1999 (10) TMI 657 - HC - Companies Law

Summary

Issues Involved:
1. Jurisdiction of the High Court vs. Debt Recovery Tribunal (DRT)
2. Interpretation of 'other proceedings' under Section 31 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993
3. Execution of a decree in the context of the Act
4. Transfer of pending cases to the DRT

Issue-wise Detailed Analysis:

1. Jurisdiction of the High Court vs. Debt Recovery Tribunal (DRT):
The primary issue was whether the High Court had jurisdiction to entertain the execution proceedings given the amount involved exceeded Rs. 10 lakhs, which typically falls under the purview of the Debt Recovery Tribunal as per Section 18 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

2. Interpretation of 'other proceedings' under Section 31 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993:
The applicant's counsel argued that execution proceedings do not fall under 'other proceedings' as mentioned in Section 31 of the Act. He contended that the term 'other proceedings' should not include execution proceedings and supported his argument by referring to various provisions of the Act and Section 44A of the Code of Civil Procedure, 1908. However, the judgment clarified that the term 'debt' includes liabilities payable under a decree or order of any civil court, and thus, execution proceedings are covered under 'other proceedings' in Section 31 of the Act.

3. Execution of a decree in the context of the Act:
The court elaborated that to execute a decree, a decree holder must first move the Tribunal by making an application under Section 19 of the Act and obtain an order to send a certificate under sub-section (7) of Section 19 to the Recovery Officer. The judgment emphasized that the execution of a decree must follow the procedure laid down under Section 19, and a certificate cannot be issued directly by the Tribunal to the Recovery Officer for recovery of the amount if the debt recoverable is a decree.

4. Transfer of pending cases to the DRT:
The judgment discussed the necessity of transferring pending execution proceedings to the DRT. It concluded that execution proceedings already pending in civil courts at the time of the establishment of the Tribunal need not be transferred to the DRT. The court reasoned that transferring such proceedings would cause unnecessary delays and confusion, contradicting the Act's objective of expeditious adjudication and recovery of debts. The judgment acknowledged that while 'other proceedings' in Section 31 include execution proceedings, a pragmatic approach should be taken to allow pending execution proceedings to continue in civil courts.

Conclusion:
The court held that the execution proceedings pending before the civil court as of the date of the establishment of the Tribunal (16-7-1999) need not be transferred to the DRT. Therefore, the High Court retained jurisdiction over the execution proceedings in this case. The receiver was directed to accept the offer of Umang Enterprises and hand over the hypothecated securities upon receiving the payment. The judge's order was disposed of accordingly.