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IN THE HIGH COURT OF JUDICATURE AT PATNA
Jyoti Saran, J.
Shri Bal Manohar Jalan – Petitioner
Versus
The Central Bank of India through its chairman cum Managing Director & Ors. – Respondents
CWJC No. 5496 of 2010
Decided On : 18.11.2011
Debt Recovery Tribunal - Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Section 26(2), Order 9 Rule 13 of the Code of Civil Procedure - [Section 1(4) of the Act, Section 31, Section 31A, Section 34 of the Code] - The court discussed the jurisdiction of the Debt Recovery Tribunal in entertaining the application filed by the respondent-Bank under Section 19 of the Act for execution of the decree passed by the learned Sub-Judge-8, Patna in Title Suit No. 192 of 1986. The court analyzed the provisions of the Act and the Code of Civil Procedure to determine the jurisdictional issue. The court also interpreted the judgment and decree passed by the trial Court in Money Suit No. 192 of 1986 to ascertain the nature of interest awarded and its implications on the jurisdiction of the Debt Recovery Tribunal.
Fact of the Case:
The petitioner challenged the jurisdiction of the Debt Recovery Tribunal in entertaining the application filed by the respondent-Bank under Section 19 of the Act for execution of the decree passed by the learned Sub-Judge-8, Patna in Title Suit No. 192 of 1986. The petitioner contended that the debt amount due to the Bank was less than Rs. 10 lacs, and thus, the Tribunal lacked jurisdiction. The petitioner also questioned the interpretation of the judgment and decree passed by the trial Court in Money Suit No. 192 of 1986, specifically regarding the nature of interest awarded.
Finding of the Court:
The court found that the Debt Recovery Tribunal lacked jurisdiction to entertain the application filed by the respondent-Bank for execution of the decree, as the debt amount due to the Bank was below Rs. 10 lacs. The court also found that the interest awarded by the trial Court was at a simple rate for the post-litigation period until realization, and not at a compound rate. The court held that the Tribunal's interpretation of the interest awarded was incorrect and that the entire proceedings before the Tribunal were without jurisdiction and quashed and set aside the impugned order and the transfer order of the Sub Judge-8, Patna.
Issues: The issues involved in the case were the jurisdiction of the Debt Recovery Tribunal in entertaining the application for execution of the decree and the interpretation of the interest awarded by the trial Court in Money Suit No. 192 of 1986.
Ratio Decidendi: The court held that the Debt Recovery Tribunal lacked jurisdiction to entertain the application for execution of the decree as the debt amount due to the Bank was below Rs. 10 lacs. The court also ruled that the interest awarded by the trial Court was at a simple rate for the post-litigation period until realization, and not at a compound rate. The court quashed and set aside the impugned order and the transfer order of the Sub Judge-8, Patna.
Final Decision: The writ petition was allowed, and the court quashed and set aside the impugned order and the transfer order of the Sub Judge-8, Patna.
With the consent of the parties the matter has been taken up for disposal at the stage of admission itself.
2. The petitioner is aggrieved by the order dated 21.12.2009 passed by the Debt Recovery Tribunal, Bihar, Patna in M.A. No. 5 of 2006 whereby the petition filed on behalf of the petitioner under Section 26(2) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as the ‘Act’), for withdrawal and/or cancellation of the certificate issued by the Tribunal together with petition filed under the provisions of Order 9 Rule 13 of the Code of Civil Procedure (hereinafter referred to as the ‘Code’) for recall of the ex parte judgment and decree dated 16.02.1989 passed in Money Suit No. 192 of 1986, have been rejected. The petitioner has also questioned the very initiation of proceedings before the Debt Recovery Tribunal giving rise to O.A. No. 2 of 2001 and has questioned its jurisdiction for issuance of certificate dated 22.08.2001 under Section 19(22) of the Act. The petitioner has also prayed for quashing the order dated 31.07.2004 whereby the learned Sub-Judge-8, Patna was pleased to transfer the application bearing Misc. Case No. 9 of 1994 filed on behalf of the petitioner under Order 9 Rule 13 of the Code for setting aside the ex parte judgment and decree dated 16.02.1989 which upon transfer to the Debt Recovery Tribunal was numbered as Misc. Case No. 5 of 2006.
3. The brief facts of the matter essential for disposal of the writ petition is that a Firm by the name M/s Kitchen King obtained a cash Credit Loan of Rs. 40,000/- from the respondent-Bank and executed a promissory note together with letter of hypothecation on 31.05.1979. Copy of the letter of hypothecation dated 31.05.1979 and the promissory note dated 31.05.1979 are placed at Annexures 1 and 2 to the writ petition. The petitioner stood as one of the security together with one Som Nath Bhattacharya to the Bank loan amount of Rs. 40,000/- extended to M/s Kitchen King. It is contended that the said cash credit loan was extended to Rs. 86,000/- on 29.01.1980 without seeking any fresh guarantee from the guarantors nor any such information being provided to the petitioner regarding enhancement of the cash credit loan. A fresh hypothecation was executed on 15.05.1983 by M/s Kitchen King who also executed a D.P. Note in respect thereof on 25.05.1983 undertaking to pay interest at the rate of 16% per annum. As M/s Kitchen King the borrower started defaulting in making repayment of the loan amount, a request was made to the Bank to allow them for disposal of the stocks held by them for repayment of the loan.
4. It is contended that even where the borrower M/s Kitchen King authorized the respondent-Bank to dispose of the hypothecated goods on 28.02.1984 and also gave a letter for liquidation of loan and pursuant to a letter dated 13.03.1984 of the borrowers the stock was evaluated by the Bank at Rs. 1,57,386.41 enough to cover the loan outstanding as on the said date, but the respondent-Bank even after preparing an inventory and placing the hypothecated goods under their lock and key instead of disposing of the same and liquidating the loan chose to file a money suit giving rise to money suit No. 192 of 1986 in the Court of Sub-Judge- 1, Patna for recovery of an amount of Rs. 1,48,667.89 which included the principal amount together with interest amount.
5. It is the case of the petitioner that he appeared in the money suit on 16.08.1987 and took adjournment to file a written statement but in the mean time the case was transferred from the Court of Sub- Judge-1 to the Sub-Judge-8, Patna and whereafter it was fixed for hearing on 22.09.1988. It is further the case of the petitioner that the records were never placed before the Court, on 22.09.1988 and whereafter there was a strike of the non-gazetted employees for a period of almost two months and no particular date was fixed in the proceedings. It is the case of the petitione
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