2002 Supreme(SC) 359

SUPREME COURT OF INDIA
B.N.Kirpal : K.G.Balakrishnan : Y.K.Sabharwal
Union Of India
Versus
Delhi High Court Bar Association
Case No. : 4679 of 1995
Date of Decision : 3/14/02
Advocates Appeared: Agarwala E.C. : Ashri Chander Shekhar : Banerjee Ujjwal : Bhardwaj Mridula Ray : Bhattacharya Avijit : Chandra Sarla : Chatterjee G.S. : Chatterjee Raja : Chowdhury Prabir Anand : Das B.V.Balaram : Das Rathin : Goswami P.K. : Gupta Anindita : Gupta Bina : Gupta Kamal Mohan : Gupta Nina : Gupta Suresh C. : Gupta Uday : Hansaria Vijay : Jain Shipra Ghose : Jain Sunil : Jain Sushil Kumar : Jhaveri Harish J. : John K.J. : Joshi Ghanshyam : Kapur Sanjay : Kapur Shubhra : Katiyar Anil : Keswani Prasenjit : Kumar Prashant : Kumar Vineet : Lal Janendra : Mahajan Arpita : Malhotra Dalip Kumar : Mathur Laxmi Arvind : Medh A.P. : Mehta Anu : Mehta Dhruv : Mehta Rajiv : Mehta S.K. : Michael M.K. : Mishra Shrish Kumar : Mukherji Ranjan : Nair K.M.K. : Pal Sanjay : Pandey Krishnanand : Pookkatt Joseph : Puri H.K. : Puri S.K. : Qadri S.W.A. : Randharangaswami : Rangam A.V. : Reddy D.Bharathi : Rohtagi Mukul : Salve Harish N. : Sawhney Indra : Sharma : Sharma A.Guneshwar : Sharma Hemant : Sharma Rakesh K. : Shobha : Shukla Arvind Kumar : Singh P.P. : Sinha Jaya : Sreekumar K.V. : Sudheer P.S. : Suri Sushma : Terdal S.N. : Venugopal P. : Verma S.K.

Headnote:

A. Constitution of India, Articles 14, 323A and 323B and Entry 45 of List I, Entry 11A of List III to the Seventh Schedule - Recovery of Debts Due to Banks and Financial Institutions Act, 1993, Section 18- Constitutional validity of Act- Contention that that the Act was unreasonable and violative of Article 14 and was beyond the legislative competent of the Parliament- Section 18 of the Act bars jurisdiction of any other court or other authority to exercise any powers or authority in relation to matters for which authority is vested with the Tribunal, except Supreme Court and High Court- The High Court declared the Act to be unconstitutional as it erodes the independence of the judiciary and was irrational, discriminatory, unreasonable, arbitrary and was hit by Article 14 of the Constitution- Held the power of the Parliament to enact a law, which is not covered by an Entry List II and List III, is absolute- While Articles 323A and 323B specifically enable the legislature to enact laws for the establishment of tribunals, in relation to the matters specified therein, the power of the Parliament to enact a law constituting a Tribunal, like the Banking Tribunal, which is not covered by any of the matters specified in Article 323A or 323B, is not taken away-With regard to any of the entries specified in List I, the exclusive jurisdiction to make laws with respect to any of the matters enumerated in List I is with the Parliament-The power conferred by Article 246(1) can be exercised notwithstanding the existence of Article 323A or 323B of the Constitution- Entry 45 of List I would cover the types of legislation now enacted. Entry 45 of List I relates to "Banking"- Banking operations would, inter alia, include accepting of loans and deposits, granting of loans and recovery of the debts due to the bank.( paras 12, 13and 14 )

B Constitution of India, Articles 14, 323A and 323B and Entry 45 of List I, Entry 11A of List III to the Seventh Schedule - Recovery of Debts Due to Banks and Financial Institutions Act, 1993, Section 19- Appointment of Presiding Officer and application to the Tribunal- The Rules contemplate appointments by a Selection Committee to consist of the Chief Justice of India or a Judge of the Supreme Court as nominated by the Chief Justice of India along with other members - The Selection Committee would ensure fair and impartial selection of competent persons to act as Presiding Officers of the Tribunal- Section 19 prescribes the manner in which an application to the Tribunal filed by a bank or a financial institution is to be dealt with- Section 22 provides that the Tribunal and the Appellate Tribunal shall not be bound by the procedure laid down by the Civil Procedure Code, but shall be guided by the principles of natural justice and, subject to the rules framed.( paras 15 and 16)

C Constitution of India, Articles 14, 323A and 323B and Entry 45 of List I, Entry 11A of List III to the Seventh Schedule - Recovery of Debts Due to Banks and Financial Institutions Act, 1993, Section 22-Purpose of the Act- The very purpose of establishing the Tribunal being to expedite the disposal of the applications filed by the banks and financial institutions for realisation of money, the Tribunal and the Appellate Tribunals are required to deal with the applications in an expeditious manner. It is precisely for this reason that Section 22(1) stipulates that the Tribunal and the Appellate Tribunal shall not be bound by the procedure laid down by the Civil Procedure Code. Therefore even though the Tribunal can regulate its own procedure, the Act requires that any procedure laid down by it must be guided by the principles of natural justice while, at the same time, it should not regard itself as being bound by the provisions of the Civil Procedure Code.( para 17)

D. Constitution of India, Article , 136- Recovery of Debts Due to Banks and SFinancial Institutions Act, 1993, Sections, 19 (6), (8) and (20) and 22- Debts Recovery Tribunal (Procedure) Rules 1993, Rule 12(6) and (7), - Civil Procedure Code, Order 19 Rule 1 - Right to cross examine witnesses in the Tribunal- A right is given by sub-section (6) of the Section 19 to the defendant to claim a set-off - Under sub-section (8) the defendant is also entitled to set-up a counter claim - Sub-section 20 provides an opportunity to the defendant of being heard- Rule 12(7) provides that if a defendant denies his liability the Tribunal may act upon the affidavit of the applicant -In this Rule, there is no reference to the examination of witnesses- It is in the proviso to Rule 12 (6) that a reference is made to the cross-examination of witnesses- The Tribunal has the power to require any particular fact to be proved by affidavit, or it may order the affidavit of any witness may be read at the hearing- While passing such an order, it must record sufficient reasons for the same-The proviso to Rule 12(6) would apply only where the Tribunal chooses to issue a direction, on its own, for any particular fact to be proved by affidavit or the affidavit of a witness being read at the hearing- The said proviso refers to the desire of an applicant or defendant for the production of a witness for cross-examination- If it appears to the Tribunal, that such a witness can be produced and it is necessary to do so and there is no desire to prolong the case that it shall be require the witness to be present for cross- examination .( paras 21, 22 and 23)

E. Constitution of India, Article 50- Recovery of Debts Due to Banks and Financial Institutions Act, 1993, Section 31- Establishment of Tribunal and transfer of cases to it-Such specialised institutions may not strictly come within the concept of the judiciary, as envisaged by Article 50, but it cannot be presumed that such tribunals are not an effective of the justice delivery system, like courts of law- The decision of the Appellate Tribunal is not final, and the same can be subjected to judicial review by the High Court under Articles 226 and 227 of the Constitution- With the establishment of the Tribunals, Section 31 provides for the transfer of pending cases from Civil Courts to the Tribunal and the same not bad in law( paras 25 and 26)

F. Recovery of Debts Due to Banks and Financial Institutions Act, 1993, Section 19 - Pecuniary Jurisdiction- The Act provides that it is only where the recovery of the money is more than Rs. 10 lacs that the Tribunal will have the jurisdiction to entertain the application under Section 19-With respect to suits for recovery of money less than Rs. 10 lacs, it is the subordinate courts which would continue to try them. In order words, for a claim of Rs. 10 lacs or more, exclusive jurisdiction has been conferred on the tribunal but for any amount less than Rs. 10 lacs, it is the ordinary civil courts which will have jurisdiction.( para 27)

G. Recovery of Debts Due to Banks and Financial Institutions Act, 1993, Sections 25 and 28 and 29- Second and Third Schedules to the Income Tax Act, 1961 - Income-Tax (Certificate Proceedings) Rules, 1962- Vires of Section 25 and 28- After amendment, while Section 25 provides for modes of recovery of debts either by attachment and sale or arrest or appointment of a receiver, Section 28 provides for modes of recovery in addition to the ones specified in Section 25- It could not be held that the same are arbitrary, unreasonable or without any guidelines- By virtue of Section 29 of the Act, the provisions of the Second and Third Schedules to the Income Tax Act, 1961 and the Income-Tax (Certificate Proceedings) Rules, 1962, have become applicable for the realisation of the dues by the Recovery Officer- Therefore nothing was bad in Sections 25 and 28. [Paras 28, 29 and 30]