Standard Chartered Bank v. India Glycols Ltd

order of transfer." It was thus observed in Nahar (supra) that the question of whether the a civil suit filed by a debtor can be considered a counter claim for the purpose of the exercise of the power of transfer, would not even arise Page 19 if the High Court/Supreme Court had no jurisdiction to pass an order of transfer under Sections 22 - 25 of the CPC.

¶25The Court then went on to hold that all civil Court proceeding cannot be transferred to the DRT, regardless of whether they are "inextricably connected" with the application before the DRT or not, as it would amount to an indirect ouster of jurisdiction of the civil Court. The Court reasoned that the Recovery Act only ousts the jurisdiction of the civil Court to the extent indicated in Section 18, read together with Section 17 of the Act. Since Section 17 confers jurisdiction on a DRT to order a recovery of debt due to a bank/financial institution and Section 18 confers this jurisdiction exclusively upon the DRT, in light of Section 9 of the CPC, it follows that the civil Court's jurisdiction is not ousted in respect of issues falling outside the ambit of Section 17. It was in this context that it was held that a tribunal is not a "civil Court", and that the tribunal consequently possesses a comparatively limited jurisdiction. Therefore, complete ouster of civil Court jurisdiction by exercise of the transfer powers would be impermissible. To quote: "85. If the Tribunal was to be treated to be a civil court, the debtor or even a third party must have an independent right to approach it without having to wait for the Bank or Financial Institution to approach it first. The continuance of its counter-claim is entirely dependent on the continuance of the applications filed by the Bank. Before it no declaratory relief can be sought for by the debtor. It is true that claim for damages would be maintainable but the same have been provided by way of extending the right of counter-claim. Page 20

¶86Debt Recovery Tribunal cannot pass a decree. It can issue only recovery certificates. [See Sections 19(2) and 19(22) of the Act]. The power of the Tribunal to grant interim order is attenuated with circumspection. See Dataware Design Labs. v. State Bank of India (2005) 12 Comp. Cas. 176 (Ker) at 184. Concededly in the proceeding before the Debt Recovery Tribunal detailed examination; cross-examinations, provisions of the Evidence Act as also application of other provisions of the Code of Civil Procedure like interrogatories, discoveries of documents and admission need not be gone into. Taking recourse to such proceedings would be an exception. Entire focus of the proceedings before the Debt Recovery Tribunal centers round the legally recoverable dues of the bank. …

¶88We have noticed hereinbefore that Civil Courts are created under different Acts. They have their own hierarchy. They necessarily are subordinate to the High Court. The appeals from their judgment will lie before a superior court. The High Court is entitled to exercise its power of revision as also superintendence over the said courts. For the aforementioned purpose, we must bear in mind the distinction between two types of courts, viz., civil courts and the courts trying disputes of civil nature. Only because a court or a tribunal is entitled to determine an issue involving civil nature, the same by itself would not lead to the conclusion that it is a civil court. For the said purpose, as noticed hereinbefore, a legal fiction is required to be created before it would have all attributes of a civil court.

¶89The Tribunal could have been treated to be a civil court provided it could pass a decree and it had all the attributes of a civil court including undertaking of a full-fledged trial in terms of the provisions of the Code of Civil Procedure and/or the Evidence Act. It is now trite law that jurisdiction of a court must be determined having regard to the purpose and object of the Act. If the Parliament, keeping in view the purpose and object thereof thought it fit to create separate Page 21 tribunal so as to enable the banks and the financial institutions to recover the debts expeditiously wherefor the provisions contained in the Code of Civil Procedure as also the Evidence Act need not necessarily be resorted to, in our opinion, by taking recourse to the doctrine of purposive construction, another jurisdiction cannot be conferred upon it so as to enable this Court to transfer the case from the civil court to a tribunal. [emphasis added]

¶26The Court nowhere suggested that the DRT is not a "court" so as to bar the applicability of Section 10. Paragraph 92 of Nahar (supra) merely states that the tribunal is neither a "civil court" nor a "court subordinate to the High Court" for the purpose of Section 23 of the CPC. Paragraph 98 reiterates the same conclusion.

¶27Likewise, the petitioner submits that proceedings before the DRT cannot be considered a "suit". Without going into the meaning of the term "suit", this Court finds that the principle of Section 10 is to avoid multiplicity of proceedings and conflicting findings being recorded by two fora that are equally competent to hear the issues. In this light, technical arguments like whether a proceeding can be termed a "suit" or not cannot be determinative of the dispute. In the present case, the following observations in Nagabhushana (supra) ought to be kept in mind in this regard: "14. The principles of Res Judicata are of universal application as it is based on two age old principles, namely, "interest reipublicaeut sit finis litium" which means that it is in the interest of the State that there should be an end to litigation and the other principle is "nemodebet his veari, siconstet curiae quod sit pro un aeteademn cause" meaning Page 22 thereby that no one ought to be vexed twice in a litigation if it appears to the Court that it is for one and the same cause. This doctrine of Res Judicata is common to all civilized system of jurisprudence to the extent that a judgment after a proper trial by a Court of competent jurisdiction should be regarded as final and conclusive determination of the questions litigated and should for ever set the controversy at rest.

¶15That principle of finality of litigation is based on high principle of public policy. In the absence of such a principle great oppression might result under the colour and pretence of law in as much as there will be no end of litigation and a rich and malicious litigant will succeed in infinitely vexing his opponent by repetitive suits and actions. This may compel the weaker party to relinquish his right. The doctrine of Res Judicata has been evolved to prevent such an anarchy. That is why it is perceived that the plea of Res Judicata is not a technical doctrine but a fundamental principle which sustains the Rule of Law in ensuring finality in litigation."

¶28The writ petitioner bank in this case had no doubt filed its claim before the DRT after the suit preferred before this court. If the DRAT's reasoning were to be affirmed, a piquant situation would be permitted where a Tribunal, exclusively created by Parliament to decide recovery claims by public banks, would have to await decisions of civil courts, instituted by defaulting debtors who might or might not set up the plea of unenforceability of the underlying transaction with their bank/creditors thus frustrating Parliamentary intention at quick dispute resolution of such matters. The public purpose underlying the creation of exclusive Tribunals would thus be easily achieved by the possibility of a potential conflict in decisions. Such a sweeping result Page 23 cannot be plainly countenanced. The petition, for the above reasons is allowed, with no order as to costs. S. RAVINDRA BHAT (JUDGE) VIBHU BAKHRU (JUDGE) JULY 30, 2014

Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI Reserved on: 22.05.2014 Pronounced on : 30.07.2014 + W.P.(C) 8592/2011 AND C.M. No.5378/2014 STANDARD CHARTERED BANK ..... Petitioner Through: Sh. Sumit Bansal, Sh. Ateev Mathur, Ms. Richa Oberoi and Sh. Devmani Bansal, Advocates. Versus INDIA GLYCOLS LTD. ..... Respondents Through: Sh. Rajeev Virmani, Sr. Advocate with Sh. Vikas Mehta, Sh. Rajat Sehgal and Sh. Anindita Mitra, Advocates. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE VIBHU BAKHRU MR. JUSTICE S. RAVINDRA BHAT % 1. This is a writ petition challenging the order of the Debts Recovery Appellate Tribunal (DRAT) dated 22.9.2011 which upholds an order of the Debt Recovery Tribunal (DRT), which found Section 10 of the Code of Civil Procedure ("CPC") to be applicable to the DRT proceedings, on account of an earlier proceeding being instituted before the High Court, invoking its original civil jurisdiction. 2. The brief facts are that the petitioner bank and the respondent company (hereafter "the borrower") entered into transactions under Page 2 which, the latter defaulted on its obligations. The borrower filed a suit before this Court on 27.10.2009 claiming that its transactions with the bank were based on speculative and wagering agreements and thus were unenforceable, illegal and contrary to public policy. It sought injunction against the petitioner bank from enforcing the demand against it (the borrower). This Court refused to grant any ad interim injunction. 3. The petitioner bank later filed an original application before the Debt Recovery Tribunal under Section 19 of the Recovery of Debts due to Banks and Financial Institutions Act ("Recovery Act"), seeking to enforce a demand for ₹19,15,22,110/- with an interest at the rate of 7% p.a. w.e.f. 22.1.2010. The borrower filed a written statement in the proceedings as well as an application under Section 10 of the CPC, seeking a stay of the proceedings in the O.A. The ground urged was that a prior suit had been filed before this Court, involving the same issues, under the same cause title, and between the same parties. The DRT allowed the application on 1.6.2011, and stayed proceedings before it on the ground that a superior forum with jurisdiction should hear the matter. The Bank's appeal from this order was dismissed by the DRAT on 22.9.2011. 4. The order of the DRAT, in relevant part, reads: "12. Keeping in view the aforesaid essence of the matter this has already been considered by the Tribunal that the matter substantially in issue in both the suits with regard to the validity of the documents whether the documents as such have validly been executed and are also valid in the Page 3 eyes of law. These are the relevant considerations and the matter in issue is directly and substantially is the same in the previously instituted suit and the O.A. which was filed later on and merely because certain matters which are incidental and collateral in issue that will not be decisive[sic] … 13. On the basis of the aforesaid now the question remains that even assuming that Section 10 as such may not have any application to the proceedings taken up in the RDBFI Act, 1993 but where by virtue of sub-section (1) of Section 22 it is directed that the Tribunal including the Appellate Tribunal shall not be bound by the procedure as contemplated in the CPC but will be guided by the principles of natural justice. As I have held earlier that the object behind Section 10 if it is taken into account and the borrower being defendant before the DRT has already taken steps to file civil suit then under these circumstances the principles of natural justice are to be applied to stay the suit to avoid the conflicting judgments by two courts and also to save the time of the courts to examine the witnesses. The policy behind Section 10 is based upon the public policy. 14. …Section 10 applies only where, on the final decision being reached in the previous suit, such decision would op