Case: Indian Bank Vs. Abs Marine Products Pvt. Ltd

issue not arising for decision, are also in the nature of law declared by this Court, the first Respondent contends that they are merely observations made on the peculiar facts and circumstances of that case, in exercise of the power under Article 142 to do complete justice. 21. The first Respondent drew our attention to the following circumstances in support of its contention that the observations relating to treating a borrowers independent suit as a counter claim, was in exercise of power under Article 142: (a) Though there was no prayer for transfer of the borrowers suit to Tribunal at any stage, this Court held that borrowers suit should be transferred to the Tribunal. (b) The four questions that were formulated for consideration (extracted above) clearly showed that the question as to whether borrowers suit should be transferred never arose for consideration. In fact, no arguments were addressed by either party on the question whether the borrowers suit can be or should be transferred to the Tribunal. (c) Sub-section (8) of Section 19 refers only to a counter-claim in the Bank application, and does not contemplate a separate suit filed against a Bank, being treated as a counter-claim. The first respondent also pointed out that this Court, in the operative portion, only directly transfer of Banks suit, but not the borrowers suit, to the Tribunal. The first respondent also relied on the following observations/directions in paras 42, 43, 44 and 45 of the judgment to demonstrate that the decision was by exercising power under Article 142: Our decision in regard to the real nature of Suit No.272 of 1985 has become necessary in the context of a plea by the debtor Company that the Companys Suit No.272 of 1985 is liable to be retained in the civil court and on account of the plea that the connected suit by the Bank Suit No.410 of 1985 is also to be retained. We, therefore, direct the Banks Suit No.410 of 1985 to be transferred by the Registrar, Calcutta High Court to the appropriate Tribunal under the Act. So far as the debtor Companys Suit No.272 of 1985 is concerned, action has to be taken likewise by the Registrar in the light of our finding, which finding has become necessary in view of the contention on behalf of the debtor Company before us, as explained above. The pendency of the Companys Suit No. 272 of 1985 in the High Court is no reason for keeping the Banks suit No. 410 of 1985 in the High Court. Suit No. 410 of 1985 is liable to be transferred to the Tribunal. Incidentally, we also hold that even Suit No. 272 of 1985 is to be tried only by the Tribunal. The appeal is allowed. The order of the learned Single Judge is set aside and Suit No. 410 of 1985 is directed to be transferred by the Registrar, High Court to the Tribunal. In the light of our finding as to the real nature of the Companys Suit No. 272 of 1985, it will be for the Registrar of the High Court to pass appropriate orders. We hope that appropriate orders will be passed in relation to suit no. 272 of 1985 expeditiously, at any rate, within one month from today. (Emphasis supplied) It is further submitted that any direction issued in exercise of power under Article 142 to do proper justice and the reasons, if any, given for exercising such power, cannot be considered as law laid down by this Court under Article 141. It is pointed out that other courts do not have the power similar to that conferred on this Court under Article 142 and any attempt to follow the exercise of such power will lead to incongruous and disastrous results. 22. Though there appears to be some merit in the first Respondents submission, we do not propose to examine that aspect. Suffice it to clarify that the observations in Abhijit that an independent suit of a defendant (in Banks application) can be deemed to be a counter claim and can be transferred to the Tribunal, will apply only if the following conditions were satisfied:- (i) The subject matter of Banks suit, and the suit of the defendant against the Bank, should be inextricably connected in the sense that decision in one would affect the decision in the other. (ii) Both parties (the plaintiff in the suit against the Bank and the Bank) should agree for the independent suit being considered as a counter-claim in Banks application before the Tribunal, so that both can be heard and disposed of by the Tribunal. In short the decision in Abhijit is distinguishable both on facts and law. 23. One word before parting. Many a time, after declaring the law, this Court in the operative part of the judgment, gives some directions which may either relax the application of law or exempt the case on hand from the rigour of the law in view of the peculiar facts or in view of the uncertainty of law till then, to do complete justice. While doing so, normally it is not stated that such direction/order is in exercise of power under Article 142. It is not uncommon to find that courts have followed not the law declared, but the exemption/relaxation made while moulding the relief in exercise of power under Article 142. When the High Courts repeatedly follow a direction issued under Article 142, by treating it as the law declared by this Court, incongruously the exemption/relaxation granted under Article 142 becomes the law, though at variance with the law declared by this Court. The courts should therefore be careful to ascertain and follow the ratio decidendi, and not the relief given on the special facts, exercising power under Art. 142. One solution to avoid such a situation is for this Court to clarify that a particular direction or portion of the order is in exercise of power under Art. 142. Be that as it may. Conclusion

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]16. Making a counter claim in the Banks application before the Tribunal is not the only remedy, but an option available to the borrower/defendant. He can also file a separate suit or proceeding before a civil court or other appropriate forum in respect of his claim against the Bank and pursue the same. Even the Bank, in whose application the counter-claim is made, has the option to apply to the tribunal to exclude the counter-claim of the defendant while considering its application. When such application is made by the Bank, the Tribunal may either refuse to exclude the counter-claim and proceed to consider the Banks application and the counter-claim together; or exclude the counter-claim as prayed, and proceed only with the Banks application, in which event the counter-claim becomes an independent claim against a bank/financial institution. The defendant will then have to approach the civil court in respect of such excluded counter claim as the Tribunal does not have jurisdiction to try any independent claim against a bank/financial institution. A defendant in an application, having an independent claim against the Bank, cannot be compelled to make his claim against the Bank only by way of a counter-claim. Nor can his claim by way of independent suit in a court having jurisdiction, be transferred to a Tribunal against his wishes17. In this case, the first respondent does not wish his case to be transferred to the Tribunal. It is, therefore, clear that the suit filed by the first respondent against the Bank in the High Court for recovery of damages, being an independent suit, and not a counter-claim made in the application filed by the bank, the Banks application for transfer of the said suit to the Tribunal was misconceived and not maintainable. The High Court, where the suit for damages was filed by the company against the bank, long prior to the bank filing an application before the tribunal against the company, continues to have jurisdiction in regard to the suit and its jurisdiction is not excluded or barred under Section 18 or any other provision of Debts Recovery Act19. With reference to the first issue, this Court held that when the appeal against the compromise decree dated 29.3.1984 was allowed and the compromise decree was set aside, the suit stood restored and it should be deemed to be pending from 29.3.1984 itself, and consequently, must be deemed in the eye of law to be pending on 27.4.1994 when the Tribunal was constituted at Calcutta, and Sections 18 and 31 of the Debts Recovery Act would apply to the said suit. There is no dispute that the decision of this Court on the first issue is the law declared by this Court20. The second issue, as noticed above, was whether the suit of the Bank against the borrower should be retained in the High Court, merely because the borrowers suit was pending in the High Court. There was no application or prayer for transfer of the borrowers suit [OS No.272/1985] to the Debts Recovery Tribunal. Neither the Bank nor the borrower had sought transfer of the said suit from the High Court. In fact, before the High Court, the borrower had not even contended that the Banks suit should be retained in the High Court on the ground that it was inextricably connected with its suit pending in the High Court. However, the borrower raised an additional ground in support of its request for retention of the Banks suit in the High Court, for the first time, in this Court by contending that the subject matter of the Banks suit was inextricably connected with the subject matter of its suit, and therefore, both should be tried together by the High Court itself. The borrower submitted that as the borrowers suit could not be transferred to the Tribunal, having regard to Sections 17, 18 and 31 of the Debts Recovery Act, the Banks suit should also not be transferred to the tribunal. This Court held that having regard to the mandate contained in Section 31, it was not possible to retain the Banks suit before the civil (High) Court on the ground that it was connected with another suit filed against the Bank. This answered the second issue. But this Court thereafter proceeded to consider as an incidental issue whether the borrowers suit could be transferred to the Tribunal as the borrower was insisting that his suit and Banks suit should be tried together. It found a solution by holding that the principle underlyingn (8) of Section 19 which enabled the defendant making am in an application filed by the Bank, can broadly be extended and applied to an independent prior suit of the borrower by considering such suit as a, so that both could be transferred to the Tribunal, instead of transferring only the Banks suit22. Though there appears to be some merit in the first Respondents submission, we do not propose to examine that aspect. Suffice it to clarify that the observations in Abhijit that an independent suit of a defendant (in Banks application) can be deemed to be a counter claim and can be transferred to the Tribunal, will apply only if the following conditions were satisfied:(i) The subject matter of Banks suit, and the suit of the defendant against the Bank, should be inextricably connected in the sense that decision in one would affect the decision in the other(ii) Both parties (the plaintiff in the suit against the Bank and the Bank) should agree for the independent suit being considered as am in Banks application before the Tribunal, so that both can be heard and disposed of by the TribunalIn short the decision in Abhijit is distinguishable both on facts and law23. One word before parting. Many a time, after declaring the law, this Court in the operative part of the judgment, gives some directions which may either relax the application of law or exempt the case on hand from the rigour of the law in view of the peculiar facts or in view of the uncertainty of law till then, to do complete justice. While doing so, normally it is not stated that such direction/order is in exercise of power under Article 142. It is not uncommon to find that courts have followed not the law declared, but the exemption/relaxation made while moulding the relief in exercise of power under Article 142. When the High Courts repeatedly follow a direction issued under Article 142, by treating it as the law declared by this Court, incongruously the exemption/relaxation granted under Article 142 becomes the law, though at variance with the law declared by this Court