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2021 DIGILAW 617 (HP)

State Bank of India, Palampur v. Debt Recovery Appellate Tribunal, Delhi

2021-09-01

SANDEEP SHARMA

body2021
ORDER : 1. Instant petition filed under Article 226 of the Constitution of India, lays challenge to order dated 13.05.2021 (Annexure P-6), whereby Debts Recovery Appellate Tribunal, Delhi (for short ‘DRAT’) erroneously without there being any jurisdiction entertained the misc. Application No.15 of 2021, having been filed by respondents No.2 and 3 (Annexure P-3), praying therein for initiation of appropriate action against the erring bank officials on account of their having fraudulently credited the amount in the account of auction purchaser 2. On 18.05.2021, Division Bench of this Court while issuing notice to the respondents, returnable for 5th July, 2021, admitted the petition for hearing and stayed the proceedings before Debts Recovery Appellate Tribunal, Delhi in Misc. Application No.15 of 2021 (Annexure P-6). 3. On 28.07.2021, Mr. Ashish Verma, Advocate put in appearance on behalf of respondent No.2 and stated that he has been appointed as legal aid counsel on behalf of respondent No.2, whereas despite service, respondent No.3 did not come present, but yet this Court with a view to afford due opportunity of being heard to respondents No.2 and 3, adjourned the matter for today’s date, specifically requesting Mr. Ashish Verma, Advocate to ensure presence of respondents No.2 and 3 in the Court on the next date of hearing. However, fact remains that despite notice respondents No.2 and 3 have not come present. Mr. Ashish Verma, learned counsel representing respondents No.2 and 3 informs this Court that immediately after passing of order dated 9.8.2021, he informed both the respondents by way of a letter sent through speed post, but they have not responded and as such, this Court has no option, but to decide the case at hand on the basis of the material already available on record. 4. Precisely, the facts of the case as emerge from the record are that respondents No.2 and 3 approached this Court by way of CWP No.4424 of 2019, seeking therein direction to State Government to investigate the case FIR No.143 of 2017 against the petitioner-bank or its employees and file the challan after the investigation. Besides above, respondents No.2 and 3 also sought direction to petitioner-bank to accept the case of respondents No.2 and 3 under One Time Settlement (OTS) of the outstanding amount. 5. Besides above, respondents No.2 and 3 also sought direction to petitioner-bank to accept the case of respondents No.2 and 3 under One Time Settlement (OTS) of the outstanding amount. 5. Aforesaid prayer made on behalf of respondents No.2 and 3 came to be resisted on behalf of petitioner-bank on the ground that matter with regard to same issue is pending before the Debts Recovery Appellate Tribunal. Petitioner-bank also informed Division Bench of this Court that as per notice dated 18.01.2021 demand was raised by the petitioner-Bank to pay Rs.10,38,100/-. Responding to aforesaid submissions made on behalf of the petitioner-bank, learned counsel representing respondent No.3 stated before the Division Bench of this Court that respondent No.3 is ready and willing to pay the entire amount within the stipulated period and to show his bona-fide he also handed over demand draft of Rs.1,03,810/-, which is 10% of the total amount as per notice dated 18.01.2021. 6. Order dated 7.4.2021 passed by Division Bench of this Court in CWP No.4424 of 2019, reveals that learned counsel representing the petitioner-bank submitted before the Division Bench that in case entire amount is deposited within a period of 10 days, notice issued in reference to the loan account shall be withdrawn. Learned counsel for respondent No.3 also submitted before the Division Bench of this Court that he has deposited Rs.5, 75,000/- in the account of one Ashwani Kumar, who according to him, is a third party. Taking note of pleadings as well as submissions adduced on record by the respective parties, Division Bench of this Court disposed of the aforesaid petition, directing respondent No.3 to deposit entire loan amount on or before 24th April, 2021. Though, the ‘OTS’ scheme had ended on 31st March, 2021, but Division Bench of this Court directed the petitioner-bank to extend the scheme till 24th April, 2021, enabling respondent No.3 to avail benefit of scheme and ordered that on clearance of the entire amount on or before the 24th April, 2021, parties would make statements before the Debt Recovery Tribunal or Debts Recovery Appellate Tribunal with regard to clearance of entire loan amount, so that matter is settled amicably for all times to come. However, at this stage, grouse of the petitioner-bank is that though pursuant to order dated 7.4.2021, passed by Division Bench of this Court in CWP No.4424 of 2019, loan account of respondent No. 3 has been settled and in that regard ‘NOC’ already stands issued to him, but yet he has not withdrawn the cases filed by him in the Debts Recovery Appellate Tribunal. Second grouse, as has been raised on behalf of petitioner- bank is that order dated 13.5.2021 (Annexure P-6) having been passed by Debts Recovery Appellate Tribunal, Delhi, is without jurisdiction as such, same cannot be allowed to sustain. 7. Having heard learned counsel representing the parties and perused the material available on record, this Court finds that there is no dispute interse parties that as of today entire loan amount stands settled and nothing is due from respondents No.2 and 3. Since despite there being undertaking given to the Division Bench at the time of passing of order dated 7.4.2021 that on clearance of entire amount on or before 24th April, 2021, submission shall be made before the Debts Recovery Appellate Tribunal or Debt Recovery Tribunal with regard to amicably settlement, enabling it to dispose of the pending petitions, till date respondents No.2 and 3 have not withdrawn the proceedings and Debts Recovery Appellate Tribunal without any jurisdiction has entertained the misc. Application No.15 of 2021, having been filed by respondents No.2 and 3, petitioner-bank has approached this Court in the instant proceedings. 8. Having taken note of the fact that no proceedings of any kind were pending before the Debts Recovery Appellate Tribunal, New Delhi interse petitioner and respondents No.2 and 3 and for the first time misc. application No.15 of 2021 having been filed by respondents No.2 and 3 came to be instituted before the Debts Recovery Appellate Tribunal, Delhi, this Court finds force in the submissions made by learned counsel for the petitioner-bank that since no proceedings were pending before the Debts Recovery Appellate Tribunal, no misc. application could have been filed directly by respondents No.2 and 3 before the Debts Recovery Appellate Tribunal. Misc. Application No.15 of 2021 (Annexure P-3) filed under Section 17(1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 read with Section 151 CPC (for short ‘Act’) could be only filed before the Debts Recovery Appellate Tribunal at first instance. Misc. Application No.15 of 2021 (Annexure P-3) filed under Section 17(1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 read with Section 151 CPC (for short ‘Act’) could be only filed before the Debts Recovery Appellate Tribunal at first instance. Aggrieved with the order, if any, passed on the aforesaid application by Debt Recovery Tribunal, Chandigarh, respondents No.2 and 3 could have filed appeal under Section 20 of the Recovery of debts due to banks and Financial Institutions Act, 1993 in Debts Recovery Appellate Tribunal. However, in the case at hand, respondents No.2 and 3 though initially prepared application (Annexure P-3) under Section 17(1) of the Act to be filed before the Debt Recovery Tribunal, Chandigarh, but it is not understood how it came to be listed before Debts Recovery Appellate Tribunal, New Delhi, who otherwise had no jurisdiction whatsoever, to entertain the aforesaid application. Interestingly, Debts Recovery Appellate Tribunal despite there being specific objections raised by the petitioner-bank, proceeded to issue notice on the aforesaid application. Perusal of aforesaid notice, dated 26.2.2021 (Annexure P-2) reveals that Debts Recovery Appellate Tribunal, Delhi considering the aforesaid application to be filed by respondent No.3 under Section 17-A of the Act, proceeded to decide the same using administrative powers under Section 17(A)of the Act, which was otherwise not permissible. 9. At this stage, it would be appropriate to take note of Section 17-A of the Act herein below:- “17A. Power of Chairperson of Appellate Tribunal.-(1) The Chairperson of an Appellate Tribunal shall exercise general power of Superintendence and control over the Tribunals under his jurisdiction including the power of appraising the work and recording the annual confidential reports of Presiding Officer. (2) The Chairperson of an Appellate Tribunal having jurisdiction over the Tribunals may, on the application of any of the parties or on his own motion after notice to the parties and after hearing them, transfer any case from one Tribunal for disposal to any other Tribunal.” 10. It is quite apparent from the aforesaid provision of law that Chairperson of an Appellate Tribunal has general power of Superintendence over the Tribunals under his jurisdiction including the power of appraising the work and recording the annual confidential reports of Presiding Officer. It is quite apparent from the aforesaid provision of law that Chairperson of an Appellate Tribunal has general power of Superintendence over the Tribunals under his jurisdiction including the power of appraising the work and recording the annual confidential reports of Presiding Officer. However, in the instant case perusal of order dated 13.5.2021 (Annexure P-6), clearly reveals that Debts Recovery Appellate Tribunal erroneously without there being any jurisdiction proceeded to decide the application under Section 17(1) of the Act, while erroneously exercising power under Section 17(A) of the Act, which was otherwise not permissible and as such, order passed under this provision cannot be allowed to sustain. 11. Record reveals that petitioner-bank besides filing reply on merit to the application filed by respondents No.2 and 3, also filed separate application raising therein plea of jurisdiction, but interestingly, Debts Recovery Appellate Tribunal straightaway dismissed the application filed by the petitioner with cost amounting to Rs.15000/-. If the aforesaid order dated 13.05.2021, is read in its entirety, it nowhere suggests that Debts Recovery Appellate Tribunal specifically dealt with the objections of jurisdiction raised by the petitioner-bank, rather Tribunal below merely swayed away with the allegations levelled by respondents No.2 and 3 against the officials of the bank and issued notice under Section 17(a) of the Act, calling upon petitioner-bank to put in appearance. Since no order, if any, ever came to be passed on the application filed by respondents No.2 and 3 under Section 17(1) of the Act by Debt Recovery Tribunal, Chandigarh, application could not have been entertained directly by Debts Recovery Appellate Tribunal, Delhi that too under Section 17(A)of the Act. 12. Hon’ble Apex Court in case titled Standard Chartered Bank vs. Dharminder Bhohi and others, (2013) 15 SCC 341, has categorically held that Debts Recovery Appellate Tribunal and Debt Recovery Tribunal are required to function within the statutory parameters and they do not enjoy any inherent power and it is limpid that Section 19(25) confers limited powers. The relevant para No.20 of the judgment is reproduced as under:- “33. Section 19 of the RDB Act, occurring in Chapter IV of the Act, deals with procedure of tribunals. Sub-section (25) of Section 19 reads as follows: 19. The relevant para No.20 of the judgment is reproduced as under:- “33. Section 19 of the RDB Act, occurring in Chapter IV of the Act, deals with procedure of tribunals. Sub-section (25) of Section 19 reads as follows: 19. (25) The Tribunal may make such orders and give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice.” The aforesaid provision makes it quite clear that the tribunal has been given power under the statute to pass such other orders and give such directions to give effect to its orders or to prevent abuse of its process or to secure the ends of justice. Thus, the tribunal is required to function within the statutory parameters. The tribunal does not have any inherent powers and it is limpid that Section 19(25) confers limited powers. 34. In this context, we may refer to a three-Judge Bench decision in Upper Doab Sugar Mills Ltd. v. Shahdara (Delhi) Saharanpur Light Rly. Co. Ltd. [ AIR 1963 SC 217 ] wherein it has been held that when the tribunal has not been conferred with the jurisdiction to direct for refund, it cannot do so. The said principle has been followed in Union of India v. Orient Paper and Industries Limited [ (2009)16 SCC 286 ]. 35. In Union of India v. R. Gandhi, President, Madras Bar Association [ (2010)11 SCC 1 ], the Constitution Bench, after referring to the opinion of Hidayatullah, J. in Harinagar Sugar Mills Ltd. v. Shyam Sunder Jhunjhunwala [ AIR 1961 SC 1669 ], the pronouncements in Jaswant Sugar Mills Ltd. v. Lakshmi Chand [ AIR 1963 SC 677 ], Associated Cement Companies Ltd. v. P.N. Sharma [ AIR 1965 SC 1595 ] and Kihoto Hollohan v. Zachillhu [1992 Supp(2) SCC 651], ruled thus: - (Madras Bar Assn. case { (2010) 11 SCC 1 }.SCC P.35 para 45. “45. Though both courts and tribunals exercise judicial power and discharge similar functions, there are certain well- recognized differences between courts and tribunals. They are: i) Courts are established by the State and are entrusted with the State’s inherent judicial power for administration of justice in general. Tribunals are established under a statute to adjudicate upon disputes arising under the said statute, or disputes of a specified nature. Therefore, all courts are tribunals. They are: i) Courts are established by the State and are entrusted with the State’s inherent judicial power for administration of justice in general. Tribunals are established under a statute to adjudicate upon disputes arising under the said statute, or disputes of a specified nature. Therefore, all courts are tribunals. But all tribunals are not courts. (ii) Courts are exclusively manned by Judges. Tribunals can have a Judge as the sole member, or can have a combination of a judicial member and a technical member who is an “expert” in the field to which the tribunal relates. Some highly specialised fact-finding tribunals may have only technical members, but they are rare and are exceptions. (iii) While courts are governed by detailed statutory procedural rules, in particular the Code of Civil Procedure and the Evidence Act, requiring an elaborate procedure in decision making, tribunals generally regulate their own procedure applying the provisions of the Code of Civil Procedure only where it is required, and without being restricted by the strict rules of the Evidence Act.” 36. From the principles that have been culled out by the Constitution Bench, it is perceptible that a tribunal is established under a statute to adjudicate upon disputes arising under the said statute. The tribunal under the RDB Act has been established with a specific purpose and we have already focused on the same. Its duty is to see that the disputes are disposed of quickly regard being had to the larger public interest. It is also graphically clear that the role of the tribunal has not been fettered by technicalities. The tribunal is required to bestow attention and give priority to the real controversy before it arising out of the special legislations. As has been stated earlier, it is really free from the shackles of procedural law and only guided by fair play and principles of natural justice and the regulations formed by it. The procedure of tribunals has been elaborately stated in Section 19 of the RDB Act. 37. It is apt to note here that Section 34 of the SARFAESI Act bars the jurisdiction of the civil court. It reads as follows: - “34. Civil court not to have jurisdiction. The procedure of tribunals has been elaborately stated in Section 19 of the RDB Act. 37. It is apt to note here that Section 34 of the SARFAESI Act bars the jurisdiction of the civil court. It reads as follows: - “34. Civil court not to have jurisdiction. – No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993).” 38. Section 34 of the RDB Act provides that the said Act would have overriding effect. We have referred to the aforesaid provisions to singularly highlight that the sacrosanct purpose with which the tribunals have been established is to put the controversy to rest between the banks and the borrowers and any third party who has acquired any interest. They have been conferred jurisdiction by special legislations to exercise a particular power in a particular manner as provided under the Act. It cannot assume the role of a court of different nature which really can grant “liberty to initiate any action against the bank”. It is only required to decide the lis that comes within its own domain. If it does not fall within its sphere of jurisdiction it is required to say so. Taking note of a submission made at the behest of the auction purchaser and then proceed to say that he is at liberty to file any action against the bank for any omission committed by it has no sanction of law. The said observation is wholly bereft of jurisdiction, and indubitably is totally unwarranted in the obtaining factual matrix. Therefore, we have no hesitation in deleting the observation, namely, “liberty is also given to the auction purchaser to file action against the bank for any omission committed by it”. 13. It is quite apparent from the aforesaid provisions of law laid down by the Hon’ble Apex Court that the Tribunal/DRAT does not have any inherent power and even Section 19(25) confers limited powers. 13. It is quite apparent from the aforesaid provisions of law laid down by the Hon’ble Apex Court that the Tribunal/DRAT does not have any inherent power and even Section 19(25) confers limited powers. The power of the Tribunal/DRAT under Section 19(25) is limited to pass such other orders and give such directions to give effect to the orders or to prevent abuse of its process or to secure the ends of justice. Courts established by the State are entrusted with the State’s inherent judicial power for administration of justice in general. The Tribunal/DRAT having been established under a Statute to adjudicate upon the disputes of a specialized nature by regulating the procedure, applying the provisions of CPC only where it is required. It has been categorically held in the aforesaid judgment that the Tribunal/DRAT are required to function within the statutory parameters and have been conferred jurisdiction by special statute to exercise a particular power in a particular manner as provided under the Act. Most importantly, in the aforesaid judgment, Hon’ble Apex Court held that the Tribunal/DRAT are required to decide the lis that come within their domain. 14. Consequently, in view of the detailed discussion made hereinabove as well as law laid down by Hon’ble Apex Court, the present petition is allowed and Misc. Application No.15 of 2021, titled as Shivani Raina and another versus State Bank of India (Annexure P- 3), order dated 13.5.2021 (Annexure P-6) as well as notice dated 26.02.2021 (Annexure P-2), are quashed and set-aside. Pending application(s), if any, also stands disposed of. Interim order is vacated.