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IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
DEBANGSU BASAK, J.
Contai Co-operative Bank Ltd. & Anr. - Petitioners
Vs.
Union of India & Ors. - Respondents
W.P. No. 19263 (W), 19264 of 2006
Decided On : 19-07-2016
CO-OPERATIVE BANK - RECOVERY OF DEBTS - TRIBUNAL JURISDICTION - RES JUDICATA - COUNTERCLAIM - ARBITRATION: 1. A co-operative bank is not required to approach the Debts Recovery Tribunal for realization of claims in excess of Rs.10 Lakhs against a borrower. 2. The claim of a co-operative bank is not barred by limitation under Section 95(2) of the West Bengal Co-operative Societies Act, 1983, as such a dispute is exempted from the purview of limitation prescribed thereunder. 3. The principles of the Code of Civil Procedure, 1908 apply to arbitration proceedings under the West Bengal Co-operative Societies Act, 1983. 4. The principles of res judicata as recognized under Section 11 of the Code of Civil Procedure, 1908 are applicable to arbitration proceedings under the West Bengal Co-operative Societies Act, 1983. 5. A respondent in a dispute case under the West Bengal Co-operative Societies Act, 1983 is entitled to raise a counterclaim and the arbitrator has the jurisdiction to decide the same.
Fact of the Case:
A co-operative bank filed a dispute case before the arbitrator under the provisions of the West Bengal Co-operative Societies Act, 1983, for realization of its claim against the private respondent. The private respondent filed a written statement which included a counterclaim but did not press it at the hearing. The private respondent preferred an appeal to the appellate authority under the provisions of the Act. The appellate Tribunal found in favor of the private respondent on the point of jurisdiction and held that the proceedings ought to be taken up by the Debts Recovery Tribunal. The private respondent filed a second dispute case raising the same counterclaim. The appellate Tribunal allowed the counterclaim.
Finding of the Court:
1. The co-operative bank is not required to approach the Debts Recovery Tribunal for realization of claims in excess of Rs.10 Lakhs against a borrower. 2. The claim of the bank is not barred by limitation under Section 95(2) of the West Bengal Co-operative Societies Act, 1983. 3. The principles of the Code of Civil Procedure, 1908 apply to arbitration proceedings under the West Bengal Co-operative Societies Act, 1983. 4. The principles of res judicata as recognized under Section 11 of the Code of Civil Procedure, 1908 are applicable to arbitration proceedings under the West Bengal Co-operative Societies Act, 1983. 5. A respondent in a dispute case under the West Bengal Co-operative Societies Act, 1983 is entitled to raise a counterclaim and the arbitrator has the jurisdiction to decide the same.
Issues: 1. Whether a bank governed by the Act of 1983 can approach the Debts Recovery Tribunal established under the provisions of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 for realization of claim in excess of Rs.10,00,000/- ? 2. Was the claim of the bank barred by the laws of limitation at the time of filing of the dispute case? 3. Whether the provisions of the Code of Civil Procedure, 1908 are attracted to an arbitration under the Act of 1983? 4. Whether the provisions of Section 11 of the Code of Civil Procedure, 1908 are applicable to a proceedings under the Act of 1983? If so, is the second dispute case barred by the principles of res judicata? 5. Whether a respondent in a dispute case under the provisions of the Act of 1983 is entitled to raise a counterclaim and if so, whether the arbitrator has the jurisdiction to decide such counterclaim?
Ratio Decidendi: 1. The provisions of recovery of debts under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 by invoking the doctrine of incorporation are not applicable to the recovery of dues by the cooperative from their members. 2. Section 95(2) of the West Bengal Co-operative Societies Act, 1983 does not apply to a dispute relating to the recovery of money. 3. The principles of the Code of Civil Procedure, 1908 apply to arbitration proceedings under the West Bengal Co-operative Societies Act, 1983. 4. The principles of res judicata as recognized under Section 11 of the Code of Civil Procedure, 1908 are applicable to arbitration proceedings under the West Bengal Co-operative Societies Act, 1983. 5. A respondent in a dispute case under the West Bengal Co-operative Societies Act, 1983 is entitled to raise a counterclaim and the arbitrator has the jurisdiction to decide the same.
Final Decision: The writ petition is allowed. The order of the appellate Tribunal dated July 25, 2006 passed in Appeal Case No. 56 of 1998 is set aside. The order passed by the appellate authority in Appeal Case No. 33 of 1999 dated July 21, 2006 is set aside. The dispute case initiated by the private respondent is held to be barred by the principles of res judicata.
DEBANGSU BASAK, J.
1. Two writ petitions have been taken up for hearing analogously as they involve the same parties and similar issues. In any event the learned Advocates appearing of the parties have given their consent for hearing of the two writ petitions analogously. Both the writ petitions have been filed by a co-operative bank. W.P. No. 19263 (W) of 2006 being filed first in point of time is referred to as the first writ petition while W.P. No. 19264 (W) of 2006 being second in point of time is referred to as the second writ petition.
2. The challenge in the first writ petition is an order passed by the appellate Tribunal dated July 25, 2006 in Appeal Case No. 56 of 1998 by which it has held that, a co-operative bank is required to approach the Debts Recovery Tribunal established under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 for realization of claims in excess of Rs.10 Lakhs against a borrower.
3. The challenge in the second writ petition is the order passed by the appellate Tribunal in Appeal Case No. 33 of 1999 dated July 21, 2006 by which the appellate Tribunal has allowed the counterclaim of the borrower made against the bank.
4. Learned Advocate for the petitioner has submitted that, the petitioner carries on banking business and is incorporated under the provisions of the West Bengal Co-operative Societies Act, 1983. The private respondent had borrowed money from the bank. The private respondent had failed to repay the bank and, therefore, the bank had taken steps for the purpose of realization of its claim against the private respondent. The bank had initiated a dispute case before the arbitrator under the provisions of the West Bengal Co-operative Societies Act, 1983. According to the learned Advocate for the bank, the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 are not applicable for recovery of amount due to a co-operative bank. In support of such contention he has relied upon 2007 Volume 6 Supreme Court Cases page 236 (Greater Bombay Co-operative Bank Ltd. v. M/s. United Yarn Tex. Pvt. Ltd. & Ors.). He has submitted that, the arbitrator had correctly passed a money award in favour of the bank in the dispute case. The private respondent had filed a written statement which included a counterclaim. The private respondent did not press the counterclaim at the hearing of the dispute case. The private respondent had preferred an appeal to the appellate authority under the provisions of the Act of 1983. In the appeal the private respondent did not press the issue of the counterclaim. On the contrary the private respondent had limited the appeal to the grounds of lack of jurisdiction of the arbitrator. The appellate Tribunal had found the contention of the private respondent that the bank has to proceed under the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 valid. In view of the ratio rendered in Greater Bombay Co-operative Bank Ltd. (supra) the decision of the appellate Tribunal is incorrect. Consequently such decision has to be set aside. So far as the second writ petition is concerned, learned Advocate for the bank has submitted that, the appellate Tribunal had erred in allowing the counterclaim.
5. He has submitted that, since the private respondent had raised the counterclaim in the first dispute case and did not press the same the private respondent is precluded from raising the same issues in the second dispute case. The counterclaim is barred by the principles of res judicata. The Tribunal had erred in not taking such fact into consideration. The Tribunal had erred in allowing the counterclaim. The order of the Tribunal ought to be set aside. In support of the contention that, the claim of the private respondent in the second dispute case is visited by the principles of res judicata learned Advocate for the petitioner has relied upon 2014 Volume 6 Supreme Court Cases page 424 (Coffee Board v
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