when such claim was completely unconnected with the question of loan and repayment thereof. He also averred that the civil court has ample power under Order VIII of the Code of Civil Procedure (hereinafter referred to as "the Code" for the sake of brevity) to entertain even counter claims as an independent suit and can be legally retained by the civil court without referring the same to any other authority or Tribunal. Learned counsel for the opposite party also relied upon the cases of R. I. Jain (D) by LRS. V/s. DDA [2004] 4 SCC 79 and Prakash Amichand Shah V/s. State of Gujarat, AIR 1986 SC 468 in which it was held that it is the ratio of any decision which should come and not every observation made in the decision and hence the decision in the case of United Bank of India [2000] 102 Comp Cas 53 ; [2000] 7 SCC 357 relied upon by the petitioner should be considered in that light. 6. Having considered the submissions of learned counsel for the parties and the materials on record as well as the above-mentioned case law and the provisions of law, I find that there is no bar in the Act or in any other law which could prevent a person from filing a suit in the civil court for any claim much less for damages which were completely alien to the claim of loan raised by the bank before the Tribunal. Even sec. 18 of the Act bars any court or authority to exercise any jurisdiction, powers or authority in relation to matters specified in sec. 17 of the Act which is merely with respect to the jurisdiction, powers and authority of the Tribunal for entertaining applications only from the banks and financial institutions and that too for recovery of debts. Even sec. 18 of the Act bars any court or authority to exercise any jurisdiction, powers or authority in relation to matters specified in sec. 17 of the Act which is merely with respect to the jurisdiction, powers and authority of the Tribunal for entertaining applications only from the banks and financial institutions and that too for recovery of debts. Hence, in my view, the bar of sec. 18 was not applicable and the civil court had full authority to proceed with the suit for damages, which was unconnected with the loan and was filed much earlier by the company for an amount as damages much higher than the amount of loan claimed much later by the bank in the Tribunal. 7. Hence, in the aforesaid circumstances, the claim of the plaintiffs-opposite parties cannot be presumed to be a counter claim to the O. A. filed by the bank in the Tribunal. In any view of the matter even the counter claim can be retained in the civil court with respect to any independent cause of action under Order VIII of the Code. Furthermore, the plaintiffs (opposite parties) are the dominus litis and had full right and option to file the said suit. So far as the case of United Bank of India [2000] 102 Comp Cas 53 ; [2000] 7 SCC 357 relied upon by learned counsel for the petitioner is concerned, it was with respect to a suit for deduction of interest and damages, etc., out of the admitted dues/loan for which O. A. case was filed by the bank in the Tribunal and hence the Supreme Court found it only as a defence of the borrower, whose claim was inextricably connected with the amount claimed by the bank under section 19 of the Act. But in the instant case the matter was completely different and absolutely independent from the claim of the bank raised in the Tribunal. Hence, the trial court would have committed a serious error of jurisdiction if it had refused to decide the suit as an independent claim. 8. In the facts and circumstances of this case, the impugned order of the learned court below is upheld and they civil revision filed by the defendant-petitioner is dismissed.