Civil Appeal Nos. 8973-8973 of 2014 (Arising out of Special Leave Petition (C) Nos. 975-976 of 2012). Case: Bank of Rajasthan Ltd. Vs VCK Shares & Stock Broking Services Ltd.. Supreme Court (India)
| Case Number | Civil Appeal Nos. 8973-8973 of 2014 (Arising out of Special Leave Petition (C) Nos. 975-976 of 2012) |
| Judges | Ranjan Gogoi and Sharad Arvind Bobde, JJ. |
| Issue | Recovery of Debts due to Banks and Financial Institutions Act, 1993 - Sections 19, 19(6), 19(11); Constitution of India - Article 227 |
| Judgement Date | Wednesday September 17, 2014 |
| Court | Supreme Court (India) |
Judgment:
Sharad Arvind Bobde, J.
Leave granted.
In these appeals, the question before us is whether having regard to the Recovery of Debts due to Banks and Financial Institutions Act, 1993 [hereinafter referred to as 'RDB Act'], a suit containing a "counter-claim" or claiming a "set-off" filed by a debtor can be heard and tried before the Debt Recovery Tribunal (hereinafter referred to as 'DRT') under the RDB Act or must be tried by a Civil Court alone.
The Appellant - Bank filed an application for recovery Under Section 19 of the RDB Act before the DRT for a recovery certificate against the Respondent for Rs. 8,62,41,973.36/-. Though the Respondent entered appearance before the DRT, it filed Civil Suit No. 77 of 1998 before the Calcutta High Court against the Appellant claiming a decree for sale of pledged shares and payment of sale proceeds to the Respondent. After the Appellant sold pledged shares for a total sum of Rs. 5,77,68,000/-, the Respondent filed Civil Suit No. 129 of 1999 praying inter alia for following reliefs:
i) A declaration that sale of shares of BFL Software Ltd.. was void;
ii) A decree for return of pledged shares in respect of overdraft facility account and in default to pay Rs. 48.95 crores; and
iii) A declaration that no sum was payable by the Respondent to the Appellant in respect of Term Loan dated 27.07.1994 and overdraft Account dated 19.09.1995 and that the Appellant is not entitled to a decree for a sum of Rs. 8,62,41,973.36 from the Respondent.
The Appellant filed an application in C.S. No. 129 of 1999 for rejecting the suit on the ground that the High Court did not have jurisdiction since the subject matter was within the exclusive jurisdiction of the DRT. The Single Judge allowed that application and directed that the suits be taken off from the file of the High Court. The Division Bench stayed operation of the Order of the Single Judge.
Since the DRT held that the Appellant's claim for Rs. 6,04,17,777.36 was satisfied, it directed inter alia to return the title deeds of the pledged shares. On the counter claim, the DRT held that the Respondent was entitled to recover Rs. 6,88,187.49 from the Appellant within 4 weeks.
The Appellant's petition Under Article 227 of the Constitution before the High Court of Calcutta challenging the DRT order dismissing the Appellant's appeal against the DRT order was dismissed in default. The Division Bench allowed the appeal filed by the Respondent against the order of the Single Judge taking off the suits from the file of the High Court. This judgment of the High Court is questioned in these appeals.
In United Bank of India, Calcutta v. Abhijit Tea Company Pvt. Ltd. and Ors. (2000) 7 SCC 357, a two-Judge Bench of this Court took the view that as per the legislative scheme of the RDB Act, jurisdiction was indeed conferred upon the Tribunal to try "counter-claim" and "set-off" by Section 19 of the RDB Act and that all such counter-claims and set-offs, including a cross suit filed independently should be tried by a Debt Recovery Tribunal. The Court...
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