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IN THE HIGH COURT AT CALCUTTA
PRASENJIT BISWAS, J.
Central Bank of India – Petitioner
Versus
M/s. Premimer Feed Meals (P) Ltd. & Ors. – Opp. Parties
C.O. No. 3486 of 2011 with CAN 2 of 2024 with CAN 6 of 2022
Decided On : 19-02-2024
Article 227 - Jurisdiction of High Court - Bathutmal Raichand Oswal Vs. Laxmibat R. Tarta (1975) 1 Supreme Court Cases 858, Central Bank of India Vs. Rabindra & Others AIR 2001, Supreme Court 3095, Allahabad Jal Sansthan Vs. State of UP And Others AIR 2004 ALL 366 - The court discussed the limitations of the High Court's jurisdiction under Article 227 and the principles of contract law. It highlighted the importance of mutual consent in altering contracts and the inability of a party to unilaterally change or cancel a contract. The court also emphasized that a creditor cannot take advantage of the adverse financial situation of the borrower and cannot unilaterally amend a contract. The judgment also referenced the High Court's limited power to interfere with findings of fact recorded by subordinate courts or tribunals.
Fact of the Case:
The petitioner challenged the judgment and order of the Debts Recovery Appellate Tribunal, Kolkata, under Article 227 of the Constitution of India. The petitioner bank sanctioned loan facilities to the opposite party, but later unilaterally reduced the original sanctioned limit, leading to a dispute over the repayment of the loan.
Finding of the Court:
The court found that the High Court cannot arrogate to itself the powers of the court of appeal and overstep its jurisdiction under Article 227. It also held that the petitioner bank's unilateral reduction of the loan amount breached the contract and that the High Court cannot interfere with findings of fact recorded by subordinate courts or tribunals.
Issues: The issues revolved around the High Court's jurisdiction under Article 227, the unilateral reduction of the loan amount by the petitioner bank, and the interpretation of contract law principles.
Ratio Decidendi: The court emphasized the limitations of the High Court's jurisdiction under Article 227, the importance of mutual consent in altering contracts, and the inability of a party to unilaterally change or cancel a contract. It also highlighted that a creditor cannot take advantage of the adverse financial situation of the borrower and cannot unilaterally amend a contract.
Final Decision: The court dismissed the application and affirmed the judgment and order of the Debts Recovery Appellate Tribunal, Kolkata, in connection with Appeal No. 11 of 2006.
JUDGMENT :
Prasenjit Biswas, J.
1. The instant application is filed at the behest of the petitioner under Article 227 of the Constitution of India challenging the impugned judgment and order dated 20th May, 2011 passed by the Debts Recovery Appellate Tribunal, Kolkata, in connection with Appeal No. 11 of 2006.
2. The moot question is that whether the High Court arrogates to itself the powers of the court of appeal and over strapped its jurisdiction under Article 227 of the Constitution of India.
3. At the very outset, learned Counsel appearing on behalf of the opposite party draws attention of this Court about the observations rendered by the Hon’ble Apex Court in case of Bathutmal Raichand Oswal Vs. Laxmibat R. Tarta And Another reported in (1975) 1 Supreme Court Cases 858 wherein Hon’ble Apex Court observed interalia that the jurisdiction of the High Court under Article 227 is limited only to see that the subordinate Court functions within limits of its authority and does not extend to correction of mere error of fact by examining the evidence and re-appreciating it. The High Court cannot in guise of exercising its jurisdiction under Article 227 convert itself into a Court of appeal when the legislature has not conferred a right of appeal and made the decision of the subordinate Court or Tribunal final on facts. In view of observations of the Hon’ble Apex Court the High Court cannot in exercise the jurisdiction under Article 227 interferes with finding of fact recorded by both the Tribunals.
4. Learned Counsel appearing on behalf of the petitioner/Bank submitted that on request and representation the bank sanctioned the loan facilities under Term Loan of Rs. 26.85 lakhs, Cash Credit Hypothecation within the limit of Rs. 5.04 lakhs and overdraft against stock within the limit of Rs. 2.63 lakhs against the interest @ 17.75% and under other terms and conditions as stipulated in the letter of sanction dated 10.11.1995. The opposite party executed various loan documents and opposite party no. 2 to 5 executed the guarantee documents in favour of the petitioner Bank. After sanctioning of the loan facilities, petitioner Bank found that as per credit facility of the Bank, the ratio for the net worth to the bank credit of the borrower was exceeded the normal ratio i.e. 1:4 and as such the exposure exceeds to the extent of Rs. 9.28 lakhs over the normal limit prescribed in the guideline of the bank. The opposite party no. 1 could not provide further securities to the bank and the opposite party no.1 represented by opposite party no.2 agreed to the reduction of limit in Term Loan Account. It is stated by the learned Counsel that the opposite party no. 1 informed his satisfaction to the bank by letter dated 02.04.1996 and thereafter, Bank issued a letter dated 16.05.1996 to the opposite party for the reduction of the limit of Rs. 9.28 lakhs from the sanctioned limit dated 10.11.1995 and the said reduction was agreed by the opposite party no. 1. The opposite party no. 1 was also agreed to reduction of Rs. 5 Lakh in Term Loan Rs. 1.65 lakh in cash credit account and Rs. 2.63 lakhs in overdraft account by letter dated 31.05.1996.
5. It is further submitted by the learned Counsel appearing for the Bank that after getting letter from the opposite party it disbursed the said loan amount and it was enjoyed by the opposite party. According to the learned Counsel for the Bank that on failure of the opposite party to repay the loan as per the agreement no option/choice was left to the bank other than filing of an application before the learned Tribunal seeking recovery of Rs. 68,97,248.09/-. Learned Tribunal after consideration of materials placed before it allowed the application of the Bank in part and it was for an amount of Rs. 19,11,437.75/-with proportionate cost i.e. fee prescribed on such amount. Being aggrieved and dissatisfied with the said order of Tribunal, Bank preferred the appeal before the Debts Recovery Appellate Tribunal at Kolkat
The main legal point established in the judgment is the limitation of the High Court's jurisdiction under Article 227, the principles of contract law regarding mutual consent in altering contracts, a....
The jurisdiction for challenging appellate tribunal orders lies in the High Court corresponding to the original tribunal's location, affirming the principle that appellate orders merge with original ....
The jurisdiction of a High Court under Article 227 pertains only to the Debts Recovery Tribunal located within its territorial limits, not an appellate tribunal for matters originating outside its ju....
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