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2016 Supreme(Bom) 343
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
D. H. WAGHELA, M. S. SONAK, JJ.
Harvestdeal Securities Ltd. - Petitioner
Versus
Punjab National Bank - Respondent
WRIT PETITION NO. 346 OF 2016
Decided On : 8-3-2016
Advocate Appeared:
Mr. Chirag Mody with Mr. Jayesh Mestry i/b. RMG Law Associates for petitioner.
Ms Jinal Gogri with Mr. Vikrant Makhare with Ms Rutuja Patil i/b.
Negandhi, Shah & Himayatullah for respondent.
Important Point – Tribunals are expected to act with quite promptitude regard being had to nature of lis.
Headnote:Recovery of Debts Due to Banks and Financial Institutions Act, 1993 – Section 19 – Recovery of debt – Intendment of legislation is for speedy recovery of dues to bank – Tribunals are expected to act with quite promptitude regard being had to nature of lis and see to it that an ingenious litigant does not take recourse to dilatory tactics – Principal purpose is to see that recovery of dues which is an essential function of any banking institution does not get halted because of procrastinated delineation by the tribunal – Petitioner has abused judicial process by raising frivolous and unsustainable preliminary objection at the stage when matter was posted for final hearing before DRT and thereby succeeded in derailing proceedings for over a decade, petition dismissed with costs computed at Rs.10,000/-.
Result – Writ Petition dismissed with costs.
M. S. Sonak, J.
1. By this petition under Articles 226 and 227 of the Constitution of India, the petitioner has challenged order dated 19 February 2015 made by the Debt Recovery Appellate Tribunal (DRAT).
2. In this case, the respondent – Punjab National Bank (PNB) has instituted Original Application No. 100 of 2005 under section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDB) with the Debt Recovery Tribunal (DRT), Mumbai seeking recovery of an amount of Rs.94,36,041/- on basis of certain transactions, with which, we are not presently concerned.
3. On 7 March 2006, the petitioner filed detailed written statement, urging inter alia that the claim of PNB is barred by limitation, untenable on merits and in any case settled. After setting out their entire defence on merits, in paragraph 30 of the written statement, the petitioner also pleaded that the claim of PNB is not maintainable owing to the arbitration clause between the petitioner and the PNB, due to which, the Stock Exchange Mumbai Arbitration Forum, will have jurisdiction to try and decide the Original Application.
4. The DRT, by cryptic order dated 9 September 2009, at a stage when the matter was posted for final arguments, entertained the preliminary objection raised by the petitioner and has held that the parties are required to be referred to arbitration, as envisaged in the contract note. On this basis, the DRT granted leave to PNB to withdraw Original Application No. 100 of 2005 and to submit the disputes to arbitration as envisaged in the contract note.
5. The PNB instituted Appeal No. 310 of 2009 before the DRAT, which has, by the impugned order dated 19 February 2015, allowed the appeal, set aside the DRT's order dated 9 September 2009 and remitted the matter to the DRT for determining the liability of the petitioner. Further, the DRAT after taking cognizance of the circumstances that the claim of PNB for an amount of Rs.94,36,041/- against the petitioner is pending since 27 February 1999, the petitioner have been directed to deposit a sum of Rs.10,00,000/- before the DRT, Mumbai, in order to show their bona fides.
6. Mr.Chirag Mody, learned counsel for the petitioner by relying upon the decision of the Hon'ble Apex Court in the case of Ardy International (P) Ltd. & Anr. vs. Inspiration Clothes & U & Anr., (2006) 1 SCC 417 has submitted that the jurisdiction of the DRT was barred in view of the arbitration clause contained in the contract notes exchanged between the parties and the cognizance of such arbitration clause could always have been taken note of by the DRT, even suo motu. Mr. Mody submitted that in any case, the direction to the petitioner to deposit a sum of Rs.10,00,000/- before the DRT, Mumbai, was clearly in excess of jurisdiction and the DRAT was not at all justified in making the same in the appeal instituted by PNB. For these reasons, Mr. Mody submitted that the impugned order dated 19 February 2015 warrants interference under Articles 226 and 227 of the Constitution of India.
7. Ms Jinal Gogri, learned counsel for the respondent Bank submitted that the view taken by the DRT in its order dated 9 September 2009 was patently unsustainable, being contrary to the provisions contained in section 8 of the Arbitration and Conciliation Act, 1996 (1996 Act) as also, several decisions, which categorically provide that the party objecting to the continuance of proceedings before a judicial authority must, not later than when submitting his first statement on the substance of the dispute, make a written application before the judicial authority, enclosing along with the original arbitration agreement or duly certified copy thereof. She submitted that in this case no such application was ever made by the petitioner, rather, the petitioner proceeded to file written statement in the matter, thereby, waiving the right, if any, to seek reference to the dispute to arbitration. Ms Gogri has submitted that the entire objective
