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1999 Supreme(All) 1485
IN THE HIGH COURT OF ALLAHABAD
Ashok A. Desai and Onkareshwar Bhatt, JJ.
MUDIT ENTERTAINMENT INDUSTRIES (P.) LTD., ALLAHABAD - Appellant
Versus
BANARAS STATE BANK LTD. - Respondents
C. M. W. P. 37200 and 25 other writ petitions Of 1998 and 86 of 1999
Decided On : 09/23/1999
Mohd.Isha Khan, NAVIN SINHA, Ravi Kant, S.N.SRIVASTAVA
The Parliament has the legislative competence to enact the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 under Entry 46 read with Entry 11A of List III of the Seventh Schedule to the Constitution, and the provisions of Articles 323A and 323B do not bar the Parliament from establishing the Tribunal.
Headnote:
RECOVERY OF DEBTS DUE TO BANKS AND FINANCIAL INSTITUTIONS ACT, 1993 - CONSTITUTIONALITY - TRIBUNAL ESTABLISHMENT - LEGISLATIVE COMPETENCE - ARTICLES 323A AND 323B - ENTRY 11A OF LIST III - INTERPRETATION - SCOPE OF TRIBUNAL'S JURISDICTION - COUNTERCLAIMS AND SET-OFFS - SECTION 17 - SECTION 19(3) - SECTION 19(4) - SECTION 22 - SECTION 2(G) - SECTION 2(H) - SECTION 3(2) - VALIDITY OF NOTIFICATION ESTABLISHING TRIBUNAL AT JABALPUR - SECTION 1(4) - SECTION 2(H)(II) - SECTION 3(2).
Fact of the Case:
Petitions challenging the legislative competence of the Parliament to enact the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (the Act, 1993) and the legality of transferring recovery suits to the Tribunal constituted thereunder, as well as the Notification dated 7.4.1988 establishing the Tribunal at Jabalpur for Uttar Pradesh and Madhya Pradesh.
Finding of the Court:
The Court upheld the validity of the Act, 1993 and the Notification establishing the Tribunal at Jabalpur. It held that the Parliament had the legislative competence to enact the Act, 1993 under Entry 46 read with Entry 11A of List III of the Seventh Schedule to the Constitution, and that the provisions of Articles 323A and 323B did not bar the Parliament from establishing the Tribunal. The Court also held that the Tribunal had the jurisdiction to adjudicate counterclaims and set-offs raised by debtors, and that the provisions of the Act, 1993 were not arbitrary or discriminatory.
Issues: 1. Whether the Parliament had the legislative competence to enact the Act, 1993 under Entry 46 read with Entry 11A of List III of the Seventh Schedule to the Constitution, in light of the provisions of Articles 323A and 323B. 2. Whether the Tribunal had the jurisdiction to adjudicate counterclaims and set-offs raised by debtors. 3. Whether the provisions of the Act, 1993 were arbitrary or discriminatory.
Ratio Decidendi: 1. The provisions of Articles 323A and 323B do not bar the Parliament from establishing the Tribunal under the Act, 1993, as these provisions do not create a bar in constituting Tribunal beyond these Articles. 2. The Tribunal has the jurisdiction to adjudicate counterclaims and set-offs raised by debtors, as the Act, 1993 does not specifically bar such claims and the Tribunal is required to decide the debts due to the bank, taking into account the cause shown by the debtor. 3. The provisions of the Act, 1993 are not arbitrary or discriminatory, as the legislature has the power to provide a special remedy for recovery of debts of more than ten lac, and the demarcation made is not arbitrary.
Final Decision: The petitions challenging the validity of the Act, 1993 and the Notification establishing the Tribunal at Jabalpur were dismissed.
ASHOK A. DESAI, J.
( 1 ) THIS bunch of petitions have questioned legislative competence of the Parliament to enact the recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to "the Act, 1993") and legality of consequent transferring of recovery suits to the Tribunal constituted thereunder, as well Notification dated 7. 4. 1988 establishing the Tribunal at Jabalpur for Uttar Pradesh and Madhya Pradesh. These petitions, since raise common questions of facts, and law, are heard together and being disposed of by this common Judgment.
( 2 ) THE Act of 1993 has established Tribunal for expeditious recovery of debts due to Banks and financial Institutions. According to the learned counsel for petitioners, 42nd Constitutional amendment of 1976 has now incorporated Part XIVA to the Constitution. This part contains articles 323a and B. Article 323b empowers the Appropriate Legislature, by law to provide tribunals for adjudication and trial, on the subjects enumerated therein. The Amendment of 1976, therefore, by necessary implication brings limitation on the plenary jurisdiction of the parliament, to establish Tribunal on the subject, which have been, excluded under Article 323b. Submission of the learned counsel, therefore, is that the Parliament now cannot establish the tribunal as it has been done under the impugned Act, by resorting to plenary jurisdiction under article 245 of the Constitution. Consequently, the Parliament has traversed beyond the legislative competence, by establishing the Tribunal.
( 3 ) CLAUSE 4 incorporates non obstante clause to Article 323b which reads thus : "clause (4 ).--The provisions of this article shall have effect notwithstanding anything in any other provision of the Constitution or in any other law for the time being in force. " similar is the provision to Article 323a. Provisions under both the Articles have overriding effect on all the provisions of the Constitution including Article 245. Further submission, therefore, is it is no more open for the Parliament to establish any Tribunal, in exercise of plenary jurisdiction. To constitute a Tribunal on any other subject, the Parliament has to suitably amend Article 323b, by inserting the particular subject.
( 4 ) THE non obstante clause gives overriding effect to the provision under the said Article. It is, therefore, explicit that the provisions existing prior to the Amendment of 1976 shall in no manner affect or control the operation of the added provisions. The non obstante clause certainly takes the provision to which it is attached at the highest pedestal than the other provisions prevailing at the relevant time. However, the clause has no gimmick or mission to bring shrinkage or control upon the existing provision including Article 245. True it is that the parliament could not take resort to Article 323b to establish Tribunal on the subjects other than those mentioned therein in absence of suitable amendment. The Parliament, however, was not prevented to exercise power under Article 245 read with Entry 46 coupled with 11a. of III list of vii Schedule to establish the Tribunal, as provided under the Act 1993. For constituting such tribunal, the Parliament was not obliged to amend Article 323b.
( 5 ) SIMILAR was the question in Delhi High Court Bar Association v. Union of India, AIR 1995 del 232. In paragraph 44 of the report, the Court has observed that Article 323a or B does not create bar in constituting Tribunal beyond these Articles. It is added Article 323b confers discretion on the Parliament to legislate in the matter to exclude jurisdiction of the Courts including High Court. The Punjab and Haryana High Court in a Judgment delivered on 11th september, 1996 in Civil Misc. Writ Petition No. 12901 of 1996, M/s. Kundan Rice and General mills v. Union of India and others, referring to Articles 323 A and B has held that the plenary power of the Parliament to legislate under the Constitution has not been curta
