2003 (1) TMI 518 - HC - Companies Law

Summary

Issues Involved:
1. Impleading Petitioners in the Debts Recovery Tribunal.
2. Maintainability of the Original Petition.
3. Authority and Jurisdiction of the Registrar.
4. Allegations of Mala Fides and Judicial Dishonesty.
5. Principles of Natural Justice.
6. Remedies Available to the Petitioners.
7. Directions to the Central Government regarding appointments in Debts Recovery Tribunals.

Issue-wise Detailed Analysis:

1. Impleading Petitioners in the Debts Recovery Tribunal:
The petitioners sought to be impleaded in O.A. No. 42 of 2001 pending before the Debts Recovery Tribunal, Ernakulam, claiming they had entered into agreements with a company for the construction of flats, for which they had paid in full. They contended that HUDCO, which had filed the O.A., was aware that the flats did not belong to the contractor and was attempting to sell the property clandestinely. Their application for impleading was dismissed by the Registrar on the grounds that the O.A. had already been disposed of.

2. Maintainability of the Original Petition:
HUDCO argued that the Original Petition was not maintainable as the petitioners had other effective remedies available under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. They could appeal to the Appellate Tribunal against the orders of the Debts Recovery Tribunal or the Registrar. The Supreme Court decision in Punjab National Bank v. O.C. Krishnan was cited to support this contention.

3. Authority and Jurisdiction of the Registrar:
The Registrar's authority was questioned, particularly whether he had the jurisdiction to pass judicial orders. The Registrar did not file a counter affidavit. The Assistant Registrar stated that the petitioners' application was unregistered because the O.A. had already been disposed of. It was contended that the Registrar could decide on the registration of applications under Rule 23(ii) of the Debts Recovery Tribunal Procedure Rules, 1993.

4. Allegations of Mala Fides and Judicial Dishonesty:
The petitioners alleged that the Registrar acted with mala fide intentions and without jurisdiction. The court found discrepancies in the Registrar's handling of the application, including alterations in the order's language, indicating judicial dishonesty and fraud. The court noted that the Registrar's actions were illegal and without jurisdiction.

5. Principles of Natural Justice:
The court emphasized that the Tribunal must follow principles of natural justice, even though it is not bound by the Code of Civil Procedure. The petitioners' application was filed before the O.A. was disposed of, but the Tribunal did not consider it, violating natural justice principles. The Tribunal was aware of the application but proceeded with undue haste to dispose of the O.A.

6. Remedies Available to the Petitioners:
The court noted that the petitioners were not debtors, sureties, or guarantors and had no defense against HUDCO's claim for money realization. Their objection was to the sale of the flats they occupied. The court suggested that the petitioners could approach a civil court or utilize remedies under the Income-tax (Certificate Proceedings) Rules, 1962, and the Second Schedule: Procedure for Recovery of Tax. These rules provide for investigation of claims and objections by the Tax Recovery Officer and allow for appeals and civil suits.

7. Directions to the Central Government regarding appointments in Debts Recovery Tribunals:
The court highlighted the need for experienced personnel in the roles of Registrar and Assistant Registrar at Debts Recovery Tribunals to avoid similar issues in the future. The Central Government was directed to give preference to individuals with relevant experience when filling these positions.

Conclusion:
The Original Petition was disposed of without setting aside the orders passed in the O.A. The petitioners were granted liberty to pursue remedies available under the law. The court emphasized the importance of adhering to natural justice principles and proper procedures to avoid delays and ensure fair adjudication.