Case: Isibars Limited Vs. Commerz Bank and Chairperson Debt Recovery Tribunal

from the said order was dismissed by the High Court. It was, inter alia, urged before the Supreme Court that the fact as to paid up share capital of rupees one crore or more of a company is a jurisdictional fact and in absence of such fact, the trial court had no jurisdiction to proceed on the basis that Rent Act is not applicable.9. The Supreme Court agreed with the submission of learned counsel that the fact as to paid up share capital of a company can be said to be a preliminary or jurisdictional fact and the said fact would confer jurisdiction on the court to consider the question whether the provisions of the Rent Act were applicable and proceeded to consider whether on account of reduction of paid up share capital, jurisdictional fact did not exist and, therefore, the Rent Act was applicable. On the basis of judgment of the Supreme Court in Pasupuleti Venkates Work v. Motor & General Traders (1975) 1 SCC 770 , it was argued that it was obligatory on the courts below including the High Court to take into consideration subsequent events. In Pasupuleti, the Supreme Court was dealing with a suit for possession on the ground of personal requirement for starting business. A decree for possession was passed in favour of the plaintiff-landlord which was confirmed by the appellate court. At the stage of revision, due to subsequent event of acquisition of non-residential building by the plaintiff-landlord, an application for amendment was made by the defendant-tenant which was allowed by the High Court. It was contended before the Supreme Court that the High Court committed an error in taking cognizance of subsequent event. The Supreme Court held that the right to relief must be judged to exist as on the date a suitor institutes the legal proceeding, but if a fact arising after the lis has come to court has a fundamental impact on the right to relief or the manner of moulding it, the court cannot blink at it because equity justified bending the rules of procedure where no specific provisions or fairplay is violated with a view to promoting substantial justice subject to the absence of other dis-entitling circumstances. The Supreme Court affirmed the proposition that for making the right or remedy claimed by the party just and meaningful the court can, and in many cases, must take cautious cognizance of events and developments subsequent to the institution of the proceedings provided the rules of fairness to both sides are scrupulously obeyed.10. After noting these observations made in Pasupuleti on which reliance was placed by the appellant therein, in Carona Ltd., the Supreme Court observed that the law is fairly settled, that the basic rule is that the rights of the parties should be determined on the basis of the date of institution of the suit. Thus, if the plaintiff has no cause of action on the date of the filing of the suit, ordinarily, he will not be allowed to take advantage of the cause of action arising subsequent to the filing of the suit. The Supreme Court further observed that conversely, no relief will normally be denied to the plaintiff by reason of any subsequent event if at the date of the institution of the suit, he has a substantive right to claim such relief. Insofar as the facts before it were concerned, the Supreme Court held that the courts below were right in holding that the date on which tenancy was determined, the right in favour of the landlord got accrued. Such right could not have been set at naught by the tenant by unilateral act by passing a resolution to reduce paid up share capital of the company.11. In our opinion, the above observations of the Supreme Court are clearly attracted to the present case. No doubt, the court can take into account subsequent events. But in Pasupuleti, the Supreme Court has clarified that that has to be done on equitable considerations with a view to promoting substantial justice. In this case, the outstanding dues payable by the petitioners to respondent 1 as on 16/8/1999 are stated to be Rs.12,31,45,872/- towards principal amount and Rs. 2,04,19,983/- towards interest. There is no dispute about the fact that when respondent 1 filed the original application, the DRT had jurisdiction to entertain it. Respondent 1 had substantive right to claim the amount. It cannot be denied to it because it has surrendered its licence during the pendency of the original application. Surrender of the banking licence does not extinguish the petitioners liability. Respondent 1 cannot be denied relief because of the subsequent event since at the date of the institution of the suit, it had a substantive right to claim the relief. In any case, as observed by the Supreme Court, subsequent events may be taken into account to promote substantive justice and on equitable considerations. Surely, by ousting DRTs jurisdiction, there would be no promotion of substantial justice nor would that be equitable.12. We may also usefully refer to the judgment of the Supreme Court in Ujjam Bai where, while considering the concept of jurisdiction, the Supreme Court observed as under:Jurisdiction means authority to decide. Whenever a judicial or quasi judicial tribunal is empowered or required to enquire into a question of law or fact for the purpose of giving a decision on it, its findings thereon cannot be impeached collaterally or on an application for certiorari but are binding until reversed on appeal. Where a quasi-judicial authority has jurisdiction to decide a matter, it does not lose its jurisdiction by coming to a wrong conclusion, whether it is wrong in law or in fact. The question whether a tribunal has jurisdiction depends not on the truth or falsehood of the facts into which it has to enquire, or upon the correctness of its findings on these facts, but upon their nature, and it is determinable at the commencement, not at the conclusion, of the inquiry. (emphasis supplied.)

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

Explanation:
0[ds]6. There is no dispute about the fact that when respondent 1 filed the application, it had banking licence. While accepting the surrender of the banking licence, the Reserve Bank of India had allowed respondent 1 to open Special Rupee Account with a bank inter alia for crediting the recovered loan amounts. The affidavit of Mr. C.G. Pradeep Kumar, HeadCredit Administration of respondent 1 discloses that the petitioners have admitted in the Restructuring Agreement dated 22/9/1999 that as on 16/8/1999, a sum of Rs.12,31,45,872/towards principal amount and an amount of Rs.2,04,19,983/towards interest is due and payable by the petitioners to respondent 1.The Supreme Court agreed with the submission of learned counsel that the fact as to paid up share capital of a company can be said to be a preliminary or jurisdictional fact and the said fact would confer jurisdiction on the court to consider the question whether the provisions of the Rent Act were applicable and proceeded to consider whether on account of reduction of paid up share capital, jurisdictional fact did not exist and, therefore, the Rent Act was applicable. On the basis of judgment of the Supreme Court in Pasupuleti Venkates Work v. MotorGeneral Traders (1975) 1 SCC 770 , it was argued that it was obligatory on the courts below including the High Court to take into consideration subsequent events. In Pasupuleti, the Supreme Court was dealing with a suit for possession on the ground of personal requirement for starting business. A decree for possession was passed in favour of thewhich was confirmed by the appellate court. At the stage of revision, due to subsequent event of acquisition ofbuilding by thean application for amendment was made by thewhich was allowed by the High Court. It was contended before the Supreme Court that the High Court committed an error in taking cognizance of subsequent event. The Supreme Court held that the right to relief must be judged to exist as on the date a suitor institutes the legal proceeding, but if a fact arising after the lis has come to court has a fundamental impact on the right to relief or the manner of moulding it, the court cannot blink at it because equity justified bending the rules of procedure where no specific provisions or fairplay is violated with a view to promoting substantial justice subject to the absence of othercircumstances. The Supreme Court affirmed the proposition that for making the right or remedy claimed by the party just and meaningful the court can, and in many cases, must take cautious cognizance of events and developments subsequent to the institution of the proceedings provided the rules of fairness to both sides are scrupulously obeyed.In our opinion, the above observations of the Supreme Court are clearly attracted to the present case. No doubt, the court can take into account subsequent events. But in Pasupuleti, the Supreme Court has clarified that that has to be done on equitable considerations with a view to promoting substantial justice. In this case, the outstanding dues payable by the petitioners to respondent 1 as on 16/8/1999 are stated to be Rs.12,31,45,872/towards principal amount and Rs. 2,04,19,983/towards interest. There is no dispute about the fact that when respondent 1 filed the original application, the DRT had jurisdiction to entertain it. Respondent 1 had substantive right to claim the amount. It cannot be denied to it because it has surrendered its licence during the pendency of the original application. Surrender of the banking licence does not extinguish the petitioners liability. Respondent 1 cannot be denied relief because of the subsequent event since at the date of the institution of the suit, it had a substantive right to claim the relief. In any case, as observed by the Supreme Court, subsequent events may be taken into account to promote substantive justice and on equitable considerations. Surely, by ousting DRTs jurisdiction, there would be no promotion of substantial justice nor would that be equitable.