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2015 DIGILAW 1453 (BOM)

Radhika Malhotra v. SICOM Ltd.

2015-07-03

A.K.MENON, MOHIT S.SHAH

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JUDGMENT : The appeal is directed against the judgment and order dated 16 April 2015 passed by the learned Single Judge dismissing the appellants' Notice of Motion for dismissal of the execution application on the ground that this Court has no jurisdiction to execute the decree passed by this Court on 3 December 2002. 2. The respondent SICOM Ltd. (SICOM) filed a summary suit against the appellants in the year 2000 for recovery of its dues. A decree came to be passed on 3 December 2002 directing the appellants to pay a sum of Rs.2,13,46,923/ to SICOM. The Recovery of Debts Due to Banks and Financial Institution Act, 1993 (DRT Act) which was enacted in 1993 was brought into force in the State of Maharashtra from 16 July 1999. Further, the notification of SICOM as a financial institution under the DRT Act was issued on 30 April 2004. Hence, when the decree was passed SICOM was not a financial institution and, therefore, not covered by the DRT Act. It is not disputed that the learned Single Judge of this Court passed a decree in favour of SICOM on 3 December 2002. Hence this Court had inherent jurisdiction to try the suit and pass the decree before notification of SICOM as a financial institution under the DRT Act. 3. For the first time SICOM filed the execution application in this Court on 27 February 2012. The appellants took out the Notice of Motion giving rise to the present appeal, for dismissal of the execution application on the ground that in view of the fact that provisions of the DRT Act applied to SICOM from 30 April 2004, no execution application could have been filed before this Court for execution of a decree passed after the date of commencement of DRT Amendment Act, which was 17 January 2000, but prior to 30 April 2004. 4. After considering the provisions of Section 31 and 31A of the DRT Act and after considering the case law cited at the bar, the learned Single Judge took the view that no execution application was pending in this Court when the DRT Act came into force on 16 July 1999 and, therefore, there was no question of transferring the execution application to DRT. The learned Single Judge also took a view that since the decree was not passed prior to commencement of the DRT Amendment Act on 17 January 2000 but was passed on 3 December 2002, Section 31A would not apply and, therefore, SICOM was not required to apply to DRT for execution of the decree passed by the High Court in the year 2002. It is the aforesaid judgment which is challenged in this appeal. 5. Mr. Madon, learned senior counsel for the appellants submitted that the scheme of Section 31 and 31A of the DRT Act has examined by this Court as well as by the Supreme Court. In Bank of India Vs. Shree Satya Corporation and Others., 2001 (1) Bom.C.R. 547 a Division Bench of this Court speaking through Justice B.N. Srikrishna traced the history of the DRT Amendment Act of 2000 and the rationale for insertion of Section 31A. After examining the conflict of views prior to the amendment and after considering the judgment dated 3 March 2000 of Justice S.H. Kapadia as a Single Judge in Suit No.2784 of 1999, the Division Bench held that the said judgment of Justice Kapadia correctly lays down the position in law that after coming into force of the DRT Amendment Act, 2000 all proceedings, whether by way of suit, miscellaneous proceedings or execution proceedings, stand transferred to the DRT and that the amendments introduced by the Amendment of 2000, take care of almost all objections against transfer of execution proceedings. The Division Bench further expressed the following opinion : “In our judgment Section 31A is enacted to apply to all situations except the one where the decree is fully executed meaning that the decretal debt has been recovered and paid over to the decree holder.” The learned counsel, therefore, submitted that since the DRT Act for the first time became applicable to the SICOM on 30 April 2004 upon notification of SICOM as a financial institution under the DRT Act, and since the decree in favour of SICOM and against the appellants was passed prior to 30 April 2004, Section 31A would squarely apply and any application for execution of the decree prior to 30 April 2004 would have to be made to DRT. 6. On the other hand Mr. 6. On the other hand Mr. Vishal Kanade, learned counsel for the respondent SICOM supported the judgment of the learned Single Judge and submitted that Section 31A expressly provides that the execution application to be made under section 31A would be in respect of decrees passed before commencement of the DRT Amendment Act, 2000. The section would apply only to decrees passed by the Civil Court prior to 17 January 2000 and not to decrees in the present suit which was passed on 3 December 2002. The learned counsel also relied upon the decision of the Supreme Court in Raghunath Bareja and Anr. Vs. Punjab National Bank, (2007) 2 SCC 230 in support of the contention that execution application filed after establishment of the DRT Act could not be transferred to DRT. 7. Having heard the learned counsel for the parties we have considered the rival submissions of the parties. In Allahabad Bank Vs. Canara Bank, (2000) 4 SCC 406 in paragraph 50 the Supreme Court observed that the DRT Act confers exclusive jurisdiction on the Debt Recovery Tribunal both at the stage of adjudication of the claim under section 17 as well as execution of the claim. In that case the Supreme Court was considering the power of company Court to interfere under section 442 of the Companies Act in matters pending before DRT. The Supreme Court held that the even in the matters of priorities amongst banks only the DRT could decide and the Company Court cannot interfere In Raghunath Bareja and Anr.(supra), the Supreme Court followed the aforesaid decision of the Supreme Court in Allahabad Bank Vs. Canara Bank (supra) taking the view that the DRT confers exclusive jurisdiction on the DRT both at the adjudication of the claim under Section 17 of the Act as well as execution of the claim. The view taken by the Division Bench of this Court in Bank of India Vs. Shree Satya Corporation and Others (supra) that Section 31A was enacted to apply to all situations except where the decree was fully executed, meaning that the decretal debt was recovered and paid to the decree holder still holds the field. 8. The view taken by the Division Bench of this Court in Bank of India Vs. Shree Satya Corporation and Others (supra) that Section 31A was enacted to apply to all situations except where the decree was fully executed, meaning that the decretal debt was recovered and paid to the decree holder still holds the field. 8. Since SICOM was notified as a financial institution only on 30 April 2004 by which date the decree was already passed by this Court acting as the Civil Court, and since no execution application was pending, there was no question of transferring the suit to DRT on or after 30 April 2004 nor was any execution application made till 27 February 2012. The contention of SICOM that Section 31A would apply only to decrees passed prior to 17 January 2000 and remaining unexecuted on that date, cannot be accepted as the correct interpretation of Section 31A. The question of applying Section 31A or for that matter any provision under the DRT Act to SICOM arose for the first time on 30 April 2004 as the SICOM was notified as the financial institution under the DRT Act on that date. Hence in respect of financial institution notified under the DRT Act after 17 January 2000 the words “commencement of Recovery of Debts Due to Banks and Financial Institution (Amendment) Act, 2000 would necessarily have to be read as date of application of the DRT Act to such financial institution (SICOM in the present case). SICOM having been notified as a financial institution under the DRT Act on 30 April 2004, for all proceedings by SICOM, the date of commencement of the DRT Act would have to mean on or after 30 April 2004. 9. In the above view of the matter, we are satisfied that execution application for execution of the decree passed by this Court on 3 December 2002 would lie before the DRT. We will now consider whether the execution application filed before this Court should be treated as not maintainable and dismissed as contended by the learned counsel for the appellants or whether the execution application should be transferred to DRT as per alternative submission of learned counsel for SICOM. 10. We will now consider whether the execution application filed before this Court should be treated as not maintainable and dismissed as contended by the learned counsel for the appellants or whether the execution application should be transferred to DRT as per alternative submission of learned counsel for SICOM. 10. We are of the view that since the SICOM bonafide filed execution application before this Court in February 2012 and has been bonafide prosecuting the same for last more than three years and their bonafides are more than proved by the fact that the learned Single Judge of this Court has taken a view that the execution application could only have been filed in this Court, we are inclined to pass the following order for transferring the application to DRT. 11. In view of the above discussion the appeal is disposed of in terms of the following order : The execution application No.380 of 2012 filed by SICOM Ltd. against the present appellants for execution of the decree dated 3 December 2002 shall stand transferred to Debt Recovery Tribunal (DRT), Mumbai Bench. The registry shall transfer the original record of the execution application to DRT, Mumbai within four weeks from today. 12. Since the appeal is disposed of the Motion is also disposed of. 13. At this stage the learned counsel for SICOM prays for stay of operation of this judgment for sometime. In the facts and circumstances of the case we are not inclined to accede to the request. The prayer is rejected.