2005 Supreme(P&H) 1251

PUNJAB & HARYANA HIGH COURT
D.K.Jain and Hemant Gupta JJ.
Kalyani Sales Company
Versus
Union Of India
Civil Writ Petition No. 2550 of 2005,
Decided On : DECEMBER 8, 2005

The doctrine of election is applicable to the remedies available under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, and the bank or financial institution having elected to seek their remedy in terms of the RDB Act or in civil Court cannot simultaneously invoke the jurisdiction of the Act for realising the secured assets without either withdrawing or abandoning the same.

Headnote:

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Constitutionality - Jurisdiction of Debts Recovery Tribunal - Court fee payable on application under Section 17(1) - Election of remedy - Scope of Section 13(4).

Fact of the Case:

The petitioners challenged the legality and validity of the action taken by various banks and financial institutions under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the Act). The main issues raised were: (i) whether the constitutionality of the provisions of the Act could be challenged before the High Court by invoking the doctrine of sub-silentio; (ii) whether the Debts Recovery Tribunal under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (the RDB Act), would have the jurisdiction to entertain an application contemplated under Section 17 of the Act in respect of the debts less than Rs. 1 lac; (iii) whether ad valorem court-fee prescribed under Rule 7 of the Debts Recovery Tribunal (Procedure) Rules, 1993, was payable on an application under Section 17(1) of the Act in the absence of any rule framed under the said Act; (iv) whether the bank or financial institution having elected to seek their remedy in terms of the RDB Act for recovery of debt of Rs. 10 lac or more or in civil Court for an amount less than Rs. 10 lac and over Rs. 1 lac, could still invoke the jurisdiction of the Act for realising the secured assets without either withdrawing or abandoning the same; and (v) whether recourse to take possession of the secured assets of the borrower in terms of Section 13(4) of the Act was the power to take actual physical possession of immovable property.

Finding of the Court:

1. The constitutionality of the provisions of the Act could not be challenged before the High Court by invoking the doctrine of sub-silentio as the Supreme Court had already upheld the constitutional validity of the Act in Mardia Chemicals Limited v. Union of India, (2004) 4 SCC 311. 2. The Debts Recovery Tribunal under the RDB Act would have the jurisdiction to entertain an application contemplated under Section 17 of the Act even in respect of the debt of less than Rs. 10 lacs. 3. In the absence of any rule framed under the Act, the court fee payable on an application under Section 17(1) of the Act would be the fee payable on an application filed for interlocutory order in terms of clause 4 of Rule 7 of the 1993 Rules. 4. The bank or financial institution having elected to seek their remedy in terms of the RDB Act or in civil Court could not simultaneously invoke the jurisdiction of the Act for realising the secured assets without either withdrawing or abandoning the same. 5. Recourse to take possession of the secured assets of the borrower in terms of Section 13(4) of the Act was not the power to take actual physical possession of immovable property.

Issues: 1. Whether the constitutionality of the provisions of the Act could be challenged before the High Court by invoking the doctrine of sub-silentio? 2. Whether the Debts Recovery Tribunal under the RDB Act would have the jurisdiction to entertain an application contemplated under Section 17 of the Act in respect of the debts less than Rs. 1 lac? 3. Whether ad valorem court-fee prescribed under Rule 7 of the Debts Recovery Tribunal (Procedure) Rules, 1993, was payable on an application under Section 17(1) of the Act in the absence of any rule framed under the said Act? 4. Whether the bank or financial institution having elected to seek their remedy in terms of the RDB Act for recovery of debt of Rs. 10 lac or more or in civil Court for an amount less than Rs. 10 lac and over Rs. 1 lac, could still invoke the jurisdiction of the Act for realising the secured assets without either withdrawing or abandoning the same? 5. Whether recourse to take possession of the secured assets of the borrower in terms of Section 13(4) of the Act was the power to take actual physical possession of immovable property?

Ratio Decidendi: 1. The doctrine of sub-silentio could not be invoked to challenge the constitutionality of the provisions of the Act as the Supreme Court had already upheld the constitutional validity of the Act in Mardia Chemicals Limited v. Union of India, (2004) 4 SCC 311. 2. The provisions of the Act and the RDB Act were to be read together and the Debts Recovery Tribunal under the RDB Act would have the jurisdiction to entertain an application contemplated under Section 17 of the Act even in respect of the debt of less than Rs. 10 lacs. 3. In the absence of any rule framed under the Act, the court fee payable on an application under Section 17(1) of the Act would be the fee payable on an application filed for interlocutory order in terms of clause 4 of Rule 7 of the 1993 Rules. 4. The doctrine of election was applicable to the remedies available under the Act and the RDB Act, and the bank or financial institution having elected to seek their remedy in terms of the RDB Act or in civil Court could not simultaneously invoke the jurisdiction of the Act for realising the secured assets without either withdrawing or abandoning the same. 5. Recourse to take possession of the secured assets of the borrower in terms of Section 13(4) of the Act was not the power to take actual physical possession of immovable property.

Final Decision: The writ petition was allowed, the impugned order was quashed, and the Rule was made absolute. The Debts Recovery Tribunal was directed to entertain and decide the appeal/application filed by the petitioners in accordance with law, on payment of a fixed court-fee of Rs. 250/-. However, in the circumstances of the case, there was no order as to costs.