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2007 Supreme(Mad) 3221
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE S.J. MUKHOPADHAYA & THE HONOURABLE MR. JUSTICE N. PAUL VASANTHAKUMAR
J. Sinu Simon
Versus
The Debts Recovery Appellate Tribunal & Another
W.P.No.13803 of 2007 and M.P.No.1 of 2007
Decided On : 04-10-2007
For the Petitioner:Narmada Sampath, Advocate. For the Respondents: R1 Tribunal, R2 V. Bhiman, for Sampath Kumar Associates.
The main legal point established in the judgment is the importance of pecuniary jurisdiction and the interpretation of Section 19 of the Recovery of Debts due to Banks & Financial Institutions Act, 1993 in determining the maintainability of claims before the Debt Recovery Tribunal.
Headnote:
Pecuniary Jurisdiction - Recovery of Debts due to Banks & Financial Institutions - Section 19 of Act 51 of 1993 - Summary of Acts and Sections: Section 19 of the Recovery of Debts due to Banks & Financial Institutions Act, 1993 (Act 51 of 1993) - The court analyzed the provisions of Section 19 and its sub-section (4) to determine the pecuniary jurisdiction of the Debt Recovery Tribunal. The court also referred to legal precedents and interpretations from (2002) 4 SCC 275 and (2005) 4 SCC 315 to support its decision.
Fact of the Case:
The petitioner sought to quash an order passed by the Debt Recovery Appellate Tribunal and to direct the rejection of the application in O.A.No.373 of 2003. The petitioner borrowed overdraft machinery loan from the second respondent Bank, and the bank clubbed the loan amounts borrowed by different defendants to show pecuniary jurisdiction before the Debt Recovery Tribunal. The petitioner filed I.A.No.207 of 2003 and prayed for dismissing the original application as it is not maintainable before the Debt Recovery Tribunal. The Debt Recovery Tribunal dismissed the I.A.No.207 of 2003, and the petitioner appealed to the Debt Recovery Appellate Tribunal, which also dismissed the appeal.
Finding of the Court:
The court found that the claim petition filed by the Bank before the Debt Recovery Tribunal is not maintainable as the individual amounts to be recovered are less than Rs.10 lakhs. The court also held that the Debt Recovery Tribunal has no pecuniary jurisdiction to entertain the original application.
Issues: The main issue was whether the Debt Recovery Tribunal had pecuniary jurisdiction to entertain O.A.No.373 of 2003 and whether the bank was justified in clubbing the claim amounts from different defendants to show pecuniary jurisdiction.
Ratio Decidendi: The court's decision was based on the interpretation of Section 19 of the Recovery of Debts due to Banks & Financial Institutions Act, 1993 and legal precedents. The court also emphasized the importance of raising preliminary objections at the earliest and the responsibility of the court to promptly dispose of such objections.
Final Decision: The court set aside the orders passed by the Debt Recovery Tribunal and the Debt Recovery Appellate Tribunal and upheld the preliminary objection raised in I.A.No.207 of 2007 in O.A.No.373 of 1993. The writ petition was allowed with no costs.
N. Paul Vasanthakumar, J.
Petitioner seeks to quash the order passed by the Debt Recovery Appellate Tribunal, Chennai, the first respondent herein, in IN-164/2007, against the order made in I.A.No.207 of 2007 in O.A.No.373 of 2003 on the file of the Debt Recovery Tribunal, Coimbatore, and to direct the first respondent to reject the application in O.A.No.373 of 2003.
2. The brief facts necessary for disposal of the writ petition as could be seen from the pleadings are as follows:
(a) Petitioner borrowed overdraft machinery loan from second respondent Bank for his business purpose. Three persons, namely, C.V.Jose William, S.Mary and Benjamin Jacob have deposited the title deeds of their property as collateral security for the said loan. Petitioner has not borrowed any other loan from the second respondent, nor he stood as guarantor for any other loan with the second respondent.
(b) The said three persons, who stood as Guarantors have also given guarantee for sanction of the loan by M/s.J.M.Hardwares and Electricals and the petitioner has no connection with the said loan obtained by the said M/s.J.M.Hardwares and Electricals.
(c) The second respondent filed O.A.No.373 of 2003 before the Debt Recovery Tribunal, Coimbatore, for recovery of the loan amount and in the said application, the second respondent clubbed the loan amounts borrowed by the defendants 1, 3 to 5 therein along with the petitioners loan amount. Petitioner was arrayed as third defendant in the said application.
(d) The total outstanding loan amount of the petitioner is much less than Rs.10.00 lakhs. Similarly, it appears that the claim amount against the said M/s.J.M.Hardwares & Electricals is also less than Rs.10.00 lakhs as could be seen from the application. However, the second respondent clubbed the alleged debts of different persons and totalled them so as to show that the amount due in the said original application is above Rs.10.00 lakhs, to make out the pecuniary jurisdiction before the Debt Recovery Tribunal.
(e) Petitioner filed I.A.No.207 of 2003 in O.A.No.373 of 2003 before the Debt Recovery Tribunal, Coimbatore, and prayed for dismissing the said Original application as it is not maintainable before the Debt Recovery Tribunal as the claim amount even according to the application against the petitioner, is only a sum of Rs.4,84,746/- and his loan is a separate one and his business is in no way connected with M/s.J.M.Hardwares & Electricals, against whom another due is claimed.
(f) Another ground taken in the writ petition is that though the said three persons stood as Guarantors for the loan obtained by the petitioner and the first defendant, the property which was given as collateral security for the loan obtained by M/s.J.M.Hardware & Electricals is A schedule property and the property given as collateral security to the loan obtained by the petitioner by the said three persons is B schedule property and therefore the two independent loan amounts obtained by two different persons cannot be clubbed together for the purpose of conferring pecuniary jurisdiction to the Debt Recovery Tribunal.
(g) The said I.A.No.207 of 2007 was dismissed by the Debt Recovery Tribunal on 22. 2007 by holding that the said prayer can be agitated at the time of arguments in the main original application itself. As against the said rejection of I.A.No.207 of 2003 on 22. 2007, petitioner has preferred appeal before the Debt Recovery Appellate Tribunal, the first respondent herein and the first respondent dismissed the appeal on 20.3.2007 and as against which the present writ petition is filed.
3. The learned counsel appearing for the petitioner submitted that unless the recovery amount exceeds Rs.10 lakhs, the Debt Recovery Tribunal has no pecuniary jurisdiction to entertain the application and the petitioner having secured the loan, which has no connection with the other loan obtained by M/s.J&M Hardwares & Electricals, the Bank cannot club both the loan amounts
