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2000 (4) TMI 757 - SC - Companies LawImpact of the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act 1993 n the provisions of the Companies Act 1956 - Held that - Appeal allowed. Direct the Registry of the Supreme Court to make over the monies deposited in this court pursuant to sale of shed No. 15 to the Debt Recovery Tribunal Delhi and it will be for the said Tribunal to find out if there are any workmen s dues by issuing notice to the workmen or other persons/bodies which can furnish information in this behalf. The above monies to be sent from this court as well as the monies realised by earlier sales in case they are not subject to any pending litigation have to be first released towards the workmen s dues. The balance remaining will then be released in favour of the appellant-bank in accordance with law and subject to the various principles stated in this judgment. In case any machinery or goods pledged to the Canara Bank are lying in the two other sheds already sold it will be open to the Canara Bank to move the Tribunal/Recovery Officer for their removal and for an inventory.
Issues Involved:
1. Exclusive jurisdiction of the Tribunal and the Recovery Officer under the RDB Act. 2. Necessity of leave from the company court under sections 442, 446, and 537 of the Companies Act for proceedings under the RDB Act. 3. Jurisdiction of the company court to stay, transfer, and decide execution and priority issues under sections 446(2) and (3) of the Companies Act. 4. Applicability of section 73 of the Civil Procedure Code and sections 529, 529A, and 530 of the Companies Act to the RDB Act proceedings. 5. Distribution of sale proceeds by the Tribunal under section 19(19) of the RDB Act and the priority of secured creditors. 6. Relief to be granted concerning the sale proceeds realized by the Recovery Officer and lying in the Tribunal and the Supreme Court. Detailed Analysis: Point 1: Exclusive Jurisdiction of the Tribunal and Recovery Officer The RDB Act is intended for the expeditious adjudication and recovery of debts due to banks and financial institutions. The Tribunal has exclusive jurisdiction under sections 17 and 18 of the RDB Act to decide applications for recovery of debts. The Recovery Officer has exclusive jurisdiction for executing the certificates issued by the Tribunal. The Act overrides other laws to the extent of inconsistency, as per section 34. Therefore, both adjudication and execution are exclusively within the jurisdiction of the Tribunal and the Recovery Officer. Point 2: Necessity of Leave from the Company Court The RDB Act, being a special statute, overrides the general provisions of the Companies Act. No leave of the company court is required under sections 446 or 537 for initiating or continuing proceedings under the RDB Act. The company court cannot stay proceedings before the Tribunal or the Recovery Officer under section 442. The exclusive jurisdiction of the Tribunal and Recovery Officer precludes the necessity of obtaining leave from the company court. Point 3: Jurisdiction of the Company Court The company court does not have jurisdiction to stay, transfer, or decide execution and priority issues under sections 446(2) and (3) of the Companies Act in respect of proceedings under the RDB Act. The Tribunal has exclusive jurisdiction to adjudicate and execute recovery certificates and to decide priorities among creditors as per section 19(19) of the RDB Act. The provisions of the RDB Act are inconsistent with the Companies Act, and the latter must yield to the former. Point 4: Applicability of Section 73 of the Civil Procedure Code and Sections 529, 529A, and 530 of the Companies Act The principles underlying section 73 of the Civil Procedure Code are applicable only if a person seeking a share in the sale proceeds has obtained a decree or an order of adjudication from the Tribunal. In the present case, the Canara Bank has not obtained any decree or adjudication of its debt from the Tribunal. Therefore, it cannot claim a share in the sale proceeds realized by the Recovery Officer. Point 5: Distribution of Sale Proceeds and Priority of Secured Creditors Section 19(19) of the RDB Act, introduced by Ordinance No. 1 of 2000, allows the Tribunal to distribute sale proceeds among secured creditors in accordance with section 529A of the Companies Act. Secured creditors who opt to stand outside the winding up can claim priority only to the extent of the "workmen's portion" as defined in section 529(3)(c). The Canara Bank, not having realized any amount outside winding up or lost any part of its security towards workmen's dues, cannot claim priority over the Allahabad Bank. Point 6: Relief to be Granted The sale proceeds realized by the Recovery Officer and lying in the Tribunal and the Supreme Court cannot be released straightaway to the Allahabad Bank. The Tribunal must first ascertain if there are any workmen's dues and satisfy them before releasing any balance to the Allahabad Bank. The Registry of the Supreme Court is directed to transfer the monies to the Debt Recovery Tribunal, Delhi, for appropriate distribution. Conclusion The appeal is allowed, and the impugned order of the High Court is set aside. The Tribunal has exclusive jurisdiction for adjudication, execution, and distribution of sale proceeds under the RDB Act. No leave from the company court is necessary for proceedings under the RDB Act. The Tribunal must distribute the sale proceeds in accordance with section 19(19) of the RDB Act, prioritizing workmen's dues. The Canara Bank cannot claim priority over the Allahabad Bank in the absence of a decree or realization of security. The Tribunal is directed to handle the distribution of the sale proceeds accordingly.
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