Pratibha Upasani, J. (Chairperson)
1. This Misc. appeal is filed by the appellants/original defendant Nos. 1 to 4, 6 and 7 being aggrieved by the order dated 4.7.2002 passed by the learned Presiding Officer of the Debts Recovery Tribunal, Nagpur on Interlocutory Application No. 482 of 2002 in Original Application No. 316 of 2001. By the impugned order, the learned Presiding Officer dismissed the interlocutory application made by the appellants to stay the proceedings under Section 10 of the Code of Civil Procedure, pending in the Debts Recovery Tribunal, Nagpur till decision of the Special Civil Suit No. 1034 of 1996, pending on the file of Civil Judge (S.D.), Nagpur.
2. Few facts, which are required to be stated, are as follows:
The original applicant Maharashtra State Financial Corporation (hereinafter to be referred to for the sake of brevity as the Corporation) filed Misc. Civil Application No. 843 of 1996 under Section 31 of the State Financial Corporation Act, 1951 in the Court of District Judge, Nagpur against the defendant Nos. 1 to 7 (applicant Nos. 1 to 4, 6 and 7 and the respondent No. 2 herein) for recovery of Rs. 32,10,183.57 paise from the defendant Nos. 2 to 7. The defendant Nos. 1, 2 and 6 filed their written statement and thereafter the case was transferred to the Debts Recovery Tribunal, Mumbai and was retransferred to the Debts Recovery Tribunal, Nagpur and was numbered as O.A. No. 316 of 2001. This original application is pending.
Earlier to Corporation filing M.C.A. No. 843 of 1996, M/s. Shrijee Nutrients Food Pvt. Ltd. (hereinafter to be referred to as the company for the sake of brevity) had filed a special civil suit No. 1034 of 1996 against the Corporation in the Court of Civil Judge (S.D.), Nagpur. This suit filed by the company against the Corporation was earlier in point of time. It was alleged therein by the company that their unit was disposed of by the Corporation for a less amount and that it was disposed of for total consideration of 35 lacs only which was not proper.
As price fetched by sale of the assets of the company was very much less than the amount due to be recovered by the Corporation, there remained a short fall in the loan account of the company (borrower company i.e. M/s. Shrijee Nutrients Food Pvt. Ltd.) after adjusting the sale proceeds of the assets. Contentions of the Corporation were that the short fall came to Rs. 32,10,183.57 including interest and other expenses and that the Corporation had taken over assets of the borrower company which were sold for only Rs. 35 lacs, which according to the company was a poor and such a poor price was fetched on account of mala fide and arbitrary action of the Corporation. According to the company the unit ought to have fetched a price not less than Rs. 85 lacs and therefore the company had filed the civil Suit against the Corporation claiming money decree for Rs. 50 lacs from the Corporation.
3. During the pendency of the proceedings, in Original Application No. 316 of 2001 before DRT, an application was made by the company for setting aside proceedings in the DRT till disposal of the Special Civil Suit No. 1034 of 1996 filed by the company against the Corporation, which is pending on the file of the Civil Judge (S.D.) Nagpur. It was this application which came to be rejected by the learned Presiding Officer by his impugned order.
4. I have heard Mr. Anoop Mohta for the appellants and Mr. Pankaj Kowali for the respondent No. 1. I have also gone through the proceedings including the impugned order and the case law cited by Mr. Mohta to support his argument that the learned Presiding Officer ought to have granted slay of the proceedings before him. After hearing both the advocates at length and after going through the material placed before me, I am of the opinion that the learned Presiding Officer has not committed any error as far as decision with respect to refusing stay of DRT proceedings is concerned. First of all, there is no provision of stay in the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter to be referred to as the 'Act') like provisions of Section 10 of the Code of Civil Procedure. In fact, provisions of the Code of Civil Procedure are not applicable to the DRT proceedings at all. Therefore, his observation to that extent cannot be faulted with.
5. It is true that relief sought by the company against the Corporation in the Civil Suit is by way of damages on the ground that the company was put to loss of Rs. 50 lacs on account of hasty and arbitrary action of the Corporation. It is also true that in the proceedings before the DRT, the Corporation is seeking money decree against the defendant Nos. 2 to 7 only who are guarantors and no relief is claimed against the company, whereas defendant Nos. 2 to 7 are not party to the Special Civil Suit No. 1034/1996 filed by the defendant No. 1 company against the Corporation. Thus, parties are not common in both the proceedings. Mr. Mohta, learned Advocate appearing for the appellants, made an alternative prayer that if the Tribunal was not inclined to stay the proceedings in the DRT, then in that case, the proceedings of the Civil Suit No. 1034/1996 which is pending on the file of Civil Judge SD, Nagpur be transferred to Debts Recovery Tribunal, Nagpur and both the proceedings be heard and disposed of together. After considering arguments of Mr. Mohta, I find force in them. I am in agreement with the submissions made by him not only because they are reasonable or because multiplicity of proceedings can be thereby avoided, but because that is the requirement of law, keeping in view provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and decision of the Supreme Court in United Bank of India Calcutta v. Abhijit Tea Company Pvt. Limited and Ors., I (2001) BC 1 (SC)=VI (2000) SLT 651-IV (2000) CLT 55 (SC)=AIR 2000 Supreme Court 2957.
6. Recovery of Debts Due to Banks and Financial Institutions Act, 1993 was enacted, which provided for establishment of Tribunals for expeditious adjudication and recovery of debts due to the Banks and financial institutions and for matters connected therewith or incidental thereto. Section 18 provides for bar of jurisdiction upon the Civil Court or authority, except the Supreme Court and the High Court exercising jurisdiction under Articles 226 and 227 of the Constitution, in relation to the matters specified in Section 17 of the Act. Section 17 of the Act, which lays down jurisdiction powers and authority of Tribunals, states as follows:
"(1) A Tribunal shall exercise on and from the appointed day, the jurisdiction powers and authority to entertain and decide applications from the Banks 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."
Thus, there is a complete bar of jurisdiction as far as Civil Court is concerned and all the matters mentioned in Section 17 of the Act are transferred to DRT established under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
Section 31 of the Act states as follows:
"Every suit or other proceeding pending before any Court immediately before the date of establishment of a Tribunal under this Act, being a suit or proceeding the cause of action where on it is based is such that it would have been, if it had arisen after such establishment within the jurisdiction of such Tribunal shall stand transferred on that date to such Tribunal."
Proceedings, pending cases under Section 31 thus, automatically, stand transferred by operation of law. Even the execution application pending in the Civil Court when the Act came into force has to be transferred under Section 31 of the Act.
7. In the present case at hand, the suit with respect to damages filed by the company against the Corporation is already pending in the Civil Court. Contention of the company, who is defendant in the original application i.e. in the proceedings before the DRT, is that the company is entitled to claim from the Corporation a sum of Rs. 50 lacs because of their certain arbitrary action. Thus, the company's claim in the Civil Suit against the Corporation is for damages. In a subsequently instituted suit/original application, which is pending in the DRT and which is filed by the Corporation against the company, the claim is for recovery of money payable allegedly by the company to the Corporation, Thus, keeping in mind provisions of the Act, there should not be any difficulty in clubbing both these proceedings, The suit of the company against the Corporation is only in the nature of counter-claim and that counter claim even though made in the earlier suit, can be tried along with the original application filed by the Corporation against the company To support this proposition, indeed, reliance can be placed on United Bank of India, Calcutta v. Abhijit Tea Company Pvt. Limited and Ors. (supra). In that case, earlier to the suit filed by the Bank for recovery of its dues, the debtor company (Abhijit Tea Company Pvt. Limited) had filed a suit for specific performance and permanent injunction against the Bank. What was claimed in that suit by the debtor company was that there was an agreement not to charge interest, that agreement was to be enforced, that interest was not liable to be charged on arrears or interest could not be charged at higher rate, that only a fixed sum was to be recovered per months, that damages suffered by the debtor company were to be deducted and further financial assistance was to be given in future. It was claimed that as both the suits were inextricably connected and as the suit for specific performance of agreement could not be transferred to Tribunal, the suit for recovery filed by the Bank should also not be transferred.
It was, however, held that the word counter claim in Sections 19(8) to (11) which is equated to a cross suit, includes a claim even if it is made in an independent suit filed earlier. It was further held that if a set-off or a counter claim is to be equated to a cross-suit under Section 19 a fortiori there can be no difficulty in treating the cross suits as one by way of set-off and counter claim, and as proceedings which ought to be dealt with simultaneously with the main suit.
The crucial paragraph of the above referred Supreme Court case, can be reproduced below. It reads as under:
"An agreement not to charge interest, the specific performance of which is claimed is nothing but a plea that the Bank could not charge interest. A permanent injunction directing the Bank not to charge interest because of an alleged agreement in that behalf is likewise a plea that no interest is chargeable. So far as the plea for further financial assistance is concerned, it is also broadly, in the nature of a counter-claim. All these fall under Sections 19(8) to (10). Again, the plea for deducting "damages" though raised in the suit is indeed broadly a plea of 'set-off' falling under Sub-clauses (6) and (7) of Section 19. Thus, the suit filed by the debtor company amounts to "counter-claim" and "set-off" under Section 19. Both the suits are suits falling within the Act and are required to be tried by the Tribunal. The pendency of the company's suit in the High Court cannot therefore be a ground for retaining the Bank's suit in the High Court."
8. Applying the same principle here, it can be said that the pleas raised by the company in the earlier suit are inextricably connected with the counter-claim in the proceedings, which are pending before the DRT. Plea of the company in the Civil Suit is that less amount was fetched through the sale of its assets because of arbitrary and mala fide action of the Corporation and therefore the company suffered loss of Rs. 50 lacs, while Corporation's claim in the DRT is for short fall of Rs. 35 lacs, which according to the Corporation is still to be paid by the company to the Corporation. Applying ratio of the Supreme Court judgment (supra), the claim made by the company for its dues against the Corporation amounts to counter claim and falls within Sub-clauses (8) to (11) of Section 19 of the Act as introduced by Act-I, 2000.
9. Thus, I find reliance placed by Mr. Mohta on Untied Bank of India, Calcutta v. Abhijit Tea Company Pvt. Limited and Ors. (supra), correct, Facts of the present case are iden-tical and therefore same ratio of the Supreme Court decision can be made applicable to the facts of present case also. In the Supreme Court case, the Supreme Court directed Bank's suit to be transferred by the Registrar, High Court to the Tribunal under the Act. In the present case at hand also, in my opinion, the proceedings of the Civil Court and the proceedings, which are pending in the DRT can be clubbed together, in the light of observations made above and in view of Supreme Court judgment (supra) and both the proceedings can be heard and disposed of together by the learned Presiding Officer of the DRT, Nagpur. For this purpose, the appellants should be permitted to approach the Civil Court for taking necessary steps and the respondent Corporation has to extend its co-operation to the appellants, so that all the necessary steps like making application to the Civil Court for transfer of the Civil Suit to the DRT and for adding necessary parties can be expeditiously taken. For this purpose, at least three months' time will have to be given. Accordingly though the appeal is being dismissed holding that the impugned order on the point of declining to grant stay, was correct one alternative relief, as prayed, is thus, granted to the appellants. Hence, following order is passed.
Misc. Appeal No. 308/2002 is dismissed.
However liberty is given to the appellants to move the Court of Civil Judge, S.D. Nagpur for taking appropriate steps to get the Civil Suit No. 1034/96 transferred to Debts Recovery Tribunal, Nagpur in the light of observations made by the learned Presiding Officer in para No. 16 of the impugned order dated 4.7.2002 and observations made by this Appellate Tribunal in its order.
Appellants to make such an application within four weeks from today to the Civil Court. The respondents to cooperate the appellants in this process to enable them to take appropriate steps expeditiously. On that being done, the Presiding Officer of Debts Recovery Tribunal, Nagpur to proceed with the matter in accordance with law on its own merits and dispose it of expeditiously as the matter is very old.
Misc. Appeal No. 308/2002 is disposed of accordingly.