IMPORTANT POINTS
1. Where as on date of coming into force of Recovery of Debts Due to Banks and Financial Institutions Act, appeal against Bank s suit was pending and subsequently appeal came to be allowed remanding suit to trial Court, such a case is covered by Section 31 of the Act and the suit is liable to be transferred to the Debt Recovery Tribunal.
2. Under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, in the context, the word counter-claim in Section 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.

Headnote:(i) Recovery of Debts Due to Banks and Financial Institutions Act, 1993-Section 31-Transfer of suits to Recovery Tribunal-As on date of coming into force of Act, appeal against compromise decree pending before High Court-Appeal came to be allowed setting aside compromise decree remanding case to trial Court-Bank s petition for transfer of suit to Tribunal-Debtor s plea that Section 31 not attracted to case-Untenable-Once suit is revived, it must, in eye of law, be deemed to be pending from beginning when it was instituted-Suit liable to be transferred to Tribunal.
       It is true that under sub-clause (c) of Section 31, every suit or proceeding "pending before any Court immediately before the date of establishment of the Tribunal under the Act" shall stand transferred to the Tribunal. It is also true that under the proviso to Section 31(1), appeals pending on the date do not stand transferred. The suit of the Bank was in fact, pending in appeal on 27.4.94 and it is clear that this provision for transfer does not apply to an appeal pending as aforesaid before any Court. (Para 13)
       But, it is now well settled that an order of remand by the appellate Court to the trial Court which had disposed of the suit revives the suit in full except as to matters, if any, decided finally by the appellate Court. Once the suit is revived, it must, in the eye of the law, be deemed to be pending-from the beginning when it was instituted. The judgment disposing of the suit passed by the Single Judge which is set aside gets effaced altogether and the continuity of the suit in the trial Court is restored, as a matter of law. The suit cannot be treated as one freshly instituted on the date of the remand order. Otherwise serious questions as to limitation would arise. In fact, if any evidence was recorded before its earlier disposal, it would be evidence in the remanded suit and if any interlocutory orders were passed earlier, they would revive. In the case of a remand, it is as if the suit was never disposed of (subject to any adjudication which has become final, in the appellate judgment). The position could have been different if the appeal was disposed of once and for all and the suit was not remanded. (Para 14)
       Applying the above principle, we are of the view that the suit 410/85 filed by the Bank in 1985, even though it was disposed of by judgment dated 29.3.94, it stood revived with continuity by the remand order passed by the Division Bench on 11.8.98, and cannot be treated as a freshly instituted on 11.8.98 before the Single Judge but must, in the eye of the law, be treated as pending on the crucial day i.e. 27.4.94. Once the appeal is allowed, the intermediate events- of disposal of the suit and the appeal - vanish into the air and the continuity of the suit before the trial Court is restored. (Paras 15 and 16)
       The principle of purposive interpretation is to be applied to Sections 18 and 31 of the Act and that suit 410/1985 filed by the Bank in 1985 and which stood remanded by the appellate Court on 11.8.98 must in the eye of the law be deemed pending before the Single Judge and that it would stand transferred to the Tribunal. The High Court was, therefore, in error in retaining the same on the original side. (Para 28)
       (ii) Recovery of Debts Due to Banks and Financial Institutions Act, 1993-Section 18 and Section 19(8) to (11) (as introduced by Act 1/2000)-Bar of jurisdiction-Counter claim-In the context the word counter claim in Section 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.
       Where the creditor Bank sought for transfer of suit to Debt Recovery Tribunal but the creditor opposed the petition contending that its suit for specific performance of agreement against Bank under which bank agreed not to charge interest for certain period was pending and since that suit could not be transferred to Tribunal, the suit of the Bank also could not be transferred.
       Held : The Company s suit 272/85 in so far claims a relief for specific performance, perpetual and mandatory injunctions, it is in substance in the nature of a counter-claim under sub-clauses (8) to (10) of Section 19 and are in the nature of a counter-claim. The plea for deduction of damages is in the nature of a set-off falling within Section 19(6) and (7). Both are equated to cross-suits. If a set-off or a counter claim is to be equated to a cross suit under Section 19, afortiori there can be no difficulty in treating the cross-suit as one by way of set-off and counter claim, and as proceedings which ought to be dealt with simultaneously with the main suit by the Bank. In fact, the Bank has not objected to such a course. Indeed, Section 19(11) says that If any particular counter-claim raised in the suit 272/85 cannot be decided by the Tribunal while deciding the Bank s suit, the defendant may apply to the Tribunal for exclusion of such a counter-claim. But such a question does not arise in this case. In our view, in the context, the word counter-claim in Section 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. 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 Section 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-clause (6) and (7) of Section 19. Both the suits, the one by the Bank against the respondent (suit 410/85) and the other by the debtor against the Bank (suit 272/85) which raises claims or pleas in the nature of set-off or counter-claim are interconnected. The respondent s suit falls under sub-clauses (6), (7) and (8) to (11) of Section 19, as stated above. Our decision in regard to the real nature of suit 272/85 has become necessary in the context of a plea by the debtor-company that the company s suit 272/85 is liable to be retained in the civil Court and on account of the plea that the connected suit by the Bank 410/85 is also to be retained. Such a plea, as shown above, cannot be accepted. Thus, both the suits are suits falling within the Act. The pendency of the company s suit 272/85 in the High Court is not a ground for retaining the Bank s suit 410/85 in the Calcutta High Court. The suit 272/85 filed by the debtor company is also a suit to be necessarily tried only by the Tribunal. The pendency of the Company s suit 272/85 in the High Court is no reason for keeping the Bank s suit 410/85 in the High Court. The suit 410/85 is liable to be transferred to the Tribunal. Incidentally, we also hold that even suit 272/85 is to be tried only by the Tribunal. (Paras 34, 35 and 37)
       (iii) Interpretation of Statutes-Principles of purposive interpretation-Application of. (Paras 26 to 28)

JUDGMENT

M. Jagannadha Rao, J.-Leave granted.

2. The appellant Bank is the plaintiff in Suit No. 410/85 which is pending on the file of the Calcutta High Court. The respondent-debtor is yet to file its written statement. By 31.12.98, an amount of Rs. 31.13 crores is said to be due to the Bank. Initially, in the above suit, a compromise decree was passed by Ajit Kumar Sen Gupta, J. on 29.3.94. It was contended by the Bank that the compromise was based upon a non-existent agreement. On appeal, the said judgment was set aside by a Division Bench of the High Court on 11.8.98 consisting of Ajoy Nath Ray and Dipak Prakas Kundu, JJ. describing the said judgment as "shocking". The Bench also observed :

"It was as if a contract was being made attempted to be made out for the parties.... It is no part of the duty of the Court to make an agreement for the parties".

The Bench allowed appeal, awarding costs in a sum of Rs.75,000/-.

3. As part of the compromise, the learned Single Judge had stayed another suit on mortgage (O.C. (Mortgage) suit No. 77 of 1991) filed by the Bank. But the Division Bench set aside the entire compromise decree.

4. Thereafter, the suit No. 410 of 1985 filed by the appellant Bark stood restored before the learned Single Judge. In the meantime, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter called the Recovery Act, 1993) came into force in West Bengal. It is stated that it came into force in West Bengal on 27.4.1994. The debtor Company then filed an application T.No. 276 of 1999 that this suit by the Bank should remain on the original side of the Calcutta High Court and be not transferred to the Tribunal under the Act. The contention was that on the crucial date, 27.4.1994, the suit was not pending on the original side but the appeal was pending before the Division Bench and that under Section 31(1), appeals did not stand transferred to the Tribunal. It was pleaded that even though the appeal was later allowed on 11.8.98 and the suit was remanded to the Single Judge, it was not a suit "immediately pending" on the original side of the High Court before the crucial date i.e. 27.4.94, in the High Court, as required by Section 31 of the Act. Therefore, it was not covered by Section 31 of the Act. This was the contention in the application filed by the respondent-company seeking retention of the suit on the original side of the High Court of Calcutta.

5. The above application filed by the respondent-company was allowed by another learned Single Judge on 3.9.99 and the Bank s suit was directed to be retained in the High Court on the basis that the Act did not apply. By the same order, the Registrar of the High Court was restrained from transferring the suit to the Tribunal.

6. Against the above order dated 3.9.99, the Bank has preferred the present appeal by special leave.

7. In this appeal, Sri Dhruv Mehta appeared for the appellant-Bank and contended that the High Court erred in not transferring the Bank s suit 410/85 to the Tribunal.

Elaborate arguments were addressed before us by Sri Shanti Bhushan, learned Senior counsel for the respondent-company and Dr. Rajeev Dhawan, learned Senior Counsel for the guarantor. We shall deal with these contentions.

8. An additional point has been raised before us by the learned Senior counsel for the respondent company Sri Shanti Bhushan that the debtor company had earlier filed suit No. 272 of 1985 against the Bank in the High Court for specific performance of an agreement with the Bank and for perpetual and mandatory injunctions and that that suit was integrally connected with the Bank s suit. It was argued that inasmuch as a suit for specific performance and mandatory injunction could not be transferred to the Debt Recovery Tribunal, this suit filed by the Bank, namely, suit No. 410/1985 must also remain in the High Court. We asked learned Senior Counsel for the Company and the learned Senior Counsel for the guarantor as to whethe

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2000 Supreme(SC) 1465

Cases Referred (2)