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2013 DIGILAW 998 (MP)

Sharmila w/o Ajitkumar Jain v. Bank of Baroda, Branch Panchmahal, Gujarat

2013-08-23

N.K.MODY

body2013
JUDGMENT N.K. Mody, J.:- 1. Being aggrieved by the order dated 18-1-2012 passed by III ADJ, Ratlam in MJC No. 21/2011 whereby order dated 26-5-2011 passed by III Civil Judge, Class-II, Ratlam in Civil Suit No. 8-A/2011 whereby application filed by the petitioners under Order XXXIX, Rules 1 and 2, Civil Procedure Code was allowed and the respondent No. 1 was restrained to execute the award passed by Debt Recovery Tribunal (which shall be referred hereinafter as “DRT”) was set aside, present petition has been filed. 2. Undisputed facts of the case are that respondent No. 1 provided a financial assistance to respondent No. 2/Company in which Smt. Nayantara Kavadia was one of the Directors. It was alleged that for the facility which was provided by the respondent No. 1 to respondent No. 2/Company Nayantara Kavadia executed the documents in the capacity of Director of respondent No. 2/Company and stood as surety in her personal capacity. It was alleged that since, respondent No. 2/Company failed to fulfil the commitments, therefore, respondent No. 1 filed original application before DRT, Ahmedabad which was numbered as 281/1998 for recovery of Rs. 3,05,07,232/-. In the said original application Smt. Nayantara Kavadia and her husband Babulal Kavadia were the defendants/non-applicants. The award was passed on 23-6-2006 whereby respondent No. 2/Company and its surety were directed to pay the amount along with interest. Recovery proceedings were initiated by the respondent No. 1 wherein the suit property was attached vide order dated 2-2-2011. At that stage petitioners filed the suit for injunction alleging that suit property has been purchased by the petitioners from Smt. Nayantara Kavadia by two registered sale-deeds dated 27-6-2006 and 3-7-2006 for a consideration of Rs. 4,01,000/-. It was alleged that petitioners are bona fide purchaser with full consideration. It was alleged that since the petitioners has purchased the suit property and property was never mortgaged with the bank, therefore, no recovery can be made from the suit property. In the application it was prayed that respondent No. 1 be restrained to recover any amount from the suit property. The application was contested by the respondent No. 1 on various grounds including on the ground that suit property is having more than value mentioned in the sale deed. It was prayed that application be dismissed. In the application it was prayed that respondent No. 1 be restrained to recover any amount from the suit property. The application was contested by the respondent No. 1 on various grounds including on the ground that suit property is having more than value mentioned in the sale deed. It was prayed that application be dismissed. After hearing the parties learned trial Court allowed the application and restrained the respondent No. 1 to proceed with the recovery proceedings against the suit property against which an appeal was filed by the respondent No. 1 which was allowed and order passed by the learned trial Court was set aside against which the present petition has been filed. 3. Learned counsel for the petitioners argued at length and submit that the impugned order passed by the learned Appellate Court is illegal, incorrect and deserves to be set aside. It is submitted that suit property was never mortgaged by Smt. Nayantara Kavadia in favour of respondent No. 1 and on the date of sale-deeds which were executed in favour of petitioners the suit property was not attached, therefore, the learned Appellate Court committed error in allowing the appeal filed by the respondent No. 1. It is further submitted that learned Appellate Court committed error in allowing the application on the ground that since the matter relates to Recovery of Debt Due to Bank and Financial Institution Act, 1993 (which shall be referred hereinafter as “RDB Act”), therefore, Civil Court is having no jurisdiction to entertain the application filed by the petitioner in view of section 18 of the Act. It is submitted that section 18 of the RDB Act puts a bar of jurisdiction only on those cases in relation to the matter covered under section 18 of RDB Act. It is submitted that suit filed by the petitioners is not covered in the matters prescribed under section 17 of RDB Act filed before the learned trial Court. It is submitted that in the facts and circumstances of the case, petition filed by the petitioners be allowed and the impugned order passed by the learned Appellate Court be set aside. 4. Mr. S.P. Majumdar, learned counsel for the respondent No. 1 placed reliance on an award dated 23-6-2006 passed by DRT. It is submitted that in the facts and circumstances of the case, petition filed by the petitioners be allowed and the impugned order passed by the learned Appellate Court be set aside. 4. Mr. S.P. Majumdar, learned counsel for the respondent No. 1 placed reliance on an award dated 23-6-2006 passed by DRT. It is submitted that Smt. Nayantara Kavadia was duly represented through her advocate and the advocate has admitted that Smt. Nayantara Kavadia is, the surety of the loan amount. It is submitted that award was passed on 23-6-2006 and immediately thereafter suit properties were sold vide registered sale-deeds dated 27-6-2006 and 3-7-2006 that too in favour of petitioners who are none else but married daughters of petitioners. It is submitted that since there is a bar under section 18 of RDB Act, therefore, learned Appellate Court has rightly allowed the appeal filed by the respondent No. 1, Learned counsel placed reliance on a decision in the matter of Punjab National Bank v. O.C. Krishnan, AIR 2001 SC 3208 wherein the order passed by DRT relating to sale of mortgaged property Hon'ble Apex Court held that writ petition under Article 227 of Constitution of India challenging said order passed by DRT is barred on grounds of alternative and efficacious remedy. Reliance is also placed on a decision in the matter of Allahabad Bank v. Canara Bank, AIR 2000 SC 1535 wherein the order of execution of attachment was passed by Tribunal, Hon'ble Apex Court observed that jurisdiction of recovery officer is exclusive and jurisdiction of Civil Court or company Court is ousted. It is submitted that on the strength of aforesaid position of law the petition filed by the petitioners has no merits and the same be dismissed. 5. Section 17 of RDB Act deals with jurisdiction, powers and authority of Tribunals, while section 18 creates the bar of jurisdiction, which are reproduced hereinbelow. Section 17. Jurisdiction, porters and authority of Tribunals. - (1) A Tribunal shall exercise, on and from the appointed day, the jurisdiction, powers and authority to entertain and decide applications from the bank and financial institutions for recovery of debts due to such banks and financial institutions. (2) An Appellate Tribunal shall exercise, on and from the appointed day, the jurisdiction, powers and authority to entertain appeals against any order made, or deemed to have been made, by a Tribunal under this Act. (2) An Appellate Tribunal shall exercise, on and from the appointed day, the jurisdiction, powers and authority to entertain appeals against any order made, or deemed to have been made, by a Tribunal under this Act. Section 18. Bar of jurisdiction. - 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 mutters specified in section 17. 6. Section 31-A of RDB Act deals with power of Tribunal to issue certificate of recovery in case of decree or order, which reads as under:- Section 31-A. 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 Institution (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. 7. In the present case the judgment was passed by the Debt Recovery Tribunal on 23-6-2006, while the sale deeds have been executed on 27-6-2006 and 3-7-2006, meaning thereby within 10 days of passing of award and purchasers who are the petitioners are none else but the married daughters. Recovery proceedings has to be initiated by the recovery Officer under section 31-A of RDB Act. That section deals with transfer of pending suits or proceedings to the Tribunal. The word 'proceedings' in section 31 of RDB Act includes an execution proceedings pending before the Civil Court. The jurisdiction of the Tribunal in regard to adjudication is exclusive. Once the Tribunal passes an order that the debt is due, the Tribunal has to issue a certificate under section 19(22) to the Recovery Officer for recovery of the debt specified in the certificate. The question arises as to the meaning of the word 'recovery' in section 17 of the Act. Once the Tribunal passes an order that the debt is due, the Tribunal has to issue a certificate under section 19(22) to the Recovery Officer for recovery of the debt specified in the certificate. The question arises as to the meaning of the word 'recovery' in section 17 of the Act. The Tribunal is to adjudicate the liability of the defendant and then it has to issue a certificate under section 19(22). Under section 18, the jurisdiction of any other Court or authority which would otherwise have had jurisdiction but for the provisions of the Act, is ousted and the power to adjudicate upon the liability is exclusively vested in the Tribunal. This exclusion does not however apply to the jurisdiction of the Supreme Court and of a High Court exercising power under Art. 226 of the Constitution. Effect of sections 17 and 18 of the RDB Act are exclusive so far as the question of adjudication of the liability of the respondent No. 2 company to the respondent No. 1 Bank is concerned. Even in regard to “execution”, the jurisdiction of the Recovery Officer is exclusive. A procedure has been laid down in the Act for recovery of the debt as per the certificate issued by the Tribunal and this procedure is contained in Chapter V of the Act and is covered by sections 25 to 30. It is not the intendment of the Act that while the basic liability of the Company is to be decided by the Tribunal under section 17, the Banks/Financial Institutions should go to the Civil Court or the Company Court or mere other authority outside the Act for the actual realisation of the amount. The certificate granted under section 19(22) has to be executed only by the Recovery Officer. No dual jurisdiction at different stages are contemplated. Further, section 34 of the Act gives overriding effect to the provisions of the RDB Act. Provisions of section 34(1) of Act clearly state that the RDB Act overrides other laws to their extent of “inconsistency”. The prescription of an exclusive Tribunal both for adjudication and execution is a procedure clearly inconsistent with realisation of these debts in any other manner. There is one more reason as to why it must be held that the jurisdiction of the Recovery Officer is exclusive. The prescription of an exclusive Tribunal both for adjudication and execution is a procedure clearly inconsistent with realisation of these debts in any other manner. There is one more reason as to why it must be held that the jurisdiction of the Recovery Officer is exclusive. The Tiwari Committee which recommended the constitution of a Special Tribunal in 1981 for recovery of debts due to Banks and financial institutions stated in its Report that the exclusive jurisdiction of the Tribunal must relate not only in regard to the adjudication of the liability but also in regard to the execution proceedings. In Annexure XI of the Report it is stated that all execution proceedings must be taken up only by the Special Tribunal under the Act. In view of the special procedure for recovery prescribed in Chapter V of the Act, and section 34, execution of the certificate is also within the exclusive jurisdiction of the Recovery Officer. 8. In view of the aforesaid position of law this Court finds that the impugned order passed by learned Court below is without jurisdiction. Since Civil Court was having no jurisdiction, therefore, no injunction could have been given. 9. In view of this, petition filed by the petitioners stands dismissed holding that Civil Court has no jurisdiction to grant injunction for staying the recovery in a case where recovery certificate is issued under, the Act. No order as to costs. Petition dismissed.