Walayar Motels Pvt. Ltd. and Others vs State Bank of India and Another

P.K. Balasubramanyan, J.—This application for review is filed by the judgment-debtors. In execution of a decree for money involving more than Rs. 10 lakhs the decree holder Bank sought for the appointment of a Receiver for the first judgment-debtor undertaking. By order, dated 24th August 1993 the executing Court appointed a Receiver. That order was challenged in the above revision, C.R.P. 1563 of 1993. Therein, the judgment-debtors moved C.M.P. 2512 of 1993 for a stay of the order of the Court below appointing the Receiver. After hearing Counsel for the judgment-debtors and the decree holder Bank, this Court passed an order on 3rd September 1993 granting the judgment-debtors an interim stay of condition that they made a payment of Rs. 5 lakhs within a period of seven days from the date of that order and a further amount of Rs. 5 lakhs within a period of one month from that order. This Court also provided that in case any of those payments were defaulted, the interim stay granted would stand automatically cancelled. The judgment-debtors did not comply with that condition. The Court below instead of taking further steps as made clear in the interim order of this Court, dated 3rd September 1993, dragged its feet and did not insist on the Receiver appointed, immediately taking possession of the motels and its assets. One can only take it that the Bank Officers were remiss in bringing to the notice of that Court the need for the issue of a direction to the Receiver, on the failure of the judgment-debtors to comply with the conditions imposed by this Court.

The Civil Revision Petition came up for hearing on 8th November 1996. The recovery of debts due to Banks and Financial Institutions Act, 1993 came into force on 24th June 1993. The concerned Tribunals were constituted and notification in that behalf u/s 3 of that Act was issued by the Central Government on 4th November 1996. When the Civil Revision Petition came up for hearing on 8th November 1996, no argument based on the Debts Recovery Act was raised before this Court. This Court dismissed the Civil Revision Petition on 8th November 1996 and refusing to accept the submission of Counsel for the judgment-debtors that the Civil Revision Petition had become infructuous, proceeded to point out the impropriety in the inaction of the Officers of the Bank, the want of care on the part of the Receiver in doing his duty and the lower Court in not taking note of the interim order passed by this Court and in ensuring that its order appointing the Receiver was implemented and directed the executing Court to ensure that the Receiver appointed forthwith takes possession of the property scheduled to the execution petition and if necessary after replacing the original Receiver with another Receiver. Thereafter, the executing Court revived the execution petition which apparently had been closed and proceeded to take steps to appoint a Receiver in the place of the original Receiver. The judgment-debtors then filed E.A. 48 of 1997 requesting that Court to review its order appointing the Receiver. On 8th December 1996 the executing Court took the view that the Court was bound by the directions made by this Court in the order, dated 8th November 1996 and could not go behind that order or review its order passed long back appointing a Receiver. When that order in E.A. 48 of 1997 was sought to be challenged by way of revision, this Court dismissed that revision finding that there was no error of jurisdiction committed by the executing Court. Thereafter the judgment-debtors filed C.M.P. 177 of 1997 before this Court in the revision which had already been disposed of. That petition purported to be one for clarifying whether the appointment of a Receiver in E.P. 213 of 1993 in O.S. 38 of 1988 still subsisted when the execution petition had earlier been dismissed by the executing Court presumably for the failure of the officers of the decree holder Bank to take the necessary steps. After hearing both sides, this Court passed an order, dated 7th February 1997, holding up the Receiver taking possession of the assets of the first judgment-debtor by giving the option to the judgment-debtors to pay off the balance decree amount in monthly installments of Rs. 3 lakhs. The first of such installments was to be paid on or before 10th March 1997. It is said that the prior orders of this Court were challenged before the Supreme Court by way of Special Leave to Appeal, though in the affidavit it is submitted that what was challenged before the Supreme Court was the order, dated 7th February 1997. It is stated on behalf of the judgment-debtors that when the Petition for Special Leave came up for consideration on 10th March 1997, the judgment-debtors were directed to approach this Court and accordingly the Petition for Special Leave was withdrawn with liberty to move this Court. A copy of the order of the Supreme Court in that behalf is not produced before this Court by the judgment-debtors. But they have filed this Review Petition essentially on the ground that on 8th November 1996 when this Court passed the original order in the revision, this Court had lost its jurisdiction to dispose of that revision, by virtue of the coming into force of the Debts Recovery Act and the constitution of the concerned Tribunal on 4th November 1996.

As noticed already, no contention based on the Debts Recovery Act was raised at the time of the hearing of the revision on 8th November 1996. Learned Counsel for the debtors submits that at the time of arguing C.M.P. 177 of 1997 this aspect was pursued. Though I find no reference to such an argument in the order I passed, I have decided to proceed on the basis that such a contention was in fact raised on behalf of the judgment-debtors at the time this Court heard and disposed of C.M.P. 177 of 1997. I may notice that this aspect is also not seen referred to in the affidavit in support of C.M.P. 177 of 1997.

According to Counsel for the judgment-debtors, by the constitution of the Tribunal and the Appellate Authority under the Recovery of Debts Act with effect from 4th November 1996, this Court has lost its jurisdiction to hear and dispose of the Revision on 8th November 1996 on which day it was heard. Though the Act came into force on 24th June 1993, the Tribunal and the Appellate Authority were established in terms of Sections 3 and 8 of the Act, only on 4th November 1996. The relevant notification was issued only on that day. Since this Court was dealing with a revision and not with a suit or execution petition, what we are concerned with is the constitution of the Appellate Tribunal under the Act. Section 17 of the Act conferred jurisdiction on the Tribunal to exercise on and from the appointed day, the jurisdiction, powers and authority to entertain and decide applications from Banks and other financial institutions for recovery of debts due to them and on the Appellate Tribunal 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 the Act. Section 18 of the Act barred the jurisdiction of Courts and other authorities except the Supreme Court and the High Court exercising jurisdiction under Articles 226 and 227 of the Constitution in respect of matters provided for by the Act and specified in Section 17 of the Act. The definition of ''debt'' in the Act took in also amounts payable under the decree or order of a Civil Court, the liability of which was subsisting on and was legally recoverable on the date of the application to be made to the Tribunal. Section 20 of the Act provided for an appeal except in a case where the decision of the Tribunal is on consent, on an aggrieved person against the order of the Tribunal. Section 31 of the Act provided for the transfer of pending cases. Section 31(1) provided that every suit or proceeding pending before the Court immediately before the date of the establishment of a Tribunal under the Act being a suit or proceeding the cause of action whereon is based is such that it would have been if it had arisen after the establishment of the Tribunal within the jurisdiction of the Tribunal, shall stand transferred on that date to such Tribunal. Section 31(1) prima facie does not relate to appeals and it relates only to suits or other proceedings pending in the Court of first instance. Even if there be any doubt in that regard, the same is set at rest by the proviso to Section 31(1) of the Act, which provides that nothing in Sub-section (1) shall apply to any appeal pending before any Court. It is therefore clear that an appeal pending before this Court is not liable to be transferred to the Appellate Tribunal under the Act. A reference to the relevant provisions of the Act indicate that there is also no provision in the Act providing for transfer of a pending appeal or a revision before an Appellate Court including the High Court, to the Appellate Tribunal under the Act. Any doubt in that regard is also set at rest by Section 31(1) of the Act specifically dealing with the transfer of pending cases. It is therefore clear that there is nothing in the Act express or implied which calls for a transfer of a revision pending in this Court in a matter which could otherwise came under the purview of that Act.

Learned Counsel for the judgment-debtors contended that what is saved by the proviso to Section 31(1) of the Act is an appeal and not a revision. Though literally Counsel may be correct, it is well settled that the revisional power is nothing but an appellate power though confined to correcting errors of jurisdiction and not as wide as the normal appellate power. But in the absence of any specific provision in the Act transferring such proceedings also to the Appellate Tribunal constituted under the Act, it is not possible to accede to the contention that all revisions pending in this Court arising at the stage of execution or otherwise, should stand transferred to the Appellate Tribunal. The proviso to Section 31(1) of the Act clearly evinces the intention that the exercise of the appellate power by the Appellate Court including the High Court is not in a manner sought to be curtailed or interfered with by the constitution of the Tribunals under the Act. Section 31(1) of the Act dealing with transfer of pending business only refers to a suit or proceeding indicating that only an original proceeding in the Court of first instance is contemplated. A transfer of proceeding pending in a Court other than the Court of first instance is not seen contemplated by the Act. I have therefore no hesitation in overruling the contention of Counsel that the jurisdiction of this Court to hear and finally dispose of C.R.P. 1563 of 1993 stood ousted on 8th November 1996 when this Court finally disposed of the revision. Of course, I have already noticed that no such contention was raised at the time of arguing the revision on 18th November 1996.

The next contention urged on behalf of the judgment-debtors was that by order dated 8th November 1996 what this Court had done was to direct the executing Court to appoint a receiver. Since after 4th November 1996 the executing Court cannot proceed with the execution of the decree in this case in view of Section 31(1) of the Act, the direction to that Court to implement the order appointing the Receiver is not justified. It is also contended that the executing Court could not have proceeded further with the execution in view of the Act. In this case the executing Court passed the order appointing the Receiver on 24th August 1993. There is no case that on that day that Court did not have jurisdiction to pass that order. It was the correctness of that order that was questioned by the judgment-debtors before this Court in the revision. This Court found no reason to interfere with the order dated 24th August 1993 by which the executing Court had appointed a Receiver. On that day the executing Court had the jurisdiction to entertain the execution petition and also to appoint a Receiver for the assets of the first judgment-debtor. When this Court dismissed the revision, this Court was not asking or directing the executing Court to appoint a receiver thereafter. This Court was only reminding that Court that it had defaulted in not directing the Receiver already appointed to take possession forthwith on the failure of the judgment-debtors to comply with the conditions imposed by this Court in its interim order and also directing the executing Court to appoint a more competent person to be the Receiver in case it found that the Receiver already appointed was found to be not up to the mark. That again is not a direction to the executing Court to appoint a Receiver for the first time. It is only a direction to change the person of the Receiver who has already been appointed. Thus in this case, the appointment of Receiver by the executing Court was on a day long prior to 4th November 1996. That order was perfectly within the jurisdiction of that Court and this Court only confirmed that order with a further direction that the Receiver ought to be directed to take possession forthwith. That does not involve any fresh entertainment of an execution petition or appointing a Receiver after the constitution of the Tribunal under the Act on 4th November 1996. The executing Court had only statistically closed the executing petition and on receiving the order of this Court only revived that execution petition. Even if that execution petition is to be transferred to the Tribunal constituted under the Act, that transfer will be only with reference to the state of affairs as on 4th November 1996 and that state of affairs would be that a Receiver had already been appointed by the Court on 24th August 1993. In other words, the transfer of the execution petition would involve a transfer of the petition with an order of the executing Court appointing a Receiver. So long as there is no fresh appointment of receiver by the executing Court after 4th November 1996 and what has been done is only to implement the order dated 24th August 1993 on a revival of the execution petition, it cannot be said that there is any merit in the contention that the Court below could not be directed to name a Receiver for the undertaking or to direct the Receiver to take possession of the undertaking. The Court had taken the property into custodia legis by appointing the Receiver. On the failure of the judgment-debtors to comply with the interim order of this Court in C.M.P. 2512 of 1993 dated 3rd September 1993, the executing Court should have directed the Receiver to forthwith assume possession. That contingency arose long before 4th November 1996. The fact that the Court was reminded of its duty by this Court on 8th November 1996 and that Court woke up to its responsibility and revived the execution petition with a view to name a more competent Receiver does not amount to entertaining of a fresh execution petition or the fresh appointment of a receiver by the executing Court. In any view, since the jurisdiction of this Court in revision is not in any manner affected, even if the order is treated as one of appointment of a Receiver by this Court, the same could not be faulted on the ground that the said appointment was made after 4th November 1996. I therefore find that there is nothing in the Recovery of Debts Act which stands in the way of this Court making the directions it had made in the Civil Revision Petition and in C.M.P. 2512 of 1993 and in C.M.P. 177 of 1997 and in the executing Court implementing those directions. I thus find no want of jurisdiction in this Court and no error in the orders warranting correction in review jurisdiction. I dismiss the Review Petition.