Suits for recovery of mortgage debts, suits involving adjustment or set off, counter claims, cross suits, and suits against employees for misappropriated or embezzled amounts should be dealt with in accordance with the provisions of the Recovery of Debts due to Banks and Financial Institutions Act, 1993.

Manmohan Sarin, J.

( 1 ). By this common order, I would be deciding the question of transfer of suits instituted by Banks and Financial Institutions to the Debt Recovery Tribunal, constituted under "the Recovery of Debts due to Banks and Financial Institutions Act, 1993" hereinafter referred to as the Act.

( 2 ). By virtue of Section 17 of the Act, the Debt Recovery Tribunal has been conferred the jurisdiction to try and entertain an application for Recovery of Debts due to Banks and Financial Institutions. An appellate Tribunal has also been constituted to entertain appeals from orders of the Debt Recovery Tribunal. The jurisdiction of the Civil Courts has been excluded in relation to matters falling within jurisdiction of the Tribunal except under Articles 226 and 227 of the Constitution of India. Reference may usefully bemade to Section 31, which deals with transfer of pending cases. Section 31 of the Act is as under:-

TRANSFER of pending cases.- (1) Every suit or other proceeding pending before any court immediately before the date of establishment of a Tribunal under this Act, being a suit or proceeding the cause of action whereon it is based is such that it would have been, if it had arisen after such establishment, within the jurisdiction of such Tribunal, shall stand transferred on that date to such Tribunal: PROVIDED that nothing in this sub- section shall apply to any appeal pending as aforesaid before any court. (2) Where any suit or other proceedings stands transferred from any court to a Tribunal under sub-section (1),- (a) the court shall, as soon as may be after such transfer, forward the records of such suit or other proceeding to the Tribunal; and (b) the Tribunal may, on receipt of such records, proceed to deal with such suit or other proceedings, so far as may be, in the same. manner as, in the case of an application made under section 19 from the stage which was reached before such transfer or from any earlier stage or de-novo as the Tribunal may deem fit.

( 3 ). Suits instituted by Banks and Financial Institutions of value exceeding the sum of Rs. 10 lacs are liable to be transferred to the Debt Recovery Tribunal from the appointed day. This has given rise to several questions regarding transfer of suits, wherein cross suits have been instituted or counter claims are filed. Additionally, there are cases where set off or adjustment is claimed. These situations may broadly be classified as under:

(I) Suits for recovery filed by the Banks and Institutions wherein the defendant raises a plea of adjustment or set off to wipe of or reduce the plaintiff s claim. (ii) Suits for recovery instituted by the Banks or Financial Institution wherein the defendant raises a counter claim, the extent of which is either lower than the amount claimed in the suit, equivalent thereto or higher than the amount in suit. (iii) Suits instituted by the Banks and Financial Institutions for recovery, wherein the defendant have filed separate cross suits for seeking declaration, damages for failure to honour its commitments and such suits have either been consolidated with the suits filed by the Bank or Financial Institutions for purposes of trial and recording of evidence. (iv) Suits instituted by the Banks against the employees for amounts embezzled or misappropriated.

( 4 ). At the very outset, it may be noted that the Debt Recovery. Tribunal would not have any jurisdiction to entertain claims or suits instituted against a Bank or Financial Institutions. The questions therefore, that arise for consideration relate to suits where pleas of adjustment or set off is raised in written statement. Further directions would be required for the trial of cases, which are liable to be transferred to the Debt Recovery Tribunal and which involve a counter claim, cross suit or separate suit for damages filed by the defendant and the two have been consolidated for the purposes of trial and recording of evidence.

( 5 ). Let us examine the first catego

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