IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE : 27.01.2009 CORAM THE HON'BLE MR. S.J.MUKHOPADHAYA, ACTING CHIEF JUSTICE AND THE HON'BLE MR. JUSTICE V.DHANAPALAN C.R.P. NOS. 3725 & 3726 OF 2008 AND M.P. NOS. 1 OF 2008 B.Poornima ..Petitioner in CRP 3725/08 M.Harish ..Petitioner in CRP 3726/08 - Vs - State Bank of Travancore Bunashankari Branch Bangalore 560 085. ..Respondent/Respondent Civil Revision Petitions filed to set aside the conditions imposed by the Hon'ble Debts Recovery Appellate Tribunal, Chennai, dated 21st Oct., 2008, made in I.A. No.1802/2008 and 1803/08 in M.A. No.207/2008 and 208/08 for grant of stay, as stated therein. For Petitioners : Mr. S.R.Rajagopal For Respondent : M/s.Padma Prakash JUDGMENT THE ACTING CHIEF JUSTICE In both the civil revision petitions, as common conditional interim order passed by Debts Recovery Appellate Tribunal, Chennai, (hereinafter referred to as 'Appellate Tribunal') is under challenge and respondent is common, they were heard together and disposed of by this common judgment. The main plea taken by the petitioners is that the Appellate Tribunal has no jurisdiction to pass conditional interim order under the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as 'DRT Act, 1993'). The stand of the respondent, per contra, is that the Debts Recovery Tribunal (hereinafter referred to as 'Tribunal') and the Appellate Tribunal has inherent power to pass such conditional interim order. 2. For deciding the issue, it is not necessary to discuss all the facts, except the relevant ones, as mentioned hereunder :- https://hcservices.ecourts.gov.in/hcservices/ An original application under the DRT Act, 1993, was filed by the respondent State Bank of Travancore (hereinafter referred to as the 'Bank') in the year 1993 against the partnership firm, two partners and guarantors. During the course of the proceedings, one of the partner died on 6th Feb., 2007 and his wife was impleaded as his legal representative. The guarantor also died in course of proceeding and the legal representatives were brought on record. On their appearance, the legal heirs of the guarantor (deceased) made grievance that the Tribunal refused to accept his written statement on the ground that it was filed belatedly. The legal heir of the guarantor sought permission for cross-examination of the witness of the Bank, which was rejected by the Tribunal. Against the refusal to accept the written statement of legal heirs of the deceased guarantor and order of rejection to cross-examine the bank officer, the legal representative of the deceased partner and the legal representative of the deceased guarantor, filed appeals before the Appellate Tribunal, wherein the impugned conditional order was passed by the Appellate Tribunal on 21st Oct., 2008, as quoted hereunder :- “These applications are for granting stay of further proceedings in OA-893/1999 on the file of DRT, Bangalore. Heard the Ld. Counsel for the petitioner in both petitions. Perused records. Interim stay till 20.11.2008 in both petitions, on condition of deposit of Rs.5,00,000/= (Rupees Five Lakhs only) in each petition, i.e., totally Rs.10,00,000/= with the Respondent Bank, in two instalments , each at Rs.2,50,000/= in each petition, i.e., totally Rs.5,00,000/=, first on or before 19.11.2008 and the second one on or before 19.12.2008. On such deposit, the Respondent Bank is directed to keep the said amount in an interest earning 'no-lien account'.” 3. Learned counsel appearing on behalf of the petitioners referred to Sections 19 (13-A), 19 (18) and 19 (20) of the DRT Act, 1993 and submitted that apart from the aforesaid provision, the DRT has no jurisdiction to pass interim order of any other nature, including conditional interim order. The Appellate Tribunal, which can set aside, confirm or modify the order of the Tribunal can, at best, have the same power and, thereby, there is no power vested with the Appellate Tribunal to pass conditional interim order. Apart from the aforesaid provisions, counsel for the Bank referred to some of the judgments in support of his case to suggest that the Tribunal has inherent power to pass interim order, including conditional interim order, which also stands vested with the Appellate Tribunal. https://hcservices.ecourts.gov.in/hcservices/ 4. We have heard the learned counsel for the parties and noticed their rival contentions and the judgments as cited. 5. The Debts Recovery Tribunal has been established u/s 3 of the DRT Act, 1993, to exercise jurisdiction, powers and authority conferred on such Tribunal by or under the said Act. The Debts Recovery Appellate Tribunal has been so established u/s 8 of the DRT Act, 1993 to exercise jurisdiction, powers and authority conferred on such Appellate Tribunal by or under the said Act. The Bank or a financial institution, for recovery of debt from any person, can make an application before the Tribunal u/s 19. Section 19 (13-A) empowers the Tribunal, if satisfied, to pass certain order, including interim order, in case the defendant of the said case obstructs or delays or frustrates the execution of any order for recovery of debt passed by the Tribunal against him. U/s 19 (18), the Tribunal, where it appears just and convenient, may appoint a receiver of any property, even before grant of certificate for recovery; remove any person from possession or custody of the property; commit the same to the possession, custody or management of the receiver and confer upon the receiver all such powers as mentioned under clause (d) of Section 19 (18) and may appoint a Commissioner for preparation of inventory of any properties of the defendant or for sale thereof, etc. U/s 19 (20), the Tribunal, after giving the applicant and defendant an opportunity of being heard, is empowered to pass interim order or final order, including the order of payment of interest to meet the ends of justice as quoted as hereunder :- “The Tribunal may, after giving the applicant and the defendant an opportunity of being heard, pass such interim or final order, including the order of payment of interest from the date on or before which payment of the amount is found due upto the date of realisation or actual payment, on the application as it thinks fit to meet the ends of justice.” Therefore, it will be evident from Section 19 (20) that the Tribunal can pass interim order to meet the ends of justice. 6. U/s 20, an appeal could be preferred before the Appellate Tribunal by any aggrieved person against any order passed by Tribunal. U/s 20 (4), the Appellate Tribunal, after hearing the parties, may pass orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against, relevant portion of which is quoted hereunder :- “(4) On receipt of an appeal under sub-section (1), the Appellate Tribunal may, after giving the parties to the appeal, an opportunity of being heard, pass such orders thereon as it things fit, confirming, modifying or setting aside the order appealed against.” https://hcservices.ecourts.gov.in/hcservices/ From the aforesaid provision it will be evident that not only the interim order, to secure the ends of justice passed by Tribunal, can be confirmed or set aside by the Appellate Tribunal, even such interim order can be modified. 7. So far as the Appellate Tribunal is concerned, it has also power under Rule 22 of the Debts Recovery Appellate Tribunal (Procedure) Rules, 1994, to pass interim orders to prevent abuse of its process or to secure ends of justice, as quoted hereunder :- “22. Orders and directions in certain cases :- The Appellate Tribunal may make such orders or give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice.” If all the aforesaid provisions are read harmoniously, it will be evident that not only the Tribunal is empowered to pass interim order of such nature or give such directions as may be necessary or expedient to prevent abuse of its process or to secure the ends of justice, which power is also vested with the Appellate Tribunal. 8. Before the Tribunal or the Appellate Tribunal, the question of grant of interim order is generally taken up during the pendency of the proceeding. If one or other interim order is passed, it not only delays the proceeding, including the proceeding before the Tribunal and, consequently, delay the recovery of debts due to banks and financial institutions, though Tribunals have been established under the DRT Act, 1993, for expeditious adjudication and recovery of debts due to banks and financial institutions and for matters connected therewith or incidental thereto. Merely by taking advantage of interim order one or other party, in one or other case, may delay such recovery by abusing the process of law. It is in such case, taking into consideration the nature of the prayer, it is open to the Tribunal or the Appellate Tribunal to make such orders or give such directions as may be necessary or expedient to prevent abuse of its process or to secure the ends of justice. In such case, if a conditional interim order is passed by Tribunal or Appellate Tribunal, it is well within their jurisdiction, having vested with such power under the DRT Act and the rules framed thereunder. 9. In the case of Industrial Credit and Investment Corporation of India Ltd. - Vs – Grapco Industries Ltd. & Anr. reported in 1999 (4) SCC 710, taking into consideration the relevant provisions u/s 19 and 22 of the DRT Act, 1993, the Supreme Court held that the Tribunal has jurisdiction to pass an ex-parte interim order. https://hcservices.ecourts.gov.in/hcservices/ In Allahabad Bank, Valvutta – Vs – Radha Krishna Maity & Ors. reported in 1999 (6) SCC 755, while the Supreme Court expressed similar view, observed as follows :- “It will be noticed that Section 22 (1) deals with the powers of the Tribunal and Section 22 (2) deals with certain specified powers. Rule 18 also deals with the powers of the Tribunal to pass orders.” It further held as follows :- “In addition Rule 18 enables the Tribunal to pass orders to secure ends of justice.” In Mardia Chemicals – Vs – Union of India reported in 2004 (4) SCC 311 :: AIR 2004 SC 2371, the Supreme Court held as follows :- “The Tribunal in exercise of its ancillary powers shall have jurisdiction to pass any stay/interim order subject to the condition as it may deem fit and proper to impose.” (Emphasis added) A Full Bench of this Court in M/s.Lakshmi Shankar Mills (P) Ltd. & Ors. - Vs – The Authorised Officer/Chief Manager, Indian Bank & Ors. reported in 2008 (2) CTC 529 observed as follows :- “15. As regards the second question, there is no specific provision made under Section 17 of the Securitisation Act or under any other provisions of the said Act empowering the Tribunal to pass any interim order. But under sub-section (12) of Section 19 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993, the Tribunal has been empowered to pass various interim orders. If sub-section (7) of Section 17 of the Securitisation Act is read along with sub-section (12) of Section 19 of the Recovery of Debts due to Banks and Financial Institutions Act, it would be clear that the Tribunal also has jurisdiction to pass interim orders under Section 17 of the Securitisation Act in appropriate cases. In Mardia Chemicals case, in Clause (iv) of paragraph 80 of the judgment, the Supreme Court has categorically held that the Tribunal in exercise of its discretionary power shall have jurisdiction to pass any stay/interim order, subject to the condition as it may deem fit and proper to impose. Earlier, there was a controversy as to whether the Tribunal has power to grant ad-interim orders under Section 19 (12) of the Recovery of Debts due to Banks and Financial Institutions Act, but that has been set at rest in I.C.I.C.I Ltd. - v- Grapco Industries https://hcservices.ecourts.gov.in/hcservices/ Ltd., 1999 (2) CTC 460 : AIR 1999 SC 1975. The Tribunal is thus empowered to grant interim stay subject to such conditions as may be deemed proper including condition of deposit. We may add that even under Section 69 of the Transfer of Property Act, the only remedy of the borrower, whose mortgagee has invoked Section 69 of the Transfer of Property Act, is to file a Civil Suit. In such Suit, the power of the Court to grant injunction and to impose condition for the grant thereof has been recognised in Jagijivan v. Shridhar, 1878 ILR 2 Bom. 252 and Narasimchariar v. E.B.S. 3rd Branch, AIR 1955 Mad. 135.” The Full Bench finally concluded at Para-22 (ii) as hereunder :- “22. * * * * * * * (ii) The Tribunal has power to impose the condition relating to deposit for grant of stay of auction.” The Bombay High Court in Narayan Avachitrao Deshmukh – Vs – State Bank of India & Anr. reported in 2004 (2) Bankmann 54, while dealing with Section 19 (25) of the DRT Act, 1993, held as follows :- “6. ...................... The provision laid down under Section 19 (25) of the Amendment Act No.1 of 2000 seems to be there in Rule 18 of the Debt Recovery Tribunal (Procedure) Rules, 1993. This sub-section (25) of Section 19 of the Act confers inherent powers on the Tribunal and wide powers for proper administration of justice. It gives authority to the Tribunal to exercise inherent powers for administering justice. Where there is no express provision in the Act for a remedy, the Tribunal can invoke at any stage of the proceedings this power to meet the ends of justice and to prevent abuse of process of law. But where there is a specific provision in the Act to meet a particular situation, this provision is complementary to the other powers mentioned in the other provisions of the Act. The main aim of this provision is that omission of any provision in the Act should not make the Tribunal powerless.” A Division Bench of this Court in Deepa Udayakumar – Vs – State Bank of Hyderabad reported in 2007 (3) CTC 277, while dealing with enforceability of a compromise decree in terms with Section 31-A of DRT Act, 1993, held as follows :- https://hcservices.ecourts.gov.in/hcservices/ “Section 19 (25) empowers the Tribunal to make such orders giving such direction as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice.” 10. From the aforesaid discussions of law and decisions, we hold that the Tribunal and the Appellate Tribunal have power to make such orders or give such directions as may be necessary, including conditional interim order, to prevent abuse of its process or to secure ends of justice. In view of our finding, we find no merit in either of the revision petitions and they are accordingly dismissed. Consequently, connected miscellaneous petitions are also dismissed. But there shall be no order as to costs. sd/- Asst.Registrar /true copy/ Sub Asst.Registrar GLN To The Registrar Debts Recovery Appellate Tribunal, Chennai. + 1 c.c. to Ms. O. Padma Prakash, Advocate. S.R.No.3401. JUDGMENT IN C.R.P. NOS. 3725 & 3726 OF 2008 VSV (CO) GSK 06.02.2009. https://hcservices.ecourts.gov.in/hcservices/