( 1 ) THIS is an application filed by the defendant under Order 9 Rule 13 read with Section 151 CPC.

( 2 ) A question has been raised by the plaintiff-non-applicant regarding the jurisdiction of this Court to deal with the instant application, which has its genesis in the present suit instituted by the plaintiff/non-applicant - admittedly a financial institution within the meaning of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - in respect of money due from the applicant/defendant on account of the loan facility granted by the former to the latter. The brief facts giving rise to the application are as under:

( 3 ) THE plaintiff extended and disbursed loan facility to defendants 1 to 3 to the extent of Rs. 15,00,000. 00 in respect of their project to manufacture cotton sewing threads, industrial threads and embroidery threads. In view of the defaults committed in the repayment of the loan, the plaintiff recalled the entire outstanding amount relating to principal sum and service charges from defendants 1 to 3 vide recall notice dated 20th August, 1990. However, the defendants failed to make the payment even after the recall notice which led to the institution of the present suit by the plaintiff for recovery of the aforesaid sum. During the course of the proceedings of the suit, the defendants were given opportunity to file the written statement. But, the same was not filed. On 20th January, 1994, final opportunity was granted to the defendants to file the written statement within 4 weeks. However, on the next date viz. , Aug 19, 1994 no one appeared for the defendants and even the written statement was not filed. Court acting under Order 8 Rule 10 Civil Procedure Code struck off the defence of the defendant applicant and decreed the suit of the plaintiff. It is this order which the defendants want to be set aside by the instant application under Order 9 Rule 13.

( 4 ) AT the outset, it may be noted that on July 5, 1994 the Debt Recovery Tribunal was established by the Government of India under Section 3 (1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 ( for short the Act) vide Notification No. F. 18 (17)/93 Cord. , Govt. of India, Ministry of Finance, Department of Economic Affairs, Bank Dues. On July 25, 1994, a Division Bench of this Court in C. W. P. No. 3050/94 stayed the operation of the Act in its application to the Union Territory of Delhi. On August 19, 1994 when decree in the instant case was passed, the above said stay order was still in operation. But at the present juncture, as conceded by both sides, the stay order stands vacated by the apex court. Therefore the position is that the Act is fully operative. Notwithstanding this position, the learned counsel for the defendants, submitted that this Court has the jurisdiction to decide the application as the proceedings under Order 9 Rule 13 are proceedings independent of the suit and are not covered by Section 31 of the Act.

( 5 ) IN order to appreciate the legal position, it will be necessary to notice the objects and reasons of the Act, its preamble and Sections 1 (4) 17, 18, 21.

( 6 ) THE objects and reasons of the Act as contained in the Bill No. 59 of 1993 introduced in the Lok Sabha on May 13, 1993, which culminated in the Act, read as follows:

"banks and financial institutions at present experience considerable difficulties in recovering loans and enforcement of securities charged with them. The existing procedure for recovery of debts due to the banks and financial institutions has blocked a significant portion of their funds in unproductive assets, the value of which deteriorates with the passage of time. The Committee on the Financial System headed by Shri M. Narasimham has considered the setting up of the Special Tribunals with special powers for adjudication of such matters and speedy recovery as critical to the successful implementation of the financial sector reforms. An urgent nee