V.P. Thamaraiselvi vs Indian Bank and Others

K. Suguna, J.—This writ petition is filed for the issue of a writ of declaration, declaring the entire process undertaken by respondents Nos. 2

and 3 herein starting from the filing of O.A. No. 287 of 2004 up to the auction sale dated February 14, 2007, is without jurisdiction, invalid and

void ab initio.

The case of the petitioner is the petitioner''s husband late V.P. Palanisamy was originally a partner of a firm called V.P. Garments. The said firm

availed certain loans and facilities from the first respondent-bank during the period between December 4, 1992 and November 9, 1994. However,

the firm was dissolved and reconstituted into a partnership business in the name of the petitioner''s husband Mr. V.P. Palanisamy. The properties of

the petitioner''s husband comprised in S.F. No. 330 of Rakyapalayam village, Avinashi taluk, Coimbatore district, were given as collateral security

for the loans availed and equitable mortgage in respect of the properties was also created by late Mr. V.P. Palanisamy in favour of the bank.

Subsequent to the death of the petitioner''s husband, the bank filed a suit before the sub-court, Tirupur in O.S. No. 470 of 2000 for the following

relief:

Therefore, the plaintiff prays that this honourable court may be pleased to pass a preliminary decree:

(a) directing the defendants personally to pay to the plaintiff a sum of Rs. 8,52,228 together with subsequent agreed rate of interest from the date

of suit till the date of realisation in full at 18.50 per cent. per annum with quarterly rests together with costs of the suit;

(b) directing the first and second defendant to pay or deposit in court the sum of Rs. 8,52,228 together with subsequent agreed rate of interest

from the date of suit till the date of realisation in full at 18.50 per cent, per annum with compounded quarterly rests together with costs on or before

the date to be determined by this hon''ble court ;

(c) in case of defendants non-payment or deposit as provided in Clauses A and B supra, a final decree for sale of mortgaged properties may be

passed ;

(d) directing the defendants to pay the costs of the suit to the plaintiff.

The said suit was filed against the petitioner and her son who was minor at that time. According to learned Counsel for the petitioner, the said

properties were ancestral properties and the petitioner''s husband had only one-third share in the said property along with his sons V.P. Karthik

Raja and V.P. Ashok Kumar and the said V.P. Karthik Raja died on October 16, 1995. According to learned Counsel for the petitioner,

consequently, the petitioner had become the sole heir, as per the Hindu Succession Act, 1956. The second son, namely, V.P. Ashok Kumar had

filed O.S. No. 37 of 1997 for partition and the same was also decreed. In the said suit filed by the respondent-bank in O.S. No. 470 of 2000, an

ex parte decree was passed by the sub-court, Tirupur on August 8, 2002, against the petitioner and the petitioner''s son, for the payment of Rs.

8,52,228 with interest thereon at 18.5 per cent, per annum with quarterly rests from the date of the suit till the date of realisation. Subsequent to

this, the first respondent-bank filed O.A. No. 287 of 2004 under Act 51 of 1993 on the file of the second respondent. The petitioner herein has

also entered appearance in the said application. Now, the stand of the petitioner is at that time, the petitioner was not aware of the fact, that the

Tribunal did not have jurisdiction to entertain the application filed by the first respondent.

The said O.A. was disposed of by order dated October 4, 2005, in the following terms:

In the result, it is ordered to issue recovery certificate in terms of the preliminary decree dated August 8, 2002, in O.S. No. 470 of 2000 of the

sub-court, Tirupur for the recovery of the sum of Rs. 15,45,367.50 (rupees fifteen lakhs forty five thousand three hundred and sixty seven and

paise fifty only) with interest on the sum of Rs. 8,52,228 (rupees eight lakhs fifty two thousand two hundred and twenty eight only) at 18.5 per

cent, per annum from March 26, 2004, till realisation by sale of the ''B'' schedule mortgaged property shown in the preliminary decree. The costs

of the applicant-bank in this proceeding shall be evidence costs in execution of the recovery certificate. Communicate copy of this order to both

parties as provided in Rule 16 of the Debts Recovery Tribunal (Procedure) Rules, 1993, as amended in 2003.

As per the averment in the affidavit filed in support of the writ petition the bank had initiated further recovery proceedings in R.P. No. 150 of

2005 to bring the property for sale. The interlocutory application filed by the petitioner herein in I.A. No. 644 of 2006 to cancel the proclamation

of sale and issue a fresh proclamation of sale only with regard to one-third share of the petitioner''s husband was also dismissed. The petitioner had

filed another application before the third respondent in I.A. No. 334 of 2007 to defer the confirmation of the sale and set aside the auction dated

February 14, 2007. When that I.A. was pending, the petitioner had filed this writ petition with the above said prayer.

According to learned Counsel for the petitioner, the order passed by the 5 Tribunal, the second respondent herein is without jurisdiction.

According to learned Counsel for the petitioner u/s 31A with respect to the decrees which were passed prior to January 17, 2000, alone, the

Tribunal has got power to entertain. As far as the case in hand is concerned, the said decree was passed on August 8, 2002. As such, according

to learned Counsel, the Tribunal does not have jurisdiction to entertain that application. Consequently, the entire proceedings before the Tribunal

and the consequential proceedings have become void ab initio, so also, the procedure adopted by the third respondent in the matter of the sale of

properties of the petitioner. Consequently, according to learned Counsel for the petitioner, right from the beginning of the filing of O.A. No. 287 of

2004 which culminated in the sale of the properties comprised in S.F. No. 330 of Rakyapalayam village, Avinashi taluk, Coimbatore district, on

February 14, 2007, has to be declared as null and void.

On the other hand, learned Counsel appearing for the first respondent-bank has submitted that late Mr. V.P. Palanisamy deposited the title

deeds pertaining to the property in question on December 19, 1992 and on December 21, 1992, the said late V.P. Palanisamy executed a

memorandum of deposit of title deeds in favour of the bank, confirming the deposit of the title deeds and creation of equitable mortgage.

According to learned Counsel for the first respondent-bank, after the death of Mr. V.P. Palanisamy with the full knowledge that V.P. Palanisamy

has deposited the title deeds in question, his son seems to have filed a suit in O.S. No. 37 of 1997 with a view to avoid probable legal action taken

by the bank against the property mortgaged, for partition. According to learned Counsel for the first respondent-bank, the said suit was a collusive

one and was only filed with an intention to defeat and delay the claim of the first respondent as secured creditor in respect of the entire property

mortgaged to the bank by late V.P. Palanisamy. According to learned Counsel for the respondent-bank since the mortgage created over the

property in question was not cleared, the first respondent-bank filed O.S. No. 470 of 2000 and obtained a preliminary decree for a sum of Rs.

8,52,228. As the decretal amount exceeds Rs. 10 lakhs payable by the judgment debtor and since the civil court seized to have the jurisdiction

over the execution of the decree, the first respondent-bank preferred O.A. No. 287 of 2004 on the file of the second respondent. According to

learned Counsel, as per Section 2(g) of Act 51 of 1993 definition of ""debt"" includes ""decretal, debt"" also, consequently, the bank had filed O.A.

No. 287 of 2004.

According to learned Counsel, the petitioner has also entered appearance in the said O.A. and the said O.A. was disposed of by an order

dated October 4, 2005 and the recovery certificate was also issued in R.P. No. 150 of 2005 on November 7, 2005. According to learned

Counsel, having known fully well that they do not have a case on merit, the petitioner and her son had submitted before the Tribunal. Apart from

this, according to learned Counsel for the respondent-bank, no appeal has been preferred by the petitioner or her son as against the order passed

in O.A. No. 287 of 2004 and even as against the order passed in I.A. No. 644 of 2006 to issue a fresh certificate only in respect of one-third

share of the petitioner''s husband. No appeal was filed. As such, according to learned Counsel for the respondent-bank, the matter has attained its

finality and now, the petitioner cannot raise the point with regard to the jurisdiction. Apart from this, the decree passed in O.S. No. 37 of 2007

does not bind the respondent-bank nor will alter the position of the mortgage in respect of the entire property created by V.P. Palanisamy. Based

on this, learned Counsel for the respondent-bank, has prayed for the dismissal of the above said writ petition.

The auction purchaser, the fourth respondent had filed M.P. No. 1 of 2007 to implead him as a party respondent in this writ petition. According

to learned Counsel appearing for the fourth respondent, the petitioner herein had submitted herself to the jurisdiction of the Tribunal. The first

respondent-bank, in pursuance of the orders passed by the second respondent, filed recovery proceedings in R.P. No. 150 of 2005. Pursuant to

the recovery proceedings in R.P. No. 150 of 2005, the first respondent herein conducted a public auction on February 14, 2007, wherein the

fourth respondent is the successful bidder and deposited the entire amount of Rs. 41,90,000 on February 14, 2007 and on February 28, 2007,

with the third respondent. According to learned Counsel, the writ-petition is not maintainable since an alternative remedy is available by way of

appeal under Sections 20 and 30 of the Act 51 of 1993. Having failed in the proceedings before the second and the third respondents, the

petitioner ought to have filed an appeal but the petitioner without availing the alternative remedy has filed this writ petition and learned Counsel for

the fourth respondent relying on the judgment reported in Indian Additives Ltd. Vs. Indian Additives Employees Union and Another, and the

judgment reported in Punjab National Bank Vs. O.C. Krishnan and Others, , has submitted that on the ground of availability of the alternative

remedy, this writ petition has to be dismissed. Apart from this, relying on the judgment reported in Om Sakthi Renergies Limited Vs. Megatech

Control Limited and A.P. Transco, , learned Counsel appearing for the fourth respondent had contended having submitted before the Tribunal the

petitioner is estopped from contending that the Tribunal does not have any power to entertain the application filed by the petitioner. Based on this,

learned Counsel for the fourth respondent has prayed for the dismissal of the above said writ petition.

I have considered the above submissions of the respective learned Counsel.

Admittedly, when the suit was filed as per the plaint filed by the bank, the suit is for a recovery of a sum of Rs. 8,52,228 which is below Rs. 10

lakhs. As such, in view of Sub-section (4) of Section 1, admittedly the Tribunal did not have the jurisdiction to entertain that claim. Besides, only in

the year 2002, the Tribunal was formed in Coimbatore. Consequently, in the year 2000, when the suit was filed, no other option for the bank

except to file a civil suit. Admittedly, the said suit was decreed on August 8, 2002. As per the said decree the petitioner has to pay a sum of Rs.

8,52,228 with interest thereon at 18.5 per cent, with a quarterly rests from the date of the suit, i.e., August 25, 2000, till realisation. On the date on

which the original application in O.A. No. 287 of 2004 was filed before the second respondent, the claim amount was Rs. 15,45,367.50, i.e.,

more than Rs. 10 lakhs. Now, the argument of learned Counsel for the petitioner is the Tribunal does not have power to entertain O.A. No. 287 of

2004. As far as this submission is concerned, as per the judgment reported in Punjab National Bank, Dasuya Vs. Chajju Ram and Others, , the

apex court has held in paragraph 9 as follows (page 45):

We are also unable, to agree with the High Court that because the original decree which was passed was for principal sum of Rs. 6,19,250 the

Tribunal would get no jurisdiction. It is to be seen that decree was for a sum of Rs. 6,19,250 plus interest at the rate of 161/2 per cent, per annum

from the date of filing of the suit till the recovery of money. As and when the amount due to the bank under the decree became more than Rs. 10

lakhs and an application for execution was filed, it could only be entertained by the Tribunal and not by the civil court. It is clear that in view of the

provisions of Section 34 of the Act, the provisions of Order 21, Rule 10 of the CPC would have no application.

Admittedly, as per the decree passed in O.S. No. 470 of 2000 by order dated August 8, 2002, the amount due was Rs. 15,45,367.50, i.e.,

more than Rs. 10 lakhs. As per the above said judgment since the value of the claim is more than Rs. 10 lakhs, admittedly, only the Tribunal is the

proper forum and in view of Sub-section (4) of Section 1 read with Section 18 of the Act 51 of 1993, civil court cannot entertain any such claim.

It is true Section 31A will apply only in respect of cases wherein decree was passed before the constitution of the Tribunal or before the

commencement of Recovery of Debts Due to the Banks and Financial Institutions (Amendment) Act, 2000 and which have not been executed. As

far as the case in hand is concerned, admittedly, decree was passed only on August 8, 2002. Now the question arises, if a decree has been passed

by a civil court subsequent to the formation of the Tribunal (since the original claim was below Rs. 10 lakhs) and if the decree amount exceeds

more than Rs. 10 lakhs whether the Tribunal is having jurisdiction or not is the issue in question. As far as this is concerned, the term ""debt"" is

defined in Section 2(g) of Act 51 of 1993 which reads as follows:

(g) ''debt'' means any liability (inclusive of interest) which is claimed as due from any person by a bank or a financial institution or, by a consortium

of banks or, financial institutions during the course of any business activity undertaken by the bank or the financial institution or the consortium

under any law for the time being in force, in cash or otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or

order of any civil court or any arbitration award or otherwise, or under a mortgage and subsisting on, and legally recoverable on, the date of the

application.

As per the above provision even the liability which is claimed as due 1 from any person under a decree is also a debt. u/s 19 of the Act, the

application can be filed, before the Tribunal, and as per Sub-Section (20) of Section 19 read with Sub-section (25) of Section 19 of the Act which

reads as follows:

Application to the Tribunal.-....

(20) The Tribunal may, after giving the applicant and the defendant an opportunity of being heard, pass such interim or final order, including the

order for payment of interest from the date on or before which payment of the amount is found due up to the date of realisation or actual payment,

on the application as it thinks fit to meet the ends of justice....

(25) The Tribunal may make such orders and give such directions as may be necessary or expedient to give effect to its order or to prevent abuse

of its process or to secure the ends of justice.

14.The Tribunal has got power to pass any interim order or final order with regard to the realisation of the amount due to the bank or any financial

institutions as the Tribunal thinks it fit to meet the ends of justice. As per Sub-section (25) of Section 19 the Tribunal has got power to pass such

orders and give such direction which are necessary or expedient to give effect to its order or to prevent abuse of its process or to secure the ends

of justice. As such in view of the bar u/s 18 and also since the decree amount exceeds Rs. 10 lakhs in view of Sub-sections (20) and (25) of

Section 19 and also in view of Section 17, in my opinion, only the second respondent has got the power to entertain the application filed by the

first respondent-bank. In the judgment reported in Glenny, C.J. Vs. The Catholic Syrian Bank Ltd., , the Full Bench of the Kerala High Court has

held in paragraphs 19 and 23 as follows (pages 235 and 236):

As already noticed, u/s 17 the jurisdiction has been conferred exclusively on the Tribunal. Section 18 ousts the right of the civil court to try any

matter relating to the recovery of an amount of Rs. 10 lakhs or more. Thus, it cannot be said that once the civil court has passed the decree, the

subsequent proceedings also shall be within its jurisdiction. This would not be in conformity with the Act....

As already noticed, ''debt'' under the Act includes an amount due under a decree passed by the civil court. u/s 19, a bank can institute an

application to recover any debt from a person. Thus, even an application for the recovery of an amount as due under a decree passed by the civil

court falls within the ambit of Section 19. The statute does not really make any distinction between an application for recovery or execution. The

aim and object is to secure the public dues. It is to recover the money.... The action of the bank was in strict conformity with the provisions of the

Act. It is not shown to be contrary to any provision of the statute. Thus, the contention as raised by learned Counsel for the appellant is rejected.

In view of this, the argument of learned Counsel for the petitioner since the decree has been passed on August 8, 2002, the Tribunal does not

have any power to entertain O.A. No. 287 of 2004 application will not hold good. Besides, the petitioner had also not raised jurisdictional

objection before the second respondent.

The first respondent has filed that application u/s 31A of the Act 51 of 1993. Admittedly, Section 31A will apply in respect of decree which

has been passed prior to the commencement of the Amendment Act of 2000. But by quoting a wrong provision of law will not make the

proceedings taken by the first respondent void before the second respondent-Tribunal. Admittedly, an ex parte decree has been passed in O.S.

No. 470 of 2000 on the file of sub-Court, Thirupur by order dated August 8, 2002. Neither the petitioner herein nor the second defendant therein

had taken any further steps as against the said decree. Having not taken any further steps as against the order passed in O.S. No. 470 of 2000 on

the file of the sub-Court, Thirupur, dated August 8, 2002 and also not taking any further steps as against the order passed in I.A. No. 644 of 2006

by order dated January 10, 2007, the petitioner had allowed the issue to reach the finality. As such, the contention of learned Counsel for the

petitioner relying on the order passed in O.S. No. 37 of 1997, cannot hold good.

As rightly contended by learned Counsel for the respondents, as per the judgment reported in Punjab National Bank Vs. O.C. Krishnan and

Others, , the hon''ble apex court has held in paragraph 6 as follows (page 21):

The Act has been enacted with a view to provide a special procedure for recovery of debts due to the banks and the financial institutions. There

is a hierarchy of appeal provided in the Act, namely, filing of an appeal u/s 20 and this fast-track procedure cannot be allowed to be derailed either

by taking recourse to proceedings under Articles 226 and 227 of the Constitution or by filing a civil suit, which is expressly barred. Even though a

provision under an Act cannot expressly oust the jurisdiction of the court under Articles 226 and 227 of the Constitution, nevertheless, when there

is an alternative remedy available, judicial prudence demands that the court refrains from exercising its jurisdiction under the said constitutional

provisions. This was a case where the High Court should not have entertained the petition under Article 227 of the Constitution and should have

directed the respondent to take recourse to the appeal mechanism provided by the Act.

Admittedly, this writ petition is filed without exhausting the alternative remedy available under the special statute.

In view of the above reasons, I am not able to grant the relief sought for by the petitioner. Hence, the writ petition is dismissed. No costs.

Consequently, connected miscellaneous petitions are also dismissed.