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2001 Supreme(Kar) 637
Karnataka High Court
Syndicate Bank - Appellant
Versus
Chamundi Industries - Respondent
Decided On : 10-06-01
W.P. : 22505 of 1998
Annapurna Bevinje, TUKURAM S.PAL, VKK Nair
The main legal point established in the judgment is that the Tribunal has the power to adjudicate applications based on different causes of action, and the consequences of filing an application based on more than a single cause of action were not provided under the Rules, rendering Rule 10 of the Rules directory and not mandatory.
Headnote:
Bank - Recovery of Debts - Sec. 17 of the Recoveries of Debts Due to Banks and Financial Institutions Act, 1993 - Sec. 1(4), Sec. 2(g), Sec. 17, Sec. 18, Sec. 19, Sec. 36(2)(c) of the Act - Rule 10 of the Debts Recovery Tribunal (Procedure) Rules, 1993 - The court discussed the maintainability of the application filed by the Bank for recovery of debts due to the Bank and the interpretation of the provisions of the Act and the Rules, particularly focusing on the definition of 'debt,' the power of the Tribunal to entertain and decide applications, and the consequences of filing an application based on more than a single cause of action. The court held that the application was maintainable and remitted the matter to the Tribunal for consideration on the points other than point No. 2.
Fact of the Case:
The Bank filed an application under Sec. 17 of the Recoveries of Debts Due to Banks and Financial Institutions Act, 1993 for recovery of a sum of Rs. 12,90,934/- with cost, current and future interest. The application was dismissed by the Debts Recovery Tribunal on the ground that it was hit by Rule 10 of the Debts Recovery Tribunal (Procedure) Rules, 1993. The respondents did not dispute the transactions but raised objections regarding the combination of distinct causes of action in the application.
Finding of the Court:
The court found that the application filed by the Bank was maintainable and remitted the matter to the Tribunal for consideration on the points other than point No. 2.
Issues: The issues involved the maintainability of the application filed by the Bank for recovery of debts due to the Bank and the interpretation of the provisions of the Act and the Rules, particularly focusing on the definition of 'debt,' the power of the Tribunal to entertain and decide applications, and the consequences of filing an application based on more than a single cause of action.
Ratio Decidendi: The court held that the Tribunal had the power to adjudicate the application filed by the Bank and also the set-off and counter-claim pleaded by the defendant, which were based on causes of action different from that of the cause of action pleaded by the Bank. The court also emphasized that the consequences of filing an application based on more than a single cause of action were not provided under the Rules, and the Rule 10 of the Rules was to be held directory and not mandatory. Additionally, the court highlighted the inconsistency between Rule 10 of the Rules and the provisions of the Act, stating that the provisions of the Act prevailed over the Rule in case of inconsistency.
Final Decision: The writ petition was allowed, the impugned order was quashed, and the matter was remitted to the Tribunal to consider the application filed by the Bank on the points other than point No. 2 after due notice to both the parties.
( 1 ) THIS writ petition is by the Bank challenging the order passed by the Debts Recovery Tribunal, Bangalore, dismissing the application for recovery of money from defendants 1 to 3 filed by the Bank holding it is not maintainable on the ground that the application is hit by Rule 10 of the debts Recovery Tribunal (Procedure) Rules, 1993 (hereinafter referred to as 'the Rules' ).
( 2 ) THE petitioner Bank filed an application under Sec. 17 of the Recoveries of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as 'the Act') for recovery of a sum of Rs. 12,90,934/- with cost, current and future interest. The respondents who are defendants before the Debts Recovery Tribunal (hereinafter referred to as 'the Tribunal') have not disputed or denied the transaction entered into between the Bank and respondents 1 to 3. Respondent 3 in the statement of objections filed before the Tribunal has stated that the Bank has unjustly combined the two distinct causes of action on two distinct loans in an effort to bring their total to an amount exceeding Rs. 10,00,000/- with a view to avoid recourse to the normal Courts of law and to unjustly avail the summary procedure prescribed under the Act and therefore the application filed by the petitioner is liable to be rejected for want of jurisdiction of the Tribunal.
( 3 ) RESPONDENT 2 in his statement of objections has not raised the abovesaid contentions.
( 4 ) RESPONDENT 1 though served remained absent.
( 5 ) ON the basis of the pleadings the Tribunal has raised four points for consideration. Point No. 2, which is relevant for the purpose of deciding the controversy in this petition reads as follows :"whether the defendants prove that the two transactions are entirely different transactions and the application is hit by Rule 10 of the Debts Recovery Tribunal (Procedure) Rules. ?"
( 6 ) THE abovesaid point has been answered by the Tribunal in the affirmative and consequently dismissed the application filed by the Bank holding that the application is hit by Rule 10 of the Rules. Therefore, the Bank is before this Court. In view of the finding recorded by the Tribunal on point No. 2, the Tribunal found it unnecessary to consider the other points.
( 7 ) THE Tribunal ought to have recorded the finding on other issues also when the trial was complete as it would have been convenient for the petitioner to challenge or for this Court to consider the findings on other points also in the event the finding recorded on point No. 2 was to be reversed.
( 8 ) THE case of the Bank is that the 1st respondent is a partnership firm and respondents 2 and 3 are its partners. The Bank sanctioned a loan of Rs. 2,45,000/- on 12-7-1982 and overdraft facility up to limit of Rs. 1,00,000/- on 25-2-1995. In respect of these transactions, the respondents have executed the required documents as stated in the application. As the respondents were irregular in making payments and they have not discharged their liability even though certain concession was given at the request of the respondent in the rate of interest, the Bank has filed the application for recovery certificate to recover a amount of Rs. 12,90,934/- with cost and interest. Respondent 3 no doubt in the statement of objections has stated that the Bank has unjustly combined two distinct causes of action alleged on two distinct loans in order to being their total to an amount exceeding Rs. 10,00,000/- with a view to avoid recourse to the normal Courts of law and therefore the application is liable to be rejected for want of jurisdiction by the Tribunal. So far as the transactions are concerned, both respondents 2 and 3 have admitted in their statement of objections. The Tribunal is of the view that one transaction relates to a loan and another relates to overdraft facility, which are covered by independent documents unconnected with each other and therefore the application filed by the Bank for recovery of amount due
