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

2. It is the petitioners case that after they filed their written statement in January, 2002, they came to know from the newspaper reports that respondent 1 had surrendered its banking licence in India and had stopped its banking operation in India. The petitioners therefore filed a miscellaneous application and called upon respondent 1 to produce the banking licence. Respondent 1 in its reply admitted that it had surrendered its banking licence. The petitioners, therefore, filed a miscellaneous application seeking dismissal of the original application on the ground that respondent 1 was no longer a bank as defined under the Recovery of Debts Due to Banks and Financial Institution Act, 1993 (for short, the RDDB Act).3. Respondent 1 opposed the said application. It contended that it was a bank at the time of filing of the original application and, therefore, the DRT had jurisdiction to entertain and decide the application. The Presiding Officer by his order dated 13/3/2003 dismissed the said application. Being aggrieved by the said order, the petitioners preferred an appeal before the Debts Recovery Appellate Tribunal (for short, the DRAT). By order dated 30/5/2003, the DRAT dismissed the said appeal. Hence, this writ petition.

Reasoning:
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.