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2023 DIGILAW 439 (JHR)

Rajesh Ranjan v. Bank of India

2023-03-28

RAJESH SHANKAR

body2023
JUDGMENT : The present writ petition has been filed seeking following reliefs:- (a) For issuance of direction upon the respondents restraining/ prohibiting them from continuing/proceeding with Certificate Case No. 08/15-16 (BOI St. Xavier School Branch, Sector-I, B. S. City Vs. M/s Aso Sales, through its partner, Rajesh Ranjan & Anr.), presently pending before the respondent No.2 as well as to quash the aforesaid certificate proceeding being a non-est proceeding. (b) For declaring that in view of the provisions of Sections 17, 18, 31 & 34 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as ‘the Act, 1993’), the aforesaid certificate proceeding initiated against the petitioner in the year 2015 by the respondent No.1 is not maintainable and is liable to be quashed. (c) For declaring that exclusive jurisdiction has been vested in the Tribunals constituted under the Act, 1993 for the Banks and financial institutions situated within the respective territorial areas of tribunals and hence the Certificate Officer has no authority to exercise jurisdiction with respect to the issue covered by the Act, 1993. (d) For declaration that as per Section 34 of the Act, 1993, the provisions of the said Act have overriding effect on all the Acts prevailing as well as the instruments and hence the aforesaid certificate proceeding initiated by the respondent No.1, supposed to be on the basis of 2009 Agreement/Instrument, is not maintainable. (e) For declaration that in view of the provisions of Section 66 of the Bihar and Orissa Public Demands Recovery Act, 1914 (hereinafter referred to as ‘the Act, 1914’), the Certificate Officer will be deemed to be a Court/other authorities and any proceeding before him shall be deemed to be a civil proceeding and shall be barred under Section 18 of the Act, 1993. (f) For declaring that the claim of the respondent-Bank being a money claim is barred by law of limitation which already became non-performing asset in the year 2010 itself, however, the Bank knowingly and maliciously adopted the procedure of recovery of loan by initiating a certificate proceeding, though the same is not maintainable, and obtained illegal, arbitrary and malafide orders including warrant of arrest. 2. 2. Learned counsel for the petitioner submits that the petitioner along with his cousin, namely, Ajit Kumar started a partnership firm in the name and style of M/s ASO Sales which was dealing in footwears, however, due to some dispute between both the partners, the petitioner left Bokaro in the year, 2014. Since the partnership between the petitioner and Ajit Kumar was unregistered, the petitioner had no concern with the said footwear business being run at Bokaro. However, the respondent No.2, without considering the said facts as well as providing any opportunity of hearing to the petitioner, issued bailable warrant against him vide order dated 12.02.2019 which has not been served to him till date. The petitioner came to know about the aforesaid certificate case only on 13.09.2021 through the concerned police station at Patna. The certificate debtor No.2 however appeared before the respondent No.2 in Certificate Case No. 08/2015-16 and filed his objection under Section 9 of the Act, 1914. 3. Learned counsel for the petitioner further submits that the entire certificate proceeding initiated by the respondent-Bank is not maintainable. The Act, 1993 was enacted for the purpose of expeditious adjudication of the matters related to realisation of loan taken from the Banks and financial institutions. After enforcement of the Act, 1993, the Certificate Court had no jurisdiction to entertain any requisition of the respondent-Bank for recovery of loan amount. The concerned authority of the Bank filed the requisition for initiating aforesaid certificate case after lapse of more than five years of the loan account becoming non-performing asset. Moreover, the respondent No.2 without following the principles of natural justice and hearing the parties, arbitrarily issued a bailable warrant against the petitioner. The petitioner was not provided any opportunity of hearing to place his case before the respondent No.2 as no notice under Section 7 of the Act, 1914 was ever served on him. 4. Per-contra, learned counsel for the respondent-Bank submits that the petitioner along with his partner, namely, Ajit Kumar had taken two loans in the name of their firm i.e. M/s Aso Sales under two loan accounts, one was ‘Cash Credit loan’ of Rs.10,00,000/- against A/c No. 485930110000045 and another was ‘Term Loan’ of Rs.5,00,000/- against A/c No. 48597311800008. 4. Per-contra, learned counsel for the respondent-Bank submits that the petitioner along with his partner, namely, Ajit Kumar had taken two loans in the name of their firm i.e. M/s Aso Sales under two loan accounts, one was ‘Cash Credit loan’ of Rs.10,00,000/- against A/c No. 485930110000045 and another was ‘Term Loan’ of Rs.5,00,000/- against A/c No. 48597311800008. The petitioner has admitted the legal dues of the respondent-Bank which otherwise cannot be denied in terms with the agreement and execution of different documents signed by him and his guarantors. However, by raising a technical issue, he intends to defeat the cause of the Bank merely on the point of jurisdiction which may not be entertained by this Court exercising equitable jurisdiction under Article 226 of the Constitution of India. The petitioner being a defaulter may not be allowed to defeat the purpose of law by not paying the entire admitted dues which is public money. The petitioner closed his business without giving any information to the concerned Branch Manager, though he had taken the aforesaid loans against his running business by hypothecating the stocks and other capitals of the business. In view of Section 31 of the Act, 1993, the certificate proceeding pending in the Court of the respondent No.2 may be allowed to be transferred with all the relevant documents to the Debts Recovery Tribunal, Ranchi so that the justice be done and the purpose of law may not be defeated as it involves huge amount of public money which the petitioner intends to illegally retain merely raising technical grounds. 5. Learned counsel for the respondent-State submits that the petitioner and his partner Ajit Kumar have appeared in Certificate Case No. 08 of 2015-16 and have filed their objections under Section 9 of the Act, 1914 and hence it is wrong to say that the petitioner has no knowledge about the aforesaid certificate case. 6. Heard learned counsel for the parties and perused the relevant materials available on record. 7. The petitioner has primarily challenged initiation of certificate proceeding for recovery of the loan amount on the ground that there is a separate law for dealing with matter i.e. the Act, 1993 which provides for the establishment of Tribunal for deciding applications filed by the Banks and financial institutions for recovery of debts. 7. The petitioner has primarily challenged initiation of certificate proceeding for recovery of the loan amount on the ground that there is a separate law for dealing with matter i.e. the Act, 1993 which provides for the establishment of Tribunal for deciding applications filed by the Banks and financial institutions for recovery of debts. The Act, 1993 is a complete code which provides a detailed procedure for recovery of debts due to Banks and financial institutions and after promulgation of the Act, 1993, no Court is empowered to entertain such type of matters. Thus, the certificate proceeding initiated against the petitioner is not maintainable for want of jurisdiction. 8. On the other hand, learned counsel for the respondent-Bank has submitted that admittedly the petitioner had taken loan from the respondent-Bank which had gone NPA and hence the Bank is entitled to realize the due amount for which the certificate proceeding in question was initiated at its instance and the same cannot be challenged on purely technical ground. 9. To appreciate the rival contentions of learned counsel for the parties, it would be appropriate to refer few provisions of the Act, 1993. 10. Section 17 of the Act, 1993 provides that a Tribunal shall exercise the jurisdiction, power and authority on and from the appointed day, to entertain and decide applications from the Banks and financial institutions for recovery of debts due to such Banks and financial institutions. It also provides for constitution of the Appellate Tribunal to entertain appeal against any order made, or deemed to have been made, by a Tribunal under this Act. 11. Section 18 of the Act, 1993 provides that on and from the appointed day, no Court or other authority shall have, or be entitled to exercise any jurisdiction, power or authority (except the Supreme Court, and a High Court exercising jurisdiction under Articles 226 & 227 of the Constitution) in relation to the matters specified in Section 17. 12. Section 31(1) of the Act, 1993 provides for transfer of every suit or other proceeding pending before any Court immediately before the date of establishment of a Tribunal under this Act, if it transpires from the cause of action that the said pending matter would have been proceeded to deal with within the jurisdiction of the Tribunal after its establishment. 13. 13. As per Sub-section (1) of Section 34 of the Act, 1993, the provisions of the said Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than the said Act. Sub-section (2) of Section 34 provides that the provisions of the Act, 1993 or the rules made thereunder shall be in addition to, and not in derogation of, the Industrial Finance Corporation Act, 1948, the State Financial Corporations Act, 1951, the Unit Trust of India Act, 1963, the Industrial Reconstruction Bank of India Act, 1984, the Sick Industrial Companies (Special Provisions) Act, 1985 and the Small Industries Development Bank of India Act, 1989. 14. The Act, 1993 provides for establishment of Tribunals for expeditious adjudication and recovery of debts due to Banks and financial institutions, insolvency resolution and bankruptcy of individual and partnership firms as well as for matters connected therewith or incidental thereto. After constitution of Tribunal, the jurisdiction of other Court is barred, except the High Courts and Supreme Court. Even Section 31 of the Act, 1993 provides for transfer of any suit/proceeding pending before other Courts to the Tribunal of concerned jurisdiction which was cognizable before such Tribunal. 15. Thus, there is a clear and unambiguous provision in the Act, 1993 that any matter relating to recovery of debts due to Banks and financial institutions etc. is cognizable before the Tribunal only. Thus, the certificate proceeding initiated by the respondent No.2 against the petitioner vide Certificate Case No. 08/15-16 for recovery of the outstanding dues is without jurisdiction and the same is liable to be vitiated. 16. One of the arguments of learned counsel for the respondents is that the certificate proceeding may be transferred to the Debts Recovery Tribunal, Ranchi in terms with the provision as contained in Section 31 of the Act, 1993. This Court is of the view that the provision of Section 31 is applicable to those cases which were pending before any Court immediately before the date of establishment of a Tribunal under the Act, 1993 and the same is not applicable to the cases which were filed in the wrong Courts after coming into force of the Act, 1993. This Court is of the view that the provision of Section 31 is applicable to those cases which were pending before any Court immediately before the date of establishment of a Tribunal under the Act, 1993 and the same is not applicable to the cases which were filed in the wrong Courts after coming into force of the Act, 1993. Moreover, the provisions of the Act, 1993 have overriding effect over any other Act and as such the certificate proceeding initiated under Sections 4/5 of the Act, 1914 is not maintainable. 17. Under the aforesaid facts and circumstances, Certificate Case No. 08/15-16 (BOI St. Xavier School Branch, Sector-I, B. S. City Vs. M/s Aso Sales, through its partner, Rajesh Ranjan & Anr.), presently pending before the respondent No.2 is hereby quashed. The respondent No.1 will however be at liberty to take other recourses as available under law for recovery of the amount in question. 18. The present writ petition is accordingly allowed with the aforesaid liberty and observation.