PUNJAB NATIONAL BANK, DASUYA

CHAJJU RAM AND ORS.

AUGUST 1, 2000

[B.N. KIRPAL, A.P. MISRA AND RUMA PAL, JJ.]

Debt Laws:

Recovery of Debts Due to Banks and Financial Institutions Act, 1993 : Sectiofts 1(4), 2(9), 17, 18, 31, 31-A and 34.

Execution application-Entertaining of-By Debts Recovery Tribunal- Jurisdiction of-Civil Court passed a decree in favour of a Bank for a sum which exceeded the minimum prescribed under S.1 ( 4 )-But the decree was not executed till the Debts Recovery Tribunal was established-Held, Tribunal has D jurisdiction to entertain the execution application and not the civil court- Further, 0.21 R.10 CPC not applicable to such cases-Recovery of Debts Due to Banks and Financial Institutions (Amendment) Act, 2000-Code of Civil Procedure, 1908-0.21 R.10.

Sections 1(4) and 2(g)-Execution application-Debt due-Recovery E of-In excess of minimum prescribed under S.1(4)-Determination of-Held, principal amount together with interest thereon have to be taken into account to determine the minimum prescribed amount-Tribunal gets jurisdiction only if the debt due exceeds the prescribed amount.

Words and Phrases :

"Debt"-Meaning of-In the context of S.2(9) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

"Proceeding" and "cause of action"-Meaning of-In the context of S.31 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

The appellant-Bank filed a suit in the civil court against the respondents for recovery of Rs. 6,19 ,250. The trial court decreed the suit for Rs. 12,91,398 including interest. Thereafter, the appellant filed an execution application before the civil court. 84

P.N.B., DASUYA v. CHAJJU RAM 85

In the meanwhile, the Recovery of Debts Due to Banks and Financial A Institutions Act, 1993 had come into force and a Debts Recovery Tribunal was established. The appellant then moved an application before the civil court for transfer of the execution proceedings, which was allowed.

The respondents thereupon filed a revision petition in the High Court.

The High Court, while reversing the decision of the trial court, held that the execution proceedings could not be transferred and it was only the civil court, which had passed the decree, which could execute the same. The High Court further held that because the original decree, which was passed, was for the principal sum of Rs. 6,19,250, the Tribunal would get no jurisdiction. Hence this appeal.

On behalf of the respondents it was contended that the use of the words 'cause of action' in Section 31 of the Act indicated that it was only pending suits which could be transferred.

Allowing the appeal, this Court

HELD : 1. Section 31 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 contemplates not only the transfer of a su~

but also transfer of a proceeding, which may be other than a suit, like an execution application. Understood in this context, the words 'being a suit E or proceeding the cause of action whereon it is based ........ ' would mean that in the case of an execution application if the decree is for more than Rs. 10 Iakhs, then that is the cause of action or the reason for an application for execution being filed before the Debts Recovery Tribunal. To put matters beyond doubt, the Act has been amended by the Recovery of Debts F Due to Banks and Financial Institutions (Amendment) Act, 2000 by which Section 31-A has been inserted. [88-B-C; D]

Allahabad Bank v. Canara Bank & Am:, JT (2000) SC 411, relied on.

2. The High Court has erred in holding that because the original decree, which was passed, was for the principal sum of Rs. 6,19,250 the Tribunal would get no jurisdiction. The decree was for a sum of Rs. 6,19,250 plus interest at the rate of 16-1/2 per cent per annum from the date of filing of the suit till the recovery of money. As and when the amount

due to the bank under the decree became more than Rs. 10 Iakhs and an H

application for execution was filed, it could only be entertained by the Tribunal and not by the Civil Court. It is clear that in view of the provisions of Section 34 of the Act, the provisions of Order 21 Rule lOof the Code of Civil Procedure, 1908 would have no application. [89-A-B]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4365 of 2000.

From the Judgment and Order dated 1.4.99 of the Punjab & Haryana High Court in R.P. No. 51 of 1998.

Dhruv Mehta, Ms. Shobha and S.K. Mehta for the Appellant.

C G.S. Jaswal and K.S. Rana for the Respondents.

The Judgment of the Court was delivered by

KIRPAL, J. Special leave granted.

The appellant, on 26th August, 1988 filed a suit for recovery of Rs. 6,19,250 in the Civil Court. By judgment dated 16th February, 1994, the trial court, decreed the suit for the aforesaid amount with interest at the rate of

16/Yz per cent per annum from the date of filing of the suit till the recovery

1of money. On 21st December, 1994, an execution application was filed by the appellant before the Court of Civil Judge, Dasuya. According to the appellant, an amount, of Rs.12,91,398 being the principal amount, of Rs.6,19,250 plus interest, thereon as per the decree, bad become due & payable and it was in respect of this amount that execution was sought.

In the meanwhile on 25th June, 1993, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as "the Act") F had come into force. On 30th August; 1994, a Tribunal was set up in Jaipur and it was given jurisdiction to decide claims even with regard to those arising in the State of Punjab. On 18th February, 1997, the appellant moved an application before the Civil Court, Dasuya for transfer of the execution proceedings to the Debts Recovery Tribunal, Jaipur. This application was G allowed and the trial court ordered the transfer of the execution proceedings to the Debts Recovery Tribunal, Jaipur.

The respondents thereupon filed a revision petition in the High Conrt.

By judgment dated !st April, 1999, the High Court came to the conclusion, while reversing the decision of the trial court, that the execution proceedings H could not be transferred and it is only the Civil Court, which had passed the

....

decree, which could execute the same. Hence, this appeal by special leave.

The point in issue is no longer res in1eva. After analysing the provisions of the Act, this Court, in Allahabad Bank v. Canara Bank & Ano1he1: IT (2000) 4 SC 411 held that the word proceeding' in Section 31 of the Act would \ include an execution proceeding pending before a Civil Court before the commencement of the Act. It was further held that the suits and proceedings B so pending would stand transferred to the Tribunal. This conclusion emanated from the fact that the definition of the word 'debt' contained in Section 2(g) of the Act, inter alia, meant any liability which was due to a bank and was payable under a decree or order of a Civil Court. The decretal amount being a debt as en visaged by Section 2(g) would clearly attract the provisions of C Sections 17 and 18 of the Act which give exclusive jurisdiction to the Tribunals constituted thereunder to decide the questions regarding recovery of debts due to the banks and financial institutions. Section 31 which deals with transfer of cases reads as under :

"31. Transfer o.f pending cases. - ( 1) Every suit or other proceed- D ing pending before any court immediately before the date of establishment of a Tribunal under this Act, being a suit or proceeding the cause of action whereon it is based is such that it would have been, if it had arisen after such establishment, within the jurisdiction of such Tribunal, shall stand transferred on that date to such Tribunal.

Provided that nothing in this sub-section shall apply to any appeal pending as aforesaid before any court.

(2) Where any suit or other proceeding stands transferred from any court to a Tribunal under sub-section (1), -

(a) the court shall, as soon as may be-after such transfer, forward the records of such suit or other proceeding to the Tribunal; and

(b) the Tribunal may, on receipt of such records, proceed to deal with such suit or other proceeding, so far as may be, in the same manner as in the case of an application made under Section 19 from the stage which was reached before such transfer or from any earlier stage or de novo as the Tribunal may deem fit."

A bare reading of the aforesaid Section shows that execution application being a proceeding pending in a Civil Court when the Act

came into force was liable to be transferred to the Tribunal because the amount for which the execution application had been filed as per the decree which had been passed, was over Rs. 10 lakhs.

Learned counsel for the respondents submitted that the use of the words 'cause of action' in Section 31 indicated that it is only pending suits which could be transferred. We are unable to agree with this submission. The words 'cause of action' are preceded by the words 'being a suit or proceeding'.

Section 31 contemplates not only the transfer of a suit but also transfer of a proceeding which may be other than a suit, like an execution application.

Understood in this context, the words 'being a suit or proceeding the cause of C action whereon it is based ...... ' would mean that in the case of an execution application if the decree is for more than Rs. 10 lakhs, then that is the cause of action or the reason for an application for execution being filed before the Tribunal.

To put matters beyond doubt, the Act has been amended by the Recovery D of Debts Due to Banks and Financial Institutions (Amendment) Act, 2000 and Section 3 lA has been inserted which reads as follows :

"3 lA. Power of Tribunal to issue certificate of recovery in case of decree or order, - (1) Where a decree or order was passed by any Court before the co•nmencement of the Recovery of Debts Due to Banks and Financial Institutions (Amendment) Act, 2000 and has not yet been executed, then, the decree-holder may apply to the Tribunal to pass an order for recovery of the amount.

(2) On receipt of an application under sub-section(!), the Tribunal may issue a certificate for recovery to a Recovery Officer.

(3) On receipt of a certificate under sub-section (2), the Recovery Officer shall proceed to recover the amount as if it was a certificate in respect of a debt recoverable under this Act."

G The aforesaid Section 31A is clearly applicable in the present case. The decree was passed by Court before the commencement of the Amendment Act and the same has not yet been executed. At least after the amendment, it is only the Tribunal which would have the jurisdiction of entertaining the application for execution of the decree inasmuch as the amount due for which H the decree was sought to be executed is over Rs.IO lakhs. We are also unable

to agree with the High Court that because the original decree which was passed was for principal sum of Rs.6,19,250 the Tribunal would get no jurisdiction.

It is to be seen that decree was for a sum of Rs.6, 19,250 plus interest at the rate of 16-112 per cent per annum from the date of filing of the suit till the recovery of money. As and when the amount due to the bank under the decree became more than Rs. 10 lakhs and an application for execution was filed, it could only be entertained by the Tribunal and not by the Civil Court. It is clear that in view of the provisions of Section 34 of the Act, the provisions of Order

21 Rule lO C.P.C. would have no application.

For the aforesaid reasons, the appeal is allowed and the judgment of the High Court is set aside, with costs throughout.

v.s.s.

Appeal allowed.