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2006 DIGILAW 830 (MAD)

Indian Bank, Thirumangalam Branch v. D. C. Mangalraj, Sole Proprietor

2006-03-24

M.THANIKACHALAM

body2006
Judgment :- M. Thanikachalam. J. 1. This is an Application under Order 14, Rule 8 of Original Side Rules read with Order 9, Rule 13, C.P.C. to set aside the ex parte decree dated 20.6.2001 in C.S.No.566 of 1993. 2. The respondent Indian Bank, as plaintiff has filed the suit for recovery of a sum of Rs.4,11,389 against the applicant/defendant and against, his property also, since it appears, he had executed a mortgage deed, seeking preliminary decree, to be followed by final decree for the sale of the hypotheca. 3. The records would reveal that when the Suit was posted for hearing, the counsel appearing for the applicant/defendant reported no instructions. Therefore, this Court setting the applicant/defendant ex parte, granted an ex parte decree as prayed for on 20.6.2001. 4. As submitted before this Court, though a preliminary decree has been' passed on 20.6.2001, no final decree proceeding has been initiated, as mandated under law. However, the applicant/defendant, realising the consequences of the ex parte decree, has filed this Application before this Court to set aside the exparte decree. 5. There was an inordinate delay, in filing the present Application to set aside the ex parte decree dated 20.6.2001, and therefore, to condone the said delay, the applicant/defendant has filed an Application in A.No.5137/2005. After contest, despite objections, the Application was ordered to be allowed on 2.1.2006, which reads: "The Application is allowed with a cost of Rs.10,000 (Rupees Ten Thousand only) payable by the applicant/defendant to the respondent/ plaintiff on or before 18.1.2006, failing which the petition shall stand automatically dismissed". Pursuant to the order passed by this Court as said above, cost also paid and the said Application was allowed condoning the delay, thereby bringing this petition, as maintainable. The plaintiff/respondent has not challenged the order in Application No.5137/2005, thereby it reached finality, wherein observations also made, assigning reasons, why the Application, should be allowed condoning the delay, which reasons have to be extended generally to this Application also. 6. In the affidavit filed in support of this Application, it is alleged, that because of the health condition, the applicant/defendant was unable to move the Court to set aside the ex parte decree in time, thereby causing delay, etc. The averments so stated in the affidavit were accepted by this Court while allowing Application No. 5137/2005. 6. In the affidavit filed in support of this Application, it is alleged, that because of the health condition, the applicant/defendant was unable to move the Court to set aside the ex parte decree in time, thereby causing delay, etc. The averments so stated in the affidavit were accepted by this Court while allowing Application No. 5137/2005. Therefore, it is unnecessary for us, at present to go into detail, about the averments in the affidavit, in order to see whether the Application could be allowed or not. In this view, if the Application is maintainable, before this Court, as said above, extending the reasons assigned by this Court in A.No.5137 of 2005, this Application 4 to be allowed. On the other hand, if this Court is of the view that this Court has no jurisdiction, at present, the proceeding has to be transferred to the Tribunal. 7. Heard the learned Senior Counsel, Mr. T.V. Ramamijarn appearing for the applicant/defendant and the learned counsel, Mr. Ranganatha Reddy appearing for the respondent/plaintiff. 8. This Application is opposed by the respondent/plaintiff, as if this Court has no jurisdiction at present, to decide the Application and if at all, this proceeding has to be transferred to the Debts Recovery Tribunal (hereinafter called 'the Tribunal') having jurisdiction, because of the amount involved, exceeding Rs.10 lacs as per preliminary decree. 9. The learned counsel appearing for the respondent/plaintiff would submit that because of the specific provisions available in Section 31 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (hereinafter called 'the Act'), this Court has no jurisdiction and the proceeding has to be transferred to the Tribunal, having jurisdiction. 10. Responding to the above said submission, the learned Senior Counsel, Mr. T.V. Ramanujam. appearing for the applicant/defendant would submit that this petition being one filed under Order 9, Rule 13, C.P.C. read with Original Side Rules, to set aside the ex parte decree, the same would not come within the meaning of Section 31 of the Act, that the Tribunal has no jurisdiction to set aside a decree passed by the High Court and that this Court alone has to decide this Application on merits. In order to assess the correctness of the rival contentions, we have to remember certain provisions of the Act as well as Order 9, Rule 13, C.P.C. 11. In order to assess the correctness of the rival contentions, we have to remember certain provisions of the Act as well as Order 9, Rule 13, C.P.C. 11. It is an admitted position, as on this date, that the Tribunal shall have jurisdiction if the claim is more than Rs. 10 lakhs. When the suit was instituted, there was no Debts Recovery Tribunal, and therefore, when this Court was conferred with the original jurisdiction exceeding Rs.1 lakh, the suit came to be filed before this Court and the claim in the suit being Rs.4,11,389. As per the preliminary decree dated 20.6.2001, now the total amount payable is Rs.34,04,875.23, which amount may come within the jurisdiction of the Tribunal, which I will discuss infra. 12. The main thrust of the learned counsel for the respondent/plaintiff is, that as on this date, the debt exceeds Rs.10 lakhs and therefore, the proceeding, if any, shall stand transferred to the Tribunal. The acceptance of this submission will depend upon the definition for 'debt ', as well as the nature of the proceeding pending, at present 'before is Court 'such as whether it relates to recovery of the debt, having cause of action. 13. Section 2(g) of the Act defines 'debt', which reads: "Debt” means 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 decree or order of any Civil Court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on the date of the Application." Admittedly, as on this date, no final decree has been passed and I refrain myself from giving any finding at this stage, whether this decree would come within the meaning, a decree debt legally recoverable. 14. 14. Section 17(1) of the Act reads: "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- thereby showing the Application or the proceedings must be for recovery of debts due to bank and financial institutions, thereby impliedly saying, if the nature of this Application is for some other purpose, the Tribunal may not" have jurisdiction. 15. Section 18 of the Act. imposes bar of jurisdiction, which reads: "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 Articles 226 and 227 of the Constitution) in relation to the matters specified in Section 17." If we read Sections 17 and 18 of the Act conjointly, it is evident that the bar is only for the Application filed for recovery of debts due to such bank and not for all the Applications in a suit already filed and it cannot be taken as a blanket bar of jurisdiction in a pending suit before the High Court. Even in a ding suit before the High Court, if the Application is aimed for an interim relief or otherwise to recover the amount (debt), then alone it should come under Section 17 of the Act inducing Section 18 of the Act,, then clamping bar, of jurisdiction, upon this Court in the ordinary course, while dealing the original suit, not otherwise. 16. Under Chapter VI Section 31 of the Act provides transfer of pending cases, which reads: "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 whereon 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". Thus, it is seen, the suit or the proceeding contemplated in Section 31 of the Act should be one related to the recovery, of debts due to such banks and financial institutions as understood under Section 17 of the Act based upon the cause of action. Thus, it is seen, the suit or the proceeding contemplated in Section 31 of the Act should be one related to the recovery, of debts due to such banks and financial institutions as understood under Section 17 of the Act based upon the cause of action. On the basis of the above said provisions, if the present Application is considered, as rightly submitted by the learned Senior Counsel, Mr. T.V. Ramanujam, this Application would not come within the meaning of Section 17 or 31 of the Act, as the case may be and therefore, transferring this Application to the Tribunal does not arise at all and in my considered opinion, the Tribunal may not have jurisdiction to set aside a decree granted by this Court, which could be seen further from the reading of Order 9, Rule 13, C.P.C., which I will discuss infra. 17. The suit or other proceedings pending before this Court which are liable to be transferred after the date of the constitution of the Tribunal, should relate to the suit or the proceeding and the cause of action wherein it is based, that means, for the claim or in other words, for the recovery of the amount, as stated in Section 17 of the Act, as extracted above. Admittedly, the present Application is not aimed, for the recovery of debt due to any it will not come on the basis of the original cause of action viz., claiming the amount. Therefore, this Application will not come within the Meaning "proceeding" as said in Section 31 of the Act and in this view, transferring the said Application to the Tribunal is not desirable, also it may not be legally sound. 18. The submission of the learned counsel for the plaintiff/respondent, if accepted, there would be an anomaly and on fact Tribunal may not have even jurisdiction to decide the suit, if this Application to set aside the ex Parte decree is to be allowed. As indicated above, the original suit claim is Rs.4,11,389, though as per the preliminary decree, the total amount comes to Rs.34,04,879.23. In case that preliminary decree is set aside, the parties and the suit would be restored to the original position viz., the suit and contest would be for Rs.4,11,389 on the basis of cause of action. The Tribunal cannot assume jurisdiction, on the basis of the amount to be decreed. In case that preliminary decree is set aside, the parties and the suit would be restored to the original position viz., the suit and contest would be for Rs.4,11,389 on the basis of cause of action. The Tribunal cannot assume jurisdiction, on the basis of the amount to be decreed. To decide the amount, as seen from Section 1(4) of the Act, the Tribunal will not have jurisdiction, since the provisions of the Act shall not apply were the amount is less than Rs.10 lakhs. Viewing the case from this angle also, it should be held that transferring this Application will not serve any purpose and in this view also this kind of proceeding, is not at all intended to transferred, under Section 31 of the Act and that is why it is specifically stated "being a suit or proceeding, the cause of action wherein it is based…” 19. In Punjab National Bank v. Chajju Ram, 2000 (6) SCC 655 , the Apex Court had an occasion to consider the definition of “debt” as contemplated under Section 2(g) of the Act and in that context, it is said though the original claim in the suit was less than Rs.10 lakhs, viz., Rs.6,19,250 after the grant of decree, which is executable, the amount was Rs.12,91,398 and therefore, the decree amount alone has to be taken into consideration and an application for recovery of the same could only be entertained by the Tribunal and not by the Civil Court. 20. In the case on hand, only a preliminary decree has been passed, which is not executable as such and at present we are not dealing with any other Application relating to the recovery of he amount and dealing only with an Application, to set aside the ex parte decree, where in we are not concerned about the amount involved, since no finding would be given for recovery of amount, or for its refusal. Therefore, on the basis of the above ruling, taking into account that the preliminary decree amount exceeds Rs.10 lakhs, transferring the Application may not be legally sound and justifiable. 21. In K. Haridas v. High Court of Kerala, 2000 (9) SCC 716 , the Apex Court has considered Section 31 of the Act as well as section 1(4) of the Act. 21. In K. Haridas v. High Court of Kerala, 2000 (9) SCC 716 , the Apex Court has considered Section 31 of the Act as well as section 1(4) of the Act. In the case involved in the above decision, the apex Court has held as follows: “If Initially a suit is filed on the original side of the High Court, such a suit is liable to be transferred if it exceeds the pecuniary limits mentioned in the above said Act. This is a consequence of Section 31 of the Act. There is no difference between suits originally instituted on the original side of the High court and those suits subsequently transferred to the High Court from a Civil court under Section 24, C.P.C. Both types of suits get automatically transferred to the Tribunal and the High court has no jurisdiction to deal with the matter.” Which proposition cannot be disputed. By going through the facts available in both the cases, and the nature of the application, which I am dealing, it is not possible to accept the submission of the learned counsel for the respondent/plaintiff, that this proceeding should be transferred, to the Tribunal as envisaged under Section 31 of the Act. 22. In support of his submission, for the transfer of this proceeding to the Tribunal, the learned counsel for the respondent/plaintiff drew my attention to a case reported in Punjab & Sind Bank v. Rama Minerals and Chemicals & Ors., (1) 2003 BC 3881. In the case involved in the above decision, a learned single Judge of the Delhi High Court, considering the Apex Court's decision, but not considering the cause of action for the proceeding, has held that even the proceeding to set aside the exparte decree could be moved before only the Tribunal and the Court which passed the exparte decree has no jurisdiction. By going through the above decision very carefully and applying the provisions of law as indicated above, I am unable to agree with the conclusion arrived at by the learned Judge and I have to respectfully disagree, though the facts involved in the above decision and the facts on hand are, more or less one and the same. 23. By going through the above decision very carefully and applying the provisions of law as indicated above, I am unable to agree with the conclusion arrived at by the learned Judge and I have to respectfully disagree, though the facts involved in the above decision and the facts on hand are, more or less one and the same. 23. The learned Judge, while considering Section 31 of the Act, in my considered opinion, has not adverted to the cause of action relating to the suit or proceeding, whether such suit or proceeding comes within Section 17 of the Act, etc. Taking the face value of the Apex Court ruling as if the decree amount exceeds Rs.10 lakhs, transferring the Application to set aside the ex parte decree appears to be, in my considered opinion, not correct, and further reasons are hereunder. 24. The learned Senior Counsel appearing for the applicant/defendant, inviting my attention to the Division Bench of Andhra Pradesh High Court in Sneha Industries v. State Bank of Hyderabad, 1999 (98) CC 564, would submit that despite the amount involved in the preliminary decree, the original debt alone has to be taken into consideration, when there is no final Decree. It is held in the said decision, that the original sum sued for is material, but upholding the return of Application for final Decree, since not challenged by parties. 25. In the case on hand also, the amount was less than Rs.10 lakhs and such no final decree has been passed and on the basis of the principle enunciated in the ruling of the Division Bench cited supra. I should once again conclude and confirm that this Court alone has jurisdiction to decide the Application to set aside the ex parte decree and not the Tribunal. If the Application is one for final Decree, the position may be different, in view of the latest rulings of the Apex Court. 26. I should once again conclude and confirm that this Court alone has jurisdiction to decide the Application to set aside the ex parte decree and not the Tribunal. If the Application is one for final Decree, the position may be different, in view of the latest rulings of the Apex Court. 26. Order 9, Rule 13, C.P.C. is very specific, that the Court, which had passed an ex parte decree alone is competent to set aside the same and the relevant provision reads: "In any case in which a decree is passed exparte against a defendant, he may apply to the Court by which the decree was passed for an order to set it aside; and if he satisfies the Court that the summons was not duly to the served, or that he was prevented by any sufficient cause from appearing when the suit was called on for hearing, the Court shall make an order setting aside the decree as against him upon such terms as to costs, payment into Court or otherwise as it thinks fit, and shall appoint a day for proceeding with the suit." (Emphasis supplied) 27. To decide the ingredients required, the competent forum must be the Court, which passed an order of ex parte decree and not the Tribunal, which may be conferred with jurisdiction after the ex parte Decree, considering the amount involved. A plain reading of the above provision also would make it clear, that the Tribunal may not have jurisdiction to set aside the exparte Decree and only this Court alone can exercise the jurisdiction, and give a finding, whether the ex parte decree could be set aside or not. As I have already pointed out, the anomaly which may arise, in case, if the Petition is allowed by the Tribunal also could be avoided, if the proceeding is detained by this Court, and decided on merit. 28. Viewing the case from all possible angles from the proper perspective, I am of the considered opinion that this Application would not come within the four walls of either Section 17 or 31 of the, Act ad therefore, question of transferring the proceeding to the Tribunal would not arise for consideration. 28. Viewing the case from all possible angles from the proper perspective, I am of the considered opinion that this Application would not come within the four walls of either Section 17 or 31 of the, Act ad therefore, question of transferring the proceeding to the Tribunal would not arise for consideration. Probably considering this also, it appears to my mind when the Application was filed to condone the delay, the respondent/plaintiff submitted to the jurisdiction of this Court and obtained an order accepted the same, since not challenged. As I have already adverted to above, the reasons assigned for the absence of the defendant and not attending, when the Court when the matter was posted as explained in the affidavit are well accepted by this Court and accepting the said finding as well the reasons, the ex parte decree has to be set aside not only to meet the ends of justice, but also on the DM -Merit giving opportunity the applicant/defendant to contest the case on merit. In the light of the above discussion, the Application is allowed and the ex parte preliminary decree passed by this Court dated 20.6.2001 is set aside. No costs.