IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED :: 07-10-2005 CORAM THE HONOURABLE MR.JUSTICE M.KARPAGAVINAYAGAM AND THE HONOURABLE MR.JUSTICE S.R.SINGHARAVELU WRIT PETITION Nos.3386,18669,18670 AND 18671 OF 2003 1.M/s.Bhanu Construction Co.Pvt.Ltd., rep.by its Managing Director Sri B.Venkateswara Rao, having its office at 6-3-354/2/B, Banjara Hills, Hyderabad. 2.Sri B.Venkateswara Rao ...Petitioners in W.P.No.3386/2003 B.Rajasekhar ...Petitioner in W.P.No.18669/2003 1.K.Suribabu 2.B.Nagendramma ...Petitioners in W.P.No.18670/2003 B.Venkat Rao ...Petitioner in W.P.No.18671/2003 -vs- 1.Andhra Bank, rep.by its Chief Manager, Balanagar Branch, Hyderabad. 2.State Bank of India, rep.by its Asst.General Manager, Yellareddyguda Branch, Hyderabad. 3.Debts Recovery Tribunal, V Floor, Triveni Complex, Abids, Hyderabad. https://hcservices.ecourts.gov.in/hcservices/ 4.Debts Recovery Appellate Tribunal, Ethiraj Salai (Commander in Chief Road), Chennai-8. ... Respondents in all W.Ps. Petitions under Article 226 of the Constitution of India, praying for issuance of a writ of certiorari. For petitioners : Mr.B.Kumar, Senior Counsel, for Mr.K.Chandrasekaran. For respondents 1 & 2 :Mr.A.L.Somayaji, Senior Counsel, for Mr.R.Gowthama Narayanan COMMON ORDER M.KARPAGAVINAYAGAM,J. Andhra Bank and State Bank of India, Hyderabad, filed an application against M/s.Bhanu Construction Co. Pvt. Ltd. and the guarantors, for recovery of a sum of Rs.19,95,86,510.79 before the Debts Recovery Tribunal, Hyderabad, in O.A.No.460 of 1999. After enquiry, the Debts Recovery Tribunal, Hyderabad, passed a decree in favour of the banks as against M/s.Bhanu Construction Co. Pvt. Ltd. and the guarantors on 31.10.2000. The judgment debtors, feeling aggrieved that the decree was passed on merits without giving an opportunity to them, filed an application to set aside the said decree, terming the same as an exparte one. Some of them filed applications to set aside the exparte decree. Some others filed applications to condone the delay in filing the applications to set aside the exparte decree. Ultimately, on 06.09.2002, the Debts Recovery Tribunal, Hyderabad, dismissed the said applications. Aggrieved by that, they filed appeals before the Debts Recovery Appellate Tribunal, situated at Chennai. After hearing the counsel for the parties, the Appellate Tribunal, dismissed the appeals. Hence, separate Writ Petitions have been filed by the judgment debtors, namely, M/s.Bhanu Construction Co. Pvt. Ltd. and the guarantors in W.P.Nos.3386,18669,18670 and 18671 of 2003 before this Madras High Court. 2. Since all these Writ Petitions would deal with the same question, they are being disposed of by a common order. https://hcservices.ecourts.gov.in/hcservices/ 3. The above Writ Petitions had come up for admission before the I Bench of this Court, which admitted the same and passed interim orders, granting stay of the decree, and issued notice to the banks, respondents 1 and 2 herein. 4. After service of notice, the respondents/banks filed a counter. Mr.A.L.Somayaji, learned Senior Counsel, appearing for Mr.R.Gowthama Narayanan, for the respondents, raised a preliminary objection that the Writ Petitions before this Madras High Court are not maintainable, since the subject matter of the Writ Petitions would deal with the order passed by the Debts Recovery Tribunal, Hyderabad, which is confirmed by the Appellate Authority, and, as such, the Andhra Pradesh High Court alone has jurisdiction. 5. In reply to the said contention, Mr.B.Kumar, learned Senior Counsel, appearing for Mr.K.Chandrasekaran, for the petitioners, would submit that the Appellate Tribunal is situated at Chennai; as such, part of cause of action has arisen at Chennai and, therefore, this High Court at Chennai has got jurisdiction. 6. In the light of the rival contentions made by the respective counsel for the parties as referred to above, it would be appropriate to deal with the preliminary objection, regarding the jurisdiction, before dealing with the merits of the matter. 7. The principal question, that arises for consideration, is the following : "Whether the petitioners are entitled to file Writ Petitions in this Madras High Court, even though the original orders were passed by the Debts Recovery Tribunal at Hyderabad, Andhra Pradesh, merely because the Debts Recovery Appellate Tribunal, which confirmed the said original orders, is situated at Chennai, within the territorial jurisdiction of this Court?" 8. The core of the contention, urged by Mr.B.Kumar, learned Senior Counsel for the petitioners, is two fold, which is as follows : (i) The order impugned is passed by the Debts Recovery Appellate Tribunal, which is situated at Chennai, within the territory, in relation to which the Madras High Court exercises jurisdiction and, therefore, the Writ Petitions are maintainable under Article 226 (1) of the Constitution of India. (ii) Though the order of the Debts Recovery Tribunal, Hyderabad, was challenged before the Debts Recovery Appellate Tribunal, when the Appellate Tribunal at Chennai disposed of the https://hcservices.ecourts.gov.in/hcservices/ appeal, the said order of the Tribunal at Hyderabad gets merged with the order passed by the Appellate Tribunal; as such, the moment the order passed by the Appellate Tribunal at Chennai, giving a finding with reference to the order passed by the Tribunal at Hyderabad, the substantial cause of action would arise at Chennai also and, as such, the Writ Petitions are maintainable in this Madras High Court, under Article 226 (2) of the Constitution of India. 9. The gist of the reply for the above two points, given by Mr.A.L.Somayaji, learned Senior Counsel for the respondents, is as follows : (i) Under Article 226 (1) of the Constitution, the High Court's jurisdiction depends upon the seat of the authority. Where the authority acts as Appellate Authority for more than one State and where the authority has power to change its place of sitting, then, a legal fiction is applied that when it deals with a case of a particular State, its seat is deemed to be within the State concerned and it is the place of locality 'in the eye of law'. Therefore, the Writ Petitions under Article 226 (1) of the Constitution in the Madras High Court are not maintainable. (ii) In this case, the entire transaction took place only at Hyderabad. Admittedly, all the parties are at Hyderabad. There is no cause of action at Chennai. Merely because the order impugned has been passed by the Appellate Tribunal, which is situated at Chennai, the same, by itself, may not be considered to be a determinative factor, relating to the part of cause of action, compelling the High Court to decide the matter on merit. Therefore, Article 226 (2) also would not apply. 10. On the strength of the above pleas, both the learned Senior Counsel for the parties would advance their arguments at length. 11. Mr.B.Kumar, learned Senior Counsel for the petitioners, would cite the following authorities : (i) AIR 1955 SC 233 (HARI VISHNU KAMATH v. AHMAD ISHAQUE AND OTHERS) ; (ii) AIR 1961 SUPREME COURT 532 (LT.COL.KHAJOOR SINGH v. UNION OF INDIA AND ANOTHER) ; (iii) AIR 1963 SUPREME COURT 1124 (COLLECTOR OF CUSTOMS, CALCUTTA, v. EAST INDIA COMMERCIAL CO.LTD., CALCUTTA AND OTHERS) ; https://hcservices.ecourts.gov.in/hcservices/ (iv) AIR 1976 SUPREME COURT 331 (NASIRUDDIN v. STATE TRANSPORT APPELLATE TRIBUNAL) ; (v) 1992 (2) L.W. 505 (K.JANARTHAN & ANR. v. R.THILAK KUMAR) ; (vi) 1994 L.W. 256 (ELLAPURAM PANCHAYAT UNION v. SRI BHAVANIAMMAN DEVASTHANAM) ; (vii) AIR 1995 SUPREME COURT 2148 (U.P.RASHTRIYA CHINI MILL ADHIKARI PARISHAD, LUCKNOW, v. STATE OF U.P. AND OTHERS) ; (viii) 2000 (3) M.L.J.570 (ASHOK U.SAMAT AND OTHERS v. M/S.SHANTHI BUILDERS) (ix) 2001 (129) E.L.T.11 (S.C.) (KUNHAYAMMED v. STATE OF KERALA); (x) (2002) 5 SUPREME COURT CASES 377 (SUSHIL KUMAR SABHARWAL v. GURPREET SINGH AND OTHERS); and (xi) JT 2004 (SUPPL.1) SC 475 (M/S.KUSUM INGOTS & ALLOYS LTD. v. UNION OF INDIA AND ANR.) ; 12. Mr.A.L.Somayaji, learned Senior Counsel for the respondents, would cite the following authorities : (i) AIR 1952 BOMBAY 449 (M.E.T CO. v. RANGANATHAN); (ii) AIR 1952 MADRAS 659 (RANGANATHAN v. MADRAS ELECTRIC TRAMWAYS) ; (iii) AIR 1953 SUPREME COURT 210 (ELECTION COMMISSION v. VENKATA RAO) ; (iv) AIR 1961 SUPREME COURT 532 (LT.COL.KHAJOOR SINGH v. UNION OF INDIA) ; (v) AIR 1967 SUPREME COURT 1244 (M/S.HAJI ISMAIL NOOR MOHAMMAD AND CO. v. COMPETENT OFFICER, LUCKNOW) ; (vi) (1984) 3 SUPREME COURT CASES 698 (SMT.SURINDER KAUR SANDHU v. HARBAX SINGH SANDHU AND ANOTHER) ; (vii) AIR 1984 SUPREME COURT 1264 (UNION https://hcservices.ecourts.gov.in/hcservices/ OF INDIA v. M/S.OSWAL WOOLLEN MILLS LTD.); (viii) (1998) 5 SUPREME COURT CASES 310 (WORLD TANKER CARRIER CORPORATION v. SNP SHIPPING SERVICES PVT.LTD.) ; (ix) AIR 1998 SUPREME COURT 1855 (M/S.CHETAK CONSTRUCTION LTD. v. OM PRAKASH); (x) (1999) 8 SUPREME COURT CASES 525 (RAJIV BHATIA v. GOVT. OF NCT OF DELHI) ; (xi) 2000 (3) SUPREME COURT CASES 14 (SARITA SHARMA v. SUSHIL SHARMA) (xii) AIR 2002 CALCUTTA 223 (NAVIN JAIN v. STATE BANK OF INDIA) ; (xiii) III (2002) BC 269 (DB) (SYNDICATE BANK v. MRS.K.CHANDRAKALA BHAKTA & ORS.); and (xiv) AIR 2004 SUPREME COURT 2321 (M/S.KUSUM INGOTS AND ALLOYS LTD. v. UNION OF INDIA AND ANOTHER); 13. We have heard the learned Senior Counsel for the parties and also perused the records. Let us now deal with the main question, with reference to the jurisdiction. 14. The first limb of arguments advanced by the learned Senior Counsel for the petitioners is that these Writ Petitions are maintainable under Article 226 (1) of the Constitution, as the orders impugned in these cases are passed by the Debts Recovery Appellate Tribunal, which is situated at Chennai, within the territory, in relation to which the Madras High Court exercises jurisdiction. 15. Regarding this contention, it shall be stated that we are of the considered opinion that this Madras High Court cannot be requested to usurp the jurisdiction of the Andhra Pradesh High Court, which is vested with the power of superintendence and review of the orders passed by the Tribunal at Hyderabad, by applying the prevailing law applicable to Andhra Pradesh. 16. Under Article 226 (1) of the Constitution, the High Court's jurisdiction depends upon the seat of the authority. In view of the fact that one DRAT is constituted for several DRTs within several States and for convenience the seat of DRAT is located at Chennai, the seat of the DRAT, in the eye of law, depends upon the place of DRT, whose order it deals with. https://hcservices.ecourts.gov.in/hcservices/ 17. Of course, it is true that DRAT is situated at Chennai. But, by virtue of the legal fiction, the seat of the DRAT should be deemed to be within the State concerned. In other words, when the seat of the Appellate Authority is situated in one place for convenience; where the same authority acts as the Appellate Authority for more than one State and where the authority has the power to change its place of sitting, then a legal fiction applies that when it deals with a case of a particular State, its seat is deemed to be within the State concerned. This is the location of the Appellate Authority 'in the eye of law'. 18. In this context, it would be worthwhile to refer to the observation of the Supreme Court, which makes a distinction of legal and factual place of authority. The relevant observation in AIR 1967 SUPREME COURT 1244 is as follows: "....in the present case, the appellate authority, though for convenience is having its head office in New Delhi, is factually and legally functioning under the State Act within the territorial jurisdiction of the High Court. To hold that such an authority, which is appointed by the State Government and holds office, entertains and disposes of appeals within the State is outside the jurisdiction of the High Court is to carry technicality beyond reasonable limits. One can hold reasonably that such an appellate authority is located within the territorial limits of the High Court for the purpose of disposing of the appeals under the Act...." 19. In this connection, it would also be relevant to refer to Rule 3 of The Debts Recovery Appellate Tribunal (Procedure) Rules,1994. "3. Sitting of Appellate Tribunal – An Appellate Tribunal shall hold its sittings either at headquarters or at such other place falling within its jurisdiction as it may consider convenient." According to this Rule, an Appellate Tribunal can hold its sitting either at headquarters or at such other place falling within its jurisdiction as it may consider convenient. 20. Thus, it is clear that the location of the Appellate Tribunal may vary from time to time according to its convenience. In the present case, as indicated above, the Appellate Tribunal is, in the eye of law, located at Hyderabad, though, for convenience, https://hcservices.ecourts.gov.in/hcservices/ it holds office at Chennai, as the same Presiding Officer has been discharging the same function for other States. 21. Admittedly, this Madras High Court has no power of jurisdiction or superintendence, either administrative or judicial, over the Debts Recovery Tribunal at Hyderabad. Merely because the Appellate Tribunal is situated within the territorial limits of this High Court, such a fact cannot confer jurisdiction to scrutinise the order passed by such Tribunal in any appeal preferred against the decision of the original Tribunal, over which this Court has no power of superintendence. 22. By virtue of Article 226 (1) of the Constitution, this High Court shall have power to issue appropriate orders to all Courts and Tribunals throughout the territories of this State, in relation to which it exercises jurisdiction, and can call for the returns from such Tribunals and may also make order, issue general rules and prescribe forms for regulating the practice and proceedings of such Courts and Tribunals. If a Tribunal is constituted as Appellate Tribunal for hearing appeals against decisions of more than one original Tribunal situated in different States, in our view, in such a case, for the purpose of challenging the orders of such Appellate Tribunals by way of an application under Article 226 or 227 of the Constitution, the aggrieved party is to approach the High Court of that State within the territorial limit of which the original Tribunal exercises jurisdiction in a particular case. 23. While entertaining the petitions under Article 226 of the Constitution of India, this Court must ascertain as to what is the effect of interference prayed for in the Writ Petitions. If the result of such intervention is that an order of a Tribunal, over which this High Court has no power of superintendence, has to be subjected to scrutiny, then, in that case, this High Court should refuse to entertain such a request. Therefore, there is no difficulty for this Court to conclude that this High Court would not entertain the Writ Petitions mainly on two reasons, namely, (i) it would amount to interfering into and usurping the power of the Andhra Pradesh High Court, which alone is vested with the power of going into the legality or otherwise of the order of the Tribunal at Hyderabad, which has been confirmed by the Appellate Tribunal at Chennai and (ii) the seat of the Appellate Authority must be deemed to be within Hyderabad, though the building of the Office is situated at Chennai, for convenience. 24. Let us now deal with the second limb of arguments, urged by the learned Senior Counsel for the petitioners, with regard to the cause of action. 25. The concept of cause of action under Article 226 of the Constitution of India came to be considered before the https://hcservices.ecourts.gov.in/hcservices/ Constitution Bench of the Supreme Court of India in AIR 1961 SUPREME COURT 532 (LT.COL.KHAJOOR SINGH v. UNION OF INDIA). The concept theory of cause of action was rejected by the Supreme Court, on the ground that the Courts have no power to impose new concept, when Article 226 does not provide for it. This judgment necessitated the amendment to Article 226 and, hence, sub-clause (2) was introduced by 15th Amendment. Article 226 (2) : "The power conferred by clause (1) to issue directions, orders or writs to any Government, authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories." 26. Thus, the legal position, after the amendment, is that a writ can be issued by a High Court, within whose jurisdiction the cause of action wholly or in part arises, irrespective of the seat of the authority. 27. According to Mr.B.Kumar, learned Senior Counsel for the petitioners, the cause of action, which originally arose at Hyderabad, ceases to exist and may get merged with the orders passed by the Debts Recovery Appellate Tribunal at Chennai; hence, the substantial cause of action is only at Chennai, within the territorial jurisdiction of this High Court at Chennai and that when the Appellate Authority exercises jurisdiction it would form part of the cause of action, although the original order is passed by the authority, situated outside the jurisdiction of the Madras High Court and, therefore, writ is maintainable under Article 226 (2) of the Constitution of India. He cited AIR 2004 SUPREME COURT 2321 (M/S.KUSUM INGOTS AND ALLOYS LTD. v. UNION OF INDIA) and pointed out the principle laid down therein. The relevant observation pointed out by the learned Senior Counsel for the petitioners is para 27 of the said judgment, which reads as follows : "When an order, however, is passed by a Court or Tribunal or an executive authority whether under provisions of a statute or otherwise, a part of cause of action arises at that place. Even in a given case, when the original authority is constituted at one place and the appellate authority is constituted at another, a writ petition would be maintainable at both the places. In other words, as order of https://hcservices.ecourts.gov.in/hcservices/ the appellate authority constitutes a part of cause of action, a writ petition would be maintainable in the High Court within whose jurisdiction it is situate having regard to the fact that the order of the appellate authority is also required to be set aside and as the order of the original authority merges with that of the appellate authority." 28. In the light of the above observation, it is strenuously contended that the above decision is an authority for the proposition that the place from where an appellate order is passed may give rise to a part of cause of action, although the original order was at a place outside the said area and when a part of the cause of action arises within one or the other High Court, it is for the petitioners to choose their forum and, as such, they have chosen the Madras High Court, since the part of cause of action has arisen when the Appellate Tribunal situated at Chennai passed the final order, which is challenged. 29. On the other hand, it is pointed out by Mr.A.L.Somayaji, learned Senior Counsel for the respondents, that even assuming that the seat of the Debts Recovery Appellate Tribunal gives a part of cause of action at Chennai, the Supreme Court, in the very same decision in paragraph 30, advised that merely because a fraction of cause of action is arising in the High Court, it need not be a ground to issue a writ and this Court can refuse to exercise the discretionary jurisdiction by applying the principle of 'forum convenience'. The relevant observation of the Supreme Court is as follows : "We must, however, remind ourselves that even if a small part of cause of action arises within the territorial jurisdiction of the High Court, the same by itself may not be considered to be a determinative factor compelling the High Court to decide the matter on merit. In appropriate cases, the Court may refuse to exercise its discretionary jurisdiction by invoking the doctrine of forum convenience." (emphasis supplied.) 30. In the light of the above dicta laid down by the Supreme Court in paragraphs 27 and 30, we shall now decide whether we could entertain these Writ Petitions and go into the merits, on the reason that part of cause of action has arisen at Chennai, as the order of the Appellate Authority is situated at Chennai or whether we could refuse to entertain the same, by exercising our discretionary jurisdiction ? https://hcservices.ecourts.gov.in/hcservices/ 31. In order to decide the said questions, it would be proper to consider the conduct of the parties and, to a certain extent, the merits of the case, with a view to find out, whether there is any chance of success and also bona fides of the parties. On these aspects, counsel for the parties were heard. 32. Let us now deal with the Writ Petitions, one by one: W.P.No.3386 OF 2003 : (i) (a) The banks filed a suit for recovery of a sum of Rs.19,95,86,510.79 against the petitioners, namely, M/s.Bhanu Construction Co.Pvt.Ltd. and Sri B.Venkateswara Rao and others, in a City Civil Court at Hyderabad. After a separate Tribunal was constituted, the said case was taken on file at Hyderabad in O.A.No.460 of 1999. On 25.08.2000, the witnesses, on behalf of the plaintiff banks, were examined in chief and, on 20.09.2000, they were examined in cross. But, no witness was produced on 12.10.2000 on the side of defendants. Therefore, on 31.10.2000, the Tribunal passed orders on merits and decreed the application. (b) The petitioners, challenging the said decree, filed W.P.No.5720 of 2001 in Andhra Pradesh High Court at Hyderabad. On 04.04.2001, the Andhra Pradesh High Court dismissed the said Writ Petition, directing the petitioners to avail the alternate remedy, either by filing an appeal before the Appellate Tribunal or by filing an application before the Debts Recovery Tribunal, seeking to recall the order impugned. (c) The petitioners, thereafter, filed M.A.No.18 of 2001 before the Debts Recovery Tribunal, Hyderabad, for recalling the order dated 31.10.2000. The said application was dismissed for default on 19.10.2001, as there was no representation. Instead of pursuing the above matter, the petitioners filed another application M.A.No.1307 of 2002 before the Tribunal at Hyderabad, seeking for condonation of delay of 602 days, in filing an application to set aside the exparte decree. The Debts Recovery Tribunal dismissed the same by an order dated 06.09.2002, holding that the reasons for the delay were not bona fide. (d) The petitioners challenged the said order in W.P.No.17152 of 2002 in Andhra Pradesh High Court, which, in turn, dismissed the same, with a direction to the petitioners to prefer an appeal before the Appellate Tribunal, before coming to the High Court. Accordingly, they filed an appeal before the Debts Recovery Appellate Tribunal at Chennai in M.A.No.203 of 2002, challenging the order in M.A.No.1307 of 2002, dated 06.09.2002. The Appellate Tribunal, by an order dated 31.01.2003, dismissed the appeal and confirmed the order passed by the Tribunal. https://hcservices.ecourts.gov.in/hcservices/ (ii) The above facts would make it clear that the petitioners in this Writ Petition approached the Andhra Pradesh High Court twice and obtained orders, with a direction to exhaust their remedy before the Tribunal and the Appellate Tribunal. Accordingly, they filed an application before the Tribunal and also an appeal before the Appellate Tribunal and got them dismissed. Now, this time, they have chosen to file this Writ Petition, before this Madras High Court, instead of approaching the Andhra Pradesh High Court. (iii) In the light of the above factual situation, three questions would arise. They are : (1) The petitioners, having filed W.P.No.5720 of 2001 before the Andhra Pradesh High Court for a direction for reopening the case by the Tribunal to put forth their defence and having obtained the order dated 04.04.2001, getting liberty to file an application for recalling the order impugned before the Tribunal and also having filed an application for reopening the case in M.A.No.18 of 2001 before the Tribunal, in pursuance of the order of the Andhra Pradesh High Court, why have they allowed the said application M.A.No.18 of 2001 to be dismissed for default on 19.10.2001 ? (2) Having chosen to file M.A.No.18 of 2001 to reopen the case in O.P., as per the liberty given by the Andhra Pradesh High Court, why the petitioners did not choose to pursue the said application, which was dismissed for default and, instead of doing that, why have they filed an independent application to