2003 (3) TMI 551 - HC - Companies Law

Summary

Issues Involved:
1. Whether the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, debar the Civil Court from setting aside an ex parte decree passed by it.
2. Jurisdiction of the Civil Court versus the Debts Recovery Tribunal in matters of debt recovery exceeding Rs. 10 lakhs.
3. Applicability of sections 17, 18, 22(g), and 31 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
4. Transfer of pending cases to the Tribunal.
5. Interpretation of the term 'debt' under the Act.
6. Legislative intent and the overriding effect of the Act.
7. Procedural aspects and the role of the Tribunal.

Detailed Analysis:

1. Jurisdiction of Civil Court vs. Debts Recovery Tribunal:
The primary issue is whether the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, bars the Civil Court from setting aside an ex parte decree. The Court held that under sections 17 and 18 of the Act, the jurisdiction of Civil Courts is ousted in matters of debt recovery exceeding Rs. 10 lakhs. The Tribunal alone has the authority to entertain and decide such applications. The Civil Court's jurisdiction is completely barred, and it cannot entertain any application related to the recovery of debts of Rs. 10 lakhs or more.

2. Applicability of Sections 17, 18, 22(g), and 31:
Section 17 vests the Tribunal with exclusive jurisdiction for debt recovery applications. Section 18 bars the jurisdiction of Civil Courts in these matters. Section 22(g) allows the Tribunal to set aside ex parte orders. Section 31 mandates the transfer of pending cases to the Tribunal. The Court emphasized that these provisions collectively ensure that any proceedings related to debt recovery exceeding Rs. 10 lakhs must be handled by the Tribunal, not the Civil Court.

3. Transfer of Pending Cases:
Section 31 provides for the transfer of pending cases to the Tribunal. The Court noted that this includes not only suits but also any proceedings, such as applications for setting aside ex parte decrees. The legislative intent is to centralize debt recovery processes within the Tribunal to avoid parallel proceedings and ensure expeditious adjudication.

4. Interpretation of 'Debt':
The term 'debt' under the Act includes amounts due under a decree passed by a Civil Court. The Court clarified that even if a decree is passed by a Civil Court, the subsequent recovery process must be conducted by the Tribunal if the amount exceeds Rs. 10 lakhs. This interpretation aligns with the Act's objective to expedite the recovery of public dues through a specialized mechanism.

5. Legislative Intent and Overriding Effect:
The Act is a special statute with an overriding effect, as provided in section 34. The legislative intent is to streamline debt recovery processes and ensure that large debts are handled by the Tribunal. The Court highlighted that the Act's provisions must be given full effect and cannot be narrowly construed. The Tribunal's establishment aims to provide a simpler, speedier, and more effective remedy than the Civil Courts.

6. Procedural Aspects and Role of the Tribunal:
The Tribunal is vested with judicial functions and has all the trappings of a Court. It follows an adversarial procedure, ensuring a just and fair opportunity for the parties. The Tribunal can make final and legally enforceable decisions. The Court emphasized that the Tribunal's procedure is designed to be less formalistic and more efficient than traditional Civil Court processes.

Conclusion:
The High Court of Kerala held that the Civil Court had no jurisdiction to entertain the application for setting aside the ex parte decree. The application should have been presented to the Debts Recovery Tribunal. The Court set aside the Civil Court's order and directed that the application be returned to the appellant for presentation to the Tribunal. The judgment affirms the exclusive jurisdiction of the Tribunal in matters of debt recovery exceeding Rs. 10 lakhs and underscores the legislative intent to expedite the recovery of public dues through specialized Tribunals.