Chhajju Ram vs Punjab National Bank

Swatanter Kumar, J.—The Punjab National Bank, Branch Office, Dasua (hereinafter referred to as the Bank) filed an application in Execution Petition No. 155 of 1994 in the Court of learned Additional Civil Judge, Senior Division, Dasua, praying that the execution application be transferred to the Debt Recovery Tribunal, Jaipur, for being tried and disposed of in accordance with law. Vide order dated 26.11.1997, the learned executing Court allowed the application and directed the execution application to be transferred to the Debt Recovery Tribunal, Jaipur. The said order has been impugned by M/s Bal-winder Rice Traders, Judgment Debtor before the executing Court (petitioner herein).

A suit for recovery of Rs.6,19,250/- was filed by the Bank in the civil court, which included the principal and interest on the date of institution of the suit. This was filed before the civil Court because the claim was less than Rs.10 lac and, therefore, under the provisions of The Recovery of Debts Due to Bankers and Financial Institutions, Act, 1993 (hereinafter referred to as the Act), the said civil court adjudicated upon the suit and passed a decree on 16.2.1994. The said decree was assailed in appeal by the present petitioners in the High Court in accordance with the provisions of the Code of Civil Procedure.

On the basis of the above undisputed facts, it is averred by the Decree Holder that at the time of filing of the execution application, the amount accumulatively due as debt was more than Rs.10 lac and, therefore, the civil court has no jurisdiction to entertain and decide the execution application. It is argued that the same should be transferred to Debt Recovery Tribunal at Jaipur. On the contrary, on behalf of the present petitioner, it was contended that no other court except the civil Court had the jurisdiction to entertain and decide the execution application. The subsequent increased liability would be no consequence to determine the jurisdiction of the competent forum.

The learned executing Court has taken the view that even the execution of a suit decreed by the Civil Court would lie before the Tribunal and has, therefore, transferred the execution petition for further proceedings to the Debt Recovery Tribunal at Jaipur. According to the learned counsel for the petitioner the decision is based upon mis-construction of the relevant provisions of law under the Act as well as that of the provisions of the Civil Code Procedure. On the other hand, it is contended by the learned counsel for the respondent that the order is in consonance with the order passed by the presiding officer, Debt Recovery Appellate Tribunal, Mumbai, in the case of Punjab National Bank v. Globe Arts Limited 1997 I.S.J.191 and as such calls for no interference by this Court.

In order to appreciate the rival contentions reference to some of the provisions of the Act would be necessary. u/s 19 of the Act, where a bank or a financial institution has to recover any debt from any person it may make an application to the Tribunal within the local limits of whose jurisdiction the defendant resides or where the cause of action arises wholly or in part. The application has to be filed in the form as prescribed. The Tribunal is under an obligation to grant opportunity to the defendant and under Sub-section 7 of Section 19 of the Act and Presiding Officer of the Debt Recovery Tribunal has to issue a certificate under his signature to the Recovery Officer for recovery.

u/s 25 of the Act the Recovery Officer can recover the amount on the basis of the recovery certificate received by him and as issued by the Debt Recovery Tribunal u/s 19(7) of the said Act. Section 17 of the Act prescribes the scope of jurisdiction and authority of the Tribunal. In accordance with this provision a Tribunal shall exercise or-and from the appointed day of jurisdiction, power and authority to entertain and decide applications from the banks and financial institutions for recovery of debt due to such banks or financial institutions. Section 31 of the Act relates to transfer of pending cases. Sub-section (1) of Section 31 reads as under:-

"31. Transfer of pending cases.- (1) 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 whereon it is based is such that it would have been, if it had arisen after such establishment, within the jurisdiction of such Tribunal, shall sand transferred on the date to such Tribunal."

A bare reading of the above provision and the scheme of this Act clearly indicates that the legislative emphasis is on the expression "debt", "application", and "cause of action". The expression debt has been defined to mean any liability inclusive of interest which a bank or the financial institution proposes to recover and is legally recoverable on the date of application. The cause of action should be one where on its basis it would be before the Tribunal after its establishment. This provision of transferring the pending cases has a restriction that it shall not be applicable to the appeals pending before any Court. The expression "application" must be understood in its correct perspective and in contract to a execution petition. The Banking Tribunal Act does not postulate filing of an execution petition. As such, it is either an application before the Debt Recovery Tribunal or it is a Recovery Certificate which is sent for recovering the amount before the specified recovery officer. In other words, no execution is filed by the bank or financial institution to recover its amount. The expression application has been used in contra distinction to the recovery certificate. It is an application filed by a bank or financial institution which ultimately culminates into issuance of recovery certificate. But where a decree is passed by the Civil Court it would have to be executed by that Court alone under the provisions of Order 21 Rule 10 of the Code of Civil Procedure. The decree holder has to file an execution petition before the Court which had passed the decree or if the decree has been sent for execution to another Court then before the officer of that Court. Execution of a decree passed by the Civil Court has to be effected in consonance with and in the manner prescribed under the provisions of various rules of Order 21. The manner prescribed therein attaches various obligations and rights to the decree holder as well as to the judgment debtor.

The matters which are liable to be transferred u/s 31 of the Act have to be the matters which are otherwise triable and required to be filed within the jurisdiction of the Debt Recovery Tribunal, upon its establishment. In other words, when the application for recovery is to be filed after coming into force the Act of 1995 that ought to be within the competence of the Tribunal in consonance with the provisions of the Act. In the present case admittedly a suit for recovery was filed for effecting recovery of Rs.6,19,250/-. As such, an application instead of a suit could not lie before the Tribunal because the tribunal could entertain only such applications for the recovery of amount which are in excess of Rs.10 lacs on the date of coming into force of the Act, As the original jurisdiction based upon a cause of action i.e. the debt allegedly and legally recoverable by the Bank or financial institution was not within the competence of the Tribunal, the Tribunal obviously would have no power to entertain and decide execution proceedings merely upon passing of decree by the Civil Court of competent jurisdiction. The amount having been increased on the date of execution i.e. in excess of Rs. 10,00,000/- would not vest jurisdiction in the Tribunal. The Civil Court has no jurisdiction to issue a recovery certificate in terms of the Act. The Civil Court is required to act and deal with the matters in consonance with the provisions of the Code of Civil Procedure. The learned executing Court has erred in law in not drawing any distinction between the right of the banks or the financial institution to file an application under the provisions of the Act and/or for enforcing a recovery certificate before the recovery officer (proceedings before recovery officer appointed by the Central Government for such purposes). The condition precedent for proceedings to commence before the recovery officer appointed by the Central Government u/s 7(1) of the Act is the issuance of a recovery certificate. The Civil Court has no such jurisdiction. In the present case a suit was instituted for recovery of Rs.6,19,260/- for which only the Civil Court had jurisdiction to entertain on the date of presentation of the plaint, even after coming into force the provisions of the Act of 1993. The Civil Court has passed the decree in accordance with law. An appeal against which is pending before the High Court. Such appeal u/s 31 of the Act is not triable before the Banking Appellate Tribunal (refer to the case of Virinder Mayoo v. Bank of India, 1997 I.S.J. 12). The Civil Court, thus, cannot be divested of its jurisdiction which was otherwise not vested in the Tribunal. The provisions relating to statutory transfer of cases to the Tribunal would have no application in the present case and as such these proceedings can neither be covered under the term application nor under the other proceedings.

For the reasons aforestated, I am of the considered view that the order impugned in this revision is liable to be set aside. In my humble opinion the law stated in the case of P.N.B. v. Globe Arts (supra) is not correctly spelt out and as such I am unable to agree with that view.

Consequently, this revision is accepted. The order of the learned executing Court dated 26.11.1997 is hereby set aside. The learned executing Court should now proceed in accordance with law. I would request the learned executing Court to deal with this execution petition expeditiously.