Nandu D. Chhabria vs State Bank of India and Others

Chandrachud D.Y. (Dr.), J.—Rule, by consent returnable forthwith. With the consent of Counsel and at their request the petition is taken up for hearing and final disposal. The Debts Recovery Tribunal issued a recovery certificate on 7 January 2010 in the sum of Rs. 17,65,787.99 against the petitioner and the second respondent in an application filed by the first respondent, the State Bank of India in 2006. The petitioner filed an application on 30 July 2010 for setting aside the recovery certificate on the ground that it was passed ex parte. The Registrar of the Tribunal by his order dated 11 August 2010 declined to register the application on the ground that such an application was governed by Article 123 of the Limitation Act and having been made beyond a period of thirty days of the order of the Tribunal, it was barred by limitation. The petitioner thereupon filed an appeal before the Tribunal which was dismissed on 15 February 2011. The order of the Tribunal was confirmed in appeal by the Debts Recovery Appellate Tribunal on 6 April 2011.

The Tribunal came to the conclusion that though it has been held by the Supreme Court in Nahar Industrial Enterprises Ltd. Vs. Hong Kong and Shanghai Banking Corporation, , that the Debts Recovery Tribunal is not a Civil Court and that the judgment and the recovery certificate issued by the Tribunal did not constitute a decree, nonetheless Article 123 of the Schedule to the Limitation Act also applies to orders which have the force of a decree and hence, an application for setting aside an order of the Tribunal would be governed by that Article. Both the Tribunal and in appeal the Appellate Tribunal have held that the object of the Recovery of Debts due to Banks and Financial Institutions Act 1993 would not be sub-served if residuary Article 137 were to apply. Consequently, the order refusing to register the application as being barred by limitation has been confirmed.

Counsel appearing on behalf of the petitioner submitted that - (i) Article 123 of the Schedule to the Limitation Act, 1963 applies to an application to set aside a decree passed ex parte or to rehear an appeal decreed or heard ex parte; (ii) Proceedings before the Debts Recovery Tribunal do not arise out of a suit and do not culminate in a decree; (iii) The expression "decree" in Article 123 of the Limitation Act 1963 must have the same meaning as contained in section 2(2) of the CPC 1908; (iv) Consequently Article 123 can have no application where an application has been submitted to the Debts Recovery Tribunal to set aside a recovery certificate.

On the other hand, Counsel appearing on behalf of the first respondent supported the orders passed by the Tribunal and the Appellate Tribunal by contending that - (i) The orders of the Debts Recovery Tribunal have all the attributes of a decree of the Civil Court having regard to the provisions of sub-sections (20) and (22) of section 19; (ii) Section 24 provides that the provisions of the Limitation Act shall, as far as may be, apply to an application made to a Tribunal; (iii) Under sub-section (2) of section 22, the Tribunal is vested with the powers of a Civil Court inter alia for deciding an application ex parte and in regard to the setting aside of any order passed by the Tribunal ex parte. Hence, it was submitted that Article 123 would govern an application for setting aside an ex parte order and that placing any other construction may lead to the object of the Act not being fulfilled.

Section 2(d) of the Recovery of Debts due to Banks and Financial Institutions Act 1993 provides that unless the context otherwise requires, an application means an application made to a Tribunal u/s 19. The expression "debt" is defined by section 2(g). u/s 18, on and from the appointed day, no Court or other authority shall have, or be entitled to exercise, any jurisdiction, powers or authority in relation to matters specified in section 17. Section 18, however, excepts the jurisdiction exercisable by the Supreme Court and by High Courts under Articles 226 and 227 of the Constitution. Section 17 confers exclusive jurisdiction on the Debts Recovery Tribunal to entertain and decide applications from banks and financial institutions for the recovery of debts due to them. Sub-section (1) of section 19 provides for an application by a bank or financial institution for the recovery of a debt due from any person. Subsection (20) empowers the Tribunal to pass an interim or final order including an order for the payment of interest, on the application as it thinks fit to meet the ends of justice. Thereupon under sub-section (22) of section 19 the Presiding Officer is required to issue a certificate under his signature on the basis of the order of the Tribunal to the Recovery Officer for the recovery of the amount of debt specified in the certificate. Section 22 stipulates that the Tribunal and the Appellate Tribunal shall not be bound by the procedure laid down in the CPC 1908, but shall be guided by the principles of natural justice. Subject to the provisions of the Act and the Rules, the Tribunal and the Appellate Tribunal have the power to regulate their own procedure. Under sub-section (2) of section 22 both the Tribunal and the Appellate Tribunal have been vested with the same powers as are vested in the Civil Court under the CPC while trying a suit in respect of certain specified matters. Among them in Clause (f) is deciding an application ex parte and in Clause (g) setting aside an order passed ex parte. Section 24 provides that the provisions of the Limitation Act 1963 shall as far as may be, apply to an application made to a Tribunal. Section 25 provides for the mode in which the Recovery Officer can on receipt of a copy of a certificate under sub-section (7) of section 19 proceed to recover the amount of debt specified in the certificate. Section 31A stipulates that if a decree or order was passed by any Court before the commencement of the Amending Act of 2000 and had not yet been executed, then the decree-holder may apply to the Tribunal to pass an order of recovery. The Tribunal is empowered to issue a certificate for recovery upon which the Recovery Officer is to proceed to recover the amount as if it was a certificate in respect of a debt recoverable under the Act.

Article 123 of the Schedule to the Limitation Act 1963 deals with applications to set aside a decree passed ex parte or to rehear an appeal decreed or heard ex parte. The expression ''decree'' does not find a definition in the Limitation Act, 1963 and must therefore receive the construction that is placed in the CPC 1908. This principle emanates from a decision of Chief Justice M.C. Chagla, speaking for a Division bench of this Court in P.N. Films Ltd. and Another Vs. Overseas Films Corporation Ltd., . The Division Bench held that expressions used in the law of limitation and the CPC 1908 must receive the same construction. Hence, if the CPC 1908 understood the expression ''ex parte'' decree in one particular or definite sense, there is no reason why it should be understood in a difference sense for the purposes of the Limitation Act 1963. Now it is trite law that in order to fulfill the definition of the expression ''decree'', in section 2(2) of the CPC 1908, three essential conditions must be fulfilled: (i) The adjudication must be given in a suit; (ii) The suit must start with a plaint and culminate in a decree; and (iii) The adjudication must be formal and final and must be given by a Civil Court Diwan Bros. Vs. Central Bank of India, Bombay and Others,

In Nahar Industrial Enterprises the Supreme Court considered inter alia as to whether the High Court or the Supreme Court had the power to transfer a suit from a Civil Court to the Debts Recovery Tribunal bearing in mind (i) the effect of a transfer from the Civil Court to the Debts Recovery Tribunal would be to oust the jurisdiction of the Civil Court which could not be done without an express statutory provision; (ii) The proceedings before the Tribunal are sui generis and are totally different from proceedings in a Civil Court; (iii) The power of transfer under the CPC 1908 is inapplicable since sections 22 to 25 of the CPC 1908 apply in a case where a transfer is made from one Court to another and the Debts Recovery Tribunal is not a Court and (iv) The power to transfer under the Recovery of Debts due to Banks and Financial Institutions Act, 1993 is restricted to cases filed by banks that were pending on the date when the Act came into force. In that context, the Supreme Court clearly laid down that the Debts Recovery Tribunal is neither a Court nor does it pass a decree. In paragraphs 85 and 86 of its judgment, the Supreme Court held as follows:

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 counterclaim 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 counterclaim.

The Debts 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 (P) Ltd. Vs. S.B.I.), 2005(127) CC 176 (Ker) Comp Cas at p. 184.] Concededly in the proceeding before the Debts Recovery Tribunal detailed examination, cross-examinations, provisions of the Evidence Act as also application of other provisions of the CPC 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 Debts Recovery Tribunal centres round the legally recoverable dues of the bank.

The Supreme Court held that the Tribunal could have been treated to be a Civil Court provided it could pass a decree and if it had all the attributes of a Civil Court including undertaking of a full-fledged trial in terms of CPC 1908 and/ or the Evidence Act. That, however, not being the case, the conclusion which was arrived at by the Supreme Court was that the High Court in that case could not have transferred a suit from a Civil Court to the Debts Recovery Tribunal.

On the basis of this principle of law which has been laid down by the Supreme Court, it is evident that an order passed by the Debts Recovery Tribunal issuing a recovery certificate does not amount to a decree. Hence, Article 123 of the Limitation Act, 1963 can have no application to an application to set aside a recovery certificate issued ex parte. A number of High Court judgments lend support to this view of the law. See (Dr. S.C. Jain Vs. Shrimati Sushila Dew) ILR 1973(2) H.P. 1238; Ram Shiromani Mishra Vs. Shiv Mohan Singh and Another, ; and Rajaji Vs. R. Krishnaji, .

The Tribunal noted the judgment of the Supreme Court in Nahar Industrial Enterprises and recorded that it is neither a Civil Court nor does the recovery certificate constitute a decree. However, on the basis of an observation contained in a commentary on the Limitation Act, the Tribunal held that Article 123 would also apply to an order which has the force of a decree and an application for setting aside the decree would be governed by the Article. The Tribunal was, however, fair to state that it did not have the benefit of adverting to the authorities which were cited in the commentary in support of that proposition. The judgment of the Madras High Court in (Subbiah Naicker Vs. Ramanathan Chettiar), (1914) ILR 37 Mad 462, observed that orders in execution which come u/s 47 of the CPC 1908 were decrees as defined in section 2 of the Code of Civil Procedure, 1908. Significantly, it will be necessary to note that as a result of the CPC (Amendment) Act 1976 the definition of the term ''decree'' was amended so that the determination of a question u/s 47 would not amount to a decree. The judgment of the Madras High Court was hence based on the provisions of section 2 as they stood earlier. But that apart, in view of the law which has now been laid down by the Supreme Court specifically in the context of the Recovery of Debts due to Banks and Financial Institutions Act, 1993, it is clear that the Tribunal is neither a Court nor does its determination constitute a decree. The Appellate Tribunal in the present case, placed a great deal of importance on the object of enacting the Act of 1993 and was of the view that an order of the Tribunal though not defined as a decree, has the effect of a decree and the Tribunal executes its orders by issuing recovery certificates and by following the procedure laid down in Chapter V. Now it is well settled by decisions of the Supreme Court that provisions of the law of limitation have to be given their strict and grammatical meaning and equitable considerations are out of place, particularly in the provisions of the law limiting the period of limitation for filing suits or legal proceedings. Bootamal Vs. Union of India (UOI), . The Appellate Tribunal, with great respect, was in error in imputing equitable considerations with a view to restrict the period of limitation so as to facilitate the object of the Act. The duty of the Court is to expound the law as it is. If Parliament considers it so appropriate, it is for the legislating body to step in and to make a provision in regard to such an eventuality. Once on its plain terms Article 123 of the Schedule to the Limitation Act, 1963 does not apply, it will be impermissible for the Court to provide for its application on the basis of equitable considerations designed to give effect to the object of the Act of 1993.

For these reasons we are of the view that both the order of the Tribunal and the Appellate Tribunal are unsustainable. The application for setting aside the order of the Tribunal issuing a recovery certificate dated 7 January 2010 ought to have been registered by the Registrar of the Debts Recovery Tribunal. The petition is accordingly made absolute by setting aside the order of the Debts Recovery Appellate Tribunal dated 6 April 2011. The Debts Recovery Tribunal is directed to register the Miscellaneous Application and to accordingly dispose it of in accordance with law. The Court has been informed that the Recovery Officer has placed the Execution Application for enforcing the ex parte order of the Debts Recovery Tribunal on 12 September 2011. In view of the order passed as aforesaid, the Recovery Officer shall adjourn the proceedings by a period of four weeks so as to enable the petitioner to have recourse to his remedies before the Tribunal. The Debts Recovery Tribunal is requested to expeditiously dispose of the application. Rule is made absolute in these terms. There shall be no order as to costs.

In view of the disposal of the petition, Civil Application 1475 of 2011 does not survive and is accordingly disposed of.