V.k. Thyagarajan v. Syndicate Bank And Others

For the The fifth defendant in O.S. No. 235 of 1988, on the file of the Additional Sub-Court, Erode, is the revision petitioner.

The suit was filed by the first respondent herein for recovery of a sum of more than Rs. 64 lakhs from the defendants and out of their assets. An ex parte decree was passed on April 18, 1995. The same was sought to be set aside by filing an application as I.A. No. 809 of 1995. The same was seriously opposed by the first respondent on the ground that the court has no jurisdiction to consider the application in view of the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

By the impugned order, the lower court accepted the objection and held that it has no jurisdiction to try the petition and further directed transfer of the petition to the Tribunal at an early date. The same is challenged in this revision.

Learned counsel for petitioner submitted that the impugned order is patently incorrect in view of section 22 of the. Learned counsel sub-mitted that the application to set aside the ex parte decree passed by the civil court is maintainable before the civil court. The Tribunal gets jurisdiction to set aside an ex parte decree only if the decree is passed by it and not by the civil court. Emphasis was laid on clause (g) to sub-section (2) of section 22 of thewherein it is said thus :

"setting aside any order of dismissal of any application for default or any order passed by it ex parte."

As against the said submission, learned counsel for the first respondent submitted that under Chapter III of the read with section 31 of the Act, the jurisdiction of the civil court is taken away completely and even in regard to interlocutory applications, the power is vested only with the Tribunal constituted under the and not by the civil court.The only question that requires consideration is, whether the civil court has got jurisdiction to consider the application under Order 9, rule 13 of the Civil Procedure Code, 1908, in spite of the constitution of Tribunals under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

The preamble to the said Act says thus (see 1993 (78) CC 120)

"An Act to provide for the establishment of Tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions and for matters connected therewith or incidental thereto."

The High Level Committee appointed by the Government of India to provide for establishment of Tribunals for expeditious adjudications and recovery of debts due to financial institutions, observed as follows :

"Bank and financial institutions at present face considerable difficulties in recovering the dues from the clients and enforcement of a security charged to them due to the delays in the legal processes. A significant portion of the funds of the banks and financial institutions is thus blocked unproductive assets, the values of which keep deteriorating with the passage of time. Banks also incur substantial amounts of expenditure by way of legal charges which add to their overheads. The question of speeding up the process of recovery was examined in great detail by a committee set up by the Government under the Chairman-ship of the late Sri Tiwari. The Tiwari Committee recommended, inter alia, the setting up of special Tribunals which could expedite the recovery process."

As per section 1(4) of the Act, if the amount due to the financial institution is more than Rs. 10 lakhs, the application will have to be filed before the Tribunal constituted under that Act. Sections 17, 18 and 31 of theread thus:

"17. Jurisdiction, powers and authority of Tribunals. - (1) A Tribunal shall exercise, on and from the appointed day, the jurisdiction, powers and authority to entertain and decide applications from the banks and financial institutions for recovery of debts due to such banks and financial institutions.

(2) An Appellate Tribunal shall exercise, on and from the appointed day, the jurisdiction, powers and authority to entertain appeals against any order made, or deemed to have been made, by a Tribunal under this Act.

18. Bar of jurisdiction. - On and from the appointed day, no court or other authority shall have, or be entitled to exercise, any jurisdiction, powers or authority (except the Supreme Court, and a High Court exercising jurisdiction under articles 226 and 227 of the Constitution) in relation to the matters specified in section 17.

31. Transfer of pending cases. - (1) Every suit or other proceeding 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."

On a reading of these provisions, it is clear that the jurisdiction of civil court is completely taken away and even in regard to pending matters if the claim is above Rs. 10 lakhs, the same is transferred to the Tribunal. So, the entire business of the civil court in regard to financial institutions above Rs. 10 lakhs is now transferred to the Tribunals constituted under the. Under section 31 of the Act, even a proceeding pending before the court is liable to be transferred even though it is not a suit. The word "proceeding" has not been defined under the. It cannot be doubted that an application under Order 9, rule 13 of the Civil Procedure Code, 1908, is a proceeding, decided on the judicial side of the court.

When the entire jurisdiction of the court is taken away in regard to claims which are above Rs. 10 lakhs, made by financial institutions, the jurisdiction stands transferred to the Tribunals constituted under the aforesaid Act.

In this case, an ex parte decree was passed before the constitution of the Tribunal, though the came into force long before the decree. When an ex parte decree was passed, the defendants had a statutory right to approach that court and file an application to set aside the ex parte decree under Order 9, rule 13 of the Civil Procedure Code, 1908, and if the application is beyond time, that application will have to be filed along with an application to condone the delay under the relevant provision of the Limitation Act.

In one of the earlier cases reported in P. N. Kalathi Mudaliar v. Ellammal, 1964 AIR(Mad) 463, an ex parte order was passed for dissolution of marriage under section 5 of the Madras Hindu (Bigamy Prevention and Divorce) Act, 1949 (6 of 1949). That Act was repealed by the Hindu Marriage Act, 1955. The question that comes for consideration was, whether the application to set aside the ex parte decree is maintainable. In paragraph 2(a) of the judgment, a learned judge of this court has held that the Hindu Marriage Act did not intend to destroy the procedural remedies which the parties litigating under the repealed Acts had acquired. The Central Act also does not contain any provision which debars the person against whom an ex parte order of dissolution of marriage has been passed previously from taking any proceeding to have the order set aside under Order 9, rule 13 of the Civil Procedure Code, 1908.In that case, their Lordships further considered about the jurisdiction of the court to entertain an application under Order 9, rule 13 of the Civil Procedure Code, 1908, and whether it should be before the court which passed the decree or whether before the court to which the business of court has been transferred. Relying on section 150 of the Civil Procedure Code, it was held thus (page 464 of AIR 1964 Mad) :

"This court has held in a number of decisions that where the business of a court is transferred to another court, it is only the latter court that can decide the question raised. In Srinivasa Rao v. Hanumantha Rao, 1922 AIR(Mad) 10, a Bench of this court held that the expression the court by which the decree was passed cannot be taken to be limited to the original court and that rule 13 of Order 9 is an enabling one which prescribes what is to be done in the ordinary course to get an ex parte decree set aside. The learned judges pointed out that the rule does not say that the court that passed the decree is the only court that can set it aside and there is nothing restrictive in the wording. They accordingly held that the court to which the whole business of the court which passed the decree is transferred is entitled on application to it to set aside an ex parte decree passed by the other court.

A similar question arose for decision before another Bench of this court in M. Guruswamy Naicher v. Sheikh Muhammadhu Rowther, 1923 AIR(Mad) 92, where the business of the court that granted the injunction was transferred to another court and on an application under Order 39, rule 2(3) was made to the latter court for punishing the breach of the injunction, it was held that the court had jurisdiction to entertain the petition under section 150. The Bench observed :Order 39, rule 2(3) does not say that it is only the court granting the injunction that should make the order under it, so that there is nothing in that rule which excludes the application of section 150 by bringing it within the words "save as otherwise provided for"."

In Devaki v. Chandrika 1997 (2) KLT 746, the question that came up for consideration was where to file an application to set aside the ex parte decree after the family courts had been established under the Family Courts Act. In paragraph 6 of the judgment, a Division Bench of the Kerala High Court held thus (page 749) :

"S. 8 excludes the jurisdiction of all civil courts within the local jurisdiction of the Family Court to deal with the categories of suits and proceedings enumerated in the Explanation to section 7. All pending suits and proceedings of the categories mentioned in the Explanation get statutorily transferred to the Family Court on its establishment. Thus, the scheme of the is to exclude with reference to the date of establishment of the Family Court all the civil courts from exercising all the jurisdictions they were having hitherto in respect of the categories of suits and proceedings mentioned in the Explanation and to confer all such jurisdictions on the Family Court on its establishment in relation to the particular area for which the Family Court is established. The above legislative scheme will be evident from the provisions in section 7(1)(a) and (b) of thewhich is as under :

Jurisdiction - (1) Subject to the other provisions of this Act, a Family Court shall -

(a) have and exercise all the jurisdiction exercisable by any district court or any subordinate civil court under any law for the time being in force in respect of suits and proceedings of the nature referred to in the Explanation; and(b) be deemed, for the purposes of exercising such jurisdiction under such law, to be a district court or, as the case may be, such sub-ordinate civil court for the area to which the jurisdiction of the Family Court extends.

It is significant to note that the jurisdiction conferred is the entirety of the jurisdiction exercised by all the civil courts in respect of the categories of the suits and proceedings mentioned in the Explanation to section 7 and that while exercising such jurisdiction there is a statutory deeming that the Family Courts shall be deemed to be civil courts of different categories for the area to which the jurisdiction of such Family Court extends. In the light of the above provision in section 7, we would hold that all the jurisdiction which the Sub-Court, Irinjalakuda, had in respect of the suit and the ex parte decree passed therein have stood vested or conferred statutorily on the Family Court, Ernakulam, as per section 7(1) of theand on the establishment of the Family Court, that court alone has got exclusive right to exercise all such jurisdictions. On the passing of the ex parte decree in the suit, the defendants had a statutory right to approach that court and to file an application to set aside the ex parte decree under Order 9, rule 13 of the Civil Procedure Code with a petition to condone the delay under the Limitation Act for condoning the delay, if any, occurred in the matter of filing such an application. The Sub-Court would have certainly had jurisdiction to entertain and dispose of such application under Order 9, rule 13 and section 5 of the Limitation Act as the court which had jurisdiction to entertain and dispose of the suit but for the provisions in sections 7 and 8 of the. As such, such jurisdiction to entertain and dispose of applications like those filed by the appellant would in this case stand vested in the Family Court, Ernakulam, on its establishment. There is nothing in the to show that civil courts would continue to have power to exercise all jurisdictions they had with reference to the suits and proceedings of the category mentioned in the Explanation which were already disposed of by them prior to the establishment of the Family Court. On the other hand, the wording of the provisions in section 7 of thewould clearly show that all the jurisdiction exercised by the civil courts in respect of the suits and proceedings of the category mentioned in the Explanation to section 7 whether disposed of, pending or to be filed would vest in the Family Court to the exclusion of all the civil courts in the area to which the jurisdiction of the Family Court extends. On and after the establishment of the Family Court it cannot also be that parties affected by the ex parte decrees passed in suits prior to the decree are deprived of their valuable right to file application under Order 9, rule 13 and section 5 of the Limitation Act if there occurs delay. It is significant to note in this connection that there is no provision in the saving the jurisdiction of the civil courts in respect of suits and proceedings covered by the Explanation and disposed of already by the civil courts prior to the establishment of the Family Court. In the circumstances, it has to be held generally that the entire jurisdiction exercisable by the civil courts in respect of suits and proceedings of the categories covered by the Explanation and already disposed of by them prior to the establishment of the Family Court would stand statutorily excluded and vested in the Family Court established for the areas within their jurisdiction and only such Family Court would have thereafter jurisdiction to entertain any application or petition in such disposed of matters and to dispose of them in accordance with law."

In the aforesaid case, their Lordships also took note of a decision of the Rajasthan High Court in Union of India v. Anandi Lal 1995 1 CCC 559, wherein a Central Government employee obtained a decree in a civil suit before the commencement of the Administrative Tribunals Act, 1985, for recovery of arrears of pay and allowance. The decree became final and in 1986, the decree-holder filed an application to execute the decree before the civil court which passed the decree. A contention was raised that the execution petition was not maintainable before the civil court and only Tribunals constituted under the Administrative Tribunals Act will have jurisdiction even to execute decrees which had become final before the constitution of the Tribunal. The Rajasthan High Court upheld the objection and held that the Tribunals alone have exclusive jurisdiction to entertain and dispose of the execution petition. The powers of the family court constituted under the Family Courts Act and Tribunals constituted under the Administrative Tribunals Act are similar like the powers of Tribunals constituted under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The business of the civil court in regard to these matters is now statutorily transferred to the newly constituted Tribunals and on the principles governed by section 150 of the Civil Procedure Code, the Tribunals alone get jurisdiction to deal with the same.

The Delhi High Court had occasion to consider a similar question under the very same Act which we are dealing with in this case, namely, the Recovery of Debts Due to Banks and Financial Institutions Act, and the decision rendered therein has been reported as short notes in Risk Capital and Technology Finance Corporation Ltd. v. Harnath Singh Bapna. It reads thus (page 282 of 89 Comp Cas):

"Under section 31 of the Act, a suit or other proceeding instituted and pending in any court before the date of establishment of a Tribunal under the, shall stand transferred to the Tribunal where the cause of action for which is such that it would have been, if it had arisen after the date of such establishment, within the jurisdiction of such Tribunal. This clearly implies that any suit or other proceedings pending in any court before the establishment of the Tribunal under the in relation to the matters which fall within the jurisdiction of the Tribunal by the sheer force of the statute automatically stand transferred to the Tribunal on the appointed date. Section 31 opens with the words every suit or other proceeding pending. As would be seen, the words other proceeding are preceded by the word suit and in between the two expressions, the word or occurs. The section not only talks of the suit but also of other proceedings. The term proceeding is of a very wide connotation. The object of the was to take out matters relating to recovery of debts due to the banks and financial institutions from the jurisdiction of the courts and to provide for their adjudication by special Tribunals so that they could be realised without delay. This being the philosophy behind the, the word proceeding has to be given an interpretation which is capable of embracing any adjudication or a legal step in a matter relating to and connected with the recovery of a debt due to the financial institutions ... In the context in which the word proceeding is used in section 31 of the Act, it must be given a wide and comprehensive meaning and cannot be confined as referring to an original civil proceeding. It would take in its sweep any matter for judicial adjudication and include (i) a proceeding which is not an original proceeding; (ii) a proceeding which is interlocutory in nature; (iii) a proceeding during the course of the suit; and (iv) a proceeding subsequent to the passing of the decree. The present application is a matter for judicial adjudication. Even otherwise it is a step envisaged by the Civil Procedure Code being an application under Order 9, rule 13 of the Civil Procedure Code, and therefore, would be a proceeding within the meaning of section 31 of the."

Taking into consideration these decisions, I am of the view that the order of the lower court is correct. It has held that it has no jurisdiction to deal with the matter. What is the procedure to be adopted in such cases has also been considered in the decision reported in Devaki v. Chandriha 1997 (2) KLT 746. In paragraph 12 of the judgment, their Lordships have said that, -

".... the proper procedure which that court ought to have followed was to receive the applications and on receipt of the applications forward the same to the family court concerned even before entertaining them with appropriate endorsement and with notice to the petitioner/petitioners; for entertainment and disposal in accordance with law."

Their Lordships further went on and said thus (page 752) :

" We are indicating the above procedure as the proper one because such a procedure would avoid the necessity of returning the applications for presentation to the family court, its presentation before the family court and the forwarding of the records by the civil court to the family court in response to the request of the family court for records, etc. which would necessarily cause considerably long delay and protraction of the proceedings. We would further indicate that as far as suits and proceedings disposed of by the civil courts prior to the establishment of the family court and coming within the ambit of the Explanation to section 7 of theare concerned, it will be legal and proper for the family court to entertain and dispose of such applications/petitions after calling for the records of the disposed of suits or proceedings from the concerned civil courts on the request of the parties."

The lower court has also followed the same procedure by directing the transfer of the application to the Tribunal.Learned counsel for the petitioner relied on the decision in Allahabad Bank v. Ghanshyam Das Damani, wherein a learned single judge of that High Court was also considering an ex parte decree passed by that High Court on its original side before the came into force, and the question that came before the Calcutta High Court was, whether that application was maintainable before the original side of the High Court or the constitution of the Tribunal will bar the entertainment of the application. The learned judge held that the original suit filed on the side of the High Court is entirely different and it is the High Court that passed the ex parte decree and the jurisdiction to set aside the ex parte decree also vests within. A decree passed by the High Court cannot be set aside by a subordinate court in view of the provisions of the original side rules. The learned judge also took into consideration the fact that the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, only speaks about the Civil Procedure Code and not about the original side rules of a chartered High Court. The learned judge said that when a High Court passes an ex parte decree while exercising a different jurisdiction, and if the Tribunal is allowed to recall that judgment, it will be the last day of the judiciary. I do not think that the above decision will have any application to the facts of the case on hand.

In the result, the impugned order is confirmed, and the civil revision petition is dismissed. No costs. Connected C.M. Ps. are also dismissed.