2006 Supreme(Bom) 528

Bombay High Court
(April 3, 2006)
Deepak Cochhar
Versus
Indusind Bank Ltd

Headnote:Presidency Towns Insolvency Act, 1909 - Section 9 - Recovery of Debts Due to Banks and Financial Institutions Act, 1993, Sections 19 and 25 - Recovery Certificate by DRT - Notice of insolvency challenged - Plea that an order passed by DRT was not an executable order but the certificate for the purpose is executable - Held - Once tribunal passes an order it is executable in law, insolvency proceedings can also be initiated under Section 9(2) of Insolvency Act.

       Presidency Towns Insolvency Act, 1909 - Section 9 - Recovery of Debts Due to Banks and Financial Institutions Act, 1993, Sections 34 and 25 - Insolvency certificate - Issuance of - Under Section 34 RDDB Act, DRT has exclusive jurisdiction for taking steps for recovery and execution of certificate - Such proceeding in rem are not controlled by individual proceeding under RDDB Act. - The proceeding under the insolvency is a proceeding in rem and such proceedings in rem are not controlled by the individual proceedings for recovery of the amount under the provisions of the RDDB Act. In that light of the matter, the contention of the counsel for the judgment debtor that by virtue of the provisions of Section 34 of the Act, the Court has no jurisdiction to invoke insolvency proceedings by virtue of the fact that it is based on recovery certificate issued by the Debt Recovery Tribunal has to be rejected. The proceedings in rem cannot be controlled by individual recovery proceedings which are initiated under the provisions of the RDDB Act. In that light of the matter, there is no substance in the contention advanced by the counsel for the judgment debtor and therefore the notice of motion must fail. The notice of motion is accordingly dismissed. Insolvency notice is accordingly made absolute.

       Presidency Towns Insolvency Act, 1909 - Section 9 - Recovery of Debts Due to Banks and Financial Institutions Act, 1993, Sections 25 and 19 - Recovery certificate not paid by judgment debtor - Applied for insolvency certificate - Insolvency notice issued - Challenged - Notice can be issued only Section 9(2) of Insolvency Act - Contradicted - Court can issue notice is cases under Section 19 of RDDB Act as well - Not proper to restrict meaning of word decree or order to Sections 2(2) and (14) of CPC, 1908. - By virtue of the fact that the provisions of sub-section (2) of Section 9 use the word ’decree’ or ’order’ and are not qualified with the words ’of any Court’ it is not permissible to restrict the meaning of the said word ’decree’ or ’order’ by resorting to and relying upon sub-section (2) of Section 2 and sub-section (14) of Section 2 of the CPC. In Court’s opinion, the word ’order’ or ’decree’ must be given its full meaning and its full effect under the provisions of sub-section (2) of Section 9 of the Insolvency Act. The word ’decree’ or ’order’ in sub-section (2) of Section 9 of words ’of any Court’ has been deliberately not used by the Legislature though it was conscious of the same because in the provisions of sub-section (2) of Section 9 the said words "of any Court" are expressly used in sub-section (9)(1)(e) and (9)(1)(h) of the said Act. It is not permissible to give a restrictive meaning to the words "decree or order’’ as contemplated under sub-section (2) of Section 9 of the Act so as to defeat the provisions of the Act in case where a claim is adjudicated by any other authorities other than the Court of Law as contemplated under Section 2(2) and Section 2(14) of the CPC. The provisions of Section 9(2) must be given widest possible interpretation and meaning so as to include each and every kind of recoveries which are adjudicated and has achieved finality so as to enable the judgment creditor to effectively seek to recover his dues.

       Presidency Towns Insolvency Act, 1909 - Section 9(2) - Recovery of Debts Due to Banks and Financial Institutions Act (51 of 1993), Section 19 - Civil Procedure Code, Section 2(2) and (14) - Insolvency notice - The order of the tribunal even if it is not a decree still it is covered by Section 9(2) of Insolvency Act - Provisions of Section 9(2) use the word ’decree’ or ’order’ and are not qualified with word ’of any Court’ - Proceeding under the insolvency is a proceeding in rem and such proceedings in rem are not controlled by the individual proceedings for recovery of the amount under the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act. - The order of the Debts Recovery Tribunal even if it is not a decree still it is covered by sub-section (2) of Section 9 of the Insolvency Act because the words used in the said sub-section are ’decree’ or ’order’. The order was passed under the provisions of Section 19, sub-section (20) of the RDDB Act. It is not in dispute that the said order adjudicates the liability of the judgment-debtor and gives a direction to the judgment-debtor to pay the said amount to the judgment-creditor. Thus, by virtue of the fact that the provisions of sub-section (2) of Section 9 use the word ’decree’ or ’order’ and are not qualified with the word ’of any Court’ it is not permissible to restrict the meaning of the said word ’decree’ or ’order’ by resorting to and relying upon sub-section (2) of Section 2 and sub-section (14) of Section 2 of the Civil Procedure Code. The word ’order’ or ’decree’ must be given its full meaning and its full effect under the provisions of sub-section (2) of Section 9 of the Insolvency Act. While using the word ’decree’ or ’order’ in sub-section (2) of Section 9 the words ’of any Court’ has been deliberately not used by the Legislature though it was conscious of the same because in the provisions of sub-section (2) of Section 9 the said words ’of any Court’ are expressly used in Section 9(1)(e) and 9(1)(h) of the said Act. It is not permissible to give a restrictive meaning to the word ’decree’ or ’order’ as contemplated under sub-section (2) of Section 9 of the Act so as to defeat the provisions of the Act in case where a claim is adjudicated by any other authorities other than the Court of Law as contemplated under Section 2(2) and Section 2(14) of the Civil Procedure Code. The provisions of Section 9(2) must be given widest possible interpretation and meaning so as to include each and every kind of recoveries which are adjudicated and has achieved finality so as to enable the judgment-creditor to effectively seek to recover his dues. The provisions of the insolvency proceedings are in rem and not in personam. The provisions of the proceedings which are in rem are for the benefits of all creditors and is not for an individual creditor. In that view of the matter, it is not permissible to interpret the said provisions in a restrictive manner. Contention of the judgment-debtor that the order is not executable and it is only the recovery certificate which is executable and the words ’recovery certificate’ are not included within the provisions of sub-section (2) of Section 9 is totally devoid of any merits. It is now well settled that for the purpose of executing any order or decree it needs to be in a format. Even a decree is required to be drawn up and execution application is required to be filed for the purpose of execution thereof. Thus, the question of issuance of recovery certificate is a procedural requirement for the purpose of execution of the said order of the Tribunal passed under Section 19, sub-section (20) of the RDDB Act. The argument that the words ’recovery certificate’ are not included in sub-section (2) of Section 9 has no merit. The word ’decree’ or ’order’ is included under sub-section (2) of Section 9. Once a Tribunal has passed an order after adjudicating the claim between the parties then such order is executable in law and on the basis of such order an insolvency proceedings can be initiated under sub-section (2) of Section 9 of the Insolvency Act. The proceeding under the insolvency is a proceeding in rem and such proceedings in rem are not controlled by the individual proceedings for recovery of the amount under the provisions of the RDDB Act. In that light of the matter, the contention of the judgment-debtor that by virtue of the provisions of Section 34 of the Act High Court has no jurisdiction to invoke insolvency proceeding by virtue of the fact that it is based on recovery certificate issued by the Debt Recovery tribunal has to be rejected. The proceedings in rem cannot be controlled by individual recovery proceedings which are initiated under the provisions of the RDDB Act. 2002 (4) Mh LJ 281; 2003 (5) Bom CR 161; AIR 2000 SC 1535; AIR 1951 (38) SC 16; AIR 1966 SC 918; AIR 1992 Bom 170; (1999) 5 SCC 688; 2003 (Supp) BCR 678; AIR 1976 SC 1503 - Referred.